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Uci Holdings Ltd – ‘20-F’ for 12/31/13

On:  Tuesday, 3/4/14, at 4:52pm ET   ·   For:  12/31/13   ·   Accession #:  1193125-14-82435   ·   File #:  333-173626

Previous ‘20-F’:  ‘20-F’ on 3/20/13 for 12/31/12   ·   Next & Latest:  ‘20-F’ on 3/4/15 for 12/31/14

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  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 3/04/14  Uci Holdings Ltd                  20-F       12/31/13  130:18M                                    Donnelley … Solutions/FA

Document/Exhibit                   Description                      Pages   Size 

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                Goodwill (Detail)                                                
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                Intangible Assets and Integrated Software System                 
                (Detail)                                                         
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                Accrued Expenses and Other Current Liabilities                   
                (Detail)                                                         
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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

Or

For the fiscal year ended December 31, 2013

Or

Or

Commission file number 333-173626

UCI HOLDINGS LIMITED

(Exact name of Registrant as specified in its charter)

Level Nine

148 Quay Street

Auckland 1010 New Zealand

(Address of principal executive offices)

Ricardo Alvergue

1900 West Field Court

Lake Forest, Illinois 60045

Tel (847) 482-4165

Fax (847) 615-6506

(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)

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

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    ¨  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.    x  Yes    ¨  No

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

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

Large accelerated filer  ¨                      Accelerated filer  ¨                     Non-accelerated filer  x

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

If “Other” has been checked in response to the previous question indicate by check mark which financial statement item the registrant has elected to follow.    ¨  Item 17    ¨  Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ¨  Yes    x  No

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Certain References

In this annual report, unless otherwise indicated or the context otherwise requires, the terms “we,” “us,” “our,” “our company” and “Company” refer to (i) UCI International, Inc. and its subsidiaries (including UCI (as defined herein)), prior to the date of the UCI Acquisition (as defined herein) and (ii) following the UCI Acquisition, Holdings (as defined herein) and its consolidated subsidiaries.

Market Data

We obtained the industry, market and competitive position data used throughout this annual report from our own internal estimates and research as well as from industry publications and research, surveys and studies conducted by third parties. Estimates of historical growth rates in the markets in which we operate are not necessarily indicative of future growth rates in such markets. In addition, unless stated otherwise, market share and market position data used throughout this annual report refer to our share of the North American light vehicle aftermarket.

Unless stated otherwise, all market industry statistics, excluding estimates that are qualified by our belief, are based on data included in the 2014 Automotive Aftermarket Industry Association (“AAIA”) Digital Automotive Aftermarket Factbook, which combines the latest available aftermarket industry data from many sources including original AAIA research, government sources and independent research suppliers.

Certain Definitions

In this annual report:

“2006 Credit Facility” refers to UCI’s senior secured term loan facility and senior secured revolving credit facility, which were repaid in full on September 23, 2010 with proceeds from the 2010 Credit Facility (as defined herein).

“2010 Credit Facility” refers to UCI International’s (as defined herein) term loan facility in an aggregate principal amount of $425.0 million, which was fully funded on September 23, 2010, and a revolving credit facility in an aggregate principal amount of $75.0 million. The 2010 Credit Facility was repaid and terminated as part of the Transactions (as defined herein).

“Acquisition Co.” refers to Uncle Acquisition 2010 Corp, which was the initial issuer of the Senior Notes (as defined herein), and which was merged with and into UCI International, Inc., with UCI International, Inc. as the surviving company in the UCI Acquisition.

“aftermarket” refers to the North American light and heavy-duty vehicle replacement products market.

“Autoparts Holdings” refers to Autoparts Holdings Limited, an affiliate of Rank Group (as defined herein) and ultimately owned by our strategic owner, Mr. Graeme Hart.

“ASC” refers to ASC Industries Inc., which was acquired by UCI International, Inc. in 2006.

“CAGR” refers to compounded annual growth rate.

“Carlyle” refers to The Carlyle Group; prior to the UCI Acquisition, affiliates of Carlyle owned approximately 90% of the common stock of UCI International, Inc. with the remainder owned by former members of our board and certain current and former employees.

“Combined Year Ended December 31, 2011” refers to the Successor (as defined herein) year ended December 31, 2011 combined with the Predecessor (as defined herein) period January 1, 2011 through January 25, 2011.

“C$” refers to the lawful currency of Canada.

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“DIFM,” an acronym for “do-it-for-me,” refers to consumers who use professionals to perform the maintenance and repair work needed on their own vehicles.

“DIY,” an acronym for “do-it-yourself,” refers to consumers who themselves perform the maintenance and repair work needed on their vehicles.

“dollars”, “U.S. dollars” and “$” refer to the lawful currency of the United States.

“Equity Contribution” refers to cash in the amount of $320.0 million contributed to Acquisition Co. in connection with the UCI Acquisition.

“Exchange Act” refers to the U.S. Securities Exchange Act of 1934, as amended.

“FRAM Group” refers to the automotive consumer products business of Autoparts Holdings.

“GAAP” refers to generally accepted accounting principles in the United States.

“Holdings” refers to UCI Holdings Limited, a New Zealand limited liability company and the indirect parent of UCI International, Inc.

“Issuer” refers to UCI International, Inc., as successor by merger to Uncle Acquisition 2010 Corp.

“Merger Agreement” refers to the Agreement and Plan of Merger dated November 29, 2010, by and among UCI International, Inc., Rank Group, and Acquisition Co. pursuant to which Acquisition Co. merged with and into UCI International, Inc. with UCI International, Inc. continuing as the surviving corporation and an affiliate of Rank Group.

“North America” and “North American” refer to the United States, Mexico and Canada.

“OEM” refers to original equipment manufacturers.

“OES” refers to original equipment service providers (the service organizations connected with new car dealers).

“OEM/OES” refers to original equipment manufacturers and original equipment service providers (the service organizations connected with new car dealers).

“Predecessor” refers to UCI International and all financial information of UCI International prior to the UCI Acquisition. The Predecessor period January 1, 2011 through January 25, 2011, includes the operations of UCI International for this period.

“Previously Outstanding Subordinated Notes” refers to UCI’s 9 3/8% Senior Subordinated Notes due 2013, which were discharged on October 25, 2010.

“Rank Group” refers to Rank Group Limited, a private company based in New Zealand and wholly-owned by Mr. Graeme Hart.

“SEC” refers to the U.S. Securities and Exchange Commission.

“Senior Notes” refers to $400.0 million aggregate principal amount of our 8.625% Senior Notes due 2019 and guarantees thereof issued as part of the Transactions on January 26, 2011.

“Senior PIK Notes” refers to the floating rate Senior PIK Notes due 2013 issued by UCI International, Inc. on December 20, 2006, of which $355.1 million aggregate principal amount was outstanding at January 26, 2011. In connection with the Transactions, we purchased $315.0 million aggregate principal amount of the Senior PIK Notes pursuant to a tender offer we commenced on January 5, 2011. The redemption of the remaining Senior PIK Notes was completed on February 25, 2011.

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“Senior Secured Credit Facilities” refers to the Senior Secured Term Loan Facility (as defined herein) and the Senior Secured Revolving Credit Facility (as defined herein) entered into as part of the Transactions on January 26, 2011.

“Senior Secured Revolving Credit Facility” refers to the $75.0 million senior secured revolving credit facility entered into as part of the Transactions on January 26, 2011.

“Senior Secured Term Loan Facility” refers to the $300.0 million senior secured term loan facility entered into as part of the Transactions on January 26, 2011.

“Successor” refers to Holdings and all financial information of Holdings for the Successor period November 26, 2010 through December 31, 2010, as of December 31, 2010, the Successor years ended December 31, 2013, 2012 and 2011, and as of December 31, 2013, 2012 and 2011. The Successor year ended December 31, 2011, includes the operations of UCI International for the period from the UCI Acquisition to December 31, 2011.

The “traditional” distribution channel refers to warehouse distributors, jobber stores and professional installers.

“Transactions” refers to (i) the offering of $400.0 million of the Senior Notes, (ii) the Equity Contribution, (iii) the borrowings under the Senior Secured Credit Facilities, (iv) the repayment of the 2010 Credit Facility, (v) the repurchase, call for redemption and satisfaction and discharge of the Senior PIK Notes, (vi) the UCI Acquisition, (vii) the merger of Acquisition Co. with and into UCI International, Inc., with the result that UCI is the direct, wholly-owned subsidiary of UCI International, Inc., (viii) the transactions related to the foregoing and (ix) the payment of fees and expenses related to the foregoing, all of which occurred on January 26, 2011.

“UCI” refers to United Components, Inc., a wholly-owned direct subsidiary of UCI International, Inc.

“UCI Acquisition” refers to the merger on January 26, 2011 of Acquisition Co., an indirect wholly-owned subsidiary of Holdings and an affiliate of Rank Group, with and into UCI International, Inc. with UCI International, Inc. surviving the merger. See “Part I, Item 4. Information on Holdings and Its Subsidiaries — History and Development — Holdings’ History.”

“UCI International” refers to UCI International, Inc., together with its subsidiaries.

“United States” and “U.S.” refer to the United States of America.

With respect to our customers, “Advance” refers to Advance Stores Company, Inc.; “AutoZone” refers to AutoZone, Inc.; “CARQUEST” refers to CARQUEST Auto Parts Inc (purchased by Advance in January 2014).; “Chrysler” refers to Chrysler Group LLC; “Ford” refers to Ford Motor Company; “GM” refers to General Motors Company; “NAPA” refers to NAPA Autoparts Inc.; and “O’Reilly” refers to O’Reilly Automotive, Inc.

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Presentation of Financial Information and Summary of Transactions

The audited consolidated financial statements of Holdings as of December 31, 2013 and 2012 and for the years ended December 31, 2013, 2012 and 2011, included elsewhere in this annual report, represent those of the Successor. The UCI Acquisition occurred on January 26, 2011. As such, Holdings’ results of operations for the year ended December 31, 2011 include the results of operations of UCI International only from the date of the UCI Acquisition. The audited consolidated financial statements of Holdings were prepared using the acquisition method of accounting. Under the acquisition method of accounting, the purchase price is required to be allocated to the underlying tangible and identifiable intangible assets acquired and liabilities assumed based on their respective fair market values as of the date of the acquisition, with any excess purchase price allocated to goodwill. Because Holdings was formed on November 26, 2010 in connection with the Transactions, it has no financial statements as of or for periods ended prior to that date. Prior to the UCI Acquisition, Holdings generated no revenue and incurred no expenses other than merger and acquisition costs of $1.3 million related to the UCI Acquisition.

The audited consolidated financial statements of UCI International for the period January 1, 2011 through January 25, 2011, included elsewhere in this annual report, represent those of the Predecessor and have been prepared based upon the historical carrying amounts of assets and liabilities of UCI International.

On November 29, 2010, UCI International, Inc. entered into the Merger Agreement by and among UCI International, Inc., Rank Group, and Acquisition Co. pursuant to which Acquisition Co. agreed to be merged with and into UCI International, Inc., with UCI International, Inc. continuing as the surviving corporation and an affiliate of Rank Group. The merger and the related Transactions were completed on January 26, 2011.

In addition, on January 26, 2011, we (i) repaid and terminated the 2010 Credit Facility, (ii) purchased $315.0 million aggregate principal amount of the Senior PIK Notes pursuant to a tender offer we commenced on January 5, 2011, (iii) called for redemption all of the Senior PIK Notes that were not purchased as of the date of the UCI Acquisition and (iv) deposited $41.2 million for the satisfaction and discharge of such remaining Senior PIK Notes with the trustee under the indenture for the Senior PIK Notes. The redemption of the remaining Senior PIK Notes was completed on February 25, 2011.

On January 26, 2011, UCI International, Inc. and certain subsidiaries entered into the Senior Secured Credit Facilities, which consisted of a $300.0 million Senior Secured Term Loan Facility drawn at closing, and a $75.0 million Senior Secured Revolving Credit Facility, which was undrawn at closing. Also on January 26, 2011, we issued the Senior Notes in an aggregate principal amount of $400.0 million.

The Transactions were financed with (i) the net proceeds from the issuance of the Senior Notes, (ii) the Equity Contribution, (iii) borrowings under the Senior Secured Term Loan Facility, (iv) advances from Rank Group and (v) available cash of UCI International.

Accounting Principles

Unless otherwise indicated, financial information in this annual report has been prepared on the basis of and in accordance with GAAP.

Forward-Looking Statements

This annual report contains forward-looking statements. The words “believe,” “expect,” “anticipate,” “intend,” “estimate” and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. The reader should not place undue reliance on these forward-looking statements. Although forward-looking statements reflect management’s good faith beliefs, reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements speak only as of the date the statements are made. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to:

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We derive many of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Several important factors that could cause actual results to differ materially from our expectations are disclosed under “Part I, Item 3. Key Information — Risk Factors” in this annual report. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the above cautionary statements as well as other cautionary statements that are made from time to time in our public communications. You should evaluate all forward-looking statements made in this annual report in the context of these risks and uncertainties.

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PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS.

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE.

Not applicable.

ITEM 3. KEY INFORMATION.

Selected Historical Consolidated Financial Data

The selected financial data has been derived from Holdings’ and, prior to Holdings’ inception, UCI International’s audited consolidated financial statements. The financial data of Holdings as of December 31, 2013 and 2012 and for the Successor years ended December 31, 2013, 2012 and 2011 has been derived from the audited consolidated financial statements of Holdings included elsewhere in this annual report. We derived the balance sheet data as of December 31, 2011 and 2010 and the statement of comprehensive income (loss) for the Successor year ended December 31, 2010 from the audited consolidated financial statements of Holdings that are not included herein. The financial data of UCI International for the Predecessor period January 1, 2011 through January 25, 2011 has been derived from the audited consolidated financial statements of UCI International, included elsewhere in this annual report. We derived the balance sheet data as of December 31, 2010 and 2009 and the statements of comprehensive income (loss) data for the Predecessor years ended December 31, 2010 and 2009 from the audited consolidated financial statements of UCI International that are not included herein. Because Holdings was formed on November 26, 2010 in connection with the Transactions, it has no consolidated financial statements as of or for periods ended prior to that date. Prior to the UCI Acquisition, Holdings generated no revenue and incurred no expenses other than merger and acquisition costs of $1.3 million related to the UCI Acquisition.

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In the Successor years ended December 31, 2013, 2012 and 2011, we incurred $1.1 million, $6.0 million and $7.1 million, respectively, of costs related to the implementation of our cost sharing and manufacturing arrangements with FRAM Group.

In the Predecessor years ended December 31, 2010 and 2009, we incurred $6.5 million and $2.2 million, respectively, of costs related to evaluating strategic opportunities including potential merger and acquisition and capital structure activities that are non-operating in nature. Costs in the Predecessor year ended December 31, 2010 include costs related to a proposed initial public offering of UCI International, Inc.’s stock that was withdrawn in November 2010 and costs associated with the UCI Acquisition.

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Risk Factors

You should carefully consider the risks and uncertainties described below and the other information in this annual report, including the discussions set forth in “Part I, Item 4. Information on Holdings and its Subsidiaries” and “Part I, Item 5. Operating and Financial Review and Prospects,” as well as the audited consolidated financial statements and related notes included elsewhere in this annual report.

Risks Related to Our Business

Economy, Market and Industry Conditions

Continued volatility in and disruption to the global economic environment may materially and adversely affect our business, financial condition and results of operations.

The global economy has continued to experience a period of significant uncertainty, characterized by very weak or negative economic growth, high unemployment, reduced spending by consumers and businesses, the bankruptcy, failure, collapse or sale of various businesses and financial institutions and a considerable level of intervention from the U.S. federal government and various foreign governments.

Consumers’ driving habits are impacted by economic conditions, with weak economic conditions generally leading to a reduction in miles driven and thereby increasing the periods between vehicle maintenance and repairs. In the latter part of 2008 and 2009, consumers’ driving habits were impacted by deteriorating economic conditions. U.S. Department of Energy statistics indicate that miles driven in the United States for the year 2008 were 3.3% lower than for 2007. This was the first annual decrease since 1980. While miles driven have increased four of the five years since 2008, with the exception of a 2.2% decrease in 2011, the increases have been small and intermittent, mirroring the U.S. economic recovery. Compared to the prior year, miles driven increased 1.6%, 0.6%, 0.8% and 0.6% in 2009, 2010, 2012 and 2013, respectively. If miles driven were to continue to remain fairly flat or decrease and consumers extend the mileage interval for routine maintenance, we could experience a decline in demand for our products due to a reduction in the need for replacement parts.

Consumer driving habits are also affected by gasoline prices at the pump. For example, during the years 2009 through 2011, general consumer discretionary spending was affected by significant increases in U.S. average gasoline prices at the pump, which increased approximately 83% from January 2009 through December 2011. Although U.S. average gasoline prices were similar in December 2011 and December 2013, there remained a significant amount of volatility in gasoline prices as evidenced by quarterly increases in three of the last eight quarters ranging from 8.8% to 17.7%, and decreases ranging from 2.2% to 14.0% in the other five quarters. The spikes in gasoline prices reflect the near record highs reached in March, April and September 2012.

In addition, demand for automotive products such as ours is linked to consumer demand for automobiles, which is impacted by the economic environment. Difficult economic conditions may cause changes to the business models, products, financial condition or consumer financing and rebate programs of the OEMs, adversely affecting the number of cars produced and purchased. For example, North American light vehicle sales reached their lowest point in nearly three decades in 2008. While light vehicle sales began rebounding in 2009 and have rebounded to pre-2008 levels in 2013, the impact of fewer cars being sold and fewer cars on the road can have an adverse impact on the demand for our products, reducing purchases by our customers in the aftermarket and by the OEMs.

In 2013, payroll tax increases and economic uncertainty surrounding the U.S. federal governmental shutdowns and fiscal spending cuts have negatively impacted consumer confidence and discretionary spending habits.

If economic conditions do not continue to improve or begin deteriorating, we may experience a material adverse impact on our business and operating results.

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The economic environment and adverse credit market conditions may significantly affect our ability to meet liquidity needs and may materially and adversely affect the financial soundness of our customers and suppliers.

Volatility and disruption in the capital and credit markets, such as what was experienced in the latter part of 2008 and 2009, may exert downward pressure on the availability of liquidity and credit capacity for many companies. While the 2008 and 2009 market volatility did not materially impair our ability to operate our business, there can be no assurance that similar conditions would not increase the cost of financing or otherwise adversely impact our ability to operate in the future.

We need liquidity to pay our operating expenses, interest on our debt and capital expenditures. Without sufficient liquidity, we will be forced to curtail our operations and our business will suffer. Our primary sources of liquidity are cash on hand, cash flow from operations, factoring of customer trade accounts receivable and available borrowing capacity under the Senior Secured Revolving Credit Facility. Many of our customers place a significant emphasis on lowering their inventories to accounts payable ratios through negotiation of longer payment terms with us. Subject to certain limitations, the Senior Secured Credit Facilities permit sales of and liens on receivables, which are being sold pursuant to factoring arrangements arranged for us by certain customers with a number of banks. At December 31, 2013, we had factoring relationships arranged by seven customers with eight banks. The terms of these relationships are such that the banks are not obligated to factor any amount of receivables. Because of the increase in our utilization of customer factoring programs as a result of our customers negotiating increased payment terms with us, it is possible that these banks may not have the capacity or willingness to fund these factoring arrangements at the levels they have in the past, if at all, or our customers could discontinue their participation in the arrangements, which could have a material adverse impact on our liquidity. If we are not able to factor accounts receivables, we would have to find other ways to finance these receivables or our liquidity would be reduced by having less cash on hand. As part of the factoring arrangements, we are charged discount fees by the banks. If interest rates increase, our costs under these factoring arrangements may increase.

In addition to the potential liquidity risks we face, some of our customers and suppliers could experience serious cash flow problems and, as a result, may find it difficult to obtain financing, if financing is available at all. As a result, our customers’ need for and ability to purchase our products or services may decrease, and our suppliers may increase their prices, reduce their output or change their terms of sale. Any inability of customers to pay us for our products and services, or any demands by suppliers for different payment terms, may materially and adversely affect our earnings and cash flow. Furthermore, our suppliers may not be successful in generating sufficient revenue or securing alternate financing arrangements, and therefore may no longer be able to supply goods and services to us. In that event, we would need to find alternate sources of these goods and services, and there is no assurance that we would be able to find such alternate sources on favorable terms, if at all. Any such disruption in our supply chain could adversely affect our ability to manufacture and deliver our products on a timely basis, and thereby affect our results of operations.

We face competition and increasing pricing pressure in our markets and, therefore, lower-cost production and successful cost savings actions may be required to be able to compete effectively.

We operate in some very competitive and fragmented markets and we compete against numerous different types of businesses, some of which have greater financial or other resources than we do. Although we have significant market positions in each of our product lines within the aftermarket, we cannot be assured that we will be able to maintain our current market share. In the OEM sales channel, some of our competitors have achieved substantially greater market penetration in many of the product lines which we offer. Competition is based on a number of considerations, including product performance, quality of customer service and support, timely delivery and price. Our customers increasingly demand a broad product range, and we must continue to develop our expertise in order to manufacture and market these products successfully. To remain competitive, we will need to invest continuously in manufacturing, working capital, customer service and support, marketing and our distribution networks. We cannot be assured that we will have sufficient resources to continue to make such investments or that we will maintain our competitive position within each of the markets we serve. As a result of competition, we have experienced pricing pressure. There can be no guarantee that this downward price pressure will not continue, and we may be forced to adjust the prices of some of our products to stay competitive, or not compete at all in some markets, possibly resulting in lost revenue.

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The trend toward consolidation and bankruptcies among automotive parts suppliers is resulting in fewer, larger suppliers who benefit from purchasing and distribution economies of scale. If we cannot achieve cost savings and operational improvements sufficient to allow us to compete favorably in the future with these larger companies, our financial condition and results of operations could be adversely affected due to a reduction of, or inability to increase, sales.

In addition, price competition from light vehicle aftermarket suppliers, particularly those based in Asia and other locations with lower production costs, have historically played a role and are playing an increasing role in the aftermarket channels in which we compete. While aftermarket manufacturers in these locations have historically competed primarily in markets for less technologically advanced products and manufactured a limited number of products, they are expanding their manufacturing capabilities to move toward producing a broad range of lower cost, higher quality products and providing an expanded product offering. In the future, competitors in Asia may be able to effectively compete in our premium markets and produce a wider range of products, which may force us to move additional manufacturing capacity to lower cost countries or lower our prices, reducing our margins or decreasing our net sales.

Our strategy to remain cost competitive includes initiatives to improve inventory management and customer delivery, consolidate plant and distribution facilities and otherwise realize cost savings. While we have and will continue to implement these strategies, there can be no assurance that we will be able to do so successfully or that we will realize the projected benefits of these cost saving plans. If we are unable to realize these anticipated cost reductions, we may not be able to compete effectively and our profitability may be adversely affected. Moreover, our continued implementation of cost saving plans and facilities integration may disrupt our operations and performance.

The shift in demand from premium to value brands may require us to produce value products at the expense of premium products, resulting in lower prices, thereby decreasing our net sales and reducing our margins.

While a significant amount of our net sales are currently derived from products we consider to be premium products, there has been, and may continue to be, a shift in demand to value products from premium products, which historically have commanded higher pricing and generated enhanced margins. If such a trend continues, we may be forced to expand our production and/or purchases of value products at competitive prices, which could reduce our margins.

If the North American light vehicle aftermarket adopts more expansive return policies, our cash flow and results of operations could be harmed.

We are subject to returns from customers, some of which may manage their excess inventory through returns. In line with industry practices, arrangements with customers typically include provisions that permit them to return specified levels of their purchases. Returns have historically represented approximately 3% to 5% of our sales. If returns from our customers significantly increase, for reasons such as obsolescence or changes in inventory management by our customers, our profitability may be adversely affected. Further, certain of our products may not be reused or resold upon return.

The introduction of new and improved products and services and the shift from domestic to foreign made vehicles poses a potential threat to the aftermarket for light vehicle parts.

Improvements in technology and product quality are extending the longevity of light vehicle parts and delaying aftermarket sales. In particular, the introduction of oil change indicators, the use of synthetic motor oils and the lengthening of oil change intervals in general are extending oil filter replacement cycles. Since 2011, there has been a 7% increase in oil filter replacement intervals. In addition, improved OEM product quality has increased the life span of original parts, particularly of fuel delivery systems products. As the percentage of these higher quality original parts increases, part replacement rate intervals may increase further resulting in a decline in our net sales. Replacement part intervals have also been impacted by a shift in the mix of foreign-made versus domestic-made vehicles purchased, which could adversely impact the demand for our products causing a decline in our net sales and profitability. In addition, the introduction of electric, fuel cell and hybrid light vehicles may pose a long-term risk to

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our business because these vehicles are unlikely to utilize many of our existing product lines. The introduction of new and improved service initiatives by OEMs also poses a risk to our market share in the light vehicle replacement parts market. In particular, we face market share risk from general automakers, which have introduced increased warranty and maintenance service initiatives, which are gaining popularity. These service initiatives have the potential to decrease aftermarket sales of our products in the traditional and retail sales channels.

Increased crude oil and energy prices and overall economic conditions could reduce global demand for and use of automobiles, which could have an adverse effect on our profitability.

Material increases in the price of crude oil have historically been a contributing factor to the periodic reduction in the global demand for and use of automobiles. A significant increase in the price of crude oil could adversely affect our profitability by reducing global demand for and use of automobiles and shifting customer demand away from larger cars and light trucks, including SUVs, which we believe have more frequent replacement intervals for our products. For example, historical highs in crude oil prices, and corresponding historical highs in gasoline prices, in 2008 impacted our consumers’ driving habits. Specifically, during the years 2009 through 2011, general consumer discretionary spending was affected by significant increases in U.S. average gasoline prices at the pump, which increased approximately 83% from January 2009 to December 2011. Although U.S. average gasoline prices were similar in December 2011 and December 2013, there remained a significant amount of volatility in gasoline prices as evidenced by quarterly increases in three of the last eight quarters ranging from 8.8% to 17.7%, and decreases ranging from 2.2% to 14.0% in the other five quarters. These spikes in gasoline prices reflect the near record highs reached in March, April and September 2012. See “— Continued volatility in and disruption to the global economic environment may materially and adversely affect our business, financial condition and results of operations.” Further, higher gasoline prices may result in a reduction in discretionary spending for auto repairs by our end customers, which could materially adversely impact our results of operations. A reduction in discretionary spending may also result in a decrease in the number of new cars purchased, which may adversely affect the demand for our products by our customers in the aftermarket and by the OEMs. Additionally, higher energy costs may increase our freight expenses associated with the shipping of our products to customers.

Entering new markets and developing new products pose commercial risks.

In the last several years, we have made significant investments as part of our strategy to develop new products and expand into new markets. Maintaining continued development and expansion requires significant investment and resources, and we cannot be assured these resources will continue to be available as needed. We also cannot guarantee that the development of any new product or our expansion into any new market will be successful, or whether we will be able to meet the needs of new customers or compete favorably in any new market. Therefore, we may be unable to recover the costs associated with such efforts.

Customer

Our relationship with AutoZone creates risks associated with a concentrated net sales source.

We generate a large percentage of our net sales from our business with AutoZone, but we cannot be certain that AutoZone will continue to purchase from us. Net sales to AutoZone accounted for 29.2%, 32.6% and 32.3% of our total net sales in the Successor years ended December 31, 2013 and 2012 and the Combined Year Ended December 31, 2011, respectively. Several of our competitors are likely to pursue business opportunities with this customer and threaten our current position. If we fail to maintain this relationship, our net sales will be significantly diminished. Even if we maintain our relationship, our net sales concentration as a result of this relationship increases the potential impact to our business that could result from any changes in the economic terms of this relationship or in AutoZone’s business. Any change in the terms of our sales to this customer could have a material impact on our financial position and results of operations. Further, to the extent AutoZone’s overall business or market share decrease, or fail to increase, we may be adversely impacted.

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Our contracts with our customers are generally short-term and do not require the purchase of a minimum amount.

We do not typically enter into firm, long-term agreements with customers for the sale of our products. Instead, our products are sold through a series of purchase orders based on our customers’ current or projected needs. By not having long-term agreements in place, we risk losing customers, or sales of a certain product to any particular customer, on relatively short notice. The loss of a significant customer, or a significant reduction in sales to a particular customer, could have a material impact on our financial position and results of operations.

The consolidation of our customers can have adverse effects on our business.

Our financial condition and results of operations could also be adversely affected because the customer base for automotive parts is decreasing in both the OEM/OES channel and aftermarket. As a result, we are competing for business from fewer customers. Due to the growing market share of these major customers, we have been, and expect to continue to be, requested to reduce prices. We cannot be certain that we will be able to generate cost savings and operational improvements in the future that are sufficient to offset price reductions requested by existing customers and necessary to win additional business.

We could be materially adversely affected by changes or imbalances in currency exchange and other rates.

As a result of increased production outside the U.S. and sourcing of components and completed parts for resale, we are exposed to risks related to the effects of changes in foreign currency exchange rates, principally exchange rates between the U.S. dollar and the Chinese yuan and the U.S. dollar and the Mexican peso. The value of the Chinese yuan against the U.S. dollar increased 2.9% during the year ended December 31, 2013 and 1.9% during the year ended December 31, 2012. As a result, the costs of goods imported from China that are denominated in Chinese yuan increased. If we are unable to negotiate commensurate price decreases from our Chinese suppliers, these higher prices would eventually translate into higher cost of sales. In that event, we would attempt to obtain corresponding price increases from our customers, but there can be no assurances that we would be successful.

Prior to 2012, our Mexican operations sourced a portion of inventory from the United States. In 2012, we initiated, and in 2013 we completed, a restructuring plan affecting our Mexican operations, which reduced the amount of U.S. sourced inventory purchased by our Mexican operations, thereby decreasing our currency exposure risk related to these inventory purchases. A strengthening of the U.S. dollar against the Mexican peso means that our Mexican operations pay more pesos to obtain inventory from the United States, which would translate into higher cost of sales. Conversely, a weakening of the U.S. dollar against the Mexican peso means that our Mexican operations pay fewer pesos to obtain inventory from the United States, which would translate into lower cost of sales. During the year ended December 31, 2013, the U.S. dollar strengthened against the Mexican peso by 1.6%, which ended a downward trend that began in the second half of 2012. During the year ended December 31, 2012, the U.S. dollar weakened against the Mexican peso by 6.6%. During the year ended December 31, 2011, the U.S. dollar strengthened against the Mexican peso by 11.3%.

We currently do not enter into foreign exchange forward contracts to hedge transactions in major currencies. Even if we wished to do so in the future, we may not be able, or it may not be cost-effective, to enter into contracts to hedge our foreign currency exposure.

Operational

Increases in our raw materials and component costs or the loss of a number of our suppliers could adversely affect our profitability.

We depend on third parties for the raw materials and components used in our manufacturing processes. We generally purchase our materials on the open market. However, in certain situations we have found it advantageous to enter into long-term contracts for certain commodities purchases. Our raw materials include hot roll steel and other commodities such as aluminum, iron, resin, rubber and multiple petrochemical products, including packaging and media. During periods of peak demand for our raw materials, we experience significant price volatility, increases and/or surcharges. These higher costs affect the prices we pay for raw materials

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and for purchased component parts and finished products. The prices of these commodities have fluctuated significantly in recent years, and future volatility in the prices of these commodities could increase the costs of manufacturing our products. Additionally, we experience from time to time longer lead times and expedited freight costs due to logistics constraints in shipping products from China.

Since the economic downturn of 2008-2009, we have experienced sporadic increases in certain commodity costs and extended lead times as the general economy has improved slightly and at an uneven pace. A further economic recovery would likely increase the demand for many of the commodities used in our business. While we have been able to obtain sufficient quantities of these commodities to satisfy our needs, increased demand from current levels for these commodities could result in further cost increases and may make procurement more difficult in the future. We may not be able to pass on any increased costs to our customers and this could have a material adverse effect on our financial condition, results of operations and cash flows. Even in the event that increased costs can be passed through to customers, our gross margin percentages would decline. While we currently maintain alternative sources for steel and most other materials, our business is subject to the risk of additional price fluctuations and periodic delays in the delivery of our raw materials. Any such price fluctuations or delays, if material, could harm our profitability and operations. In addition, the loss of a substantial number of suppliers could result in material cost increases or reduce our production capacity. We are also significantly affected by the cost of natural gas used for fuel and the cost of electricity. Natural gas and electricity prices have historically been volatile.

In order to mitigate the effects of these price increases, we continually undertake initiatives focused on reducing our costs to procure raw materials and commodities. However, there can be no assurance that these initiatives will be successful at reducing our procurement costs in the future.

We monitor sources of supply to attempt to assure that adequate raw materials and other supplies needed in manufacturing processes are available. However, we do not typically enter into hedge transactions to reduce our exposure to price risks and there can be no assurance that we will be successful in passing on these attendant costs if these risks were to materialize. In addition, our operations could be disrupted and our profitability could be adversely impacted if, (i) we are unable to continue to purchase our required quantities of raw materials on commercially reasonable terms or at all, (ii) we are unable to maintain or enter into purchasing contracts for commodities or (iii) delivery of materials from suppliers is delayed or non-conforming.

Our international operations are subject to uncertainties that could affect our operating results.

Our business is subject to certain risks associated with operating internationally. Our non-U.S. sales represented approximately 18% of our total net sales for the Successor year ended December 31, 2013. In addition, we operate seven manufacturing facilities outside of the United States. Accordingly, our future results could be harmed by a variety of factors, including but not limited to:

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In addition, we may face obstacles in China, including a cumbersome bureaucracy and significant political, economic and legal risks, which may adversely affect our operations in that country.

As we continue to expand our business globally, our success will depend, in large part, on our ability to anticipate and effectively manage these and other risks associated with our international operations. However, any of these factors could adversely affect our international operations and, consequently, our operating results.

We may be subject to work stoppages at our facilities, or our customers may be subjected to work stoppages, either of which could negatively impact the profitability of our business.

As of December 31, 2013, we had approximately 3,900 employees, with union affiliations and collective bargaining agreements at two of our facilities, representing approximately 13% of our workforce. The collective bargaining agreement for our Fond du Lac, Wisconsin plant expires in April 2015. The collective bargaining agreement for our Fairfield, Illinois plant was renewed in August 2013 and will expire in August 2014. Since 1984, we have had one work stoppage, which lasted for three days at our Fairfield, Illinois plant. If our unionized workers were to engage in a strike, work stoppage or other slowdown in the future, we could experience a disruption of our operations, which could interfere with our ability to deliver products on a timely basis and could have other negative effects, such as decreased productivity and increased labor costs. We may also incur increased labor costs in the event that more of our work force becomes unionized or as a result of any renegotiation of our existing labor arrangements. In addition, many of our direct and indirect customers and vendors have unionized workforces. Strikes, work stoppages or slowdowns experienced by these customers or vendors or their other suppliers could result in slowdowns or closings of assembly plants that use our products or supply materials for use in the production of our products. Organizations responsible for shipping our products may also be impacted by occasional strikes. Any interruption in the delivery of our products could reduce demand for our products and could have a material adverse effect on us.

If the products we manufacture or distribute are found to be defective, we could incur significant costs and our reputation could be adversely affected.

We face a business risk of exposure to product liability claims in the event that the use of our products has, or is alleged to have, resulted in injury, death or other adverse effects. We currently maintain product liability insurance coverage, but we cannot be assured that we will be able to obtain such insurance on acceptable terms in the future, if at all, or that any such insurance will provide adequate coverage against potential claims. Product liability claims can be expensive to defend and can divert the attention of management and other personnel for long periods of time, regardless of the ultimate outcome. An unsuccessful product liability defense could have a material adverse effect on our business, financial condition, results of operations or prospects. If one of our products is determined to be defective, we may face substantial warranty costs and may be responsible for significant costs associated with a product recall or a redesign. In addition, our business depends on the strong brand reputation we have developed. In the event that our reputation is damaged, we may face difficulty in maintaining our pricing positions with respect to some of our products or have reduced demand for our products, which could negatively impact our net sales and profitability.

If we are unable to meet future capital requirements, our business may be adversely affected.

We periodically make capital investments to, among other things, maintain and upgrade our facilities, expand capacity and enhance our production processes. We may have to incur capital expenditures to maintain and grow our business. Historically, we have been able to fund these expenditures through cash flow from operations and borrowings under the Senior Secured Credit Facilities. However, the Senior Secured Credit Facilities contain limitations that could affect our ability to fund our future capital expenditures and other capital requirements. We cannot be assured that we will have, or be able to obtain, adequate funds to make all necessary capital expenditures when required, or that the amount of future capital expenditures will not be materially in excess of our anticipated or current expenditures. If we are unable to make necessary capital expenditures, our product lines may become dated, our

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productivity may be decreased and the quality of our products may be adversely affected, which, in turn, could reduce our net sales and profitability.

We are subject to risks associated with changing manufacturing techniques, which could place us at a competitive disadvantage.

The successful implementation of our business strategy requires us to continuously evolve our existing products and introduce new products to meet customers’ needs in the industries we serve. Our products are characterized by stringent performance and specification requirements that mandate a high degree of manufacturing and engineering expertise. If we fail to meet these requirements, our business could be at risk. We believe that our customers rigorously evaluate their suppliers on the basis of a number of factors, including:

Our success will depend on our ability to continue to meet our customers’ changing specifications with respect to these criteria. We cannot be assured that we will be able to address technological advances or introduce new products that may be necessary to remain competitive within our markets. Furthermore, we cannot be assured that we can adequately protect any of our own technological developments to produce a sustainable competitive advantage.

We may not be successful in realizing cost savings or purchasing benefits from our cost sharing and manufacturing arrangements with FRAM Group.

On July 29, 2011, Rank Group and one of its affiliates, which are ultimately owned by Mr. Graeme Hart, completed the purchase of FRAM Group, the former automotive consumer products business of Honeywell International, Inc. UCI International and FRAM Group are operated by a common senior management team. UCI International and FRAM Group each include filtration product businesses. After the acquisition of FRAM Group, an extensive analysis was conducted to identify cost savings and efficiency opportunities. During 2012, we began implementing these initiatives and have started to realize cost savings and operational efficiencies between the two filtration businesses as well as to consolidate a number of administrative functions to reduce the costs of the respective companies. We believe these and other future opportunities have resulted in, and will continue to result in, cost savings that will benefit both UCI International and FRAM Group. However, we may not be able to achieve the anticipated cost savings or purchasing benefits in connection with our cost sharing and manufacturing arrangements with FRAM Group. Such activities inherently involve risks, including those associated with assimilating different business operations, corporate cultures, personnel, infrastructure and technologies or products and increasing the scope, geographic diversity and complexity of our operations. There may be additional costs or liabilities that are not currently anticipated, including unexpected loss of key employees or customers and hiring additional management and other critical personnel. These activities may also be disruptive to our ongoing business and not be favorably perceived by our customers.

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Other

It may be difficult for us to recruit and retain the types of highly skilled employees we need to remain competitive.

Our continued success depends in part on our ability to recruit, retain and motivate highly skilled sales, marketing and engineering personnel. Competition for persons in our industry is intense and we may not be able to successfully recruit, train or retain qualified personnel. If we fail to retain and recruit the necessary personnel, our business and our ability to obtain new customers and retain existing customers, develop new products and provide acceptable levels of customer service could suffer. We have entered into employment agreements with certain of our key personnel. However, we cannot be assured that these individuals will stay with us. If any of these persons were to leave our company, it could be difficult to replace him or her, and our operations and ability to manage day-to-day aspects of our business may be materially adversely affected.

Environmental, health and safety laws and regulations may impose significant compliance costs and liabilities on us.

We are subject to many environmental, health and safety laws and regulations governing emissions to air, discharges to water, the generation, handling and disposal of waste and the investigation and cleanup of contaminated properties. Compliance with these laws and regulations is costly. We have incurred, and expect to continue to incur, significant costs to maintain or achieve compliance with applicable environmental, health and safety laws and regulations. Moreover, if these environmental, health and safety laws and regulations become more stringent in the future, we could incur additional costs. We cannot assure that we are in full compliance with all environmental, health and safety laws and regulations. Our failure to comply with applicable environmental, health and safety laws and regulations and permit requirements could result in civil or criminal fines, penalties or enforcement actions, third-party claims for property damage and personal injury, requirements to investigate or cleanup property or to pay for the costs of investigation or cleanup or regulatory or judicial orders enjoining or curtailing operations or requiring corrective measures, including the installation of pollution control equipment or remedial actions.

We may be subject to liability under the Comprehensive Environmental Response, Compensation and Liability Act and similar state or foreign laws for contaminated properties that we currently own, lease or operate or that we or our predecessors have previously owned, leased or operated, and for sites to which we or our predecessors sent hazardous substances. Such liability may be joint and several so that we may be liable for more than our share of contamination and any such liability may be determined without regard to fault or knowledge of contamination. We or our predecessors have been named potentially responsible parties at contaminated sites from time to time in the past.

We are currently investigating or remediating, or are otherwise currently responsible for, contamination at several sites, for which management believes it has made adequate reserves. See “Part I, Item 4. Information on Holdings and its Subsidiaries — Environmental, Health and Safety Matters.” In addition, we occasionally evaluate various alternatives with respect to our facilities, including possible dispositions or closings. Investigations undertaken in connection with these activities may lead to discoveries of contamination that must be remediated, and closings of facilities may trigger remediation requirements that are not applicable to operating facilities. We may also face lawsuits brought by third parties that either allege property damage or personal injury as a result of, or seek reimbursement for costs associated with, such contamination.

We may not be able to continue to grow through acquisitions of, or investments in, other companies.

In the past we have grown through acquisitions and partnership opportunities and we may engage in similar transactions in the future, including as a result of the investment strategy of our strategic owner, Mr. Graeme Hart. Such transactions, however, involve significant risks including the integration of the newly acquired business, the diversion of management’s attention from other business concerns and effects on our business relationships with customers and suppliers. We cannot be assured that we will successfully identify suitable acquisition or partnership opportunities in the future, and in the event we do commence with such transactions, we cannot be assured we will be successful at integrating the newly acquired businesses or that they will perform as anticipated. Any such failure could have a material adverse effect on our business.

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Our intellectual property may be misappropriated or subject to claims of infringement.

We attempt to protect our intellectual property rights through a combination of patent, trademark, copyright and trade secret protection, as well as licensing agreements and third-party non-disclosure and assignment agreements. The costs associated with the protection of our intellectual property are ongoing and in some instances may be substantial. We cannot be assured that any of our applications for protection of our intellectual property rights will be approved or that others will not infringe or challenge our intellectual property rights. We currently, and may continue in the future to, rely on unpatented proprietary technology. It is possible that our competitors will independently develop the same or similar technology or otherwise obtain access to our unpatented technology. To protect our trade secrets and other proprietary information, we require employees, consultants and advisors to maintain the confidentiality of our trade secrets and proprietary information. We cannot be assured that these measures will provide meaningful protection for our trade secrets, know-how or other proprietary information in the event of any unauthorized use, misappropriation or disclosure. If we are unable to maintain the proprietary nature of our technologies, our ability to sustain margins on some or all of our products may be affected, which could reduce our sales and profitability.

In addition, from time to time, we pursue and are pursued in potential litigation relating to the protection of certain intellectual property rights, including with respect to some of our more profitable products. In some instances, we may be found to have infringed on the intellectual property rights of others. In such a case, we may incur significant costs or losses and may be subject to an injunction that would prevent us from selling a product found to infringe.

An impairment in the carrying value of goodwill, intangible assets or other long-lived assets could negatively affect our consolidated results of operations and net worth.

Pursuant to GAAP, we are required to annually assess our goodwill, intangible assets and other long-lived assets to determine if the values are impaired. In addition, interim reviews must be performed whenever events or changes in circumstances indicate that impairment may have occurred. If the testing performed indicates that impairment has occurred, we are required to record a non-cash impairment charge for the difference between the carrying value of the goodwill or other intangible assets and the implied fair value of the goodwill or other intangible assets in the period the determination is made. Disruptions to our business, end market conditions, protracted economic weakness and unexpected significant declines in operating results may result in impairment charges for goodwill, intangible assets and other long-lived assets. We assess the potential impairment of goodwill and indefinite-lived intangibles on an annual basis, as of December 31, as well as when interim events or changes in circumstances indicate that the carrying value may not be recoverable. We assess definite lived intangible assets and other long-lived assets when events or changes in circumstances indicate that the carrying value may not be recoverable. Our most recent annual goodwill impairment test resulted in no impairment charges. However, our 2013 annual indefinite-lived intangibles impairment tests resulted in a $2.0 million trademark impairment loss. Further changes in our business environment or materially different assumptions regarding the future performance of our businesses could result in impairment losses on goodwill, intangible assets or other long-lived assets. As a result of the current year impairment, there is no difference between the book value and the recoverable amount of one of our indefinite-lived intangible assets, which increases the risk of having to record an additional impairment in the future as a result of the factors discussed above.

Our pension obligations could adversely impact our business.

We sponsor defined benefit pension plans that were underfunded by $49.0 million at December 31, 2013 and $106.7 million at December 31, 2012. Following the UCI Acquisition, our funding policy for pension plans is to fund amounts sufficient to maintain a minimum 80% funded level. During 2013, we contributed $3.5 million to our defined benefit pension plans. If the performance of the assets in the defined benefit pension plans does not meet our expectations or actuarial assumptions, our required contributions may be significantly greater than we currently expect. In such an event, our cash flows may be insufficient to make such a payment or otherwise be negatively impacted.

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Compliance with new regulations regarding the use of “conflict minerals” could limit the supply and increase the cost of certain metals used in manufacturing our products.

Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, requires the SEC to promulgate new disclosure requirements for manufacturers of products containing certain minerals which are mined from the Democratic Republic of Congo and adjoining countries. These “conflict minerals” may be found in materials used in the manufacture of some of our products. Manufacturers are also required to disclose their efforts to prevent the sourcing of such minerals and metals produced by that country. The new disclosure rules will take effect in May 2014, one year after the promulgation of the SEC’s final rules. The implementation of these new regulations may limit the sourcing and availability of some of the metals used in the manufacture of our products. The regulations may also reduce the number of suppliers who provide conflict-free minerals and metals, and may affect our ability to obtain products in sufficient quantities or at competitive prices. We may also incur significant costs for due diligence to determine whether conflict minerals are used in our products and, if so, the sources of those materials.

Risks Related to Our Structure, the Guarantees and the Senior Notes

Our substantial indebtedness could adversely affect our ability to fulfill our obligations under the Senior Notes.

We have a substantial amount of outstanding indebtedness. As of December 31, 2013, we had (i) outstanding indebtedness of $400.0 million in aggregate principal amount of Senior Notes, (ii) $291.0 million of outstanding borrowings under the Senior Secured Term Loan Facility, and (iii) $0.7 million in other long-term debt, short-term borrowings and capital lease obligations. In addition, we currently have available $67.7 million under the Senior Secured Revolving Credit Facility ($7.3 million of letters of credit were issued under the Senior Secured Revolving Credit Facility at December 31, 2013). Our substantial indebtedness could have significant consequences. For example, it could:

Despite our substantial indebtedness we may be able to incur substantially more debt.

Despite our substantial indebtedness we may be able to incur or issue substantial additional debt in the future. Although restrictions on the incurrence of additional debt are contained in the indenture governing the Senior Notes, in the terms of our Senior Secured Credit Facilities and in our other financing arrangements, these restrictions are subject to a number of qualifications and exceptions and, under certain circumstances, the debt incurred in compliance with such restrictions could be very substantial. Also, these restrictions do not prevent us from incurring obligations that do not constitute indebtedness as defined in such restrictions. Our ability to incur additional indebtedness will depend, in part, upon our satisfaction of certain financial covenants in the indenture governing the Senior Notes and in the terms of our Senior Secured Credit Facilities. The amount of additional indebtedness that we can incur at any point in time will vary materially as a result of historical and pro forma changes in our earnings, cash flows and performance, including as a result of acquisitions.

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Restrictive covenants in the Senior Notes and our other indebtedness could adversely affect our business by limiting our operating and strategic flexibility.

The indenture governing the Senior Notes contains restrictive covenants that limit our ability to, among other things:

These restrictive covenants could have an adverse effect on our financial flexibility, restricting our ability to take advantage of mergers and acquisitions, joint ventures or other growth opportunities and limiting our ability to respond to competitive changes.

The Senior Secured Credit Facilities contain, and our future indebtedness may contain, other and more restrictive covenants and also prohibit us from prepaying certain of our other indebtedness, prior to the discharge of the Senior Secured Credit Facilities or such future indebtedness. The Senior Secured Credit Facilities require us to maintain an interest coverage ratio and a senior secured leverage ratio which becomes more restrictive over time.

If we default on our obligations to pay our other indebtedness, we may not be able to make payments on the Senior Notes.

Any default under the agreements governing our indebtedness, including a default under our Senior Secured Credit Facilities, that is not waived by the required lenders or holders of such indebtedness, and the remedies sought by the holders of such indebtedness, could prevent us from paying principal, premium, if any, and interest on the Senior Notes and substantially decrease the market value of the Senior Notes. If we are unable to generate sufficient cash flow or are otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, and interest on our indebtedness, or if we otherwise fail to comply with the various covenants in the agreements governing our indebtedness, including the covenants contained in our Senior Secured Credit Facilities, we would be in default under the terms of the agreements governing such indebtedness. In the event of such a default under our Senior Secured Credit Facilities, including a failure to satisfy the relevant financial ratios:

As a result of such default and any actions the lenders may take in response thereto, we could be forced into bankruptcy or liquidation.

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Our ability to generate the significant amount of cash needed to pay interest and principal on the Senior Notes and service our other debt and the ability to refinance all or a portion of our indebtedness or obtain additional financing depends on many factors beyond our control.

Our ability to generate sufficient cash flow from operations to make scheduled payments on, or to refinance obligations under, our debt will depend on our financial and operating performance, which, in turn, will be subject to prevailing economic and competitive conditions and to financial and business-related factors, many of which may be beyond our control. See “— Risks Related to Our Business” above.

As of December 31, 2013, we had $691.7 million (excluding original issue discount of $0.6 million) of outstanding indebtedness. For the Successor year ended December 31, 2013, annualized cash interest obligations on our Senior Secured Credit Facilities, the Senior Notes and our other indebtedness was $54.9 million. If our cash flow and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce working capital levels, reduce or delay capital expenditures, sell assets, seek to obtain additional equity capital or restructure all or a portion of our debt. In the future, our cash flow and capital resources may not be sufficient to allow us to make payments of principal and interest on our debt. In addition, any alternative measures we may take may not be successful or be on commercially reasonable terms and may not permit us to meet our scheduled debt service obligations, including the payment of interest or principal in respect of the Senior Notes. We also cannot assure holders of the Senior Notes that we will be able to refinance any of our indebtedness or obtain additional financing, particularly because of our high levels of debt, prevailing market conditions and the debt incurrence restrictions imposed by the agreements governing our debt. In the absence of sufficient cash flow and capital resources, we could face substantial liquidity problems and may be required to dispose of material assets or operations to meet our debt service and other obligations. The indenture governing the Senior Notes, the terms of the Senior Secured Credit Facilities and the agreements governing our other debt restrict, and our future indebtedness is likely to restrict, both our ability to dispose of assets and the use of proceeds from any such disposition. There can be no assurance that we will be able to consummate any asset sales, or if we do, what the timing of the sales will be or whether the proceeds that we realize will be adequate to meet our debt service obligations when due or that we will be contractually permitted to apply such proceeds for that purpose. Our inability to generate sufficient cash flow to satisfy our debt obligations, or to implement any of these alternative measures, would have a material adverse effect on our business, financial condition and results of operations.

Mr. Graeme Hart, our strategic owner, controls us through a number of holding companies and may have conflicts of interest with the holders of our debt or us in the future. Our strategic owner may also enter into, or cause us to enter into, strategic transactions that could change the nature or structure of our business, our capital structure or our credit profile.

As a result of the UCI Acquisition, Mr. Graeme Hart indirectly owns all of our common stock, and the actions he is able to undertake as our sole ultimate shareholder may differ from or adversely affect the interests of our debt holders. Because Mr. Hart ultimately controls our voting shares and those of all of our subsidiaries, he has the power, among other things, to affect our legal and capital structure and our day-to-day operations, as well as to elect our directors and those of our subsidiaries, to change our management and to approve any other changes to our operations. Mr. Hart has advised us that an entity controlled by him has pledged its capital stock in the entities that control us in support of indebtedness with respect to which an affiliate under the ultimate common control of Mr. Hart is the obligor. If that affiliate were to default on such obligations, the lenders under the applicable agreements could foreclose on the capital stock that is subject to the pledge, which could result in a change of control with respect to us. The lenders under any indebtedness with respect to which the affiliate of Mr. Hart is the obligor may have interests that differ from those of holders of the Senior Notes or of our lenders under the Senior Secured Credit Facilities.

Additionally, Mr. Hart is in the business of making investments in companies and in the future may seek to acquire interests in businesses that operate in our industry and may compete, directly or indirectly, with us. Mr. Hart may also pursue acquisition opportunities that may be complementary to our business, which could have the effect of making such acquisition opportunities unavailable to us. In the past, Mr. Hart has caused certain of the companies in which he has made investments to acquire or purchase other companies or businesses, in whole or in part, or to enter into transactions and business relationships with other businesses that he controls, directly or indirectly, for the purpose of, among other things, achieving operating synergies and cost savings. If Mr. Hart were

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to cause us to enter into any transaction with another company or business that he acquires or controls, our business or the scope of our operations could significantly change, or we could become part of a group of companies organized under the ultimate common control of Mr. Hart that may be operated in a manner different from the manner in which we have historically operated. Any such group of companies may have a significant amount of indebtedness, and such indebtedness may be secured by substantially all our assets.

Finally, because we have no securities listed on a securities exchange, we are not subject to certain of the corporate governance requirements of any securities exchange, including any requirement to have any independent directors.

An increase in interest rates would increase the cost of servicing our debt and could reduce our profitability.

A significant portion of our outstanding debt, including the borrowings under the Senior Secured Credit Facilities, bears and, potentially, our future indebtedness may bear, interest at variable rates. As of December 31, 2013, we had $291.0 million of variable rate debt outstanding. As a result, an increase in interest rates, whether because of an increase in market interest rates or an increase in our cost of borrowing, would increase the cost of servicing this debt and could materially reduce our profitability and adversely affect our ability to meet our obligations under the Senior Notes. The impact of such an increase would be more significant than it would be for some other companies because of our substantial debt.

UCI International, Inc. and Holdings are holding companies with no operations and no assets other than their investments in their respective subsidiaries. Each conducts all of its operations through its subsidiaries. Accordingly, UCI International, Inc.’s ability to make payments on its indebtedness, including the Senior Notes, and Holdings’ ability to meet its obligations under its guarantee of the Senior Notes, are entirely dependent on the generation of cash flow by their respective subsidiaries.

UCI International, Inc. is a holding company with no operations and no assets other than its investments in its subsidiaries, and it conducts all of its operations through its subsidiaries. UCI International, Inc.’s ability to make payments on the Senior Notes and its other indebtedness is entirely dependent on the earnings and the distribution of funds from its subsidiaries.

Accordingly, repayment of UCI International, Inc.’s indebtedness, including the Senior Notes, depends on the generation of cash flow by its subsidiaries, and (if they are not guarantors of the Senior Notes) the ability of subsidiaries to make such cash available to UCI International, Inc. whether by dividend, debt repayment, investment, loan, advance or otherwise. Unless they are guarantors of the Senior Notes, UCI International, Inc.’s subsidiaries do not have any obligation to pay amounts due on the Senior Notes or to make funds available for that purpose. UCI International, Inc.’s subsidiaries may not be able to make payments to it to enable it to make payments in respect of its indebtedness, including the Senior Notes. Each subsidiary is a distinct legal entity and, under certain circumstances, legal and contractual restrictions may limit UCI International, Inc.’s ability to obtain cash from its subsidiaries. While the indenture governing the Senior Notes limits the ability of UCI International, Inc.’s subsidiaries to incur consensual restrictions on their ability to pay dividends or make other intercompany payments, these limitations are subject to certain qualifications and exceptions. There can be no assurance that the agreements governing the current and future indebtedness of UCI International, Inc.’s subsidiaries will permit its subsidiaries to provide it with sufficient dividends, distributions or loans to fund scheduled interest and principal payments on the Senior Notes when due. In the event that UCI International, Inc. does not receive payments from its subsidiaries, it may be unable to make required principal and interest payments on its indebtedness, including the Senior Notes. In addition, any payment of interest, dividends, distributions, debt repayments, investments, loans or advances by UCI International, Inc.’s subsidiaries could be subject to restrictions on such payments under applicable local law, monetary transfer restrictions, withholding taxes and foreign currency exchange regulations in the jurisdictions in which the subsidiaries operate or under arrangements with local partners.

In addition, Holdings’ only assets are the equity interests it holds in its subsidiaries. It has no operations of its own and derives all of its revenue and cash flows from its subsidiaries. As a result, it is dependent upon dividends and other payments from its subsidiaries to generate the funds necessary to meet its outstanding debt service and other obligations, including its guarantee of the Senior Notes.

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Holdings’ subsidiaries may not generate sufficient cash from operations to enable it to make principal and interest payments on the Senior Notes in the event Holdings is required to make such payments on the Senior Notes pursuant to its guarantee. Accordingly, Holdings’ guarantee of the Senior Notes provides little, if any, additional credit support for the Senior Notes and investors should not rely on this guarantee in evaluating an investment in the Senior Notes.

The right to receive payments on the Senior Notes is effectively subordinated to the right of lenders who have security interests in our assets, to the extent of the value of those assets.

Our obligations under the Senior Notes and the obligations of the guarantors of the Senior Notes under their guarantees are unsecured and, therefore, are effectively subordinated to our secured obligations and the secured obligations of our existing or future guarantors, to the extent of the value of the assets securing such obligations. All of Holdings’ subsidiaries that guarantee the Senior Notes also guarantee all of our obligations under our Senior Secured Credit Facilities. Our obligations under our Senior Secured Credit Facilities and our subsidiary guarantors’ obligations thereunder are secured by a first-lien security interest in substantially all of such subsidiary guarantors’ assets. As of December 31, 2013, we had $291.0 million of secured indebtedness.

If we are declared bankrupt or become insolvent, or if we default under our Senior Secured Credit Facilities, the lenders could declare all of the funds borrowed thereunder, together with accrued interest, immediately due and payable. If we were unable to repay such indebtedness, the lenders could foreclose on their collateral to the exclusion of holders of the Senior Notes, even if an event of default exists under the indenture governing the Senior Notes at such time. In any such event, because the Senior Notes are not secured by any of our assets or the equity interests in the guarantors, it is possible that there would be no assets remaining from which the claims of holders of the Senior Notes could be satisfied or, if any assets remained, they might be insufficient to satisfy those claims fully.

We may be unable to raise funds necessary to finance the change of control repurchase offers required by the indenture governing the Senior Notes and similar requirements in the agreements governing our other indebtedness.

If a specified change of control occurs in relation to us, we would be required to make an offer to purchase all of the outstanding Senior Notes at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of repurchase. The occurrence of a change of control under the Senior Notes would require that the Senior Secured Credit Facilities, and may require that any of our future indebtedness, be immediately repaid or that we make an offer to repurchase it, possibly at a premium or subject to penalties. We may be dependent on our subsidiaries for the funds necessary to cure the events of default caused by such change of control event. UCI International, Inc. and its subsidiaries may not have sufficient financial resources to purchase all of the Senior Notes that are tendered upon a change of control offer or to redeem such Senior Notes. Our failure to purchase the Senior Notes after a change of control in accordance with the terms of the indenture requiring such purchases would result in a default under the Senior Secured Credit Facilities and the indenture governing the Senior Notes and may result in a default under any future indebtedness.

In the event of a change of control, there can be no assurance that we will have sufficient assets to satisfy all of our obligations under the Senior Secured Credit Facilities, the Senior Notes, any future indebtedness and any other debt requiring repayment upon such event.

The terms of the Senior Secured Credit Facilities limit, and our future indebtedness may limit, our right to purchase or redeem certain indebtedness. In the event any purchase or redemption is prohibited, we may seek to obtain waivers from the required lenders under the Senior Secured Credit Facilities or our future lenders to permit the required repurchase or redemption, but the required lenders do not have, and our future lenders are unlikely to have, any obligation to grant, and may refuse to grant, such a waiver.

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Not all of our subsidiaries guarantee the Senior Notes, and the Senior Notes and the guarantees of the Senior Notes are structurally subordinated to all of the claims of creditors of those non-guarantor subsidiaries.

The Senior Notes are guaranteed by our subsidiaries that guarantee the Senior Secured Credit Facilities. In the future, other subsidiaries will be required to guarantee the Senior Notes only under certain limited circumstances. Therefore, not all of our subsidiaries will guarantee the Senior Notes. Moreover, guarantees may be released from time to time.

In the event that any non-guarantor subsidiary becomes insolvent, is liquidated, reorganized or dissolved, or is otherwise wound up other than as part of a solvent transaction, the assets of such non-guarantor subsidiary are used first to satisfy the claims of its creditors, including its trade creditors, banks and other lenders. Only the residual equity value will be available to us and any other guarantor (and only to the extent the issuer or any guarantor are parent companies of such non-guarantor subsidiary). Consequently, the Senior Notes and each guarantee of the Senior Notes will be structurally subordinated to claims of creditors of non-guarantor subsidiaries. The indenture governing the Senior Notes permits our subsidiaries, including our non-guarantor subsidiaries, to incur additional debt (subject to certain conditions and limitations with respect to restricted subsidiaries) and does not limit their ability to incur trade payables and similar liabilities. In addition, the indenture governing the Senior Notes does not limit the transfer of assets to, or the making of investments in, any of our restricted subsidiaries, including our non-guarantor subsidiaries.

As of December 31, 2013, UCI International, Inc.’s subsidiaries that do not guarantee the Senior Notes accounted for $173.5 million, or approximately 12%, of our total assets, and for the Successor year ended December 31, 2013, UCI International, Inc.’s subsidiaries that do not guarantee the Senior Notes accounted for (i) $85.3 million, or approximately 9%, of our net sales to third parties and (ii) $15.3 million, or approximately 13%, of our total Adjusted EBITDA.

Federal and state fraudulent transfer laws may permit a court to void the Senior Notes or the guarantees, and if that occurs, holders may not receive any payments on the Senior Notes.

The proceeds from the sale of the Senior Notes (together with other funds available on the closing date of the Transactions) were used in part to consummate the UCI Acquisition and pay the purchase price to our prior shareholders. In addition, the Senior Notes are guaranteed by certain of our subsidiaries. Federal and state fraudulent transfer and conveyance statutes may apply to the issuance of the Senior Notes and the incurrence of the guarantees of the Senior Notes. Under federal bankruptcy law and comparable provisions of state fraudulent transfer or conveyance laws, which may vary from state to state, the Senior Notes or the guarantees thereof could be voided as a fraudulent transfer or conveyance if we or any of the guarantors, as applicable, (a) issued the Senior Notes or incurred the guarantee with the intent of hindering, delaying or defrauding creditors or (b) received less than reasonably equivalent value or fair consideration in return for either issuing the Senior Notes or incurring the guarantee and, in the case of (b) only, one of the following is also true at the time thereof:

We cannot be certain as to the standards a court would use to determine whether or not we or any of the guarantors were insolvent at the relevant time or, regardless of the standard that a court uses, whether the Senior Notes or the guarantees would be subordinated to our or any of our guarantors’ other debt. In general, however, a court would deem an entity insolvent if:

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As a general matter, value is given for a note or guarantee if, in exchange for the note or guarantee, property is received or an antecedent debt is satisfied. A debtor will generally not be considered to have received value in connection with a debt offering if the debtor uses the proceeds of that offering to retire or redeem equity securities issued by the debtor. For example, in a transaction such as the initial offering of the Senior Notes, there is increased risk of a determination that we incurred the debt obligations represented by the Senior Notes and the guarantees for less than reasonably equivalent value or fair consideration as a court may find that the benefit of the transaction went to our prior equity holders, while neither we nor the guarantors benefited directly from the Senior Notes or the guarantees. Even if a court found that we received reasonably equivalent value or fair consideration because we received the net cash proceeds from the sale of the Senior Notes, in order to avoid a finding that there was fraudulent transfer with respect to the guarantees, there is an additional requirement of a determination that the guarantors also received reasonably equivalent or fair consideration in exchange for the guarantees that they will grant with respect to the Senior Notes.

If a court were to find that the issuance of the Senior Notes or the incurrence of a guarantee was a fraudulent transfer or conveyance, the court could void the payment obligations under the Senior Notes or that guarantee, could subordinate the Senior Notes or that guarantee to presently existing and future indebtedness of ours or of the related guarantor or could require the holders of the Senior Notes to repay any amounts received with respect to the Senior Notes or that guarantee. Furthermore, the holders of voided Senior Notes would cease to have any direct claim against us or the applicable guarantor. Consequently, our or the applicable guarantor’s assets would be applied first to satisfy our or the applicable guarantor’s other liabilities, before any portion of our or its assets could be applied to the payment of the Senior Notes. Sufficient funds to repay the Senior Notes may not be available from other sources, including the remaining guarantors, if any. In the event of finding that a fraudulent transfer or conveyance occurred, holders may not receive any repayment on the Senior Notes. Further, the avoidance of the Senior Notes could result in an event of default with respect to our and our subsidiaries’ other debt that could result in acceleration of that debt.

Finally, as a court of equity, the bankruptcy court may subordinate the claims in respect of the Senior Notes to other claims against us under the principle of equitable subordination if the court determines that (1) the holders of Senior Notes engaged in some type of inequitable conduct, (2) the inequitable conduct resulted in injury to our other creditors or conferred an unfair advantage upon the holders of Senior Notes and (3) equitable subordination is not inconsistent with the provisions of the U.S. Bankruptcy Code.

Because each guarantor’s liability under its guarantee may be reduced to zero, avoided or released under certain circumstances, holders of the Senior Notes may not receive any payments from some or all of the guarantors.

Holders of the Senior Notes have the benefit of the guarantees of Holdings and certain of its subsidiaries. However, the guarantees are limited to the maximum amount that the guarantors are permitted to guarantee under applicable law. As a result, a guarantor’s liability under a guarantee could be reduced to zero depending on the amount of other obligations of such entity. Further, under certain circumstances, a court under applicable fraudulent conveyance and transfer statutes or other applicable laws could void the obligations under a guarantee or subordinate the guarantee to other obligations of the guarantor. See “— Federal and state fraudulent transfer laws may permit a court to void the Senior Notes or the guarantees, and if that occurs, holders may not receive any payments on the Senior Notes.” In addition, such holders will lose the benefit of a particular guarantee if it is released under certain circumstances.

As a result, an entity’s liability under its guarantee could be materially reduced or eliminated depending upon the amounts of its other obligations and upon applicable laws. In particular, in certain jurisdictions, a guarantee issued by a company that is not in the company’s corporate interests or where the burden of that guarantee exceeds the benefit to the company may not be valid and enforceable. It is possible that a creditor of an entity or the insolvency administrator in the case of an insolvency of an entity may contest the validity and enforceability of the guarantee and that the applicable court may determine that the guarantee should be limited

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or voided. In the event that any guarantees are deemed invalid or unenforceable, in whole or in part, or to the extent that agreed limitations on the guarantee apply, the Senior Notes would be effectively subordinated to all liabilities of the applicable guarantor, including trade payables of such guarantor.

The calculation of Adjusted EBITDA in accordance with the instruments governing our indebtedness permits certain estimates and assumptions that may cause Adjusted EBITDA to differ materially from actual results.

Although the Adjusted EBITDA presentation included in this annual report is derived from our historical financial records, the calculation of Adjusted EBITDA presented in this annual report permits certain estimates and assumptions that may differ materially from actual results. Although our management believes these estimates and assumptions are reasonable, investors should not place undue reliance upon any of these calculations given how they are calculated and the possibility that the underlying estimates and assumptions may ultimately not reflect actual results. In addition, the estimated savings expected from our cost savings plans are merely estimates and may not actually be achieved in the time frame anticipated or at all.

A downgrade, suspension or withdrawal of the rating assigned by a rating agency to our company or the Senior Notes, if any, could cause the liquidity or market value of the Senior Notes to decline.

The Senior Notes have been rated by nationally recognized rating agencies and may in the future be rated by additional rating agencies. There can be no assurance that any rating assigned will remain for any given period of time or that a rating will not be lowered or withdrawn entirely by a rating agency if, in that rating agency’s judgment, circumstances relating to the basis of the rating, such as adverse changes in our business, so warrant. Any downgrade, suspension or withdrawal of a rating by a rating agency (or any anticipated downgrade, suspension or withdrawal) could reduce the liquidity or market value of the Senior Notes.

Any future lowering of our ratings may make it more difficult or more expensive for us to obtain additional debt financing. If any credit rating initially assigned to the Senior Notes is subsequently lowered or withdrawn for any reason, a holder of the Senior Notes may lose some or all of the value of the investment.

ITEM 4. INFORMATION ON HOLDINGS AND ITS SUBSIDIARIES.

Corporate Information

Holdings’ executive offices are located at Level Nine, 148 Quay Street, Auckland 1010, New Zealand and its telephone number is 64 (9) 366-6259. UCI International’s executive offices are located at 1900 West Field Court, Lake Forest, Illinois 60045 and its telephone number is (847) 482-2045.

History and Development

Holdings’ History

Holdings, an entity domiciled in New Zealand, was incorporated on November 26, 2010 for the purpose of consummating the acquisition of UCI International, Inc.

On November 29, 2010, UCI International, Inc. entered into the Merger Agreement by and among UCI International, Inc., Rank Group and Acquisition Co. pursuant to which Acquisition Co. agreed to be merged with and into UCI International, Inc., with UCI International, Inc. continuing as the surviving corporation and an affiliate of Rank Group. On January 26, 2011, Holdings, through its indirect subsidiary Acquisition Co., acquired 100% of the outstanding stock of UCI International, Inc. for a purchase price of $375.0 million and assumed the indebtedness of UCI International. The Merger Agreement did not include any post-closing indemnification obligations or any provision for adjusting the amount payable to stockholders (whether for working capital or otherwise). The merger and the related Transactions were completed on January 26, 2011.

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In addition, on January 26, 2011, we (i) repaid and terminated the 2010 Credit Facility, (ii) purchased $315.0 million aggregate principal amount of the Senior PIK Notes pursuant to a tender offer we commenced on January 5, 2011, (iii) called for redemption all of the Senior PIK Notes that were not purchased as of the date of the UCI Acquisition and (iv) deposited $41.2 million for the satisfaction and discharge of such remaining Senior PIK Notes with the trustee under the indenture for the Senior PIK Notes. The redemption of the remaining Senior PIK Notes was completed on February 25, 2011.

On January 26, 2011, UCI International, Inc. and certain subsidiaries entered into the Senior Secured Credit Facilities, which consist of a $300.0 million Senior Secured Term Loan Facility drawn at closing, and a $75.0 million Senior Secured Revolving Credit Facility, which was undrawn at closing. Also on January 26, 2011, we issued the Senior Notes in an aggregate principal amount of $400.0 million.

The Transactions were financed with (i) the net proceeds from the issuance of the Senior Notes, (ii) the Equity Contribution of $320.0 million, (iii) borrowings under the Senior Secured Term Loan Facility, (iv) advances from Rank Group and (v) available cash of UCI International.

UCI International’s History

UCI International, Inc. was incorporated on March 8, 2006 as a holding company for UCI.

UCI, through its predecessors, has been in operation since 1958. In 2003, UCI purchased all of the issued and outstanding common stock or other equity interests of Champion Laboratories, Inc., Wells Manufacturing Corporation, Wells Manufacturing Canada Limited, Airtex Products S.A., Airtex Products, Inc., (currently Airtex Mfg., Inc.), Talleres Mecanicos Montserrat S.A. de C.V., Brummer Seal de Mexico, S.A. de C.V., Brummer Mexicana en Puebla, S.A. de C.V., Automotive Accessory Co. Ltd and Airtex Products, LLC. These companies, along with ASC, purchased in 2006, represent UCI’s primary operating subsidiaries.

Our Business

We are a leading supplier to the light and heavy-duty vehicle aftermarket for replacement parts, supplying a broad range of filtration, fuel delivery systems, vehicle electronics and cooling systems products. We believe, based on management estimates, that we maintain a leading market position in each of our four product lines, including the number one market position by revenue in both fuel delivery systems and cooling systems in the North American light vehicle aftermarket. In the Successor year ended December 31, 2013, approximately 78% of our net sales, including approximately 8% related to the OES channel, were generated from sales to a diverse group of aftermarket customers, including some of the largest and fastest growing companies in our industry. We have developed a global and low-cost manufacturing, sourcing and distribution platform and we sell into multiple sales channels, including retailers, wholesale distributors, dealers and the heavy-duty vehicle market. Our principal end-markets include light vehicles, commercial vehicles and construction, mining, agricultural, marine and other industrial equipment.

We believe we have one of the most comprehensive product lines in the aftermarket, offering approximately 44,300 unique part numbers. The majority of our products, including fuel delivery systems, vehicle electronics and cooling systems, are non-discretionary parts that must be replaced upon failure for the vehicle to successfully operate. In addition, filtration products are replaced at regular maintenance intervals, generating a predictable, recurring revenue stream. This overall product mix provides a stable base of business, even in difficult economic cycles.

Aftermarket sales generally are tied to the regular replacement cycle or the natural wearing cycle of a vehicle part; accordingly, we expect industry growth will be heavily influenced by the following key factors: increasing global vehicle population, aging of vehicle population, increasing vehicle miles driven and a growing heavy-duty aftermarket.

We have established longstanding relationships with some of the largest companies in the aftermarket, such as Advance, AutoZone, CARQUEST, NAPA and O’Reilly. We have maintained our key customer relationships for approximately 20 years on average. We also supply to select OEM platforms that complement our core aftermarket business and provide us with visibility into

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emerging product trends. We believe our high-quality product portfolio and superior services, combined with our product support and category management services, enhance our customers’ financial and operating performance, allow us to achieve strong operating margins and position us well for profitable growth.

We design, develop, manufacture and distribute replacement parts that can be used in a substantial majority of light vehicles in operation in North America, including approximately 95% of pre-2009 models. Our four product lines provide a stable and diverse base of business, even in difficult economic cycles, and can be classified into two groups:

The following table sets forth information about our four product lines:

		Filtration		Fuel Delivery Systems		Vehicle Electronics		Cooling Systems
Products		•      Oil Filters   •      Air Filters   •      Fuel Filters   •      Cabin Air, Transmission. Hydraulic and Industrial Filters		•      Fuel Pump Assemblies   •      Electric Fuel Pumps   •      Mechanical Fuel Pumps   •      Strainers and Kits		•      Sensors   •      Coils   •      Switches   •      Caps and Rotors Emission Control		•      Aluminum and Cast Iron Cooling Systems   •      Fan Clutches
% of Total Net Sales(1)		38%		19%		21%		22%
Number of Parts(2)		5,000		1,900		36,000		1,400
Number of Customers(2)		1,600		600		300		900
Representative Brands(3)

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Seasonality

We do not experience any significant seasonal fluctuation in our business, net sales or profitability.

Our Competitive Strengths

Aftermarket focus with a leading position in our product lines. We are one of the largest aftermarket focused suppliers in North America, with approximately $776 million, or approximately 78% of our net sales, including approximately 8% related to the OES channel, for the Successor year ended December 31, 2013, attributable to the aftermarket. We believe, based on management estimates, that we maintain a leading market position in each of our four product lines, including the number one market position by net sales in both fuel delivery systems and cooling systems in the North American light vehicle aftermarket. This market leadership is further bolstered by our family of brand names, which are widely recognized and respected in the light and heavy-duty vehicle aftermarkets.

Attractive aftermarket product portfolio. We believe that we have an attractive product portfolio for several reasons, including:

Long-standing and deep relationships with industry leading customers. We have a diverse and extensive customer base with embedded long-term relationships, and we are a leading supplier to some of the largest companies in the aftermarket and have maintained our key relationships for approximately 20 years on average. We have supplied our largest customer, AutoZone, since it opened its first store in 1979, and we are one of its largest suppliers today, with net sales of $290.4 million, or 29.2% of our total net sales, for the Successor year ended December 31, 2013. Underscoring the value we deliver, we have been selected as the “Category Captain” for our product lines at many of our customers. In this important role, we are responsible for analyzing market data and making product recommendations for a specific product category in order to drive higher customer sales and profitability. These recommendations, which include optimal inventory level and mix, marketing and promotion concepts and product positioning, are integral to our customers’ overall product strategy and procurement practices. These “Category Captain” responsibilities position us well to profitably grow alongside our customers.

Capability to enhance customer financial and operating performance. Through our strong service and delivery capabilities, broad product coverage, high product quality, engineering resources and product management support (such as cataloging and technical support), we enhance our customers’ financial and operating performance. We supply approximately 44,300 unique part numbers, providing our customers with one of the most comprehensive product offerings in our product categories. We believe that this breadth of product numbers enables our customers to fulfill their customers’ needs often to a greater extent than many of our competitors, adding revenue and end-consumer satisfaction while providing us with increased revenue. We deliver these products in a timely fashion, allowing our customers to offer the right product, at the right place, at the right time. Our ability to reliably deliver a broad variety of products in a timely fashion, evidenced by our ability to ship products within 24 to 48 hours of the order, also allows our customers to reduce their working capital investment. Additionally, we utilize a flexible branding strategy, which includes our own brands, licensed brands and private label brands to best meet the needs of our customers.

Innovative category management expertise. We believe our sophisticated category management capabilities are highly valued by our customers and provide us a competitive advantage. Our category management process utilizes our experienced professionals, specialized software and proprietary processes and tools to analyze industry, competitive and customer inputs to develop and recommend specific targeted actions to our customers. These targeted actions help our customers improve their sales growth and category profitability, increase consumer satisfaction through robust parts availability and minimize their working capital needs

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through enhanced inventory efficiency. Our early adoption of these innovative category management services has strengthened our customer relationships, as evidenced by our “Category Captain” status with key customers across multiple product areas. Successful application of these services within our customer base has enabled us to increase our customer retention, expand sales of our products, optimize our product sourcing decisions through increased market visibility and penetrate new customers across the aftermarket.

Global and low-cost manufacturing, sourcing and distribution platform. We operate manufacturing facilities in low-cost countries, including a presence of over 20 years in both China and Mexico, and have invested significantly in automation throughout our global operations. We have made investments to establish Chinese filtration and fuel pump manufacturing facilities which complement our existing cooling system operations. Currently, approximately 22%, 6% and 4% of our total workforce is located in China, Mexico and Europe, respectively. In addition to our three manufacturing facilities, we have two sourcing offices in China, with low-cost product development, supplier development, engineering resources and procurement capabilities. Our world-wide distribution network allows us to provide unique direct shipment capabilities. These global capabilities enable us to provide our customers with quality components at a competitive cost on a timely basis.

Our Strategy

Our objective is to continue to be a market leader by providing superior products and services to our customers while maximizing sustainable free cash flow. Over the past several years, we have invested significant resources to develop differentiated services for our customers, improve our operational efficiency and enhance our low-cost country manufacturing and sourcing capabilities. We believe these investments provide a solid foundation for profitable net sales growth and continued operational improvements as highlighted below.

Maximize sustainable free cash flow. One of our critical business strategies is to continue to maximize sustainable free cash flow. Our strategy is to grow revenue through increased sales of existing products to existing and new customers, introduction of new products, select expansion into new geographic markets and increasing overall demand for our products. In addition, we intend to continue to reduce costs by promoting a culture of continuous improvement in our manufacturing operations and focusing on implementing cost-reduction measures, including streamlining operations through plant and overhead rationalization, systematically linking technological improvements to a reduction in material costs for new and existing products and optimizing our supply chain management. Furthermore, we will focus on maximizing our free cash flow through prudent working capital management and stringent minimum return levels for capital expenditures.

Our managers are accountable for meeting specific cost reduction and productivity improvement targets. In addition, we believe we will benefit from the extensive operating experience of our strategic owner, Mr. Graeme Hart, who has implemented successful cost reduction programs with existing and previously owned companies.

Drive incremental net sales in excess of anticipated industry growth in our core markets. Our strategy is to use our category management expertise, broad product coverage and superior product support and delivery to continue to differentiate ourselves from our competition, drive incremental growth and attract new customers. Historically, some of our most important customers have grown faster than the overall market and as these customers continue to expand their revenue and market share, we seek to increase their reliance on our capabilities to increase our own market share. We are also actively marketing these capabilities to new customers across our aftermarket channels.

Selectively pursue opportunities outside of the retail and traditional aftermarket channels. Our product expertise and scalable platform enable us to add new customers and penetrate multiple end markets. We will continue to promote these attributes to pursue opportunities and expand our existing presence in the OEM, OES, military, heavy-duty, power generation and other channels. We believe these opportunities will provide incremental near-term growth, visibility into technological trends and profit expansion over the long term. For example, we have been awarded long life-cycle OEM contracts with Caterpillar/Perkins, Ford and GM, which have now launched production. As result of an OEM contract, net sales with GM were 10.1% of total net sales during the Successor year ended December 31, 2013.

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Expand sales in international markets. We have a long-standing presence in the international light and heavy-duty vehicle aftermarket from which we generated $175.2 million of non-U.S. net sales in the Successor year ended December 31, 2013. We plan to leverage our established global footprint to significantly increase our sales to international markets. We are strategically investing in targeted international market initiatives, including increasing management resources, expanding international product offerings, leveraging internationally recognized brands, such as Luber-finer and Airtex, and expanding our international catalog.

Enhance margins through our culture of operational excellence. We believe we have developed a culture that drives ongoing cost reduction and operational improvement through investments in automation and other process enhancements and the expansion of our global low-cost manufacturing, sourcing and distribution platform. We believe that our China manufacturing and sourcing capabilities position us to realize continued cost savings. Starting in 2012, efforts were initiated to (i) consolidate certain manufacturing operations to optimize the manufacturing footprint of our filtration, fuel delivery system and cooling systems product lines and (ii) streamline the distribution footprint of our filtration product line through the strategic consolidation of certain distribution facilities with existing FRAM Group distribution facilities. During 2013, we completed an expansion at our existing vehicle electronics facility to provide additional manufacturing capacity. In addition, we continue to execute our Product Source Optimization initiative, or PSO, launched in 2010, which utilizes our existing global footprint and unique category management insights to optimize the mix of products manufactured versus sourced and to determine the optimal manufacturing or sourcing location with a focus on increasing the utilization of our Chinese facilities. In addition to PSO, we believe that there are further cost improvements that will be captured through our collective global purchasing power, utilization of our low-cost country resources and further operational enhancements. Beginning in 2012 and thereafter, we implemented cost savings initiatives designed to mitigate any exposure to raw material shortages and price increases by leveraging our purchasing power across all product lines, including that of FRAM Group, and by rationalizing our supply base with regards to performance history. We believe this established culture of operational excellence and specific initiatives such as PSO and the manufacturing and distribution footprint optimization will continue to drive annual cost reductions in our core operations and administrative overhead.

Expand our platform through strategic partnerships and acquisitions. The aftermarket remains relatively fragmented and we are well positioned to capitalize on additional partnering and consolidation opportunities. Examples of this strategy are the opportunities that exist from our relationship with FRAM Group, which we began implementing and realizing cost savings and efficiencies beginning in 2012. We and our strategic owner will continue to analyze and selectively pursue strategic opportunities where we can add value by leveraging our core competencies and realize synergies by applying our operating culture and processes to improve operating results. Our partnership and acquisition strategy also focuses on growth through product extensions that fit well within our existing distribution channels and expansion into new geographic markets.

Our Industry

We operate primarily in the North American aftermarket, which is large and fragmented. According to RL Polk, the number of vehicles in operation globally totals approximately one billion, of which approximately 248 million are located in the United States. Based on data available for 2013, we believe the addressable market for our current product lines servicing vehicles in North America represents approximately $10 billion of potential consumer spending.

The light vehicle aftermarket generally is stable and less susceptible to volatility in new vehicle sales. From 1999 to 2007 and 2009 to 2012, sales in the light-duty aftermarket grew at a CAGR of 4.3% and 4.0%, respectively, and are projected to grow at a CAGR of 3.4% between 2012 and 2016. As an example of the aftermarket’s stability, while sales of new light vehicles in North America during 2009 declined 21.2%, sales in the aftermarket declined by only 1.3% in the same period.

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Aftermarket sales generally are tied to the regular replacement cycle or the natural wearing cycle of a vehicle part; accordingly, we expect industry growth will be heavily influenced by the following key factors:

Further, we believe that aftermarket dynamics will continue to be impacted by additional longer-term trends, such as the increasing complexity of vehicles and proliferation of related parts, blurring distinctions between the retail and traditional channels and ongoing industry consolidation, resulting in a customer base with more complex needs. These trends are driving industry participants to rely on suppliers that can provide a full product portfolio across multiple channels in a timely and reliable manner. We believe that we are well positioned to capitalize on these trends as we continue to partner with our customers who are leading aftermarket participants and have been active in industry consolidation.

Conversely, over the last several years, we have seen long-term trends including an increase in oil change service intervals to an average of 5,800 miles due to improved vehicle and product quality and a consumer shift from DIY to DIFM due to aggressive pricing by auto maintenance services, both of which have applied pressure to our business. We have also seen a decline in the replacement rate of fuel delivery systems parts driven by improved OEM product quality and other factors. We believe we are well positioned to respond to these trends as we continue to adjust our business strategies and cost structure to meet the changing market.

Products

We design, develop, manufacture and distribute replacement parts that can be used in a substantial majority of light vehicles in operation in North America, including approximately 95% of pre-2009 models. Our four product lines are filtration, fuel delivery systems, vehicle electronics and cooling systems.

Filtration

We are a leading designer and manufacturer of a broad range of filtration products for the automotive, trucking, construction, mining, agricultural, marine and other industrial markets. Our filtration product line consists of approximately 5,000 part numbers, including oil filters, air filters, fuel filters, transmission filters, cabin air filters, PCV valves, hydraulic filters, fuel dispensing filters and

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fuel/water separators. These products serve approximately 1,600 customers across a wide range of channels, including premier retailers as well as the heavy-duty, installer and OEM/OES channels. Our filtration market position is bolstered by our broad portfolio of brands, which include private label brands such as ACDelco, Motorcraft, K&N and Service Champ, national consumer brands under exclusive license, including STP and Mobil 1, and our proprietary brands, Champ, Luber-finer, ACE and Kleener.

We have established ourselves as a low-cost provider in the aftermarket for filters by making significant investments in high-speed automated filter lines, low-cost country sourcing and increased manufacturing capabilities and efficiencies.

Fuel Delivery Systems

We are a leading provider of fuel delivery systems for the aftermarket and strategic OEM applications, supplying approximately 1,900 part numbers to approximately 600 customers. Our fuel delivery systems are distributed under the proprietary brand Airtex as well as certain private labels, such as CARQUEST and NAPA.

In recent years, fuel delivery systems have become increasingly complex, transitioning from basic mechanical and electrical pumps to higher priced module assemblies, which we believe will constitute a majority of fuel delivery systems sales in the light vehicle aftermarket in the future. With our sophisticated engineering and operational capabilities, we believe that we are well positioned to benefit from this trend, as well as other emerging trends in the market, including diesel emissions regulations. Enhanced OEM product quality has increased the life expectancy for original fuel delivery systems, thus decreasing failure rates, which has negatively impacted aftermarket unit volumes. In addition, the increased volume and quality of foreign manufactured products has placed pricing pressures on the fuel delivery system market as a whole. We continue to adjust our manufacturing footprint and cost structure to attempt to mitigate the impact of these market changes.

Vehicle Electronics

We are a leading designer and manufacturer of a broad line of vehicle electronics components for aftermarket and OEM applications. Vehicle electronics components include distributor caps and rotors, ignition coils, electronic controls, sensors, emissions components, solenoids, switches, voltage regulators and wire sets. These components are primarily used to regulate the ignition, emissions and fuel management functions of the engine and determine vehicle performance. By supplying approximately 36,000 part numbers to over 300 customers, we believe that we have one of the industry’s most comprehensive lines of highly engineered vehicle electronics products for use in a broad range of vehicle platforms. Our portfolio of brands in our vehicle electronics product line includes our Wells and Airtex Engine Management proprietary brand names and certain private labels, such as CARQUEST and Duralast.

Given the increase in vehicle variety, complexity and electrical content over the last decade, the vehicle electronics product line is expected to grow as these new applications enter the light vehicle aftermarket.

Cooling Systems

We believe, based on management estimates, that we are the largest manufacturer of new light vehicle aftermarket cooling systems in the world, supplying approximately 1,400 part numbers to over 900 customers under our Airtex, ASC and Master Parts brands as well as private labels, such as CARQUEST, Duralast, Tough One and Murray. In addition to the aftermarket, we manufacture cooling systems for strategic OEM applications.

Our leading market position is a result of our worldwide manufacturing, sourcing and distribution footprint, the broadest product coverage in the industry and value-added services. Over the past few decades, enhanced product quality has increased the life expectancy for cooling systems, thus decreasing failure rates, which negatively impacted aftermarket unit volumes. In the most recent years, the average price for cooling systems has decreased driving a shift in the industry away from remanufactured parts to new and more complex product applications. Combined with the proliferation of OEM parts, this has led to a greater number of lower unit volume, higher-value pumps.

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Sales Channels and Customers

We capture demand throughout the life cycle of a vehicle by diversifying our sales among the various aftermarket sales channels. In the early part of a vehicle’s life, the OES channel services a significant percentage of vehicle maintenance and repair volume as the vehicle is still under the OEM warranty period. As vehicles age and the OEM warranty expires, consumers increasingly rely on the traditional and retail aftermarket channels for vehicle repair and maintenance.

The Light Vehicle Aftermarket

Replacement parts for the light vehicle aftermarket are distributed through two main channels:

Light Vehicle Aftermarket Channel Overview

Retail

The retail channel is our largest channel, representing approximately 40% of our 2013 net sales, and historically has provided us with a steadily increasing revenue stream. As retailers become increasingly focused on consolidating their supplier base, we believe that our category management, broad product offering, product quality and customer-focused service make us increasingly valuable to these customers. One of our longest-standing customers is AutoZone, which we have been supplying since the opening of its first store

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in 1979. We believe that we are one of the few suppliers in the industry that can consistently provide AutoZone with the levels of quality, customer service and product breadth that AutoZone requires, which is substantiated by our multiple honorary awards from AutoZone based on our service, including the “Content Vendor of the Year” Award in 2013; “What it Takes to do the Job Right” Award in 2011; “Largest Increase in Application Coverage” Award in 2011 from AutoZone Mexico; and “Content Vendor of the Year” Award in 2012. Other honorary awards we have received in the retail channel include O’Reilly Auto Parts “Excellence in Cataloging and Content” Award in 2014 and “Changeover Award” in 2009 for work with O’Reilly Auto Parts’ acquisition of CSK; “2011 New Packaging Showcase Award” from the Automotive Aftermarket Products Expo; and “Best Use of YouTube Video” Award from Automotive Communications Council/Car Care Council Business-to-Consumer in 2012. We have successfully developed specific strategies to assist our retail customers with sales growth within our product lines that often exceeds growth in non-UCI product lines through category management, a key differentiator in the industry.

Traditional

The traditional channel is comprised of established warehouses and installers and represented approximately 20% of our 2013 net sales. The traditional channel is important to us because it is the primary source of products for professional mechanics, or the DIFM market. We have many long-standing relationships with leading customers in the traditional channel, such as CARQUEST and NAPA, to whom we have sold products for over 20 years. We believe that our product depth and outstanding product quality place us in a strong position in this channel, allowing us to capitalize on new traditional channel customer opportunities within the aftermarket. We believe that professional mechanics place a premium on the quality of a product and unlike the retail channel, these users require manufacturers to provide a high level of individual customer service, including field support and product breadth. Awards from customers in the traditional channel include: NAPA Canada “Club 95 Award” in 2013; Channel Partner “Outstanding Shipping Performance” Award in 2012; NAPA “Canada Shipping Performance” Award in 2012; Babcox Publishing “AMN Newsmaker of the Year” Award in 2012; National Association of Autoparts Service Shops “National Prize of Quality” Award 2012 and “Finalist of the Pilot in 2012” Award for logistic excellence from Spain.

The traditional channel also includes installers such as quick lubes, tire dealers and full service gas stations. Almost all of our sales to installers consist of filtration products, which are supplied to the national and regional service chains through distributors such as Firestone and Service Champ. Installers require “Just-In-Time” availability, ability to meet competitive price points and product breadth and depth. We believe these capabilities will allow our customers to capture additional revenue and increase customer satisfaction.

Heavy-Duty Vehicle Aftermarket

We believe the large and highly fragmented heavy-duty vehicle aftermarket channel, which accounted for approximately 10% of our 2013 net sales, provides us with another strong opportunity for growth. Heavy-duty truck owners tend to be less price-sensitive and more diligent about maintenance of their vehicles than vehicle owners in other markets. We believe we have developed a well-recognized brand presence in this channel with our Luber-finer brand of filtration products which has further opportunity for growth given our relatively small market share in this channel both domestically and internationally. We supply several points within the channel, including large distributors such as FleetPride and TruckPro as well as individual service depots.

Original Equipment

The original equipment channel is comprised of two sources: OEM and OES. This combined channel, which comprised 22% of our 2013 net sales, provides the ability to capitalize on our relationships with original equipment manufacturers to participate in emerging product trends and access OEM dealership service bays for vehicle maintenance early on in a vehicle’s life cycle.

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OEM

We selectively participate in this channel to gain visibility into emerging product trends and to strengthen our credibility as an OEM supplier where we believe that we can achieve our targeted margins. We sell products to a strategic mix of OEMs, enabling us to capitalize on a number of different opportunities and market shifts. Our OEM products are sold to end-users within each of the following categories:

We are benefiting from the recent OEM channel recovery following the difficult economic environment in 2008 and early 2009. We continue to selectively pursue long life-cycle OEM contracts including recent contracts with Caterpillar/Perkins, Ford and GM in our cooling systems and fuel delivery systems product lines, which have all now launched.

OES

The OES channel is comprised of a diverse mix of dealership service bays in the automotive, truck, motorcycle and watercraft vehicle markets. A substantial majority of our OES net sales were derived from sales of filtration products and cooling systems. Our position in this channel allows us to capitalize on vehicle maintenance in the early years of a vehicle’s life, when the vehicle is under warranty and the consumer typically returns to the dealer for routine maintenance. We utilize our industry leading direct ship logistics capability to allow these customers to reduce their overall working capital investment and improve their product flow. Our most significant OES channel customers include service parts operations associated with companies such as GM, Ford and Chrysler. In 2013, our filtration and vehicle electronics businesses received the Certificate of Excellence Platinum Supplier Status from GM for Customer Care and Aftersales On-Time Shipping. Our vehicle electronics business received the “Certificate of Excellence Gold Supplier Status” in 2012 and the Gold Award for “Outstanding On-Time Shipping Performance” from GM in 2011.

Competition

Within each of our product lines, we compete on price, part offerings, delivery time, quality, technology, product support and value added services. All of our product lines are highly competitive, although each line has a different competitive dynamic.

Filtration. The North American filter aftermarket is comprised of both light and heavy-duty vehicle participants. The light duty filter aftermarket is comprised of several large U.S. manufacturers that compete with us, including FRAM Group under its FRAM brand (a related party as a result of the common ownership by Mr. Graeme Hart), MANN+HUMMEL under its Purolator brand and The Affinia Group under its Wix brand. Our primary heavy-duty vehicle competitors include Cummins under its Fleetguard brand, Donaldson and CLARCOR under its Baldwin brand.

Fuel Delivery Systems. Fuel delivery systems in the North American aftermarket have become increasingly complex, transitioning from basic mechanical and electrical pumps to higher priced module assemblies. Our primary fuel delivery systems competitors are Crown LLC under its Carter brand, ACDelco, Delphi, Spectra Premium and Bosch.

Vehicle Electronics. The vehicle electronics category is expected to grow given the increase in vehicle variety, complexity and electrical content. Our primary vehicle electronics competitors are Standard Motor Products and ACDelco.

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Cooling Systems. Competition in the cooling systems space is limited to a few competitors, including GMB North America, Inc. and Gates Corporation.

Sales and Marketing

We market our products to a wide range of customers across a variety of global sales channels. To effectively address the requirements of our customers and end-users, we organize our team of over 200 employees and independent representatives by a combination of sales channel and product line. Each sales group and representative is uniquely qualified to sell all of our products and has specific expertise to focus on the requirements of their particular sales channel, product line and market, bolstering our market positions. In addition, we have a centralized in-house sales force for selected markets, including regional traditional channel participants and international customers. We have a dedicated marketing group that promotes our products through selected activities including extensive cataloging, industry trade shows and print media. We are increasing our efforts in selected international markets by investing in an expanded international catalog and strategic management additions.

The following table reflects our net sales by region for the Successor years ended December 31, 2013 and 2012 and the Combined Year Ended December 31, 2011 (in millions):

Operations

We have a global and low-cost manufacturing, procurement and distribution platform, including a presence of over 20 years in both China and Mexico. We have invested significantly in automation throughout our operations as part of our culture of operational excellence. This culture relies on continuous improvement in quality, inventory management, customer delivery and maximizing plant utilization. We have made substantial progress in improving our cost structure and overall productivity and our results reflect the related benefits realized to date.

Our procurement organization, comprised of approximately 60 employees, includes centralized corporate level resources and dedicated commodity buyers at each of our manufacturing locations. Our overall global procurement strategy is to secure a stable supply chain, leverage our collective buying power while mitigating risk. Our standardized policies and processes for purchase orders, supply agreements and commodity risk management are in place and managed from the corporate level. Enabling this strategy are our two procurement offices in China, which are focused on low cost product development, supplier development, engineering and supply chain capabilities. Specific raw material and product expertise typically resides at our manufacturing locations and is leveraged and coordinated globally with overall procurement activities through our centralized procurement organization.

We have a world-wide distribution network, including our own facilities in North America, Europe and Asia, in addition to strategic distributor relationships on other continents. This network provides us the capability to efficiently distribute our products on a global basis. We have a unique capability to direct ship on a daily basis to individual customer service locations, bypassing their distribution network, thereby reducing their inventory levels and logistics costs.

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We provide extensive technical and installation support to our customers and end-users, including product training and toll-free technical service lines manned by our own personnel.

Suppliers and Raw Materials

We purchase various raw materials, components and finished goods for use in our manufacturing processes as well as purchase finished products for resale. In 2013, we procured goods and services from approximately 1,300 suppliers. Our raw materials include hot roll steel and other commodities such as aluminum, iron, resin, rubber and multiple petrochemical products, including packaging materials and media. During periods of peak demand for our raw materials, we experience significant price volatility, increases and/or surcharges. More recently, the volatility associated with many of the commodities in our business has been coupled with supply and demand issues resulting in increased prices for some of the materials we use. While we have been, and expect to continue to be, able to obtain sufficient quantities of these raw materials to satisfy our needs, due to volatility and allocation, we may be required to pay higher prices and/or be required to purchase across multiple suppliers adding complexity into the supply chain, or have difficulty procuring these raw materials. Beginning in 2012 and thereafter, we implemented cost savings initiatives designed to mitigate any exposure to raw material shortages and price increases by leveraging our purchasing power across all product lines, including that of FRAM Group, and by rationalizing our supply base with regards to performance history. Historically, we have been able to pass a portion of higher commodity prices on to our customers through contractual clauses or negotiated price increases.

Trademarks and Patents

We rely on a combination of patents, trademarks, copyright and trade secret protection, employee and third-party non-disclosure agreements, license arrangements and domain name registrations to protect our intellectual property. We sell many of our products under a number of registered trademarks, which we believe are widely recognized in the sales channels we serve. No single patent, trademark or trade name is material to our business as a whole. See “Litigation – Patent Litigation” for more information.

Employees

As of December 31, 2013, 2012 and 2011, we had approximately 3,900, 3,900 and 3,800 employees, respectively. In 2013, 2012 and 2011, approximately 67%, 69% and 75%, respectively, of our workforce was located in the U.S. and approximately 22%, 18% and 15%, respectively, was located in China. As of December 31, 2013, approximately 13% of our workforce was represented by union affiliations and collective bargaining agreements at two of our U.S. manufacturing locations. The collective bargaining agreement for our Fond du Lac, Wisconsin plant expires in April 2015. The collective bargaining agreement for our Fairfield, Illinois plant was renewed in August 2013 and will expire in August 2014. Management considers our labor relations to be good and our labor rates competitive.

Environmental, Health and Safety Matters

We are subject to a variety of federal, state, local and foreign environmental, health and safety laws and regulations, including those governing the discharge of pollutants into the air or water, the management and disposal of hazardous substances or wastes and the investigation and cleanup of contaminated sites. Some of our operations require environmental permits and controls to prevent and reduce air and water pollution, and these permits are subject to modification, renewal and revocation by issuing authorities. We are also subject to the U.S. Occupational Health and Safety Act and similar state and foreign laws. We believe that we are in substantial compliance with all applicable material environmental, health and safety laws and regulations in the United States. Historically, our costs of achieving and maintaining compliance with environmental, health and safety requirements have not been material to our operations.

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We may be subject to liability under the Comprehensive Environmental Response, Compensation and Liability Act and similar state or foreign laws for contaminated properties that we currently own, lease or operate or that we or our predecessors have previously owned, leased or operated, and sites to which we or our predecessors sent hazardous substances. Such liability may be joint and several so that we may be liable for more than our share of contamination, and any such liability may be determined without regard to fault or knowledge of contamination.

We are currently investigating and/or remediating, or are otherwise currently responsible for, contamination at several sites for which management believes it has adequate reserves. One of these sites is a former facility in Edison, New Jersey, where a state agency has ordered us to continue with the monitoring and investigation of chlorinated solvent groundwater contamination. We are analyzing what further investigation and remediation, if any, may be required at this site. We also have certain responsibilities for contamination identified at a previously owned site in Solano County, California. At the request of the regional water board, we are investigating and analyzing the nature and extent of the chlorinated solvent groundwater contamination at the site and are conducting some remediation. Based on currently available information, management believes that the cost of the ultimate outcome of these matters will not exceed the amounts accrued at December 31, 2013 by a material amount, if at all. See Note 14 to the audited consolidated financial statements included elsewhere in this annual report for details regarding such accrued amounts.

Litigation

Antitrust Litigation

Starting in 2008, UCI and Champion were named as defendants in the U.S. Actions. Some of these complaints were putative class actions on behalf of all persons that purchased aftermarket filters in the U.S. directly from the defendants, from 1999. Others were putative class actions on behalf of all persons who acquired indirectly aftermarket filters manufactured and/or distributed by one or more of the defendants, beginning in 1999. The complaints sought treble damages, an injunction against future violations, costs and attorney’s fees. Also in 2008, Champion, but not UCI, was named as a defendant in two separate complaints in Ontario and Quebec (the “Ontario Action” and the “Quebec Action”, respectively, and, collectively, the “Canadian Actions”). The complaints included allegations similar to those in the U.S. Actions, and were brought as putative class actions on behalf of all persons in Canada that purchased aftermarket filters directly or indirectly from the defendants, beginning in 1999.

U.S. Actions

On February 9, 2012, the parties announced that Champion and two other defendants had reached an agreement in principle with all plaintiffs to settle the U.S. Actions. On March 8, 2012, Champion and two other defendants executed a settlement agreement with all plaintiffs to settle the U.S. Actions. On April 24, 2012, the court granted preliminary approval of the settlement and required $7.8 million to be paid to the trustee for the class members. On November 28, 2012, the court entered an order approving the settlement, certifying the settlement class and dismissing the U.S. Actions with prejudice. The period for appeal of this order expired on December 28, 2012, without any notice of appeal having been filed.

During the Successor year ended December 31, 2012, we incurred post-trial costs of $1.2 million related to the U.S. Actions. During the Successor year ended December 31, 2011, we recorded a provision of $7.8 million related to the February 9, 2012 settlement agreement of the U.S. Actions. During the Successor year ended December 31, 2011 and the Predecessor period January 1, 2011 through January 25, 2011, we incurred $3.9 million and $0.8 million, respectively, defending against these claims. These amounts are included in “Antitrust litigation costs” in the audited consolidated statements of comprehensive income (loss).

Canadian Actions

In 2008, Champion, but not UCI, was also named as one of five defendants in the Quebec Action and as one of 14 defendants in the Ontario Action. The Quebec Action alleges conspiracy violations under the Canadian Competition Act and violations of the obligation to act in good faith related to the sale of aftermarket filters. The plaintiff seeks joint and several liability against the five defendants in the amount of C$5 million in compensatory damages and C$1 million in punitive damages. The Ontario Action alleges

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civil conspiracy, intentional interference with economic interests, and conspiracy violations under the Canadian Competition Act related to the sale of aftermarket filters. The plaintiff seeks joint and several liability against the 14 defendants in the amount of C$150 million in general damages and C$15 million in punitive damages. In both actions, the plaintiff is seeking authorization to have the matter proceed as a class proceeding, which motion has not yet been ruled on.

On September 12, 2013, all defendants executed a settlement agreement with all plaintiffs in the Canadian Actions. The Ontario Court granted preliminary approval of the settlement with respect to the Ontario Action on October 3, 2013, at which point Champion was obligated to pay $0.1 million to a trust account for the benefit of the settlement class members in the Canadian Actions. The settlement of the Ontario Action was approved by the court in January 2014. A hearing on approval of the settlement of the Quebec Action was held in January 2014, but the court did not make a ruling on the settlement at that time.

During the Successor year ended December 31, 2013, we recorded a reserve of $0.1 million related to the Canadian Actions settlement and incurred post-trial costs of $0.1 million related to the Canadian Actions. These amounts are included in “Antitrust litigation costs” in the audited consolidated statements of comprehensive income (loss).

Value-added Tax Receivable

A wholly-owned Mexican subsidiary of Holdings had outstanding receivables denominated in Mexican pesos in the amount of $2.2 million from the Mexican Department of Finance and Public Credit related to refunds of Mexican value-added tax. In June 2013, a refund payment was received totaling $4.4 million (57.7 million Mexican pesos) including claims, interest and inflation of $2.0 million (25.5 million Mexican pesos), $1.8 million (23.3 million Mexican pesos) and $0.6 million (8.9 million Mexican pesos), respectively. The $1.8 million in interest and $0.6 million in inflation are included in “Interest expense, net” in the audited consolidated statements of comprehensive income (loss) included elsewhere in this annual report.

In addition, Holdings’ Mexican subsidiary received a letter dated April 9, 2013 giving notification that the tax court had agreed to refund claims totaling $0.3 million (3.7 million Mexican pesos). On April 25, 2013, a refund payment was received totaling $0.7 million (8.2 million Mexican pesos) including interest and inflation of $0.3 million (3.3 million Mexican pesos) and $0.1 million (1.2 million Mexican pesos), respectively. The $0.3 million in interest and $0.1 million in inflation are included in “Interest expense, net” in the audited consolidated statements of comprehensive income (loss) included elsewhere in this annual report.

A wholly-owned Chinese subsidiary of Holdings had outstanding duty and value-added tax claims denominated in Chinese yuan in the amount of $2.0 million (RMB 12.5 million) with the Chinese tax authority. The claims relate to the refund of duties and value-added tax for equipment purchases made in 2005 – 2007 for use in the production of product for export. Due to concerns about the collectability of the refunds, no receivable had been previously recorded. During the Successor year ended December 31, 2013, we recorded the collection of $1.9 million of the claims and recorded a receivable for $0.1 million for amounts still to be refunded. The $2.0 million of total claims has been recorded in “Miscellaneous, net” in the audited consolidated statements of comprehensive income (loss) included elsewhere in this annual report. The receivable of $0.1 million is recorded in “Other current assets” in the audited consolidated balance sheet included elsewhere in this annual report.

Patent Litigation

Champion was named as a defendant in a complaint filed by Hengst, on August 23, 2013 in the United States District Court for the District of South Carolina, Columbia Division, pursuant to which Hengst claims that certain of Champion’s products infringe on a Hengst patent. On February 14, 2014, Champion and Hengst reached a settlement of this litigation. The settlement includes the payment of $2.2 million by Champion to Hengst, a license from Hengst to Champion of certain intellectual property in exchange for royalty payments, $0.8 million in rebates granted to Champion for future purchases by Champion of Hengst products and the dismissal with prejudice of this case. Champion paid the initial $0.4 million payment during the first quarter of 2014 and will pay the remainder as follows: $0.5 million in the second quarter of 2014, $0.25 million in each of the third and fourth quarters of 2014,

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and $0.2 million in the third quarter of each year 2015 through 2018. During the Successor year ended December 31, 2013, Champion accrued $2.2 million for the settlement. These costs are included in “Patent litigation costs” in the audited consolidated statements of comprehensive income (loss) included elsewhere in this annual report.

Champion was a defendant in litigation with Parker-Hannifin pursuant to which Parker-Hannifin claimed that certain of Champion’s products infringed a Parker-Hannifin patent. On July 18, 2011, Champion and Parker-Hannifin reached a settlement of this litigation, as well as other disputes between the companies. The settlement included the payment of $9.0 million by Champion to Parker-Hannifin, $0.5 million in discounts granted to Champion for future purchases by Champion of Parker-Hannifin products and the dismissal with prejudice of this case and certain other cases between the companies. Champion made the $9.0 million payment during the Successor year ended December 31, 2011. During the Successor year ended December 31, 2011, Champion incurred post-trial costs of $0.4 million. These costs are included in “Patent litigation costs” in the audited consolidated statements of comprehensive income (loss) included elsewhere in this annual report.

Product Recall

In January 2014, Holdings was notified by one of its customers that the customer was recalling certain defective parts manufactured by one of our U.S. subsidiaries. As of December 31, 2013, we recorded estimated costs of $0.6 million for the recall. The estimate included costs of replacement parts and labor and other costs associated with the recall.

During the Successor year ended December 31, 2012, we recalled certain defective products manufactured by our Chinese operations and distributed by our Spanish subsidiary. During the Successor year ended December 31, 2012, we recorded estimated costs of $1.2 million (€0.9 million). For the Successor year ended December 31, 2013, we recorded no additional provision for this matter. As of December 31, 2013, we had paid $1.0 million (€0.7 million) of costs related to this matter and a remaining accrual of $0.2 million (€0.1 million) is recorded in the audited consolidated balance sheet. We believe that we have insurance coverage for a significant percentage of the costs related to this matter. As of December 31, 2013, we have filed claims totaling $0.9 million (€0.7 million) with our insurance carrier. During 2013, we received reimbursement for claims and product recall costs totaling $0.7 million (€0.5 million) under our insurance coverage, which was recorded in warranty expenses.

Other Litigation

We are subject to various other contingencies, including routine legal proceedings and claims arising out of the normal course of business. These proceedings primarily involve commercial claims, product liability claims, personal injury claims and workers’ compensation claims. The outcome of these lawsuits, legal proceedings and claims cannot be predicted with certainty. Nevertheless, we believe that the outcome of any of these currently existing proceedings, even if determined adversely, would not have a material adverse effect on our financial condition or results of operations.

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Organizational Structure

We are a holding company that conducts its business operations through its controlled entities. The following diagram sets forth a summary of our corporate structure and certain financing arrangements following the completion of the Transactions. Certain intermediate holding companies have been omitted from this chart for convenience.

UCI’s principal U.S. operating subsidiaries are Airtex Products, LP, ASC Industries, Inc., Champion Laboratories, Inc. and Wells Manufacturing, LP.

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Property, Plant and Equipment

We currently maintain 17 manufacturing facilities, 13 of which are located in North America, two in Europe and two in China. In addition, we maintain 10 distribution and warehouse facilities. Listed below are the locations of our principal manufacturing facilities:

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ITEM 4A. UNRESOLVED STAFF COMMENTS.

Not applicable.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS.

The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including, without limitation, those set forth in “Part I, Item 3. Key Information — Risk Factors,” “Forward-Looking Statements” and other matters included elsewhere in this annual report. In addition, the following discussion covers periods prior to the consummation of the Transactions. Accordingly, the discussion and analysis of those historical periods does not reflect the significant impact that the Transactions had and will have on us, including significantly increased leverage and liquidity requirements. See “— Liquidity and Capital Resources” below for a discussion of new indebtedness that we incurred and former indebtedness that we repaid as part of the Transactions. The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto included elsewhere in this annual report, as well as the information presented under “Part I, Item 3. Key Information — Selected Historical Consolidated Financial Data.”

Overview

We are a leading supplier to the light-and heavy-duty vehicle aftermarket for replacement parts, supplying a broad range of filtration, fuel delivery systems, vehicle electronics and cooling systems products. We believe, based on management estimates, that we maintain a leading market position in each of our four product lines, including the number one market position by revenue in both fuel delivery systems and cooling systems in the North American light vehicle aftermarket. For the Successor year ended December 31, 2013, approximately 78% of our net sales, including approximately 8% related to our OES channel, were generated from sales to a diverse group of aftermarket customers, including some of the largest and fastest growing companies in our industry. We have developed a global and low-cost manufacturing, sourcing and distribution platform and we sell into multiple sales channels, including retailers, wholesale distributors, dealers and the heavy-duty vehicle market. Our principal end-markets include light vehicles, commercial vehicles and construction, mining, agricultural, marine and other industrial equipment. We believe we have one of the most comprehensive product lines in the aftermarket, offering approximately 44,300 unique part numbers.

Aftermarket sales generally are tied to the regular replacement cycle or the natural wearing cycle of a vehicle part; accordingly, we expect industry growth will be heavily influenced by the following key factors: increasing global vehicle population, aging of vehicle population, increasing vehicle miles driven and growing heavy-duty aftermarket. Over the last several years, long-term trends have included an increase in oil change service intervals to an average of 5,800 miles due to improved vehicle and product quality and a consumer shift from DIY to DIFM resulting from aggressive pricing by auto maintenance services, both of which have applied pressure to our business. We have also seen a decline in the replacement rate of fuel delivery systems parts driven by improved OEM product quality and other factors.

The following is a discussion of the key line items included in the financial statements for the periods presented below under the heading “Results of Operations.” These are the measures that management utilizes most to assess our results of operations and anticipate future trends and risks in our business.

The audited consolidated financial statements of Holdings as of December 31, 2013 and 2012 and years ended December 31, 2013, 2012 and 2011, included elsewhere in this annual report, represent those of the Successor. The UCI Acquisition occurred on January 26, 2011. As such, Holdings’ results of operations for the year ended December 31, 2011 include the results of operations of UCI International only from the date of the UCI Acquisition.

The audited consolidated financial statements of Holdings were prepared using the acquisition method of accounting. Under the acquisition method of accounting, the purchase price is required to be allocated to the underlying tangible and identifiable intangible assets acquired and liabilities assumed based on their respective fair market values as of the date of the acquisition, with any excess purchase price allocated to goodwill.

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The audited consolidated financial statements of UCI International for the period January 1, 2011 through January 25, 2011, included elsewhere in this annual report, represent those of the Predecessor and have been prepared based upon the historical carrying amounts of assets and liabilities of UCI International.

Components of Comprehensive Income (Loss)

Net Sales

Net sales, including related party sales to FRAM Group, includes the selling price of our products sold to our customers, less provisions for warranty costs, estimated sales returns, customer allowances and cash discounts. In addition, up-front costs to obtain exclusive contracts and other new business changeover costs are recorded as a reduction to sales in arriving at net sales. Recording such provisions as a reduction to sales is customary in our industry. Provisions for sales returns, customer allowances and warranty costs are recorded at the time of sale based upon historical experience, current trends and our expectations regarding future experience. Adjustments to such sales returns, allowances and warranty costs are made as new information becomes available.

As most of our sales are to the aftermarket, we believe that our sales are primarily driven by the number of vehicles on the road, the average age of those vehicles, the average number of miles driven per year, the mix of light trucks to passenger cars on the road and the relative strength of our sales channels. Historically, our sales have not been materially adversely affected by market cyclicality, as we believe that our aftermarket sales are less dependent on economic conditions than our sales to OEMs, due to the generally non-discretionary nature of vehicle maintenance and repair. While many vehicle maintenance and repair expenses are non-discretionary in nature, high gasoline prices and difficult economic conditions can lead to a reduction in miles driven (a key metric in measuring aftermarket performance), which then results in increased time intervals for routine maintenance and vehicle parts lasting longer before needing replacement. Over the last several years, long-term trends have included an increase in oil change service intervals to an average of 5,800 miles due to improved vehicle and product quality and a consumer shift from DIY to DIFM resulting from aggressive pricing by auto maintenance services, both of which have applied pressure to our business. We have also seen a decline in the replacement rate of fuel delivery systems parts driven by improved OEM product quality and other factors.

Historical highs in crude oil prices experienced in 2008 and corresponding historical highs at that time in retail gasoline prices at the pump negatively impacted consumers’ driving and vehicle maintenance habits. While miles driven have increased four of the five years since 2008, with the exception of a 2.2% decrease in 2011, the increases have been small and intermittent, mirroring the U.S. economic recovery. Compared to the prior year, miles driven increased 1.6%, 0.6%, 0.8% and 0.6% in 2009, 2010, 2012 and 2013, respectively.

Our net sales are impacted by consumer discretionary spending for auto repair by the end-users of our products. For example, during the years 2009 through 2011, general consumer discretionary spending was affected by significant increases in U.S. average gasoline prices at the pump, which increased approximately 83% from January 2009 through December 2011. Although U.S. average gasoline prices were similar in December 2011 and December 2013, there remained a significant amount of volatility in gasoline prices as evidenced by quarterly increases in three of the last eight quarters ranging from 8.8% to 17.7%, and decreases ranging from 2.2% to 14.0% in the other five quarters. The spikes in gasoline prices reflect the near record highs reached in March, April and September of 2012.

We believe that we have leading market positions in our primary product lines, based on management estimates, and we continue to expand our product and service offerings to meet the needs of our customers. We believe that a key competitive advantage is that we have one of the most comprehensive product offerings in the vehicle replacement parts market, consisting of approximately 44,300 parts. This product breadth, along with our extensive manufacturing and distribution capabilities, product innovation and reputation for quality and service, makes us a leader in our industry.

It is also important to note that net sales to AutoZone accounted for 29.2%, 32.6% and 32.3% of our total net sales in the Successor years end December 31, 2013 and 2012 and the Combined Year Ended December 31, 2011, respectively. AutoZone is considered to be a leader in the North American aftermarket and, as with all of our customers, we make efforts to maintain and strengthen our relationship with AutoZone. Our failure to maintain a favorable relationship with AutoZone would result in a

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significant decrease in our net sales. Even if we maintain our relationship, this sales concentration with one customer increases the potential impact to our business that could result from any changes in the economic terms of this relationship or a change in AutoZone’s business.

Cost of Sales

Cost of sales includes all costs of manufacturing required to bring a product to a ready-for-sale condition. Such costs include direct and indirect materials, direct and indirect labor and benefit costs, supplies, utilities, freight, depreciation, insurance and other costs. Cost of sales also includes all costs to procure, package and ship products that we purchase and resell.

With the slight recovery in the general U.S. economy, we have experienced increases in certain commodities costs and extended supply lead times as a result of suppliers having reduced their capacity during the economic downturn. In addition, we have experienced longer lead times and expedited freight costs due to logistics constraints in connection with shipping product from China. Continued economic recovery would likely increase the demand for many of the commodities used in our business. While we have been, and expect to continue to be, able to obtain sufficient quantities of these commodities to satisfy our needs, increased demand from current levels for these commodities could result in further cost increases and may make procurement more difficult in the future.

In addition to the adverse impact of increasing commodities and energy costs, we may be adversely affected by changes in foreign currency exchange rates, primarily relating to the Mexican peso and the Chinese yuan. A strengthening of the U.S. dollar against the Mexican peso means that our Mexican operations pay more pesos to obtain inventory from the United States. Conversely, a weakening of the U.S. dollar against the Mexican peso means that our Mexican operations pay fewer pesos to obtain inventory from the United States. During the year ended December 31, 2013, the U.S. dollar strengthened against the Mexican peso by 1.6%, which ended a downward trend that began in the second half of 2012. During the year ended December 31, 2012 the U.S. dollar weakened against the Mexican peso by 6.6%. Historically, our Mexican operations sourced a significant amount of inventory from the United States. During 2012 we initiated, and in 2013 we completed, a restructuring plan affecting our Mexican operations, which has resulted in a reduction in the amount of U.S. sourced inventory purchased by our Mexican operations, thereby reducing our currency exposure risk related to these inventory purchases.

In addition, from January 1, 2013 to December 31, 2013, the value of the Chinese yuan increased by 2.9%. The value of the yuan increased 1.9% during the year ended December 31, 2012. As a result of the strengthening of the Chinese yuan against the U.S. dollar, the costs of goods imported from China that are denominated in Chinese yuan have increased.

Generally, we attempt to mitigate the effects of cost increases and currency changes via a combination of design changes, material substitution, global resourcing efforts, other cost savings initiatives and increases in the selling prices for our products. With respect to pricing, it should be noted that, while the terms of supplier and customer contracts and special pricing arrangements can vary, generally a time lag exists between when we incur increased costs and when we might recover a portion of the higher costs through increased pricing. This time lag typically spans a fiscal quarter or more, depending on the specific situation. We continue to pursue efforts to mitigate the effects of any cost increases; however, there are no assurances that we will be successful. To the extent that we are unsuccessful, our profit margins will be adversely affected, and even if we are successful in maintaining our gross margin dollars, our gross margin percentages will decline. Because of uncertainties regarding future commodities and energy prices, and the success of our mitigation efforts, it is difficult to estimate the impact of changes in commodities and energy costs on future operating results.

We have implemented a number of cost savings initiatives in recent years to align our cost structure with current business levels and we have continued to implement costs savings initiatives throughout 2013. Cost savings initiatives have included workforce reductions in both direct and indirect manufacturing headcounts. Also, effective March 15, 2012, certain of our defined benefit retirement plans were amended to freeze the plans for all non-union participants and were replaced with an enhanced benefit under our defined contribution plans. Tight controls over discretionary spending are expected to continue. These cost savings actions helped offset the adverse impact of higher material costs.

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We are realizing cost savings and operational efficiencies related to cost sharing and manufacturing arrangements with FRAM Group. See further discussion under “Liquidity and Capital Resources – Cost Sharing and Manufacturing Arrangements with FRAM Group.” During 2012, we conducted a comprehensive review of our business with the assistance of third party consultants and identified a number of potential profit improvement opportunities. We have detailed plans regarding these opportunities that have been or are currently being implemented.

Selling and Warehousing Expenses

Selling and warehousing expenses primarily include sales and marketing, warehousing and distribution costs. Our major cost elements include salaries and wages, pension and fringe benefits, depreciation, advertising and information technology costs.

General and Administrative Expenses

General and administrative expenses primarily include executive, accounting and administrative personnel salaries and fringe benefits, professional fees, pension benefits, insurance, provision for doubtful accounts, rent and information technology costs.

Critical Accounting Policies and Estimates

The methods, estimates and judgments we use in applying our most critical accounting policies have a significant impact on the results we report in our financial statements. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on historical experience and on assumptions that we believe to be reasonable under the circumstances. Our experience and assumptions form the basis for our judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may vary from what we anticipate, and different assumptions or estimates about the future could change our reported results.

We believe the following accounting policies are the most critical in that they significantly affect our financial statements, and they require our most significant estimates and complex judgments.

Revenue Recognition

We record sales, including related party sales to FRAM Group, when title has transferred to the customer, the sales price is fixed and determinable, and the collection of the related accounts receivable is reasonably assured. Our related party sales to FRAM Group are entered into on an arm’s-length basis documented by product purchase orders.

Some agreements with our customers provide for sales discounts, marketing allowances, return allowances and performance incentives. Any discount, allowance or incentive is treated as a reduction to sales, based on estimates of the criteria that give rise to the discount, allowance or incentive, such as sales volume and marketing spending. We routinely review these criteria and our estimating process and make adjustments as facts and circumstances change.

In order to obtain exclusive contracts with certain customers, we may incur up-front costs or assume the cost of returns of products sold by the previous supplier. The up-front costs are capitalized and amortized over the life of the contract as a reduction of sales. The cost of returns of products sold by the previous supplier is recorded as a reduction to net sales as incurred.

New business changeover costs also can include the costs related to removing a new customer’s inventory and replacing it with our inventory, commonly referred to as a “stocklift.” Stocklift costs are recorded as a reduction to sales when incurred.

Our customers have the right to return parts that are covered under our standard warranty within stated warranty periods. Our customers also have the right, in varying degrees, to return excess quantities of product. Credits for parts returned under warranty and parts returned because of customer excess quantities are estimated and recorded as a reduction to sales at the time of the related sales.

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These estimates are based on historical experience, current trends and our expectations regarding future experience. Revisions to these estimates are recorded in the period in which the facts and circumstances that give rise to the revision become known. Any significant increase in the amount of product returns above historical levels could have a material adverse effect on our financial results. Our product returns accrual was $42.0 million at December 31, 2013. A hypothetical 10% increase in the product returns accrual would decrease our pre-tax earnings by $4.2 million.

The table below provides a summary reconciliation of sales to net sales for the Successor years ended December 31, 2013 and 2012 and the Combined Year Ended December 31, 2011 (in millions):

Restructuring Charges

We recognize a liability for restructuring charges in the period in which the liability is incurred. These restructuring charges include costs for certain initiatives such as consolidation of operations or facilities, management reorganization, rationalization of non-manufacturing infrastructure, outsourcing of non-core components and asset impairments. See Note 3 to the audited consolidated financial statements included elsewhere in this annual report for a more detailed discussion of restructuring charges.

Inventory

We record inventory at the lower of cost or market. Cost is principally determined using standard cost, which approximates the first-in, first-out method. Estimated market value is based on assumptions for future demand and related pricing. If actual market conditions are less favorable than those projected by management, reductions in the value of inventory may be required.

Impairment of Goodwill and Identifiable Intangible Assets

Goodwill is subject to annual review unless conditions arise that require a more frequent evaluation. The review for impairment is either a qualitative assessment or a two-step process. If we choose to perform a qualitative assessment and determine that the fair value more likely than not exceeds the carrying value, no further evaluation is necessary. For the two-step process, the first step is to compare the estimated fair value of the business with the recorded net book value (including the goodwill). If the estimated fair value of the company is higher than the recorded net book value, no impairment is deemed to exist and no further testing is required. If, however, the estimated fair value of the company is below the recorded net book value, then a second step must be performed to determine the goodwill impairment required, if any. In this second step, the implied fair value of goodwill is calculated as the excess of the fair value of the business over the fair values assigned to its assets and liabilities. If the implied fair value of goodwill is less than the book value of the goodwill, the difference is recognized as an impairment loss.

We perform our annual goodwill impairment review as of December 31 each year using discounted future cash flows, unless conditions exist that would require a more frequent evaluation. The process of evaluating the potential impairment of goodwill is subjective because it requires the use of estimates and assumptions as to future cash flows, discount rates commensurate with the risks involved in the assets, future economic and market conditions, competition, customer relations, pricing, raw material costs, production costs, selling, general and administrative costs, and income and other taxes. Although we base cash flow forecasts on assumptions that are consistent with plans and estimates we use to manage our business, there is significant judgment in determining the cash flows. Based upon the results of the annual impairment review as of December 31, 2013, it was determined that the fair

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value of our business exceeded the carrying value of its net assets, therefore no impairment of goodwill was recorded. A hypothetical 10% decrease to the fair value of our business would not have triggered an impairment of goodwill.

Trademarks with indefinite lives are tested for impairment annually as of December 31, unless conditions arise that would require a more frequent evaluation. In assessing the recoverability of these assets, projections regarding estimated discounted future cash flows and other factors are made to determine if impairment has occurred. If we conclude that there has been impairment, we will write down the carrying value of the asset to its fair value. Based upon the results of the annual impairment review as of December 31, 2013, it was determined that the fair value of one of our trademarks did not exceed its carrying value, therefore a $2.0 million trademarks impairment was recorded as a “Trademark impairment loss” in the audited consolidated statements of comprehensive income (loss). A hypothetical 10% decrease to the fair value of our business would not have triggered an impairment of our indefinite-lived intangibles with the exception of the trademark that was impaired as of December 31, 2013, which is recorded at fair value.

We also evaluate those trademarks with indefinite lives to determine whether events and circumstances continue to support the indefinite lives. We have concluded that events and circumstances continue to support the indefinite lives of these trademarks.

Retirement Benefits

Pension obligations are actuarially determined and are affected by assumptions including discount rate, life expectancy, annual compensation increases and the expected rate of return on plan assets. Changes in the discount rate and differences between actual results and assumptions will affect the amount of pension expense we recognize in future periods.

Post-retirement benefit obligations are actuarially determined and are based on assumptions including discount rate, life expectancy and health care cost trends. Changes in the discount rate and differences between actual results and assumptions will affect the amount of expense we recognize in future periods.

Insurance Reserves

Our insurance policies for workers’ compensation, automobile, product and general liability include high deductibles or self-insured retention (up to $0.5 million) for which we are responsible, which are recorded in accrued expenses. Estimates of such losses involve substantial uncertainties including litigation trends, the severity of reported claims and incurred but not yet reported claims. External actuaries are used to assist us in estimating these losses. Our self-insured insurance reserves, including group medical insurance reserves, were $7.9 million at December 31, 2013. A hypothetical 10% increase in the insurance reserve would decrease our pre-tax earnings by $0.8 million.

Environmental Expenditures

Our expenditures for environmental matters fall into two categories. The first category is routine compliance with applicable laws and regulations related to the protection of the environment. The costs of such compliance are based on actual charges and do not require significant estimates.

The second category of expenditures is for matters related to investigation and remediation of contaminated sites. The impact of this type of expenditure requires significant estimates by management. The estimated cost of the ultimate outcome of these matters is included as a liability in our December 31, 2013 and 2012 audited consolidated balance sheets. This estimate is based on all currently available information, including input from outside legal and environmental professionals, and numerous assumptions. Management believes that the ultimate outcome of these matters will not exceed the $1.4 million accrued at December 31, 2013 by a material amount, if at all. However, because all investigation and site analysis has not yet been completed and because of the inherent uncertainty in such environmental matters and any related litigation, there can be no assurance that the ultimate outcome of these matters will not be significantly different than our estimates.

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Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis. Deferred tax assets are also recognized for operating losses and tax credit carryforwards. We establish valuation allowances against deferred tax assets when the ability to fully utilize these benefits is determined to be uncertain. Deferred tax assets and liabilities are measured using enacted tax rates applicable in the years in which they are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax law is recognized in tax expense in the period that includes the enactment date.

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

We record a liability for uncertain tax positions when management concludes that the likelihood of sustaining such positions upon examination by taxing authorities is less than “more-likely-than-not.” We also record any interest and penalties related to these uncertain tax positions as a component of “Income tax benefit (expense)” in the statements of comprehensive income (loss).

Accounting for Business Combinations

We account for business combinations, where the business is acquired from an unrelated third party, under the acquisition method of accounting, which requires the acquired assets, including separately identifiable intangible assets, and assumed liabilities to be recorded as of the acquisition date at their respective fair values. Any excess of the purchase price over the fair value of the assets acquired, including separately identifiable intangible assets, and liabilities assumed is allocated to goodwill.

The allocation of purchase price to the fair value of assets acquired and liabilities assumed involves assessments of the expected future cash flows associated with individual assets and liabilities and appropriate discount rates at the date of the acquisition. Where appropriate, we consult with external advisors to assist in the determination of fair value. For non-observable market values, fair value has been determined using acceptable valuation principles (e.g., relief from royalty method). Subsequent changes in our assessments may trigger an impairment loss that would be recognized in the statement of comprehensive income (loss).

Goodwill and acquired indefinite life intangible assets are not amortized. Other acquired intangible assets with finite lives are amortized over the period of expected benefit in relation to the pattern in which the intangible assets are consumed.

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

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Results of Operations

The following table was derived from the audited consolidated statements of comprehensive income (loss) for the Successor years ended December 31, 2013, 2012 and 2011 and the Predecessor period January 1, 2011 through January 25, 2011. The column titled “Combined” presents a non-GAAP financial measure, and the following discussions of “Combined” results is included for purposes of providing additional analysis. The “Combined” results do not purport to be on a pro forma basis. The “Combined” information is presented to provide a more meaningful comparative discussion against the Successor years ended December 31, 2013 and 2012. The amounts are presented in millions of dollars.

Successor Year Ended December 31, 2013 compared with Successor Year Ended December 31, 2012

Net sales. Net sales of $995.9 million for the year ended December 31, 2013 increased $11.4 million, or 1.2%, compared to net sales of $984.5 million for the year ended December 31, 2012. Excluding related party sales, our net sales were consistent with the year ended December 31, 2012.

Our retail channel net sales decreased $52.6 million, or 11.6%, attributable to $32.3 million in volume due to the soft retail market and year-over-year timing of new product rollout in our fuel delivery systems and vehicle electronics product lines, $15.5 million from the loss of a customer at the end of the first quarter of 2012 due to the customer’s decision to change fuel delivery system suppliers, $12.1 million in lower customer pricing primarily in the fuel delivery systems and vehicle electronics product lines, $4.6 million in higher product warranty costs, including reserves released in 2012 related to the loss of a fuel delivery systems customer and

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contractual changes, and $1.3 million associated with cost of acquiring new business. The decrease was partially offset by $11.3 million in net sales to a new customer in our cooling systems product line beginning in the third quarter of 2012 and favorable mix of $1.9 million in our cooling systems product line. During the year ended December 31, 2013, the retail market was negatively impacted by a significantly colder winter in 2013 than in 2012, higher consumer payroll taxes that we believe reduced consumer discretionary spending, an increase in intervals between oil changes and improved OEM parts quality.

Our heavy-duty channel net sales decreased $5.8 million, or 5.7%, due primarily to unfavorable market conditions in our filtration product line and lower co-manufacturing sales, partially offset by $2.3 million in improved customer pricing in our filtration product line.

Our traditional channel net sales increased $2.5 million, or 1.3%, due to $8.1 million in customer and product offering expansions in our vehicle electronics and cooling systems product lines, including a favorable product mix, partially offset by $4.6 million in overall market weakness across all of our product lines and $4.7 million in lower customer pricing. In addition, our net sales for the year ended December 31, 2013 benefited from $1.8 million of favorable foreign currency fluctuations in our cooling systems product line and our cost of product recalls decreased by $1.9 million.

Our OEM/OES channel net sales increased $55.4 million, or 33.6%, primarily due to the launch of OEM projects in our cooling systems product line. We also had increases from replenishment orders in our fuel delivery systems and expansion of volume in our filtration product line, partially offset by $1.0 million in lower customer pricing.

Net sales for the years ended December 31, 2013 and 2012 for our four product lines are in the following table, derived from our audited consolidated statements of comprehensive income (loss) for the respective periods.