UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



	Form 10-K



x	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



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

For the transition period from to

Commission file number 333-174896

WireCo WorldGroup Inc.

(Exact name of registrant as specified in its charter)

	Delaware		27-0061302
	(State or other jurisdiction ofincorporation or organization)		(I.R.S. EmployerIdentification No.)
	12200 NW Ambassador DriveKansas City, Missouri		64163
	2400 West 75th StreetPrairie Village, Kansas		66208
	(Address of registrant's executive offices)		(Zip Code)
	(816) 270-4700
	(Registrant's telephone number, including area code)

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 ¨ NO x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES x NO ¨

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 ¨ NO x

NOTE: While the Registrant is a voluntary filer not subject to the filing requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 (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.

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

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

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



Large accelerated filer	¨	Accelerated filer	¨

Non-accelerated filer	x	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). YES ¨ NO x

There is no market for the Registrant’s equity, all of which is held by affiliates of WireCo WorldGroup (Cayman) Inc. (the “Company”). As of ~~February~~March 2310, ~~2015~~2016, the Registrant had 100 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None

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WireCo WorldGroup Inc.

Annual Report

For the year ended December 31, ~~2014~~2015

TABLE OF CONTENTS

PART I
ITEM 1. BUSINESS	4
ITEM 1A. RISK FACTORS	11
ITEM 1B. UNRESOLVED STAFF COMMENTS	15
ITEM 2. PROPERTIES	15
ITEM 3. LEGAL PROCEEDINGS	16
ITEM 4. MINE SAFETY DISCLOSURES	16
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	16
ITEM 6. SELECTED FINANCIAL DATA	16
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	17
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	3332
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	3534
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	7268
ITEM 9A. CONTROLS AND PROCEDURES	7268
ITEM 9B. OTHER INFORMATION	7369
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	7369
ITEM 11. EXECUTIVE COMPENSATION	7671
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	8176
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE	8277
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES	8479
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES	8579
SIGNATURES	8680

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Our Organization

The diagram below illustrates our current corporate structure at December 31, ~~2014~~2015, including WireCo WorldGroup Inc. (the "Registrant"), the issuer of the 9.50% Senior Notes due 2017, the guarantors, and non-guarantors designated by the shaded boxes. WireCo WorldGroup (Cayman) Inc. ("WireCo" or the "Company") indirectly owns 100% of the voting common stock of the Registrant and all of the subsidiaries guaranteeing the 9.50% Senior Notes. For a list of our subsidiaries, refer to Exhibit 21. Percentages of sales or assets represent the respective portion of consolidated WireCo net sales for the year ended December 31, ~~2014~~2015, ~~and~~or assets at December 31, ~~2014~~2015.

(1) This entity is 8482% beneficially owned by Paine & Partners Fund III, of which Paine & Partners, LLC ("Paine & Partners") is the manager.


⁽²⁾	Certain current and former members of management beneficially own 3.3% of the non-voting common stock of U.S. Holdings, reflected as non-controlling interests.


⁽³⁾	For subsidiaries in which the Company does not have a controlling interest, we account for our respective ownership interests as equity method investments.

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Cautionary Information Regarding Forward-Looking Statements

The Securities and Exchange Commission (“SEC”) encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This report contains statements that relate to future events and expectations and, as such, constitute “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as “anticipates,” “believes,” “continues,” “estimates,” “expects,” “forecasts,” “outlook,” “plans,” “projects,” “should,” “targets,” “will,” or the negative of those words or other comparable terminology. All statements that reflect WireCo's expectations, assumptions or projections about the future other than statements of historical fact are forward-looking statements, including, without limitation, forecasts concerning end-market growth or other trend projections, anticipated financial results or operating performance, and statements about WireCo's business plans and strategies.

Forward-looking statements are subject to a number of known and unknown risks, uncertainties and other factors and are not guarantees of future performance. Actual results, performance or outcomes may differ materially from those expressed in or implied by those forward-looking statements. A number of factors or combination of factors including, but not limited to, the factors identified below and those discussed in Item 1A, Risk Factors, of this annual report may cause WireCo’s actual results to differ materially from those projected in any forward-looking statements.

Readers are strongly encouraged to consider these factors and the following factors when evaluating any forward-looking statements concerning the Company:


•	the general economic conditions in markets and countries where we have operations;


•	fluctuations in end market demand;


•	foreign currency exchange rate fluctuations;


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


•	our ability to meet quality standards;


•	our ability to protect our trade names;


•	the competitive environment in which we operate;


•	changes in the availability or cost of raw materials and energy;


•	risks associated with our manufacturing activities;


•	violations of laws and regulations;


•	the impact of environmental issues and changes in environmental laws and regulations;


•	our ability to successfully execute and integrate acquisitions;


•	comparability of our specified scaled disclosure requirements applicable to emerging growth companies;


•	labor disturbances, including any resulting from suspension or termination of our collective bargaining agreements;


•	our significant indebtedness;


•	covenant restrictions;


•	the interests of our principal equity holder may not be aligned with the holders of our 9.5% Senior Notes; and


•	credit-rating downgrades.

Any forward-looking statements that WireCo makes in this annual report speak only as of the date of such statement and we disclaim any intention or obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law.

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PART I

Item 1.Business

INTRODUCTION

Unless otherwise indicated, the financial information included in this annual report on Form 10-K are those of WireCo WorldGroup (Cayman) Inc., its wholly-owned subsidiaries, including WireCo WorldGroup Inc., and subsidiaries in which it has a controlling interest. In this report, unless the context otherwise requires, “WireCo,” the “Company,” “we,” “our” or “us” means WireCo WorldGroup (Cayman) Inc. and all subsidiaries consolidated for the purposes of its financial statements. WireCo WorldGroup (Cayman) Inc. is an exempted company incorporated under the laws of the Cayman Islands in 2008. WireCo WorldGroup Inc. (the "Registrant") was originally founded in 1931 as Wire Rope Corporation of America, Inc.

COMPANY OVERVIEW

~~WireCo~~We isare a leading global manufacturer of both steel and synthetic rope, specialty wire and engineered products serving a diverse range of end markets, geographies and customers. We maintain a broad portfolio of critical products across the end markets we serve, including, but not limited to, industrial and infrastructure, oil and gas (both offshore and onshore), fishing, mining, maritime, structures, poultry, and storage systems. We market our products under well-known brands including: Union™, CASAR®, Lankhorst Ropes®, Camesa®, Euronete™, Oliveira™®, Phillystran®, Drumet™®, Lankhorst Engineered Products™ and Lankhorst Mouldings™.

Our highly engineered, specialized ropes are "mission-critical" equipment components used in applications, such as heavy lifting, pulling, mooring, supporting and suspension. Our products' performance, quality and safety are of the utmost importance to our customers to limit exposure to costly unplanned operational disruptions and downtime. The consumable nature of our products and rigid replacement cycles result in a recurring revenue base over time.

We operate 2324 manufacturing facilities in 8 countries, which are supplemented by a global network of company-owned distribution facilities, consignment centers, distributor partnerships and sales offices. In addition, we have non-consolidated joint ventures with manufacturing activities in India, Spain, Norway, Greece and China. Our acquisitions have enhanced our leadership position by creating new growth opportunities, served to diversify and increase end market penetration, and reduced our dependence on external wire suppliers. The timeline below highlights a few of the more significant acquisitions we have made over the past decade.

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OUR STRENGTHS


•	Mission-Critical Products with Recurring Revenue. Due to the mission-critical nature of our products, customers choose our products based on quality, service and engineering support. Rigorous operating conditions require frequent replacement, generating a steady stream of recurring revenue.

• Highly Diversified Business Mix. Our revenue base ~~has~~is aspread ~~balanced exposure~~ across a diverse mix of end-user markets, geographies, products and brands. We believe our ~~diversified~~overall ~~portfolio~~business ~~insulates~~diversity ushelps ~~from~~to ~~volatility~~mitigate the impact of a downturn in any ~~single~~one ~~industry~~product, end market or region. In ~~2014~~2015, no single end market represented more than 4026% of our total sales. In addition, we are geographically diversified with approximately 6671% of sales outside of the United States ("U.S.") during ~~2014~~2015.

• Leading Market Share. We believe we hold a top market position in each of the end markets in which we choose to participate. We attribute our leadership position to our engineering capabilities and technical expertise underpinned by a heritage of over 75 years of innovation, quality, industry experience and superior customer service. We are actively pursuing the high margin global marketplace, where quality and service is key for buying decisions.


•	Track Record of Successful Acquisitions. We have been able to successfully execute several key acquisitions resulting in a market leading position and diversification among products, end markets and geographies.


•	Consistent Margins Despite Volatile Raw Material Prices. We have pass-through pricing mechanisms for all products at the time of sale to reflect current commodity prices, which allows for stabilized margins during volatile commodity markets.

• Organic Innovation. We introduced, 17enhanced ~~new~~or improved 20 products during ~~2014~~2015. Driving this organic innovation is a team of over 70 research, design and development engineers involved in product conception, research, design, development, testing and full technical customer support. We employ some of the end markets' most creditable subject matter experts, currently serving or having served on committees such as the Wire Rope Technical Board, American Society of Mechanical Engineers B30.30 Committee, and in Europe, The Drahtseil-Vereinigung for the wire rope industry. In addition, our experienced manufacturing team of plant managers and engineers has extensive industry experience, allowing us to leverage a talented and knowledgeable workforce to deliver high-performance products to our customers.

REPORTABLE SEGMENT

Our operations consist of one operating segment and one reportable segment. Refer to Note 1514—“Segment and Geographic Area Information” to our consolidated financial statements included in Item 8, Financial Statements and Supplementary Data, of this annual report for additional information.

PRODUCTS

The table below summarizes each product's contribution as a percentage of our total consolidated ~~net~~ sales during ~~2014~~2015, ~~2013~~2014 and ~~2012~~2013. ~~The Lankhorst acquisition in July 2012 affects the comparability of period-over-period results.~~

Product Sales as a Percentage of Total Consolidated Sales

	2014		2013		2012
	2015		2014		2013
Rope	73	%	7473	%	74	%
Specialty Wire	1617	%	16	%	2016	%
Engineered Products	1110	%	1011	%	610	%
	100	%	100	%	100	%

ROPE

Product Portfolio

~~WireCo~~We isare a leading global producer with a broad product offering of steel rope, electromechanical cable ("EM Cable"), synthetic rope and synthetic yarns. These customized products are capable of withstanding extremely heavy loads and harsh operating environments with specific quality, durability, weight, functionality and performance capabilities. Given the intensity of rope usage in certain applications and their consumable nature, they are subject to strict inspection and removal criteria, necessitating frequent replacement. As a result, the aftermarket represents a significant portion of highly engineered rope sales. ~~WireCo's products are mainly used for lifting equipment within the oil and gas, fishing, mining, maritime and industrial and infrastructure end markets.~~

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WeOur ~~sell our~~ products ~~through~~are amainly ~~global~~used sales force consisting of regional sales managers and application or end market specialists. To enhance our overall level of service to our customers, we have: an extensive engineering and research and development organization that is actively involved in developing innovative products for ~~our~~lifting ~~customers;~~equipment ~~leading~~within ~~technical~~the ~~training~~oil ~~seminars surrounding our products;~~ and ~~fieldwork with our customers to maximize product performance. We service our customers through a global network of owned distribution centers~~gas, ~~consignment centers and distributor partnerships in order to provide fast delivery~~fishing, ~~short lead-times~~mining, ~~consistent~~maritime ~~product~~and ~~supply~~industrial and ~~high~~infrastructure ~~quality~~end ~~customer service~~markets.

~~The~~We ~~below~~sell ~~table~~our ~~summarizes~~products ~~each~~through ~~product's~~a ~~contribution~~global assales aforce ~~percentage~~consisting of regional sales managers and application or end market specialists. To enhance our overall level of service to our ~~consolidated~~customers, ~~rope~~we ~~sales~~have ~~during~~an ~~2014~~extensive engineering and research and development organization that is actively involved in developing innovative products for our customers, ~~2013~~leading technical training seminars surrounding our products and ~~2012~~fieldwork with our customers to maximize product performance. ~~The~~We ~~Lankhorst~~service ~~acquisition~~our ~~affects~~customers ~~the~~through ~~comparability~~a global network of ~~period~~owned distribution centers, consignment centers and distributor partnerships in order to provide fast delivery, short lead-~~over-period~~times, ~~results~~consistent product supply and high quality customer service.

~~Rope~~The ~~Product~~below ~~Portfolio~~table ~~Sales~~summarizes each product's contribution as a ~~Percentage~~percentage of ~~Total~~our ~~Rope~~total ~~Sales~~consolidated sales during 2015, 2014 and 2013.

	2014		2013		2012
Steel Rope	53	%	49	%	57	%
Steel EM Cable	5	%	5	%	6	%
Total Steel	58	%	54	%	63	%
Synthetic Rope	12	%	16	%	10	%
Synthetic Yarns	3	%	4	%	1	%
Total Synthetic	15	%	20	%	11	%
Rope Total Sales	73	%	74	%	74	%

Rope Product Portfolio Sales as a Percentage of Total Consolidated Sales



	2015		2014		2013
Steel Rope	50	%	53	%	49	%
Steel EM Cable	3	%	5	%	5	%
Total Steel	53	%	58	%	54	%
Synthetic Rope	17	%	12	%	16	%
Synthetic Yarns	3	%	3	%	4	%
Total Synthetic	20	%	15	%	20	%
Rope Total Sales	73	%	73	%	74	%

Steel Rope consists of a group of high-carbon steel wire strands helically and symmetrically twisted and “closed” together around a central core. Steel rope can range from small specialty rope of 1/16th of an inch to large mining ropes of up to five inches in diameter. We produce both highly engineered specialty products and steel rope suitable for a variety of uses, such as drill lines, mining ropes, cranes, mooring lines, bridges and logging. Major applications of these highly engineered products involve mineral mining, oil and gas exploration, fishing, maritime, construction and heavy industry (e.g., cranes).

EM Cable is a highly engineered, customized electrical power and electrical signal transmission cable that is armored with high-carbon steel wire or special metal alloys, providing protection for the electrical conductors inside and various mechanical performance properties. Our EM Cable product is used in the oil and gas exploration industry and provides a link to the surface from underground instrumentation. The cable not only transmits data, but also acts as a strength member for the insertion and removal of the geophysical tools used for data-logging and perforating oil and gas wells. Over the past several years, advancements in drilling technology have opened up large shale gas reserves, creating a significant ~~shale~~EM ~~drilling~~Cable ~~market~~opportunity ~~for~~in ~~our~~the EMshale ~~Cable~~oil ~~product.~~and gas market.

Synthetic Ropes include high tenacity fiber ropes, strands, braids and strength members made from fibers such as Kevlar®, Dyneema®, Twaron®, Technora® (all registered trademarks are owned by their respective owners) and our own proprietary formulations. These products are unique in that they have the strength characteristics of steel rope but weigh significantly less. Synthetic ropes are primarily used in maritime, offshore oil and gas, fishing and other industries that require specific operating strength, buoyancy (when in high-modulus polyethylene), corrosion resistance or weight tolerance characteristics beyond wire rope. These include mooring lines, fishing ropes, fishing nets, life and winch lines, structural and support lines, boat rigging, power cables and broadcast tower guy cables. For certain applications, fiber ropes offer attractive physical characteristics compared to steel. Although fiber has comparative strength features, it is known to have greater flexibility and lighter weight, which allows submersion to approximately 10,000 meters, allowing far greater depth reach with virtually no increase in weight. Synthetic products have become crucial in the offshore oil and gas markets as greater drilling depths have made steel ropes impractical and obsolete due to the weight of the steel rope. We have pioneered the development of new products, which combine the use of steel wire ropes with high-strength synthetic components that improve the strength to weight ratio in the finished product.

Synthetic ~~Yarns~~Yarn products, such as tapes, yarns and monofilaments, are used in a variety of end market applications including flexible intermediate bulk containers, horticulture, agriculture, cables, concrete reinforcement, synthetic grass, geotextiles, electrical fencing, antiballistics, luggage, sports products, industrial and infrastructure usage and synthetic ropes. We ~~The Company~~ also ~~manufactures~~manufacture synthetic yarns for use in the production of ~~its~~our own synthetic ropes.

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End Markets

Our ~~Rope~~rope products provide solutions in a variety of end markets with attractive growth opportunities, focusing on premium high-margin business. A breakdown of our net sales for the year ended December 31, ~~2014~~2015 by end market, as well as our ~~Go-to-Market~~rope brands were as follows:

The following provides a detailed description regarding some uses of our products by end market:

Industrial and Infrastructure - This end market encompasses industrial and infrastructure applications that use steel rope in various industries, including construction, transportation, defense, automotive, agriculture and logging. Crane ropes sold within this end market consist of both Original Equipment Manufacturers ("OEMs") tied to new crane build annually and a much larger global market of end users of cranes in the aftermarket. Crane ropes are a consumable working component of cranes that require replacement every one to four years depending on cycle counts, working conditions and operator experience.

Oil and Gas - Steel and synthetic ropes are used throughout the oil and gas industry, providing solutions, from exploration all the way to production. We have a full suite of product offerings for onshore oil and gas (well servicing, tubing and sandlines, drill lines, and mast raising lines), offshore above platform (drill lines, buoy pendants, tensioner ropes, riser ropes, cranes and cable lays), and solutions for offshore mooring systems below platform (deep water mooring, anchor lines, mooring systems, modulines and synthetic tethers). Onshore and offshore above platform ropes are mission critical and typically need to be replaced every 6 to 12 months depending on the application and operating environment.

Fishing - The fishing industry encompasses applications that use steel ~~and~~ropes, synthetic ~~wire~~ ropes and netting for fishing and other related ~~equipment~~uses. We are a leading global supplier of these products to the fishing industry, with worldwide distribution of our recognized Oliveira and Euronete brands. We believe we are the only company with a complete fishing gear range and the unique ability to produce netting, ~~and~~ wire and synthetic ropes. Our products are consumable ~~working~~wire ropes and nets for fishing vessels and fish farms, which need to be replaced ~~every~~based ~~three~~on tolevel ~~four~~of ~~years~~activity. Our ~~based~~research and development department is constantly working to build on ~~level~~our history of ~~activity~~providing ininnovative ~~order~~and unique products to ~~protect~~the ~~valuable~~markets ~~fish~~that ~~catches~~are orat ~~fish~~the ~~farm~~front ~~production~~line of the industry.

Mining - Our steel rope products are primarily consumable working ropes for mining operations. We participate both in the underground and surface mining market for the extraction of coal, copper, iron ore and other minerals and ores. Due to the severe wear-and-tear that steel ropes endure in surface mining operations, they typically need to be replaced every two to four months depending on the application and operating environment.

Maritime - Steel and synthetic ropes are used for various maritime operating applications including mooring, tugging, lifting and anchoring. The maritime business is managed with ship owners directly or with affiliated companies, like ship yards and ship management companies with regular activity in vessels designed for bulk cargo, containers and tankers for shipping product globally, as well as working boats built for towing, dredging, drilling, offshore installations, holiday cruises and defense purposes. These types of ropes typically need to be replaced every 12 to 18 months depending on the application and operating environment.

~~Structures~~Mining - Our steel ~~and synthetic~~ rope products are ~~used~~primarily consumable working ropes for mining operations. We participate both in ~~bridges~~the underground and surface mining market for the extraction of coal, ~~stadiums~~copper, ~~towers~~iron ore and other ~~cable~~minerals ~~supported~~and ~~structures~~ores. ~~Our~~Due ~~specialty~~to ~~wire~~the ~~products~~severe ~~are~~wear-and-tear ~~also~~that ~~commonly~~steel ~~used~~ropes asendure ~~concrete~~in ~~reinforcement~~surface ~~for~~mining ~~infrastructure~~operations, ~~projects~~they typically need to be replaced every two to four months depending on the application and operating environment.

Structures - Our steel and synthetic rope products are used in bridges, stadiums, towers and other cable supported structures.

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SPECIALTY WIRE

Product Portfolio

Our specialty wire provides a competitive edge, fulfilling substantially all of our internal supply chain needs. The majority of our volume in wire is high-carbon steel wire for use in the production of our own steel ropes and EM Cable products. For our external customers, we offer a variety of selective products such as prestressed concrete ("PC") strand, PC wire, roping and automotive wire, tire bead, spring and duct, guy strand and staple band, which are manufactured for a wide variety of uses in a broad range of industries. Of our specialty wire production for the year ended December 31, ~~2014~~2015, we produced 4843% for internal use and the remaining for our external customers. Our ~~Go-to-Market~~ brands ~~during~~for ~~2014~~specialty ~~were~~wire are as follows:

End Markets

Besides serving our internal needs, we serve niche markets in the infrastructure and industrial industries. Our primary infrastructure ~~product~~products isare PC strand, and PC wire. PC strand is used in highways, dams, silos, long extension bridges and industrial structures~~. PC~~ ~~strand~~and is a reinforcing component for concrete. PC wire is used in residential construction in areas of Mexico as well as railroad ties in the U.S. and Mexico. Our specialty wire products are also commonly used as concrete reinforcement for infrastructure projects. For the industrial market, we serve a variety of applications including air conditioning, automotive, furniture and fencing applications. Guy strand is used in telecommunications and utilities and staple band is used to manufacture staples for various industries.

ENGINEERED PRODUCTS

Product Portfolio

~~Lankhorst~~ Engineered ~~Products~~products are highly engineered, plastic injected molded products and sheets including strakes for vibration suppression, piggyback blocks, coil and pipe storage and railway sleepers. Our products have a very low maintenance cost, long useful life, high impact resistance, and perform in extreme temperature conditions. In many cases, these products are used as a substitute for steel, concrete or wood alternatives due to their unique engineered design, performance characteristics and price. Most products are custom designed by our dedicated team of research and development engineers to meet specific customer requirements. Since these applications are complementary with some of our wire and synthetic rope products, we can offer our customers a "complete solution." An example is our oil-platform mooring systems where we offer both the high strength synthetic ropes and ~~buoyancy~~the ~~modules~~related ~~produced~~buoyancy ~~by our Lankhorst Engineered Products facilities~~modules. ~~Sales~~Our sales and distribution of engineered products are done primarily in Europe ~~and, for the oil and gas market, by our own team in Houston, Texas~~. Together with our global network of dedicated distributors and agents, we are able to serve customers around the world.

End Markets

Engineered products are used in the following end markets: oil and gas, poultry, industrial and infrastructure and storage systems. Within oil and gas, we produce applications ranging from impact protection to buoyancy to anti-oscillation. Our poultry end market includes poultry manufacturing conveyor belts for eggs and manure that are tailored for the end application. The industrial and infrastructure end market produces manholes, poles, planks, decking sheet, furniture, bridges, and railroad cross ties. Engineered products are used in pipe storage systems for worksite mobility and coil storage solutions, such as steel plants, service centers, automotive plants and transportation. A breakdown of our net sales for the year ended December 31, ~~2014~~2015 by end market, as well as our ~~Go-to-Market~~engineered products brands were as follows:

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RAW MATERIALS

The main raw materials that we use to manufacture our rope products are high-carbon steel wire, polymers, such as polypropylene and polyethylene, and synthetic fibers, such as polyester and polyamide (nylon) and high tenacity synthetic fibers, such as Ultra High Molecular Weight Polyethylene. The main raw material that we use to manufacture wire is high-carbon steel rod. Our steel rope and wire products are made from steel rod that is primarily made from recycled steel scrap and iron ore and our synthetic ropes are primarily composed of new raw materials. Engineered ~~Products~~products are made from new plastic materials (36%) and recycled plastic materials (64%). The recycled plastics are sourced from agricultural foils, bottle caps and industrial waste. All of our products have a variety of different coatings or ancillary materials required to complete finished products. Examples include zinc, grease, lubrication, master batch for coloring, polyurethane, fittings and hardware.

Due to the wide geographic dispersion of our production facilities, we use numerous suppliers for the raw materials needed in our operations. We are not significantly dependent on any one or a limited number of suppliers, especially considering we are vertically integrated and manufacture the majority of the wire, fibers and cores we use in our ropes. These raw materials are purchased at regular intervals, usually on a monthly or quarterly basis, depending on pricing and market conditions.

MANUFACTURING FOOTPRINT

We have a comprehensive global footprint, with both highly engineered value -added manufacturing and low cost production serving diverse end markets. Our rope products are produced on a diverse set of manufacturing assets and our engineered products have unique production capabilities, such as low and high pressure injection molding, flat-die extrusion and high production flexibility. Refer to Item 2, Properties, of this annual report for more information on our manufacturing footprint.

CUSTOMERS

We serve a broad customer base, both in terms of industries and geographic regions. Our rope and specialty wire customers include distributors, OEMs and end users of our products in the various industries we serve. Engineered products' customers include: engineering firms, contractors, multinational oil and gas energy companies, offshore pipelayers, steel manufacturers and railroads. Due to our diversified customer base, our top 10 customers only accounted for approximately 10% of our net sales in ~~2014~~2015, and our largest customer accounted for less than 2% of net sales in ~~2014~~2015.

BACKLOG

Our policy is to include only firm unfilled orders shippable within twelve months in backlog. The backlog of orders for the principal products manufactured and marketed was $~~156~~73.63 million at December 31, ~~2014~~2015, relating primarily to offshore oil and gas contracts. The backlog of orders at December 31, 2014 was $156.6 million. We anticipate that most of the ~~2014~~2015 backlog of orders will be filled during fiscal year ~~2015~~2016.

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COMPETITIVE CONDITIONS

We are subject to competitive conditions in most end markets. Our competitors include other global well-capitalized wire rope manufacturers, ~~as well as other~~ local and specialized wire manufacturers and niche markets with a wide variety of specialized producers of plastic solutions, asand ~~well as~~ large producers of steel, concrete and wood alternatives. In spite of this moderately competitive environment, we have established market leading positions in our various end markets under our distinguished brands and design capabilities. We generally compete on the basis of product performance, sales and technical service support, and price.

INTELLECTUAL PROPERTY

~~The~~We ~~Company~~believe ~~believes~~ that ~~its~~our patents, brands, trademarks and other intellectual property provide itus with a significant competitive advantage. We own numerous patents and patent applications worldwide. We regularly file patent applications and obtain issued patents resulting from our research and development activities. Although we use patented inventions throughout our product portfolio, our business is not substantially dependent on any single patent or group of patents. We have a significant number of trademarks registered around the world covering our company names and material brands. These trademarks include WireCo WorldGroup®, WireCo®, Union™, CASAR®, Lankhorst Ropes®, Camesa®, Euronete™, Oliveira™®, WireCo® Structures, Phillystran®, Drumet™®, Lankhorst Engineered Products™ and Lankhorst Mouldings™. In addition, we have trademarks registered in the U.S. and some foreign countries to protect our specific “marker strand” designs, which, consistent with market practice, designate our steel rope products as well as various brands. We have also trademarked our orange-colored plastic coating used to enhance the performance of our steel rope product lines.

RESEARCH AND DEVELOPMENT

We believe our focused agenda of research and development initiatives has enhanced our reputation as one of the leading product innovators in the industries that we serve. Demand for our products developed in previous years continues to increase as our customers recognize the added value to their respective business. In ~~2014~~2015, we introduced, ~~seventeen~~enhanced ~~new~~or improved over 20 products to the diverse global industries that we serve. These new products have been included in our already extensive and highly engineered product portfolio. Our strategy is to continue to build on our history of innovation and technological expertise while bringing new, highly engineered products to market. Our investment in research and development was $54.38 million, $45.03 million and $34.10 million for the years ended December 31, ~~2014~~2015, ~~2013~~2014 and ~~2012~~2013, respectively.

REGULATION - Environmental Matters

Our business operations and facilities are subject to a number of laws and regulations, which govern the discharge of pollutants and hazardous substances into the air and water; the handling, storage, use and disposal of such materials; and remediation of contaminated sites. Operations at our facilities include transforming steel rods and wire into steel rope or cable, which can produce wastewater, spent acid and petroleum waste; and transforming polymers and synthetic fibers into fiber strand and fiber rope, which may be recycled or may produce polymer or synthetic fiber waste; and transforming lumber into wooden reels, which may produce waste that may be recycled or incinerated. We also store certain petroleum products and hazardous substances that we use in our operations. Due to the nature of these activities, our facilities are subject to routine inspection by regulators. Our regulators have not identified any material findings or situations that could have a material impact on our operations. Although we continually incur expenses and make capital expenditures related to environmental protection, we do not anticipate that future expenditures should materially impact our financial condition, results of operations, or liquidity.

EMPLOYEES AND LABOR RELATIONS

At December 31, ~~2014~~2015, we employed approximately 43,~~100~~800 employees worldwide, not including our non-consolidated joint ventures in India, Spain, Norway, Greece and China, of which approximately ~~800~~700 were employed by the Registrant in the U.S. Approximately 3734% of our employees were covered by collective bargaining agreements, of which none are subject to agreements that expire within one year of December 31, ~~2014~~2015. ~~The~~We ~~Company~~believe ~~believes~~we it will be able to successfully negotiate all such contracts as they come due.

FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREAS

We conduct a significant amount of our business and have a number of operating facilities in countries outside the United States. Refer to Note 14—“Segment and Geographic Area Information” to our consolidated financial statements included in Item 8, Financial Statements and Supplementary Data, of this annual report for financial information about our domestic and foreign operations.

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FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREAS

The Company conducts a significant amount of its business and has a number of operating facilities in countries outside the United States. Refer to Note 15—“Segment and Geographic Area Information” to our consolidated financial statements included in Item 8, Financial Statements and Supplementary Data, of this annual report for financial information about WireCo’s domestic and foreign operations.

AVAILABLE INFORMATION

~~The~~We ~~Company~~make ~~makes~~ available free of charge on ~~its~~our website, www.wirecoworldgroup.com, ~~its~~our current reports on Form 8-K, quarterly reports on Form 10-Q and annual reports on Form 10-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after the Company electronically files such material with, or furnishes it to, the Securities and Exchange Commission ("SEC"). The SEC maintains an Internet website, www.sec.gov, ~~that~~which contains reports and other information issuers file electronically with the SEC. Interested parties may also read and copy any of our filings at the SEC’s Public Reference Room at 100 F Street N.E., Room 1580, Washington, DC 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.

Item 1A.Risk Factors

Our business is subject to various risks, many of which are not exclusively within our control and may cause actual performance to differ materially from historical or projected future performance. The risks described below could materially and adversely affect our business, financial condition, results of operations or cash flows. These risks are not the only risks that we face and our business operations could also be affected by additional factors that are not presently known to us or that we currently consider to be immaterial to our operations. See “Cautionary Information Regarding Forward-Looking Statements” on page 3 of this annual report for cautionary statements regarding forward-looking statements.

Risks Relating to our Business

Worldwide economic conditions could negatively impact our business.

The general worldwide economic conditions continue to affect many industries, including industries in which we or our customers operate. These conditions have and could continue to negatively impact our business by adversely affecting, among other things, our: net sales; operating income; margins; cash flows; suppliers' and distributors' ability to perform and the availability and costs of materials; customers' orders; customers' ability to access credit; and customers' ability to pay amounts due to us. As a result of the weakening oil and gas end market during 2015, we reduced our factory work force in the United States, Mexico and Poland and implemented work force reductions in several administrative departments. We have been reducing our inventory in order to better match current demand. In addition, we are strategically supporting certain customers in the short-term with longer payment terms, which has resulted in an increase in days sales outstanding. If economic conditions ~~are~~continue ~~not~~to ~~favorable~~be unfavorable or worsen, the negative impact on our business could increase or continue for longer than we expect.

Some of our end markets are cyclical, which may cause us to experience fluctuations in net sales or operating results.

We have experienced, and expect to continue to experience, fluctuations in net sales and operating results due to business cycles. We sell our products principally to oil and gas (both offshore and onshore), industrial and infrastructure, fishing, mining, maritime, structures, poultry, and storage systems markets. Although we serve a variety of markets to avoid a dependency on any one, a significant downturn in any one of these markets could cause a material reduction in our net sales that could be difficult to offset. In addition, decreased market demand typically results in excess manufacturing capacity among our competitors which, in turn, results in pricing pressure. As a consequence, a significant downturn in our markets can result in lower profit margins.

Our reported financial condition and results of operations are subject to exchange rate fluctuations, which will make it more difficult to predict our financial results.

Our reported financial condition and results of operations are reported in multiple currencies, which primarily include the euro, the Mexican peso, and the Polish złoty, and are then translated into U.S. dollars at the applicable exchange rate for inclusion in our consolidated financial statements. Appreciation of the U.S. dollar against the euro, the Mexican peso, and the Polish złoty will have a negative impact on our reported net sales and operating income while depreciation of the U.S. dollar against such currencies will have a positive effect on reported net sales and operating income. Additionally, foreign currency exchange rate fluctuations related to intercompany loans denominated in U.S. dollars with subsidiaries whose functional currency is the euro, the Mexico peso, and the Polish złoty impact the Foreign currency exchange gains (losses), net line item included in our consolidated statements of operations.

We may be subject to risks relating to our non-U.S. operations.

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Wepotentially ~~may~~adverse betax ~~subject~~consequences; toand ~~risks~~difficulties ~~relating~~in toimplementing restructuring actions on a timely basis. Given our ~~non-~~global operations, the strengthening of the U.S. ~~operations~~dollar has had a significant negative impact on our 2015 results, and we expect the changes in foreign currency exchange rates to continue to add volatility going forward. If we are unable to successfully manage the risks associated with expanding our global business or adequately manage operational fluctuations internationally, the risks could have a material adverse effect on our business, results of operations or financial condition.

Many of our manufacturing operations and suppliers are located outside the United States. Our non-U.S. operations are subject to risks in addition to those facing our domestic operations, including: fluctuations in currency exchange rates; limitations on ownership and on repatriation of earnings; transportation delays and interruptions; political, social and economic instability and disruptions; government embargoes or trade restrictions; the imposition of duties and tariffs and other trade barriers; import and export controls; labor unrest and current and changing regulatory environments; the potential for nationalization of enterprises; difficulties in staffing and managing multi-national operations; limitations on our ability to enforce legal rights and remedies; potentially adverse tax consequences; and difficulties in implementing restructuring actions on a timely basis. If we are unable to successfully manage the risks associated with expanding our global business or adequately manage operational fluctuations internationally, the risks could have a material adverse effect on our business, results of operations or financial condition.

If we do not maintain the quality of our products, our sales would be harmed and product liability claims could increase our costs.

Our products are used in applications by our customers where quality and performance are critical. If we are unable to maintain the high standards, including various quality certifications, expected by our customers, or our competitors are able to produce higher quality products, our sales may be harmed by the loss of existing customers and our ability to attract new customers. Also, we have potential exposure to product liability claims in the event that the use of any of our products results in personal injury or property damage, or a failure of our products causes a work stoppage, including situations resulting from misuse of our products. Any such claims may be significant. Therefore, product liability claims against us could have a negative reputational impact, particularly if the failure of a product is highly publicized. Furthermore, manufacturing defects may not be discovered for some time after new products are introduced. In the event that any of our products prove to be defective, among other things, we may be responsible for any related damages, and we may be required to recall or redesign such products. Any insurance we maintain may not continue to be available on terms acceptable to us or such coverage may not be adequate for liabilities actually incurred. Should this occur, we may also need to increase our investments in manufacturing processes, which could increase our expenses, reduce our margins and adversely affect our cash flows.

Our reputation and competitive position are dependent on our ability to protect our intellectual property rights.

We believe that our trade names are important to our success and competitive position. We cannot, however, guarantee that we will be able to secure protection for our intellectual property in the future or that such protection will be adequate for future operations. Furthermore, we face the risk of ineffective protection of intellectual property rights in jurisdictions where we source and distribute our products, some of which do not protect intellectual property rights to the same extent as the United States. If we are unsuccessful in challenging a party’s products on the basis of infringement of our intellectual property rights, continued sales of these products could adversely affect our sales, devalue our brands and result in a shift in consumer preference away from our products. We may face significant expenses and liability in connection with the protection of our intellectual property rights, and if we are unable to successfully protect our rights or resolve intellectual property conflicts with others, our business or financial condition could be adversely affected.

We face competition and competitive pressures, which could adversely affect our results of operations and financial condition.

~~Our industry is moderately competitive.~~ We face competition on multiple fronts in our industry, including from large global firms and local specialized rope manufacturers. Other global firms may have more capital at their disposal, and may be able to produce their products at a lower cost due to their size and economies of scale. Our competitors who are based in other jurisdictions may have lower production costs because of lower labor costs, fewer regulatory standards, local access to raw materials, lower shipping costs or other factors. Local specialized firms may have an advantage due to their knowledge of the markets in which they operate. In addition, our competitors may be able to offer substitute products that customers could use as a replacement to our products.

We face volatility in the prices for, and availability of, raw materials and energy used in our business, which could adversely impact our competitive position and results of operations.

We rely heavily on certain raw materials (principally rod, polymers and synthetic fibers), and energy sources (principally electricity, natural gas and propane) in our manufacturing processes. As a result, our earnings are affected by changes in the costs and availability of these raw materials and energy. Unanticipated increases in the prices of such commodities could increase our costs, negatively impacting our business, results of operations and financial condition if we are unable to fully offset the effects of higher raw material or energy costs through price increases, productivity improvements or cost-reduction programs. InAlthough ~~addition~~we are not significantly dependent on any one or a limited number of suppliers, the loss of some of our significant raw material suppliers could cause shortages, which could have a material adverse effect on operations. The imposition of tariffs pursuant to trade laws and regulations in the jurisdictions in which our operations and suppliers are located can have an adverse impact on our business by placing tariffs and tariff-rate quotas on the import of certain raw materials and raising the prices of raw materials we require for our production. In addition, under certain tax laws, customs and taxing authorities may, from time to time, review the tariff classifications we use to import our raw materials and export our products.

We experience risks associated with manufacturing, which could adversely affect our business and results of operations.

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~~under~~some ~~certain~~customers. To ~~tax~~the ~~laws,~~extent ~~customs~~these ~~and~~events ~~taxing~~are ~~authorities~~not ~~may~~covered by insurance, ~~from~~we ~~time~~are unable to ~~time,~~recover ~~review~~insurance ~~the~~proceeds ~~tariff~~to ~~classifications~~reimburse for losses or business interruption, or if we ~~use~~are toinsured ~~import~~but ~~our~~there ~~raw~~are ~~materials~~delays ~~and~~in ~~export~~the receipt of such reimbursements, our ~~products~~cash flows may be adversely impacted by events of this type.

We experience risks associated with manufacturing, which could adversely affect our business and results of operations.

A manufacturing disruption, such as equipment downtime, facility shutdown or casualty loss, could lead to production curtailment and could substantially impair our business. Interruptions in production capabilities would increase production costs and reduce our sales and earnings. In addition to lost revenue, long-term business interruption could result in the loss of some customers. To the extent these events are not covered by insurance, we are unable to recover insurance proceeds to reimburse for losses or business interruption, or if we are insured, but there are delays in the receipt of such reimbursements, our cash flows may be adversely impacted by events of this type.

We are subject to extensive governmental laws and regulations that can adversely affect the cost, manner or feasibility of doing business and could result in restrictions on our operations or civil or criminal liability.

We are required to comply with various governmental laws and regulations, including but not limited to environmental, occupational health and safety, tax, trade, import and export, anti-dumping, anti-bribery, anti-trust and reporting obligations of the Exchange Act. Failure to comply could lead to manufacturing shutdowns, product shortages, delays in product manufacturing, operating restrictions, withdrawal of required licenses and prohibitions against exporting or importing of products. In addition, civil and criminal penalties could result from regulatory violations. Such laws and regulations may become more stringent and result in necessary modifications to our current practices and facilities that could force us to incur additional costs that could materially affect us.

We are subject to significant environmental compliance obligations and potential environmental liabilities, which could increase our costs or cause us to change our operations.

As activities in certain of our facilities involve the handling, storage, use and disposal of hazardous substances, we may be subject to material liabilities arising from conditions caused by the release of these substances. Such liability can include the costs of investigation and clean-up, fines and penalties sought by environmental authorities and damages arising out of personal injury and contaminated property and other toxic tort claims, as well as claims for lost or impaired natural resources. Certain environmental laws impose strict liability, and under certain circumstances, joint and several liability on current and prior owners and operators of sites without regard to comparative fault. In addition, environmental requirements change frequently, and have tended to become more stringent over time. We cannot predict what environmental laws or regulations will be enacted or amended in the future, how existing or future laws or regulations will be interpreted or enforced, or the amount of future expenditures that may be required to comply with such laws or regulations. Failure to maintain or comply with environmental permits, governmental approvals or other environmental requirements necessary to operate our business, exposure to any one of the possible environmental obligations and liabilities listed above, and the uncertainty that our indemnification rights will result in the recovery of any environmental losses that may arise, may subject us to significant obligations and liabilities that could have a material adverse effect on our business, financial condition and results of operations.

We may pursue and execute acquisitions, which could adversely affect our business.

We have made, and may in the future make, acquisitions of or significant investments in businesses with complementary products, services and/or technologies. We cannot provide assurance that we will be able to consummate any such transactions or that any future acquisitions will be consummated at acceptable prices and terms. Acquisitions involve numerous risks, including: unforeseen difficulties in integrating operations, technologies, services, accounting and personnel; the diversion of financial and management resources from existing operations; unforeseen difficulties related to entering geographic regions or target markets where we do not have prior experience; and the assumption of known and unknown liabilities and exposure to litigation. If we finance an acquisition with debt, it could result in higher leverage and interest costs. As a result, if we fail to evaluate and execute acquisitions properly, we might not achieve the anticipated benefits of these acquisitions, and we may incur costs in excess of what we anticipate.

An information technology system failure or breach of security may adversely affect our business.

We rely on our information technology ("IT") systems and infrastructure in order to achieve our business objectives and manage our operations. An IT system failure due to computer viruses, internal or external security breaches, power interruptions, hardware failures, fire, natural disasters, human error or other causes could disrupt our operations and prevent us from being able to operate our manufacturing facilities, process transactions with our customers and properly report those transactions in a timely manner. In addition, our efforts to avoid or mitigate the impact of cyber-based attacks and security breaches may not be successful in avoiding a material breach, which could result in unauthorized disclosure of confidential information or damage to our IT networks and systems. Any such events could cause us to lose customers or revenue and could require us to incur significant expense to eliminate these problems and address related security concerns.

We are an emerging growth company and our election to delay compliance with new or revised accounting standards and utilize scaled disclosure and governance requirements applicable to reporting companies may result in our financial statements not being comparable to those of other reporting companies.

We are an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), and we are utilizing certain exemptions from various reporting requirements that are applicable to other reporting companies that are not emerging growth companies. An emerging growth company may also take advantage of some or all of the scaled disclosure provisions that are applicable to emerging growth companies, such as delayed compliance with new or revised accounting pronouncements applicable to reporting companies until such pronouncements are made applicable to private companies and reduced disclosure about executive compensation arrangements. We are electing to take advantage of the extended transition period for complying with new or revised accounting standards until we (i) no longer qualify as an emerging growth company

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pronouncements applicable to reporting companies until such pronouncements are made applicable to private companies and reduced disclosure about executive compensation arrangements. We are electing to take advantage of the extended transition period for complying with new or revised accounting standards until we (i) no longer qualify as an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided by the JOBS Act. As a result of this election, our financial statements may not be comparable to the financial statements of other reporting companies. Also, we are taking advantage of scaled disclosure provisions within Item 11, Executive Compensation, of this annual report provided by the JOBS Act to emerging growth companies. We cannot predict if investors will find our debt securities less attractive because we are relying on these exemptions. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and our trading price may be more volatile. We may utilize these reporting exemptions until we are no longer an emerging growth company. We will continue to be an emerging growth company until the earliest of: (i) the last day of the fiscal year during which we have total annual gross revenues of $1 billion or more or (ii) the date on which we have issued more than $1 billion in non-convertible debt securities during the previous three-year period.

Organized labor action could have a material adverse effect on our business.

Many of our operations are highly labor intensive. We have collective bargaining agreements with our employees at several plant locations and distribution centers. Approximately 3734% of our work force is unionized. If our unionized employees were to engage in a strike, work stoppage or other slowdown at any of our plants, this could adversely affect our ability to produce our products. In addition, any significant increase in labor costs or the making of other significant concessions as a result of agreements with our unionized workforce could have a material adverse effect on our business, financial condition and results of operations.

Risks Relating to our Public Debt

Our substantial level of indebtedness could have a material adverse effect on our financial condition and prevent us from fulfilling our debt service obligations.

As of December 31, ~~2014~~2015, we had $~~874~~829.38 million of total indebtedness at face value. Face value excludes adjustments for unamortized premium and discounts. In addition, subject to restrictions in the indenture governing the 9.50% Senior Notes (the “Indenture”) and restrictions in our current debt agreements, we may incur additional indebtedness. Our high level of indebtedness could have important consequences, including the following:


•	it may be more difficult for us to satisfy our obligations with respect to the 9.50% Senior Notes;


•	our ability to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes may be impaired;


•	we must use a substantial portion of our cash flow from operations to pay interest and principal on the 9.50% Senior Notes and other indebtedness, which will reduce the funds available to us for other purposes such as capital expenditures;


•	we may be more vulnerable to economic downturns and adverse developments in our business; and


•	there would be a material adverse effect on our business and financial condition if we were unable to service our indebtedness or obtain additional financing, as needed.

WeWithout ~~expect~~a tosuccessful ~~obtain~~equity ~~the~~capital ~~money~~raise toor ~~pay~~refinance ~~our~~of ~~expenses and to pay the principal and interest on all debt from~~ our ~~cash~~current ~~flow~~long-term ~~from operations. Our ability to satisfy our expenses thus depends on our future performance~~debt, ~~which~~or ~~will~~some becombination ~~affected by financial~~thereof, ~~business,~~we ~~economic and other factors. We~~ will not behave ~~able to control many of these factors, such as economic conditions in the markets where we operate and pressure from competitors. We cannot be certain that our cash flow will be~~ sufficient toliquidity ~~allow us~~ to ~~pay~~satisfy ~~principal~~these ~~and interest on our indebtedness and meet our other~~ obligations. Ifas wethey ~~lack~~become ~~sufficient~~due ~~liquidity,~~in ~~we may be required to refinance all or part of our existing debt, sell assets or borrow more money~~2017. We cannot guarantee that we will be able to do so on terms acceptable to us, or at all. In addition, the terms of existing or future debt agreements may restrict us from pursuing any of these alternatives.

Covenants in our debt instruments may limit our ability to operate our business and any failure by us to comply with such covenants may accelerate our obligation to repay the underlying debt.

Certain debt instruments contain covenant restrictions that limit our ability to operate our business, including covenant restrictions that may prevent us from:


•	incurring additional debt or issuing guarantees;


•	creating liens;


•	entering into certain transactions with our affiliates; and


•	consolidating, merging or transferring all or substantially all of our assets and the assets of our subsidiaries on a consolidated basis.

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The Revolving Loan Facility and the Term Loan due 2017 requires us to maintain specific leverage ratios, and the Indenture governing the 9.50% Senior Notes requires us to meet a specific fixed charge coverage ratio prior to incurring certain additional debt. Our ability to comply with these covenants is dependent on our future performance, which will be subject to many factors, some of which are beyond our control, including prevailing economic conditions. Our failure to comply with these obligations could prevent us from borrowing additional money and could result in our default. If a default occurs under any of our senior indebtedness, the relevant lenders could elect to declare such indebtedness, together with accrued interest and other fees, to be immediately due and payable and to proceed against our assets that secure such senior indebtedness. Moreover, if the lenders under a facility or other agreement in default were to accelerate the indebtedness outstanding under that facility, it could result in a default under other indebtedness. If all or any part of our indebtedness were to be accelerated, we may not have or be able to obtain sufficient funds to repay it. In addition, we may incur other indebtedness in the future that may contain financial or other covenants that are more restrictive than those contained in the Indenture. As a result of these and certain other covenants, our ability to respond to changes in business and economic conditions and to obtain additional financing, if needed, may be significantly restricted, and we may be prevented from engaging in transactions that might otherwise be beneficial to us.

We are controlled by a principal equity holder who will be able to make important decisions about our business and capital structure.

A majority of our shares are held by Paine & Partners Fund III, an affiliate of Paine & Partners. As a result, Paine & Partners controls us and has the power to elect the members of our board of directors, appoint new management and approve any action requiring the approval of the holders of our stock, including approving acquisitions or sales of all or substantially all of our assets. Paine & Partners has the ability to control decisions affecting our capital structure, including the issuance of additional capital stock, the implementation of stock repurchase programs and the declaration of dividends. The interests of our principal equity holder may not be aligned with the holders of our 9.50% Senior Notes. Our principal equity holder may have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in their judgment, could enhance their equity investment, even though such transactions might involve risks to the holders of our 9.50% Senior Notes.

Any lower-than-expected rating of our bank debt and debt securities could adversely affect our business.

Two rating agencies, Moody's and Standard & Poor's, rate our debt securities. If the rating agencies were to reduce their current ratings, then our ability to access certain financial markets may become limited, the perception of us in the view of our customers, suppliers and security holders may worsen and as a result, our business and financial condition may be adversely affected.

Item 1B.Unresolved Staff Comments

None.

Item 2.Properties

Our principal properties include our manufacturing facilities and our distribution centers. A depiction of our global manufacturing footprint, excluding our non-consolidated joint ventures in ~~China~~India, Spain, Norway, Greece and ~~India~~China, is below:

North America	South America	Europe
United States (8)	Brazil (1)	France (12)	Germany (2)	Portugal (6)
Mexico (2)		The Netherlands (2)	Poland (1)

We have eight domestic manufacturing facilities in Missouri, Texas and Pennsylvania and ~~fifteen~~sixteen international manufacturing facilities in Mexico, Germany, Portugal, Poland, the Netherlands, Brazil and France, excluding our ~~three~~five non-consolidated joint ventures. We have global capacity to annually produce approximately 307,000 metric tons of wire, 231,000 metric tons of rope, 35,000 metric tons of engineered products and 5,000 metric tons of recycled raw materials. Utilization of manufacturing capacity varies by manufacturing plant based upon the type of products assigned and the level of demand for those products.

The Company adequately uses its total production capacity. Utilization of manufacturing capacity varies by manufacturing plant based upon the type of products assigned and the level of demand for those products.

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metric tons of engineered products, and 5,000 metric tons of recycled raw materials. Utilization of manufacturing capacity varies by manufacturing plant based upon the type of products assigned and the level of demand for those products.

We have twenty stand-alone distribution facilities in the U.S., Portugal, the Netherlands, France, United Kingdom, Australia, Denmark, Slovakia and Czech Republic. In addition to these distribution facilities, we have warehouse space available at substantially all of our manufacturing facilities.

We own all but ~~six~~five of our manufacturing facilities and lease ~~eleven~~fourteen stand-alone distribution centers. Refer to Note 1413—“Commitments and Contingencies” to our consolidated financial statements included in Item 8, Financial Statements and Supplementary Data, of this annual report for further information on the Company's lease commitments.

Most of our properties and other assets are subject to liens securing our various borrowings. Refer to Note 76—“Borrowings” to our consolidated financial statements included in Item 8, Financial Statements and Supplementary Data, of this annual report for further information on assets secured.

We believe our properties are in good condition, well maintained, adequately utilized and sufficient to support the anticipated operations of the business.

Item 3.Legal Proceedings

We are not a party to any material legal proceedings. From time to time, we are involved in routine litigation arising in the ordinary course of business, which is incidental to our operations. For further information required by this item, refer to Note 1413—“Commitments and Contingencies” to our consolidated financial statements included in Item 8, Financial Statements and Supplementary Data, of this annual report.

Item 4.Mine Safety Disclosures

Not applicable.

PART II

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

The Registrant's common equity consists of common stock that is privately held and there is no established public trading market. As of ~~February~~March 2310, ~~2015~~2016, there was one stockholder of record. There are currently no significant restrictions on the ability of the Registrant to pay dividends to WireCo WorldGroup US Holdings Inc., its sole stockholder.

Item 6.Selected Financial Data

The selected financial data below should be read in conjunction with Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Item 8, Financial Statements and Supplementary Data, of this annual report. During the periods presented, we acquired businesses as set forth in the footnotes. The Company's consolidated financial statements include the results of operations of these acquired businesses from the date of acquisition and as such, period to period results of operations vary depending on these dates. Accordingly, this selected financial data is not necessarily comparable or indicative of our future financial results.

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	Years ended December 31,
	2014			2013			2012 (1)			2011 (2)			2010 (3)
	2015			2014			2013			2012 (1)			2011 (2)
	(in thousands)
Statement of Operations Data:
Net sales	$	~~856~~683,~~760~~953		$	~~821~~856,~~055~~760		$	~~742~~821,~~689~~055		$	~~604~~742,~~927~~689		$	~~447~~604,~~678~~927
Gross profit	~~208~~161,~~245~~439			~~198~~208,~~749~~245			~~163~~198,~~755~~749			~~158~~163,~~573~~755			~~118~~158,~~531~~573
Operating income	7037,~~954~~984			5170,~~418~~954			4551,~~195~~418			5745,~~009~~195			4157,~~354~~009
Net loss	(2835,~~773~~508		)	(2728,~~004~~773		)	(1827,~~174~~004		)	(5018,~~707~~174		)	(650,~~565~~707		)
	As of December 31,
	2014			2013			2012 (1)			2011 (2)			2010 (3)
	2015			2014			2013			2012 (1)			2011 (2)
Balance Sheet Data:
Working capital	$	283,101		$	300,088		$	325,605		$	202,707		$	226,468
Working capital (3)	$	216,178		$	279,545		$	295,362		$	320,888		$	199,309
Total assets	1,124,851			1,199,215			1,250,260			885,703			822,406
Total assets (3)	980,447			1,121,274			1,185,669			1,245,011			882,696
Long-term debt, excluding current maturities	~~854~~820,~~042~~208			~~862~~854,~~492~~042			~~893~~862,~~217~~492			~~565~~893,~~044~~217			~~500~~565,~~248~~044
Total stockholders’ equity	44,263			96,233			112,012			129,536			195,069
Total stockholders’ equity (deficit)	(16,429		)	44,263			96,233			112,012			129,536
	Years ended December 31,
	2014			2013			2012 (1)			2011 (2)			2010 (3)
	2015			2014			2013			2012 (1)			2011 (2)
Statement of Cash Flows Data:
Cash flows provided by (used in):
Operating activities	$	5943,~~418~~046		$	5559,~~151~~418		$	1355,~~554~~151		$	1013,~~653~~554		$	(410,~~351~~653	)
Investing activities	(2729,~~494~~802		)	(2927,~~353~~494		)	(~~210~~29,~~232~~353		)	(93210,~~335~~232		)	(~~102~~93,~~326~~335		)
Financing activities	(445,~~865~~420		)	(404,~~980~~865		)	~~214~~(40,~~599~~980		)	56214,~~956~~599			~~140~~56,~~984~~956


⁽¹⁾	The 2012 financial information reflects the acquisition of Royal Lankhorst Euronete Group B.V. ("Lankhorst") on July 12, 2012.


⁽²⁾	The 2011 financial information reflects the acquisition of Drumet Liny I Druty Sp Z O.O. ("Drumet") on July 18, 2011.

(3) ~~The~~During ~~2010~~the ~~financial~~fourth ~~information~~quarter ~~reflects~~of 2015, the ~~acquisition~~Company adopted new accounting guidance regarding the presentation of ~~Luís~~deferred ~~Oliveira~~tax ~~Sá,~~assets ~~SGPS,~~and ~~S.A.~~liabilities ~~("Oliveira")~~as onnon-current ~~November~~in ~~16,~~a ~~2010~~classified balance sheet and applied it retrospectively.

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

Unless the context otherwise requires, the use of the terms “WireCo,” the “Company,” “we,” “our” or “us” in the following refers to WireCo WorldGroup (Cayman) Inc., its wholly-owned subsidiaries, including WireCo WorldGroup Inc., and subsidiaries in which it has a controlling interest.

Management’s Discussion and Analysis (“MD&A”) provides a reader of our financial statements with a narrative from the perspective of our management on our consolidated results of operations, financial condition, liquidity and capital resources on a historical basis and certain other factors that have affected recent earnings, as well as those factors that may affect future earnings. Please see “Cautionary Information Regarding Forward-Looking Statements” for a discussion of the risks, uncertainties and assumptions relating to these statements. This MD&A is provided as a supplement to, and should be read in conjunction with the consolidated financial statements and accompanying notes included in Item 8, Financial Statements and Supplementary Data, of this annual report.

Non-GAAP Financial Measures

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). This MD&A includes various financial measures that have not been calculated in accordance with GAAP, commonly referred to as “Non-GAAP Financial Measures”. These Non-GAAP Financial Measures include:


•	Adjusted EBITDA

• ~~Acquisition~~Credit ~~Adjusted~~Agreement EBITDA


•	Adjusted Working Capital


•	Net Debt


•	Free Cash Flow

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•We ~~Free~~provide ~~Cash~~Adjusted ~~Flow~~EBITDA and Credit Agreement EBITDA as a means to enhance communication with security holders by providing additional information regarding our operating results. We use these Non-GAAP Financial Measures internally to evaluate our performance, allocate resources, calculate debt covenant ratios and for incentive compensation purposes. We believe that our presentation of these measures provides investors with greater transparency with respect to our results of operations, are required for debt covenant calculation purposes and are useful for peer and period-to-period comparisons of results considering our history of acquisitions.

We provide Adjusted EBITDA and Acquisition Adjusted EBITDA as a means to enhance communication with security holders by providing additional information regarding our operating results. We use these Non-GAAP Financial Measures internally to evaluate our performance, allocate resources, calculate debt covenant ratios and for incentive compensation purposes. We believe that our presentation of these measures provides investors with greater transparency with respect to our results of operations, are required for debt covenant calculation purposes and are useful for peer and period-to-period comparisons of results considering our history of acquisitions.

We provide Adjusted Working Capital, Net Debt and Free Cash Flow as additional information regarding our liquidity. We believe that Adjusted Working Capital provides a meaningful measure of our efforts to manage inventory, our customer collections and vendor payments. We believe Net Debt is meaningful to investors because management assesses our leverage position after factoring in available cash and restricted cash that eventually could be used to repay outstanding debt. We believe that the Free Cash Flow measure is meaningful to investors because it represents the cash flow we have available to pay down debt and/or invest for future growth. It is important to note that Free Cash Flow does not represent the residual cash flow available for discretionary expenditures since other non-discretionary expenditures, such as mandatory debt service requirements, are not deducted from the measure.

These measures are not in accordance with, or an alternative to GAAP, and may be different from Non-GAAP Financial Measures used by other companies. These measures have important limitations as analytical tools and should not be considered in isolation, nor as a substitute for, or superior to, analysis of our results as reported under GAAP. We recommend that investors view these measures in conjunction with the GAAP measures included in this MD&A and have provided reconciliations of reported GAAP amounts to the Non-GAAP amounts.

BUSINESS OVERVIEW

We are a leading global manufacturer of both steel and synthetic rope, specialty wire and engineered products. Our products are used in a diverse range of industries including, but not limited to, industrial and infrastructure, oil and gas (both offshore and onshore), fishing, mining, maritime, structures, poultry, and storage systems. Our global manufacturing footprint includes 2324 manufacturing facilities in 8 countries.

EXECUTIVE SUMMARY

~~During~~We ~~2014,~~provide westeel ~~saw~~and asynthetic ~~full year of benefit from initiatives commenced in the second half of 2013~~rope, asspecialty ~~well~~wire ~~as benefits from new initiatives implemented during 2014. Key initiatives implemented in 2013~~ and ~~further~~engineered ~~capitalized~~products onacross inmultiple ~~2014 include: executing clear sales strategies in each of our markets to best serve our~~ customers, ~~reducing plant costs to run a more efficient operation, actively managing inventory, accounts receivable~~ and ~~accounts~~geographies payable to reduce working capital, and applying rigorous return on investment standards to our capital spending. In 2014, we continued our focus on operational improvements with new procurement initiatives focused on consolidating and improving global purchasing processes, as well as implementing standard procedures to support data driven decisions and rigorous productivity initiatives.which

Inresults ~~April~~in ~~2014, we acquired certain assets from Endenburg B.V. to reorganize into~~ a ~~new~~diversified ~~distribution~~revenue ~~facility called WireCo Crane Center~~stream. ~~Endenburg B.V. is headquartered in Gouda, Holland and supplied high quality hoisting and lifting gear, among other products.~~ The ~~WireCo~~long-term ~~Crane~~sales ~~Center~~growth ~~establishes a key central stocking location with good inland transportation routes near the Rotterdam Port, allowing us to provide quicker response times~~ and ~~higher~~profitability ~~service~~of ~~levels to~~ our ~~European~~product ~~and~~portfolio ~~international customer base. This facility~~ is ~~expected~~dependent ~~to make a contribution to rope sales in 2015.~~ not

Inonly ~~2013,~~on weincreased ~~initiated~~demand ~~an inventory optimization program (the "Inventory Optimization Program") designed to generate cash~~ in the ~~short-term~~end ~~instead~~markets ofwhich ~~holding certain inventory for longer periods of time and to create efficiencies from a physical material movement perspective at our manufacturing and distribution facilities. In 2014,~~ we ~~continued~~serve ~~to monitor inventory levels in conjunction with the Inventory Optimization Program,~~ and ~~we increased~~ the ~~breadth~~overall ~~and~~economic ~~depth of the program~~environment, ~~including~~but ~~initiating~~also ~~a plan to sell higher volumes of our slower moving inventory, which had historically sold at or above cost. We identified further opportunities with this initiative in 2014 to maximize the return~~ on ~~inventory, especially with~~ our ~~focus~~ability on improving working capital management and gaining efficiencies in our operations. As a result of these opportunities, which also resulted in sales below cost, we recognized a charge of $9.2 million in 2014 to ~~adjust certain inventory to its net realizable value.~~

Asincrease aour ~~result~~existing ofmarket ~~these~~share ~~initiatives,~~and inexpand ~~fiscal year 2014,~~ our ~~net~~presence ~~sales increased by $35.7 million~~geographically, ~~Adjusted~~continuously ~~EBITDA~~improve ~~grew~~operational ~~by $11.8 million~~excellence, ~~and we generated $59.4 million of cash from operating activities.~~

identify, consummate and integrate strategic acquisitions and develop and market innovative new products.

For the year ended December 31, 2015, we reported sales of $684.0 million, a net loss of $35.5 million and Adjusted EBITDA of $106.4 million compared to sales of $856.8 million, a net loss of $28.8 million and Adjusted EBITDA of $151.0 million for the year ended December 31, 2014. Given our global operations, the strengthening of the U.S. dollar had a significant negative impact on our 2015 results. For the year ended December 31, 2015, approximately 68% of our sales were generated in currencies other than the U.S. dollar. During 2015, the euro, Polish złoty and Mexican peso all devalued between 19-20% compared to the year ended December 31, 2014. Given the translation of our international results into U.S. dollars, this devaluation unfavorably impacted our sales by $87.0 million and our Adjusted EBITDA by $15.5 million for the twelve months ended December 31, 2015. The foreign currency exchange impact on cash for the year ended December 31, 2015 is a decrease of $5.0 million. Conversely, while the appreciation of the U.S. dollar has an immediate negative impact on our earnings, there is potential for leveraging a weakening currency as a competitive sales advantage. Given our scale and ability to serve a global market, when our non-U.S. manufactured products are imported by customers in countries that have not experienced a currency devaluation, the prices of these produced goods have decreased.

As a result of the weakening oil and gas end market during 2015, we reduced our factory work force in the United States, Mexico and Poland and implemented workforce reductions in several administrative departments. In addition, we took other cost containment measures, such as certain procurement initiatives and other selling and administrative savings. The disciplined management of capital expenditures during 2015 has also contributed to our cost savings initiatives. During 2015, management achieved $18.3 million of savings resulting from operational initiatives.

During the year ended December 31, 2015, we reduced our inventory in order to better match current demand. As a result, we reduced inventory levels by $38.1 million at December 31, 2015 as compared to the December 31, 2014 balance. In addition, we are strategically supporting certain customers in the short-term with longer payment terms which has resulted in an increase in days sales outstanding. Despite short-term challenges in some of our end markets, we continue to believe that our targeted strategies, including acquisitions, geographic expansion, market share gains and new product development, will provide attractive long-term opportunities for sustainable growth. We remain focused on maintaining our financial strength by

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~~The~~adjusting ~~increase~~our incost ~~sales~~structure ~~for the year ended December 31, 2014 compared~~ to ~~the~~reflect ~~same~~changes ~~period~~ in ~~2013~~demand ~~was~~levels ~~primarily due to increased sales in our oil~~ and ~~gas and fishing markets, which were partially offset~~ by ~~weakness~~proactively inmanaging ~~the~~working ~~mining~~capital and ~~industrial~~cash ~~and~~flow ~~infrastructure end markets~~generation.

We reported a net loss of $28.8 million and Adjusted EBITDA, a Non-GAAP Financial Measure, of $151.0 million for the year ended December 31, 2014, compared to a net loss of $27.0 million and Adjusted EBITDA of $139.2 million for the same period in 2013. Adjusted EBITDA as a percentage of sales was 17.6% during 2014 compared to 17.0% during 2013. The increase in net loss of $1.8 million year-over-year was primarily due to $36.3 million of foreign currency exchange losses during 2014, related mostly to the depreciation of the euro, compared to $13.6 million of foreign currency exchange gains in 2013. The majority of the foreign currency exchange gain/loss activity is unrealized and relates to the revaluation of intercompany loans based on the end of period foreign currency exchange rates. This increase in foreign currency exchange losses was partially offset by higher gross profit of $9.5 million attributable primarily to sales growth, reduced operating expenses of $10.0 million related to cost management initiatives and lower income taxes of $26.2 million. The increase in Adjusted EBITDA was driven primarily by sales growth and efficiencies gained in our plant operations.

Below is a comparison of Adjusted EBITDA to Net loss, the most comparable GAAP measure. For the definition of Adjusted EBITDA and reconciliation to net loss, see the section titled “Adjusted EBITDA and Acquisition Adjusted EBITDA”. Also, see the section entitled "Non-GAAP Financial Measures" for further information on our Non-GAAP Financial Measures.

	Years ended December 31,
	2014			2013
	(in thousands)
Adjusted EBITDA (Non-GAAP)	$	151,009		$	139,193
Net loss as reported (GAAP)	$	(28,773	)	$	(27,004	)

CONSOLIDATED RESULTS OF OPERATIONS

This section focuses on significant items that impacted our operating results during the years ended December 31, ~~2014~~2015, ~~2013~~2014 and ~~2012~~2013. Most notably, our acquisition of Royal Lankhorst Euronete Group B.V. (“Lankhorst”) on July 12, 2012 affects the comparability of 2012 results. Operating results of Lankhorst are included in our consolidated statements of operations since the date of acquisition.

Our reported financial condition and results of operations have been ~~converted~~translated to U.S. dollars from multiple currencies, which primarily include the euro, the Mexican peso and the Polish złoty. Our revenues and certain expenses are affected by fluctuations in the value of the U.S. dollar against these local currencies. When we refer to changes in foreign currency exchange rates, we are referring to the differences between the foreign currency exchange rates we use to ~~convert~~translate our international operations’ results from local currencies into U.S. dollars for reporting purposes. The impacts of foreign currency exchange rate fluctuations are calculated as the difference between current period activity translated using the current period’s currency exchange rates and the comparable prior year period’s currency exchange rates. We use this method for all countries where the functional currency is not the U.S. dollar.

Year ended December 31, ~~2014~~2015 compared to the year ended December 31, ~~2013~~2014

The following table presents selected consolidated financial data for the years ended December 31, ~~2014~~2015 and ~~2013~~2014:

	Years ended December 31,						Change
	2014			2013			Dollars			Percent
	2015			2014			Dollars			Percent
	(in thousands)
Net sales	$	~~856~~683,~~760~~953		$	~~821~~856,~~055~~760		$	35(172,~~705~~807	)	4(20.2	)%
Gross profit	~~208~~161,~~245~~439			~~198~~208,~~749~~245			9(46,~~496~~806		)	(22.5	)%
Other operating expenses	(~~137~~123,~~291~~455		)	(~~147~~137,~~331~~291		)	1013,~~040~~836			(710.1	)%
Other expense, net	(~~115~~73,~~368~~370		)	(67115,~~881~~368		)	~~(47~~41,~~487~~998		)	70(36.4	)%
Income tax benefit (expense)	~~15,641~~(122		)	~~(10~~15,~~541~~641		)	26(15,~~182~~763		)	NM
Net loss	$	(2835,~~773~~508	)	$	(2728,~~004~~773	)	$	(16,~~769~~735	)	NM
Gross profit as % of net sales	2423.6		%	24.3		%
Other operating expenses as % of net sales	1618.1		%	1816.0		%

NM = Not Meaningful

Net sales

Our consolidated net sales decreased $172.8 million, or 20.2%, during the year ended December 31, 2015 compared to the same period in 2014. Contributing to the decrease was an $87.0 million decline due to foreign currency exchange rate fluctuations when comparing the average exchange rates for the twelve months ended December 31, 2015 to the average exchange rates for the twelve months ended December 31, 2014.

Excluding the impacts of foreign currency exchange rates, rope sales decreased by $76.7 million primarily due to decreased sales in the onshore oil and gas, mining and industrial and infrastructure end markets. Sales to our onshore oil and gas end market decreased $72.2 million primarily driven by a slowdown in domestic drilling activity evidenced by the decline in rig count. According to Baker Hughes, the average North American onshore rig count during the full fiscal year 2015 was 1,132 compared to 2,182 in 2014, a 48.1% decline, while finishing the year at 756 on December 31, 2015 compared to 2,035 at December 31, 2014. Sales to our mining end market decreased $6.4 million primarily driven by a decrease in tons mined in the United States. According to the National Mining Association, tons mined in the United States decreased by 10.5% during 2015 compared to year-end 2014. Sales to our industrial and infrastructure end market decreased $10.9 million primarily due to weakness with global OEM cranes and continuing softening economic conditions in China. However, offshore oil and gas project sales increased $13.2 million for the year ended December 31, 2015 compared to the same period last year. Rope sales represented 73% of our total consolidated net sales for the years ended December 31, 2015 and 2014.

Excluding the impacts of foreign currency exchange rates, specialty wire sales decreased $1.5 million for the year ended December 31, 2015 compared to the year ended December 31, 2014 primarily due to a slowdown in the fencing wire business in Poland. Specialty wire sales represented 17% of our total consolidated net sales for the year ended December 31, 2015 compared to 16% for the same period in 2014.

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Excluding the impacts of foreign currency exchange rates, engineered products sales decreased $7.5 million for the year ended December 31, 2015 compared to the year ended December 31, 2014 primarily driven by lower sales within the mature oil and gas portfolio in 2015 and by higher end cap product sales in 2014 than in 2015, partially offset by buoyancy sales. End caps are highly engineered products produced for pipeline sealing applications. Engineered product sales represented 10% of our total consolidated net sales for the year ended December 31, 2015 compared to 11% for the same period in 2014.

Gross profit

Gross profit decreased $46.8 million for the year ended December 31, 2015 compared to 2014, and gross profit as a percentage of sales (“gross margin”) decreased from 24.3% for the year ended December 31, 2014 to 23.6% for the year ended December 31, 2015. The decline in gross profit was directly related to the decline in sales and the lower gross margin was due to product mix as well as price concessions in the industrial and oil and gas markets. Contraction in margins during 2015 was partially offset by management's operational initiatives in procurement, plants and selling, general and administrative ("SG&A"). We saw less volume declines in select specialty wire which generates lower margin than the products in the rope portfolio and conversely, saw greater volume declines in onshore oil and gas products which generate some of the Company's highest margins.

Other operating expenses



	Years ended December 31,						Change
	2015			2014			Dollars		Percent
	(in thousands)
Selling expenses	$	(37,573	)	$	(44,417	)	$	6,844	(15.4	)%
Administrative expenses	(76,937		)	(82,361		)	5,424		(6.6	)%
Amortization expense	(8,945		)	(10,513		)	1,568		(14.9	)%
Other operating expenses	$	(123,455	)	$	(137,291	)	$	13,836	(10.1	)%

Other operating expenses decreased $13.8 million, or 10.1%, for the year ended December 31, 2015 compared to the same period in 2014. Total other operating expenses increased as a percentage of net sales from 16.0% for the year ended December 31, 2014 to 18.1% for the year ended December 31, 2015.

Selling expenses decreased $6.8 million, or 15.4%, over the same period in 2014 primarily due to foreign currency exchange rate fluctuations, which accounted for $4.4 million of the change. We incurred $0.9 million less labor and related expenses during the year ended December 31, 2015 compared to the same period in 2014. We incurred $1.3 million less external distributor commissions during the year ended December 31, 2015 compared to the same period in 2014 due to the decline in net sales during the period.

Administrative expenses decreased $5.4 million, or 6.6%, during the year ended December 31, 2015 compared to the same period in 2014. Foreign currency exchange rate fluctuations accounted for $6.5 million of the decrease due to depreciation of the euro, Polish złoty and Mexican peso. Due to the decline in Adjusted EBITDA, incentive compensation was $1.8 million lower during the year ended December 31, 2015 compared to the same period in 2014. We incurred $1.5 million less advisory fees during the year ended December 31, 2015 compared to the same period in 2014 due to external fees incurred on Paine & Partners' behalf related to business process improvements in 2014. We incurred $1.1 million less third party consultant fees during 2015 compared to 2014 primarily due to cost management initiatives, which included the management of more projects with internal resources instead of with external consultants. Due to the corporate headquarters relocation, we incurred $0.9 million less lease expenses during the year ended December 31, 2015 compared to the same period in 2014. We incurred $0.7 million less acquisition costs and $0.5 million less start-up costs during the year ended December 31, 2015 compared to the same period in 2014 due to the purchase of certain assets from Endenburg B.V. in 2014. As a result of our workforce reductions during 2015, we incurred $0.5 million less personnel expenses during the year ended December 31, 2015 compared to the same period in 2014. Partially offsetting these decreases, reorganization and restructuring charges were $6.2 million higher during the year ended December 31, 2015 compared to the same period in 2014 due to workforce reductions and the corporate headquarters relocation. We also incurred $3.2 million in impairment charges during 2015 related to one of our brand names and certain patented technologies.

Amortization expense decreased $1.6 million, or 14.9%, over the same period in 2014 primarily due to the depreciation of the euro, Polish złoty and Mexican peso during the year ended December 31, 2015.

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Other expense, net

Total other expense decreased by $42.0 million, or 36.4%, for the year ended December 31, 2015, compared to the same period in 2014. This decrease was primarily due to foreign currency exchange fluctuations. Significant components of the change in total other expense were as follows:



	Years ended December 31,						Change
	2015			2014			Dollars			Percent
	(in thousands)
Interest expense, net	$	(70,586	)	$	(78,477	)	$	7,891		(10.1	)%
Foreign currency exchange gains (losses), net	(1,939		)	(36,298		)	34,359			94.7	%
Loss on extinguishment of debt	—			(617		)	617			100.0	%
Other income (expense), net	(845		)	24			(869		)	3,620.8	%
Total other expense, net	$	(73,370	)	$	(115,368	)	$	41,998		(36.4	)%

Interest expense decreased $7.9 million for the year ended December 31, 2015 primarily due to our cross-currency swaps.

For the year ended December 31, 2015, foreign currency exchange losses were $1.9 million compared to foreign currency exchange losses of $36.3 million for the same period in 2014. At December 31, 2015 and 2014, we had intercompany loans that required remeasurement in the aggregate amounts of $368.5 million and $408.3 million, respectively. Foreign currency exchange losses for the year ended December 31, 2015 primarily related to the depreciation of the euro, Polish złoty and Mexican peso. The U.S. dollar to euro exchange rate at December 31, 2014 was $1.00 to €0.8237 compared to $1.00 to €0.9185 at December 31, 2015. The U.S. dollar to the Polish złoty exchange rate at December 31, 2014 was $1.00 to zł3.5196 compared to $1.00 to zł3.9165 at December 31, 2015. The U.S. dollar to the Mexican peso exchange rate at December 31, 2014 was $1.00 to $14.7348 compared to $1.00 to $17.3398 at December 31, 2015. These losses were partially offset by $31.2 million and $16.1 million unrealized gains in 2015 and 2014, respectively, on the fair value marked-to-market adjustments on the cross-currency swaps. The 2014 unrealized gain on the cross-currency swaps only partially offsets the unrealized losses because the swaps were entered into during late third quarter 2014.

Income tax benefit (expense)

For the year ended December 31, 2015, income tax expense was $0.1 million as compared to income tax benefit of $15.6 million for the year ended December 31, 2014. The resulting effective tax rate was an expense of 0.3% and a benefit of 35.2% for the year ended December 31, 2015 and 2014, respectively. The 2015 effective tax rate was primarily driven by a mix of earnings in various jurisdictions, releases of uncertain tax benefits as well as valuation allowances related to our U.S. deferred tax assets and certain foreign net operating losses.

Year ended December 31, 2014 compared to the year ended December 31, 2013

The following table presents selected consolidated financial data for the years ended December 31, 2014 and 2013:



	Years ended December 31,						Change
	2014			2013			Dollars			Percent
	(in thousands)
Net sales	$	856,760		$	821,055		$	35,705		4.3	%
Gross profit	208,245			198,749			9,496			4.8	%
Other operating expenses	(137,291		)	(147,331		)	10,040			(6.8	)%
Other expense, net	(115,368		)	(67,881		)	(47,487		)	70.0	%
Income tax expense	15,641			(10,541		)	26,182			NM
Net loss	$	(28,773	)	$	(27,004	)	$	(1,769	)	NM
Gross profit as % of net sales	24.3		%	24.2		%
Other operating expenses as % of net sales	16.0		%	17.9		%

NM = Not Meaningful

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Net sales

Our consolidated net sales increased $35.7 million, or 4.3%, ~~during~~for the year ended December 31, 2014 compared to the same period in 2013. Offsetting the increase was a $2.3 million decline due to foreign currency exchange rate fluctuations when comparing the average exchange rates for the twelve months ended December 31, 2014 to the average exchange rates for the twelve months ended December 31, 2013.

Excluding the impacts of foreign currency exchange rates, rope sales increased by $20.8 million which was driven primarily by increased sales in our oil and gas and fishing end markets. Sales of our offshore oil and gas products were up $10.7 million primarily due to new contracts in South America and Europe. Onshore oil and gas sales increased $6.9 million driven by an increase in drilling activity evidenced by a higher average rig count throughout the year relative to the average throughout 2013, despite ending the 2014 fiscal year at a lower rig count, a decline that is anticipated to continue into fiscal year 2015. According to Baker Hughes, the average North American onshore rig count during the full fiscal year 2014 was 2,182 compared to 2,056 in 2013, while finishing the year at 2,035 on December 31, 2014. Fishing sales increased $11.7 million primarily due to product innovation in our netting offerings, new customer activity across several markets globally, and lower gas prices for fishing vessels, which lowers operating costs, increases spending on fishing gear and results in improved fish prices. Maritime sales increased $2.8 million due to growth in new vessel build orders and new customers from the April 2014 Endenburg B.V acquisition, which had maritime, offshore and heavy lifting business activities. These increases were offset by declines of $2.2 million in the mining end market driven by low mineral prices, mine closures and cost reductions at the major mining companies, $6.6 million in the industrial and infrastructure end market as a result of continued macroeconomic weakness in Europe and Asia and $1.8 million in the structures end market due to fewer large bridge projects. Rope sales represented 73% of our total consolidated net sales for the year ended December 31, 2014 compared to 74% for the same period in 2013.

Excluding the impacts of foreign currency exchange rates, specialty wire sales increased $12.7 million for the year ended December 31, 2014 compared to the year ended December 31, 2013 primarily due to increased sales in Mexico. Specialty wire sales represented 16% of our total consolidated net sales for the years ended December 31, 2014 and 2013.

Excluding the impacts of foreign currency exchange rates, engineered products sales increased $4.5 million for the year ended December 31, 2014 compared to the year ended December 31, 2013 driven by an increase in offshore contracts and further product innovation. Engineered product sales represented 11% of our total consolidated net sales for the year ended December 31, 2014 compared to 10% for the same period in 2013.

Gross profit

Gross profit increased $9.5 million for the year ended December 31, 2014 compared to 2013, but gross profit as a percentage of sales (“gross margin”) stayed constant at 24.3%. Improved margin performance was partially offset by costs related to our Inventory Optimization Program. The effect of our Inventory Optimization Program on Cost of sales was $9.2 million in 2014 and $3.0 million in 2013. Excluding the effect of the Inventory Optimization Program, our gross margin would have been 25% in 2014 and 2013. We have seen continued improvement in our margins due to cost reduction initiatives that were partially offset by the margin generated by our product mix. We saw volume growth in select specialty wire and engineered products categories, which generate lower margin than the products in the rope portfolio.

Other operating expenses

	Years ended December 31,						Change
	Years endedDecember 31,						Change
	2014			2013			Dollars			Percent
	(in thousands)
Selling expenses	$	(44,417	)	$	(41,661	)	$	(2,756	)	76.6	%
Administrative expenses	(82,361		)	(88,598		)	6,237			(7.0	)%
Amortization expense	(10,513		)	(17,072		)	6,559			(38.4	)%
Other operating expenses	$	(137,291	)	$	(147,331	)	$	10,040		(76.8	)%

Other operating expenses decreased $10.0 million, or 76.8%, for the year ended December 31, 2014 compared to the same period in 2013. Total other operating expenses decreased as a percentage of net sales from 1817.9% for the year ended December 31, 2013 to 16.0% for the year ended December 31, 2014 as a result of generating higher sales while maintaining a steady level of operating expenses.

20Selling expenses increased $2.8 million, or 6.6%, over the same period in 2013 primarily due to the increase in commissions of $1.1 million directly related to sales volume and $1.8 million in payroll costs associated with reallocation of certain personnel

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tobetween ~~16%~~administrative ~~for~~expenses ~~the~~and ~~year~~selling ~~ended~~expenses ~~December 31,~~primarily ~~2014~~related asto aproduct ~~result~~development ofand ~~generating~~purchasing. Foreign ~~higher~~currency ~~sales~~exchange ~~while~~rate ~~maintaining~~fluctuations ahad ~~steady~~no ~~level~~material ofimpact ~~operating~~on the change in selling expenses. for the year ended December 31, 2014.

~~Selling~~Administrative expenses ~~increased~~decreased $26.82 million, or 7.0%, over the same period in 2013. Lower ~~primarily~~reorganization ~~due~~and torestructuring ~~the~~charges ~~increase~~of in$7.3 ~~commissions~~million, consulting fees of $1.13 million, ~~directly~~bank ~~related~~fees toof ~~sales~~$1.0 ~~volume~~million, and foreign currency exchange rate fluctuations of $1.2 million were offset by higher compensation, impairment charges and $0.8 million more of advisory fees. Contributing to the decrease was $4.5 million in payroll costs associated with reallocation of certain personnel between administrative expenses, ~~and~~ selling expenses and cost of sales primarily related to product development and purchasing. ~~Foreign~~In ~~currency~~2013, ~~exchange~~we ~~rate~~incurred ~~fluctuations~~more ~~had~~reorganization noand ~~material~~restructuring ~~impact~~charges onassociated with severance costs related to changes in personnel, including executive management positions. Consulting fees were lower in 2014 compared to 2013 primarily due to cost management initiatives, which included the ~~change~~management of more projects with internal resources and fewer matters requiring external professional services. Also, we incurred non-capitalizable bank fees in ~~selling~~the ~~expenses~~second ~~for~~quarter of 2013 associated with the ~~year~~Second ~~ended~~Amendment ~~December 31~~of the Credit Agreement. Incentive compensation, based on Adjusted EBITDA, was $5.0 million higher in 2014 compared to the same period in 2013 as Adjusted EBITDA increased. Share-based compensation was $1.8 million more in 2014 compared to the same period in 2013 due to grants of options and restricted stock awards in July of 2013. Non-cash impairment charges of $1.1 million were recorded in 2014 related to an office building that was abandoned and the write-off of certain intangible assets.

~~Administrative~~Amortization ~~expenses~~expense decreased $6.26 million, or 738.4%, over the same period in 2013~~. Lower~~ ~~reorganization~~primarily ~~and~~due ~~restructuring~~to ~~charges~~certain offinite-lived ~~$7.3~~intangible ~~million,~~assets ~~consulting~~becoming ~~fees~~fully ofamortized ~~$1.3~~effective ~~million,~~the ~~bank~~first ~~fees~~quarter of ~~$1.0~~2014 ~~million,~~ and ~~foreign currency exchange rate fluctuations of~~ $~~1.2 million were offset by higher compensation, impairment charges and $~~0.84 million more of ~~advisory~~amortization ~~fees. Contributing~~expense ~~to the decrease was $4.5 million~~ in ~~payroll~~prior ~~costs~~year associated with reallocation of certain personnel between administrative expenses, selling expenses and cost of sales primarily related to product development and purchasing. In 2013, we incurred more reorganization and restructuring charges associated with severance costs related to changes in personnel, including executive management positions. Consulting fees were lower in 2014 compared to 2013 primarily due to ~~cost management initiatives, which included~~ the ~~management~~acceleration of ~~more~~amortization ~~projects with internal resources and fewer matters requiring external professional services. Also, we incurred non-capitalizable bank fees in the second quarter of 2013~~ associated with ~~the~~a ~~Second Amendment of the Credit Agreement. Incentive compensation, based on Adjusted EBITDA, was $5.0 million higher in 2014 compared to the same period in 2013 as Adjusted EBITDA increased. Share~~finite-~~based~~lived ~~compensation~~trade ~~was~~name $1.8 million more in 2014 compared to the same period in 2013 due to grants of options and restricted stock awards in July of 2013. Non-cash impairment charges of $1.1 million were recorded in 2014 related to an office building that ~~was~~is ~~abandoned~~no ~~and~~longer ~~the write-off of certain intangible assets~~used.

Amortization expense decreased $6.6 million, or 38% over the same period in 2013 primarily due to certain finite-lived intangible assets becoming fully amortized effective the first quarter of 2014 and $0.4 million more of amortization expense in prior year due to the acceleration of amortization associated with a finite-lived trade name that is no longer used.

Other expense, net

Other expense increased by $47.5 million, or 70.0%, for the year ended December 31, 2014, compared to the same period in 2013. Significant components of this change were as follows:

	Years ended December 31,						Change
	Years endedDecember 31,						Change
	2014			2013			Dollars			Percent
	(in thousands)
Interest expense, net	$	(78,477	)	$	(80,830	)	$	2,353		(32.9	)%
Foreign currency exchange gains (losses), net	(36,298		)	13,584			(49,882		)	367	%
Foreign currency exchange gains (losses)	(36,298		)	13,584			(49,882		)	367.2	%
Loss on extinguishment of debt	(617		)	—			(617		)	100.0	%
Other income (expense), net	24			(635		)	659			104	%
Other expense, net	24			(635		)	659			103.8	%
Total other expense, net	$	(115,368	)	$	(67,881	)	$	(47,487	)	70	%
Other expense, net	$	(115,368	)	$	(67,881	)	$	(47,487	)	70.0	%

Interest expense decreased $2.4 million for the year ended December 31, 2014 primarily due to a decrease in outstanding debt due to principal and excess cash payments, amending the Note Purchase Agreement to reduce the interest rate from 11.75% to 9.00% on the privately placed senior notes, and partial refinancing of debt carried at the highest interest rate of all the Company's debt prior to the amendment.

For the year ended December 31, 2014, foreign currency exchange losses were $36.3 million compared to foreign currency exchange gains of $13.6 million for the same period in 2013. These foreign currency exchange losses were primarily related to the remeasurement of intercompany loans denominated in U.S. dollars for subsidiaries who have a different functional currency. At December 31, 2014 and 2013, we had intercompany loans that required remeasurement in the aggregate amounts of $408.3 million and $473.1 million, respectively. The depreciation of the euro and the Polish złoty on our intercompany loans contributed to most of these unrealized foreign currency exchange losses. The revaluation of intercompany loans denominated in U.S. dollars for subsidiaries whose functional currency is the euro and the Polish ~~zloty~~złoty resulted in $38.1 million and $11.2 million, respectively, of the losses recognized. The U.S. dollar to euro exchange rate at December 31, 2013 was $1.00 to €0.7251 compared to $1.00 to €0.8237 at December 31, 2014. The U.S. dollar to the Polish złoty exchange rate at December 31, 2013 was $1.00 to zł3.0123 compared to $1.00 to zł3.5196 at December 31, 2014. These losses were partially offset by a $16.3 million unrealized gain on the fair value marked-to-market adjustment on the cross-currency swaps entered into during 2014. During 2013, the revaluation of intercompany loans denominated in U.S. dollars for subsidiaries whose functional currency is the euro resulted in $12.6 million of the gains recognized. The U.S. dollar to euro exchange rate at December 31, 2012 was $1.00 to €0.7579 compared to $1.00 to €0.7251 at December 31, 2013.

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currency is the euro resulted in $12.6 million of the gains recognized. The U.S. dollar to euro exchange rate at December 31, 2012 was $1.00 to €0.7579 compared to $1.00 to €0.7251 at December 31, 2013.

Loss on extinguishment of debt increased by $0.6 million for the year ended December 31, 2014 compared to the same period in 2013 due to the call premium and write-off of unamortized debt issuance costs in conjunction with the redemption of a portion of the 9.00% Senior Notes (formerly the 11.75% Senior Notes).

Income tax benefit (expense)

For the year ended December 31, 2014, income tax benefit was $15.6 million, a decrease in expense of $26.2 million, as compared to income tax expense of $10.5 million for the year ended December 31, 2013. The resulting effective tax rate was a benefit of 35% and an expense of 64% for the year ended December 31, 2014 and 2013, respectively. The 2014 effective tax rate was primarily driven by a mix of earnings in various jurisdictions, releases of uncertain tax benefits as well as valuation allowances related to our U.S. deferred tax assets and certain foreign net operating losses.

Year ended December 31, 2013 compared to the year ended December 31, 2012

The following table presents selected consolidated financial data for the years ended December 31, 2013 and 2012:

	Years endedDecember 31,						Change
	2013			2012			Dollars			Percent
	(in thousands)
Net sales	$	821,055		$	742,689		$	78,366		11	%
Gross profit	198,749			163,755			34,994			21	%
Other operating expenses	(147,331		)	(118,560		)	(28,771		)	24	%
Other expense, net	(67,881		)	(49,492		)	(18,389		)	37	%
Income tax expense	(10,541		)	(13,877		)	3,336			NM
Net loss	$	(27,004	)	$	(18,174	)	$	(8,830	)	NM
Gross profit as % of net sales	24		%	22		%
Other operating expenses as % of net sales	18		%	16		%

NM = Not Meaningful

Net sales

Our net sales increased $78.4 million, or 11%, for the year ended December 31, 2013 as compared to the same period in 2012. Of the increase, $119.9 million was attributable to a full year of Lankhorst sales and $14.7 million was a result of foreign currency exchange rate fluctuations. Due to the market softness in certain end markets, our organic sales declined $56.5 million over prior year.

Excluding the impacts of foreign currency exchange rates, rope sales declined $30.7 million primarily driven by a reduction in demand in onshore oil and gas activities and weakness in the industrial/infrastructure end markets of Europe and Asia. Sales of rope in the oil and gas end market were down $14.0 million due to continued weakness in the U.S. and Canada onshore markets. According to Baker Hughes, the average North American rig count during 2013 was 2,116 as compared to 2,283 during the same period in 2012, a 7% decrease. At February 7, 2014, there were 2,392 rigs actively drilling in North America, compared to 2,020 rigs at December 31, 2013; an increase of 18.4% from year end 2013 levels. The price of oil increased to $99.98 per barrel and gas increased to $4.78 per mmbtu at February 7, 2014, representing a 2% increase in oil prices and a 12% increase in gas prices from the end of 2013. The sales of rope in the industrial/infrastructure end market declined $17.0 million, primarily in Europe and Asia. According to Eurostat, construction sector production declined 6.3% in 2013 compared to 2012. Rope sales represented 74% of our total consolidated net sales for the year ended December 31, 2013 compared to 74% for the same period in 2012.

Excluding the impacts of foreign currency exchange rates, specialty wire sales declined $25.8 million primarily due to lower demand of prestressed concrete strand related to delays of Mexican governmental infrastructure projects and our decision to reduce production of certain low margin wire products primarily in Mexico. We expect the Mexican infrastructure plan to be executed in 2014. Specialty wire sales represented 16% of our total consolidated net sales for the year ended December 31, 2013 compared to 20% for the same period in 2012.

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The Lankhorst acquisition contributed engineered products to our product mix, and as a result we do not have comparable results period over period. Sales of engineered products were $85.9 million for the year ended December 31, 2013, or 10% of our total consolidated net sales. With an increase in offshore oil and gas contracts, the demand for certain engineered products that serve that end market is growing.

Gross profit

Gross profit increased $35.0 million but gross profit as a percentage of sales (“gross margin”) decreased to 24% in 2013 from 22% in 2012. Improved margin performance is attributable to growth in higher margin end markets, reduced sales of low margin wire products and cost reduction initiatives. These improvements were partially offset by a $3.0 million write-down of inventory related to our inventory optimization program. In 2012, gross margin was negatively impacted 1% due to the amortization of a $6.8 million purchase accounting inventory step-up adjustment.

Other operating expenses

	Years endedDecember 31,						Change
	2013			2012			Dollars			Percent
	(in thousands)
Selling expenses	$	(41,661	)	$	(32,527	)	$	(9,134	)	28	%
Administrative expenses	(88,598		)	(71,267		)	(17,331		)	24	%
Amortization expense	(17,072		)	(14,766		)	(2,306		)	16	%
Other operating expenses	$	(147,331	)	$	(118,560	)	$	(28,771	)	24	%

Other operating expenses increased $28.8 million, or 24%, for the year ended December 31, 2013 compared to the same period in 2012. Our acquisition of Lankhorst accounted for $20.5 million of the increase. Total other operating expenses increased as a percentage of net sales from 16% for the year ended December 31, 2012 to 18% for the year ended December 31, 2013.

Selling expenses increased $9.1 million, or 28%, in 2012 over the same period in 2012. Of the increase, approximately $7.1 million related to a full year of Lankhorst selling expenses. The remaining increase was primarily due to additional payroll costs associated with our investment in our international sales force. Foreign currency exchange rate fluctuations had no material impact on the change.

Administrative expenses increased $17.3 million, or 24%, in 2012 over the same period in 2012. Of the increase, approximately $12.0 million related to a full year of Lankhorst administrative expenses. During 2013, we recognized $2.1 million more in reorganization and restructuring charges primarily related to changes in our executive team, among other positions. Share-based compensation was $4.5 million higher due to the incremental cost associated with stock option modifications and new awards granted during 2013, partially offset by the reversal of previously recognized expense associated with forfeitures. Compensation costs have increased approximately $6.8 million due to higher incentive bonuses earned, new positions and salary increases during the year ended December 31, 2013. Advisory fees were $1.1 million more than the same period in 2012 due to a higher projected Adjusted EBITDA for 2013. These increases in administrative expenses were partially offset by lower acquisition costs of $10.9 million during 2013 as compared to 2012. Administrative expenses increased $0.9 million for the year ended December 31, 2013 due to foreign currency exchange rate fluctuations.

Amortization expense increased $2.3 million, or 16% over the same period in 2012 primarily due to the amortization of Lankhorst's intangibles.

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~~Other~~Income ~~expense,~~tax ~~net~~benefit (expense)

~~Other~~For the year ended December 31, 2014, income tax benefit was $15.6 million, a decrease in expense ~~decreased~~of by$26.2 million, as compared to income tax expense of $1810.45 million for the year ended December 31, or2013. The 37resulting effective tax rate was a benefit of 35.2%, and an expense of 64.0% for the year ended December 31, 2014 and 2013, ~~compared~~respectively. The to2014 ~~the~~effective ~~same~~tax ~~period~~rate was primarily driven by a mix of earnings in ~~2012.~~various ~~Significant~~jurisdictions, ~~components~~releases of ~~this~~uncertain ~~change~~tax ~~were~~benefits as ~~follows:~~well as valuation allowances related to our U.S. deferred tax assets and certain foreign net operating losses.

	Years endedDecember 31,						Change
	2013			2012			Dollars			Percent
	(in thousands)
Interest expense, net	$	(80,830	)	$	(64,842	)	$	(15,988	)	25	%
Foreign currency exchange gains (losses)	13,584			20,170			(6,586		)	(33	)%
Loss on extinguishment of debt	—			(2,358		)	2,358			(100	)%
Other expense, net	(635		)	(2,462		)	1,827			(74	)%
Other expense, net	$	(67,881	)	$	(49,492	)	$	(18,389	)	37	%

Adjusted EBITDA

~~Interest~~Adjusted ~~expense~~EBITDA ~~increased~~is ~~$16.0~~a ~~million~~Non-GAAP ~~for~~Financial ~~the~~Measure, ~~year~~defined ~~ended~~in ~~December 31,~~the ~~2013~~indenture ~~primarily~~governing ~~due~~the to9.50% ~~additional~~Senior ~~debt~~Notes, ~~outstanding~~as tonet ~~fund~~income ~~the~~(loss) ~~Lankhorst~~plus, ~~acquisition~~without ~~and~~duplication: ~~refinance~~interest ~~existing~~expense, ~~debt. On~~income ~~July~~tax ~~12,~~expense ~~2012~~(benefit), wedepreciation ~~issued~~and ~~$82.5~~amortization, ~~million~~as ~~aggregate~~further ~~principal~~adjusted ~~amount~~by of(i) all ~~9.00%~~fees ~~Senior~~and ~~Notes~~costs ~~resulting~~incurred in ~~approximately~~connection ~~$5.5~~with ~~million~~any ofmerger, ~~increased~~consolidation, ~~interest~~acquisition ~~expense. Also~~or onoffering ~~July~~of ~~12,~~debt ~~2012~~or equity securities, we(ii) realized ~~retired~~and ~~the~~unrealized ~~Term~~gains ~~Loan~~(losses) ~~due~~resulting ~~2014~~from ~~with~~foreign acurrency ~~portion~~transactions, (iii) payments of ~~the~~advisory ~~proceeds~~fees ~~from~~pursuant to the ~~$335.0~~Management ~~million~~Fee ~~Term~~Letter ~~Loan~~with ~~due~~Paine & ~~2017~~Partners, ~~resulting~~LLC, in(iv) all ~~$7.9~~amounts ~~million~~deducted ofin arriving at net ~~additional~~income ~~interest~~(loss) ~~expense. The~~in ~~amortization~~respect of ~~debt~~severance ~~issuance~~packages ~~costs~~payable ~~and~~in connection with the ~~discount~~termination ~~related~~of toany ~~these~~officer, ~~new~~director ~~issuances~~or ~~resulted~~employee, in(v) business anoptimization ~~additional~~expenses ~~$1.1~~and ~~million~~other inreorganization ~~interest~~or ~~expense~~restructuring charges, reserves or expenses (which, for the ~~year~~avoidance ~~ended~~of ~~December 31~~doubt, ~~2013. Additionally~~will include, wewithout ~~capitalized~~limitation, ~~$2.3~~the ~~million~~effect ~~more~~of ininventory ~~interest~~optimization inprograms, ~~2012~~plant ~~compared~~closures, tofacility ~~2013~~consolidations, ~~resulting~~retention, insystem ~~more~~establishment ~~interest~~costs, ~~expense~~contract ~~this~~termination ~~year. Prior~~costs, tofuture ~~2012~~lease commitments and excess pension charges), we(vi) other ~~did~~expenses, ~~not~~such ~~capitalize~~as ~~interest~~share-based compensation expense and income (loss) on ~~construction~~our investments in ~~progress~~joint ~~for~~ventures, ~~property~~and (vii) non-cash items, ~~plant~~other ~~and~~than ~~equipment~~the ataccrual ~~our~~of ~~Mexican~~revenue ~~subsidiaries. During~~in the ~~first~~ordinary ~~quarter~~course of ~~2012,~~business. Management weuses ~~corrected~~Adjusted ~~this~~EBITDA ~~error~~to compare our financial measures to those of our peers and ~~capitalized~~for $1debt covenant calculations.9 See ~~million~~the ofsection ~~interest~~entitled "Non-GAAP Financial Measures" for further information on our Non-GAAP measures.

For the year ended December 31, 2013, foreign currency exchange gains were $13.6 million compared to foreign currency exchange gains of $20.2 million for the same period in 2012. At December 31, 2013 and 2012, we had intercompany loans that required remeasurement in the aggregate amounts of $473.1 million and $488.8 million, respectively. The ~~revaluation~~following ~~of intercompany loans denominated in U.S. dollars for subsidiaries whose functional currency~~ is ~~the~~a ~~euro~~reconciliation ~~resulted in $12.6 million~~ of ~~the~~net gains recognized. The U.S. dollar to euro exchange rate at December 31, 2012 was $1.00 to €0.7579 compared to $1.00 to €0.7251 at December 31, 2013. During 2012, the revaluation of $212.3 million new intercompany loans denominated in U.S. dollars at our Lankhorst subsidiaries contributed to $16.6 million of the gains recognized. The revaluation of other intercompany loans denominated in U.S. dollars for subsidiaries whose functional currency is the euro and Polish zloty contributed to $4.9 million and $6.2 million, respectively, of foreign currency exchange gains. These gains were offset by a $7.3 million foreign currency exchange loss ~~related~~ to ~~the~~Adjusted ~~settlement of two foreign currency forward contracts on July 12, 2012 associated with the purchase of Lankhorst and refinancing transactions.~~EBITDA:

Loss on extinguishment of debt decreased by $2.4 million for the year ended December 31, 2013 compared to the same period in 2012. In July 2012, we wrote-off $2.4 million of unamortized debt issuance costs associated with the retirement of the Term Loan due 2014, the Revolving Credit Agreement, the CASAR Revolving Credit Agreement and the Euro Facility.



	Years ended December 31,
	2015			2014			2013
	(in thousands)
Net loss (GAAP)	$	(35,508	)	$	(28,773	)	$	(27,004	)
Plus:
Interest expense, net	70,586			78,477			80,830
Income tax expense (benefit)	122			(15,641		)	10,541
Depreciation and amortization	44,272			50,558			58,534
Foreign currency exchange losses (gains), net	1,939			36,298			(13,584		)
Share-based compensation	7,496			7,816			5,969
Other expense (income), net	845			(24		)	635
Loss on extinguishment of debt	—			617			—
Acquisition costs (a)	—			1,453			369
Purchase accounting (inventory step-up and other) (b)	—			—			2,191
Advisory fees (c)	3,907			5,397			4,551
Reorganization and restructuring charges (d)	8,676			2,234			9,548
Non- cash impairment of assets	3,238			1,144			—
Effect of inventory optimization program (e)	—			9,244			2,970
Other adjustments	838			2,209			3,643
Adjusted EBITDA (Non-GAAP)	$	106,411		$	151,009		$	139,193

Income tax expense

For the year ended December 31, 2013, our income tax expense was $10.5 million, an increase of $3.3 million, as compared to income tax expense of $13.9 million for the year ended December 31, 2012. The resulting effective tax rate was an expense of 64% and an expense of 323% for the year ended December 31, 2013 and 2012, respectively. The 2013 effective tax rate was primarily driven by an increase in the U.S. valuation allowance.

Adjusted EBITDA and Acquisition Adjusted EBITDA

Adjusted EBITDA is a Non-GAAP Financial Measure defined as net income (loss) plus, without duplication: interest expense, income tax expense (benefit), depreciation and amortization, as further adjusted by (i) all fees and costs incurred in connection with any merger, consolidation, acquisition or offering of debt or equity securities, (ii) realized and unrealized gains (losses) resulting from foreign currency transactions, (iii) payments of advisory fees pursuant to the Management Fee Letter with Paine & Partners, LLC (“Paine & Partners”), (iv) all amounts deducted in arriving at net income (loss) in respect of severance packages payable in connection with the termination of any officer, director or employee, (v) business optimization expenses and other reorganization or restructuring charges, reserves or expenses (which, for the avoidance of doubt, will include, without limitation, the effect of inventory optimization programs, plant closures, facility consolidations, retention, systems establishment costs (including costs of instituting systems and controls to comply with the Sarbanes-Oxley Act of 2002), contract termination costs, future lease commitments and excess pension charges), (vi) other expenses, such as share-based

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compensation expense and income or loss on our investments in joint ventures, and (vii) non-cash items increasing such consolidated net income, other than the accrual of revenue in the ordinary course of business. We define Acquisition Adjusted EBITDA, another Non-GAAP Financial Measure, as Adjusted EBITDA plus pre-acquisition EBITDA of acquired companies. Management uses Adjusted EBITDA and Acquisition Adjusted EBITDA to compare our financial measures to those of our peers and for debt covenant calculations. See the section entitled "Non-GAAP Financial Measures" for further information on our Non-GAAP measures.

The following is a reconciliation of net loss to Adjusted EBITDA and Acquisition Adjusted EBITDA:

	Years ended December 31,
	2014			2013			2012
	(in thousands)
Net loss (GAAP)	$	(28,773	)	$	(27,004	)	$	(18,174	)
Plus:
Interest expense, net	78,477			80,830			64,842
Income tax expense (benefit)	(15,641		)	10,541			13,877
Depreciation and amortization	50,558			58,534			47,493
Foreign currency exchange losses (gains), net	36,298			(13,584		)	(20,170		)
Share-based compensation	7,816			5,969			1,466
Other expense (income), net	(24		)	635			2,462
Loss on extinguishment of debt	617			—			2,358
Acquisition costs (a)	1,453			369			11,304
Purchase accounting (inventory step-up and other) (b)	—			2,191			8,471
Advisory fees (c)	5,397			4,551			3,438
Reorganization and restructuring charges (d)	2,234			9,548			6,181
Non- cash impairment of assets	1,144			—			—
Effect of inventory optimization program (e)	9,244			2,970			—
Other adjustments	2,209			3,643			4,487
Adjusted EBITDA (Non-GAAP)	$	151,009		$	139,193		$	128,035
Lankhorst pre-acquisition EBITDA (f)	—			—			15,908
Acquisition Adjusted EBITDA (Non-GAAP)	$	151,009		$	139,193		$	143,943


(a)	Acquisition costs, including costs directly attributable to acquisitions and certain start-up activities, are recorded in Administrative expenses in the consolidated statements of operations.


(b)	The amortization of purchase accounting inventory step-up adjustments, as well as certain other purchase accounting adjustments, are recorded in Cost of sales in the consolidated statements of operations.

(c) Advisory fees consist of the management fee paid to Paine & Partners for administrative and other support services, reimbursement of travel and other out-of-pocket costs incurred on our behalf and external fees incurred on Paine & Partners' behalf related to business process improvements. Also, payments to certain members of the board of directors are included. Advisory fees are recorded in Administrative expenses in the consolidated statements of operations.

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Partners' behalf related to business process improvements. Also, payments to certain members of the board of directors are included. Advisory fees are recorded in Administrative expenses in the consolidated statements of operations.


(d)	Reorganization and restructuring charges consist of severance costs related to headcount reductions, reorganizations and consultation fees for legal entity restructurings and synergies from acquisitions and fees associated with any replacement of key executives. Reorganization and restructuring charges are recorded in Administrative expenses in the consolidated statements of operations.


(e)	As a result of the Inventory Optimization Program, we recorded a charge in Cost of Sales to adjust the inventory value to its net realizable value.

~~(f)~~Credit ~~The~~Agreement Lankhorst acquisition closed on July 12, 2012 and its results have been included in our consolidated statements of operations since the date of acquisition. Pro forma adjustments are included for the 193 days ended July 11, 2012 as if the acquisition had been consummated on the first day of 2012 for comparative purposes. These amounts represent the net income of Lankhorst before deductions for interest, taxes, depreciation and amortization. Also, we adjusted for the purchase of the remaining 40% of our Australian subsidiary and disposal of the yachting division and certain otherEBITDA

Credit Agreement EBITDA is a Non-GAAP Financial Measure, defined in the Credit Agreement as Consolidated Net Income, adjusted by adding thereto, (a) to the extent deducted in determining Consolidated Net Income, the sum of (i) Consolidated Interest Expense, (ii) provision for Taxes based on income of the Parent and its Subsidiaries, (iii) depreciation and amortization expense, (iv) Closing Date Transaction Expenses incurred in connection with the Closing Date Transactions, (v) Transaction Expenses of the type described in clause (a) of the definition thereof, provided that the amount of Transaction Expenses included pursuant to this clause (v) shall not exceed (a) with respect to Transaction Expenses paid to the Sponsor, 1.0% of the value of the applicable transaction and (b) with respect to Transaction Expenses paid to any other Person, such Transaction Expenses as are normal and customary, (vi) non-cash, stock-based compensation expense, (vii) non-recurring or unusual losses or expenses (including non-recurring or unusual losses on permitted sales or dispositions of assets and casualty events), (viii) all other non-cash charges that represent an accrual to the extent no cash is expected to be paid in the next twelve months (excluding any such non-cash item to the extent that it represents an accrual or reserve for potential cash items in any future period or amortization of a prepaid cash item that was paid in a prior period), (ix) Permitted Management Fees paid during such period, (x) non-cash, restricted stock award charges, (xi) unrealized non- cash losses resulting from foreign currency balance sheet adjustments required by GAAP, (xii) severance packages payable in connection with the termination of the ten highest paid officers, directors or employees of Parent or any of its Subsidiaries in an aggregate amount not to exceed $5,000,000 from the Closing Date until the date of determination and (xiii) non-cash minority interest expense; minus (b) to the extent included in determining Consolidated Net Income, the sum of (i) extraordinary, non-recurring or unusual gains (including extraordinary, non-recurring or unusual income or gains on permitted sales or dispositions of assets and casualty events), (ii) all other non-cash income to the extent no cash is expected to be received in the next twelve months (excluding any such non-cash item to the extent it represents the reversal of and accrual or reserve for potential cash item in any prior period), (iii) unrealized non-cash gains resulting from foreign currency balance sheet adjustments required by GAAP, and (iv) non-cash minority interest income.

We use this Non-GAAP Financial Measure to calculate debt covenant ratios, to the extent it differs from Adjusted EBITDA as described above. We believe that our presentation of this measure provides investors with greater transparency with respect to the inputs utilized to determine covenant compliance.



	Years ended December 31,
	2015		2014		2013
	(in thousands)
Adjusted EBITDA (Non-GAAP)	$	106,411	$	151,009	$	139,193
Plus:
Additional reorganization and restructuring charges	261		300		—
Additional effect of Inventory Optimization Program	470		—		—
Production curtailment	2,861		—		—
Impact of nonrecurring resin procurement costs	920		—		—
Impact of nonrecurring and unusual items in Brazil	3,745		—		—
Pro forma SG&A expense savings	7,997		4,700		—
Pro forma facility consolidation	4,693		—		—
Additional other adjustments	359		500		—
Credit Agreement EBITDA (Non-GAAP)	$	127,717	$	156,509	$	139,193

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transactions related to percentage of completion accounting and start-up costs. The amount for the 193-day period ended July 11, 2012 were converted from euros to U.S. dollars using $1.00 to €0.7724, the average income statement exchange rate for the period.

LIQUIDITY AND CAPITAL RESOURCES

Overview

Our principal sources of liquidity consist of cash from operations and borrowings under our Revolving Loan Facility. Our principal uses of cash are to fund working capital and capital expenditures, support operations and service our debt. Our liquidity is influenced by many factors, including the amount and timing of cash collections from our customers and fluctuations in the cost of our raw materials.

~~For~~principal ~~the~~uses ~~year~~of ~~ended December 31, 2014, we generated~~ cash ~~flow~~are ~~from operating activities of $59.4 million driven primarily by a continued decrease in Adjusted Working Capital due~~ to ~~management~~fund ofworking ~~accounts~~capital ~~receivable, inventory~~ and ~~accounts~~capital ~~payable. Adjusted Working Capital~~expenditures, asupport ~~Non-GAAP~~operations Financial Measure defined as accounts receivable plus inventories less accounts payable, decreased $31.4 million due to execution upon our initiative to generate cash through improved collection efforts and ~~focus~~service ~~on operational efficiencies. However, we believe there continues to be more opportunity in working capital and will further implement~~ our ~~initiatives in 2015~~debt. Our

Deleveraging remains another key initiative and we will continue to apply excess cash towards our outstanding debt balances. We reduced our Net Debt $28.5 million during the year ended December 31, 2014. For the definition and reconciliation of total debt to Net Debt, see within this section (MD&A). During the third quarter, we amended the Note Purchase Agreement to reduce the interest rate on our 9.00% Senior Notes (formerly the 11.75% Senior Notes) from 11.75% to 9.00% and we redeemed $26.5 million of the 9.00% Senior Notes with available cash and funds under the Revolving Loan Facility. The 9.00% Senior Notes carried the highest interest rate of all of our debt prior to the amendment. Also, we paid off the Polish Debt in December 2014. Total available liquidity, ~~defined~~is asinfluenced ~~availability~~by ~~under~~many ~~our Revolving Loan Facility plus cash and cash equivalents~~factors, ~~was~~including ~~$133.5 million at December 31, 2014. Availability under~~ the ~~Revolving~~amount ~~Loan Facility is based upon the maximum borrowing capacity of $145.0 million, less outstanding borrowings, letters of credit~~ and ~~further~~timing ~~restricted by certain covenants in our financing agreements. Although our outstanding revolver balance was $68.8 million as~~ of ~~December 31, 2014, our available~~ cash ~~balance~~collections tofrom ~~apply against~~ our ~~borrowings~~customers ~~was $58.2 million.~~and

Wefluctuations ~~reinvest~~in the ~~earnings~~cost of ~~substantially all of~~ our ~~non-U.S.~~raw ~~subsidiaries in those respective operations~~materials. ~~The~~Based ~~foreign operating subsidiaries use cash generated from earnings to fund working capital, invest in capital expenditures and service interest and principal payments~~ on ~~intercompany~~our ~~debt. Our~~current ~~outstanding~~assessment ~~debt~~of isour ~~issued by the U.S.~~ operating ~~subsidiary~~plan, ~~and~~we ~~there~~believe ~~are intercompany loans within the corporate legal structure~~ that ~~are paid with earnings from the operating subsidiaries in foreign jurisdictions to provide liquidity in the U.S. for interest and principal payments on~~ our ~~outstanding debt. Of the consolidated~~ cash and cash equivalents balance of $58.2 million at December 31, 2014, cash and cash equivalents held in foreign countries were $52.9 million, of which $9.5 million was in U.S. dollars. The cash balances in currencies other than the U.S. dollar are primarily in the euro, the Mexican peso and the Polish złoty, all of which can be readily converted to U.S. dollars.

~~Based~~and oncash ~~our~~equivalents ~~current assessment of our operating plan~~balance, ~~we believe that~~ cash flow from operations, ~~cash~~ and ~~cash~~availability ~~equivalents and available borrowing~~ under our Revolving Loan Facility will be adequate to fund anticipated operating, capital and debt service requirements and other commitments over the next 12twelve months.

As discussed in Note 1—“Organization and Description of the Business” to our consolidated financial statements in Item 8, Financial Statements and Supplementary Data, of this annual report, our debt financing consists of secured credit facilities due in February 2017 and senior notes due in May 2017. We plan to either raise additional equity capital or refinance our current long-term debt, or some combination thereof, in order to satisfy these obligations before they become due.

Total available liquidity, defined as availability under our Revolving Loan Facility plus cash and cash equivalents, was $122.1 million at December 31, 2015 compared to $133.5 million at December 31, 2014. Availability under the Revolving Loan Facility is based upon the maximum borrowing capacity of $145.0 million, less outstanding borrowings, letters of credit and if applicable, further restricted by certain covenants in our credit agreements. On June 24, 2015, we entered into a third amendment (the “Amendment”) to the credit agreement dated as of July 12, 2012 (the "Credit Agreement"). The Amendment, among other things, amended the Credit Agreement to (i) update the Interest Coverage Ratio financial covenant for fiscal quarters ending June 30, 2015 and thereafter from a range of 1.75x to 2.00x to a fixed ratio covenant of 1.50x and (ii) reduce incremental capacity to the greater of (a) $75.0 million and (b) 2.25:1.00 Senior Secured Leverage from the greater of (a) $125.0 million and (b) 2.75:1.00 Senior Secured Leverage. We do not anticipate that the Amendment will have a material impact on our available liquidity.

We reinvest the earnings of substantially all of our subsidiaries in those respective operations. The foreign operating subsidiaries use cash generated from earnings to fund working capital, invest in capital expenditures and service interest and principal payments on intercompany debt. Our outstanding debt is issued by the U.S. operating subsidiary and there are intercompany loans within the Company's legal structure that are paid with earnings from the operating subsidiaries in foreign jurisdictions to provide liquidity in the U.S. for interest and principal payments on our outstanding debt. Of the consolidated cash and cash equivalents balance of $21.1 million at December 31, 2015, cash and cash equivalents held in foreign countries were $18.5 million, of which $3.2 million was in U.S. dollars. The cash balances in currencies other than the U.S. dollar are primarily in the euro and can be readily converted to U.S. dollars. It is our present intention to permanently reinvest

the undistributed earnings associated with our foreign subsidiaries, and our current plans do not require repatriation of these

earnings other than servicing intercompany loans.

Working Capital Management

~~Working~~Within our asset base, working capital management is our largest opportunity for cash generation. During these challenging market conditions, we continue to monitor working capital and our cash conversion cycle. Working Capital, which is all current assets minus all current liabilities, decreased from $279.5 million at December 31, 2014 to $216.2 million at December 31, 2015. Adjusted Working Capital, a Non-GAAP Financial Measure defined as accounts receivable plus inventories less accounts payable and customer advances, decreased $3133.42 million from $~~300~~263.65 million as of December 31, ~~2013~~2014 to $~~269~~230.24 million as of December 31, ~~2014~~2015. The decrease in Working Capital and Adjusted Working Capital was primarily due to ~~execution~~foreign ~~upon~~currency ~~our~~exchange ~~initiatives~~rate fluctuations. ~~Due~~During this downturn in certain end markets, we are trying to ~~strong~~manage ~~collection~~inventory ~~efforts~~levels in line with the demand. Also, we saw declines in accounts receivable and accounts payable related to the reduced demand in certain key end markets of our business. Our days sales outstanding ~~were~~increased from 61 days at December 31, 2014 ~~compared~~ to 6566 days at December 31, ~~2013. The~~2015 ~~Company~~due ~~continued~~to ~~its~~supporting ~~initiatives~~customers in ~~procurement~~our tochallenging ~~promote~~end ~~cost~~markets ~~savings and negotiate extended terms~~ with ~~key~~longer ~~suppliers~~terms. ~~Days~~Our ~~payables~~days payable outstanding ~~were~~decreased from 56 days at December 31, 2014 ~~compared~~ to 4554 days at December 31, ~~2013~~2015. WeAdjusted ~~made~~Working ~~significant~~Capital ~~progress~~as ina ~~reducing~~percentage ~~inventory~~of ~~levels~~annualized ~~during~~fourth ~~2014,~~quarter ~~especially~~2015 ~~with~~sales ~~our~~was ~~Inventory~~36.4% ~~Optimization~~compared ~~Program~~to 32. ~~Our~~5% ~~Inventory~~as ~~Optimization~~a ~~Program~~percentage ~~was~~of ~~designed~~fourth toquarter ~~generate~~2014 ~~cash~~sales ~~from~~with ~~the~~a ~~sale~~cash conversion cycle of ~~inventory~~152 indays and 136 days for the ~~near~~respective ~~term~~periods. We ~~instead~~use ofAdjusted ~~holding~~Working ~~the~~Capital ~~inventory~~to ~~for~~monitor ~~longer~~our ~~periods~~liquidity ofand ~~time. This~~believe ~~program~~that ~~has~~Adjusted ~~led~~Working toCapital ~~selling~~provides ~~certain~~a ~~inventory~~meaningful atmeasure ~~lower~~of ~~than~~our ~~normal~~efforts ~~prices~~to ormanage ~~even~~inventory, ~~below~~our ~~cost~~customer incollections ~~some~~and ~~instances~~vendor payments.

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~~See the section entitled "Non-GAAP Financial Measures" for further information on our Non-GAAP Financial Measures.~~ The following is a reconciliation of ~~working capital to~~ Adjusted Working Capital to working capital:

	December 31, 2014			December 31, 2013
	December 31, 2015			December 31, 2014
	(in thousands)
Accounts receivable	$	~~143~~124,~~068~~463		$	~~148~~143,~~564~~068
Inventories	~~225~~186,~~075~~964			~~228~~225,~~245~~075
Accounts payable	(9872,~~914~~153		)	(7698,~~181~~914		)
Adjusted Working Capital (Non-GAAP)	$	269,229		$	300,628
Customer advances	(8,918		)	(5,716		)
Plus: All other current assets	78,908			55,999
Adjusted Working Capital (Non-GAAP)	$	230,356		$	263,513
Less: All other current liabilities	(65,036		)	(56,539		)
Plus: All other current assets (1)	33,494			75,041
Working capital (GAAP)	$	283,101		$	300,088
Less: All other current liabilities (1)	(47,672		)	(59,009		)
Working capital (GAAP) (1)	$	216,178		$	279,545


⁽¹⁾	During the fourth quarter of 2015, the Company adopted new accounting guidance regarding the presentation of deferred tax assets and liabilities as non-current in a classified balance sheet and applied it retrospectively.

Cash Flow Information

The following table summarizes our cash flows from operating, investing and financing activities for the years ended December 31, ~~2014~~2015, ~~2013~~2014 and ~~2012~~2013, respectively.

	Years ended December 31,
	2014			2013			2012
	2015			2014			2013
	(in thousands)
Cash flows provided by (used in)
Operating activities	$	5943,~~418~~046		$	5559,~~151~~418		$	1355,~~554~~151
Investing activities	(2729,~~494~~802		)	(2927,~~353~~494		)	(~~210~~29,~~232~~353		)
Financing activities	(445,~~865~~420		)	(404,~~980~~865		)	~~214~~(40,~~599~~980		)
Effect of exchange rates on cash and cash equivalents	(34,~~851~~959		)	~~925~~(3,851		)	~~3,660~~925
Net increase (decrease) in cash and cash equivalents	$	23(37,~~208~~135	)	$	~~(14~~23,~~257~~208	)	$	21(14,~~581~~257	)
Cash and cash equivalents, beginning of year	3458,~~987~~195			4934,~~244~~987			2749,~~663~~244
Cash and cash equivalents, end of year	$	5821,~~195~~060		$	3458,~~987~~195		$	4934,~~244~~987

Cash from Operating Activities

	Years ended December 31,
	2014			2013			2012
	2015			2014			2013
	(in thousands)
Net loss	$	(2835,~~773~~508	)	$	(2728,~~004~~773	)	$	(1827,~~174~~004	)
Adjustments to reconcile net loss to net cash provided by operating activities	8855,~~126~~085			6188,~~698~~126			3961,~~335~~698
Changes in assets and liabilities	6523,469			~~20,457~~65			(720,~~607~~457		)
Net cash provided by operating activities	$	5943,~~418~~046		$	5559,~~151~~418		$	1355,~~554~~151

~~The~~Cash ~~slight increase in cash~~ flows from operating activities decreased during ~~2014~~the year ended December 31, 2015 as compared to ~~2013,~~the ~~was~~same ~~due~~period in 2014 primarily due to ~~management~~less ofcash ~~working~~earnings ~~capital~~related ~~and~~to anbusiness ~~increase~~performance inand ~~cash~~foreign ~~earnings~~currency translation. Cash earnings is our net loss adjusted for non-cash items, such as depreciation and amortization among other reconciling items.

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Cash from Investing Activities

	Years ended December 31,
	2014			2013			2012
	2015			2014			2013
	(in thousands)
Capital expenditures	$	(2429,~~872~~802	)	$	(2924,~~318~~872	)	$	(4129,~~422~~318	)
Acquisition of business, net of cash acquired	~~(4,573~~—		)	—(4,573		)	~~(169,243~~—		)
Other investing activities	~~1,951~~—			~~(35~~1,951		)	~~433~~(35		)
Net cash used in investing activities	$	(2729,~~494~~802	)	$	(2927,~~353~~494	)	$	(~~210~~29,~~232~~353	)

Cash flows from investing activities consist primarily of capital expenditures that are funded with cash from operations and draws on our Revolving Loan Facility when necessary. We will continue reinvesting in our business in ~~2015~~2016 to capitalize on our long-term growth opportunities. We ~~with~~expect ~~increased~~ capital expenditures~~. As~~ ofto ~~December~~be ~~31,~~between ~~2014,~~$20 ~~the~~million ~~Company~~and ~~had~~ $~~4.8~~35 million for 2016. A significant portion of ~~committed~~the anticipated capital expenditures ~~for~~in ~~2015. In~~2016 ~~the~~are ~~past~~not ~~three~~committed ~~years~~and represent discretionary capital investments that we plan to make as we believe they would generate an immediate return. During 2014, we ~~have~~purchased ~~completed~~certain ~~two~~assets ~~acquisitions~~from Endenburg B.V. for approximately $4.6 million. We expect to continue seeking and completing strategic business acquisitions that are complementary to our business.

Cash from Financing Activities

	Years ended December 31,
	2014			2013			2012
	2015			2014			2013
	(in thousands)
Proceeds from issuance of long-term debt	$	—		$	—		$	414,150
Principal payments on long-term debt	$	(17,908	)	$	(14,232	)	$	(20,824	)
Debt issuance costs paid	—(1,067		)	~~(1,880~~—		)	(161,~~819~~880		)
Repayment of long-term debt	(41,178		)	(20,824		)	(164,439		)
Retirement of long-term debt	—			(26,946		)	—
Net borrowings (repayments) under revolving credit agreements	36(26,~~750~~445		)	~~(18~~36,~~276~~750		)	5(18,~~580~~276		)
Acquisition installment payments	—			—			(9,418		)
Other financing activities	—			(437		)	—
Repurchase of common stock	—			—			(14,465		)
Net cash used in financing activities	$	(45,420	)	$	(4,865	)	$	(40,980	)
Other, net	(437		)	—			10
Net cash provided by (used in) financing activities	$	(4,865	)	$	(40,980	)	$	214,599

Cash flows from financing activities result primarily from borrowings under our revolving credit agreements and payments on long-term debt. During ~~2014~~2015, we paid ~~off~~down ~~the~~our ~~Polish~~long-term ~~Debt,~~debt ~~redeemed~~ $2645.54 million ~~of the privately placed senior notes using cash drawn under the Revolving Loan Facility and paid down $6~~.~~5 million of the Term Loan due 2017 outstanding balance.~~ We plan to pay $198.19 million on our debt in ~~2015~~2016 related to principal payments and other required payments. Also, if economic conditions, business opportunities or other factors present themselves, we may refinance some of our debt. During 2012, we issued debt to finance the Lankhorst acquisition and refinance existing debt. Excluding the repurchase of common stock in 2012, certain debt covenants restrict repurchase activity to $2.5 million each year.

Long-term Debt

We have historically funded our growth, capital spending and acquisitions through a combination of operating cash flows and debt financing. Our debt financing at December 31, ~~2014~~2015 consisted primarily of long-term debt. For a detailed discussion of our borrowings, see Note 76—“Borrowings” to our consolidated financial statements in Item 8, Financial Statements and Supplementary Data, of this annual report.

Revolving Loan Facility and Term Loan due 2017 – On July 12, 2012, we entered into a credit agreement (“Credit Agreement”) with Goldman Sachs Bank USA and Deutsche Bank Securities Inc., as joint lead arrangers, and Fifth Third Bank, as the administrative and collateral agent, that provides for a $335.0 million senior secured term loan (“Term Loan due 2017”) and a $145.0 million senior secured revolving credit facility (“Revolving Loan Facility” and together with the Term Loan due 2017, the “Credit Facilities”), with sub-limits for letters of credit and swingline loans. The Term Loan due 2017 was issued at an original issue discount of 1.00% or $3.4 million. The Credit Facilities mature on February 15, 2017. The Term Loan due 2017 requires quarterly principal payments of approximately $0.8 million, which can be adjusted downward as a result of the annual excess cash flow payment, if applicable, as defined in the Credit Agreement. As of December 31, ~~2014~~2015 and ~~2013~~2014, the Company calculated an annual excess cash flow payment of $135.98 million and $313.19 million, respectively, which is classified in Current maturities onof long-term debt in the consolidated balance sheets. A 2013 amendment to the Credit Agreement required proceeds from the Inventory Optimization Program be used to pay down the Term Loan due 2017 balance. We calculated a payment of $1.8 million from these proceeds at December 31, 2014, which is classified in Current maturities of long-term debt in the consolidated balance sheet.

On June 24, 2015, the Company entered into a third amendment (the “Amendment”) to the Credit Agreement. The Amendment, among other things, amended the Credit Agreement to (i) update the Interest Coverage Ratio financial covenant for fiscal quarters ending June 30, 2015 and thereafter from a range of 1.75x to 2.00x to a fixed ratio covenant of 1.50x and (ii) reduce incremental capacity to the greater of (a) $75,000 and (b) 2.25:1.00 Senior Secured Leverage from the greater of (a)

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$125,000 and (b) 2.75:1.800 ~~million~~Senior ~~from~~Secured ~~these~~Leverage. During ~~proceeds~~2015, atthe ~~December~~Company ~~31,~~paid ~~2014~~$1,067 ~~which~~in isdebt ~~classified~~issuance costs in ~~Current~~connection ~~maturities~~with onthis ~~long-term~~Amendment ~~debt~~that inare being amortized to interest expense over the ~~consolidated~~term ~~balance~~of ~~sheet~~the debt instrument.

Borrowings under the Credit Facilities incur interest at a variable rate based upon the nature of the loan under the facility. Loans are designated as either (i) Alternate Base Rate (“ABR”) or (ii) Eurodollar loans. ABR loans incur interest at the higher of (x) the prime rate of Fifth Third Bank or (y) the federal funds rate plus 1/2 of 1.00% (the higher of (x) or (y) equals the “Base Rate”), plus a margin of 3.75%. Eurodollar loans incur interest at the applicable LIBOR, plus a margin of 4.75%. A Eurodollar loan is distinguished from an ABR loan in that a Eurodollar loan bears interest in reference to the applicable LIBOR. The Base Rate applicable to the Term Loan is subject to a 2.25% floor, and the LIBOR applicable to the Term Loan is subject to a 1.25% floor. In addition to paying interest on the outstanding principal balance under the Credit Agreement, we must pay a commitment fee to the lenders under the Revolving Loan Facility for unutilized commitments at a rate ranging from approximately 0.38% to 0.50%, based on our consolidated leverage. We must also pay customary arrangement fees, upfront fees, administration fees and letter of credit fees. Interest on ABR loans is payable on the last business day of each March, June, September and December, and interest on Eurodollar loans is payable on the last day of the applicable interest period for loans of three months or less and, for loans of more than three months, at the end of each three month period starting on the first day of the applicable interest period. The interest rate on the Term Loan due 2017 was 6.00%, 6.00% and 6.00% at December 31, ~~2014~~2015, ~~2013~~2014, and ~~2012~~2013, respectively. The weighted average interest rate on the Revolving Loan Facility was 5.38%, 45.9538% and 74.0095% at December 31, ~~2014~~2015, ~~2013~~2014, and ~~2012~~2013, respectively.

The Credit Agreement contains covenants that restrict the ability of the Company and guarantors to take certain actions,

including, among other things and subject to certain significant exceptions: incurring indebtedness, incurring liens, paying

dividends and making other distributions, limiting capital expenditures, engaging in mergers and acquisitions, selling property,

engaging in transactions with affiliates or amending organizational documents. The Credit Agreement requires us to comply with certain financial ratio maintenance covenants, including a maximum consolidated net leverage ratio and a minimum consolidated interest coverage ratio. The Credit Agreement also contains customary affirmative covenants and events of default. As of December 31, 2015, we were in compliance with all restrictive and financial covenants associated with our borrowings, and we expect to be in compliance with these covenants throughout 2016.

with certain financial ratio maintenance covenants, including a maximum consolidated net leverage ratio and a minimum

consolidated interest coverage ratio. The Credit Agreement also contains customary affirmative covenants and events of

default.

9.00% Senior Notes (formerly the 11.75% Senior Notes) – On July 12, 2012, we issued $82.5 million aggregate principal amount of unsecured 11.75% Senior Notes due May 15, 2017 in a private placement pursuant to a note purchase agreement (the “Note Purchase Agreement”). On July 16, 2014, we entered into an amendment to the Note Purchase Agreement that reduced the interest rate from 11.75% to 9.00% on these senior notes ("9.00% Senior Notes") and provided a waiver for the notice of redemption. On July 17, 2014, we redeemed $26.5 million of the $82.5 million aggregate principal amount of the 9.00% Senior Notes, using available cash and cash drawn under the Revolving Loan Facility.

9.50% Senior Notes – On May 19, 2010, we issued $275.0 million aggregate principal amount of unsecured 9.50% Senior Notes due May 15, 2017 ("9.50% Senior Notes") at an original issue discount of $6.8 million, or 97.53%, of their aggregate principal amount under the indenture governing the 9.50% Senior Notes (the “Indenture”). On June 10, 2011, we issued an additional $150.0 million aggregate principal amount of unsecured 9.50% Senior Notes at a premium of $6.2 million, or 104.75%, of their aggregate principal amount under the Indenture. Interest on the 9.50% Senior Notes is due semi-annually on May 15th and November 15th of each year. The effective interest rate on the aggregate principal amount of 9.50% Senior Notes, including debt issuance costs, is 10.39%. The 9.50% Senior Notes are redeemable at our option, in whole or in part, during the twelve-month period beginning on May 15, ~~2014 at 102.38% and~~ 2015 and thereafter at 100.00%. In the event of a change in control, we may repurchase the 9.50% Senior Notes at a price equal to 101.00% of the principal amount, plus accrued and unpaid interest.

Net Debt

~~Net~~At ~~Debt~~December 31, ~~decreased~~2015, ~~from~~our ~~$845.3~~total ~~million~~debt, atincluding ~~December 31~~capital leases, ~~2013~~was to $~~816~~831.84 million atcompared ~~December 31,~~to ~~2014~~Net ~~and~~Debt ~~our~~of ~~Net~~$808.8 ~~Leverage~~million, ~~ratio~~with ~~was~~the ~~5.42x~~difference atbeing ~~December 31,~~cash ~~2014,~~currently ~~compared~~and eventually available to ~~6.07x~~pay atdown ~~December 31,~~our ~~2013~~outstanding debt. Net Debt is a Non-GAAP Financial Measure defined as consolidated total debt at face value plus capital lease obligations less cash and cash equivalents and restricted cash. ~~See~~Total ~~the~~debt ~~section~~decreased ~~entitled~~$45.2 ~~"Non-GAAP~~million ~~Financial~~from ~~Measures"~~December 31, ~~for~~2014 ~~further~~due ~~information~~to repayments on our ~~Non-GAAP~~revolver, ~~Financial~~routine ~~Measures~~principal payments and passage of time with our capital lease contracts. Our Net Leverage ratio, Net Debt to the last twelve months of Adjusted EBITDA, increased to 6.34x at December 31, 2015, compared to 5.42x at December 31, 2014, due to the decline in Adjusted EBITDA. We believe Net Debt is meaningful to investors because management assesses our leverage position after factoring in available cash and restricted cash that eventually could be used to repay outstanding debt.

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The following is a reconciliation of total debt to Net Debt:

	December 31, 2014			December 31, 2013
	December 31, 2015			December 31, 2014
	(in thousands)
Borrowings under Revolving Loan Facility	$	6842,~~750~~305		$	3268,~~000~~750
Polish Debt due 2014	—			8,860
Term Loan due 2017	306,454			324,362
Term Loan due 2017	324,362			330,813
9.00% Senior Notes due 2017	56,000			56,000
9.00% Senior Notes due 2017	56,000			82,500
9.50% Senior Notes due 2017	425,000			425,000
Other indebtedness	~~157~~—			~~688~~157
Capital lease obligations	21,~~328~~619			32,~~333~~328
Total debt at face value plus capital lease obligations (GAAP)	$	~~876~~831,~~597~~378		$	~~883~~876,~~194~~597
Less: Cash and cash equivalents	(5821,~~195~~060		)	(3458,~~987~~195		)
Less: Restricted cash	(1,~~565~~522		)	(21,~~887~~565		)
Net Debt (Non-GAAP)	$	~~816~~808,~~837~~796		$	~~845~~816,~~320~~837

As of December 31, ~~2014~~2015, we were in compliance with all restrictive and financial covenants associated with our borrowings. As defined in our respective credit agreements, the Senior Secured Net Leverage to Adjusted EBITDA ratio was 2.~~23x~~58x at December 31, ~~2014~~2015 compared to the maximum ratio of 3.25x. The maximum Senior Secured Net Leverage Ratio will step-down to 3.00x effective June 30, 2016. As defined in our respective credit agreements, the interest coverage ratio was 2.~~14x~~03x at December 31, ~~2014~~2015 compared to a required ratio of no less than 1.~~75x~~50x.

Free Cash Flow

We generated cash flow from operations of $43.0 million and $8.0 million in Free Cash Flow during the year ended December 31, 2015. Free Cash Flow, a Non-GAAP Financial Measure, is defined as cash flows from operating activities less capital expenditures, acquisitions and other investing activities and further adjusted by effect of exchange rates on cash and cash equivalents and other items. Our Free Cash Flow is ~~also~~lower ~~equivalent~~than tocash ~~the~~flow ~~change~~from inoperations ~~Net~~primarily ~~Debt. We~~due ~~generated~~to ~~Free~~capital ~~Cash~~expenditures ~~Flow of $28.5 million~~ and ~~$27.2~~changes ~~million~~in ~~for~~foreign ~~the~~currency ~~years ended December 31, 2014 and 2013, respectively, evidencing our intent to deleverage~~rates. ~~See the section entitled "Non-GAAP Financial Measures" for further information on our Non-GAAP Financial Measures.~~

	Years ended December 31,
	2014			2013
	(in thousands)
Net cash provided by operating activities (GAAP)	$	59,418		$	55,151
Less: capital expenditures	(24,872		)	(29,318		)
Less: acquisition of business and other investing activities	(2,622		)	(35		)
Effect of exchange rates on cash and cash equivalents	(3,851		)	925
Other items	410			494
Free Cash Flow (Non-GAAP)	$	28,483		$	27,217

We believe that the Free Cash Flow measure is meaningful to investors because it represents the cash flow we have available to pay down debt and/or invest for future growth. We use Free Cash Flow internally for incentive compensation purposes. It is important to note that Free Cash Flow does not represent the residual cash flow available for discretionary expenditures since other non-discretionary expenditures, such as mandatory debt service requirements, are not deducted from the measure. Free Cash Flow is also equivalent to the change in Net Debt.

The following is a reconciliation of net cash provided by operating activities to Free Cash Flow:



	Years ended December 31,
	2015			2014
	(in thousands)
Net cash provided by operating activities (GAAP)	$	43,046		$	59,418
Less: capital expenditures	(29,802		)	(24,872		)
Less: acquisition of business and other investing activities	—			(2,622		)
Effect of exchange rates on cash and cash equivalents	(4,959		)	(3,851		)
Other items	(244		)	410
Free Cash Flow (Non-GAAP)	$	8,041		$	28,483

Contractual Obligations and Commitments

The following table provides information regarding our contractual obligations and commitments as of December 31, ~~2014~~2015. Amounts payable in a currency other than the U.S. dollar have been translated using the foreign currency exchange rates in effect as of year -end.

We believe we will be able to fund these obligations through cash generated from our operations, availability under our Revolving Loan Facility, and refinancing or changes to our capital structure. Our ability to refinance or change our capital structure is dependent upon certain factors that are outside of management's control. There can be no assurance that we will be ~~successful at any such efforts, if it were necessary to do so in order to meet these obligations. Our contractual obligations will~~

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	Payments due by period
		2015		2016		2017		2018		2019		Thereafter		Total
Obligations:	(in thousands)
Long-term debt (1)		$	19,113	$	3,318	$	851,838	$	—	$	—	$	—	$	874,269
Interest on long-term debt (2)		67,441		67,292		25,601		—		—		—		160,334
Capital leases		1,728		323		138		122		299		1		2,611
Operating leases		4,890		3,722		2,311		1,193		833		1,953		14,902
Pension benefits		213		277		315		292		343		1,883		3,323
Total contractual obligations		$	93,385	$	74,932	$	880,203	$	1,607	$	1,475	$	3,837	$	1,055,439

successful at any such efforts, if it were necessary to do so in order to meet these obligations. Our contractual obligations will have an impact on our future liquidity.



	Payments due by period
		2016		2017		2018		2019		2020		Thereafter		Total
Obligations:	(in thousands)
Long-term debt ⁽¹⁾		$	8,948	$	820,811	$	—	$	—	$	—	$	—	$	829,759
Interest on long-term debt ⁽²⁾		66,314		25,185		—		—		—		—		91,499
Capital leases		749		381		366		474		179		—		2,149
Operating leases		3,754		2,744		1,726		1,170		970		3,079		13,443
Pension benefits		184		189		191		209		192		1,104		2,069
Total contractual obligations		$	79,949	$	849,310	$	2,283	$	1,853	$	1,341	$	4,183	$	938,919


⁽¹⁾	The Revolving Loan Facility is classified as long-term and amounts drawn are denoted as due based on the contractual maturity date.

(2) Amounts include contractual interest payments using the interest rates as of December 31, ~~2014~~2015 applicable to our variable interest debt instruments and stated fixed rates for all other debt instruments.

Income Taxes - Due to the uncertainty with respect to the timing of cash payments, the table above excludes unrecognized tax benefits. At December 31, ~~2014~~2015, unrecognized tax benefits of $76.38 million, including interest and penalties, were classified on our consolidated balance sheet in Other non-current liabilities and Non-current deferred income tax liabilities. We do not expect to make significant payments on these liabilities within the next year. For further information, refer to Note 1211—“Income Taxes” to our consolidated financial statements in Item 8, Financial Statements and Supplementary Data, of this annual report.

Off-balance Sheet Arrangements

Our liquidity is not dependent on the use of off-balance sheet financing arrangements other than in connection with our operating leases. We also periodically maintain standby letters of credit for purchase of inventory, contract performance on certain sales contracts and other guarantees of our performance.

CRITICAL ACCOUNTING POLICIES

The judgments, assumptions and estimates used by management to prepare our U.S. GAAP consolidated financial statements are based on our historical experiences, current trends and understanding of current facts and circumstances. However, actual results could differ from our judgments, assumptions and estimates, and such differences could be material. Some of our accounting estimates are considered critical as they are both important to the portrayal of our financial condition and results, and require management to make significant, subjective and complex judgments. We believe the following accounting estimates are most critical to aid in fully understanding and evaluating our results. Note 2—“Summary of Significant Accounting Policies” to our consolidated financial statements in Item 8, Financial Statements and Supplementary Data, of this annual report expands upon the discussion of our Company's accounting policies.

Inventories Reserve—We write down our inventory for excess, slow moving and obsolescence to the net realizable value based upon assumptions about future demand and market conditions, such as potential uses, likelihood that overstocked inventory will be sold and the expected selling prices of the inventory. If actual market conditions are less favorable than those we project, additional write-downs may be required. As of December 31, ~~2014~~2015, the estimated reserve for excess, slow moving and obsolete inventory was $75.41 million or 32.37% of the gross inventory balance. During 2014, we recorded a charge of $9.2 million to adjust certain inventory to its net realizable value in connection with our Inventory Optimization Program.

Impairment of property, plant and equipment and finite-lived intangible assets—On a quarterly basis, we review our long-lived asset groups for indicators, such as, a significant decrease in the market price of an asset group, a significant adverse change in the manner in which we are using an asset group, or its physical condition. For purposes of this test, we group long-lived assets at the lowest level of identifiable cash flows, which we have determined to be our key manufacturing locations or combinations thereof. The recoverability of the carrying amount is tested by estimating the undiscounted future cash flows anticipated to be generated by the particular asset(s) being tested for impairment. The key assumptions in the discounted cash flow analysis are the discount rate and the projected cash flows. If our assumptions on discount rates and future cash flows change as a result of events or circumstances, and we believe these assets may have declined in value, we may record impairment charges, resulting in lower profits. During 2015, we concluded that the carrying amount of certain patented technologies exceeded their fair value, and we recognized impairment on these finite-lived intangible assets.

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~~events~~Impairment orof ~~circumstances,~~goodwill and indefinite-lived intangible assets—During 2015, we ~~believe~~performed ~~these~~step ~~assets~~1 ~~may~~of ~~have~~the ~~declined~~two-step ingoodwill ~~value~~test for our one reporting unit as of October 1st. We used a discounted cash flow analysis utilizing Level 3 inputs, wea ~~may~~guideline ~~record~~public company market approach, and a comparable transaction market approach to determine the fair value of our one reporting unit. Inputs considered for the 2015 goodwill impairment ~~charges~~assessment included, ~~resulting~~but inwere ~~lower~~not ~~profits~~limited to: assumptions about future revenue and cost growth rates, discount rates and companies which we identified as peers. As a result of the 2015 assessment, we concluded that the fair value of our reporting unit exceeded the carrying amount by a significant margin.

~~Impairment~~During ~~of goodwill and indefinite-lived intangible assets—For our annual testing period of October 1st~~2015, we performed ~~either~~a ~~step~~quantitative 0impairment orassessment ~~step~~relative 1to ~~of the two-step goodwill test for~~ our ~~reporting~~trade ~~units as existed on October 1st~~names. We used athe ~~discounted~~relief ~~cash~~from ~~flow~~royalty ~~analysis~~method ~~utilizing Level 3 inputs, a guideline public company market approach, and a comparable transaction market approach~~ to determine the fair value of the ~~reporting units~~brands. Quantitative factors considered for the 2015 brand name impairment assessment included, but were not limited to,: ~~assumptions about future~~ revenue ~~and~~projections, ~~cost~~ growth rates, ~~discount~~royalty rates, ~~and~~discount ~~the~~rates ~~amount~~and oftax ~~future capital expenditures~~rates. As a result of ~~the~~this ~~2013~~ assessment, weit ~~concluded~~was determined that the fair ~~values~~value of ~~each~~these assets exceeded their carrying amounts. The results of the indefinite-lived intangible assets impairment test showed an excess of fair value to book value in total, but one of our ~~reporting~~brand ~~units~~names ~~exceeded~~had ~~their~~a carrying ~~amounts~~amount bywhich aexceeded ~~significant~~its ~~margin~~fair value.

During 2014, we performed a step 1 goodwill test for our one reporting unit as of October 1st. Inputs considered for the 2014 goodwill impairment assessment included, but were not limited to: assumptions about future revenue and cost growth rates, discount rates, and companies which we identified as peers. As a result of the 2014 assessment, we concluded that the fair value of our reporting unit exceeded the carrying amount by a significant margin.

During 2014, we performed a quantitative impairment assessment relative to our trade names. We used the relief from royalty method to determine the fair value of the brands. Quantitative factors considered for the 2014 brand name impairment assessment included, but were not limited to: revenue projections, growth rates, royalty rates, discount rates, and tax rates. As a result of this assessment, it was determined that the fair value of these assets exceeded their carrying amounts. The results of the indefinite-lived intangible assets impairment test showed an excess of fair value to book value.

Valuation of intangibles associated with business combinations—We are required to estimate the fair value and useful lives of assets acquired and liabilities assumed, including intangible assets, in a business combination. Under the income approach valuation technique, we primarily use variations of the discounted cash flow method, such as the relief from royalty method and excess earnings method to value intangibles. Judgment used in the valuation of intangible assets can include the cash flows that an asset is expected to generate per management’s projections, royalty rates, growth rates, customer attrition rates, obsolescence curve rates, present value factors, tax shield benefit factors, the weighted average cost of capital and discount rates. We believe that the assumptions made are comparable to those that market participants would use in making estimates of fair value. Additionally, determining the expected life of an intangible asset requires management’s judgment and is based on the evaluation of various factors, including the competitive environment and customer history. We have determined our trade names to have indefinite lives because we plan to use these names into perpetuity. If actual results are not consistent with our estimates, we may be exposed to impairment charges.

Income taxes—We are required to estimate our income taxes in each of the jurisdictions in which we operate. ~~Significant~~The ~~judgment~~calculation isof ~~required in determining~~ our ~~provision for~~ income taxes, ~~our~~involves ~~deferred~~the ~~taxes~~application ~~including~~of ~~valuation~~complex ~~allowances~~tax ~~required~~laws ~~against~~and ~~the~~regulations ~~net~~in ~~deferred~~a ~~tax~~multitude ~~assets,~~of ~~and~~jurisdictions ~~evaluating~~across our ~~tax~~global ~~positions~~operations. ~~Our~~ASC ~~income~~740 ~~tax~~requires ~~returns~~that ~~are~~a ~~subject~~tax tobenefit ~~review~~from byan ~~various~~uncertain ~~U.S.~~tax ~~and~~position ~~foreign~~may ~~taxing~~be ~~authorities. As~~recognized ~~such,~~when weit ~~recorded~~is ~~unrecognized~~more ~~tax~~likely ~~benefits~~than ~~for~~not that the ~~positions~~position ~~that~~will webe ~~believe~~sustained ~~may~~upon beexamination, ~~challenged~~including byresolutions ~~these~~of ~~taxing~~any ~~authorities~~related ~~based~~appeals or litigation processes, on the basis of technical merits. Our income tax returns are subject to review by various U.S. and foreign taxing authorities. The total amount of unrecognized tax benefits as of December 31, ~~2014~~2015 was $76.38 million, including accrued interest and penalties. If the unrecognized tax benefits were recognized in our consolidated financial statements, $76.38 million would affect income tax expense and our related effective tax rate. The ultimate outcome of tax matters may differ from our estimates and assumptions. Unfavorable settlement of any particular issue may result in increased income tax expense. Favorable resolution could result in reduced income tax expense.

The accounting estimate for valuation allowances against deferred tax assets is a critical accounting estimate because judgment is required in assessing the likely future utilization of our deferred tax assets. The Company considers all positive and negative evidences in making this assessment, including: (i) future reversals of existing taxable temporary differences, (ii) future taxable income exclusive of reversing temporary differences and carryforwards, (iii) taxable income in prior carryback years and (iv) tax planning strategies that would, if necessary, be implemented. In ~~2014~~2015, we concluded it was necessary to maintain a valuation allowance of $4956.86 million on $7978.59 million of deferred tax assets as we do not expect to realize the tax benefits primarily arising from ~~losses in the U.S. and~~ interest deductions in the U.S. and ~~Portugal. The gross deferred tax assets primarily related to limitations on interest deductions in the U.S. and Portugal, and~~ losses ~~recognized~~ in the U.S. ~~The~~ ~~ultimate outcome of tax matters may differ from our estimates~~ and ~~assumptions. Unfavorable settlement of any particular issue may require the use of cash and could result~~ in ~~increased~~various ~~income~~foreign ~~tax expense~~entities. ~~Favorable resolution could result in reduced income tax expense.~~

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RECENTLY ISSUED ACCOUNTING STANDARDS

Refer to Note 2—“Summary of Significant Accounting Policies” to our consolidated financial statements in Item 8, Financial Statements and Supplementary Data, of this annual report for a discussion of recently issued accounting standards.

Item 7A.Quantitative and Qualitative Disclosures About Market Risk

Market risk is the potential economic loss arising from adverse changes in market factors. Our exposure to financial market risks results primarily from fluctuations in commodity prices, interest rates and foreign currency exchange rates. We normally

do not use derivative financial instruments to hedge these exposures (except as described below), nor do we use derivatives for trading purposes.

Commodity Price Risk. In our manufacturing operations, we rely heavily on certain raw materials (principally rod, polymers and synthetic fibers) and energy sources (principally electricity, natural gas and propane). We are exposed to changes in the prices of these raw materials and energy sources due to, among other things, fluctuations in foreign and domestic production capacity, availability, consumption and foreign currency exchange rates. Our raw material and energy costs are unpredictable and subject to a variety of factors outside our control. We monitor the cost of our raw materials and pass along price increases and decreases accordingly. We have not entered into any commodity contracts to manage the exposure on forecasted purchases of raw materials.

Interest Rate Risk. Our variable rate debt may be sensitive to fluctuations in interest rates. Variable-rate indebtedness totaled $393.1 million at December 31, 2014. Our Term Loan due 2017 and Revolving Loan Facility contain variable rate debt, which accrues interest based on target interest indexes (LIBOR and prime) subject to certain floors, plus an applicable spread as set forth in the Credit Agreement. In our present condition, a hypothetical 10% increase in LIBOR would not result in any additional interest expense on our Term Loan due 2017 balance as the current variable rate would still be below the 1.25% LIBOR floor. Also, a hypothetical 10% increase in the weighted average interest rate on our borrowings under the Revolving Loan Facility would not have a material impact on interest expense considering the outstanding amount at December 31, 2014. Actual changes in interest rates may differ from hypothetical changes. 32

~~Foreign~~Table Currency Exchange Rate Risk. Fluctuations in foreign currency exchange rates result in increases or decreases in our foreign currency exchange gains (losses). Our consolidated financial statements are prepared in U.S. dollars, but the assets and liabilities of certain of our foreign subsidiaries are denominated in foreign currencies, which create exposure to changes in foreign currency exchange rates. The activity in the Foreign currency exchange gains (losses), net line item included in our consolidated statements of operations, primarily results from foreign currency exchange rate fluctuations related to intercompany loans denominated in U.S. dollars with subsidiaries whose functional currency is the euro, Polish złoty and Mexican peso. At December 31, 2014, we had intercompany loans that required remeasurement in the aggregate amount of $408.3 million. For the year ended December 31, 2014, we recognized unrealized foreign currency exchange losses of $51.4 million on these intercompany loans. The foreign currency exchange gains and losses recognized as a result of the remeasurement are unrealized until such time that the loans are paid. The unrealized foreign currency exchange gains (losses) due to a hypothetical 10% change in the U.S. dollar to the euro exchange rate, the Polish złoty exchange rate and the Mexican peso exchange rate are shown in the following table:Contents

	Year ended December 31,
	2014
	(in thousands)
	+10%			-10%
Unrealized foreign currency exchange gains (losses) due to 10% rate movement:
U.S. dollar to euro	$	(82,375	)	$	6,153
U.S. dollar to Polish złoty	(20,716		)	(1,598		)
U.S. dollar to Mexican peso	(2,620		)	(1,340		)

and subject to a variety of factors outside our control. We monitor the cost of our raw materials and pass along price increases and decreases accordingly. We have not entered into any commodity contracts to manage the exposure on forecasted purchases of raw materials.

~~From~~Interest ~~time~~Rate Risk. Our variable rate debt may be sensitive to ~~time~~fluctuations in interest rates. Variable-rate indebtedness totaled $348.8 million at December 31, as2015. Our ~~market~~Term ~~conditions~~Loan ~~indicate~~due 2017 and Revolving Loan Facility contain variable rate debt, wewhich ~~will~~accrues ~~enter~~interest ~~into~~based ~~foreign~~on ~~currency~~target ~~contracts~~interest indexes (LIBOR and prime) subject to ~~manage~~certain floors, plus an applicable spread as set forth in the ~~risks~~Credit ~~associated~~Agreement. In ~~with~~our ~~anticipated~~present ~~future~~condition, ~~transactions~~a ~~and~~hypothetical ~~current~~10% increase in LIBOR would not result in any additional interest expense on our Term Loan due 2017 balance ~~sheet~~as ~~positions~~the ~~that~~current ~~are~~variable rate would still be below the 1.25% LIBOR floor. Also, a hypothetical 10% increase in ~~currencies~~the ~~other~~weighted ~~than~~average interest rate on our borrowings under the ~~functional~~Revolving Loan Facility would not have a material impact on interest expense considering the outstanding amount at December 31, 2015. Actual changes in interest rates may differ from hypothetical changes.

Foreign Currency Exchange Rate Risk. Fluctuations in foreign currency exchange rates result in increases or decreases in our foreign currency exchange gains (losses). Our consolidated financial statements are prepared in U.S. dollars, but the assets and liabilities of certain of our foreign subsidiaries are denominated in foreign currencies, which create exposure to changes in foreign currency exchange rates. The activity in the Foreign currency exchange gains (losses), net line item included in our consolidated statements of operations, primarily results from foreign currency exchange rate fluctuations related to intercompany loans denominated in U.S. dollars with subsidiaries whose functional currency is the euro, Polish złoty and Mexican peso. At December 31, 2015, we had intercompany loans that required remeasurement in the aggregate amount of $368.5 million, of which $270.7 million were with a subsidiary whose functional currency is the euro. For the year ended December 31, 2015, we recognized unrealized foreign currency exchange losses of $27.8 million on these intercompany loans. The foreign currency exchange gains and losses recognized as a result of the remeasurement are unrealized until such time that the loans are paid. The unrealized foreign currency exchange gains (losses) due to a hypothetical 10% change in the exchange rates of the U.S. dollar to the euro, Polish złoty and Mexican peso are shown in the following table:



	Year ended December 31,
	2015
	(in thousands)
	+10%			-10%
Unrealized foreign currency exchange gains (losses) due to 10% rate movement:
U.S. dollar to euro	$	(73,297	)	$	9,638
U.S. dollar to Polish złoty	(18,432		)	(1,125		)
U.S. dollar to Mexican peso	(1,239		)	(779		)

At times, we have partially hedged foreign currency exchange rate volatility through the use of derivative instruments. During

2014, we entered into cross-currency swaps with an aggregate notional value of $300.0 million, and during 2015, we entered into a cross-currency swap with a notional value of $125.0 million to hedge exposures to foreign currency exchange rate risk. Among other things, the table below includes the potential change in fair value of these instruments related to a hypothetical 10% change in the foreign currency exchange rates. Refer to Note 7—“Derivative Financial Instruments” to our consolidated financial statements included in Item 8, Financial Statements and Supplementary Data, of this annual report for further information on these cross-currency swap contracts.



Cross-currency swaps:
Fair value at December 31, 2014	$	16,133
Unrealized gain for the twelve months ended December 31, 2015	31,178
Fair value at December 31, 2015	47,311
Change in fair value due to hypothetical 10% foreign currency exchange rate movement	42,350

Notwithstanding our efforts to mitigate some foreign currency exchange rate risk, we do not hedge all of our foreign currency

exposures, and there can be no assurance that our mitigating activities related to the exposures that we hedge will adequately

protect us against risks associated with foreign currency fluctuations.

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currencies of our operations. Notwithstanding our efforts to mitigate some foreign currency exchange rate risk, we do not hedge all of our foreign currency exposures, and there can be no assurance that our mitigating activities related to the exposures that we hedge will adequately protect us against risks associated with foreign currency fluctuations.

In late September 2014, we entered into cross-currency swaps with three counterparties to hedge exposures to foreign currency exchange risk. The notional amount and unrealized gain on our outstanding cross-currency swap contracts are shown in the table below. In addition, this table shows the change in fair value of these swaps assuming a hypothetical foreign currency exchange rate movement of 10% as of December 31, 2014.

	Year ended December 31,
	2014
	(in thousands)
Cross-currency swaps:
Notional amount	$	300,000
Unrealized gain	16,133
Change in fair value due to 10% foreign currency exchange rate movement	34,124

Refer to Note 8—“Derivative Financial Instruments” to our consolidated financial statements included in Item 8, Financial Statements and Supplementary Data, of this annual report.

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Item 8.Financial Statements and Supplementary Data

Index to Consolidated Financial Statements	Page
Report of Independent Registered Public Accounting Firm	3635
Consolidated Balance Sheets as of December 31, 2014 and December 31, 2013	37
Consolidated Balance Sheets as of December 31, 2015 and December 31, 2014	36
Consolidated Statements of Operations for the three years ended December 31, 2014	38
Consolidated Statements of Operations for the three years ended December 31, 2015	37
Consolidated Statements of Comprehensive Loss for the three years ended December 31, 2014	39
Consolidated Statements of Comprehensive Loss for the three years ended December 31, 2015	38
Consolidated Statements of Stockholders’ Equity for the three years ended December 31, 2014	40
Consolidated Statements of Stockholders’ Equity (Deficit) for the three years ended December 31, 2015	39
Consolidated Statements of Cash Flows for the three years ended December 31, 2014	41
Consolidated Statements of Cash Flows for the three years ended December 31, 2015	40
Notes to Consolidated Financial Statements	4241

3534

Report of Independent Registered Public Accounting Firm

The Board of Directors

WireCo WorldGroup (Cayman) Inc.:

We have audited the accompanying consolidated balance sheets of WireCo WorldGroup (Cayman) Inc. and subsidiaries (the Company) as of December 31, ~~2014~~2015 and ~~2013~~2014, and the related consolidated statements of operations, comprehensive loss, stockholders’ equity (deficit), and cash flows for each of the years in the three‑-year period ended December 31, ~~2014~~2015. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of WireCo WorldGroup (Cayman) Inc. and subsidiaries as of December 31, ~~2014~~2015 and ~~2013~~2014, and the results of their operations and their cash flows for each of the years in the three‑-year period ended December 31, ~~2014~~2015, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Kansas City, Missouri

March 310, ~~2015~~2016

3635

WIRECO WORLDGROUP (CAYMAN) INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except share and per share data)

	December 31, 2014			December 31, 2013
	December 31, 2015			December 31, 2014
Assets
Current assets:
Cash and cash equivalents	$	5821,~~195~~060		$	3458,~~987~~195
Restricted cash	1,~~565~~522			21,~~887~~565
Accounts receivable, net	~~143~~124,~~068~~463			~~148~~143,~~564~~068
Other receivables	2,~~305~~779			72,~~196~~305
Inventories, net	~~225~~186,~~075~~964			~~228~~225,~~245~~075
Current deferred income tax assets	3,867			5,468
Prepaid expenses and other current assets	8,133			12,976
Prepaid expenses and other current assets	12,976			5,461
Total current assets	$	344,921		$	443,184
Total current assets	$	447,051		$	432,808
Property, plant and equipment, net	283,655			319,198
Property, plant and equipment, net	319,198			366,338
Intangible assets, net	102,765			125,578
Intangible assets, net	125,578			150,287
Goodwill	181,738			188,925
Goodwill	188,925			198,329
Deferred financing fees, net	9,118			15,425
Deferred financing fees, net	15,425			22,702
Non-current deferred income tax assets	1,459			1,413
Non-current deferred income tax assets	1,123			8,078
Derivative assets	47,519			16,133
Other non-current assets	279,~~551~~272			2011,~~673~~418
Total assets	$	1980,~~124,851~~447		$	1,~~199~~121,~~215~~274
Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of long-term debt	$	8,948		$	19,113
Current maturities of long-term debt	$	19,113		$	14,933
Interest payable	6,159			6,322
Interest payable	6,322			6,731
Accounts payable	72,153			98,914
Accounts payable	98,914			76,181
Accrued compensation and benefits	18,516			19,117
Accrued compensation and benefits	19,117			17,873
Other current liabilities	22,967			20,173
Current deferred income tax liabilities	311			742
Total current liabilities	$	128,743		$	163,639
Other current liabilities	20,173			16,260
Long-term debt, excluding current maturities	820,208			854,042
Total current liabilities	$	163,950		$	132,720
Non-current deferred income tax liabilities	34,214			43,469
Long-term debt, excluding current maturities	854,042			862,492
Other non-current liabilities	13,711			15,861
Non-current deferred income tax liabilities	46,735			75,763
Total liabilities	$	996,876		$	1,077,011
Other non-current liabilities	15,861			32,007
Total liabilities	$	1,080,588		$	1,102,982
Commitments and contingencies
Stockholders’ equity:
Stockholders’ equity (deficit):
Common stock, $0.01 par value. 3,000,000 shares authorized; 2,054,374 and 2,053,174 shares issued, respectively, 2,005,205 and 2,004,005 shares outstanding, respectively	$	21		$	21
Common stock, $0.01 par value. 3,000,000 shares authorized; 2,054,374 and 2,005,205 shares issued and outstanding, respectively, at December 31, 2015 and December 31, 2014	$	21		$	21
Additional paid-in capital	~~232~~240,~~883~~379			~~225~~232,~~106~~883
Accumulated other comprehensive loss	(4880,~~579~~694		)	(1848,~~527~~579		)
Accumulated deficit	(~~125~~164,~~626~~263		)	(94125,~~809~~626		)
Treasury stock, at cost; 49,169 shares at December 31, 2014 and 2013	(14,465		)	(14,465		)
Treasury stock, at cost; 49,169 shares at December 31, 2015 and 2014	(14,465		)	(14,465		)
Total stockholders’ equity attributable to WireCo WorldGroup (Cayman) Inc.	$	44,234		$	97,326
Total stockholders’ equity (deficit) attributable to WireCo WorldGroup (Cayman) Inc.	$	(19,022	)	$	44,234
Non-controlling interests	292,593			~~(1,093~~29		)
Total stockholders’ equity	$	44,263		$	96,233
Total stockholders’ equity (deficit)	$	(16,429	)	$	44,263
Total liabilities and stockholders’ equity	$	1980,~~124,851~~447		$	1,~~199~~121,~~215~~274

The accompanying notes are an integral part of the consolidated financial statements.

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WIRECO WORLDGROUP (CAYMAN) INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(in thousands)

	Years ended December 31,
	2014			2013			2012
	2015			2014			2013
Net sales	$	~~856~~683,~~760~~953		$	~~821~~856,~~055~~760		$	~~742~~821,~~689~~055
Cost of sales	(~~648~~522,~~515~~514		)	(~~622~~648,~~306~~515		)	(~~578~~622,~~934~~306		)
Gross profit	~~208~~161,~~245~~439			~~198~~208,~~749~~245			~~163~~198,~~755~~749
Other operating expenses:
Selling expenses	(4437,~~417~~573		)	(4144,~~661~~417		)	(3241,~~527~~661		)
Administrative expenses	(8276,~~361~~937		)	(8882,~~598~~361		)	(7188,~~267~~598		)
Amortization expense	(108,~~513~~945		)	(1710,~~072~~513		)	(1417,~~766~~072		)
Total other operating expenses	(~~137~~123,~~291~~455		)	(~~147~~137,~~331~~291		)	(~~118~~147,~~560~~331		)
Operating income	7037,~~954~~984			5170,~~418~~954			4551,~~195~~418
Other income (expense):
Interest expense, net	(7870,~~477~~586		)	(8078,~~830~~477		)	(6480,~~842~~830		)
Foreign currency exchange gains (losses), net	(361,~~298~~939		)	13(36,~~584~~298		)	2013,~~170~~584
Loss on extinguishment of debt	~~(617~~—		)	—(617		)	~~(2,358~~—		)
Other income (expense), net	24(845		)	~~(635~~24		)	(~~2,462~~635		)
Total other expense, net	(~~115~~73,~~368~~370		)	(67115,~~881~~368		)	(4967,~~492~~881		)
Loss before income taxes	(4435,~~414~~386		)	(1644,~~463~~414		)	(416,~~297~~463		)
Income tax benefit (expense)	~~15,641~~(122		)	~~(10~~15,~~541~~641		)	(1310,~~877~~541		)
Net loss	(2835,~~773~~508		)	(2728,~~004~~773		)	(1827,~~174~~004		)
Less: Net income (loss) attributable to non-controlling interests	23,~~044~~129			~~(545~~2,044		)	(~~2,710~~545		)
Net loss attributable to WireCo WorldGroup (Cayman) Inc.	$	(3038,~~817~~637	)	$	(2630,~~459~~817	)	$	(1526,~~464~~459	)

The accompanying notes are an integral part of the consolidated financial statements.

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WIRECO WORLDGROUP (CAYMAN) INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Loss

(in thousands)

	Years ended December 31,
	2014			2013			2012
	2015			2014			2013
Net loss	$	(2835,~~773~~508	)	$	(2728,~~004~~773	)	$	(1827,~~174~~004	)
Other comprehensive income (loss):
Foreign currency translation gain (loss)	(3132,~~038~~954		)	5(31,~~838~~038		)	105,~~963~~838
Pension benefits	64274			~~(582~~64		)	~~136~~(582		)
Total other comprehensive income (loss)	$	(3032,~~974~~680	)	$	5(30,~~256~~974	)	$	115,~~099~~256
Comprehensive loss	(5968,~~747~~188		)	(2159,~~748~~747		)	(721,~~075~~748		)
Less: Comprehensive income (loss) attributable to non-controlling interests	12,~~122~~564			~~(790~~1,122		)	(~~2,521~~790		)
Comprehensive loss attributable to WireCo WorldGroup (Cayman) Inc.	$	(6070,~~869~~752	)	$	(2060,~~958~~869	)	$	(420,~~554~~958	)

The accompanying notes are an integral part of the consolidated financial statements.

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WIRECO WORLDGROUP (CAYMAN) INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders' Equity (Deficit)

(in thousands)

	Common stock		Additional paid-in capital			Accumulated other comprehensive income (loss)			Accumulated deficit			Treasury stock			WireCo WorldGroup (Cayman) Inc. stockholders' equity (deficit)			Non-controlling interests			Total stockholders' equity (deficit)
Balance, December 31, 2011	$	20	$	216,924		$	(34,392	)	$	(52,886	)	$	—		$	129,666		$	(130	)	$	129,536
Increase in non-controlling interests from business acquisition	—		—			—			—			—			—			2,385			2,385
Purchase of non-controlling interest	—		—			—			—			—			—			(535		)	(535		)
Common stock issued related to exchange rights (1)	1		47			(546		)	—			—			(498		)	498			—
Repurchase of common stock	—		—			—			—			(14,465		)	(14,465		)	—			(14,465		)
Exercise of stock options	—		700			—			—			—			700			—			700
Share-based compensation	—		1,466			—			—			—			1,466			—			1,466
Other comprehensive income	—		—			10,910			—			—			10,910			189			11,099
Net loss	—		—			—			(15,464		)	—			(15,464		)	(2,710		)	(18,174		)
Balance, December 31, 2012	$	21	$	219,137		$	(24,028	)	$	(68,350	)	$	(14,465	)	$	112,315		$	(303	)	$	112,012
Share-based compensation	—		5,969			—			—			—			5,969			—			5,969
Other comprehensive income (loss)	—		—			5,501			—			—			5,501			(245		)	5,256
Net loss	—		—			—			(26,459		)	—			(26,459		)	(545		)	(27,004		)
Balance, December 31, 2013	$	21	$	225,106		$	(18,527	)	$	(94,809	)	$	(14,465	)	$	97,326		$	(1,093	)	$	96,233
Exercise of stock options	—		228			—			—			—			228			—			228
Share-based compensation	—		7,816			—			—			—			7,816			—			7,816
Other comprehensive loss	—		—			(30,052		)	—			—			(30,052		)	(922		)	(30,974		)
Net income (loss)	—		—			—			(30,817		)	—			(30,817		)	2,044			(28,773		)
Other	—		(267		)	—			—			—			(267		)	—			(267		)
Balance, December 31, 2014	$	21	$	232,883		$	(48,579	)	$	(125,626	)	$	(14,465	)	$	44,234		$	29		$	44,263
Share-based compensation	—		7,496			—			—			—			7,496			—			7,496
Other comprehensive loss	—		—			(32,115		)	—			—			(32,115		)	(565		)	(32,680		)
Net income (loss)	—		—			—			(38,637		)	—			(38,637		)	3,129			(35,508		)
Balance, December 31, 2015	$	21	$	240,379		$	(80,694	)	$	(164,263	)	$	(14,465	)	$	(19,022	)	$	2,593		$	(16,429	)

(1) During 2012, certain members of management exchanged non-voting shares in WireCo WorldGroup US Holdings, Inc. ("US Holdings") for shares in the WireCo WorldGroup (Cayman) Inc. at an exchange ratio of 1 to 1 pursuant to the Stockholders Agreement dated February 8, 2007. As a result, the Company's indirect ownership interest in U.S. Holdings increased from 95.2% to 97.6% and the non-controlling interest percentage decreased from 4.8% to 2.4%. For the shares exchanged, the Company issued shares of common stock at par value and recorded additional paid-in capital for the difference between the value of U.S. Holdings' shares and the par value of the Company's stock.

The accompanying notes are an integral part of the consolidated financial statements.

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Consolidated Statements of Cash Flows

(in thousands)

	Years ended December 31,
	2014			2013			2012
	2015			2014			2013
Cash flows from operating activities:
Net loss	$	(2835,~~773~~508	)	$	(2728,~~004~~773	)	$	(1827,~~174~~004	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	5044,~~558~~272			5850,~~534~~558			4758,~~493~~534
Amortization of debt issuance costs, discounts and premium	87,~~347~~885			98,~~026~~347			79,~~931~~026
Loss on extinguishment of debt	~~617~~—			—617			~~2,358~~—
Shared-based compensation	7,~~816~~496			57,~~969~~816			15,~~466~~969
Unrealized gain on derivative instruments	(1631,~~133~~178		)	—(16,133		)	—
Unrealized foreign currency exchange losses (gains), net	5127,~~392~~848			~~(13~~51,~~764~~392		)	(2813,~~085~~764		)
Provision for deferred income taxes	(135,~~286~~246		)	(7713,286		)	~~5,540~~(77		)
Other adjustments	(14,~~185~~008		)	2(1,~~010~~185		)	2,~~632~~010
Changes in assets and liabilities, net of business acquired and disposed:
Accounts receivable	(616,~~523~~670		)	8(6,~~320~~523		)	98,~~935~~320
Inventories	~~(17~~21,~~077~~615		)	24(17,~~987~~077		)	1224,~~361~~987
Prepaid expenses and other assets	21,~~553~~557			~~(821~~2,553		)	(~~3,194~~821		)
Interest payable	(~~1,770~~143		)	~~143~~(1,770		)	~~(212~~143		)
Accounts payable	26(17,~~969~~508		)	(926,~~019~~969		)	(199,~~531~~019		)
Other accrued liabilities	(41,~~087~~278		)	(34,~~153~~087		)	(63,~~966~~153		)
Net cash provided by operating activities	$	5943,~~418~~046		$	5559,~~151~~418		$	1355,~~554~~151
Cash flows from investing activities:
Capital expenditures	(2429,~~872~~802		)	(2924,~~318~~872		)	(4129,~~422~~318		)
Acquisition of business, net of cash acquired	~~(4,573~~—		)	—(4,573		)	~~(169,243~~—		)
Proceeds from sale of business	—			—			3,569
Other investing activities	—			1,951			(35		)
Other investing activities	1,951			(35		)	(3,136		)
Net cash used in investing activities	$	(29,802	)	$	(27,494	)	$	(29,353	)
Net cash used in investing activities	$	(27,494	)	$	(29,353	)	$	(210,232	)
Cash flows from financing activities:
Principal payments on long-term debt	(1417,~~232~~908		)	(2014,~~824~~232		)	(520,~~971~~824		)
Proceeds from issuance of long-term debt	—			—			414,150
Debt issuance costs paid	(1,067		)	—			(1,880		)
Debt issuance costs paid	—			(1,880		)	(16,819		)
Retirement of long-term debt	—			(26,946		)	—
Retirement of long-term debt	(26,946		)	—			(158,468		)
Borrowings under current Revolving Loan Facility	78,400			178,650			158,130
Net repayments under former revolving credit agreements	—			—			(44,696		)
Repayments under current Revolving Loan Facility	(104,845		)	(141,900		)	(176,406		)
Borrowings under current Revolving Loan Facility	178,650			158,130			181,016
Other financing activities	—			(437		)	—
Repayments under current Revolving Loan Facility	(141,900		)	(176,406		)	(130,740		)
Net cash used in financing activities	$	(45,420	)	$	(4,865	)	$	(40,980	)
Acquisition installment payments	—			—			(9,418		)
Effect of exchange rates on cash and cash equivalents	(4,959		)	(3,851		)	925
Purchase of non-controlling interest	—			—			(690		)
Increase (decrease) in cash and cash equivalents	$	(37,135	)	$	23,208		$	(14,257	)
Repurchase of common stock	—			—			(14,465		)
Cash and cash equivalents, beginning of year	58,195			34,987			49,244
Other financing activities	(437		)	—			700
Cash and cash equivalents, end of year	$	21,060		$	58,195		$	34,987
Net cash provided by (used in) financing activities	$	(4,865	)	$	(40,980	)	$	214,599
Effect of exchange rates on cash and cash equivalents	(3,851		)	925			3,660
Increase (decrease) in cash and cash equivalents	$	23,208		$	(14,257	)	$	21,581
Cash and cash equivalents, beginning of year	34,987			49,244			27,663
Cash and cash equivalents, end of year	$	58,195		$	34,987		$	49,244
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest, net of interest capitalized	$	6967,~~762~~772		$	7269,~~046~~762		$	6072,~~589~~046
Cash paid for income taxes, net of refunds	87,~~617~~047			8,~~042~~617			8,~~733~~042
Debt and capital leases assumed from business acquired	—			—			62,660

The accompanying notes are an integral part of the consolidated financial statements.

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WIRECO WORLDGROUP (CAYMAN) INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

(1) Organization and Description of the Business

The financial information included in this annual report on Form 10-K are those of WireCo WorldGroup (Cayman) Inc., its wholly-owned subsidiaries, including WireCo WorldGroup Inc., and subsidiaries in which it has a controlling interest (collectively, the “Company”). WireCo WorldGroup (Cayman) Inc., an exempted company incorporated under the laws of the Cayman Islands, is a holding company. The Company is a global manufacturer of both steel and synthetic rope, specialty wire and engineered products serving a diverse range of end markets, including, but not limited to, industrial and infrastructure, oil and gas (both offshore and onshore), fishing, mining, maritime, structures, poultry, and storage systems. The Company has manufacturing locations in North America, South America and Europe, and participates in joint ventures with locations in Europe and Asia.

(2) Summary of Significant Accounting Policies

(a)Principles of Consolidation

The consolidated financial statements include the accounts of the Company, including entities which are not wholly-owned, ~~but~~over which the Company has control. Non-controlling interests ~~are~~result ~~representative~~from of current and former management members owning 3.3% of the outstanding, non-voting shares of US Holdings and a 20.0% investment in Lankhorst Euronete - Indústria e Comércio Itda in Brazil, both indirect subsidiaries of the Company. ~~Equity transactions during 2012 changed the non-controlling interest percentage from 4.8% as of January 1, 2012 to its current 3.3%.~~ Non-controlling interests are presented as a component of the consolidated statements of operations, comprehensive loss and stockholders' equity (deficit) for the periods presented. All intercompany transactions and balances have been eliminated in consolidation. The consolidated financial statements have been prepared in United States ("U.S.") dollars and in accordance with U.S. generally accepted accounting principles (“GAAP”).

(b)Management Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts of certain assets, liabilities, revenue and expenses. Actual results could differ from those estimates.

(c)Comparability of Prior Year Financial Data

Certain reclassifications, ~~not affecting net income,~~ have been made to prior year amounts on the ~~Consolidated~~consolidated ~~Statements~~balance ofsheets ~~Operations~~ to conform to the current year presentation.

(d)~~Out-of-period~~Cash, ~~Errors~~Cash Equivalents and Restricted Cash

During the first quarter of 2014, the Company identified certain prior period accounting entries, which were not recorded in the proper functional currency. The Company corrected this error in the first quarter of 2014 resulting in an increase to Other Comprehensive Loss of $3,351 on the Consolidated Statement of Comprehensive Income (Loss). This error was not material to the current and any previously reported periods.

(e)Cash, Cash Equivalents and Restricted Cash

Cash and all highly liquid investments with an original maturity of three months or less are classified as cash and cash equivalents. Cash balances are recorded net of book overdrafts when a bank right-of-offset exists. All other book overdrafts are recorded in accounts payable. The change in book overdrafts is reported as a component of cash flows from operating activities. Book overdrafts are checks issued, but not presented to banks in excess of cash balances.

The Company maintains restricted cash deposits to support ~~product~~ performance guarantees issued to certain customers. These restricted cash deposits are included in a separate financial statement line item in the consolidated balance sheets.

(fe)Accounts Receivable, net

Accounts receivable are recorded at the invoiced amount, net of an allowance for doubtful accounts. The allowance is based on the specific identification of receivables the Company considers at risk, and for all other receivables, management considers historical losses, current aging of receivables and existing economic conditions. Account balances are written off against the allowance when it becomes evident that collection will not occur.

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Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share data)

Below is a rollforward of the allowance for doubtful accounts for the periods indicated:

	Years ended December 31,
	2014			2013			2012
	2015			2014			2013
Balance at beginning of year	$	32,~~458~~223		$	3,~~119~~458		$	23,~~012~~119
Charged to operations	~~786~~682			~~395~~786			~~1,718~~395
Deductions from reserve	(1,737		)	(170		)	(692		)
Deductions from allowance	(566		)	(1,737		)	(170		)
Effect of exchange rate changes	(284		)	114			81
Effect of foreign exchange rate changes	(159		)	(284		)	114
Balance at end of year	$	2,~~223~~180		$	32,~~458~~223		$	3,~~119~~458

(gf)Inventories, net

Inventories are stated at the lower of cost or market, determined using the first-in, first-out (“FIFO”) method, net of ~~reserves~~allowance for excess, slow-moving and obsolete inventory. Inventory costs include raw materials, labor and allocated manufacturing overhead.

(hg)Property, Plant and Equipment, net

Property, plant and equipment are stated at historical cost, less accumulated depreciation. Additions and improvements that extend the lives of assets or significantly increase capacity are capitalized, while expenditures for minor tools and equipment and repairs and maintenance are expensed as incurred. The Company capitalizes interest on qualified construction projects.

Depreciation is calculated on a straight-line basis over the estimated useful lives of the respective classes of assets as follows:



Asset category	Useful life
Buildings and improvements	10	-	40 years
Machinery and equipment	5	-	20 years
Capitalized software	2	-	7 years
Furniture, fixtures and office equipment	2	-	5 years

Long-lived assets, such as property, plant and equipment, are reviewed for impairment whenever events or changes in business circumstances indicate that the carrying amount of an asset group may not be fully recoverable. For purposes of this test, long-lived assets are grouped at the lowest level of identifiable cash flows. Recoverability of an asset group considered to be held-and-used is determined by comparing the carrying amount of the asset group to the estimated undiscounted future net cash flows expected to be generated by the use of the asset. If the carrying amount exceeds its estimated undiscounted net cash flows, the asset group’s carrying amount is reduced to its estimated fair value.

(ih)Intangible Assets and Goodwill

Intangible assets with finite lives, recognized in connection with business combinations, are amortized on a straight-line basis over the estimated useful lives of the respective classes of assets as follows:



Asset category	Useful life
Customer relationships	5	-	20 years
Patented and unpatented technology	5	-	20 years
Other	7 years

Finite-lived intangible assets are evaluated for impairment in accordance with the Company’s policy for long-lived assets as discussed above for property, plant and equipment.

Indefinite-lived intangible assets and goodwill, recognized in connection with business combinations, are not amortized. The Company reviews the carrying amount of indefinite-lived intangible assets and goodwill annually on October 1st, or upon the occurrence of events or changes in circumstances that indicate that the carrying amount of the goodwill or intangible assets may not be recoverable. Qualitative factors may be assessed to determine whether it is "more likely than not" that the fair value of the intangible asset/reporting unit is less than its carrying amount. If an election is made not to perform the qualitative assessment or the qualitative assessment indicates it is "more likely than not" that the fair value of the intangible asset/reporting unit is less than the carrying amount, the Company is required to calculate the fair value of the intangible asset/reporting unit. For goodwill, if the fair value of the reporting unit is less than its carrying amount, an indication of impairment exists for the ~~reporting unit and the entity must perform step two of the goodwill impairment test. An impairment loss is recognized for any excess of the carrying amount over the implied fair value.~~

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Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share data)

~~(j)Debt~~reporting ~~Issuance~~unit ~~Costs~~and the entity must perform step two of the goodwill impairment test. An impairment loss is recognized for any excess of the carrying amount over the implied fair value.

(i)Debt Issuance Costs

For revolving credit agreements, all costs are capitalized and amortized using the straight-line method over the term of the debt instrument as additional interest expense. All fees associated with the incurrence of other indebtedness are capitalized and amortized using the effective interest method over the term of the debt instrument. For non-substantial debt modifications to debt agreements other than revolving credit agreements, only fees paid directly to the lender are capitalized and amortized using the effective interest method over the term of the debt as additional interest expense. Third-party fees associated with non-substantial debt modifications (e.g. attorney fees) are expensed as incurred in either Administrative expenses or Loss on Extinguishment of Debt in the consolidated statements of operations, depending on the facts and circumstances. Original issuance discounts are recorded as a direct deduction from the face amount of the debt and amortized using the effective-interest method over the term of the debt instrument as additional interest expense. Premiums are recorded as an accretion to the face amount of the debt and amortized using the effective-interest method over the term as a reduction to interest expense.

(kj)Derivative Financial Instruments

Derivative financial instruments are measured at fair value and recorded on the balance sheet as either assets or liabilities. The notional value is marked-to-market each reporting period based on various factors, but typically the current spot rate for most of the Company's contracts. For derivative financial instruments that do not qualify for hedge accounting, gains and losses associated with these changes in the fair value are recorded to earnings, as opposed to other comprehensive income/loss, in the period of change. None of the Company's current contracts qualify for hedge accounting.

(lk)Fair Value of Financial Instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Inputs used to measure fair value are within a hierarchy consisting of three levels. Level 1 inputs represent unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 inputs represent unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability. Level 3 inputs represent unobservable inputs for the asset or liability.

(ml)Revenue Recognition

Revenues from the sale of inventories are recognized when the customer takes ownership and assumes the risk of loss, collection of the revenue is probable, persuasive evidence of an arrangement exists and the sales price is fixed and determinable. An allowance for sales returns is recorded as a reduction to revenue. The Company uses the percentage-of-completion method of accounting to recognize revenues and associated costs as work progresses for certain long-term synthetic rope manufacturing contracts. The Company measures the extent of progress towards completion based on the units produced.

Shipping and handling amounts charged to customers to deliver product are included in net sales and the associated shipping and handling costs are included in cost of sales. Sales taxes collected from customers and remitted to government authorities are recorded on a net basis and therefore are excluded from net sales in the consolidated statements of operations.

(nm)Share-based Compensation

Share-based compensation expense is measured at the grant date based on the fair value of the award and recognized on a straight-line basis over the vesting period in which the awards are earned. The Company uses the Black-Scholes valuation method to determine the fair value of stock options. The Company's stock price as of the grant date is the fair value of the restricted stock. The incremental compensation cost related to an award modification, which is calculated as the difference in the fair value of the options immediately before and immediately after the modification using the Black-Scholes option pricing model, is recognized immediately. Share-based compensation expense previously recognized is reversed when the employee fails to provide the requisite service and forfeits awards. The Company adjusts the expense when actual forfeitures are different from the Company's estimates.

(on)Pension Obligations

The Company provides defined benefit pension plans to certain active and former employees. Determination of pension obligations is based on assumptions, such as discount rates and rate of increase in compensation levels, made by management in consultation with independent actuaries. Any translational asset/liability, prior service cost/credit or actuarial gain/loss is recognized in other comprehensive income (loss) and expensed in future periods using the corridor approach. As of December 31, ~~2014~~2015 and ~~2013~~2014, the fair value of pension plan assets ~~in aggregate~~ was $~~2,652~~0 ~~(Level 3 assets)~~ and ~~$3,065, respectively, and~~ the fair value of projected benefit obligations in aggregate was $62,~~262~~472 and $62,~~889~~961, respectively. As a result, the Company's defined benefit pension plans were underfunded by ~~approximately $3,610 and $3,824 at December 31, 2014 and 2013, respectively, and were recorded as a net liability in the consolidated balance sheets.~~

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WIRECO WORLDGROUP (CAYMAN) INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share data)

~~(p)Income~~approximately ~~Taxes~~$2,472 and $2,961 at December 31, 2015 and 2014, respectively, and were recorded as a net liability in the consolidated balance sheets.

(o)Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis, and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which those temporary differences are expected to be recovered or settled. Deferred taxes are determined separately for each tax-paying component within each tax jurisdiction based on provisions of enacted tax law. A valuation allowance is established or maintained when, based on currently available information and other factors, it is "more likely than not" that all or a portion of a deferred tax asset will not be realized. The Company considers all positive and negative evidences in making this assessment, including: (i) future reversals of existing taxable temporary differences, (ii) future taxable income exclusive of reversing temporary differences and carryforwards, (iii) taxable income in prior carryback years and (iv) tax planning strategies that would, if necessary, be implemented.

The Company recognizes benefit of a tax return position under the threshold that only if a position is "more likely than not" to be sustained solely based on technical merits. If the recognition threshold is met, the tax benefit is measured and recognized as the largest amount of tax benefit that, in our judgment, is greater than fifty percent likely to be realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties as a component of income tax expense.

(qp)Research and Development Costs

Research and development costs are charged to Administrative expenses as incurred and totaled $54,~~289~~781, $45,~~001~~289 and $34,~~051~~001 in ~~2014~~2015, ~~2013~~2014 and ~~2012~~2013, respectively.

(rq)Foreign Currency Translation and Transactions

Assets and liabilities of subsidiaries whose functional currency is not the U.S. dollar were translated at the exchange rate in effect at the balance sheet date, and revenues and expenses were translated at average exchange rates for the period. Translation adjustments are included in other comprehensive income (loss).

Due to their short-term nature, gains and losses on the Company's intercompany loans are included in Foreign currency exchange gains (losses), net in the consolidated statements of operations along with all other gains and losses on foreign currency transactions.

(sr)Accounting Standards Adopted During ~~2014~~2015

~~The~~In ~~Company~~November ~~adopted~~2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ~~2013~~2015-1117, ~~Presentation~~Balance ofSheet anClassification ~~Unrecognized~~of ~~Tax~~Deferred ~~Benefit~~Taxes, ~~When~~which arequires ~~Net~~entities ~~Operating~~with ~~Loss Carryforward,~~ a ~~Similar~~classified ~~Tax~~balance ~~Loss,~~sheet orto apresent ~~Tax~~all ~~Credit~~deferred ~~Carryforward~~tax ~~Exists,~~assets ~~prospectively~~and onliabilities ~~January~~as ~~1, 2014~~noncurrent. ~~ASU~~The ~~2013-11~~standard ~~requires~~is ~~the~~effective ~~netting~~for ofreporting ~~unrecognized~~periods ~~tax~~beginning ~~benefits~~after ~~against~~December ~~all~~15, ~~same-jurisdiction~~2016; ~~deferred~~however, ~~tax~~early ~~assets~~adoption ~~for~~is apermitted. The ~~loss~~Company orearly ~~other~~adopted ~~carryforward~~the ~~that~~new ~~would~~guidance ~~apply~~ in ~~settlement~~the fourth quarter of ~~the~~2015 ~~uncertain~~and ~~tax~~applied ~~positions~~it retrospectively. The adoption of this standard only affected presentation on the consolidated balance sheet; there was no impact on the Company's operating results.

(ts)~~Accounting~~Recently ~~Standards~~ Issued ~~During~~Accounting ~~2014~~Standards

In May 2014, the ~~Financial Accounting Standards Board ("~~FASB") issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP. ~~The~~As ~~new~~a ~~standard~~result isof ~~effective~~a ~~for~~deferral ~~public~~of ~~entities~~the oneffective ~~January~~date 1,enacted ~~2017,~~in ~~with~~July ~~early adoption not permitted. As an EGC~~2015, wethe ~~plan~~new tostandard ~~apply~~would ~~this~~be ~~guidance on the public entity~~ effective ~~date as permitted~~ for ~~nonpublic~~public entities inon ~~the~~January ~~standard~~1, 2018. ASU 2014-09 allows the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect of ASU 2014-09 and has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

~~(3)~~In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern, which requires management to evaluate whether there are conditions and events that raise substantial doubt about the entity's ability to continue as a going concern within one year after the financial statements are issued, and to provide the related footnote disclosures when applicable. ~~Acquisition~~This ASU is effective for reporting periods beginning after December 15, 2016, with early adoption permitted. The Company does not expect the adoption of this standard will have a material impact on its consolidated financial statements and disclosures.

OnIn ~~July 12,~~April ~~2012~~2015, the ~~Company~~FASB ~~acquired~~issued ~~100%~~ASU of2015-03, ~~the~~Interest ~~outstanding~~- ~~shares~~Imputation of ~~Royal~~Interest, ~~Lankhorst~~to ~~Euronete~~reduce ~~Group~~complexity ~~B.V.~~in ~~(“Lankhorst”). Total~~accounting ~~consideration~~standards ~~for~~and ~~this~~make ~~transaction~~the ~~was~~presentation ~~$231,585, net~~ of ~~cash~~debt ~~acquired,~~issuance ~~consisting~~costs ofconsistent ~~cash~~with ~~paid~~the presentation of ~~$169,243~~debt ~~and~~discounts. This ~~assumed~~ASU requires debt ~~of $62,342.~~

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WIRECO WORLDGROUP (CAYMAN) INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share data)

~~The~~issuance ~~allocation~~costs to be presented in the balance sheet as a direct deduction from the carrying amount of the ~~purchase~~associated ~~price~~debt ~~was~~liability, rather than as ~~follows:~~an asset. ASU 2015-03 is limited to simplifying the presentation of debt issuance costs and there will be no effect on the income statement. This ASU requires retrospective adoption and is effective for the Company during the first quarter of 2016, with early adoption permitted. Upon adoption, the Company will present its remaining unamortized debt issuance costs as a direct deduction from the carrying amount of the related debt liability.

Working capital, net of cash acquired	$	71,788
Property, plant and equipment	104,654
Investments in non-consolidated affiliates	2,625
Intangible assets (1)	60,060
Goodwill	25,355
Other non-current liabilities, net	(692		)
Deferred income tax liabilities, net	(29,820		)
Assumed debt	(62,342		)
Non-controlling interests	(2,385		)
Net assets acquired	$	169,243

In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory, which changes the measurement principle for inventory from the lower of cost or market to the lower of cost and net realizable value. This ASU requires prospective adoption and is effective for annual reporting periods beginning after December 15, 2016 and interim periods within those annual periods, with early adoption permitted. The Company does not expect the adoption of this standard will have a material impact on its consolidated financial statements.

~~(1)~~In ~~The~~February ~~identifiable~~2016, ~~intangible~~the ~~assets~~FASB ~~acquired~~issued ~~consist~~ASU of2016-02, ~~two trade names~~Leases, ~~Lankhorst~~which ~~Ropes®~~aims ~~and~~to ~~Euronete™,~~make ~~valued~~leasing atactivities ~~$30,811,~~more ~~customer~~transparent ~~relationships~~and ofcomparable ~~$21,757,~~and ~~developed~~requires ~~technology~~substantially ofall ~~$7,162~~leases ~~and~~be ~~other~~recognized ~~intangibles.~~by ~~The~~lessees ~~trade~~on ~~names~~their ~~are~~balance ~~classified~~sheet as ~~indefinite~~a right-~~lived~~of-use ~~intangibles~~asset and ~~therefore~~corresponding lease liability, ~~are~~including ~~not~~leases ~~amortized.~~currently ~~The~~accounted ~~customer~~for ~~relationships~~as ~~and~~operating ~~developed~~leases. This ~~technology~~ASU ~~are~~is ~~finite-lived~~effective ~~intangibles~~for all interim and ~~amortized~~annual onreporting aperiods ~~straight-line~~beginning ~~basis~~after ~~over~~December ~~their~~15, ~~respective~~2018, ~~weighted-average~~with ~~amortization~~early ~~period,~~adoption ofpermitted. The ~~which~~Company is 9currently ~~years~~evaluating ~~for~~the ~~customer~~impact ~~relationships~~that ~~and~~the 12adoption ~~years~~of ~~for~~ASU ~~developed~~2016-02 ~~technology~~will have on our consolidated financial statements and related disclosures.

~~Operating results of Lankhorst are included in the consolidated statements of operations since the date of acquisition.~~(3) ~~The Company expensed $11~~Inventories,~~082~~ ofnet ~~direct acquisition costs associated with this acquisition in Administrative expenses for the year ended December 31, 2012.~~

On October 12, 2012, the Company acquired the remaining 40% of Lankhorst Euronete Australia PTY LTD, a joint venture located in Australia, for cash consideration of $690 and assumed debt of $318. Previously, this subsidiary was consolidated with the portion not owned by the Company reflected as non-controlling interests.

On November 12, 2012, the Company disposed of Lankhorst's yachting division for $3,569 and recognized a loss on disposal of $382.

(4) Inventories, net

The major classes of inventories were as follows as of the dates indicated:

	December 31, 2014		December 31, 2013
	December 31, 2015		December 31, 2014
Raw materials, net	$	8664,~~669~~826	$	7486,~~486~~669
Work in process, net	109,~~487~~535		1810,~~612~~487
Finished goods, net	~~127~~112,~~919~~603		~~135~~127,~~147~~919
Inventories, net	$	~~225~~186,~~075~~964	$	~~228~~225,~~245~~075

During 2014 ~~and 2013~~, the Company adjusted certain inventory to its net realizable value in connection with the Company's Inventory Optimization Program. As a result, the Company recognized a charge of $9,244 ~~and $2~~,~~970,~~ which is included in Cost of sales in the consolidated ~~statements~~statement of operations for the ~~years~~year ended December 31, 2014 ~~and 2013, respectively~~. The Inventory Optimization Program is designed to generate cash in the short-term instead of holding certain inventory for longer periods of time and to create efficiencies from a physical material movement perspective at the Company's manufacturing and distribution facilities. During 2014, the Company increased the breadth and depth of the Inventory Optimization Program, including initiating a plan to sell higher volumes of its slower moving inventory, which had historically sold at or above cost. This initiative resulted in sales below cost during 2014.

46(4) Property, Plant and Equipment, net

The components of property, plant and equipment, net were as follows as of the dates indicated:



	December 31, 2015			December 31, 2014
Land	$	43,043		$	48,306
Buildings and improvements	113,250			117,316
Machinery and equipment	263,756			281,527
Capitalized software	27,567			26,938
Furniture, fixtures and office equipment	9,614			9,588
Construction in progress	23,078			17,251
Property, plant and equipment	480,308			500,926
Less: Accumulated depreciation	(196,653		)	(181,728		)
Property, plant and equipment, net	$	283,655		$	319,198

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WIRECO WORLDGROUP (CAYMAN) INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share data)

~~(5) Property~~Depreciation expense was $35,327, ~~Plant~~$40,045 and ~~Equipment~~$41,462 ~~net~~for the years ended December 31, 2015, 2014 and 2013, respectively. Depending on the nature and use of the asset, depreciation expense is recorded in Cost of sales, Selling expenses and Administrative expenses in the consolidated statements of operations.

~~The~~(5) Intangible ~~components~~Assets ~~of property, plant~~ and ~~equipment,~~Goodwill ~~net were as follows as of the dates indicated:~~

	December 31, 2014			December 31, 2013
Land	$	48,306		$	54,422
Buildings and improvements	117,316			127,466
Machinery and equipment	281,527			288,117
Capitalized software	26,938			24,254
Furniture, fixtures and office equipment	9,588			13,254
Construction in progress	17,251			22,075
Property, plant and equipment	500,926			529,588
Less: Accumulated depreciation	(181,728		)	(163,250		)
Property, plant and equipment, net	$	319,198		$	366,338

Depreciation expense was $40,045, $41,462 and $32,727 for the years ended December 31, 2014, 2013 and 2012, respectively. Depending on the nature and use of the asset, depreciation expense is recorded in Cost of sales, Selling expenses and Administrative expenses in the consolidated statements of operations.

(6) Intangible Assets and Goodwill

The components of finite-lived intangible assets were as follows as of the dates indicated:

December 31, 2014

December 31, 2013

December 31, 2015

December 31, 2014

Grosscarryingamount

Accumulatedamortization

Netcarryingamount

Grosscarryingamount

Accumulatedamortization

Netcarryingamount

Finite-lived Assets

Customer relationships

~~124~~117,~~856~~459

(8790,~~406~~736

)

3726,~~450~~723

~~132~~124,~~397~~856

(8287,~~569~~406

)

4937,~~828~~450

Patented and unpatented technology

2217,~~216~~395

(10,~~539~~271

)

117,~~677~~124

2422,~~320~~216

(910,~~508~~539

)

1411,~~812~~677

Other

6,~~505~~214

(6,~~505~~214

)

—

76,~~193~~505

(6,~~966~~505

)

~~227~~—

Total finite-lived intangible assets

~~153~~141,~~577~~068

(~~104~~107,~~450~~221

)

4933,~~127~~847

~~163~~153,~~910~~577

(99104,~~043~~450

)

6449,~~867~~127

Amortization of intangible assets was $108,~~513~~945, $1710,~~072~~513 and $1417,~~766~~072 for the years ended December 31, ~~2014~~2015, ~~2013~~2014 and ~~2012~~2013, respectively. Using the exchange rates in effect at year -end, estimated amortization of finite-lived intangible assets as of December 31, ~~2014~~2015 was as follows:

2015	$	9,496
2016	$	8,180
2016	9,268
2017	6,677
2017	7,562
2018	3,123
2018	3,781
2019	2,886
2019	3,540
2020	2,653
Thereafter	1510,~~480~~328
Total	$	4933,~~127~~847

Intangible assets with indefinite lives are not amortized. The carrying amounts of trade names as of December 31, ~~2014~~2015 and ~~2013~~2014 were $7668,~~451~~918 and $8576,~~420~~451, respectively.

47The changes in the carrying amount of goodwill were as follows as of the dates indicated:



December 31, 2013	$	198,329
Foreign currency translation	(9,404		)
December 31, 2014	$	188,925
Foreign currency translation	(7,187		)
December 31, 2015	$	181,738

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WIRECO WORLDGROUP (CAYMAN) INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share data)

~~The~~(6) Borrowings ~~changes in the carrying amount of goodwill were as follows as of the dates indicated:~~

Long-term debt consisted of the following as of the dates indicated:

December 31, 2012	$	197,437
		December 31, 2015			December 31, 2014
Foreign currency translation	$	892
Borrowings under the Revolving Loan Facility		$	42,305		$	68,750
December 31, 2013	$	198,329
Term Loan due 2017		306,454			324,362
Foreign currency translation	$	(9,404	)
9.00% Senior Notes due 2017		56,000			56,000
December 31, 2014	$	188,925
9.50% Senior Notes due 2017		425,000			425,000
Other indebtedness		—			157
Total debt at face value		$	829,759		$	874,269
Less: Unamortized discount, net		(603		)	(1,114		)
Less: Current maturities of long-term debt		(8,948		)	(19,113		)
Total long-term debt		$	820,208		$	854,042

~~(7)~~Certain subsidiaries jointly and severally and fully and unconditionally guarantee, subject to customary release provisions, substantially all of the outstanding long-term debt. ~~Borrowings~~As of December 31, 2015, the Company was in compliance with all restrictive and financial covenants associated with its borrowings. Certain of the Company's debt agreements contain cross default provisions whereby the default of any agreement will result in the default of all agreements.

	December 31, 2014			December 31, 2013
Borrowings under the Revolving Loan Facility	$	68,750		$	32,000
Polish Debt paid in 2014	—			8,860
Term Loan due 2017	324,362			330,813
9.00% Senior Notes due 2017	56,000			82,500
9.50% Senior Notes due 2017	425,000			425,000
Other indebtedness	157			688
Total debt at face value	$	874,269		$	879,861
Less: Unamortized discount, net	(1,114		)	(2,436		)
Less: Current maturities of long-term debt	(19,113		)	(14,933		)
Total long-term debt	$	854,042		$	862,492

Certain subsidiaries jointly and severally and fully and unconditionally guarantee, subject to customary release provisions, substantially all of the outstanding long-term debt. As of December 31, 2014, the Company was in compliance with all restrictive and financial covenants associated with its borrowings. Certain of the Company's debt agreements contain cross default provisions whereby the default of any agreement will result in the default of all agreements.

Polish Debt paid in 2014

With the acquisition of Drumet on July 18, 2011, the Company assumed long-term debt with a face value of zł.91,700 and €1,100 (equivalent of $33,864 at closing) (“Polish Debt”). The Polish Debt bore no interest and required varied installment payments each calendar year end until December 31, 2014, the maturity date. The Company estimated the fair value of this non-interest bearing debt on the date of acquisition to be zł.74,998 and €897 (equivalent of $27,692 at closing) using an effective interest rate of 10.00%. The discounted value of the Polish Debt was accreted to the face value of the debt through interest expense. The Company paid off its Polish Debt at the end of 2014.

Senior Secured Credit Facilities - Revolving Loan Facility and Term Loan due 2017

On July 12, 2012, the Company entered into a credit agreement (“Credit Agreement”) with Goldman Sachs Bank USA and Deutsche Bank Securities Inc., as joint lead arrangers, and Fifth Third Bank, as the administrative and collateral agent, that provides for a $335,000 senior secured term loan (“Term Loan due 2017”) and a $145,000 senior secured revolving credit facility (“Revolving Loan Facility” and together with the Term Loan due 2017, the “Credit Facilities”), with sub-limits for letters of credit and swingline loans. The Term Loan due 2017 was issued at an original issue discount of 1.00% or $3,350. The Credit Facilities mature on February 15, 2017. The Term Loan due 2017 requires quarterly principal payments of approximately $830, which can be adjusted downward as a result of the annual excess cash flow payment, if applicable, as defined in the Credit Agreement. As of December 31, ~~2014~~2015 and ~~2013~~2014, the Company calculated an annual excess cash flow payment of $135,~~948~~781 and $313,~~124~~948, respectively, which is classified in Current maturities onof long-term debt in the consolidated balance sheets. A 2013 amendment to the Credit Agreement required proceeds from the Inventory Optimization Program be used to pay down the Term Loan due 2017 balance. The Company calculated a payment of $1,832 from these proceeds at December 31, 2014, which is classified in Current maturities onof long-term debt in the consolidated balance sheet.

48On June 24, 2015, the Company entered into a third amendment (the “Amendment”) to the Credit Agreement. The Amendment, among other things, amended the Credit Agreement to (i) update the Interest Coverage Ratio financial covenant for fiscal quarters ending June 30, 2015 and thereafter from a range of 1.75x to 2.00x to a fixed ratio covenant of 1.50x and (ii) reduce incremental capacity to the greater of (a) $75,000 and (b) 2.25:1.00 Senior Secured Leverage from the greater of (a) $125,000 and (b) 2.75:1.00 Senior Secured Leverage. During 2015, the Company paid $1,067 in debt issuance costs in connection with this Amendment that are being amortized to interest expense over the term of the debt instrument.

Borrowings under the Credit Facilities incur interest at a variable rate based upon the nature of the loan under the facility. Loans are designated as either (i) Alternate Base Rate (“ABR”) or (ii) Eurodollar loans. ABR loans incur interest at the higher of (x) the prime rate of Fifth Third Bank or (y) the federal funds rate plus 1/2 of 1.00% (the higher of (x) or (y) equals the “Base Rate”), plus a margin of 3.75%. Eurodollar loans incur interest at the applicable LIBOR, plus a margin of 4.75%. A Eurodollar loan is distinguished from an ABR loan in that a Eurodollar loan bears interest in reference to the applicable LIBOR. The Base Rate applicable to the Term Loan is subject to a 2.25% floor, and the LIBOR applicable to the Term Loan is subject to a 1.25% floor. In addition to paying interest on the outstanding principal balance under the Credit Agreement, the Company must pay a commitment fee to the lenders under the Revolving Loan Facility for unutilized commitments at a rate ranging from approximately 0.38% to 0.50%, based on the Company’s consolidated leverage. The Company must also pay customary arrangement fees, upfront fees, administration fees and letter of credit fees. Interest on ABR loans is payable on the last business day of each March, June, September and December, and interest on Eurodollar loans is payable on the last day of the applicable interest period for loans of three months or less and, for loans of more than three months, at the end of each three month period starting on the first day of the applicable interest period. The interest rate on the Term Loan due 2017 was 6.00%, 6.00% and 6.00% at December 31, 2015, 2014, and 2013, respectively. The weighted average interest rate on the Revolving Loan Facility was 5.38%, 5.38% and 4.95% at December 31, 2015, 2014, and 2013, respectively.

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WIRECO WORLDGROUP (CAYMAN) INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share data)

Borrowings under the Credit Facilities incur interest at a variable rate based upon the nature of the loan under the facility. Loans are designated as either (i) Alternate Base Rate (“ABR”) or (ii) Eurodollar loans. ABR loans incur interest at the higher of (x) the prime rate of Fifth Third Bank or (y) the federal funds rate plus 1/2 of 1.00% (the higher of (x) or (y) equals the “Base Rate”), plus a margin of 3.75%. Eurodollar loans incur interest at the applicable LIBOR, plus a margin of 4.75%. A Eurodollar loan is distinguished from an ABR loan in that a Eurodollar loan bears interest in reference to the applicable LIBOR. The Base Rate applicable to the Term Loan is subject to a 2.25% floor, and the LIBOR applicable to the Term Loan is subject to a 1.25% floor. In addition to paying interest on the outstanding principal balance under the Credit Agreement, the Company’s ~~must~~availability ~~pay a commitment fee to the lenders~~ under the Revolving Loan Facility ~~for~~was ~~unutilized~~$101,032 ~~commitments~~ at aDecember 31, ~~rate ranging from approximately 0~~2015.~~38%~~ Availability tois ~~0.50%,~~ based onupon the ~~Company’s~~maximum ~~consolidated~~borrowing ~~leverage. The Company must also pay customary arrangement fees~~capacity, ~~upfront~~less ~~fees,~~outstanding ~~administration~~borrowings ~~fees~~ and ~~letter~~letters of credit ~~fees. Interest on ABR loans is payable on the last business day of each March~~, ~~June, September~~ and ~~December,~~further ~~and~~restricted ~~interest~~by oncertain ~~Eurodollar~~covenants ~~loans~~in ~~is payable on~~ the ~~last~~Company's ~~day~~financing of the applicable interest period for loans of three months or less and, for loans of more than three months, at the end of each three month period starting on the first day of the applicable interest periodagreements. ~~The~~Outstanding ~~interest~~letters ~~rate~~of oncredit ~~the Term Loan due 2017 was 6%~~were $1, ~~6% and 6%~~ 663 at December 31, ~~2014, 2013, and 2012, respectively~~2015. ~~The~~Cash ~~weighted~~flows ~~average~~under ~~interest rate on~~ the Revolving Loan Facility ~~was~~are ~~5.38%,~~presented ~~4.95%~~gross ~~and~~based ~~7.00%~~on atthe ~~December 31,~~terms ~~2014,~~of ~~2013,~~the ~~and 2012, respectively~~arrangement.

The Company’s availability under the Revolving Loan Facility was $75,265 at December 31, 2014. Availability is based upon the maximum borrowing capacity, less outstanding borrowings and letters of credit, and further restricted by certain covenants in the Company's financing agreements. Outstanding letters of credit were $985 at December 31, 2014. Cash flows under the Revolving Loan Facility are presented gross based on the terms of the arrangement.

The Credit Agreement contains covenants that restrict the ability of the Company and guarantors to take certain actions, including, but not limited to: incurring indebtedness, incurring liens, paying dividends and making other distributions, limiting capital expenditures, engaging in mergers and acquisitions, selling property, engaging in transactions with affiliates or amending organizational documents. The Credit Agreement also contains customary affirmative covenants and events of default and requires the Company to comply with certain financial ratio maintenance covenants. During 2013, the Company entered into an amendment that among other things, amended the Credit Agreement to (i) update the total net leverage ratio financial covenant to a senior secured net leverage ratio financial covenant and (ii) modify certain defined terms used in the calculation of the Company's financial covenants. The amendment set the senior secured net leverage ratio at 3.50x with proposed step-downs thereafter to 3.25x effective December 31, 2014 and 3.00x effective June 30, 2016. During 2013, the Company paid $1,880 in debt issuance costs in connection with this Amendment that are being amortized to interest expense over the term of the debt instrument. The Senior Secured Credit Facilities are secured by a first-priority lien on all assets of the Company's subsidiaries, except assets at the Company’s Portuguese, Dutch, French and Brazilian subsidiaries.

9.00% Senior Notes due 2017 (formerly the 11.75% Senior Notes)

On July 12, 2012, the Company issued $82,500 aggregate principal amount of unsecured 11.75% Senior Notes due May 15, 2017 in a private placement pursuant to a note purchase agreement (the “Note Purchase Agreement”). On July 16, 2014, the Company entered into an amendment to the Note Purchase Agreement that reduced the interest rate from 11.75% to 9.00% on these senior notes ("9.00% Senior Notes") and provided a waiver for the notice of redemption. On July 17, 2014, the Company redeemed $26,500 of the $82,500 aggregate principal amount of the 9.00% Senior Notes, using available cash and cash drawn under the Revolving Loan Facility.

The terms applicable to the 9.00% Senior Notes, including covenants and events of default, are substantially the same as those applicable to the Company’s existing publicly registered 9.50% Senior Notes, except these senior notes do not include registration rights, accrue interest at another rate and have different redemption values. The Company may redeem the 9.00% Senior Notes, in whole or in part, ~~during the twelve-month period beginning on May 15, 2014~~ at ~~101.50% and 2015 and thereafter at~~ 100%.

9.50% Senior Notes due 2017

On May 19, 2010, the Company issued $275,000 aggregate principal amount of unsecured 9.50% Senior Notes due May 15, 2017 ("9.50% Senior Notes") at an original issue discount of $6,795, or 97.53%, of their aggregate principal amount under the indenture governing the 9.50% Senior Notes (the “Indenture”). On June 10, 2011, the Company issued an additional $150,000 aggregate principal amount of unsecured 9.50% Senior Notes at a premium of $6,236, or 104.75%, of their aggregate principal amount under the Indenture. Interest on the 9.50% Senior Notes is due semi-annually on May 15th and November 15th of each year. The effective interest rate on the aggregate principal amount of 9.50% Senior Notes, including debt issuance costs, is 10.39%. The 9.50% Senior Notes are redeemable at the Company’s option, in whole or in part, beginning on May 15, 2015 and thereafter at 100%. Additionally, the holders of the 9.50% Senior Notes have the right to put the 9.50% Senior Notes to the Company at 101% of their principal amount plus accrued and unpaid interest in the event the Company has a change of control.

Table of Contents

WIRECO WORLDGROUP (CAYMAN) INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share data)

10.39%. The 9.50% Senior Notes are redeemable at the Company’s option, in whole or in part, during the twelve-month period beginning on May 15, 2014 at 102.38% and 2015 and thereafter at 100%. Additionally, the holders of the 9.50% Senior Notes have the right to put the 9.50% Senior Notes to the Company at 101% of their principal amount plus accrued and unpaid interest in the event the Company has a change of control.

The Indenture contains various covenants including, but not limited to, limitations on: indebtedness, dividends and other capital distributions, sale of assets, transactions with affiliates, liens and issuances of preferred stock. The 9.50% Senior Notes are senior unsecured obligations that rank equally in right of payment with all of the Company's existing and future senior debt and the 9.50% Senior Notes are senior to the Company's existing and future subordinated debt. The 9.50% Senior Notes are

guaranteed, jointly and severally, on a senior unsecured basis by certain other Company subsidiaries.

Loss on Extinguishment of Debt

As a result of redeeming a portion of the 9.00% Senior Notes earlier than the stated maturity, the Company paid a call premium of approximately $400 and wrote-off $217 of unamortized debt issuance costs associated with the pro rata portion that was redeemed during 2014.

Concurrently with the issuance of the Term Loan due 2017 and 9.00% Senior Notes in 2012, the Company retired debt under its term loan with Deutsche Bank Trust Company America (“Term Loan due 2014”) and repaid indebtedness outstanding under all revolving credit agreements. Upon the retirement and termination of these credit facilities, the Company incurred a $2,358 loss on extinguishment of debt for unamortized debt issuance costs during the year ended December 31, 2012. Cash flows under the revolving credit agreement with HSBC Bank USA, National Association, as amended ("Revolving Credit Agreement"), the CASAR Revolving Credit Agreement, and the revolving credit agreement with Deutsche Bank AG, London Branch and Goldman Sachs Bank USA (“Euro Facility”) were presented on a net basis based on the terms of the arrangements.

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WIRECO WORLDGROUP (CAYMAN) INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share data)

on extinguishment of debt for unamortized debt issuance costs during the year ended December 31, 2012. Cash flows under the revolving credit agreement with HSBC Bank USA, National Association, as amended ("Revolving Credit Agreement"), the CASAR Revolving Credit Agreement, and the revolving credit agreement with Deutsche Bank AG, London Branch and Goldman Sachs Bank USA (“Euro Facility”) were presented on a net basis based on the terms of the arrangements.

These costs were recorded in Loss on extinguishment of debt in the consolidated statements of operations for the years ended December 31, 2014 and 2013.

Interest expense, net

Components of interest expense were as follows for the periods indicated:

	Years ended December 31,
	2014			2013			2012
	2015			2014			2013
Interest on long-term debt and revolvers	$	7062,~~720~~908		$	7370,~~420~~720		$	6073,~~215~~420
Amortization of debt issuance costs, discounts and premium	87,~~347~~885			98,~~026~~347			79,~~931~~026
Capitalized interest	(~~980~~550		)	(~~1,644~~980		)	(31,~~952~~644		)
Other	~~390~~343			28390			~~648~~28
Interest expense, net	$	7870,~~477~~586		$	8078,~~830~~477		$	6480,~~842~~830

Future Principal Payments on Long-Term Debt

The aggregate minimum principal payments required on the Company’s long-term debt as of December 31, ~~2014~~2015 ~~were~~are as follows:

2015	19,113
2016	$	8,948
2016	3,318
2017	820,811
2017	851,838
2018	—
2019	—
2020	—
Thereafter	—
Total	$	~~874~~829,~~269~~759

50The Company currently has $348,759 of long-term debt which matures on February 15, 2017 and $481,000 of long-term debt which matures on May 15, 2017. The Company plans to either raise additional equity capital or refinance its current long-term debt, or some combination thereof, in order to satisfy these obligations before they become due.

(7) Derivative Financial Instruments

To minimize the exposure to foreign currency fluctuations, derivative contracts are entered into from time to time.

During September 2014, the Company entered into cross-currency swaps with three counterparties to economically hedge exposures to foreign currency exchange risk related to its global operations. The notional value of the cross-currency swaps is $300,000, at a weighted average foreign currency exchange rate of $1.00 to €0.7820, and matures in February 2017. In accordance with the cross-currency swap agreements, on a semi-annual basis, the Company pays interest on €234,597 at a weighted average fixed rate of 8.79% and receives interest on $300,000 based on a fixed rate of 9.50%, which is included in Interest expense, net within the consolidated statements of operations.

During June 2015, the Company entered into a cross-currency swap with a counterparty to economically hedge exposures to foreign currency exchange risk related to its global operations. The cross-currency swap notional value is $125,000, at a foreign currency exchange rate of $1.00 to €0.9125, and matures in February 2017. In accordance with the cross-currency swap agreement, on a quarterly basis, the Company pays interest on €114,062 at a fixed rate of 8.94% and receives interest on $125,000 based on a fixed rate of 9.50%, which is included in Interest expense, net within the consolidated statements of operations.

The Company incurred settlements with each of its counterparties during 2015, which resulted in a net reduction in Interest

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WIRECO WORLDGROUP (CAYMAN) INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share data)

~~(8) Derivative~~expense, ~~Financial~~net ~~Instruments~~of $6,159 for the twelve months ended December 31, 2015.

ToIn ~~minimize~~March 2015, the ~~exposure~~Company toentered into a foreign currency forward contract to mitigate the exchange rate risk associated with fluctuations of the U.S. dollar to euro on internal cash movements associated with its global operations. Pursuant to the contract, ~~derivative~~the ~~contracts~~Company ~~are~~received ~~entered~~a ~~into~~notional ~~from~~value ~~time~~of $3,093 at a foreign currency exchange rate of $1.00 to ~~time~~€0.9700 on the settlement date of May 13, 2015. Upon cash settlement, the Company realized a $253 foreign currency exchange loss, which is included in Foreign currency exchange gains (losses) within the consolidated statements of operations.

~~During~~The ~~September 2014, the~~ Company's ~~entered~~derivative ~~into~~financial ~~cross-currency~~instruments ~~swaps~~do ~~with~~not ~~three~~qualify ~~counterparties~~for ~~to economically~~ hedge ~~exposures~~accounting totreatment ~~foreign~~and ~~currency~~accordingly, ~~exchange~~changes ~~risk. The~~in ~~cross-currency~~fair ~~swaps notional~~ value isare ~~$300,000,~~recorded atin aForeign ~~weighted average foreign~~ currency exchange ~~rate~~gains of(losses) ~~$1.00~~within ~~to €0.7820, and matures in February 2017. In accordance with~~ the ~~cross-currency~~consolidated ~~swap~~statements ~~agreements, on a semi-annual basis, the Company pays interest at a weighted average fixed rate~~ of 8operations.~~79% and receives interest based on a fixed rate of 9.50%.~~ The Company ~~recorded~~recognized an unrealized ~~gain~~gains of $31,178 and $16,133 that were recorded in Foreign currency exchange gains (losses), ~~net~~ in the consolidated ~~statement~~statements of operations for the ~~year~~twelve months ended December 31, ~~2014~~2015 ~~related~~and to2014, ~~the change in fair value on these cross-currency swaps~~respectively.

~~During~~Refer ~~2012, the Company entered into two foreign currency forward contracts~~ to ~~hedge~~Note ~~specific~~8—“Fair ~~transactions. Upon~~Value ~~cash~~Measurements” ~~settlement,~~for ~~the~~additional ~~Company~~information ~~realized~~regarding ~~a $7,314 foreign currency exchange loss, which was included in Foreign currency exchange gains (losses), net in~~ the ~~consolidated~~fair ~~statement~~value of ~~operations for~~ the ~~year~~Company’s ~~ended~~derivative ~~December 31, 2012~~arrangements.

~~None of the Company's derivative financial instruments received hedge accounting treatment and accordingly, adjustments to fair value are recorded in the consolidated statements of operations.~~(8) ~~Refer to Note 9—“~~Fair Value Measurements” ~~for additional information regarding the fair value of the Company’s derivative arrangements.~~

(9) Fair Value Measurements

The Company’s short-term financial instruments include cash and cash equivalents, accounts receivable and accounts payable. The carrying amounts reported on the consolidated balance sheets for these items approximate fair market value due to their relative short-term nature.

The table below sets forth by level, within the fair value hierarchy, the Company's financial instruments that are measured at fair value on a recurring basis:

		December 31, 2014
			December 31, 2015
		~~Level 1~~	Level 1		~~Level 2~~	Level 2		~~Level 3~~	Level 3
Other non-current assets
Derivatives Designated	Balance Sheet Classification
Derivative instruments:
Cross-currency swaps	Derivative assets		$	—		$	47,519		$	—
Cross-currency swap fair value		$	—		$	16,133		$	—
Cross-currency swap	Other non-current liabilities		$	—		$	208		$	—

The Company estimates the fair value of its foreign currency forward contracts using present value measurements based on the spot rate, forward option spreads and other relevant market conditions. Market interest rate and foreign currency exchange rate inputs are utilized in the discounted cash flow calculation considering the instrument’s term, notional amount, discount rate and credit risk.



		December 31, 2014
		Level 1		Level 2		Level 3
Derivatives Designated	Balance Sheet Classification
Cross-currency swaps	Derivative assets	$	—	$	16,133	$	—
Cross-currency swap	Other non-current liabilities	$	—	$	—	$	—

The ~~carrying~~Company ~~amounts~~estimates ~~and~~the ~~estimated~~ fair ~~values~~value of its foreign currency forward contracts using present value measurements based on the ~~Company~~spot rate, forward option spreads and other relevant market conditions. Market interest rate and foreign currency exchange rate inputs are utilized in the discounted cash flow calculation considering the instrument’s ~~long-~~term, ~~debt~~notional ~~at December 31~~amount, ~~2014~~discount ~~were~~rate asand ~~follows:~~credit risk. The Company does not offset fair value amounts for derivative instruments held with the same counterparty.

	Carryingamount		Estimatedfair value
Revolving Loan Facility	$	68,750	$	68,750
Term Loan due 2017	322,818		324,768
9.00% Senior Notes due 2017	56,000		55,930
9.50% Senior Notes due 2017	425,430		425,000

The carrying amounts and estimated fair values of the Company’s long-term debt at December 31, 2015 were as follows:

As the Revolving Loan Facility is a revolving credit agreement, the carrying amount approximates fair value. The estimated fair value of the Term Loan due 2017 is based on rates currently available for obligations with similar terms and maturities (Level 2 inputs). The estimated fair value of the privately placed 9.00% Senior Notes is based on a model that incorporates assumptions a market participant would use in pricing the liability (Level 3 inputs) and the estimated fair value of the 9.50% Senior Notes is based on current market rates in inactive markets (Level 2 inputs).



	Carrying amount		Estimated fair value
Revolving Loan Facility	$	42,305	$	42,305
Term Loan due 2017	305,595		295,728
9.00% Senior Notes due 2017	56,000		46,620
9.50% Senior Notes due 2017	425,256		352,750

51As the Revolving Loan Facility is a revolving credit agreement, the carrying amount approximates fair value. The estimated fair value of the Term Loan due 2017 is based on rates currently available for obligations with similar terms and maturities (Level 2 inputs). The estimated fair value of the privately placed 9.00% Senior Notes is based on a model that incorporates

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WIRECO WORLDGROUP (CAYMAN) INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share data)

assumptions a market participant would use in pricing the liability (10Level 3 inputs) ~~Share-~~ and the estimated fair value of the 9.50% Senior Notes is based ~~Compensation~~on current market rates in inactive markets (Level 2 inputs).

~~The Company maintains the 2008 Long Term Incentive Plan~~ (~~the "Plan"~~9) ~~pursuant to which the Company may grant up to 563,216 shares of common stock pursuant to non~~ Share-~~qualified~~based ~~stock~~Compensation ~~options and restricted stock to directors, officers and key employees. There were 29,779 options available for future grants under the Plan at December 31, 2014.~~

The Company maintains the 2008 Long Term Incentive Plan (the "Plan") pursuant to which the Company may grant up to 563,216 shares of common stock pursuant to non-qualified stock options and restricted stock to directors, officers and key employees. There were 33,479 options available for future grants under the Plan at December 31, 2015.


(a)	Service-based Stock Options

Service-based stock option awards vest over a service period of up to three or five years (most five years) from date of grant, with 33.3% and 20.0%, respectively, vesting each year, and have a contractual term of ten years. The vesting of the stock options partially accelerate upon certain "liquidity events" as defined is the Option Award Agreement and certain terminations of employment in connection with such liquidity events.

The fair value of the ~~2014~~2015, ~~2013~~2014 and ~~2012~~2013 stock options were estimated on the respective grant date using a Black-Scholes option-pricing model. The assumptions used in the model are noted in the following table.

	2014	2013	2012
	2015	2014	2013
Expected volatility (1)	4435.5651% ~~- 45.36%~~	4544.4756% - 45.8136%	45.0047% - 45.81%
Risk-free interest rate (2)	1.9980% ~~- 2.24%~~	1.7099% - 12.8624%	01.9470% - 1.86%
Expected term of the option (years) (3)	6.5	6.~~0 - 6.~~5	6.0 - 6.5
Expected dividend yield	—%	—%	—%
Grant-date fair value	$~~129~~75.~~37 - $138.42~~43	$~~116~~129.3037 - $~~120~~138.7242	$~~132~~116.6530 - $120.72


⁽¹⁾	Based on the average historical volatility of similar entities with publicly traded shares since the Company's shares are privately held.


⁽²⁾	Based on the U.S. Treasury interest rate whose term is consistent with the expected term of the stock options.


⁽³⁾	Based on the expected term considering vesting and contractual terms.

Stock option activity during the periods indicated was as follows:

Options	Number ofoptions		Weightedaverageexercise price		Weightedaverageremainingcontractual term(years)
Outstanding at December 31, 2013	481,970		$	163.19
Outstanding at December 31, 2014	513,491		$	172.76
Granted	4010,000		~~288.68~~—
Exercised	~~(1,200~~—	)	~~190.00~~—
Expired	~~(346~~—	)	~~294.18~~—
Forfeited	(313,~~000~~700	)	~~255~~254.9076
Other	~~(3,933~~—	)	~~100.00~~—
Outstanding at December 31, 2014	513,491		$	172.76	4.9
Outstanding at December 31, 2015	509,791		$	170.99	3.9
Vested and expected to vest as of December 31, 2014	513,491		172.76		4.9
Vested and expected to vest as of December 31, 2015	509,791		170.99		3.9
Exercisable at December 31, 2014	361,074		133.47		3.4
Exercisable at December 31, 2015	417,958		150.78		3.1

The Company recorded share-based compensation expense of $6,~~933~~613, $56,~~528~~933 and $15,~~466~~528 related to unvested options for the years ended December 31, ~~2014~~2015, ~~2013~~2014 and ~~2012~~2013, respectively, in Administrative expenses in the consolidated statements of operations. The share-based compensation expense recognized in 2013 included an incremental compensation cost of $2,635 associated with modified vested awards. The expected term of certain stock option awards were modified in accordance with various separation agreements executed in conjunction with the Company's organizational restructuring. The term was extended from 90 days post-separation to the remaining contractual life of the awards.

~~At December 31, 2014, total unrecognized share-based compensation cost related to the unvested portion of the Company's~~ 51

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WIRECO WORLDGROUP (CAYMAN) INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share data)

At December 31, 2015, total unrecognized share-based compensation cost related to the unvested portion of the Company's service-based stock options that remains to be expensed was $158,~~594~~175, with the weighted average remaining years to vest of approximately 2.70 years.


(b)	Performance Conditions

In conjunction with the CEO's employment agreement effective July 1, 2013, a special bonus may be awarded upon a change in control prior to the third anniversary of his hire date. The special bonus ranges from an amount equal to the product of 20,000 and the per share price associated with the closing ("Deal Share Price") (if the event occurs within the second year of his employment), and the product of 10,000 and the Deal Share Price (if the event occurs within the third year of his employment). The award is payable in the same proportion of cash and/or equity consideration received by the controlling shareholders of the Company in connection with the change in control. The Company will not begin accruing any share-based compensation cost until a change in control event occurs.

In 2013, the Company granted 13,800 shares of restricted stock that cliff vest after a four-year service period. If a change in control occurs, all unvested shares of restricted stock will immediately vest. The fair value of the shares granted was $255.90 per share. The Company recorded $883 ~~and $441~~ of share-based compensation expense related to unvested shares of restricted stock during ~~2014~~both 2015 and ~~2013, respectively~~2014.

At December 31, ~~2014~~2015, total unrecognized share-based compensation cost related to the unvested portion of the Company's restricted stock that remains to be expensed was $21,~~207~~324, with the weighted average remaining years to vest of approximately 21.5 years.

(1110) Restructuring

~~During~~As ~~2013,~~part of the Company's ~~underwent~~initiatives anto ~~organizational~~manage ~~restructuring,~~costs ~~which~~in ~~included~~response ~~among~~to ~~other~~the ~~positions,~~challenges ~~a change~~ in ~~its~~certain ~~chief~~end ~~executive officer~~markets, ~~chief operating officer and chief financial officer. Additionally,~~ the Company reduced ~~headcount~~its atproduction ~~certain manufacturing facilities as a result of lower than expected sales volume~~ and ~~initiatives~~administrative toworkforce ~~maintain~~during ~~a competitive cost structure~~2015. AsRestructuring acharges ~~result~~related ofto ~~these~~employee ~~actions,~~and ~~the~~certain ~~Company~~executive ~~recorded~~termination ~~employee~~and ~~termination~~related benefits ofwere ~~$7,304~~recorded in Administrative expenses in the consolidated statement of operations ~~for the year ended December 31, 2013~~. The accrual balance ~~was~~is included in Other current liabilities on the consolidated balance sheet ~~at December 31, 2013~~.

A rollforward of the restructuring activities is set forth below:

Balance at December 31, 2012	$	—
Restructuring charges incurred in 2013	7,304
Payments made in 2013	(4,492		)
Balance at December 31, 2013	$	2,812
Restructuring charges incurred in 2014	—
Payments made in 2014	(2,677		)
Balance at December 31, 2014	$	135
Restructuring charges incurred in 2015	2,134
Payments made in 2015	(1,151		)
Balance at December 31, 2015	$	1,118

~~(12) Income Taxes~~ 52

The provision for income taxes is based on income (loss) before income taxes as follows:

	2014			2013			2012
U.S. operations	$	548		$	(47,166	)	$	(49,558	)
Foreign operations	(44,962		)	30,703			45,261
Loss before income taxes	$	(44,414	)	$	(16,463	)	$	(4,297	)

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WIRECO WORLDGROUP (CAYMAN) INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share data)

	2014			2013			2012
Current:
U.S. federal	$	5,739		$	194		$	2,338
State and local	(453		)	(231		)	(449		)
Foreign jurisdictions	(2,931		)	(10,581		)	(10,226		)
Total current benefit (expense)	$	2,355		$	(10,618	)	$	(8,337	)
Deferred:
U.S. federal	$	(7,070	)	$	(271	)	$	(5,147	)
State and local	83			462			340
Foreign jurisdictions	20,273			(114		)	(733		)
Total deferred benefit (expense)	$	13,286		$	77		$	(5,540	)
Income tax benefit (expense)	$	15,641		$	(10,541	)	$	(13,877	)

(11) Income Taxes

The provision for income taxes is based on loss before income taxes as follows:



	2015			2014			2013
U.S. operations	$	(20,418	)	$	548		$	(47,166	)
Foreign operations	(14,968		)	(44,962		)	30,703
Loss before income taxes	$	(35,386	)	$	(44,414	)	$	(16,463	)

For the years ended December 31, 2015, 2014 and 2013, the components of income tax benefit (expense) consisted of the following:



	2015			2014			2013
Current:
U.S. federal	$	(373	)	$	5,739		$	194
State and local	(299		)	(453		)	(231		)
Foreign jurisdictions	(4,696		)	(2,931		)	(10,581		)
Total current benefit (expense)	$	(5,368	)	$	2,355		$	(10,618	)
Deferred:
U.S. federal	$	863		$	(7,070	)	$	(271	)
State and local	408			83			462
Foreign jurisdictions	3,975			20,273			(114		)
Total deferred benefit	$	5,246		$	13,286		$	77
Income tax benefit (expense)	$	(122	)	$	15,641		$	(10,541	)

Income taxes attributable to the loss before income taxes differed from the amounts computed by applying the U.S. federal income tax rate of 34% to pretax loss as a result of the following:

	2014			2013			2012
	2015			2014			2013
Computed “expected” tax benefit	$	1512,~~101~~031		$	515,~~598~~101		$	15,~~461~~598
State income taxes, net	~~(215~~42		)	~~363~~(215		)	44363
Taxes on foreign operations	1(3,~~451~~911		)	~~(435~~1,451		)	~~18,593~~(435		)
Permanent differences	(1,~~402~~317		)	(1,~~903~~402		)	~~(30~~1,~~285~~903		)
Net decreases (increases) in uncertain tax positions	~~15,418~~(783		)	(315,~~631~~418		)	1(3,~~786~~631		)
Change in deferred tax asset valuation allowance	(147,~~121~~444		)	(1314,~~334~~121		)	(413,~~571~~334		)
Foreign withholding taxes	(~~879~~28		)	(~~874~~879		)	—(874		)
Other, net	288			(131		)	(905		)
Expiration of foreign tax credits	(954		)	—			—
Income tax benefit (expense)	$	15,641		$	(10,541	)	$	(13,877	)
Other, net	(392		)	288			(131		)
Income tax benefit (expense)	$	(122	)	$	15,641		$	(10,541	)

The taxes on foreign operations ~~reflects~~reflect the impact of the difference in the tax rates in the jurisdictions that the Company operates compared to the U.S. federal income tax rate, as well as foreign municipal and autonomous taxes. The permanent differences are primarily comprised of a variety of differences to compute taxable income in the domestic and various foreign tax jurisdictions.

5453

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WIRECO WORLDGROUP (CAYMAN) INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share data)

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, ~~2014~~2015 and ~~2013~~2014 are presented below:

	December 31, 2014			December 31, 2013
	December 31, 2015			December 31, 2014
Deferred tax assets:
Disallowed interest carryforward	$	3539,~~878~~841		$	2835,~~611~~878
Domestic net operating loss carryforwards	~~8,454~~657			98,~~427~~454
Foreign net operating loss carryforwards	59,~~807~~304			35,~~859~~807
Foreign tax credits and alternative minimum tax carryforwards	3,~~781~~268			3,~~525~~781
Foreign tax on net assets to be recovered	21,~~411~~897			32,~~157~~411
Inventories	2,637			3,199
Unrealized currency losses	236			—
Share-based compensation	9,567			7,196
Inventories	2,800			2,637
Reserve on advances to non-consolidated affiliates	3,952			3,943
Share-based compensation	12,000			9,567
Other deductible temporary differences	6,983			4,087
Reserve on advances to non-consolidated affiliates	3,954			3,952
Total gross deferred tax assets	$	79,470		$	67,004
Other deductible temporary differences	4,919			6,983
Less: Valuation allowance	(49,750		)	(35,629		)
Total gross deferred tax assets	$	78,876		$	79,470
Net deferred tax assets	$	29,720		$	31,375
Less: Valuation allowance	(56,596		)	(49,750		)
Net deferred tax assets	$	22,280		$	29,720
Deferred tax liabilities:
Property, plant and equipment	$	(2523,~~130~~679	)	$	(3325,~~344~~130	)
Intangible assets	(3828,~~692~~777		)	(4938,~~395~~692		)
Unrealized foreign currency exchange gains	~~(5,607~~—		)	(95,~~666~~607		)
Other taxable temporary differences	(2,~~347~~579		)	(12,~~929~~347		)
Total gross deferred tax liabilities	$	(7155,~~776~~035	)	$	(9471,~~334~~776	)
Net deferred tax liabilities	$	(4232,~~056~~755	)	$	(6242,~~959~~056	)

The Company recorded a valuation allowance of $4956,~~750~~596 and $3549,~~629~~750 at December 31, ~~2014~~2015 and ~~2013~~2014, respectively, against certain deferred tax assets primarily related to ~~foreign tax credits,~~ interest expense deduction limitations in the U.S., and net operating losses in the U.S. and various countries. Management believes that the recoverability of a portion of certain acquired and generated deferred tax assets is not "more likely than not" to be utilized because the realization of the deferred tax asset is mainly dependent on the availability of future taxable income in the U.S. and other countries, and the ability of the U.S. entities to utilize ~~foreign tax credits and~~ interest ~~deduction~~deductions given the Company's borrowing structure.

The Company adopted ASU ~~2013~~2015-1117 ~~prospectively~~retrospectively on January 1, ~~2014~~2016, which only impacted the presentation ofon ~~periods~~the consolidated balance sheet and had no impact on the Company's operating results. Refer to Note 2—“Summary of Significant Accounting Policies” to ~~our~~the Company's consolidated financial statements for a brief description of this ASU.

~~The U.S. companies generated excess foreign tax credits of $954, which could only be utilized to offset U.S. taxes imposed on foreign source income.~~ At December 31, ~~2014~~2015 and ~~2013~~2014, the Company had domestic net operating loss carryforwards of $~~23,233~~633 and $3823,~~969~~233, respectively. These domestic net operating loss carryforwards of $633 will begin expiring in 2033.

~~These domestic net operating loss carryforwards of $23,233 will begin expiring in 2031.~~ At December 31, ~~2014~~2015 and ~~2013~~2014, the Company had foreign net operating loss carryforwards of approximately $2539,~~038~~226 and $1625,~~183~~038, respectively. Of these foreign net operating loss carryforwards at December 31, ~~2014~~2015, $2130,~~887~~403 will ~~expire~~begin ~~beginning~~expiring ~~2015~~in 2016 through ~~2024~~2033 and the remaining can be carried forward indefinitely.

At December 31, ~~2014~~2015, the Company has not provided tax on cumulative undistributed earnings attributable to foreign subsidiaries because it is the Company’s intention to reinvest these earnings indefinitely. These earnings relate to ongoing operations and, at December 31, ~~2014~~2015, were approximately $~~174~~185,~~320~~091. If earnings were distributed, the Company would be subject to income taxes and withholding taxes payable to various governments. However, it is impractical to determine the deferred taxes due to the complexities associated with the hypothetical calculation.

55The Company is required to inventory, evaluate and measure all uncertain tax positions taken or to be taken on tax returns, and to record liabilities for the amount of such positions that may not be sustained, or may only partially be sustained, upon examination by the relevant taxing authorities.

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WIRECO WORLDGROUP (CAYMAN) INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share data)

The ~~Company~~following istable ~~required~~summarizes tothe ~~inventory,~~Company’s ~~evaluate,~~reconciliation ~~and~~of ~~measure~~unrecognized ~~all uncertain~~ tax ~~positions~~benefits, ~~taken~~excluding orpenalties toand ~~be taken on tax returns~~interest, ~~and to record liabilities~~ for the ~~amount~~years ofended ~~such positions that may not be sustained~~December 31, ~~or may only partially be sustained~~2015, ~~upon~~2014 ~~examination~~and by2013: ~~the relevant taxing authorities.~~

The following table summarizes the Company’s reconciliation of unrecognized tax benefits, excluding penalties and interest, for the years ended December 31, 2014, 2013 and 2012:



	2015			2014			2013
Balance at beginning of period	$	6,374		$	22,151		$	19,108
Increases based on current year tax positions	—			—			1,547
Increases for prior years’ tax positions	552			734			4,419
Decreases for prior years’ tax positions	(874		)	(16,511		)	(2,923		)
Balance at end of period	$	6,052		$	6,374		$	22,151

	2014			2013			2012
Balance at beginning of period	$	22,151		$	19,108		$	18,021
Increases based on current year tax positions	—			1,547			—
Increases for prior years’ tax positions	734			4,419			3,791
Decreases for prior years’ tax positions	(16,511		)	(2,923		)	(2,704		)
Balance at end of period	$	6,374		$	22,151		$	19,108

The net amount of unrecognized tax benefits at December 31, 2015, 2014 and 2013 that, if recognized, would favorably impact the Company's effective tax rate was $6,821, $7,294 and $19,460, respectively. Tax expense for 2015, 2014 and 2013 reflects accrued interest and penalties related to uncertain tax positions of $(151), $(954) and $(406), respectively. The total accrued interest and penalties included in the consolidated balance sheets at December 31, 2015 and 2014 was $769 and $921, respectively.

~~The~~It ~~net~~is reasonably possible that the amount of gross unrecognized tax benefits atcould ~~December 31,~~increase ~~2014,~~or ~~2013~~decrease ~~and~~over ~~2012~~the ~~that,~~next if12 ~~recognized~~months; however, ~~would~~it ~~favorably~~is ~~impact~~not possible to reasonably estimate the effect on unrecognized tax benefits at this time. The Company's ~~effective~~files tax ~~rate~~returns ~~was~~in ~~$7,294,~~multiple ~~$19,460~~jurisdictions and ~~$17,862,~~is ~~respectively~~subject to examination by taxing authorities where we file tax returns. ~~Tax~~The ~~expense~~statute ~~for~~of ~~2014,~~limitations ~~2013~~vary by country and ~~2012~~the ~~reflects~~open ~~accrued~~tax ~~interest~~years remain subject to examination. The federal, state and ~~penalties~~foreign ~~related~~statutes of limitations for assessment of tax liability generally lapse three to ~~uncertain~~five years after the date the tax ~~positions~~returns ofare ~~$(954)~~filed. However, ~~$(406)~~income ~~and~~tax ~~$235~~attributes that are carried forward, ~~respectively. The~~such ~~total~~as ~~accrued~~net ~~interest~~operating loss carryforwards, may be challenged and ~~penalties~~adjusted ~~included~~by intaxing authorities at any time prior to the ~~consolidated~~expiration ~~balance~~of ~~sheets~~the atstatute ~~December 31,~~of ~~2014~~limitations ~~and~~for ~~2013~~the ~~was~~tax ~~$921~~year ~~and~~in ~~$2,107,~~which ~~respectively.~~they are utilized.

~~It is reasonably possible that the amount of gross unrecognized tax benefits could increase or decrease over the next~~ (12 ~~months; however, it is not possible to reasonably estimate the effect on unrecognized tax benefits at this time.~~) ~~The~~Related ~~Company~~Party ~~files~~Transactions tax returns in multiple jurisdictions and is subject to examination by taxing authorities where we file tax returns. The statute of limitations vary by country and the open tax years remain subject to examination. In general, the Company is no longer subject to income tax examinations by tax authorities for years before 2009.

Paine & Partners, LLC (13“Paine & Partners”), which manages the funds that control the Company, has entered into a management agreement with the Company to provide administrative and other support services. ~~Related~~The ~~Party~~Company ~~Transactions~~paid management fees of $3,112, $3,042 and $3,160 for the years ended December 31, 2015, 2014 and 2013, respectively. During 2015, 2014 and 2013, the Company reimbursed Paine & Partners $145, $207 and $569, respectively, for its related expenses, such as travel, consultation and other. All Paine & Partners' fees were recorded in Administrative expenses in the consolidated statements of operations.

~~Paine &~~During ~~Partners,~~2015 ~~LLC~~and ~~(“Paine & Partners”)~~2014, ~~which manages~~ the ~~funds that control the~~ Company, ~~has~~had ~~entered~~product ~~into~~sales aof ~~management~~$975 ~~agreement~~and ~~with~~$1,508, ~~the~~respectively, ~~Company~~ to ~~provide~~its ~~administrative~~Spanish ~~and~~joint ~~other~~venture, ~~support~~Lankhorst ~~services~~Euronete Espana SA. ~~The~~Also the Company ~~paid~~purchased ~~management~~product ~~fees~~ of $32,~~042~~234, $34,~~160~~695 and $25,~~800~~685 for the years ended December 31, ~~2014~~2015, ~~2013~~2014 and ~~2012~~2013, respectively~~. In addition to these fees~~, ~~the~~from ~~Company~~Eurorope ~~paid~~Performance aRope ~~fee~~Producers ~~of $2~~SA,~~200~~ ~~during~~its ~~2012~~Greek ~~associated~~joint ~~with Paine & Partners' services related to the Lankhorst acquisition~~venture. ~~During~~The ~~2014 and 2013, the~~ Company ~~reimbursed~~accounts ~~Paine & Partners $207 and $569~~ for its ~~related~~investments ~~expenses,~~with ~~such~~these asjoint ~~travel,~~ventures ~~consultation~~using ~~and other. All Paine & Partners' fees were recorded in Administrative expenses in~~ the ~~consolidated~~equity ~~statements of operations~~method.

~~During 2014, the Company had product sales of $1,508 to its Spanish joint venture, Lankhorst Euronete Espana SA.~~(13) ~~Also,~~Commitments ~~the Company purchased product of $4,695, $5,685~~ and ~~$5,933~~Contingencies for the years ended December 31, 2014, 2013 and 2012, respectively, from Eurorope Performance Rope Producers SA, its Greek joint venture. The Company accounts for its investments with these joint ventures using the equity method.

During 2012, the Company made advances to the China JV primarily related to professional services and capital expenditures the Company paid on behalf of the China JV and travel expenses of Company employees assisting with training, engineering and other matters. For the year ended December 31, 2012, the Company fully reserved $3,466 against these advances, which was recorded in Other expense, net in the statement of operations. Management determined it probable that the Company will be unable to collect all amounts due according to the original terms of the advances since there is substantial doubt as to the China JV’s ability to continue as a going concern. Commitments

~~During~~The ~~2012~~Company leases certain distribution centers, ~~the~~sales ~~Company~~offices, ~~repurchased~~machinery ~~shares~~and ~~from~~equipment, ~~members~~and oftransportation ~~management~~equipment under non-cancellable capital and aoperating ~~director~~leases ~~that~~with ~~was~~varying ~~classified~~expiration asdates. Capital ~~treasury~~leases ~~stock~~generally athave ~~cost~~3 onto ~~the~~5 ~~consolidated~~year ~~balance~~terms, ~~sheet~~with ~~and~~one ~~resulted~~or inmore arenewal ~~reduction~~options. Operating ofleases ~~stockholders'~~generally ~~equity~~have 1 to 10 year terms, with one or more renewal options. Rent expense under operating leases was $6,740, $9,383 and $8,153 for the years ended December 31, 2015, 2014 and 2013, respectively.

5655

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WIRECO WORLDGROUP (CAYMAN) INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share data)

~~(14) Commitments~~Using ~~and~~the ~~Contingencies~~exchange rates in effect at year end, future minimum lease payments at December 31, 2015 were as follows:

Commitments



	Capital leases			Operating leases
2016	$	749		$	3,754
2017	381			2,744
2018	366			1,726
2019	474			1,170
2020	179			970
Thereafter	—			3,079
Total	$	2,149		$	13,443
Less: Interest portion	(530		)
Present value of future minimum lease payments	$	1,619

The Company leases certain distribution centers, sales offices, machinery and equipment, and transportation equipment under non-cancellable capital and operating leases with varying expiration dates. Capital leases generally have 3 to 5 year terms, with one or more renewal options. Operating leases generally have 1 to 10 year terms, with one or more renewal options. Rent expense under operating leases was $9,383, $8,153 and $7,048 for the years ended December 31, 2014, 2013 and 2012, respectively.

Using the exchange rates in effect at year end, future minimum lease payments at December 31, 2014 were as follows:

	Capitalleases			Operatingleases
2015	$	1,728		$	4,890
2016	323			3,722
2017	138			2,311
2018	122			1,193
2019	299			833
Thereafter	1			1,953
Total	$	2,611		$	14,902
Less: Interest portion	(283		)
Present value of future minimum lease payments	$	2,328

The amounts payable in relation to the capital leases are recorded in the consolidated balance sheets in Other accrued liabilities (current and non-current captions).

Contingencies

The Company is involved in various claims and legal actions arising in the ordinary course of business, which are incidental to its operations. The Company currently maintains insurance coverage for certain risks, such as product liability and workers’ compensation. In accordance with Accounting Standards Codification Topic 450, Contingencies, the Company establishes accruals for litigation matters when the Company believes it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. If the Company has not accrued an amount because the litigation does not meet the criteria for accrual as set forth above, the Company discloses the matter if a material loss is reasonably possible and the Company is able to estimate a range of possible losses. At December 31, ~~2014~~2015, no legal proceedings or other contingencies met the accrual or disclosure criteria.

57(14) Segment and Geographic Area Information

The Company reports the manufacturing, marketing, selling and distribution of wire and synthetic ropes, specialty wire and engineered products as one operating and one reportable segment. The Company's chief operating decision maker is its Chief Executive Officer, who reviews financial information on a consolidated basis for purposes of making operating decisions and assessing financial performance. The Company's net sales by product line for the periods presented was as follows:



	Years ended December 31,
	2015				2014				2013
Product line net sales	($)		(%)		($)		(%)		($)		(%)
Rope	$	496,706	73	%	$	626,670	73	%	$	606,276	74	%
Specialty wire	119,015		17	%	139,596		16	%	128,923		16	%
Engineered products	68,232		10	%	90,494		11	%	85,856		10	%
Total net sales	$	683,953	100	%	$	856,760	100	%	$	821,055	100	%

Table of Contents

WIRECO WORLDGROUP (CAYMAN) INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share data)

(15) Segment and Geographic Area Information

	Years ended December 31,
	2014				2013				2012
Product line net sales	($)		(%)		($)		(%)		($)		(%)
Rope	$	626,670	73	%	$	606,276	74	%	$	549,590	74	%
Specialty wire	139,596		16	%	128,923		16	%	148,538		20	%
Engineered products	90,494		11	%	85,856		10	%	44,561		6	%
Total net sales	$	856,760	100	%	$	821,055	100	%	$	742,689	100	%

Enterprise-wide Disclosures and Concentration of Business

Net sales by geographical area

Net sales by geographical area are based on the location of the facility producing the sales. No single customer accounted for more than 10% of net sales in ~~2014~~2015, ~~2013~~2014 or ~~2012~~2013.

Years ended December 31,

Net sales

~~2014~~2015

~~2013~~2014

~~2012~~2013

United States

~~288~~199,~~852~~255

~~286~~288,~~849~~852

~~320~~286,~~977~~849

The Netherlands

~~147~~125,~~410~~632

~~135~~147,~~609~~410

66135,~~611~~609

Portugal

~~113~~102,~~330~~347

~~114~~113,~~672~~330

79114,~~612~~672

Poland

82,004

78,913

77,522

Mexico

69,863

78,736

67,857

Mexico

78,736

67,857

91,826

Poland

69,363

82,004

78,913

Germany

7449,~~240~~543

8474,~~275~~240

8684,~~562~~275

Other countries

7267,~~188~~950

5272,~~880~~188

1952,~~579~~880

Total net sales

~~856~~683,~~760~~953

~~821~~856,~~055~~760

~~742~~821,~~689~~055

Long-lived assets, net by geographical area

Long-lived assets, net consist of property, plant and equipment, net of depreciation. Long-lived assets, net by geographical area are based on the location of the Company's facilities.

As of December 31,

Long-lived assets, net

~~2014~~2015

~~2013~~2014

~~2012~~2013

Portugal

9380,~~826~~413

~~111~~93,~~320~~826

~~104~~111,~~883~~320

Mexico

56,050

65,648

68,273

United States

51,837

54,306

59,090

United States

54,306

59,090

65,162

Mexico

45,234

56,050

65,648

Poland

4340,~~884~~267

5143,~~068~~884

5051,~~670~~068

The Netherlands

4035,~~113~~214

4540,~~286~~113

5045,~~002~~286

Germany

2220,~~979~~239

2622,~~682~~979

2526,~~190~~682

Other countries

810,~~040~~451

78,~~244~~040

87,~~281~~244

Total long-lived assets, net

~~319~~283,~~198~~655

~~366~~319,~~338~~198

~~372~~366,~~461~~338

(15) Condensed Consolidating Financial Statements

Guarantees of the 9.50% Senior Notes

The Company has registered 9.50% Senior Notes, which are unsecured obligations of WireCo WorldGroup Inc. These obligations are jointly and severally and fully and unconditionally guaranteed by WireCo WorldGroup (Cayman) Inc. Certain entities controlled by the Company (collectively referred to as the “Guarantor Subsidiaries”) also jointly and severally and fully and unconditionally guarantee these obligations, subject to customary release provisions. All voting shares for the entities presented in the “Guarantor Subsidiaries” column are 100% owned directly or indirectly by the Company. Certain subsidiaries with locations primarily located in the Netherlands, Brazil and France do not guarantee the debt (collectively referred to as the “Non-Guarantor Subsidiaries”). The following condensed consolidating financial statements are prepared with each entity’s investment in subsidiaries accounted for under the equity method. The adjustments eliminate investments in subsidiaries, related stockholders’ equity and other intercompany balances and transactions. There are currently no significant restrictions on the ability of WireCo WorldGroup Inc. or any guarantor to obtain funds from its subsidiaries by dividend or loan.

Table of Contents

WIRECO WORLDGROUP (CAYMAN) INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share data)

Condensed Consolidating Balance Sheets



	December 31, 2015
	WireCo WorldGroup (Cayman) Inc. (Parent)			WireCo WorldGroup Inc. (Issuer)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Elimination Adjustments			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	21		$	2,378	$	10,906	$	7,755	$	—		$	21,060
Restricted cash	—			—		533		989		—			1,522
Accounts receivable, net	—			28,087		59,211		37,165		—			124,463
Intercompany accounts receivable	1,252			60,560		41,627		27,418		(130,857		)	—
Other receivables	—			11		2,191		577		—			2,779
Inventories, net	—			67,319		90,982		28,663		—			186,964
Prepaid expenses and other current assets	—			2,983		3,701		1,449		—			8,133
Total current assets	$	1,273		$	161,338	$	209,151	$	104,016	$	(130,857	)	$	344,921
Long-term intercompany notes receivable	—			422,668		16,984		107,887		(547,539		)	—
Property, plant and equipment, net	—			51,833		190,285		41,537		—			283,655
Intangible assets, net	—			30,512		57,458		14,795		—			102,765
Goodwill	—			116,842		46,824		18,072		—			181,738
Investments in subsidiaries	(59,270		)	—		115,440		7,805		(63,975		)	—
Deferred financing fees, net	—			9,118		—		—		—			9,118
Non-current deferred income tax assets	—			171		697		591		—			1,459
Derivative assets	40,284			7,235		—		—		—			47,519
Other non-current assets	—			199		9,065		8		—			9,272
Total assets	$	(17,713	)	$	799,916	$	645,904	$	294,711	$	(742,371	)	$	980,447
Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of long-term debt	$	—		$	8,948	$	—	$	—	$	—		$	8,948
Interest payable	—			5,970		21		168		—			6,159
Accounts payable	—			17,808		39,351		14,994		—			72,153
Intercompany accounts payable	871			48,758		69,636		11,532		(130,797		)	—
Accrued compensation and benefits	—			6,039		9,670		2,807		—			18,516
Other current liabilities	230			6,054		14,687		1,996		—			22,967
Total current liabilities	$	1,101		$	93,577	$	133,365	$	31,497	$	(130,797	)	$	128,743
Long-term debt, excluding current maturities	—			820,208		—		—		—			820,208
Long-term intercompany notes payable	—			—		520,684		26,831		(547,515		)	—

Table of Contents

WIRECO WORLDGROUP (CAYMAN) INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share data)

(16) Condensed Consolidating Financial Statements



Non-current deferred income tax liabilities	—			9,295			17,918			7,001		—			34,214
Other non-current liabilities	208			714			11,371			1,418		—			13,711
Total liabilities	$	1,309		$	923,794		$	683,338		$	66,747	$	(678,312	)	$	996,876
Stockholders’ equity:
Total stockholders’ equity attributable to WireCo WorldGroup (Cayman) Inc.	$	(19,022	)	$	(123,878	)	$	(33,244	)	$	221,181	$	(64,059	)	$	(19,022	)
Non-controlling interests	—			—			(4,190		)	6,783		—			2,593
Total stockholders’ equity	$	(19,022	)	$	(123,878	)	$	(37,434	)	$	227,964	$	(64,059	)	$	(16,429	)
Total liabilities and stockholders’ equity	$	(17,713	)	$	799,916		$	645,904		$	294,711	$	(742,371	)	$	980,447

Guarantees of the 9.50% Senior Notes

During 2014, the Company determined that it had previously reported Royal Lankhorst Euronete Group B.V. ("RLEG"), an indirect wholly owned subsidiary, as a "Guarantor Subsidiary" in error in its 2013 10-K. RLEG is principally a holding company with substantially all of its activities being intercompany in nature. The Company has correctly presented RLEG as a "Non-Guarantor Subsidiary" in the current period condensed consolidating financial statements. This error was not material in the current period and any previously reported periods.

Table of Contents

WIRECO WORLDGROUP (CAYMAN) INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share data)

Condensed Consolidating Balance Sheets



	December 31, 2014
	WireCo WorldGroup (Cayman) Inc. (Parent)		WireCo WorldGroup Inc. (Issuer)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Elimination Adjustments			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	24	$	4,178	$	35,792	$	18,201	$	—		$	58,195
Restricted cash	—		—		656		909		—			1,565
Accounts receivable, net	—		45,159		69,645		28,264		—			143,068
Intercompany accounts receivable	27,454		64,043		55,654		18,493		(165,644		)	—
Other receivables	—		—		1,914		391		—			2,305
Inventories, net	—		71,924		122,025		31,126		—			225,075
Prepaid expenses and other current assets	—		2,935		6,378		3,663		—			12,976
Total current assets	$	27,478	$	188,239	$	292,064	$	101,047	$	(165,644	)	$	443,184
Long-term intercompany notes receivable	—		467,127		22,461		112,482		(602,070		)	—
Property, plant and equipment, net	—		54,302		220,675		44,221		—			319,198
Intangible assets, net	—		34,052		70,186		21,340		—			125,578
Goodwill	—		116,842		50,906		21,177		—			188,925
Investment in subsidiaries	25,057		—		129,522		7,659		(162,238		)	—

Filing Compare · WireCo WorldGroup Inc.