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2020-07-29 0001616862 srt:MaximumMember axta:GlobalRestructuringCOVID19AndSustainedGrowthMember us-gaap:SubsequentEventMember 2020-07-29 xbrli:pure iso4217:USD xbrli:shares xbrli:shares iso4217:USD axta:Employee axta:interest_rate_swap axta:Segment
 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     .
Commission File Number: 001-36733
 
AXALTA COATING SYSTEMS LTD.
(Exact name of registrant as specified in its charter)
 
Bermuda
 
2851
 
98-1073028
(State or other jurisdiction of
incorporation or organization)
 
(Primary Standard Industrial
Classification Code Number)
 
(I.R.S. Employer
Identification No.)
Two Commerce Square
2001 Market Street
Suite 3600
Philadelphia, Pennsylvania 19103
(855) 547-1461
(Address, including zip code, and telephone number, including area code, of the registrant’s principal executive offices)
 
Securities registered pursuant to Section 12(b) of the Act:
Common Shares, $1.00 par value
 
AXTA
 
New York Stock Exchange
(Title of class)
 
(Trading symbol)
 
(Exchange on which registered)

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer ☒ Non-accelerated filer ☐ Accelerated filer ☐
Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

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

As of July 23, 2020, there were 235,359,947 shares of the registrant’s common shares outstanding.
 
 
 
 
 



Table of Contents
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2
Table of Contents

PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

AXALTA COATING SYSTEMS LTD.
Condensed Consolidated Statements of Operations (Unaudited)
(In millions, except per share data)

 
Three Months Ended June 30,
 
Six Months Ended June 30,

 
2020
 
2019
 
2020
 
2019
Net sales
 
$
652.7

 
$
1,157.5

 
$
1,636.2

 
$
2,276.8

Cost of goods sold
 
499.2

 
748.4

 
1,146.0

 
1,499.7

Selling, general and administrative expenses
 
154.2

 
202.4

 
349.6

 
418.0

Other operating charges
 
24.7

 
2.5

 
56.3

 
9.6

Research and development expenses
 
11.2

 
17.9

 
27.8

 
36.1

Amortization of acquired intangibles
 
27.9

 
28.4

 
55.9

 
56.9

(Loss) income from operations
 
(64.5
)
 
157.9

 
0.6

 
256.5

Interest expense, net
 
36.1

 
41.0

 
72.6

 
82.3

Other income, net
 
(2.2
)
 
(0.9
)
 
(1.4
)
 
(1.9
)
(Loss) income before income taxes
 
(98.4
)
 
117.8

 
(70.6
)
 
176.1

(Benefit) provision for income taxes
 
(15.2
)
 
17.9

 
(39.8
)
 
32.1

Net (loss) income
 
(83.2
)
 
99.9

 
(30.8
)
 
144.0

Less: Net (loss) income attributable to noncontrolling interests
 
(0.4
)
 
1.5

 
(0.2
)
 
2.2

Net (loss) income attributable to controlling interests
 
$
(82.8
)
 
$
98.4

 
$
(30.6
)
 
$
141.8

Basic net (loss) income per share
 
$
(0.35
)
 
$
0.42

 
$
(0.13
)
 
$
0.61

Diluted net (loss) income per share
 
$
(0.35
)
 
$
0.42

 
$
(0.13
)
 
$
0.60


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

3
Table of Contents

AXALTA COATING SYSTEMS LTD.
Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited)
(In millions)
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Net (loss) income
 
$
(83.2
)
 
$
99.9

 
$
(30.8
)
 
$
144.0

Other comprehensive income (loss), before tax:
 
 
 
 
 
 
 
 
Foreign currency translation adjustments
 
7.0

 
(0.9
)
 
(79.5
)
 
12.4

Unrealized loss on derivatives
 
(2.6
)
 
(20.3
)
 
(43.3
)
 
(34.9
)
Unrealized gain on pension plan obligations
 
0.2

 
—

 
—

 
0.5

Other comprehensive income (loss), before tax
 
4.6

 
(21.2
)
 
(122.8
)
 
(22.0
)
Income tax benefit related to items of other comprehensive loss
 
(0.6
)
 
(3.1
)
 
(6.4
)
 
(4.8
)
Other comprehensive income (loss), net of tax
 
5.2

 
(18.1
)
 
(116.4
)
 
(17.2
)
Comprehensive (loss) income
 
(78.0
)
 
81.8

 
(147.2
)
 
126.8

Less: Comprehensive income (loss) attributable to noncontrolling interests
 
0.5

 
3.7

 
(2.5
)
 
4.9

Comprehensive (loss) income attributable to controlling interests
 
$
(78.5
)
 
$
78.1

 
$
(144.7
)
 
$
121.9


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

4
Table of Contents

AXALTA COATING SYSTEMS LTD.
Condensed Consolidated Balance Sheets (Unaudited)
(In millions, except per share data)

 
June 30, 2020
 
December 31, 2019
Assets
 

 

Current assets:
 

 

Cash and cash equivalents
 
$
1,123.6

 
$
1,017.5

Restricted cash
 
2.9

 
3.0

Accounts and notes receivable, net
 
664.0

 
830.1

Inventories
 
539.3

 
591.6

Prepaid expenses and other current assets
 
150.4

 
131.2

Total current assets
 
2,480.2

 
2,573.4

Property, plant and equipment, net
 
1,158.2

 
1,223.0

Goodwill
 
1,209.3

 
1,208.9

Identifiable intangibles, net
 
1,158.1

 
1,223.9

Other assets
 
662.8

 
588.8

Total assets
 
$
6,668.6

 
$
6,818.0

Liabilities, Shareholders’ Equity
 

 

Current liabilities:
 

 

Accounts payable
 
$
331.9

 
$
483.7

Current portion of borrowings
 
41.3

 
43.9

Other accrued liabilities
 
487.7

 
545.3

Total current liabilities
 
860.9

 
1,072.9

Long-term borrowings
 
3,980.0

 
3,790.2

Accrued pensions
 
278.3

 
285.2

Deferred income taxes
 
108.7

 
115.5

Other liabilities
 
182.1

 
144.6

Total liabilities
 
5,410.0

 
5,408.4

Commitments and contingencies (Note 5)
 

 

Shareholders’ equity:
 

 

Common shares, $1.00 par, 1,000.0 shares authorized, 250.6 and 250.1 shares issued at June 30, 2020 and December 31, 2019, respectively
 
250.5

 
249.9

Capital in excess of par
 
1,479.5

 
1,474.1

Retained earnings
 
411.1

 
443.2

Treasury shares, at cost, 15.2 shares at June 30, 2020 and December 31, 2019
 
(418.4
)
 
(417.5
)
Accumulated other comprehensive loss
 
(509.6
)
 
(395.5
)
Total Axalta shareholders’ equity
 
1,213.1

 
1,354.2

Noncontrolling interests
 
45.5

 
55.4

Total shareholders’ equity
 
1,258.6

 
1,409.6

Total liabilities and shareholders’ equity
 
$
6,668.6

 
$
6,818.0


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

5
Table of Contents

AXALTA COATING SYSTEMS LTD.
Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)
(In millions)
 
Common Stock
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of Shares
 
Par/Stated Value
 
Capital In Excess Of Par
 
Retained Earnings
 
Treasury Shares, at cost
 
Accumulated Other Comprehensive Loss
 
Non controlling Interests
 
Total
Balance at December 31, 2019
234.9

 
$
249.9

 
$
1,474.1

 
$
443.2

 
$
(417.5
)
 
$
(395.5
)
 
$
55.4

 
$
1,409.6

Comprehensive income (loss):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
—

 
—

 
—

 
52.2

 
—

 
—

 
0.2

 
52.4

Net realized and unrealized loss on derivatives, net of tax benefit of $6.0 million
—

 
—

 
—

 
—

 
—

 
(34.7
)
 
—

 
(34.7
)
Long-term employee benefit plans, net of tax benefit of $0.2 million
—

 
—

 
—

 
—

 
—

 
(0.4
)
 
—

 
(0.4
)
Foreign currency translation, net of tax of $0.0 million
—

 
—

 
—

 
—

 
—

 
(83.3
)
 
(3.2
)
 
(86.5
)
Total comprehensive income (loss)
—

 
—

 
—

 
52.2

 
—

 
(118.4
)
 
(3.0
)
 
(69.2
)
Cumulative effect of an accounting change
—

 
—

 
—

 
(1.5
)
 
—

 
—

 
—

 
(1.5
)
Recognition of stock-based compensation
—

 
—

 
5.1

 
—

 
—

 
—

 
—

 
5.1

Shares issued under compensation plans
0.4

 
0.5

 
(1.6
)
 
—

 
—

 
—

 
—

 
(1.1
)
Ownership changes relating to noncontrolling interests
—

 
—

 
0.5

 
—

 
—

 
—

 
(2.1
)
 
(1.6
)
Dividends declared to noncontrolling interests
—

 
—

 
—

 
—

 
—

 
—

 
(0.5
)
 
(0.5
)
Balance at March 31, 2020
235.3

 
250.4

 
1,478.1

 
493.9

 
(417.5
)
 
(513.9
)
 
49.8

 
1,340.8

Comprehensive income (loss):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
—

 
—

 
—

 
(82.8
)
 
—

 
—

 
(0.4
)
 
(83.2
)
Net realized and unrealized loss on derivatives, net of tax benefit of $0.4 million
—

 
—

 
—

 
—

 
—

 
(2.2
)
 
—

 
(2.2
)
Long-term employee benefit plans, net of tax of $0.2 million
—

 
—

 
—

 
—

 
—

 
0.4

 
—

 
0.4

Foreign currency translation, net of tax of $0.0 million
—

 
—

 
—

 
—

 
—

 
6.1

 
0.9

 
7.0

Total comprehensive income (loss)
—

 
—

 
—

 
(82.8
)
 
—

 
4.3

 
0.5

 
(78.0
)
Recognition of stock-based compensation
—

 
—

 
6.1

 
—

 
—

 
—

 
—

 
6.1

Shares issued under compensation plans
0.1

 
0.1

 
1.1

 
—

 
—

 
—

 
—

 
1.2

Changes in redeemable noncontrolling interest
—

 
—

 
(5.8
)
 
—

 
—

 
—

 
(4.8
)
 
(10.6
)
Common stock purchases
—

 
—

 
—

 
—

 
(0.9
)
 
—

 
—

 
(0.9
)
Balance at June 30, 2020
235.4

 
$
250.5

 
$
1,479.5

 
$
411.1

 
$
(418.4
)
 
$
(509.6
)
 
$
45.5

 
$
1,258.6


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

6
Table of Contents


AXALTA COATING SYSTEMS LTD.
Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)
(In millions)

 
Common Stock
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of Shares
 
Par/Stated Value
 
Capital In Excess Of Par
 
Retained earnings
 
Treasury Shares, at cost
 
Accumulated Other Comprehensive Loss
 
Non controlling Interests
 
Total
Balance at December 31, 2018
235.6

 
$
245.3

 
$
1,409.5

 
$
198.6

 
$
(312.2
)
 
$
(336.1
)
 
$
105.4

 
$
1,310.5

Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
—

 
—

 
—

 
43.4

 
—

 
—

 
0.7

 
44.1

Net realized and unrealized loss on derivatives, net of tax benefit of $2.2 million
—

 
—

 
—

 
—

 
—

 
(12.4
)
 
—

 
(12.4
)
Long-term employee benefit plans, net of tax of $0.5 million
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Foreign currency translation, net of tax of $0.0 million
—

 
—

 
—

 
—

 
—

 
12.8

 
0.5

 
13.3

Total comprehensive income
—

 
—

 
—

 
43.4

 
—

 
0.4

 
1.2

 
45.0

Cumulative effect of an accounting change
—

 
—

 
—

 
(0.7
)
 
—

 
—

 
—

 
(0.7
)
Recognition of stock-based compensation
—

 
—

 
6.7

 
—

 
—

 
—

 
—

 
6.7

Shares issued under compensation plans
1.1

 
1.7

 
9.7

 
—

 
—

 
—

 
—

 
11.4

Ownership changes relating to noncontrolling interests
—

 
—

 
5.7

 
—

 
—

 
—

 
(32.1
)
 
(26.4
)
Common stock purchases
(2.5
)
 
—

 
—

 
—

 
(65.8
)
 
—

 
—

 
(65.8
)
Dividends declared to noncontrolling interests
—

 
—

 
—

 
—

 
—

 
—

 
(1.1
)
 
(1.1
)
Balance at March 31, 2019
234.2

 
247.0

 
1,431.6

 
241.3

 
(378.0
)
 
(335.7
)
 
73.4

 
1,279.6

Comprehensive income (loss):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
—

 
—

 
—

 
98.4

 
—

 
—

 
1.5

 
99.9

Net realized and unrealized loss on derivatives, net of tax of $2.7 million
—

 
—

 
—

 
—

 
—

 
(17.6
)
 
—

 
(17.6
)
Long-term employee benefit plans, net of tax of $0.4 million
—

 
—

 
—

 
—

 
—

 
0.4

 
—

 
0.4

Foreign currency translation, net of tax of $0.0 million
—

 
—

 
—

 
—

 
—

 
(3.1
)
 
2.2

 
(0.9
)
Total comprehensive income (loss)
—

 
—

 
—

 
98.4

 
—

 
(20.3
)
 
3.7

 
81.8

Correction to previous cumulative effect upon adoption of ASU 2014-09
—

 
—

 
—

 
(3.7
)
 
—

 
—

 
—

 
(3.7
)
Recognition of stock-based compensation
—

 
—

 
(1.4
)
 
—

 
—

 
—

 
—

 
(1.4
)
Shares issued under compensation plans
0.7

 
1.2

 
13.3

 
—

 
—

 
—

 
—

 
14.5

Ownership changes relating to noncontrolling interests
—

 
—

 
(1.7
)
 
—

 
—

 
—

 
(22.5
)
 
(24.2
)
Common stock purchases
(1.6
)
 
—

 
—

 
—

 
(39.5
)
 
—

 
—

 
(39.5
)
Balance at June 30, 2019
233.3

 
$
248.2

 
$
1,441.8

 
$
336.0

 
$
(417.5
)
 
$
(356.0
)
 
$
54.6

 
$
1,307.1


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


7
Table of Contents

AXALTA COATING SYSTEMS LTD.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In millions)

 
Six Months Ended June 30,

 
2020
 
2019
Operating activities:
 

 

Net (loss) income
 
$
(30.8
)

$
144.0

Adjustment to reconcile net income to cash (used for) provided by operating activities:
 

 

Depreciation and amortization
 
163.2

 
180.3

Amortization of deferred financing costs and original issue discount
 
4.1

 
4.4

Debt extinguishment and refinancing related costs
 
2.4

 
0.2

Deferred income taxes
 
(61.2
)
 
(1.6
)
Realized and unrealized foreign exchange losses, net
 
2.8

 
2.8

Stock-based compensation
 
11.2

 
5.3

Divestitures and impairment charges
 
3.2

 
3.9

Interest income on swaps designated as net investment hedges
 
(7.3
)
 
(7.2
)
Other non-cash, net
 
8.3

 
(0.6
)
Changes in operating assets and liabilities:
 

 

Trade accounts and notes receivable
 
136.8

 
(152.9
)
Inventories
 
32.5

 
(1.4
)
Prepaid expenses and other assets
 
(60.3
)
 
(81.6
)
Accounts payable
 
(131.0
)
 
20.7

Other accrued liabilities
 
(87.9
)
 
(54.0
)
Other liabilities
 
11.5

 
6.5

Cash (used for) provided by operating activities
 
(2.5
)
 
68.8

Investing activities:
 

 

Acquisitions, net of cash acquired
 
—

 
(1.9
)
Purchase of property, plant and equipment
 
(42.4
)
 
(47.2
)
Proceeds from sale of consolidated joint venture, net of cash divested
 
—

 
8.2

Interest proceeds on swaps designated as net investment hedges
 
7.3

 
7.2

Other investing activities, net
 
0.8

 
—

Cash used for investing activities
 
(34.3
)
 
(33.7
)
Financing activities:
 


 


Proceeds from long-term borrowings
 
500.0

 
—

Payments on short-term borrowings
 
(18.6
)
 
(20.5
)
Payments on long-term borrowings
 
(313.1
)
 
(13.7
)
Financing-related costs
 
(6.0
)
 
(2.1
)
Purchases of common stock
 
(0.9
)
 
(105.3
)
Net cash flows associated with stock-based awards
 
0.3

 
25.9

Purchase of noncontrolling interests
 
(1.6
)
 
(31.1
)
Other financing activities, net
 
(1.0
)
 
(1.1
)
Cash provided by (used for) financing activities
 
159.1

 
(147.9
)
Increase (decrease) in cash
 
122.3

 
(112.8
)
Effect of exchange rate changes on cash
 
(16.3
)
 
1.0

Cash at beginning of period
 
1,020.5

 
696.4

Cash at end of period
 
$
1,126.5

 
$
584.6


 


 


Cash at end of period reconciliation:
 


 


Cash and cash equivalents
 
$
1,123.6

 
$
577.3

Restricted cash
 
2.9

 
7.3

Cash at end of period
 
$
1,126.5

 
$
584.6

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

8
Table of Contents
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In millions, unless otherwise noted)


Index
Note
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


9
Table of Contents
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In millions, unless otherwise noted)


(1)     BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The interim condensed consolidated financial statements included herein are unaudited. In the opinion of management, these statements include all adjustments, consisting only of normal, recurring adjustments, necessary for a fair statement of the financial position of Axalta Coating Systems Ltd., a Bermuda exempted company limited by shares, and its consolidated subsidiaries ("Axalta," the "Company," "we," "our" and "us") at June 30, 2020 and December 31, 2019, the results of operations, comprehensive income (loss) and changes in shareholders' equity for the three and six months ended June 30, 2020 and 2019, and cash flows for the six months then ended. All intercompany balances and transactions have been eliminated.
These interim unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.
The interim unaudited condensed consolidated financial statements include the accounts of Axalta and its subsidiaries, and entities in which a controlling interest is maintained. Certain of our joint ventures are accounted for on a one-month lag basis, the effect of which is not material.
The results of operations for the three and six months ended June 30, 2020 are not necessarily indicative of the results to be expected for a full year.
Summary of Significant Accounting Policies Updates
Reclassifications
The condensed consolidated statements of operations for the three and six months ended June 30, 2019 have been updated for comparability with the current year presentation to separately present other operating charges as detailed in our annual report on Form 10-K for the year ended December 31, 2019.
Recently Adopted Accounting Guidance
On January 1, 2020, we adopted Accounting Standards Update ("ASU") 2016-13, “Financial Instruments - Credit Losses” under a modified retrospective approach for all financial assets. ASU 2016-13 replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires considerations of a broader range of reasonable and supportable information to inform credit loss estimates. The provisions of this standard primarily impact the allowance for doubtful accounts on our trade receivables, in which we have applied historical loss percentages, combined with reasonable and supportable forecasts of future losses to the respective aging categories. Adoption of ASU 2016-13 at January 1, 2020 resulted in a one-time loss to retained earnings of $1.5 million on our condensed consolidated balance sheets and statements of shareholders' equity for the six months ended June 30, 2020.
In March 2020, we adopted ASU 2020-04, "Reference Rate Reform" which provides optional expedients exercisable through December 31, 2022 to ease the potential burden in accounting for the effects of reference rate reform on financial reporting. As of June 30, 2020, the expedients provided in this standard do not impact the Company. We will continue to monitor for potential impacts on our financial statements.
Accounting Guidance Issued But Not Yet Adopted
In December 2019, the FASB issued ASU 2019-12, "Simplifying the Accounting for Income Taxes" as part of its initiative to reduce complexity in accounting standards. The ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The new standard is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact of ASU 2019-12 on our financial statements.
Risks and Uncertainties
In March 2020, the World Health Organization characterized the coronavirus ("COVID-19") a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. The rapid spread of the pandemic and the continuously evolving responses to combat it have had an increasingly negative impact on the global economy. In view of the rapidly changing business environment, unprecedented market volatility and heightened degree of uncertainty resulting from COVID-19, we are currently unable to fully determine its future impact on our business. However, we are monitoring the progression of the pandemic and its potential effect on our financial position, results of operations and cash flows. The pandemic had a significant adverse impact on the Company's results of operations, financial condition and cash flows during 2020 and, over time, the effects could have a material adverse impact.

10
Table of Contents
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In millions, unless otherwise noted)


(2)    REVENUE
Consideration for products in which control has transferred to our customers that is conditional on something other than the passage of time is recorded as a contract asset within prepaid expenses and other current assets on the balance sheet. The contract asset balances at June 30, 2020 and December 31, 2019 were $36.2 million and $37.5 million, respectively.
We provide certain customers with incremental up-front consideration, subject to clawback provisions, including Business Incentive Plan assets ("BIPs"), which is capitalized as a component of other assets and amortized over the estimated life of the contractual arrangement as a reduction of net sales. At June 30, 2020 and December 31, 2019, the total carrying value of BIPs were $178.8 million and $191.2 million, respectively, and are presented within other assets on the condensed consolidated balance sheets. For the three and six months ended June 30, 2020 and 2019, $16.4 million, $33.3 million, $16.0 million and $33.1 million, respectively, were amortized and reflected as reductions of net sales in the condensed consolidated statements of operations. The total carrying value of BIPs exclude other upfront incentives made in conjunction with long-term customer commitments of $92.3 million and $79.0 million at June 30, 2020 and December 31, 2019, respectively, which will be repaid in future periods.
See Note 16 for disaggregated net sales by end-market.
(3)    GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS
Goodwill
The following table shows changes in the carrying amount of goodwill from December 31, 2019 to June 30, 2020 by reportable segment:
 
 
Performance
Coatings
 
Transportation
Coatings
 
Total
Balance at December 31, 2019
 
$
1,130.9

 
$
78.0

 
$
1,208.9

Foreign currency translation
 
0.2

 
0.2

 
0.4

Balance at June 30, 2020
 
$
1,131.1

 
$
78.2

 
$
1,209.3


Identifiable Intangible Assets
The following tables summarize the gross carrying amounts and accumulated amortization of identifiable intangible assets by major class:
June 30, 2020
 
Gross Carrying
Amount
 
Accumulated
Amortization
 
Net Book
Value
 
Weighted Average
Amortization Periods (years)
Technology
 
$
541.0

 
$
(338.0
)
 
$
203.0

 
10.4
Trademarks - indefinite-lived
 
265.9

 
—

 
265.9

 
Indefinite
Trademarks - definite-lived
 
98.9

 
(32.8
)
 
66.1

 
15.8
Customer relationships
 
908.1

 
(290.7
)
 
617.4

 
19.0
Other
 
15.2

 
(9.5
)
 
5.7

 
5.0
Total
 
$
1,829.1

 
$
(671.0
)
 
$
1,158.1

 
 
December 31, 2019
 
Gross Carrying
Amount
 
Accumulated
Amortization
 
Net Book
Value
 
Weighted Average
Amortization Periods (years)
Technology
 
$
540.2

 
$
(310.6
)
 
$
229.6

 
10.4
Trademarks—indefinite-lived
 
264.9

 
—

 
264.9

 
Indefinite
Trademarks—definite-lived
 
99.7

 
(30.1
)
 
69.6

 
15.8
Customer relationships
 
923.8

 
(271.3
)
 
652.5

 
19.1
Other
 
15.2

 
(7.9
)
 
7.3

 
5.0
Total
 
$
1,843.8

 
$
(619.9
)
 
$
1,223.9

 
 


11
Table of Contents
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In millions, unless otherwise noted)


The estimated amortization expense related to the fair value of acquired intangible assets for the remainder of 2020 and each of the succeeding five years is:
Remainder of 2020
 
$
57.5

2021
 
111.7

2022
 
109.6

2023
 
70.2

2024
 
65.4

2025
 
64.7


(4)    RESTRUCTURING
In accordance with the applicable guidance for ASC 712, Nonretirement Postemployment Benefits, we accounted for termination benefits and recognized liabilities when the loss was considered probable that employees were entitled to benefits and the amounts could be reasonably estimated.
We have incurred costs in connection with involuntary termination benefits associated with our corporate-related initiatives and cost-saving opportunities associated with our Axalta Way initiatives. During the three and six months ended June 30, 2020 and 2019, we incurred restructuring costs, net of changes to estimates, of $13.7 million, $32.2 million, $2.9 million and $4.2 million, respectively. These amounts are recorded within other operating charges in the condensed consolidated statements of operations. The remaining payments associated with these actions are expected to be substantially completed within 18 months.
The following table summarizes the activities related to the restructuring reserves and expenses from December 31, 2019 to June 30, 2020:
 
 
2020 Activity
Balance at December 31, 2019
 
$
78.0

Expenses, net of changes to estimates
 
32.2

Payments made
 
(37.9
)
Foreign currency translation
 
0.1

Balance at June 30, 2020
 
$
72.4


We recognized impairments of $2.7 million and $3.2 million during the three and six months ended June 30, 2020, respectively, primarily attributable to impairments and associated write-downs resulting from our recent decision to exit the Performance Coatings segment business in Argentina. The impairments are included in the condensed consolidated statements of operations within other operating charges.
The impacts to pre-tax earnings from incremental accelerated depreciation resulting from the previously announced closure of our manufacturing facility in Mechelen, Belgium for the three and six months ended June 30, 2020 and 2019 were $0.4 million, $8.5 million, $6.7 million and $12.8 million, respectively, which were recorded to cost of goods sold on the condensed consolidated statements of operations.
(5)    COMMITMENTS AND CONTINGENCIES
Guarantees
We guarantee certain of our customers’ obligations to third parties, whereby any default by our customers on their obligations could force us to make payments to the applicable creditors. At June 30, 2020 and December 31, 2019, we had outstanding bank guarantees of $10.9 million and $11.6 million, respectively. Most of our bank guarantees expire between 2020 and 2026, while others do not have specified expiration dates. We monitor the obligations to evaluate whether we have a liability at the balance sheet date. At June 30, 2020, we recorded a liability related to our outstanding bank guarantees of $1.0 million. We did not have any liabilities related to our outstanding bank guarantees recorded at December 31, 2019.

12
Table of Contents
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In millions, unless otherwise noted)


Other
We are subject to various pending lawsuits, legal proceedings and other claims in the ordinary course of business, including civil, regulatory and environmental matters. These litigation matters may involve third-party indemnification obligations and/or insurance covering all or part of any potential damage incurred by us. All of these matters are subject to many uncertainties and, accordingly, we cannot determine the ultimate outcome of the proceedings and other claims at this time. The potential effects, if any, on our condensed consolidated financial statements will be recorded in the period in which these matters are probable and estimable. We believe that any sum we may be required to pay in connection with proceedings or claims in excess of the amounts recorded would likely not have a material adverse effect upon our results of operations, financial conditions or cash flows on a consolidated annual basis but, however, could have a material adverse impact in a particular quarterly reporting period.
We are involved in environmental remediation and ongoing compliance activities at several sites. The timing and duration of remediation and ongoing compliance activities are determined on a site by site basis depending on local regulations. The liabilities recorded represent our estimable future remediation costs and other anticipated environmental liabilities. We have not recorded liabilities at sites where a liability is probable, but that a range of loss is not reasonably estimable. We believe that any sum we may be required to pay in connection with environmental remediation matters in excess of the amounts recorded would likely occur over a period of time and would likely not have a material adverse effect upon our results of operations, financial condition or cash flows on a consolidated annual basis but, however, could have a material adverse impact in a particular quarterly reporting period.
(6)    LONG-TERM EMPLOYEE BENEFITS
Components of Net Periodic Benefit Cost
The following table sets forth the components of net periodic benefit cost for the three and six months ended June 30, 2020 and 2019:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Components of net periodic benefit cost:
 
 
 
 
 
 
 
 
Net periodic benefit cost:
 
 
 
 
 
 
 
 
Service cost
 
$
1.9

 
$
1.7

 
$
3.7

 
$
3.6

Interest cost
 
2.3

 
3.4

 
4.6

 
6.6

Expected return on plan assets
 
(3.1
)
 
(3.5
)
 
(6.3
)
 
(7.0
)
Amortization of actuarial loss, net
 
0.8

 
0.4

 
1.8

 
0.9

Plan curtailments
 
(0.6
)
 
—

 
(1.8
)
 
—

Net periodic benefit cost
 
$
1.3

 
$
2.0

 
$
2.0

 
$
4.1


All non-service components of net periodic benefit cost are recorded in other income, net within the accompanying condensed consolidated statements of operations.
(7)    STOCK-BASED COMPENSATION
During the three and six months ended June 30, 2020 and 2019, we recognized expenses of $6.1 million, $11.2 million, income of $1.4 million and expense of $5.3 million, respectively, for stock-based compensation, which was allocated between costs of goods sold and selling, general and administrative expenses on the condensed consolidated statements of operations. The income recognized during the three months ended June 30, 2019 resulted primarily from forfeitures. We recognized tax benefits of $1.3 million, $1.5 million, tax expense of $0.2 million and tax benefits of $1.1 million for the three and six months ended June 30, 2020 and 2019, respectively.

13
Table of Contents
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In millions, unless otherwise noted)


2020 Activity
In February 2020, we granted restricted stock units and performance share units to certain employees and directors. All awards were granted under the Company's Amended and Restated 2014 Incentive Award Plan. During 2020, the Company withheld shares and used cash to settle the employees' tax portion of vesting awards in the amount of $0.5 million.
A summary of award activity by type for the six months ended June 30, 2020 is presented below.
Stock Options
 
Awards
(in millions)
 
Weighted-
Average
Exercise
Price
 
Aggregate
Intrinsic
Value
 (in millions)
 
Weighted
Average
Remaining
Contractual
Life (years)
Outstanding at January 1, 2020
 
3.0

 
$
25.92

 
 
 
 
Granted
 
—

 
$
—

 
 
 
 
Exercised (1)
 
—

 
$
14.61

 
 
 
 
Forfeited (1)
 
—

 
$
28.24

 
 
 
 
Outstanding at June 30, 2020
 
3.0

 
$
26.27

 
 
 
 
Vested and expected to vest at June 30, 2020
 
3.0

 
$
26.27

 
$
5.4

 
5.24
Exercisable at June 30, 2020
 
2.4

 
$
25.94

 
$
5.4

 
4.49

(1)
Activity during the six months ended June 30, 2020 rounds to zero.
Cash received by the Company upon exercise of options for the six months ended June 30, 2020 was $0.8 million. Excess tax benefits on these exercises were $0.1 million.
At June 30, 2020, there is $1.6 million of unrecognized expense relating to unvested stock options that is expected to be amortized over a weighted average period of 1.2 years.
Restricted Stock Awards and Restricted Stock Units
 
Awards/Units
(millions)
 
Weighted-Average
Fair Value
Outstanding at January 1, 2020
 
1.2

 
$
28.45

Granted
 
0.4

 
$
29.73

Vested
 
(0.4
)
 
$
28.35

Forfeited
 
(0.1
)
 
$
28.13

Outstanding at June 30, 2020
 
1.1

 
$
29.03


Tax shortfall expenses on the vesting of restricted stock and restricted stock units during the six months ended June 30, 2020 was $0.3 million.
At June 30, 2020, there is $16.2 million of unamortized expense relating to unvested restricted stock and restricted stock units that is expected to be amortized over a weighted average period of 1.5 years.
Performance Stock Awards and Performance Share Units
 
Awards/Units
(millions)
 
Weighted-Average
Fair Value
Outstanding at January 1, 2020
 
0.5

 
$
32.11

Granted
 
0.4

 
$
31.88

Vested
 
(0.1
)
 
$
38.11

Forfeited
 
(0.1
)
 
$
32.95

Outstanding at June 30, 2020
 
0.7

 
$
31.14


Our performance stock awards and share units allow for participants to vest in more or less than the targeted number of shares granted. Some of our awards are currently performing at better or worse than targets, and we currently expect a total of 0.6 million shares with a weighted average fair value per share of $30.46 to vest. At June 30, 2020, there is $13.2 million of unamortized expense relating to unvested performance stock awards and performance share units that is expected to be amortized over a weighted average period of 2.2 years. The forfeitures include performance stock awards and performance share units that vested below target.

14
Table of Contents
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In millions, unless otherwise noted)


(8)    OTHER INCOME, NET
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Foreign exchange (gains) losses, net
 
$
(0.3
)
 
$
2.2

 
$
2.0

 
$
4.6

Debt extinguishment and refinancing related costs
 
—

 
0.2

 
2.4

 
0.2

Other miscellaneous income, net
 
(1.9
)
 
(3.3
)
 
(5.8
)
 
(6.7
)
Total
 
$
(2.2
)
 
$
(0.9
)
 
$
(1.4
)
 
$
(1.9
)

(9)    INCOME TAXES
Our effective income tax rates for the six months ended June 30, 2020 and 2019 are as follows:
 
 
Six Months Ended June 30,
 
 
2020
 
2019
Effective Tax Rate
 
56.4
%
 
18.2
%

The Company's effective tax rate for the periods reflected in the condensed consolidated financial statements are not directly comparable primarily due to the intra-entity asset transfers of certain of its intellectual property and the impacts of certain ongoing tax audits, which occurred during the six months ended June 30, 2020 and are discussed in further detail below.
On January 1, 2020, we completed an intra-entity transfer of certain intellectual property rights (the “IP”) to our Swiss subsidiary, where our EMEA regional headquarters is located. The transfer of the IP did not result in a taxable gain; however, it did result in step-up of the Swiss tax-deductible basis in the transferred assets, and accordingly, created a temporary difference between the book basis and the tax basis of the IP, which was transferred at fair value. We applied significant judgment when determining the fair value of the IP, which serves as the tax basis of the deferred tax asset. Consequently, this transaction resulted in the recognition of a deferred tax asset at the applicable Swiss tax rate, resulting in a one-time tax benefit of $50.5 million during the six months ended June 30, 2020. The Company expects to be able to realize the deferred tax assets resulting from these intra-entity asset transfers.
In connection with the income tax audit in Germany for the tax period 2010-2013, the Germany Tax Authority (“GTA”) indicated that it believed that certain positions taken on the 2010-2013 corporate income tax returns were not in compliance with German tax law. While the Company believes our filings were accurate based on the technical merits of our positions, after extensive discussions with the GTA, in March 2020 the Company expressed a willingness to settle with the GTA on certain matters and expects to reach a formal agreement in the coming months. As a result of these changes, the Company recorded a charge to income tax expense of $14.3 million during the six months ended June 30, 2020. The Company is also currently under audit in Germany for tax years 2014-2017 and is prepared to vigorously defend itself on these matters.

15
Table of Contents
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In millions, unless otherwise noted)


(10)    NET (LOSS) INCOME PER COMMON SHARE
Basic earnings per common share excludes the dilutive impact of potentially dilutive securities and is computed by dividing net (loss) income by the weighted average number of common shares outstanding for the period. For periods in which we recognize net income, diluted earnings per common share includes the effect of potential dilution from the hypothetical exercise of outstanding stock options and vesting of restricted shares and performance shares. For periods in which we recognize net loss, such impacts are excluded from the calculation of earnings per share as its inclusion would have an anti-dilutive effect. A reconciliation of our basic and diluted earnings per common share is as follows:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(In millions, except per share data)
 
2020
 
2019
 
2020
 
2019
Net (loss) income to common shareholders
 
$
(82.8
)
 
$
98.4

 
$
(30.6
)
 
$
141.8

Basic weighted average shares outstanding
 
235.2

 
233.3

 
235.1

 
233.7

Diluted weighted average shares outstanding
 
235.2

 
235.4

 
235.1

 
236.0

Net income (loss) per common share:
 
 
 
 
 
 
 
 
Basic net (loss) income per share
 
$
(0.35
)
 
$
0.42

 
$
(0.13
)
 
$
0.61

Diluted net (loss) income per share
 
$
(0.35
)
 
$
0.42

 
$
(0.13
)
 
$
0.60


The number of anti-dilutive shares that have been excluded in the computation of diluted earnings per share for the three and six months ended June 30, 2020 and 2019 were 4.6 million, 4.5 million, 3.0 million and 2.9 million, respectively.
(11)    ACCOUNTS AND NOTES RECEIVABLE, NET
Trade accounts receivable are stated at the amount we expect to collect. We maintain allowances for doubtful accounts for estimated losses by applying historical loss percentages, combined with reasonable and supportable forecasts of future losses, to respective aging categories. Management considers the following factors in developing its current estimate of expected credit losses: customer credit-worthiness, past transaction history with the customer, current economic industry trends, changes in market or regulatory matters, and changes in customer payment terms, including the impacts from COVID-19.
 
 
June 30, 2020
 
December 31, 2019
Accounts receivable - trade, net (1)
 
$
548.7

 
$
718.4

Notes receivable
 
25.0

 
24.7

Other
 
90.3

 
87.0

Total
 
$
664.0

 
$
830.1


(1)
Allowance for doubtful accounts was $25.4 million and $16.0 million at June 30, 2020 and December 31, 2019, respectively.
Bad debt expense of $7.0 million, $10.4 million, $1.6 million, and $2.6 million was included within selling, general and administrative expenses for the three and six months ended June 30, 2020 and 2019, respectively. The increase in expense in the three months ended June 30, 2020, was as a result of the increased risk for future credit losses primarily related to the COVID-19 pandemic.
(12)    INVENTORIES
 
 
June 30, 2020
 
December 31, 2019
Finished products
 
$
294.8

 
$
327.4

Semi-finished products
 
93.4

 
109.9

Raw materials
 
131.1

 
133.7

Stores and supplies
 
20.0

 
20.6

Total
 
$
539.3

 
$
591.6


Inventory reserves are $20.4 million and $13.1 million at June 30, 2020 and December 31, 2019, respectively. The increase in our reserve at June 30, 2020, includes impacts from obsolescence due to a lower demand environment resulting from the COVID-19 pandemic.

16
Table of Contents
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In millions, unless otherwise noted)


(13)    PROPERTY, PLANT AND EQUIPMENT, NET
 
 
June 30, 2020
 
December 31, 2019
Property, plant and equipment
 
$
2,198.2

 
$
2,231.9

Accumulated depreciation
 
(1,040.0
)
 
(1,008.9
)
Property, plant, and equipment, net
 
$
1,158.2

 
$
1,223.0


Depreciation expense amounted to $31.7 million, $73.3 million, $43.7 million and $89.1 million for the three and six months ended June 30, 2020 and 2019, respectively.
(14)    BORROWINGS
Borrowings are summarized as follows:
 
 
June 30, 2020
 
December 31, 2019
2024 Dollar Term Loans
 
$
2,075.3

 
$
2,387.5

2024 Dollar Senior Notes
 
500.0

 
500.0

2024 Euro Senior Notes
 
377.0

 
375.2

2025 Euro Senior Notes
 
506.5

 
504.0

2027 Dollar Senior Notes
 
500.0

 
—

Short-term and other borrowings
 
105.6

 
109.0

Unamortized original issue discount
 
(8.3
)
 
(10.5
)
Unamortized deferred financing costs
 
(34.8
)
 
(31.1
)
Total borrowings, net
 
4,021.3

 
3,834.1

Less:
 

 

Short-term borrowings
 
17.0

 
19.6

Current portion of long-term borrowings
 
24.3

 
24.3

Long-term debt
 
$
3,980.0

 
$
3,790.2


Revolving Credit Facility
At June 30, 2020 and December 31, 2019, letters of credit issued under the Revolving Credit Facility totaled $39.0 million and $38.8 million, respectively, which reduced the availability under the Revolving Credit Facility. Availability under the Revolving Credit Facility was $361.0 million and $361.2 million at June 30, 2020 and December 31, 2019, respectively.
Significant Transactions
During January 2020, we voluntarily prepaid $300.0 million of the outstanding principal on the 2024 Dollar Term Loans. As a result of the prepayment, we recorded a loss on extinguishment of debt of $2.7 million consisting of the write off of unamortized deferred financing costs and original issue discounts of $1.5 million and $1.2 million, respectively.
Issuance of 2027 Senior Notes
During June 2020, Axalta Coating Systems, LLC and Axalta Coating Systems Dutch Holding B B.V. (collectively, the "Issuers"), each an indirect, wholly owned subsidiary of the Company, issued $500.0 million in aggregate principal amount of 4.750% Senior Notes due 2027 (the “2027 Senior Notes”).
The 2027 Senior Notes are fully and unconditionally guaranteed by the Company and each of the Company's existing restricted subsidiaries, subject to certain exceptions.
The indenture governing the 2027 Senior Notes contains covenants that limit the Company’s (and its subsidiaries’) ability to, among other things: (i) incur additional debt or issue certain preferred stock; (ii) pay dividends, redeem stock or make other distributions; (iii) make other restricted payments or investments; (iv) create liens on assets; (v) transfer or sell assets; (vi) create restrictions on payment of dividends or other amounts by the Company to the Company’s restricted subsidiaries; (vii) engage in mergers or consolidations; (viii) engage in certain transactions with affiliates; and (ix) designate the Company’s subsidiaries as unrestricted subsidiaries.

17
Table of Contents
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In millions, unless otherwise noted)


The 2027 Senior Notes were issued at par and are due June 15, 2027. We will defer debt issuance costs of $8.3 million, which are recorded as reductions to long-term borrowings in the condensed consolidated balance sheets and amortized over the life of the issuance. The 2027 Senior Notes bear interest at 4.750% which is payable semi-annually on June 15th and December 15th. We have the option to redeem all or part of the 2027 Senior Notes at the following redemption prices (expressed as percentages of principal amount), plus accrued and unpaid interest, if any, on or after June 15th of the years indicated:
Period
 
2027 Senior Notes Percentage
2023
 
102.375
%
2024
 
101.188
%
2025 and thereafter
 
100.000
%

Notwithstanding the foregoing, at any time and from time to time prior to June 15, 2023, we may at our option redeem in the aggregate up to 40% of the original aggregate principal amount of the 2027 Senior Notes with the net cash proceeds of one or more Equity Offerings (as defined in the indenture governing the 2027 Senior Notes) at a redemption price of 104.75% plus accrued and unpaid interest, if any, to the redemption date. At least 50% of the original aggregate principal of the notes must remain outstanding after each such redemption.
Upon the occurrence of certain events constituting a change of control, holders of the 2027 Senior Notes have the right to require us to repurchase all or any part of the 2027 Senior Notes at a purchase price equal to 101% of the principal amount plus accrued and unpaid interest, if any, to the repurchase date.
The indebtedness under the 2027 Senior Notes is senior unsecured indebtedness of the Issuers, is senior in right of payment to all future subordinated indebtedness of the Issuers and guarantors, and is equal in right of payment to all existing and future senior indebtedness of the Issuers and guarantors. The 2027 Senior Notes are effectively subordinated to any secured indebtedness of the Issuers and guarantors (including indebtedness outstanding under the Senior Secured Credit Facilities) to the extent of the value of the assets securing such indebtedness.
Future repayments
Below is a schedule of required future repayments of all borrowings outstanding at June 30, 2020.
Remainder of 2020
 
$
23.5

2021
 
30.4

2022
 
54.2

2023
 
27.1

2024
 
2,870.3

Thereafter
 
1,058.9

Total borrowings
 
4,064.4

Unamortized original issue discount
 
(8.3
)
Unamortized deferred financing costs
 
(34.8
)
Total borrowings, net
 
$
4,021.3


(15)    FINANCIAL INSTRUMENTS, HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENTS
Fair value of financial instruments
Equity securities with readily determinable fair values - Balances of equity securities are recorded within other assets, with any changes in fair value recorded within other income, net. The fair values of equity securities are based upon quoted market prices, which are considered Level 1 inputs.
Long-term borrowings - The estimated fair values of these borrowings are based on recent trades, as reported by a third-party pricing service. Due to the infrequency of trades, these inputs are considered to be Level 2 inputs.
Derivative instruments - The Company’s interest rate caps, interest rate swaps, cross-currency swaps, and foreign currency forward contracts are valued using broker quotations, or market transactions in either the listed or over-the-counter markets. As such, these derivative instruments are included in the Level 2 hierarchy.

18
Table of Contents
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In millions, unless otherwise noted)


The table below presents the fair values of our financial instruments measured on a recurring basis by level within the fair value hierarchy at June 30, 2020 and December 31, 2019.
 
 
June 30, 2020
 
December 31, 2019
 
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prepaid expenses and other current assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cross-currency swaps (2)
 
$
—

 
$
14.5

 
$
—

 
$
14.5

 
$
—

 
$
14.4

 
$
—

 
$
14.4

Foreign currency forward contracts (1) (3)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Other assets:
 
 
 
 
 
 
 


 
 
 
 
 
 
 


Cross-currency swaps (2)
 
—

 
19.9

 
—

 
19.9

 
—

 
8.0

 
—

 
8.0

Investments in equity securities
 
0.7

 
—

 
—

 
0.7

 
0.6

 
—

 
—

 
0.6

Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other accrued liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate caps (1)
 
—

 
2.0

 
—

 
2.0

 
—

 
1.3

 
—

 
1.3

Interest rate swaps (1)
 
—

 
28.0

 
—

 
28.0

 
—

 
8.9

 
—

 
8.9

Other liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate caps (1)
 
—

 
1.0

 
—

 
1.0

 
—

 
1.2

 
—

 
1.2

Interest rate swaps (1)
 
—

 
44.5

 
—

 
44.5

 
—

 
20.5

 
—

 
20.5

Long-term borrowings:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2024 Dollar Term Loans
 
—

 
2,007.4

 
—

 
2,007.4

 
—

 
2,396.5

 
—

 
2,396.5

2024 Dollar Senior Notes
 
—

 
507.0

 
—

 
507.0

 
—

 
520.2

 
—

 
520.2

2024 Euro Senior Notes
 
—

 
375.6

 
—

 
375.6

 
—

 
388.2

 
—

 
388.2

2025 Euro Senior Notes
 
—

 
501.7

 
—

 
501.7

 
—

 
520.7

 
—

 
520.7

2027 Dollar Senior Notes
 
—

 
503.6

 
—

 
503.6

 
—

 
—

 
—

 
—

(1)
Cash flow hedge
(2)
Net investment hedge
(3)
Balance at June 30, 2020 rounds to zero.

Derivative Financial Instruments
We selectively use derivative instruments to reduce market risk associated with changes in foreign currency exchange rates and interest rates. The use of derivatives is intended for hedging purposes only, and we do not enter into derivative instruments for speculative purposes.
Derivative Instruments Qualifying and Designated as Cash Flow and Net Investment Hedges
Interest Rate Swaps Designated as Cash Flow Hedges
During the three months ended March 31, 2020, we entered into two interest rate swaps with aggregate notional amounts totaling $400.0 million to hedge interest rate exposures associated with the 2024 Dollar Term Loans. Under the terms of the interest rate swap agreements, the Company is required to pay the counterparties a stream of fixed interest payments at rates of 1.61% and 1.18% on $200.0 million of notional value for each instrument, and in-turn, receives variable interest payments based on 3-month LIBOR from the counter-parties. The interest rate swaps are designated as cash flow hedges and expire on December 31, 2022. These interest rate swaps are marked to market at each reporting date and any unrealized gains or losses are included in accumulated other comprehensive loss ("AOCI") and reclassified to interest expense in the same period or periods during which the hedged transactions affect earnings.
Foreign Currency Forward Contracts Designated as Cash Flow Hedges
During the three months ended March 31, 2020, we designated foreign currency forward contracts with a notional value of $5.0 million as cash flow hedges of the Company’s exposure to variability in exchange rates on forecasted purchases of inventory denominated in foreign currencies. These forward currency contracts are marked to market at each reporting date and any unrealized gains or losses are included in AOCI and reclassified to cost of goods sold in the same period or periods during which the hedged transactions affect earnings.

19
Table of Contents
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In millions, unless otherwise noted)


The following table presents the gains (losses) included in AOCI for derivative instruments that qualify and have been designated as cash flow and net investment hedges:
 
 
June 30, 2020
 
December 31, 2019
AOCI:
 
 
 
 
Interest rate caps (cash flow hedges)
 
$
3.7

 
$
3.5

Interest rate swaps (cash flow hedges)
 
72.5

 
29.4

Foreign currency forward contracts (cash flow hedges) (1)
 
—

 
—

Cross-currency swaps (net investment hedges)
 
(34.4
)
 
(22.4
)
Total AOCI
 
$
41.8

 
$
10.5


(1)
Balance at June 30, 2020 rounds to zero.
Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis.
The following tables set forth the locations and amounts recognized during the three and six months ended June 30, 2020 and 2019 for these cash flow and net investment hedges.
 
 
 
 
For the Three Months Ended June 30,
 
 
 
 
2020
 
2019
Derivatives in Cash Flow and Net Investment Hedges
 
Location of Loss Recognized in Income on Derivatives
 
Net Amount of Loss Recognized in OCI on Derivatives
 
Amount of Loss (Gain) Recognized in Income
 
Net Amount of Loss (Gain) Recognized in OCI on Derivatives
 
Amount of (Gain) Loss Recognized in Income
Interest rate caps
 
Interest expense, net
 
$
—

 
$
0.6

 
$
3.4

 
$
(0.5
)
Interest rate swaps
 
Interest expense, net
 
6.1

 
2.9

 
16.6

 
0.2

Foreign currency forward contracts (1)
 
Cost of goods sold
 
—

 
—

 
—

 
—

Cross-currency swaps
 
Interest expense, net
 
3.1

 
(3.7
)
 
(1.6
)
 
(3.6
)

(1)
Activity during the three months ended June 30, 2020 rounds to zero.
 
 
 
 
For the Six Months Ended June 30,
 
 
 
 
2020
 
2019
Derivatives in Cash Flow and Net Investment Hedges
 
Location of Loss (Gain) Recognized in Income on Derivatives
 
Net Amount of Loss (Gain) Recognized in OCI on Derivatives
 
Amount of Loss (Gain) Recognized in Income
 
Net Amount of Loss (Gain) Recognized in OCI on Derivatives
 
Amount of (Gain) Loss Recognized in Income
Interest rate caps
 
Interest expense, net
 
$
1.1

 
$
0.9

 
$
5.9

 
$
(1.6
)
Interest rate swaps
 
Interest expense, net
 
47.6

 
4.5

 
27.6

 
0.1

Foreign currency forward contracts (1)
 
Cost of goods sold
 
—

 
—

 
—

 
—

Cross-currency swaps
 
Interest expense, net
 
(19.4
)
 
(7.4
)
 
(14.9
)
 
(7.2
)
(1)
Activity during the six months ended June 30, 2020 rounds to zero.
Over the next 12 months, we expect losses of $31.8 million pertaining to cash flow hedges to be reclassified from AOCI into earnings, related to our interest rate caps, interest rate swaps, and foreign currency forward contracts.
Derivative Instruments Not Designated as Hedges
We periodically enter into foreign currency forward and option contracts to reduce market risk and hedge our balance sheet exposures and cash flows for subsidiaries with exposures denominated in currencies different from the functional currency of the relevant subsidiary. These contracts have not been designated as hedges and all gains and losses are marked to market through other income, net in the condensed consolidated statement of operations.


20
Table of Contents
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In millions, unless otherwise noted)


Fair value gains and losses of derivative contracts, as determined using Level 2 inputs, that were not designated for hedge accounting treatment were recorded in earnings as follows:
Derivatives Not Designated as Hedging
Instruments under ASC 815
 
Location of Loss (Gain) Recognized in
Income on Derivatives
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Foreign currency forward contracts
 
Other income, net
 
$
0.8

 
$
0.3

 
$
(0.9
)
 
$
1.8


(16)    SEGMENTS
The Company identifies an operating segment as a component: (i) that engages in business activities from which it may earn revenues and incur expenses; (ii) whose operating results are regularly reviewed by the Chief Operating Decision Maker ("CODM") to make decisions about resources to be allocated to the segment and assess its performance; and (iii) that has available discrete financial information.
We have two operating segments, which are also our reportable segments: Performance Coatings and Transportation Coatings. The CODM reviews financial information at the operating segment level to allocate resources and to assess the operating results and financial performance for each operating segment. Our CODM is identified as the Chief Executive Officer because he has final authority over performance assessment and resource allocation decisions. Our segments are based on the type and concentration of customers served, service requirements, methods of distribution and major product lines.
Through our Performance Coatings segment, we provide high-quality liquid and powder coatings solutions to a fragmented and local customer base. We are one of only a few suppliers with the technology to provide precise color matching and highly durable coatings systems. The end-markets within this segment are refinish and industrial.
Through our Transportation Coatings segment, we provide advanced coating technologies to OEMs of light and commercial vehicles. These increasingly global customers require a high level of technical support coupled with cost-effective, environmentally responsible coatings systems that can be applied with a high degree of precision, consistency and speed. The end-markets within this segment are light vehicle and commercial vehicle.

21
Table of Contents
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In millions, unless otherwise noted)


Adjusted EBIT is the primary measure to evaluate financial performance of the operating segments and allocate resources. Asset information is not reviewed or included with our internal management reporting. Therefore, the Company has not disclosed asset information for each reportable segment. The following table presents relevant information of our reportable segments.
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Net sales (1):
 
 
 
 
 
 
 
 
Refinish
 
$
261.9

 
$
447.3

 
$
629.7

 
$
852.8

Industrial
 
220.2

 
309.4

 
500.1

 
617.2

Total Net sales Performance Coatings
 
482.1

 
756.7

 
1,129.8

 
1,470.0

Light Vehicle
 
126.3

 
306.1

 
386.4

 
622.0

Commercial Vehicle
 
44.3

 
94.7

 
120.0

 
184.8

Total Net sales Transportation Coatings
 
170.6

 
400.8

 
506.4

 
806.8

Total Net sales
 
$
652.7

 
$
1,157.5

 
$
1,636.2

 
$
2,276.8

Equity in earnings in unconsolidated affiliates:
 
 
 
 
 
 
 
 
Performance Coatings
 
$
—

 
$
0.1

 
$
—

 
$
0.2

Transportation Coatings
 
(0.2
)
 
0.4

 
(0.1
)
 
—

Total
 
$
(0.2
)
 
$
0.5

 
$
(0.1
)
 
$
0.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2020
 
December 31, 2019
Investment in unconsolidated affiliates:
 
 
 
 
 
 
 
 
Performance Coatings
 
 
 
 
 
$
2.0

 
$
2.4

Transportation Coatings
 
 
 
 
 
12.6

 
12.7

Total
 
 
 
 
 
$
14.6

 
$
15.1


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

22
Table of Contents
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In millions, unless otherwise noted)


The following table reconciles our segment operating performance to (loss) income before income taxes for the periods presented:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Segment Adjusted EBIT (1):
 
 
 
 
 
 
 
 
Performance Coatings
 
$
1.5

 
$
127.6

 
$
80.9

 
$
206.2

Transportation Coatings
 
(39.3
)
 
40.4

 
(13.5
)
 
74.6

Total (2)
 
(37.8
)
 
168.0

 
67.4

 
280.8

Interest expense, net
 
36.1

 
41.0

 
72.6

 
82.3

Debt extinguishment and refinancing related costs (a)
 
—

 
0.2

 
2.4

 
0.2

Termination benefits and other employee related costs (b)
 
15.2

 
2.8

 
34.7

 
4.1

Strategic review and retention costs (c)
 
6.7

 
0.8

 
18.2

 
0.8

Offering and transactional costs (d)
 
0.1

 
0.2

 
0.2

 
0.8

Loss (gain) on divestiture and impairments (e)
 
2.7

 
(1.3
)
 
3.2

 
3.9

Pension special event (f)
 
(0.6
)
 
—

 
(1.8
)
 
—

Accelerated depreciation (g)
 
0.4

 
6.7

 
8.5

 
12.8

Indemnity income (h)
 
—

 
(0.2
)
 
—

 
(0.2
)
(Loss) income before income taxes
 
$
(98.4
)
 
$
117.8

 
$
(70.6
)
 
$
176.1

(1)
The primary measure of segment operating performance is Adjusted EBIT, which is defined as net income before interest, taxes and select other items impacting operating results. These other items impacting operating results are items that management has concluded are (1) non-cash items included within net income, (2) items the Company does not believe are indicative of ongoing operating performance or (3) non-recurring, unusual or infrequent items that have not occurred within the last two years or we believe are not reasonably likely to recur within the next two years. Adjusted EBIT is a key metric that is used by management to evaluate business performance in comparison to budgets, forecasts and prior year financial results, providing a measure that management believes reflects the Company’s core operating performance, which represents Adjusted EBIT adjusted for the select items referred to above.
 
 
(2)
Does not represent Axalta’s Adjusted EBIT referenced elsewhere by the Company as there are additional adjustments that are not allocated to the segments.
 
 
(a)
Represents expenses and associated changes to estimates related to the prepayment, restructuring, and refinancing of our indebtedness, which are not considered indicative of our ongoing operating performance.
 
 
(b)
Represents expenses and associated changes to estimates related to employee termination benefits and other employee-related costs. Employee termination benefits are associated with Axalta Way initiatives. These amounts are not considered indicative of our ongoing operating performance.
 
 
(c)
Represents costs for legal, tax and other advisory fees pertaining to our review of strategic alternatives that was concluded in March 2020, as well as retention awards for certain employees which will be earned over a period of 18-24 months. These amounts are not considered indicative of our ongoing performance.
 
 
(d)
Represents acquisition and divestiture-related expenses, all of which are not considered indicative of our ongoing operating performance.
 
 
(e)
Represents expenses and associated changes to estimates related to the sale of our interest in a joint venture business and other impairments, which are not considered indicative of our ongoing operating performance.
 
 
(f)
Represents certain defined benefit pension costs associated with special events, including pension curtailments, which we do not consider indicative of our ongoing operating performance.
 
 
(g)
Represents incremental depreciation expense resulting from truncated useful lives of the assets impacted by our manufacturing footprint assessments, which we do not consider indicative of our ongoing operating performance.
 
 
(h)
Represents indemnity income associated with the acquisition by Axalta of the DuPont Performance Coatings business, which we do not consider indicative of our ongoing operating performance.


23
Table of Contents
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In millions, unless otherwise noted)


(17)    ACCUMULATED OTHER COMPREHENSIVE LOSS
 
 
Unrealized
Currency
Translation
Adjustments
 
Pension
Adjustments
 
Unrealized
(Loss) Gain on
Derivatives
 
Accumulated
Other
Comprehensive
 (Loss) Income
Balance at December 31, 2019
 
$
(297.0
)
 
$
(69.9
)
 
$
(28.6
)
 
$
(395.5
)
Current year deferrals to AOCI
 
(83.3
)
 
—

 
(36.3
)
 
(119.6
)
Reclassifications from AOCI to Net income
 
—

 
(0.4
)
 
1.6

 
1.2

Net Change
 
(83.3
)
 
(0.4
)
 
(34.7
)
 
(118.4
)
Balance at March 31, 2020
 
(380.3
)
 
(70.3
)
 
(63.3
)
 
(513.9
)
Current year deferrals to AOCI
 
6.1

 
—

 
(5.2
)
 
0.9

Reclassifications from AOCI to Net income
 
—

 
0.4

 
3.0

 
3.4

Net Change
 
6.1

 
0.4

 
(2.2
)
 
4.3

Balance at June 30, 2020
 
$
(374.2
)
 
$
(69.9
)
 
$
(65.5
)
 
$
(509.6
)

Included within reclassifications from AOCI to Net income for the three and six months ended June 30, 2020 were curtailment gains of $0.6 million and $1.8 million, respectively. The cumulative income tax benefit related to the adjustments for pension benefits at June 30, 2020 was $27.0 million. The cumulative income tax benefit related to the adjustments for unrealized loss on derivatives at June 30, 2020 was $10.7 million.
 
 
Unrealized
Currency
Translation
Adjustments
 
Pension
Adjustments
 
Unrealized
Gain (Loss) on
Derivatives
 
Accumulated
Other
Comprehensive
Income (Loss)
Balance at December 31, 2018
 
$
(299.4
)
 
$
(36.4
)
 
$
(0.3
)
 
$
(336.1
)
Current year deferrals to AOCI
 
12.8

 
—

 
(11.4
)
 
1.4

Reclassifications from AOCI to Net income
 
—

 
—

 
(1.0
)
 
(1.0
)
Net Change
 
12.8

 
—

 
(12.4
)
 
0.4

Balance at March 31, 2019
 
(286.6
)
 
(36.4
)
 
(12.7
)
 
(335.7
)
Current year deferrals to AOCI
 
(5.7
)
 
(0.1
)
 
(17.3
)
 
(23.1
)
Reclassifications from AOCI to Net income
 
2.6

 
0.5

 
(0.3
)
 
2.8

Net Change
 
(3.1
)
 
0.4

 
(17.6
)
 
(20.3
)
Balance at June 30, 2019
 
$
(289.7
)
 
$
(36.0
)
 
$
(30.3
)
 
$
(356.0
)

The cumulative income tax benefit related to the adjustments for pension benefits at June 30, 2019 was $14.3 million. The cumulative income tax benefit related to the adjustments for unrealized loss on derivatives at June 30, 2019 was $4.4 million.
(18)    SUBSEQUENT EVENTS
On July 29, 2020, we announced a global restructuring of our business given the significant customer demand headwinds we are facing due to COVID-19 and to better position the Company for sustained growth. The restructuring, which is subject to works council consultations and local legal requirements, is expected to result in a pretax charge of approximately $40-45 million, of which approximately $30-35 million relates primarily to employee severance and other cash costs. The remaining approximately $10 million relates to the accelerated depreciation of assets and other non-cash costs. Capital expenditures associated with these restructuring actions are anticipated in the range of $10-15 million. Substantially all of the restructuring actions are expected to be completed over the next 24 months and result in a net reduction to our workforce of approximately 550 employees globally, with the potential for additional reductions from Europe.

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Table of Contents

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the interim unaudited condensed consolidated financial statements and the condensed notes thereto included elsewhere in this Quarterly Report on Form 10-Q, as well as the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
FORWARD-LOOKING STATEMENTS
Many statements made in the following discussion and analysis of our financial condition and results of operations and elsewhere in this Quarterly Report on Form 10-Q that are not statements of historical fact, including statements about our beliefs and expectations, are "forward-looking statements" within the meaning of federal securities laws and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plan, strategies and capital structure. These statements often include words such as "anticipate," "expect," "suggests," "plan," "believe," "intend," "estimates," "targets," "projects," "should," "could," "would," "may," "will," "forecast" and other similar expressions. We base these forward-looking statements or projections on our current expectations, plans and assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances and at such time. As you read and consider this Quarterly Report on Form 10-Q, you should understand that these statements are not guarantees of performance or results. The forward-looking statements and projections are subject to and involve risks, uncertainties and assumptions, including, but not limited to, the risks and uncertainties described in "Forward-Looking Statements," as well as "Risk Factors" and you should not place undue reliance on these forward-looking statements or projections. Although we believe that these forward-looking statements and projections are based on reasonable assumptions at the time they are made, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those expressed in the forward-looking statements and projections. Factors that may materially affect such forward-looking statements and projections include:
•
adverse developments in economic conditions as a result of global coronavirus pandemic ("COVID-19") or otherwise;
•
the duration and spread of COVID-19 outbreak; its severity; actions taken to contain the virus, including government actions to mitigate the economic impact of the outbreak; how quickly and to what extent normal economic and operating conditions can resume; how quickly and to what extent our customers and counterparties can recover from the negative impacts of the outbreak; and the effects, and unpredictability resulting from, recurring containment and mitigation actions;
•
volatility in the capital, credit and commodities markets;
•
our inability to successfully execute on our growth strategy and our cost savings initiatives, including restructurings;
•
increased competition;
•
reduced demand for some of our products as a result of improved safety features on vehicles, insurance company influence, new business models or new methods of travel
•
risks of the loss or change in purchasing levels of any of our significant customers or the consolidation of MSOs, distributors and/or body shops;
•
our reliance on our distributor network and third-party delivery services for the distribution and export of certain of our products;
•
credit risk exposure from our customers;
•
price increases or business interruptions in our supply of raw materials;
•
failure to develop and market new products and manage product life cycles;
•
business disruptions, security threats and security breaches, including security risks to our information technology systems;
•
risks associated with our outsourcing strategies;
•
risks associated with our non-U.S. operations;
•
currency-related risks;
•
terrorist acts, conflicts, wars, natural disasters, pandemics, and other health crises that may materially adversely affect our business, financial condition and results of operations;
•
risks associated with the United Kingdom’s withdrawal from the European Union;
•
failure to comply with the anti-corruption laws of the United States and various international jurisdictions;
•
failure to comply with anti-terrorism laws and regulations and applicable trade embargoes;
•
risks associated with protecting data privacy;

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Table of Contents

•
significant environmental liabilities and costs as a result of our current and past operations or products, including operations or products related to our business prior to our acquisition of DuPont Performance Coatings;
•
transporting certain materials that are inherently hazardous due to their toxic nature;
•
litigation and other commitments and contingencies;
•
ability to recruit and retain the experienced and skilled personnel we need to compete;
•
unexpected liabilities under any pension plans applicable to our employees;
•
work stoppages, union negotiations, labor disputes and other matters associated with our labor force;
•
our ability to protect and enforce intellectual property rights;
•
intellectual property infringement suits against us by third parties;
•
our ability to realize the anticipated benefits of any acquisitions and divestitures;
•
our joint ventures’ ability to operate according to our business strategy should our joint venture partners fail to fulfill their obligations;
•
risk that the insurance we maintain may not fully cover all potential exposures;
•
risks associated with changes in tax rates, laws or regulations, or the interpretation or application of tax laws and regulations, including unexpected impacts of the new U.S. TCJA legislation, which may differ with further regulatory guidance and changes in our current interpretations and assumptions;
•
our substantial indebtedness;
•
our ability to obtain additional capital on commercially reasonable terms may be limited;
•
any statements of belief and any statements of assumptions underlying any of the foregoing;
•
other factors disclosed in this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K for the year ended December 31, 2019 and our other filings with the Securities and Exchange Commission; and
•
other factors beyond our control.
These cautionary statements should not be construed by you to be exhaustive and are made only as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
OVERVIEW
We are a leading global manufacturer, marketer and distributor of high performance coatings systems. We have over a 150-year heritage in the coatings industry and are known for manufacturing high-quality products with well-recognized brands supported by market-leading technology and customer service. Our diverse global footprint of 47 manufacturing facilities, four technology centers, 53 customer training centers and approximately 13,000 people allows us to meet the needs of customers in over 130 countries. We serve our customer base through an extensive sales force and technical support organization, as well as through approximately 4,000 independent, locally based distributors.
We operate our business in two operating segments, Performance Coatings and Transportation Coatings. Our segments are based on the type and concentration of customers served, service requirements, methods of distribution and major product lines.
Through our Performance Coatings segment, we provide high-quality liquid and powder coatings solutions to a fragmented and local customer base. We are one of only a few suppliers with the technology to provide precise color matching and highly durable coatings systems. The end-markets within this segment are refinish and industrial.
Through our Transportation Coatings segment, we provide advanced coating technologies to OEMs of light and commercial vehicles. These increasingly global customers require a high level of technical support coupled with cost-effective, environmentally responsible, coatings systems that can be applied with a high degree of precision, consistency and speed. The end-markets within this segment are light vehicle and commercial vehicle.

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Table of Contents

BUSINESS HIGHLIGHTS
General Business Highlights
Our net sales decreased 28.1% for the six months ended June 30, 2020 compared with the six months ended June 30, 2019, primarily driven by a decrease in volumes of 26.3% as a result of decreased demand largely due to COVID-19 impacts. The decrease in net sales is inclusive of negative impacts of portfolio changes of 1.3% associated with the prior year sale of a consolidated joint venture, as well as impacts of unfavorable currency translation of 2.4%. Partially offsetting these declines was a 0.6% increase from higher average selling price and product mix driven by the Transportation Coatings segment, with contributions from both end-markets and all regions. The following trends have impacted our segment and end-market net sales performance:
•
Performance Coatings: Net sales decreased 23.1% driven primarily by a decrease in volumes of 20.8% as a result of decreased demand largely due to COVID-19 across both end-markets, inclusive of the negative net impacts of portfolio changes of 1.9% associated with the 2019 sale of our consolidated powder joint venture in China. Furthering the decrease during the period were the impacts of unfavorable foreign currency translation of 2.2%, as well as a 0.1% decrease from lower average selling prices and product mix resulting primarily from a change in product mix in the refinish end-market.
•
Transportation Coatings: Net sales decreased 37.2% driven primarily by a decrease in volumes of 36.1% as a result of customer shutdowns caused by COVID-19, as well as the impacts of unfavorable foreign currency translation of 3.1%. Partially offsetting the decline in volumes during the period was an increase of 2.0% from increased average selling prices and product mix across both end-markets and all regions.
Our business serves four end-markets globally with net sales for the three and six months ended June 30, 2020 and 2019, as follows:
(In millions)
 
Three Months Ended June 30,
 
2020 vs 2019
 
Six Months Ended June 30,
 
2020 vs 2019
 
 
2020
 
2019
 
% change
 
2020
 
2019
 
% change
Performance Coatings
 
 
 
 
 
 
 
 
 
 
 
 
Refinish
 
$
261.9

 
$
447.3

 
(41.4
)%
 
$
629.7

 
$
852.8

 
(26.2
)%
Industrial
 
220.2

 
309.4

 
(28.8
)%
 
500.1

 
617.2

 
(19.0
)%
Total Net sales Performance Coatings
 
482.1

 
756.7

 
(36.3
)%
 
1,129.8

 
1,470.0

 
(23.1
)%
Transportation Coatings
 
 
 
 
 
 
 
 
 
 
 
 
Light Vehicle
 
126.3

 
306.1

 
(58.7
)%
 
386.4

 
622.0

 
(37.9
)%
Commercial Vehicle
 
44.3

 
94.7

 
(53.2
)%
 
120.0

 
184.8

 
(35.1
)%
Total Net sales Transportation Coatings
 
170.6

 
400.8

 
(57.4
)%
 
506.4

 
806.8

 
(37.2
)%
Total Net sales
 
$
652.7

 
$
1,157.5

 
(43.6
)%
 
$
1,636.2

 
$
2,276.8

 
(28.1
)%
Coronavirus (COVID-19) Pandemic
During the six months ended June 30, 2020, the COVID-19 pandemic had a significant adverse impact on the demand for our products, and, thus, our income from operations. These impacts have been felt globally; however, we have seen improvements as countries are reopening. We have taken action to both plan for and address the near-term impact commensurate with the decline in demand in certain areas of our business. The focus is on dynamically adjusting our cost structure as needed and has already included actions related to reducing discretionary spend across the organization which is aided by our highly variable cost structure. We saw sequential improvements month-to-month during the second quarter along with the economic reopening; however, if the global pandemic continues to grow and evolve into an even more prolonged health crisis or there are new shutdowns or restrictions put in place, the effects could have a material adverse impact on our future results of operations, financial condition and cash flows.
Consistent with the actions taken or recommended by governmental authorities, in March 2020 and the following months, we elected to shut down certain manufacturing operations in regions around the world for periods of time during the six months ended June 30, 2020. Currently, all of our manufacturing sites are open, and the timing of re-opening has been phased and in-line with the return of customer demand. At each of our sites, we have taken steps to enhance safety standards in place to protect workers. The reduced production levels during the three months ended June 30, 2020 had a significant adverse impact on our results of operations. A continued disruption to our production levels will have a substantial adverse effect on our financial condition, liquidity, and results of operations.
We are actively monitoring and managing supply chain challenges, including logistics, but thus far, there have been no significant disruptions. Our supply chain team is coordinating with our suppliers to identify and mitigate potential areas of risk and manage inventories. Further, we are actively monitoring our customers credit worthiness, and while there has been an increase in credit risk levels, at this point we are not aware of any material changes to our customers' ability to settle outstanding receivables.

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Table of Contents

A significant portion of our non-operations focused workforce continues to work remotely while we monitor COVID-19 and adhere to government guidelines for safe operation; however, plans have been formulated for a gradual return to on-site work, where appropriate, during the third quarter. We expect to continue to be able to meet our customers' needs while ensuring the safety of our employees, customers and communities.
While we remain committed to our Axalta Way cost savings initiative and expect to meet our full year 2020 savings goals, the timing of achieving our established savings goals during the year has changed as our focus shifted to maximizing short-term liquidity amid the COVID-19 downturn. During the quarter, we were able to reduce operating costs by approximately $75 million and achieve incremental cash flows of approximately $70 million from COVID-19 related cost and cash flow actions. In addition, we announced a global restructuring initiative in July which is expected to achieve approximately $50 million of annual savings, with the majority realized by the end of 2021.
From a liquidity standpoint, we have $1,123.6 million of cash and cash equivalents and $361.0 million of available borrowing capacity under our Senior Secured Credit Facilities. We have no outstanding borrowing on the Revolving Credit Facility and, therefore, are not currently subject to any financial covenants under the Senior Secured Credit Facility.
Capital and Liquidity Highlights
During January 2020, we voluntarily prepaid $300.0 million of the outstanding principal on the 2024 Dollar Term Loans.
During June 2020, we issued $500.0 million in aggregate principal amount of 4.750% Senior Notes due 2027, with the proceeds to be used for general corporate purposes and to pay related transaction costs and expenses.
See Note 14 to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.
Strategic Review
On March 31, 2020, we announced that our Board of Directors concluded that the previously announced review of strategic alternatives was complete and that the ongoing execution of our strategic plan is the best alternative to maximize value for Axalta’s shareholders.
FACTORS AFFECTING OUR OPERATING RESULTS
Except as described in "Risk Factors" below, there have been no changes in the factors affecting our operating results previously reported in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2019 other than the impact of COVID-19 as discussed herein.

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RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the information contained in the accompanying financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. Our historical results of operations summarized and analyzed below may not necessarily reflect what will occur in the future.
Net sales
 
 
Three Months Ended June 30,
 
2020 vs 2019
 
Six Months Ended June 30,
 
2020 vs 2019
 
 
2020
 
2019
 
$ Change
 
% Change
 
2020
 
2019
 
$ Change
 
% Change
Net sales
 
$
652.7

 
$
1,157.5

 
$
(504.8
)
 
(43.6
)%
 
$
1,636.2

 
$
2,276.8

 
$
(640.6
)
 
(28.1
)%
Volume effect
 
 
 
 
 
 
 
(39.2
)%
 
 
 
 
 
 
 
(25.0
)%
Impact of portfolio changes
 
 
 
 
 
 
 
(1.1
)%
 
 
 
 
 
 
 
(1.3
)%
Price/product mix effect
 
 
 
 
 
 
 
(0.5
)%
 
 
 
 
 
 
 
0.6
 %
Exchange rate effect
 
 
 
 
 
 
 
(2.8
)%
 
 
 
 
 
 
 
(2.4
)%
Three months ended June 30, 2020 compared to the three months ended June 30, 2019
Net sales decreased due to the following:
n Lower sales volumes across both segments and all regions driven by significantly reduced global automotive production, lower vehicle miles driven and accelerated industrial slowdown primarily as a result of COVID-19 impacts, as well as previously anticipated muted industrial trends and declines in light and commercial vehicle builds
n Unfavorable impacts of currency translation, due primarily to the weakening of the Brazilian Real, Euro, Mexican Peso and Chinese Renminbi compared to the U.S. dollar
n Negative impacts as a result of portfolio changes resulting from the sale of our consolidated joint venture interests within our Performance Coatings segment during the second quarter of 2019
n Lower average selling prices and product mix resulting primarily from a change in product mix in refinish, substantially offset by increases across both end-markets and all regions within the Transportation Coatings segment.
Six months ended June 30, 2020 compared to the six months ended June 30, 2019
Net sales decreased due to the following:
n Lower sales volumes across both segments and all regions driven by significantly reduced global automotive production, lower vehicle miles driven and accelerated industrial slowdown primarily as a result of COVID-19 impacts, as well as previously anticipated muted industrial trends and declines in light and commercial vehicle builds
n Unfavorable impacts of currency translation, due primarily to the weakening of the Euro, Brazilian Real, Mexican Peso and Chinese Renminbi compared to the U.S. dollar
n Negative impacts as a result of portfolio changes resulting from the sale of our consolidated joint venture interests within our Performance Coatings segment during the second quarter of 2019
Partially offset by:
n Higher average selling prices across both end-markets and all regions within the Transportation Coatings segment

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Table of Contents

Cost of sales
 
 
Three Months Ended June 30,
 
2020 vs 2019
 
Six Months Ended June 30,
 
2020 vs 2019
 
 
2020
 
2019
 
$ Change
 
% Change
 
2020
 
2019
 
$ Change
 
% Change
Cost of sales
 
$
499.2

 
$
748.4

 
$
(249.2
)
 
(33.3
)%
 
$
1,146.0

 
$
1,499.7

 
$
(353.7
)
 
(23.6
)%
% of net sales
 
76.5
%
 
64.7
%
 
 
 
 
 
70.0
%
 
65.9
%
 
 
 
 
Three months ended June 30, 2020 compared to the three months ended June 30, 2019
Cost of sales decreased due to the following:
n Lower sales volumes across both segments and all regions
n Lower costs as a result of portfolio changes resulting from the sale of our consolidated joint venture interests within our Performance Coatings segment during the second quarter of 2019
n Favorable impacts of currency translation of 2.1%, due primarily to the weakening of the Brazilian Real, Euro, Mexican Peso and Chinese Renminbi compared to the U.S. dollar
n Decline in depreciation expense for operating equipment
n Decreased variable input costs
n Reduction in costs due to operational efficiencies associated with our cost savings initiatives, as well as decreased compensation related expenses, associated with COVID-19 related cost reduction actions
Partially offset by:
n Increased expenses associated with reduced utilization at certain manufacturing sites and increased inventory reserves
Cost of sales as a percentage of net sales increased due to the following:
n Decreased net sales from price and product mix, primarily resulting from impacts of product mix sold in refinish
n Lower sales volume covering fixed costs, including impacts of reduced utilization at certain manufacturing sites and increased inventory reserves
Partially offset by:
n Decreases associated with variable cost savings and operational efficiencies associated with cost savings initiatives, as well as decreased compensation related expenses, associated with COVID-19 related cost reduction actions
Six months ended June 30, 2020 compared to the six months ended June 30, 2019
Cost of sales decreased due to the following:
n Lower sales volumes across both segments and all regions
n Lower costs as a result of portfolio changes resulting from the sale of our consolidated joint venture interests within our Performance Coatings segment during the second quarter of 2019
n Favorable impacts of currency translation of 1.8%, due primarily to the weakening of the Euro, Brazilian Real, Mexican Peso and Chinese Renminbi compared to the U.S. dollar
n Decline in depreciation expense for operating equipment
n Decreased variable input costs across both segments and all regions
n Reduction in costs due to operational efficiencies associated with our cost savings initiatives, as well as decreased compensation related expenses, associated with COVID-19 related cost reduction actions
Partially offset by:
n Increased expenses associated with reduced utilization at certain manufacturing sites and increased inventory reserves
Cost of sales as a percentage of net sales increased due to the following:
n Lower sales volume covering fixed costs, including impacts of reduced utilization at certain manufacturing sites and increased inventory reserves
Partially offset by:
n Decreases associated with variable cost savings and operational efficiencies associated with cost savings initiatives, as well as decreased compensation related expenses, associated with COVID-19 related cost reduction actions
n Price and product mix increase to net sales, primarily resulting from higher average selling prices across both end-markets and all regions within the Transportation Coatings segment, partially offset by lower average selling prices and product mix in refinish

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Table of Contents

Selling, general and administrative expenses
 
 
Three Months Ended June 30,
 
2020 vs 2019
 
Six Months Ended June 30,
 
2020 vs 2019
 
 
2020
 
2019
 
$ Change
 
% Change
 
2020
 
2019
 
$ Change
 
% Change
SG&A
 
$
154.2

 
$
202.4

 
$
(48.2
)
 
(23.8
)%
 
$
349.6

 
$
418.0

 
$
(68.4
)
 
(16.4
)%
Three months ended June 30, 2020 compared to the three months ended June 30, 2019
Selling, general and administrative expenses decreased due to the following:
n Reduction in costs due to operational efficiencies associated with our cost savings initiatives, as well as decreased compensation-related expenses, associated with COVID-19 related cost reduction actions
n Decline in commissions and sales incentive compensation driven by decrease in net sales
n Lower costs as a result of portfolio changes resulting from the sale of our consolidated joint venture interests within our Performance Coatings segment during the second quarter of 2019
n Favorable impacts of currency translation of 4.6%, due primarily to the weakening of the Euro, Chinese Renminbi, Mexican Peso and Brazilian Real compared to the U.S. dollar
Partially offset by:
n Increased stock-based compensation expenses of $6.9 million, primarily due to forfeitures in the prior year
n Increased reserves for trade receivables of $5.6 million to $7.0 million from $1.4 million in the prior year
Six months ended June 30, 2020 compared to the six months ended June 30, 2019
Selling, general and administrative expenses decreased due to the following:
n Reduction in costs due to operational efficiencies associated with our cost savings initiatives, as well as decreased compensation-related expenses associated, with COVID-19 related cost reduction actions
n Decline in commissions and sales incentive compensation driven by decrease in net sales
n Lower costs as a result of portfolio changes resulting from the sale of our consolidated joint venture interests within our Performance Coatings segment during the second quarter of 2019
n Favorable impacts of currency translation of 3.8%, due primarily to the weakening of the Euro, Chinese Renminbi, and Brazilian Real compared to the U.S. dollar
Partially offset by:
n Increased reserves for trade receivables of $7.9 million to $10.4 million from $2.5 million in the prior year
n Increased stock-based compensation expenses of $6.0 million, primarily due to forfeitures in the prior year
Other operating charges
 
 
Three Months Ended June 30,
 
2020 vs 2019
 
Six Months Ended June 30,
 
2020 vs 2019
 
 
2020
 
2019
 
$ Change
 
% Change
 
2020
 
2019
 
$ Change
 
% Change
Other operating charges
 
$
24.7

 
$
2.5

 
$
22.2

 
888.0
%
 
$
56.3

 
$
9.6

 
$
46.7

 
486.5
%
Three months ended June 30, 2020 compared to the three months ended June 30, 2019
Other operating charges increased due to the following:
n Increase in termination benefits and other employee related costs associated with our cost savings initiatives of $12.4 million from $2.8 million in the prior year to $15.2 million in the current year
n Increased expenses of $5.9 million associated with the review of strategic alternatives that was concluded in March 2020 as discussed above within "Business Highlights - Strategic Review" and retention costs from $0.8 million in the prior year to $6.7 million in the current year
n Increase in divestiture and impairment charges of $4.0 million from a gain of $1.3 million in the prior year to expenses of $2.7 million in the current year, which are primarily attributable to impairments and associated write-downs resulting from our recent decision to exit the Performance Coatings segment business in Argentina

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Six months ended June 30, 2020 compared to the six months ended June 30, 2019
Other operating charges increased due to the following:
n Increase in termination benefits and other employee related costs associated with our cost saving initiatives of $30.6 million from $4.1 million in the prior year to $34.7 million in the current year
n Increased expenses of $17.4 million associated with the review of strategic alternatives that was concluded in March 2020 as discussed above within "Business Highlights - Strategic Review" and retention costs from $0.8 million in the prior year to $18.2 million in the current year
Research and development expenses
 
 
Three Months Ended June 30,
 
2020 vs 2019
 
Six Months Ended June 30,
 
2020 vs 2019
 
 
2020
 
2019
 
$ Change
 
% Change
 
2020
 
2019
 
$ Change
 
% Change
Research and development expenses
 
$
11.2

 
$
17.9

 
$
(6.7
)
 
(37.4
)%
 
$
27.8

 
$
36.1

 
$
(8.3
)
 
(23.0
)%
Three months ended June 30, 2020 compared to the three months ended June 30, 2019
Research and development expenses decreased due to the following:
n Decrease in operating expenses as a result of operational efficiencies associated with cost savings initiatives, as well as decreased compensation-related expenses, associated with COVID-19 related cost reduction actions
n Favorable impacts of currency translation, which reduced expenses by 0.9%, due primarily to the weakening of the Euro compared to the U.S. dollar
Six months ended June 30, 2020 compared to the six months ended June 30, 2019
Research and development expenses decreased due to the following:
n Decrease in operating expenses as a result of operational efficiencies associated with cost savings initiatives, as well as decreased compensation-related expenses, associated with COVID-19 related cost reduction actions
n Favorable impacts of currency translation, which reduced expenses by 0.8%, due primarily to the weakening of the Euro compared to the U.S. dollar
Amortization of acquired intangibles
 
 
Three Months Ended June 30,
 
2020 vs 2019
 
Six Months Ended June 30,
 
2020 vs 2019
 
 
2020
 
2019
 
$ Change
 
% Change
 
2020
 
2019
 
$ Change
 
% Change
Amortization of acquired intangibles
 
$
27.9

 
$
28.4

 
$
(0.5
)
 
(1.8
)%
 
$
55.9

 
$
56.9

 
$
(1.0
)
 
(1.8
)%
Three months ended June 30, 2020 compared to the three months ended June 30, 2019
Amortization of acquired intangibles decreased due to the following:
n Favorable impacts of foreign currency translation of 1.4%, primarily related to the weakening of the Euro compared to the U.S. dollar
Six months ended June 30, 2020 compared to the six months ended June 30, 2019
Amortization of acquired intangibles decreased due to the following:
n Favorable impacts of foreign currency translation of 1.1%, primarily related to the weakening of the Euro compared to the U.S. dollar

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Table of Contents

Interest expense, net
 
 
Three Months Ended June 30,
 
2020 vs 2019
 
Six Months Ended June 30,
 
2020 vs 2019
 
 
2020
 
2019
 
$ Change
 
% Change
 
2020
 
2019
 
$ Change
 
% Change
Interest expense, net
 
$
36.1

 
$
41.0

 
$
(4.9
)
 
(12.0
)%
 
$
72.6

 
$
82.3

 
$
(9.7
)
 
(11.8
)%
Three months ended June 30, 2020 compared to the three months ended June 30, 2019
Interest expense, net decreased primarily due to the following:
n Decrease in principal base due to the voluntary prepayment of $300.0 million on our 2024 Dollar Term Loans in January 2020
n Decrease in average interest rates due to LIBOR decreases on our variable rate debt over the comparable period
n Weakening of the Euro compared to the U.S. Dollar of 2.1%
Partially offset by:
n Increase from a partial period of expense associated with the issuance of $500.0 million aggregate principal amount of 2027 Senior Notes
n Unfavorable impacts of our derivative instruments
Six months ended June 30, 2020 compared to the six months ended June 30, 2019
Interest expense, net decreased primarily due to the following:
n Decrease in principal base due to the voluntary prepayment of $300.0 million on our 2024 Dollar Term Loans in January 2020
n Decrease in average interest rates due to LIBOR decreases on our variable rate debt over the comparable period
n Weakening of the Euro compared to the U.S. Dollar of 2.5%
Partially offset by:
n Increase from a partial period of expense associated with the issuance of $500.0 million aggregate principal amount of 2027 Senior Notes
n Unfavorable impacts of our derivative instruments
Other income, net
 
 
Three Months Ended June 30,
 
2020 vs 2019
 
Six Months Ended June 30,
 
2020 vs 2019
 
 
2020
 
2019
 
$ Change
 
% Change
 
2020
 
2019
 
$ Change
 
% Change
Other income, net
 
$
(2.2
)
 
$
(0.9
)
 
$
(1.3
)
 
144.4
%
 
$
(1.4
)
 
$
(1.9
)
 
$
0.5

 
(26.3
)%
Three months ended June 30, 2020 compared to the three months ended June 30, 2019
Other income, net increased due to the following:
n Increased impact from foreign exchange of $2.5 million from losses of $2.2 million during the prior period to gains $0.3 million during the current period
n Pension curtailment benefits released from accumulated other comprehensive loss for $0.6 million
Partially offset by:
n Decrease in miscellaneous income

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Table of Contents

Six months ended June 30, 2020 compared to the six months ended June 30, 2019
Other income, net decreased due to the following:
n Debt extinguishment and refinancing related costs of $2.4 million, driven primarily by the write off of unamortized deferred financing costs and original issue discounts in relation with the voluntary prepayment of $300.0 million of outstanding principal on our 2024 Dollar Term Loans in January 2020
n Decrease in miscellaneous income
Partially offset by:
n Decreased impact from foreign exchange of $2.6 million from losses of $4.6 million during the prior year to losses of $2.0 million during the current year, as well as increases from pension curtailment benefits released from accumulated other comprehensive loss for $1.8 million
(Benefit) provision for income taxes
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
(Loss) income before income taxes
 
$
(98.4
)
 
$
117.8

 
$
(70.6
)
 
$
176.1

(Benefit) provision for income taxes
 
(15.2
)
 
17.9

 
(39.8
)
 
32.1

Statutory U.S. Federal income tax rate
 
21.0
 %
 
21.0
 %
 
21.0
%
 
21.0
 %
Effective tax rate
 
15.4
 %
 
15.2
 %
 
56.4
%
 
18.2
 %
Effective tax rate vs. statutory U.S. Federal income tax rate
 
(5.6
)%
 
(5.8
)%
 
35.4
%
 
(2.8
)%
 
 
(Favorable) Unfavorable Impact
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
Items impacting the effective tax rate vs. statutory U.S. federal income tax rate
 
2020
 
2019
 
2020
 
2019
Earnings generated in jurisdictions where the statutory rate is different from the U.S. Federal rate (1)
 
$
(1.6
)
 
$
(8.3
)
 
$
(5.9
)
 
$
(10.9
)
Changes in valuation allowance
 
1.8

 
(21.8
)
 
7.4

 
(19.2
)
Foreign exchange gain (loss), net
 
0.3

 
1.5

 
(1.3
)
 
0.9

Stock-based compensation excess tax benefits, net
 
—

 
(3.2
)
 
—

 
(6.8
)
Non-deductible expenses and interest
 
1.7

 
0.6

 
3.1

 
2.2

Increase in unrecognized tax benefits(2)
 
1.4

 
6.4

 
19.3

 
7.2

Intra-entity asset transfer (3)
 
—

 
—

 
(50.5
)
 
—

Foreign taxes (4)
 
1.9

 
16.8

 
3.5

 
18.4

(1) Primarily related to earnings in Bermuda, Germany, Luxembourg, and Switzerland.
(2) Primarily related to charges recorded in connection with the income tax audit in Germany.
(3) Related to the step-up of tax-deductible basis upon transfer of certain intellectual property rights to our Swiss subsidiary.
(4) For the three and six months ended June 30, 2019, the unfavorable impact is primarily related to an adjustment for certain tax attributes for which the Company determined are no longer realizable. This was mostly offset by a tax benefit for the decrease to the valuation allowance on the tax attributes previously recorded as a result of changes under U.S. tax reform.


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Table of Contents

SEGMENT RESULTS
The Company's products and operations are managed and reported in two operating segments: Performance Coatings and Transportation Coatings.
Performance Coatings Segment
 
 
Three Months Ended June 30,
 
2020 vs 2019
 
Six Months Ended June 30,
 
2020 vs 2019
 
 
2020
 
2019
 
$ Change
 
% Change
 
2020
 
2019
 
$ Change
 
% Change
Net sales
 
$
482.1

 
$
756.7

 
$
(274.6
)
 
(36.3
)%
 
$
1,129.8

 
$
1,470.0

 
$
(340.2
)
 
(23.1
)%
Volume effect
 
 
 
 
 
 
 
(29.7
)%
 
 
 
 
 
 
 
(18.9
)%
Impact of portfolio changes
 
 
 
 
 
 
 
(1.6
)%
 
 
 
 
 
 
 
(1.9
)%
Price/product mix effect
 
 
 
 
 
 
 
(2.6
)%
 
 
 
 
 
 
 
(0.1
)%
Exchange rate effect
 
 
 
 
 
 
 
(2.4
)%
 
 
 
 
 
 
 
(2.2
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBIT
 
$
1.5

 
$
127.6

 
$
(126.1
)
 
(98.8
)%
 
$
80.9

 
$
206.2

 
$
(125.3
)
 
(60.8
)%
Adjusted EBIT Margin
 
0.3
%
 
16.9
%
 
 
 
 
 
7.2
%
 
14.0
%
 
 
 
 
Three months ended June 30, 2020 compared to the three months ended June 30, 2019
Net sales decreased due to the following:
n Lower organic volumes across both end-markets and all regions due to decreased demand primarily as a result of COVID-19
n Lower average selling prices and product mix across both end-markets, primarily driven by a change in product mix sold in refinish, partially offset by stable average price and product mix in our other regions and the industrial end-market
n Unfavorable impacts of currency translation, due primarily to the weakening of the Euro, Chinese Renminbi, and Brazilian Real compared to the U.S. dollar
n Negative impacts as a result of portfolio changes within our industrial end-market, which included the sale of our consolidated joint venture interests during the second quarter of 2019
Adjusted EBIT decreased due to the following:
n Lower organic volumes across both end-markets and all regions due to decreased demand primarily as a result of COVID-19
n Lower average selling prices and product mix across both end-markets, primarily driven by a change in product mix sold in refinish, partially offset by stable average price and product mix in our other regions and across our industrial end-market
n Unfavorable impacts of currency translation, due primarily to the weakening of the Euro, Chinese Renminbi, and Brazilian Real compared to the U.S. dollar
n Lower sales volume covering fixed costs, including impacts of reduced utilization at certain manufacturing sites and increased inventory reserves
Partially offset by:
n Lower operating expenses across both end-markets resulting from operational efficiencies associated with our cost savings initiatives as well as overall lower compensation expense associated with COVID-19 related cost reduction actions and costs to support net sales
n Lower variable input costs across both end-markets
Six months ended June 30, 2020 compared to the six months ended June 30, 2019
Net sales decreased due to the following:
n Lower organic volumes across both end-markets and all regions due to decreased demand primarily as a result of COVID-19
n Unfavorable impacts of currency translation, due primarily to the weakening of the Euro, Chinese Renminbi, and Brazilian Real compared to the U.S. dollar
n Negative impacts as a result of portfolio changes within our industrial end-market, which included the sale of our consolidated joint venture interests during the second quarter of 2019
n Lower average selling prices and product mix across both end-markets, primarily driven by a change in product mix sold in refinish, offset by increases in EMEA refinish and stable average price and product mix in our industrial end-market

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Table of Contents

Adjusted EBIT decreased due to the following:
n Lower organic volumes across both end-markets and all regions due to decreased demand primarily as a result of COVID-19
n Lower average selling prices and product mix across both end-markets, primarily driven by a change in product mix sold in refinish, offset by increases in refinish and stable average price and product mix in our industrial end-market
n Unfavorable impacts of currency translation, due primarily to the weakening of the Euro, Chinese Renminbi, and Brazilian Real compared to the U.S. dollar
n Lower sales volume covering fixed costs, including impacts of reduced utilization at certain manufacturing sites and increased inventory reserves
Partially offset by:
n Lower operating expenses across both end-markets and all regions except Latin America, resulting from operational efficiencies associated with our cost savings initiatives as well as overall lower compensation expense associated with COVID-19 related cost reduction actions and costs to support net sales
n Lower variable input costs across both end-markets and all regions
Transportation Coatings Segment
 
 
Three Months Ended June 30,
 
2020 vs 2019
 
Six Months Ended June 30,
 
2020 vs 2019
 
 
2020
 
2019
 
$ Change
 
% Change
 
2020
 
2019
 
$ Change
 
% Change
Net sales
 
$
170.6

 
$
400.8

 
$
(230.2
)
 
(57.4
)%
 
$
506.4

 
$
806.8

 
$
(300.4
)
 
(37.2
)%
Volume effect
 
 
 
 
 
 
 
(57.2
)%
 
 
 
 
 
 
 
(36.1
)%
Price/product mix effect
 
 
 
 
 
 
 
3.5
 %
 
 
 
 
 
 
 
2.0
 %
Exchange rate effect
 
 
 
 
 
 
 
(3.7
)%
 
 
 
 
 
 
 
(3.1
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBIT
 
$
(39.3
)
 
$
40.4

 
$
(79.7
)
 
(197.3
)%
 
$
(13.5
)
 
$
74.6

 
$
(88.1
)
 
(118.1
)%
Adjusted EBIT Margin
 
(23.0
)%
 
10.1
%
 
 
 
 
 
(2.7
)%
 
9.2
%
 
 
 
 
Three months ended June 30, 2020 compared to the three months ended June 30, 2019
Net sales decreased due to the following:
n Lower organic volumes across both end-markets and all regions due to decreased demand primarily as a result of COVID-19 as well as a previously anticipated decrease in vehicle builds
n Unfavorable impacts of currency translation, due primarily to the weakening of the Brazilian Real, Euro and Chinese Renminbi compared to the U.S. dollar
Partially offset by:
n Higher average selling prices across both end-markets and all regions
Adjusted EBIT decreased due to the following:
n Lower organic volumes across both end-markets and all regions due to decreased demand primarily as a result of COVID-19, as well as a previously anticipated decrease in vehicle builds
n Unfavorable impacts of currency translation, due primarily to the weakening of the Brazilian Real, Euro and Chinese Renminbi compared to the U.S. dollar
n Lower sales volume covering fixed costs, including impacts of reduced utilization at certain manufacturing sites and increased inventory reserves
Partially offset by:
n Lower operating expenses across both end-markets and all regions, primarily in light vehicle resulting from operational efficiencies associated with our cost savings initiatives as well as lower compensation expense associated with COVID-19 related cost reduction actions and costs to support net sales
n Higher average selling prices across both end-markets and all regions

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Table of Contents

Six months ended June 30, 2020 compared to the six months ended June 30, 2019
Net sales decreased due to the following:
n Lower organic volumes across both end-markets and all regions due to decreased demand primarily as a result of COVID-19 as well as a previously anticipated decrease in vehicle builds
n Unfavorable impacts of currency translation, due primarily to the weakening of the Brazilian Real, Euro and Chinese Renminbi compared to the U.S. dollar
Partially offset by:
n Higher average selling prices across both end-markets and all regions
Adjusted EBIT decreased due to the following:
n Lower organic volumes across both end-markets and all regions due to decreased demand primarily as a result of COVID-19, as well as a previously anticipated decrease in vehicle builds
n Unfavorable impacts of currency translation, due primarily to the weakening of the Brazilian Real, Euro and Chinese Renminbi compared to the U.S. dollar
n Lower sales volume covering fixed costs, including impacts of reduced utilization at certain manufacturing sites and increased inventory reserves
Partially offset by:
n Lower operating expenses across both end-markets and all regions, primarily in light vehicle resulting from operational efficiencies associated with our cost savings initiatives as well as lower compensation expense associated with COVID-19 related cost reduction actions and costs to support net sales
n Higher average selling prices across both end-markets and all regions
n Lower variable input costs across both end-markets and all regions
LIQUIDITY AND CAPITAL RESOURCES
Our primary sources of liquidity are cash on hand, cash flow from operations and available borrowing capacity under our Senior Secured Credit Facilities.
At June 30, 2020, availability under the Revolving Credit Facility was $361.0 million, net of $39.0 million of letters of credit outstanding. All such availability may be utilized without violating any covenants under the credit agreement governing such facility or the indentures governing the Senior Notes. At June 30, 2020, we had $10.2 million of outstanding borrowings under other lines of credit. Our remaining available borrowing capacity under other lines of credit in certain non-U.S. jurisdictions totaled $8.4 million.
We, or our affiliates, at any time and from time to time, may purchase shares of our common stock, the Senior Notes, prepay our Term Loans or other indebtedness. Any such purchases of our common stock or Senior Notes may be made through the open market or privately negotiated transactions with third parties or pursuant to one or more redemption, tender or exchange offers or otherwise, upon such terms and at such prices, as well as with such consideration, as we, or any of our affiliates, may determine.

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Table of Contents

Cash Flows
 
 
Six Months Ended June 30,
(In millions)
 
2020
 
2019
Net cash provided by (used for):
 
 
 
 
Operating activities:
 
 
 
 
Net (loss) income
 
$
(30.8
)
 
$
144.0

Depreciation and amortization
 
163.2

 
180.3

Amortization of deferred financing costs and original issue discount
 
4.1

 
4.4

Debt extinguishment and refinancing related costs
 
2.4

 
0.2

Deferred income taxes
 
(61.2
)
 
(1.6
)
Realized and unrealized foreign exchange losses, net
 
2.8

 
2.8

Stock-based compensation
 
11.2

 
5.3

Divestitures and impairment charges
 
3.2

 
3.9

Interest income on swaps designated as net investment hedges
 
(7.3
)
 
(7.2
)
Other non-cash, net
 
8.3

 
(0.6
)
Net income adjusted for non-cash items
 
95.9

 
331.5

Changes in operating assets and liabilities
 
(98.4
)
 
(262.7
)
Operating activities
 
(2.5
)
 
68.8

Investing activities
 
(34.3
)
 
(33.7
)
Financing activities
 
159.1

 
(147.9
)
Effect of exchange rate changes on cash
 
(16.3
)
 
1.0

Net increase (decrease) in cash, cash equivalents and restricted cash
 
$
106.0

 
$
(111.8
)
Six months ended June 30, 2020
Net Cash Used for Operating Activities
Net cash used for operating activities for the six months ended June 30, 2020 was $2.5 million. Net income before deducting depreciation, amortization and other non-cash items generated cash of $95.9 million. This was offset by net uses of working capital of $98.4 million, for which the most significant drivers were decreases in accounts payable of $131.0 million, other accrued liabilities of $87.9 million and increases in prepaid expenses and other assets of $60.3 million during the six months ended June 30, 2020. These outflows were primarily related to the timing of cash payments for employee related benefits, customer incentive payments, payments of normal seasonal operating activities and decreased business activity associated with the COVID-19 downturn. Partially offsetting these outflows were decreases in receivables of $136.8 million and inventory of $32.5 million.
Net Cash Used for Investing Activities
Net cash used for investing activities for the six months ended June 30, 2020 was $34.3 million. The primary use was for purchases of property, plant and equipment of $42.4 million, partially offset by interest proceeds on swaps designated as net investment hedges of $7.3 million.
Net Cash Provided by Financing Activities
Net cash provided by financing activities for the six months ended June 30, 2020 was $159.1 million. This change was driven primarily by cash proceeds of $500.0 million from the issuance of our 2027 Senior Notes, partially offset by the voluntary prepayment of $300.0 million of the outstanding principal on the 2024 Dollar Term Loans. Offsetting the inflows were routine repayments of $31.7 million on short-term and long-term borrowings, payments for financing-related costs of $6.0 million and purchases of noncontrolling interests of $1.6 million.
Other Impacts on Cash
Currency exchange impacts on cash for the six months ended June 30, 2020 were unfavorable by $16.3 million, which was driven primarily by weakening of the British Pound, Mexican Peso, South African Rand, Brazilian Real and Russian Ruble compared to the U.S. Dollar.

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Table of Contents

Six months ended June 30, 2019
Net Cash Provided by Operating Activities
Net cash provided by operating activities for the six months ended June 30, 2019 was $68.8 million. Net income before deducting depreciation, amortization and other non-cash items generated cash of $331.5 million. This was partially offset by net uses of working capital of $262.7 million. The most significant drivers of the uses of working capital were increases in accounts receivable of $152.9 million, prepaid expenses and other assets of $81.6 million and inventories of $1.4 million during the six months ended June 30, 2019, as well as a decrease in other accrued liabilities of $54.0 million. These outflows were primarily driven by customer incentive payments and payments of normal seasonal operating activities, including interest payments on our long-term indebtedness and timing of cash payments for annual employee performance related benefits. Partially offsetting these outflows were increases in accounts payable of $20.7 million and other liabilities of $6.5 million.
Net Cash Used for Investing Activities
Net cash used for investing activities for the six months ended June 30, 2019 was $33.7 million. The primary uses were for purchases of property, plant and equipment of $47.2 million, business acquisitions of $1.9 million, partially offset by proceeds from the sale of our noncontrolling interest subsidiary of $8.2 million and interest proceeds on swaps designated as net investment hedges of $7.2 million.
Net Cash Used for Financing Activities
Net cash used for financing activities for the six months ended June 30, 2019 was $147.9 million. This change was driven by purchases of treasury stock totaling $105.3 million, payments of $34.2 million on short-term and long-term borrowings, investments in noncontrolling interests of $31.1 million and dividends to noncontrolling interests of $1.1 million. These payments were partially offset by cash received from stock option exercises of $25.9 million.
Other Impacts on Cash
Currency exchange impacts on cash for the six months ended June 30, 2019 were favorable by $1.0 million, which was driven primarily by the Chinese Renminbi.
Financial Condition
We had cash and cash equivalents at June 30, 2020 and December 31, 2019 of $1,123.6 million and $1,017.5 million, respectively. Of these balances, $528.1 million and $540.0 million were maintained in non-U.S. jurisdictions as of June 30, 2020 and December 31, 2019, respectively. We believe our organizational structure allows us the necessary flexibility to move funds throughout our subsidiaries to meet our operational working capital needs.
Our business may not generate sufficient cash flow from operations and future borrowings may not be available under our Senior Secured Credit Facilities in an amount sufficient to enable us to pay our indebtedness, or to fund our other liquidity needs, including planned capital expenditures. In such circumstances, we may need to refinance all or a portion of our indebtedness on or before maturity. We may not be able to refinance any of our indebtedness on commercially reasonable terms or at all. If we cannot service our indebtedness, we may have to take actions such as selling assets, seeking additional equity or reducing or delaying capital expenditures, strategic acquisitions, investments and alliances. Our primary sources of liquidity are cash on hand, cash flow from operations and available borrowing capacity under our Senior Secured Credit Facilities. Based on our forecasts, we believe that cash flow from operations, available cash on hand and available borrowing capacity under our Senior Secured Credit Facilities and existing lines of credit will be adequate to service debt, fund our cost saving initiatives, meet liquidity needs and fund necessary capital expenditures for the next twelve months.
Our ability to make scheduled payments of principal or interest on, or to refinance, our indebtedness or to fund working capital requirements, capital expenditures and other current obligations will depend on our ability to generate cash from operations. Such cash generation is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control, including the effects of COVID-19.
If required, our ability to raise additional financing and our borrowing costs may be impacted by short and long-term debt ratings assigned by independent rating agencies, which are based, in significant part, on our performance as measured by certain credit metrics such as interest coverage and leverage ratios. Our highly leveraged nature may limit our ability to procure additional financing in the future.

39
Table of Contents

The following table details our borrowings outstanding at the end of the periods indicated:
(In millions)
 
June 30, 2020
 
December 31, 2019
2024 Dollar Term Loans
 
$
2,075.3

 
$
2,387.5

2024 Dollar Senior Notes
 
500.0

 
500.0

2024 Euro Senior Notes
 
377.0

 
375.2

2025 Euro Senior Notes
 
506.5

 
504.0

2027 Dollar Senior Notes
 
500.0

 
—

Short-term and other borrowings
 
105.6

 
109.0

Unamortized original issue discount
 
(8.3
)
 
(10.5
)
Unamortized deferred financing costs
 
(34.8
)
 
(31.1
)
Total borrowings, net
 
4,021.3

 
3,834.1

Less:
 
 
 
 
Short-term borrowings
 
17.0

 
19.6

Current portion of long-term borrowings
 
24.3

 
24.3

Long-term debt
 
$
3,980.0

 
$
3,790.2

Our indebtedness, including the Senior Secured Credit Facilities and Senior Notes, is more fully described in Note 14 to unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q and Note 18 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2019.
We believe that we continue to maintain sufficient liquidity to meet our requirements, including our leverage and associated interest as well as our working capital needs. Availability under the Revolving Credit Facility was $361.0 million and $361.2 million at June 30, 2020 and December 31, 2019, respectively, all of which may be borrowed by us without violating any covenants under the Credit Agreement governing such facility or the indentures governing the Senior Notes.
Contractual Obligations
Information related to our contractual obligations can be found in the Company's Annual Report on Form 10-K for the year ended December 31, 2019. There have been no material changes in the Company's contractual obligations since December 31, 2019.
Off-Balance Sheet Arrangements
See Note 5 "Commitments and Contingencies" to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for disclosure of our guarantees of certain customers’ obligations to third parties.
Recent Accounting Guidance
See Note 1 "Basis of Presentation and Summary of Significant Accounting Policies" to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a summary of recent accounting guidance.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Critical accounting policies are those accounting policies that can have a significant impact on the presentation of our financial condition and results of operations, and that require the use of complex and subjective estimates based upon past experience and management’s judgment. Because of the uncertainty inherent in such estimates, actual results may differ materially from these estimates. The policies applied in preparing our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q are those that management believes are the most dependent on estimates and assumptions. There have been no material changes to our critical accounting policies and estimates previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019. For a description of our critical accounting policies and estimates as well as a listing of our significant accounting policies, see “Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates” and “Note 1 - Basis of Presentation and Summary of Significant Accounting Policies” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

40
Table of Contents

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in the market risks previously disclosed in our financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures
As required by Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”), the Company carried out an evaluation, under the supervision and with the participation of management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on the foregoing, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of June 30, 2020.
Changes in internal control over financial reporting
There were no changes in the Company’s internal control over financial reporting that occurred during the three months ended June 30, 2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

41
Table of Contents

PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are from time to time party to legal proceedings that arise in the ordinary course of business. We are not involved in any litigation other than that which has arisen in the ordinary course of business. We do not expect that any currently pending lawsuits will have a material effect on us.
ITEM 1A. RISK FACTORS
There have been no material changes in our risk factors from the risks previously reported in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2019, other than as set forth below.
Our business, results of operations, financial condition, cash flows and stock price can be adversely affected by pandemics, epidemics or other public health emergencies, such as the recent outbreak of COVID-19.
The impact of the coronavirus (COVID-19) has created significant volatility in the global economy and led to declining near-term, and uncertain longer-term, economic activity and conditions. There have been extraordinary actions taken by international, federal, state, and local public health and governmental authorities to contain and combat the outbreak and spread of COVID-19 in regions throughout the world, including travel bans, quarantines, “stay-at-home” orders, and similar mandates for many individuals to substantially restrict daily activities and for many businesses to curtail or cease normal operations.
Although we have continued to operate our facilities to date consistent with applicable governmental orders, the outbreak of COVID-19 and any preventive, protective or other actions taken by governmental authorities may have a material adverse effect on our operations, supply chain, customers and logistics networks, including business shutdowns and other disruptions. The extent to which COVID-19 may adversely impact our business depends on future developments, which are highly uncertain and unpredictable, depending upon the severity and duration of the outbreak and the effectiveness of actions taken globally to contain or mitigate its effects, including any ongoing actions in response to changing health conditions over time. Any resulting financial impact cannot be estimated reasonably at this time, but may materially adversely affect our business, results of operations, financial condition and cash flows. Even after the COVID-19 pandemic has subsided, we may experience materially adverse impacts to our business due to any resulting economic recession or depression. Additionally, concerns over the economic impact of COVID-19 have caused extreme volatility in financial and other capital markets which has and may continue to adversely impact our stock price and our ability to access capital markets. To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in our Annual Report on Form 10-K for the year ended December 31, 2019, such as those relating to our products and financial performance.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.

42
Table of Contents

ITEM 6. EXHIBITS
EXHIBIT NO.
DESCRIPTION OF EXHIBITS
 
 
4.1*
 
 
31.1
 
 
31.2
 
 
32.1†
 
 
32.2†
 
 
101
INS - Inline XBRL Instance Document. The document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document
 
 
101
SCH - Inline XBRL Taxonomy Extension Schema Document
 
 
101
CAL - Inline XBRL Taxonomy Extension Calculation Linkbase Document
 
 
101
DEF - Inline XBRL Taxonomy Extension Definition Linkbase Document
 
 
101
LAB - Inline XBRL Taxonomy Extension Label Linkbase Document
 
 
101
PRE - Inline XBRL Taxonomy Extension Presentation Linkbase Document
 
 
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)
 
 
*
Previously filed.
 
 
†
This certificate is being furnished solely to accompany the report pursuant to 18 U.S.C. Section 1350 and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.



43
Table of Contents


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned duly authorized.


 
 
 
 
AXALTA COATING SYSTEMS LTD.
 
 
 
 
Date:
July 29, 2020
 
By: /s/ Robert W. Bryant
 
 
 
Robert W. Bryant
 
 
 
Chief Executive Officer and President
 
 
 
(Principal Executive Officer)
 
 
 
 
Date:
July 29, 2020
 
By: /s/ Sean M. Lannon
 
 
 
Sean M. Lannon
 
 
 
Senior Vice President and Chief Financial Officer
 
 
 
(Principal Financial Officer)
 
 
 
 
Date:
July 29, 2020
 
By: /s/ Anthony Massey
 
 
 
Anthony Massey
 
 
 
Vice President and Global Controller
 
 
 
(Principal Accounting Officer)

44
 Exhibit


Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Robert W. Bryant, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Axalta Coating Systems Ltd.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: July 29, 2020
 
By:
/s/ Robert W. Bryant
Name:
Robert W. Bryant
Title:
Chief Executive Officer and President


Exhibit


Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Sean M. Lannon, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Axalta Coating Systems Ltd.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: July 29, 2020
 
By:
/s/ Sean M. Lannon
Name:
Sean M. Lannon
Title:
Senior Vice President and Chief Financial Officer


Exhibit


Exhibit 32.1
Certification of CEO Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, Robert W. Bryant, Chief Executive Officer and President of Axalta Coating Systems Ltd. (the "Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(1)
The Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 30, 2020 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 29, 2020
 
By:
/s/ Robert W. Bryant
Name:
Robert W. Bryant
Title:
Chief Executive Officer and President
This certification accompanies this report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended or otherwise subject to liability pursuant to that section. The certification shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.


Exhibit


Exhibit 32.2
Certification of CFO Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, Sean M. Lannon, Senior Vice President and Chief Financial Officer of Axalta Coating Systems Ltd. (the "Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(1)
The Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 30, 2020 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 29, 2020
 
By:
/s/ Sean M. Lannon
Name:
Sean M. Lannon
Title:
Senior Vice President and Chief Financial Officer
This certification accompanies this report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended or otherwise subject to liability pursuant to that section. The certification shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.


v3.20.2
Cover Page - shares
 6 Months Ended
Jun. 30, 2020
Jul. 23, 2020
Cover [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Jun. 30, 2020  
Document Transition Report false  
Entity File Number 001-36733  
Entity Registrant Name AXALTA COATING SYSTEMS LTD.  
Entity Incorporation, State or Country Code D0  
Entity Tax Identification Number 98-1073028  
Entity Address, Address Line One Two Commerce Square  
Entity Address, Address Line Two 2001 Market Street  
Entity Address, Address Line Three Suite 3600  
Entity Address, City or Town Philadelphia  
Entity Address, State or Province PA  
Entity Address, Postal Zip Code 19103  
City Area Code 855  
Local Phone Number 547-1461  
Title of 12(b) Security Common Shares, $1.00 par value  
Trading Symbol AXTA  
Security Exchange Name NYSE  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   235,359,947
Entity Central Index Key 0001616862  
Current Fiscal Year End Date --12-31  
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q2  
Amendment Flag false  
v3.20.2
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Income Statement [Abstract]        
Net sales $ 652.7 $ 1,157.5 $ 1,636.2 $ 2,276.8
Cost of goods sold 499.2 748.4 1,146.0 1,499.7
Selling, general and administrative expenses 154.2 202.4 349.6 418.0
Other operating charges 24.7 2.5 56.3 9.6
Research and development expenses 11.2 17.9 27.8 36.1
Amortization of acquired intangibles 27.9 28.4 55.9 56.9
(Loss) income from operations (64.5) 157.9 0.6 256.5
Interest expense, net 36.1 41.0 72.6 82.3
Other income, net (2.2) (0.9) (1.4) (1.9)
(Loss) income before income taxes (98.4) 117.8 (70.6) 176.1
(Benefit) provision for income taxes (15.2) 17.9 (39.8) 32.1
Net (loss) income (83.2) 99.9 (30.8) 144.0
Less: Net (loss) income attributable to noncontrolling interests (0.4) 1.5 (0.2) 2.2
Net (loss) income attributable to controlling interests $ (82.8) $ 98.4 $ (30.6) $ 141.8
Basic net (loss) income per share (in dollars per share) $ (0.35) $ 0.42 $ (0.13) $ 0.61
Diluted net (loss) income per share (in dollars per share) $ (0.35) $ 0.42 $ (0.13) $ 0.60
v3.20.2
Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Statement of Comprehensive Income [Abstract]        
Net (loss) income $ (83.2) $ 99.9 $ (30.8) $ 144.0
Other comprehensive income (loss), before tax:        
Foreign currency translation adjustments 7.0 (0.9) (79.5) 12.4
Unrealized loss on derivatives (2.6) (20.3) (43.3) (34.9)
Unrealized gain on pension plan obligations 0.2 0.0 0.0 0.5
Other comprehensive income (loss), before tax 4.6 (21.2) (122.8) (22.0)
Income tax benefit related to items of other comprehensive loss (0.6) (3.1) (6.4) (4.8)
Other comprehensive income (loss), net of tax 5.2 (18.1) (116.4) (17.2)
Comprehensive (loss) income (78.0) 81.8 (147.2) 126.8
Less: Comprehensive income (loss) attributable to noncontrolling interests 0.5 3.7 (2.5) 4.9
Comprehensive (loss) income attributable to controlling interests $ (78.5) $ 78.1 $ (144.7) $ 121.9
v3.20.2
Condensed Consolidated Balance Sheets (Unaudited) - USD ($)
$ in Millions
Jun. 30, 2020
Dec. 31, 2019
Current assets:    
Cash and cash equivalents $ 1,123.6 $ 1,017.5
Restricted cash 2.9 3.0
Accounts and notes receivable, net 664.0 830.1
Inventories 539.3 591.6
Prepaid expenses and other current assets 150.4 131.2
Total current assets 2,480.2 2,573.4
Property, plant and equipment, net 1,158.2 1,223.0
Goodwill 1,209.3 1,208.9
Identifiable intangibles, net 1,158.1 1,223.9
Other assets 662.8 588.8
Total assets 6,668.6 6,818.0
Current liabilities:    
Accounts payable 331.9 483.7
Current portion of borrowings 41.3 43.9
Other accrued liabilities 487.7 545.3
Total current liabilities 860.9 1,072.9
Long-term borrowings 3,980.0 3,790.2
Accrued pensions 278.3 285.2
Deferred income taxes 108.7 115.5
Other liabilities 182.1 144.6
Total liabilities 5,410.0 5,408.4
Commitments and contingencies (Note 5)
Shareholders’ equity:    
Common shares, $1.00 par, 1,000.0 shares authorized, 250.6 and 250.1 shares issued at June 30, 2020 and December 31, 2019, respectively 250.5 249.9
Capital in excess of par 1,479.5 1,474.1
Retained earnings 411.1 443.2
Treasury shares, at cost, 15.2 shares at June 30, 2020 and December 31, 2019 (418.4) (417.5)
Accumulated other comprehensive loss (509.6) (395.5)
Total Axalta shareholders’ equity 1,213.1 1,354.2
Noncontrolling interests 45.5 55.4
Total shareholders’ equity 1,258.6 1,409.6
Total liabilities and shareholders’ equity $ 6,668.6 $ 6,818.0
v3.20.2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares
Jun. 30, 2020
Dec. 31, 2019
Statement of Financial Position [Abstract]    
Common stock, par value (in dollars per share) $ 1.00 $ 1.00
Common shares authorized (in shares) 1,000,000,000.0 1,000,000,000.0
Common shares issued (in shares) 250,600,000.0 250,100,000.0
Treasury shares, at cost (in shares) 15,200,000.0 15,200,000.0
v3.20.2
Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) - USD ($)
shares in Millions, $ in Millions
Total
Common Stock
Capital In Excess Of Par
Retained Earnings
Treasury Shares, at cost
Accumulated Other Comprehensive Loss
Non controlling Interests
Beginning balance (in shares) at Dec. 31, 2018   235.6          
Beginning balance at Dec. 31, 2018 $ 1,310.5 $ 245.3 $ 1,409.5 $ 198.6 $ (312.2) $ (336.1) $ 105.4
Comprehensive income (loss):              
Net income (loss) 44.1     43.4     0.7
Net realized and unrealized loss on derivatives, net of tax (12.4)         (12.4)  
Long-term employee benefit plans, net of tax 0.0         0.0  
Foreign currency translation, net of tax 13.3         12.8 0.5
Comprehensive (loss) income 45.0     43.4   0.4 1.2
Recognition of stock-based compensation 6.7   6.7        
Shares issued under compensation plans (in shares)   1.1          
Shares issued under compensation plans 11.4 $ 1.7 9.7        
Ownership changes relating to noncontrolling interests (26.4)   5.7       (32.1)
Common stock purchases (in shares)   (2.5)          
Common stock purchases (65.8)       (65.8)    
Dividends declared to noncontrolling interests (1.1)           (1.1)
Ending balance (in shares) at Mar. 31, 2019   234.2          
Ending balance at Mar. 31, 2019 1,279.6 $ 247.0 1,431.6 241.3 (378.0) (335.7) 73.4
Beginning balance (in shares) at Dec. 31, 2018   235.6          
Beginning balance at Dec. 31, 2018 1,310.5 $ 245.3 1,409.5 198.6 (312.2) (336.1) 105.4
Comprehensive income (loss):              
Net income (loss) 144.0            
Comprehensive (loss) income 126.8            
Ending balance (in shares) at Jun. 30, 2019   233.3          
Ending balance at Jun. 30, 2019 1,307.1 $ 248.2 1,441.8 336.0 (417.5) (356.0) 54.6
Beginning balance (in shares) at Mar. 31, 2019   234.2          
Beginning balance at Mar. 31, 2019 1,279.6 $ 247.0 1,431.6 241.3 (378.0) (335.7) 73.4
Comprehensive income (loss):              
Net income (loss) 99.9     98.4     1.5
Net realized and unrealized loss on derivatives, net of tax (17.6)         (17.6)  
Long-term employee benefit plans, net of tax 0.4         0.4  
Foreign currency translation, net of tax (0.9)         (3.1) 2.2
Comprehensive (loss) income 81.8     98.4   (20.3) 3.7
Recognition of stock-based compensation (1.4)   (1.4)        
Shares issued under compensation plans (in shares)   0.7          
Shares issued under compensation plans 14.5 $ 1.2 13.3        
Ownership changes relating to noncontrolling interests (24.2)   (1.7)       (22.5)
Common stock purchases (in shares)   (1.6)          
Common stock purchases (39.5)       (39.5)    
Ending balance (in shares) at Jun. 30, 2019   233.3          
Ending balance at Jun. 30, 2019 1,307.1 $ 248.2 1,441.8 336.0 (417.5) (356.0) 54.6
Beginning balance (in shares) at Dec. 31, 2019   234.9          
Beginning balance at Dec. 31, 2019 1,409.6 $ 249.9 1,474.1 443.2 (417.5) (395.5) 55.4
Comprehensive income (loss):              
Net income (loss) 52.4     52.2     0.2
Net realized and unrealized loss on derivatives, net of tax (34.7)         (34.7)  
Long-term employee benefit plans, net of tax (0.4)         (0.4)  
Foreign currency translation, net of tax (86.5)         (83.3) (3.2)
Comprehensive (loss) income (69.2)     52.2   (118.4) (3.0)
Recognition of stock-based compensation 5.1   5.1        
Shares issued under compensation plans (in shares)   0.4          
Shares issued under compensation plans (1.1) $ 0.5 (1.6)        
Ownership changes relating to noncontrolling interests (1.6)   0.5       (2.1)
Dividends declared to noncontrolling interests (0.5)           (0.5)
Ending balance (in shares) at Mar. 31, 2020   235.3          
Ending balance at Mar. 31, 2020 1,340.8 $ 250.4 1,478.1 493.9 (417.5) (513.9) 49.8
Beginning balance (in shares) at Dec. 31, 2019   234.9          
Beginning balance at Dec. 31, 2019 1,409.6 $ 249.9 1,474.1 443.2 (417.5) (395.5) 55.4
Comprehensive income (loss):              
Net income (loss) (30.8)            
Comprehensive (loss) income $ (147.2)            
Shares issued under compensation plans (in shares) 0.0            
Ending balance (in shares) at Jun. 30, 2020   235.4          
Ending balance at Jun. 30, 2020 $ 1,258.6 $ 250.5 1,479.5 411.1 (418.4) (509.6) 45.5
Beginning balance (in shares) at Mar. 31, 2020   235.3          
Beginning balance at Mar. 31, 2020 1,340.8 $ 250.4 1,478.1 493.9 (417.5) (513.9) 49.8
Comprehensive income (loss):              
Net income (loss) (83.2)     (82.8)     (0.4)
Net realized and unrealized loss on derivatives, net of tax (2.2)         (2.2)  
Long-term employee benefit plans, net of tax 0.4         0.4  
Foreign currency translation, net of tax 7.0         6.1 0.9
Comprehensive (loss) income (78.0)     (82.8)   4.3 0.5
Recognition of stock-based compensation 6.1   6.1        
Shares issued under compensation plans (in shares)   0.1          
Shares issued under compensation plans 1.2 $ 0.1 1.1        
Changes in redeemable noncontrolling interest (10.6)   (5.8)       (4.8)
Common stock purchases (0.9)       (0.9)    
Ending balance (in shares) at Jun. 30, 2020   235.4          
Ending balance at Jun. 30, 2020 $ 1,258.6 $ 250.5 $ 1,479.5 $ 411.1 $ (418.4) $ (509.6) $ 45.5
v3.20.2
Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) (Parenthetical) - USD ($)
$ in Millions
 3 Months Ended
Jun. 30, 2020
Mar. 31, 2020
Jun. 30, 2019
Mar. 31, 2019
Statement of Stockholders' Equity [Abstract]        
Loss on derivatives, tax (benefit) expense $ (0.4) $ (6.0) $ 2.7 $ (2.2)
Long-term employee benefit plans, tax (benefit) expense 0.2 (0.2) 0.4 0.5
Foreign currency translation, tax expense $ 0.0 $ 0.0 $ 0.0 $ 0.0
v3.20.2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Millions
 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Operating activities:    
Net (loss) income $ (30.8) $ 144.0
Adjustment to reconcile net income to cash (used for) provided by operating activities:    
Depreciation and amortization 163.2 180.3
Amortization of deferred financing costs and original issue discount 4.1 4.4
Debt extinguishment and refinancing related costs 2.4 0.2
Deferred income taxes (61.2) (1.6)
Realized and unrealized foreign exchange losses, net 2.8 2.8
Stock-based compensation 11.2 5.3
Divestitures and impairment charges 3.2 3.9
Interest income on swaps designated as net investment hedges (7.3) (7.2)
Other non-cash, net 8.3 (0.6)
Changes in operating assets and liabilities:    
Trade accounts and notes receivable 136.8 (152.9)
Inventories 32.5 (1.4)
Prepaid expenses and other assets (60.3) (81.6)
Accounts payable (131.0) 20.7
Other accrued liabilities (87.9) (54.0)
Other liabilities 11.5 6.5
Cash (used for) provided by operating activities (2.5) 68.8
Investing activities:    
Acquisitions, net of cash acquired 0.0 (1.9)
Purchase of property, plant and equipment (42.4) (47.2)
Proceeds from sale of consolidated joint venture, net of cash divested 0.0 8.2
Interest proceeds on swaps designated as net investment hedges 7.3 7.2
Other investing activities, net 0.8 0.0
Cash used for investing activities (34.3) (33.7)
Financing activities:    
Proceeds from long-term borrowings 500.0 0.0
Payments on short-term borrowings (18.6) (20.5)
Payments on long-term borrowings (313.1) (13.7)
Financing-related costs (6.0) (2.1)
Purchases of common stock (0.9) (105.3)
Net cash flows associated with stock-based awards 0.3 25.9
Purchase of noncontrolling interests (1.6) (31.1)
Other financing activities, net (1.0) (1.1)
Cash provided by (used for) financing activities 159.1 (147.9)
Increase (decrease) in cash 122.3 (112.8)
Effect of exchange rate changes on cash (16.3) 1.0
Cash at beginning of period 1,020.5 696.4
Cash at end of period 1,126.5 584.6
Cash at end of period reconciliation:    
Cash at end of period $ 1,126.5 $ 584.6
v3.20.2
Basis of Presentation and Summary of Significant Accounting Policies
 6 Months Ended
Jun. 30, 2020
Accounting Policies [Abstract]  
Basis of Presentation and Summary of Significant Accounting Policies BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The interim condensed consolidated financial statements included herein are unaudited. In the opinion of management, these statements include all adjustments, consisting only of normal, recurring adjustments, necessary for a fair statement of the financial position of Axalta Coating Systems Ltd., a Bermuda exempted company limited by shares, and its consolidated subsidiaries ("Axalta," the "Company," "we," "our" and "us") at June 30, 2020 and December 31, 2019, the results of operations, comprehensive income (loss) and changes in shareholders' equity for the three and six months ended June 30, 2020 and 2019, and cash flows for the six months then ended. All intercompany balances and transactions have been eliminated.
These interim unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.
The interim unaudited condensed consolidated financial statements include the accounts of Axalta and its subsidiaries, and entities in which a controlling interest is maintained. Certain of our joint ventures are accounted for on a one-month lag basis, the effect of which is not material.
The results of operations for the three and six months ended June 30, 2020 are not necessarily indicative of the results to be expected for a full year.
Summary of Significant Accounting Policies Updates
Reclassifications
The condensed consolidated statements of operations for the three and six months ended June 30, 2019 have been updated for comparability with the current year presentation to separately present other operating charges as detailed in our annual report on Form 10-K for the year ended December 31, 2019.
Recently Adopted Accounting Guidance
On January 1, 2020, we adopted Accounting Standards Update ("ASU") 2016-13, “Financial Instruments - Credit Losses” under a modified retrospective approach for all financial assets. ASU 2016-13 replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires considerations of a broader range of reasonable and supportable information to inform credit loss estimates. The provisions of this standard primarily impact the allowance for doubtful accounts on our trade receivables, in which we have applied historical loss percentages, combined with reasonable and supportable forecasts of future losses to the respective aging categories. Adoption of ASU 2016-13 at January 1, 2020 resulted in a one-time loss to retained earnings of $1.5 million on our condensed consolidated balance sheets and statements of shareholders' equity for the six months ended June 30, 2020.
In March 2020, we adopted ASU 2020-04, "Reference Rate Reform" which provides optional expedients exercisable through December 31, 2022 to ease the potential burden in accounting for the effects of reference rate reform on financial reporting. As of June 30, 2020, the expedients provided in this standard do not impact the Company. We will continue to monitor for potential impacts on our financial statements.
Accounting Guidance Issued But Not Yet Adopted
In December 2019, the FASB issued ASU 2019-12, "Simplifying the Accounting for Income Taxes" as part of its initiative to reduce complexity in accounting standards. The ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The new standard is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact of ASU 2019-12 on our financial statements.
Risks and Uncertainties
In March 2020, the World Health Organization characterized the coronavirus ("COVID-19") a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. The rapid spread of the pandemic and the continuously evolving responses to combat it have had an increasingly negative impact on the global economy. In view of the rapidly changing business environment, unprecedented market volatility and heightened degree of uncertainty resulting from COVID-19, we are currently unable to fully determine its future impact on our business. However, we are monitoring the progression of the pandemic and its potential effect on our financial position, results of operations and cash flows. The pandemic had a significant adverse impact on the Company's results of operations, financial condition and cash flows during 2020 and, over time, the effects could have a material adverse impact.
v3.20.2
Revenue Revenue
 6 Months Ended
Jun. 30, 2020
Revenue from Contract with Customer [Abstract]  
Revenue REVENUE
Consideration for products in which control has transferred to our customers that is conditional on something other than the passage of time is recorded as a contract asset within prepaid expenses and other current assets on the balance sheet. The contract asset balances at June 30, 2020 and December 31, 2019 were $36.2 million and $37.5 million, respectively.
We provide certain customers with incremental up-front consideration, subject to clawback provisions, including Business Incentive Plan assets ("BIPs"), which is capitalized as a component of other assets and amortized over the estimated life of the contractual arrangement as a reduction of net sales. At June 30, 2020 and December 31, 2019, the total carrying value of BIPs were $178.8 million and $191.2 million, respectively, and are presented within other assets on the condensed consolidated balance sheets. For the three and six months ended June 30, 2020 and 2019, $16.4 million, $33.3 million, $16.0 million and $33.1 million, respectively, were amortized and reflected as reductions of net sales in the condensed consolidated statements of operations. The total carrying value of BIPs exclude other upfront incentives made in conjunction with long-term customer commitments of $92.3 million and $79.0 million at June 30, 2020 and December 31, 2019, respectively, which will be repaid in future periods.
See Note 16 for disaggregated net sales by end-market.
v3.20.2
Goodwill and Identifiable Intangible Assets
 6 Months Ended
Jun. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Identifiable Intangible Assets GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS
Goodwill
The following table shows changes in the carrying amount of goodwill from December 31, 2019 to June 30, 2020 by reportable segment:
 
 
Performance
Coatings
 
Transportation
Coatings
 
Total
Balance at December 31, 2019
 
$
1,130.9

 
$
78.0

 
$
1,208.9

Foreign currency translation
 
0.2

 
0.2

 
0.4

Balance at June 30, 2020
 
$
1,131.1

 
$
78.2

 
$
1,209.3


Identifiable Intangible Assets
The following tables summarize the gross carrying amounts and accumulated amortization of identifiable intangible assets by major class:
June 30, 2020
 
Gross Carrying
Amount
 
Accumulated
Amortization
 
Net Book
Value
 
Weighted Average
Amortization Periods (years)
Technology
 
$
541.0

 
$
(338.0
)
 
$
203.0

 
10.4
Trademarks - indefinite-lived
 
265.9

 
—

 
265.9

 
Indefinite
Trademarks - definite-lived
 
98.9

 
(32.8
)
 
66.1

 
15.8
Customer relationships
 
908.1

 
(290.7
)
 
617.4

 
19.0
Other
 
15.2

 
(9.5
)
 
5.7

 
5.0
Total
 
$
1,829.1

 
$
(671.0
)
 
$
1,158.1

 
 
December 31, 2019
 
Gross Carrying
Amount
 
Accumulated
Amortization
 
Net Book
Value
 
Weighted Average
Amortization Periods (years)
Technology
 
$
540.2

 
$
(310.6
)
 
$
229.6

 
10.4
Trademarks—indefinite-lived
 
264.9

 
—

 
264.9

 
Indefinite
Trademarks—definite-lived
 
99.7

 
(30.1
)
 
69.6

 
15.8
Customer relationships
 
923.8

 
(271.3
)
 
652.5

 
19.1
Other
 
15.2

 
(7.9
)
 
7.3

 
5.0
Total
 
$
1,843.8

 
$
(619.9
)
 
$
1,223.9

 
 

The estimated amortization expense related to the fair value of acquired intangible assets for the remainder of 2020 and each of the succeeding five years is:
Remainder of 2020
 
$
57.5

2021
 
111.7

2022
 
109.6

2023
 
70.2

2024
 
65.4

2025
 
64.7
v3.20.2
Restructuring
 6 Months Ended
Jun. 30, 2020
Restructuring and Related Activities [Abstract]  
Restructuring RESTRUCTURING
In accordance with the applicable guidance for ASC 712, Nonretirement Postemployment Benefits, we accounted for termination benefits and recognized liabilities when the loss was considered probable that employees were entitled to benefits and the amounts could be reasonably estimated.
We have incurred costs in connection with involuntary termination benefits associated with our corporate-related initiatives and cost-saving opportunities associated with our Axalta Way initiatives. During the three and six months ended June 30, 2020 and 2019, we incurred restructuring costs, net of changes to estimates, of $13.7 million, $32.2 million, $2.9 million and $4.2 million, respectively. These amounts are recorded within other operating charges in the condensed consolidated statements of operations. The remaining payments associated with these actions are expected to be substantially completed within 18 months.
The following table summarizes the activities related to the restructuring reserves and expenses from December 31, 2019 to June 30, 2020:
 
 
2020 Activity
Balance at December 31, 2019
 
$
78.0

Expenses, net of changes to estimates
 
32.2

Payments made
 
(37.9
)
Foreign currency translation
 
0.1

Balance at June 30, 2020
 
$
72.4


We recognized impairments of $2.7 million and $3.2 million during the three and six months ended June 30, 2020, respectively, primarily attributable to impairments and associated write-downs resulting from our recent decision to exit the Performance Coatings segment business in Argentina. The impairments are included in the condensed consolidated statements of operations within other operating charges.
The impacts to pre-tax earnings from incremental accelerated depreciation resulting from the previously announced closure of our manufacturing facility in Mechelen, Belgium for the three and six months ended June 30, 2020 and 2019 were $0.4 million, $8.5 million, $6.7 million and $12.8 million, respectively, which were recorded to cost of goods sold on the condensed consolidated statements of operations.
v3.20.2
Commitments and Contingencies
 6 Months Ended
Jun. 30, 2020
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies COMMITMENTS AND CONTINGENCIES
Guarantees
We guarantee certain of our customers’ obligations to third parties, whereby any default by our customers on their obligations could force us to make payments to the applicable creditors. At June 30, 2020 and December 31, 2019, we had outstanding bank guarantees of $10.9 million and $11.6 million, respectively. Most of our bank guarantees expire between 2020 and 2026, while others do not have specified expiration dates. We monitor the obligations to evaluate whether we have a liability at the balance sheet date. At June 30, 2020, we recorded a liability related to our outstanding bank guarantees of $1.0 million. We did not have any liabilities related to our outstanding bank guarantees recorded at December 31, 2019.
Other
We are subject to various pending lawsuits, legal proceedings and other claims in the ordinary course of business, including civil, regulatory and environmental matters. These litigation matters may involve third-party indemnification obligations and/or insurance covering all or part of any potential damage incurred by us. All of these matters are subject to many uncertainties and, accordingly, we cannot determine the ultimate outcome of the proceedings and other claims at this time. The potential effects, if any, on our condensed consolidated financial statements will be recorded in the period in which these matters are probable and estimable. We believe that any sum we may be required to pay in connection with proceedings or claims in excess of the amounts recorded would likely not have a material adverse effect upon our results of operations, financial conditions or cash flows on a consolidated annual basis but, however, could have a material adverse impact in a particular quarterly reporting period.
We are involved in environmental remediation and ongoing compliance activities at several sites. The timing and duration of remediation and ongoing compliance activities are determined on a site by site basis depending on local regulations. The liabilities recorded represent our estimable future remediation costs and other anticipated environmental liabilities. We have not recorded liabilities at sites where a liability is probable, but that a range of loss is not reasonably estimable. We believe that any sum we may be required to pay in connection with environmental remediation matters in excess of the amounts recorded would likely occur over a period of time and would likely not have a material adverse effect upon our results of operations, financial condition or cash flows on a consolidated annual basis but, however, could have a material adverse impact in a particular quarterly reporting period.
v3.20.2
Long-term Employee Benefits
 6 Months Ended
Jun. 30, 2020
Retirement Benefits [Abstract]  
Long-term Employee Benefits LONG-TERM EMPLOYEE BENEFITS
Components of Net Periodic Benefit Cost
The following table sets forth the components of net periodic benefit cost for the three and six months ended June 30, 2020 and 2019:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Components of net periodic benefit cost:
 
 
 
 
 
 
 
 
Net periodic benefit cost:
 
 
 
 
 
 
 
 
Service cost
 
$
1.9

 
$
1.7

 
$
3.7

 
$
3.6

Interest cost
 
2.3

 
3.4

 
4.6

 
6.6

Expected return on plan assets
 
(3.1
)
 
(3.5
)
 
(6.3
)
 
(7.0
)
Amortization of actuarial loss, net
 
0.8

 
0.4

 
1.8

 
0.9

Plan curtailments
 
(0.6
)
 
—

 
(1.8
)
 
—

Net periodic benefit cost
 
$
1.3

 
$
2.0

 
$
2.0

 
$
4.1


All non-service components of net periodic benefit cost are recorded in other income, net within the accompanying condensed consolidated statements of operations.
v3.20.2
Stock-based Compensation
 6 Months Ended
Jun. 30, 2020
Share-based Payment Arrangement [Abstract]  
Stock-based Compensation STOCK-BASED COMPENSATION
During the three and six months ended June 30, 2020 and 2019, we recognized expenses of $6.1 million, $11.2 million, income of $1.4 million and expense of $5.3 million, respectively, for stock-based compensation, which was allocated between costs of goods sold and selling, general and administrative expenses on the condensed consolidated statements of operations. The income recognized during the three months ended June 30, 2019 resulted primarily from forfeitures. We recognized tax benefits of $1.3 million, $1.5 million, tax expense of $0.2 million and tax benefits of $1.1 million for the three and six months ended June 30, 2020 and 2019, respectively.
2020 Activity
In February 2020, we granted restricted stock units and performance share units to certain employees and directors. All awards were granted under the Company's Amended and Restated 2014 Incentive Award Plan. During 2020, the Company withheld shares and used cash to settle the employees' tax portion of vesting awards in the amount of $0.5 million.
A summary of award activity by type for the six months ended June 30, 2020 is presented below.
Stock Options
 
Awards
(in millions)
 
Weighted-
Average
Exercise
Price
 
Aggregate
Intrinsic
Value
 (in millions)
 
Weighted
Average
Remaining
Contractual
Life (years)
Outstanding at January 1, 2020
 
3.0

 
$
25.92

 
 
 
 
Granted
 
—

 
$
—

 
 
 
 
Exercised (1)
 
—

 
$
14.61

 
 
 
 
Forfeited (1)
 
—

 
$
28.24

 
 
 
 
Outstanding at June 30, 2020
 
3.0

 
$
26.27

 
 
 
 
Vested and expected to vest at June 30, 2020
 
3.0

 
$
26.27

 
$
5.4

 
5.24
Exercisable at June 30, 2020
 
2.4

 
$
25.94

 
$
5.4

 
4.49

(1)
Activity during the six months ended June 30, 2020 rounds to zero.
Cash received by the Company upon exercise of options for the six months ended June 30, 2020 was $0.8 million. Excess tax benefits on these exercises were $0.1 million.
At June 30, 2020, there is $1.6 million of unrecognized expense relating to unvested stock options that is expected to be amortized over a weighted average period of 1.2 years.
Restricted Stock Awards and Restricted Stock Units
 
Awards/Units
(millions)
 
Weighted-Average
Fair Value
Outstanding at January 1, 2020
 
1.2

 
$
28.45

Granted
 
0.4

 
$
29.73

Vested
 
(0.4
)
 
$
28.35

Forfeited
 
(0.1
)
 
$
28.13

Outstanding at June 30, 2020
 
1.1

 
$
29.03


Tax shortfall expenses on the vesting of restricted stock and restricted stock units during the six months ended June 30, 2020 was $0.3 million.
At June 30, 2020, there is $16.2 million of unamortized expense relating to unvested restricted stock and restricted stock units that is expected to be amortized over a weighted average period of 1.5 years.
Performance Stock Awards and Performance Share Units
 
Awards/Units
(millions)
 
Weighted-Average
Fair Value
Outstanding at January 1, 2020
 
0.5

 
$
32.11

Granted
 
0.4

 
$
31.88

Vested
 
(0.1
)
 
$
38.11

Forfeited
 
(0.1
)
 
$
32.95

Outstanding at June 30, 2020
 
0.7

 
$
31.14


Our performance stock awards and share units allow for participants to vest in more or less than the targeted number of shares granted. Some of our awards are currently performing at better or worse than targets, and we currently expect a total of 0.6 million shares with a weighted average fair value per share of $30.46 to vest. At June 30, 2020, there is $13.2 million of unamortized expense relating to unvested performance stock awards and performance share units that is expected to be amortized over a weighted average period of 2.2 years. The forfeitures include performance stock awards and performance share units that vested below target.
v3.20.2
Other Income, Net
 6 Months Ended
Jun. 30, 2020
Other Income and Expenses [Abstract]  
Other Income, Net OTHER INCOME, NET
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Foreign exchange (gains) losses, net
 
$
(0.3
)
 
$
2.2

 
$
2.0

 
$
4.6

Debt extinguishment and refinancing related costs
 
—

 
0.2

 
2.4

 
0.2

Other miscellaneous income, net
 
(1.9
)
 
(3.3
)
 
(5.8
)
 
(6.7
)
Total
 
$
(2.2
)
 
$
(0.9
)
 
$
(1.4
)
 
$
(1.9
)
v3.20.2
Income Taxes
 6 Months Ended
Jun. 30, 2020
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
Our effective income tax rates for the six months ended June 30, 2020 and 2019 are as follows:
 
 
Six Months Ended June 30,
 
 
2020
 
2019
Effective Tax Rate
 
56.4
%
 
18.2
%

The Company's effective tax rate for the periods reflected in the condensed consolidated financial statements are not directly comparable primarily due to the intra-entity asset transfers of certain of its intellectual property and the impacts of certain ongoing tax audits, which occurred during the six months ended June 30, 2020 and are discussed in further detail below.
On January 1, 2020, we completed an intra-entity transfer of certain intellectual property rights (the “IP”) to our Swiss subsidiary, where our EMEA regional headquarters is located. The transfer of the IP did not result in a taxable gain; however, it did result in step-up of the Swiss tax-deductible basis in the transferred assets, and accordingly, created a temporary difference between the book basis and the tax basis of the IP, which was transferred at fair value. We applied significant judgment when determining the fair value of the IP, which serves as the tax basis of the deferred tax asset. Consequently, this transaction resulted in the recognition of a deferred tax asset at the applicable Swiss tax rate, resulting in a one-time tax benefit of $50.5 million during the six months ended June 30, 2020. The Company expects to be able to realize the deferred tax assets resulting from these intra-entity asset transfers.
In connection with the income tax audit in Germany for the tax period 2010-2013, the Germany Tax Authority (“GTA”) indicated that it believed that certain positions taken on the 2010-2013 corporate income tax returns were not in compliance with German tax law. While the Company believes our filings were accurate based on the technical merits of our positions, after extensive discussions with the GTA, in March 2020 the Company expressed a willingness to settle with the GTA on certain matters and expects to reach a formal agreement in the coming months. As a result of these changes, the Company recorded a charge to income tax expense of $14.3 million during the six months ended June 30, 2020. The Company is also currently under audit in Germany for tax years 2014-2017 and is prepared to vigorously defend itself on these matters.
v3.20.2
Net (Loss) Income Per Common Share
 6 Months Ended
Jun. 30, 2020
Earnings Per Share [Abstract]  
Net (Loss) Income Per Common Share NET (LOSS) INCOME PER COMMON SHARE
Basic earnings per common share excludes the dilutive impact of potentially dilutive securities and is computed by dividing net (loss) income by the weighted average number of common shares outstanding for the period. For periods in which we recognize net income, diluted earnings per common share includes the effect of potential dilution from the hypothetical exercise of outstanding stock options and vesting of restricted shares and performance shares. For periods in which we recognize net loss, such impacts are excluded from the calculation of earnings per share as its inclusion would have an anti-dilutive effect. A reconciliation of our basic and diluted earnings per common share is as follows:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(In millions, except per share data)
 
2020
 
2019
 
2020
 
2019
Net (loss) income to common shareholders
 
$
(82.8
)
 
$
98.4

 
$
(30.6
)
 
$
141.8

Basic weighted average shares outstanding
 
235.2

 
233.3

 
235.1

 
233.7

Diluted weighted average shares outstanding
 
235.2

 
235.4

 
235.1

 
236.0

Net income (loss) per common share:
 
 
 
 
 
 
 
 
Basic net (loss) income per share
 
$
(0.35
)
 
$
0.42

 
$
(0.13
)
 
$
0.61

Diluted net (loss) income per share
 
$
(0.35
)
 
$
0.42

 
$
(0.13
)
 
$
0.60


The number of anti-dilutive shares that have been excluded in the computation of diluted earnings per share for the three and six months ended June 30, 2020 and 2019 were 4.6 million, 4.5 million, 3.0 million and 2.9 million, respectively.
v3.20.2
Accounts and Notes Receivable, Net
 6 Months Ended
Jun. 30, 2020
Receivables [Abstract]  
Accounts and Notes Receivable, Net ACCOUNTS AND NOTES RECEIVABLE, NET
Trade accounts receivable are stated at the amount we expect to collect. We maintain allowances for doubtful accounts for estimated losses by applying historical loss percentages, combined with reasonable and supportable forecasts of future losses, to respective aging categories. Management considers the following factors in developing its current estimate of expected credit losses: customer credit-worthiness, past transaction history with the customer, current economic industry trends, changes in market or regulatory matters, and changes in customer payment terms, including the impacts from COVID-19.
 
 
June 30, 2020
 
December 31, 2019
Accounts receivable - trade, net (1)
 
$
548.7

 
$
718.4

Notes receivable
 
25.0

 
24.7

Other
 
90.3

 
87.0

Total
 
$
664.0

 
$
830.1


(1)
Allowance for doubtful accounts was $25.4 million and $16.0 million at June 30, 2020 and December 31, 2019, respectively.
Bad debt expense of $7.0 million, $10.4 million, $1.6 million, and $2.6 million was included within selling, general and administrative expenses for the three and six months ended June 30, 2020 and 2019, respectively. The increase in expense in the three months ended June 30, 2020, was as a result of the increased risk for future credit losses primarily related to the COVID-19 pandemic.
v3.20.2
Inventories
 6 Months Ended
Jun. 30, 2020
Inventory Disclosure [Abstract]  
Inventories INVENTORIES
 
 
June 30, 2020
 
December 31, 2019
Finished products
 
$
294.8

 
$
327.4

Semi-finished products
 
93.4

 
109.9

Raw materials
 
131.1

 
133.7

Stores and supplies
 
20.0

 
20.6

Total
 
$
539.3

 
$
591.6


Inventory reserves are $20.4 million and $13.1 million at June 30, 2020 and December 31, 2019, respectively. The increase in our reserve at June 30, 2020, includes impacts from obsolescence due to a lower demand environment resulting from the COVID-19 pandemic.
v3.20.2
Property, Plant and Equipment, Net
 6 Months Ended
Jun. 30, 2020
Property, Plant and Equipment [Abstract]  
Property, Plant and Equipment, Net PROPERTY, PLANT AND EQUIPMENT, NET
 
 
June 30, 2020
 
December 31, 2019
Property, plant and equipment
 
$
2,198.2

 
$
2,231.9

Accumulated depreciation
 
(1,040.0
)
 
(1,008.9
)
Property, plant, and equipment, net
 
$
1,158.2

 
$
1,223.0


Depreciation expense amounted to $31.7 million, $73.3 million, $43.7 million and $89.1 million for the three and six months ended June 30, 2020 and 2019, respectively.
v3.20.2
Borrowings
 6 Months Ended
Jun. 30, 2020
Debt Disclosure [Abstract]  
Borrowings BORROWINGS
Borrowings are summarized as follows:
 
 
June 30, 2020
 
December 31, 2019
2024 Dollar Term Loans
 
$
2,075.3

 
$
2,387.5

2024 Dollar Senior Notes
 
500.0

 
500.0

2024 Euro Senior Notes
 
377.0

 
375.2

2025 Euro Senior Notes
 
506.5

 
504.0

2027 Dollar Senior Notes
 
500.0

 
—

Short-term and other borrowings
 
105.6

 
109.0

Unamortized original issue discount
 
(8.3
)
 
(10.5
)
Unamortized deferred financing costs
 
(34.8
)
 
(31.1
)
Total borrowings, net
 
4,021.3

 
3,834.1

Less:
 

 

Short-term borrowings
 
17.0

 
19.6

Current portion of long-term borrowings
 
24.3

 
24.3

Long-term debt
 
$
3,980.0

 
$
3,790.2


Revolving Credit Facility
At June 30, 2020 and December 31, 2019, letters of credit issued under the Revolving Credit Facility totaled $39.0 million and $38.8 million, respectively, which reduced the availability under the Revolving Credit Facility. Availability under the Revolving Credit Facility was $361.0 million and $361.2 million at June 30, 2020 and December 31, 2019, respectively.
Significant Transactions
During January 2020, we voluntarily prepaid $300.0 million of the outstanding principal on the 2024 Dollar Term Loans. As a result of the prepayment, we recorded a loss on extinguishment of debt of $2.7 million consisting of the write off of unamortized deferred financing costs and original issue discounts of $1.5 million and $1.2 million, respectively.
Issuance of 2027 Senior Notes
During June 2020, Axalta Coating Systems, LLC and Axalta Coating Systems Dutch Holding B B.V. (collectively, the "Issuers"), each an indirect, wholly owned subsidiary of the Company, issued $500.0 million in aggregate principal amount of 4.750% Senior Notes due 2027 (the “2027 Senior Notes”).
The 2027 Senior Notes are fully and unconditionally guaranteed by the Company and each of the Company's existing restricted subsidiaries, subject to certain exceptions.
The indenture governing the 2027 Senior Notes contains covenants that limit the Company’s (and its subsidiaries’) ability to, among other things: (i) incur additional debt or issue certain preferred stock; (ii) pay dividends, redeem stock or make other distributions; (iii) make other restricted payments or investments; (iv) create liens on assets; (v) transfer or sell assets; (vi) create restrictions on payment of dividends or other amounts by the Company to the Company’s restricted subsidiaries; (vii) engage in mergers or consolidations; (viii) engage in certain transactions with affiliates; and (ix) designate the Company’s subsidiaries as unrestricted subsidiaries.
The 2027 Senior Notes were issued at par and are due June 15, 2027. We will defer debt issuance costs of $8.3 million, which are recorded as reductions to long-term borrowings in the condensed consolidated balance sheets and amortized over the life of the issuance. The 2027 Senior Notes bear interest at 4.750% which is payable semi-annually on June 15th and December 15th. We have the option to redeem all or part of the 2027 Senior Notes at the following redemption prices (expressed as percentages of principal amount), plus accrued and unpaid interest, if any, on or after June 15th of the years indicated:
Period
 
2027 Senior Notes Percentage
2023
 
102.375
%
2024
 
101.188
%
2025 and thereafter
 
100.000
%

Notwithstanding the foregoing, at any time and from time to time prior to June 15, 2023, we may at our option redeem in the aggregate up to 40% of the original aggregate principal amount of the 2027 Senior Notes with the net cash proceeds of one or more Equity Offerings (as defined in the indenture governing the 2027 Senior Notes) at a redemption price of 104.75% plus accrued and unpaid interest, if any, to the redemption date. At least 50% of the original aggregate principal of the notes must remain outstanding after each such redemption.
Upon the occurrence of certain events constituting a change of control, holders of the 2027 Senior Notes have the right to require us to repurchase all or any part of the 2027 Senior Notes at a purchase price equal to 101% of the principal amount plus accrued and unpaid interest, if any, to the repurchase date.
The indebtedness under the 2027 Senior Notes is senior unsecured indebtedness of the Issuers, is senior in right of payment to all future subordinated indebtedness of the Issuers and guarantors, and is equal in right of payment to all existing and future senior indebtedness of the Issuers and guarantors. The 2027 Senior Notes are effectively subordinated to any secured indebtedness of the Issuers and guarantors (including indebtedness outstanding under the Senior Secured Credit Facilities) to the extent of the value of the assets securing such indebtedness.
Future repayments
Below is a schedule of required future repayments of all borrowings outstanding at June 30, 2020.
Remainder of 2020
 
$
23.5

2021
 
30.4

2022
 
54.2

2023
 
27.1

2024
 
2,870.3

Thereafter
 
1,058.9

Total borrowings
 
4,064.4

Unamortized original issue discount
 
(8.3
)
Unamortized deferred financing costs
 
(34.8
)
Total borrowings, net
 
$
4,021.3
v3.20.2
Financial Instruments, Hedging Activities and Fair Value Measurements
 6 Months Ended
Jun. 30, 2020
Fair Value Disclosures [Abstract]  
Financial Instruments, Hedging Activities and Fair Value Measurements FINANCIAL INSTRUMENTS, HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENTS
Fair value of financial instruments
Equity securities with readily determinable fair values - Balances of equity securities are recorded within other assets, with any changes in fair value recorded within other income, net. The fair values of equity securities are based upon quoted market prices, which are considered Level 1 inputs.
Long-term borrowings - The estimated fair values of these borrowings are based on recent trades, as reported by a third-party pricing service. Due to the infrequency of trades, these inputs are considered to be Level 2 inputs.
Derivative instruments - The Company’s interest rate caps, interest rate swaps, cross-currency swaps, and foreign currency forward contracts are valued using broker quotations, or market transactions in either the listed or over-the-counter markets. As such, these derivative instruments are included in the Level 2 hierarchy.
The table below presents the fair values of our financial instruments measured on a recurring basis by level within the fair value hierarchy at June 30, 2020 and December 31, 2019.
 
 
June 30, 2020
 
December 31, 2019
 
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prepaid expenses and other current assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cross-currency swaps (2)
 
$
—

 
$
14.5

 
$
—

 
$
14.5

 
$
—

 
$
14.4

 
$
—

 
$
14.4

Foreign currency forward contracts (1) (3)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Other assets:
 
 
 
 
 
 
 


 
 
 
 
 
 
 


Cross-currency swaps (2)
 
—

 
19.9

 
—

 
19.9

 
—

 
8.0

 
—

 
8.0

Investments in equity securities
 
0.7

 
—

 
—

 
0.7

 
0.6

 
—

 
—

 
0.6

Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other accrued liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate caps (1)
 
—

 
2.0

 
—

 
2.0

 
—

 
1.3

 
—

 
1.3

Interest rate swaps (1)
 
—

 
28.0

 
—

 
28.0

 
—

 
8.9

 
—

 
8.9

Other liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate caps (1)
 
—

 
1.0

 
—

 
1.0

 
—

 
1.2

 
—

 
1.2

Interest rate swaps (1)
 
—

 
44.5

 
—

 
44.5

 
—

 
20.5

 
—

 
20.5

Long-term borrowings:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2024 Dollar Term Loans
 
—

 
2,007.4

 
—

 
2,007.4

 
—

 
2,396.5

 
—

 
2,396.5

2024 Dollar Senior Notes
 
—

 
507.0

 
—

 
507.0

 
—

 
520.2

 
—

 
520.2

2024 Euro Senior Notes
 
—

 
375.6

 
—

 
375.6

 
—

 
388.2

 
—

 
388.2

2025 Euro Senior Notes
 
—

 
501.7

 
—

 
501.7

 
—

 
520.7

 
—

 
520.7

2027 Dollar Senior Notes
 
—

 
503.6

 
—

 
503.6

 
—

 
—

 
—

 
—

(1)
Cash flow hedge
(2)
Net investment hedge
(3)
Balance at June 30, 2020 rounds to zero.

Derivative Financial Instruments
We selectively use derivative instruments to reduce market risk associated with changes in foreign currency exchange rates and interest rates. The use of derivatives is intended for hedging purposes only, and we do not enter into derivative instruments for speculative purposes.
Derivative Instruments Qualifying and Designated as Cash Flow and Net Investment Hedges
Interest Rate Swaps Designated as Cash Flow Hedges
During the three months ended March 31, 2020, we entered into two interest rate swaps with aggregate notional amounts totaling $400.0 million to hedge interest rate exposures associated with the 2024 Dollar Term Loans. Under the terms of the interest rate swap agreements, the Company is required to pay the counterparties a stream of fixed interest payments at rates of 1.61% and 1.18% on $200.0 million of notional value for each instrument, and in-turn, receives variable interest payments based on 3-month LIBOR from the counter-parties. The interest rate swaps are designated as cash flow hedges and expire on December 31, 2022. These interest rate swaps are marked to market at each reporting date and any unrealized gains or losses are included in accumulated other comprehensive loss ("AOCI") and reclassified to interest expense in the same period or periods during which the hedged transactions affect earnings.
Foreign Currency Forward Contracts Designated as Cash Flow Hedges
During the three months ended March 31, 2020, we designated foreign currency forward contracts with a notional value of $5.0 million as cash flow hedges of the Company’s exposure to variability in exchange rates on forecasted purchases of inventory denominated in foreign currencies. These forward currency contracts are marked to market at each reporting date and any unrealized gains or losses are included in AOCI and reclassified to cost of goods sold in the same period or periods during which the hedged transactions affect earnings.
The following table presents the gains (losses) included in AOCI for derivative instruments that qualify and have been designated as cash flow and net investment hedges:
 
 
June 30, 2020
 
December 31, 2019
AOCI:
 
 
 
 
Interest rate caps (cash flow hedges)
 
$
3.7

 
$
3.5

Interest rate swaps (cash flow hedges)
 
72.5

 
29.4

Foreign currency forward contracts (cash flow hedges) (1)
 
—

 
—

Cross-currency swaps (net investment hedges)
 
(34.4
)
 
(22.4
)
Total AOCI
 
$
41.8

 
$
10.5


(1)
Balance at June 30, 2020 rounds to zero.
Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis.
The following tables set forth the locations and amounts recognized during the three and six months ended June 30, 2020 and 2019 for these cash flow and net investment hedges.
 
 
 
 
For the Three Months Ended June 30,
 
 
 
 
2020
 
2019
Derivatives in Cash Flow and Net Investment Hedges
 
Location of Loss Recognized in Income on Derivatives
 
Net Amount of Loss Recognized in OCI on Derivatives
 
Amount of Loss (Gain) Recognized in Income
 
Net Amount of Loss (Gain) Recognized in OCI on Derivatives
 
Amount of (Gain) Loss Recognized in Income
Interest rate caps
 
Interest expense, net
 
$
—

 
$
0.6

 
$
3.4

 
$
(0.5
)
Interest rate swaps
 
Interest expense, net
 
6.1

 
2.9

 
16.6

 
0.2

Foreign currency forward contracts (1)
 
Cost of goods sold
 
—

 
—

 
—

 
—

Cross-currency swaps
 
Interest expense, net
 
3.1

 
(3.7
)
 
(1.6
)
 
(3.6
)

(1)
Activity during the three months ended June 30, 2020 rounds to zero.
 
 
 
 
For the Six Months Ended June 30,
 
 
 
 
2020
 
2019
Derivatives in Cash Flow and Net Investment Hedges
 
Location of Loss (Gain) Recognized in Income on Derivatives
 
Net Amount of Loss (Gain) Recognized in OCI on Derivatives
 
Amount of Loss (Gain) Recognized in Income
 
Net Amount of Loss (Gain) Recognized in OCI on Derivatives
 
Amount of (Gain) Loss Recognized in Income
Interest rate caps
 
Interest expense, net
 
$
1.1

 
$
0.9

 
$
5.9

 
$
(1.6
)
Interest rate swaps
 
Interest expense, net
 
47.6

 
4.5

 
27.6

 
0.1

Foreign currency forward contracts (1)
 
Cost of goods sold
 
—

 
—

 
—

 
—

Cross-currency swaps
 
Interest expense, net
 
(19.4
)
 
(7.4
)
 
(14.9
)
 
(7.2
)
(1)
Activity during the six months ended June 30, 2020 rounds to zero.
Over the next 12 months, we expect losses of $31.8 million pertaining to cash flow hedges to be reclassified from AOCI into earnings, related to our interest rate caps, interest rate swaps, and foreign currency forward contracts.
Derivative Instruments Not Designated as Hedges
We periodically enter into foreign currency forward and option contracts to reduce market risk and hedge our balance sheet exposures and cash flows for subsidiaries with exposures denominated in currencies different from the functional currency of the relevant subsidiary. These contracts have not been designated as hedges and all gains and losses are marked to market through other income, net in the condensed consolidated statement of operations.

Fair value gains and losses of derivative contracts, as determined using Level 2 inputs, that were not designated for hedge accounting treatment were recorded in earnings as follows:
Derivatives Not Designated as Hedging
Instruments under ASC 815
 
Location of Loss (Gain) Recognized in
Income on Derivatives
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Foreign currency forward contracts
 
Other income, net
 
$
0.8

 
$
0.3

 
$
(0.9
)
 
$
1.8
v3.20.2
Segments
 6 Months Ended
Jun. 30, 2020
Segment Reporting [Abstract]  
Segments SEGMENTS
The Company identifies an operating segment as a component: (i) that engages in business activities from which it may earn revenues and incur expenses; (ii) whose operating results are regularly reviewed by the Chief Operating Decision Maker ("CODM") to make decisions about resources to be allocated to the segment and assess its performance; and (iii) that has available discrete financial information.
We have two operating segments, which are also our reportable segments: Performance Coatings and Transportation Coatings. The CODM reviews financial information at the operating segment level to allocate resources and to assess the operating results and financial performance for each operating segment. Our CODM is identified as the Chief Executive Officer because he has final authority over performance assessment and resource allocation decisions. Our segments are based on the type and concentration of customers served, service requirements, methods of distribution and major product lines.
Through our Performance Coatings segment, we provide high-quality liquid and powder coatings solutions to a fragmented and local customer base. We are one of only a few suppliers with the technology to provide precise color matching and highly durable coatings systems. The end-markets within this segment are refinish and industrial.
Through our Transportation Coatings segment, we provide advanced coating technologies to OEMs of light and commercial vehicles. These increasingly global customers require a high level of technical support coupled with cost-effective, environmentally responsible coatings systems that can be applied with a high degree of precision, consistency and speed. The end-markets within this segment are light vehicle and commercial vehicle.
Adjusted EBIT is the primary measure to evaluate financial performance of the operating segments and allocate resources. Asset information is not reviewed or included with our internal management reporting. Therefore, the Company has not disclosed asset information for each reportable segment. The following table presents relevant information of our reportable segments.
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Net sales (1):
 
 
 
 
 
 
 
 
Refinish
 
$
261.9

 
$
447.3

 
$
629.7

 
$
852.8

Industrial
 
220.2

 
309.4

 
500.1

 
617.2

Total Net sales Performance Coatings
 
482.1

 
756.7

 
1,129.8

 
1,470.0

Light Vehicle
 
126.3

 
306.1

 
386.4

 
622.0

Commercial Vehicle
 
44.3

 
94.7

 
120.0

 
184.8

Total Net sales Transportation Coatings
 
170.6

 
400.8

 
506.4

 
806.8

Total Net sales
 
$
652.7

 
$
1,157.5

 
$
1,636.2

 
$
2,276.8

Equity in earnings in unconsolidated affiliates:
 
 
 
 
 
 
 
 
Performance Coatings
 
$
—

 
$
0.1

 
$
—

 
$
0.2

Transportation Coatings
 
(0.2
)
 
0.4

 
(0.1
)
 
—

Total
 
$
(0.2
)
 
$
0.5

 
$
(0.1
)
 
$
0.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2020
 
December 31, 2019
Investment in unconsolidated affiliates:
 
 
 
 
 
 
 
 
Performance Coatings
 
 
 
 
 
$
2.0

 
$
2.4

Transportation Coatings
 
 
 
 
 
12.6

 
12.7

Total
 
 
 
 
 
$
14.6

 
$
15.1


(1)
The Company has no intercompany sales between segments.
The following table reconciles our segment operating performance to (loss) income before income taxes for the periods presented:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Segment Adjusted EBIT (1):
 
 
 
 
 
 
 
 
Performance Coatings
 
$
1.5

 
$
127.6

 
$
80.9

 
$
206.2

Transportation Coatings
 
(39.3
)
 
40.4

 
(13.5
)
 
74.6

Total (2)
 
(37.8
)
 
168.0

 
67.4

 
280.8

Interest expense, net
 
36.1

 
41.0

 
72.6

 
82.3

Debt extinguishment and refinancing related costs (a)
 
—

 
0.2

 
2.4

 
0.2

Termination benefits and other employee related costs (b)
 
15.2

 
2.8

 
34.7

 
4.1

Strategic review and retention costs (c)
 
6.7

 
0.8

 
18.2

 
0.8

Offering and transactional costs (d)
 
0.1

 
0.2

 
0.2

 
0.8

Loss (gain) on divestiture and impairments (e)
 
2.7

 
(1.3
)
 
3.2

 
3.9

Pension special event (f)
 
(0.6
)
 
—

 
(1.8
)
 
—

Accelerated depreciation (g)
 
0.4

 
6.7

 
8.5

 
12.8

Indemnity income (h)
 
—

 
(0.2
)
 
—

 
(0.2
)
(Loss) income before income taxes
 
$
(98.4
)
 
$
117.8

 
$
(70.6
)
 
$
176.1

(1)
The primary measure of segment operating performance is Adjusted EBIT, which is defined as net income before interest, taxes and select other items impacting operating results. These other items impacting operating results are items that management has concluded are (1) non-cash items included within net income, (2) items the Company does not believe are indicative of ongoing operating performance or (3) non-recurring, unusual or infrequent items that have not occurred within the last two years or we believe are not reasonably likely to recur within the next two years. Adjusted EBIT is a key metric that is used by management to evaluate business performance in comparison to budgets, forecasts and prior year financial results, providing a measure that management believes reflects the Company’s core operating performance, which represents Adjusted EBIT adjusted for the select items referred to above.
 
 
(2)
Does not represent Axalta’s Adjusted EBIT referenced elsewhere by the Company as there are additional adjustments that are not allocated to the segments.
 
 
(a)
Represents expenses and associated changes to estimates related to the prepayment, restructuring, and refinancing of our indebtedness, which are not considered indicative of our ongoing operating performance.
 
 
(b)
Represents expenses and associated changes to estimates related to employee termination benefits and other employee-related costs. Employee termination benefits are associated with Axalta Way initiatives. These amounts are not considered indicative of our ongoing operating performance.
 
 
(c)
Represents costs for legal, tax and other advisory fees pertaining to our review of strategic alternatives that was concluded in March 2020, as well as retention awards for certain employees which will be earned over a period of 18-24 months. These amounts are not considered indicative of our ongoing performance.
 
 
(d)
Represents acquisition and divestiture-related expenses, all of which are not considered indicative of our ongoing operating performance.
 
 
(e)
Represents expenses and associated changes to estimates related to the sale of our interest in a joint venture business and other impairments, which are not considered indicative of our ongoing operating performance.
 
 
(f)
Represents certain defined benefit pension costs associated with special events, including pension curtailments, which we do not consider indicative of our ongoing operating performance.
 
 
(g)
Represents incremental depreciation expense resulting from truncated useful lives of the assets impacted by our manufacturing footprint assessments, which we do not consider indicative of our ongoing operating performance.
 
 
(h)
Represents indemnity income associated with the acquisition by Axalta of the DuPont Performance Coatings business, which we do not consider indicative of our ongoing operating performance.
v3.20.2
Accumulated Other Comprehensive Loss
 6 Months Ended
Jun. 30, 2020
Equity [Abstract]  
Accumulated Other Comprehensive Loss ACCUMULATED OTHER COMPREHENSIVE LOSS
 
 
Unrealized
Currency
Translation
Adjustments
 
Pension
Adjustments
 
Unrealized
(Loss) Gain on
Derivatives
 
Accumulated
Other
Comprehensive
 (Loss) Income
Balance at December 31, 2019
 
$
(297.0
)
 
$
(69.9
)
 
$
(28.6
)
 
$
(395.5
)
Current year deferrals to AOCI
 
(83.3
)
 
—

 
(36.3
)
 
(119.6
)
Reclassifications from AOCI to Net income
 
—

 
(0.4
)
 
1.6

 
1.2

Net Change
 
(83.3
)
 
(0.4
)
 
(34.7
)
 
(118.4
)
Balance at March 31, 2020
 
(380.3
)
 
(70.3
)
 
(63.3
)
 
(513.9
)
Current year deferrals to AOCI
 
6.1

 
—

 
(5.2
)
 
0.9

Reclassifications from AOCI to Net income
 
—

 
0.4

 
3.0

 
3.4

Net Change
 
6.1

 
0.4

 
(2.2
)
 
4.3

Balance at June 30, 2020
 
$
(374.2
)
 
$
(69.9
)
 
$
(65.5
)
 
$
(509.6
)

Included within reclassifications from AOCI to Net income for the three and six months ended June 30, 2020 were curtailment gains of $0.6 million and $1.8 million, respectively. The cumulative income tax benefit related to the adjustments for pension benefits at June 30, 2020 was $27.0 million. The cumulative income tax benefit related to the adjustments for unrealized loss on derivatives at June 30, 2020 was $10.7 million.
 
 
Unrealized
Currency
Translation
Adjustments
 
Pension
Adjustments
 
Unrealized
Gain (Loss) on
Derivatives
 
Accumulated
Other
Comprehensive
Income (Loss)
Balance at December 31, 2018
 
$
(299.4
)
 
$
(36.4
)
 
$
(0.3
)
 
$
(336.1
)
Current year deferrals to AOCI
 
12.8

 
—

 
(11.4
)
 
1.4

Reclassifications from AOCI to Net income
 
—

 
—

 
(1.0
)
 
(1.0
)
Net Change
 
12.8

 
—

 
(12.4
)
 
0.4

Balance at March 31, 2019
 
(286.6
)
 
(36.4
)
 
(12.7
)
 
(335.7
)
Current year deferrals to AOCI
 
(5.7
)
 
(0.1
)
 
(17.3
)
 
(23.1
)
Reclassifications from AOCI to Net income
 
2.6

 
0.5

 
(0.3
)
 
2.8

Net Change
 
(3.1
)
 
0.4

 
(17.6
)
 
(20.3
)
Balance at June 30, 2019
 
$
(289.7
)
 
$
(36.0
)
 
$
(30.3
)
 
$
(356.0
)

The cumulative income tax benefit related to the adjustments for pension benefits at June 30, 2019 was $14.3 million. The cumulative income tax benefit related to the adjustments for unrealized loss on derivatives at June 30, 2019 was $4.4 million.
v3.20.2
Subsequent Events
 6 Months Ended
Jun. 30, 2020
Subsequent Events [Abstract]  
Subsequent Events SUBSEQUENT EVENTS
On July 29, 2020, we announced a global restructuring of our business given the significant customer demand headwinds we are facing due to COVID-19 and to better position the Company for sustained growth. The restructuring, which is subject to works council consultations and local legal requirements, is expected to result in a pretax charge of approximately $40-45 million, of which approximately $30-35 million relates primarily to employee severance and other cash costs. The remaining approximately $10 million relates to the accelerated depreciation of assets and other non-cash costs. Capital expenditures associated with these restructuring actions are anticipated in the range of $10-15 million. Substantially all of the restructuring actions are expected to be completed over the next 24 months and result in a net reduction to our workforce of approximately 550 employees globally, with the potential for additional reductions from Europe.
v3.20.2
Basis of Presentation and Summary of Significant Accounting Policies (Policies)
 6 Months Ended
Jun. 30, 2020
Accounting Policies [Abstract]  
Reclassifications
Reclassifications
The condensed consolidated statements of operations for the three and six months ended June 30, 2019 have been updated for comparability with the current year presentation to separately present other operating charges as detailed in our annual report on Form 10-K for the year ended December 31, 2019.
Recently Adopted Accounting Guidance and Accounting Guidance Issued But Not Yet Adopted
Recently Adopted Accounting Guidance
On January 1, 2020, we adopted Accounting Standards Update ("ASU") 2016-13, “Financial Instruments - Credit Losses” under a modified retrospective approach for all financial assets. ASU 2016-13 replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires considerations of a broader range of reasonable and supportable information to inform credit loss estimates. The provisions of this standard primarily impact the allowance for doubtful accounts on our trade receivables, in which we have applied historical loss percentages, combined with reasonable and supportable forecasts of future losses to the respective aging categories. Adoption of ASU 2016-13 at January 1, 2020 resulted in a one-time loss to retained earnings of $1.5 million on our condensed consolidated balance sheets and statements of shareholders' equity for the six months ended June 30, 2020.
In March 2020, we adopted ASU 2020-04, "Reference Rate Reform" which provides optional expedients exercisable through December 31, 2022 to ease the potential burden in accounting for the effects of reference rate reform on financial reporting. As of June 30, 2020, the expedients provided in this standard do not impact the Company. We will continue to monitor for potential impacts on our financial statements.
Accounting Guidance Issued But Not Yet Adopted
In December 2019, the FASB issued ASU 2019-12, "Simplifying the Accounting for Income Taxes" as part of its initiative to reduce complexity in accounting standards. The ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The new standard is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact of ASU 2019-12 on our financial statements.
v3.20.2
Goodwill and Identifiable Intangible Assets (Tables)
 6 Months Ended
Jun. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of Goodwill
The following table shows changes in the carrying amount of goodwill from December 31, 2019 to June 30, 2020 by reportable segment:
 
 
Performance
Coatings
 
Transportation
Coatings
 
Total
Balance at December 31, 2019
 
$
1,130.9

 
$
78.0

 
$
1,208.9

Foreign currency translation
 
0.2

 
0.2

 
0.4

Balance at June 30, 2020
 
$
1,131.1

 
$
78.2

 
$
1,209.3
Schedule of Finite-Lived and Indefinite-Lived Intangible Assets by Major Class
The following tables summarize the gross carrying amounts and accumulated amortization of identifiable intangible assets by major class:
June 30, 2020
 
Gross Carrying
Amount
 
Accumulated
Amortization
 
Net Book
Value
 
Weighted Average
Amortization Periods (years)
Technology
 
$
541.0

 
$
(338.0
)
 
$
203.0

 
10.4
Trademarks - indefinite-lived
 
265.9

 
—

 
265.9

 
Indefinite
Trademarks - definite-lived
 
98.9

 
(32.8
)
 
66.1

 
15.8
Customer relationships
 
908.1

 
(290.7
)
 
617.4

 
19.0
Other
 
15.2

 
(9.5
)
 
5.7

 
5.0
Total
 
$
1,829.1

 
$
(671.0
)
 
$
1,158.1

 
 
December 31, 2019
 
Gross Carrying
Amount
 
Accumulated
Amortization
 
Net Book
Value
 
Weighted Average
Amortization Periods (years)
Technology
 
$
540.2

 
$
(310.6
)
 
$
229.6

 
10.4
Trademarks—indefinite-lived
 
264.9

 
—

 
264.9

 
Indefinite
Trademarks—definite-lived
 
99.7

 
(30.1
)
 
69.6

 
15.8
Customer relationships
 
923.8

 
(271.3
)
 
652.5

 
19.1
Other
 
15.2

 
(7.9
)
 
7.3

 
5.0
Total
 
$
1,843.8

 
$
(619.9
)
 
$
1,223.9

 
 
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense
The estimated amortization expense related to the fair value of acquired intangible assets for the remainder of 2020 and each of the succeeding five years is:
Remainder of 2020
 
$
57.5

2021
 
111.7

2022
 
109.6

2023
 
70.2

2024
 
65.4

2025
 
64.7
v3.20.2
Restructuring (Tables)
 6 Months Ended
Jun. 30, 2020
Restructuring and Related Activities [Abstract]  
Restructuring and Related Costs
The following table summarizes the activities related to the restructuring reserves and expenses from December 31, 2019 to June 30, 2020:
 
 
2020 Activity
Balance at December 31, 2019
 
$
78.0

Expenses, net of changes to estimates
 
32.2

Payments made
 
(37.9
)
Foreign currency translation
 
0.1

Balance at June 30, 2020
 
$
72.4
v3.20.2
Long-term Employee Benefits (Tables)
 6 Months Ended
Jun. 30, 2020
Retirement Benefits [Abstract]  
Schedule of Net Benefit Costs
The following table sets forth the components of net periodic benefit cost for the three and six months ended June 30, 2020 and 2019:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Components of net periodic benefit cost:
 
 
 
 
 
 
 
 
Net periodic benefit cost:
 
 
 
 
 
 
 
 
Service cost
 
$
1.9

 
$
1.7

 
$
3.7

 
$
3.6

Interest cost
 
2.3

 
3.4

 
4.6

 
6.6

Expected return on plan assets
 
(3.1
)
 
(3.5
)
 
(6.3
)
 
(7.0
)
Amortization of actuarial loss, net
 
0.8

 
0.4

 
1.8

 
0.9

Plan curtailments
 
(0.6
)
 
—

 
(1.8
)
 
—

Net periodic benefit cost
 
$
1.3

 
$
2.0

 
$
2.0

 
$
4.1
v3.20.2
Stock-based Compensation (Tables)
 6 Months Ended
Jun. 30, 2020
Share-based Payment Arrangement [Abstract]  
Schedule of Stock Options Roll Forward
A summary of award activity by type for the six months ended June 30, 2020 is presented below.
Stock Options
 
Awards
(in millions)
 
Weighted-
Average
Exercise
Price
 
Aggregate
Intrinsic
Value
 (in millions)
 
Weighted
Average
Remaining
Contractual
Life (years)
Outstanding at January 1, 2020
 
3.0

 
$
25.92

 
 
 
 
Granted
 
—

 
$
—

 
 
 
 
Exercised (1)
 
—

 
$
14.61

 
 
 
 
Forfeited (1)
 
—

 
$
28.24

 
 
 
 
Outstanding at June 30, 2020
 
3.0

 
$
26.27

 
 
 
 
Vested and expected to vest at June 30, 2020
 
3.0

 
$
26.27

 
$
5.4

 
5.24
Exercisable at June 30, 2020
 
2.4

 
$
25.94

 
$
5.4

 
4.49

(1)
Activity during the six months ended June 30, 2020 rounds to zero.
Schedule of Restricted Stock Units and Restricted Stock Awards Roll Forward
Restricted Stock Awards and Restricted Stock Units
 
Awards/Units
(millions)
 
Weighted-Average
Fair Value
Outstanding at January 1, 2020
 
1.2

 
$
28.45

Granted
 
0.4

 
$
29.73

Vested
 
(0.4
)
 
$
28.35

Forfeited
 
(0.1
)
 
$
28.13

Outstanding at June 30, 2020
 
1.1

 
$
29.03
Schedule of Performance Stock Roll Forward
Performance Stock Awards and Performance Share Units
 
Awards/Units
(millions)
 
Weighted-Average
Fair Value
Outstanding at January 1, 2020
 
0.5

 
$
32.11

Granted
 
0.4

 
$
31.88

Vested
 
(0.1
)
 
$
38.11

Forfeited
 
(0.1
)
 
$
32.95

Outstanding at June 30, 2020
 
0.7

 
$
31.14
v3.20.2
Other Income, Net (Tables)
 6 Months Ended
Jun. 30, 2020
Other Income and Expenses [Abstract]  
Schedule of Other Nonoperating Income (Expense)
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Foreign exchange (gains) losses, net
 
$
(0.3
)
 
$
2.2

 
$
2.0

 
$
4.6

Debt extinguishment and refinancing related costs
 
—

 
0.2

 
2.4

 
0.2

Other miscellaneous income, net
 
(1.9
)
 
(3.3
)
 
(5.8
)
 
(6.7
)
Total
 
$
(2.2
)
 
$
(0.9
)
 
$
(1.4
)
 
$
(1.9
)
v3.20.2
Income Taxes (Tables)
 6 Months Ended
Jun. 30, 2020
Income Tax Disclosure [Abstract]  
Schedule of Effective Income Tax Rate Reconciliation
Our effective income tax rates for the six months ended June 30, 2020 and 2019 are as follows:
 
 
Six Months Ended June 30,
 
 
2020
 
2019
Effective Tax Rate
 
56.4
%
 
18.2
%
v3.20.2
Net (Loss) Income Per Common Share (Tables)
 6 Months Ended
Jun. 30, 2020
Earnings Per Share [Abstract]  
Schedule of Earnings Per Share, Basic and Diluted A reconciliation of our basic and diluted earnings per common share is as follows:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(In millions, except per share data)
 
2020
 
2019
 
2020
 
2019
Net (loss) income to common shareholders
 
$
(82.8
)
 
$
98.4

 
$
(30.6
)
 
$
141.8

Basic weighted average shares outstanding
 
235.2

 
233.3

 
235.1

 
233.7

Diluted weighted average shares outstanding
 
235.2

 
235.4

 
235.1

 
236.0

Net income (loss) per common share:
 
 
 
 
 
 
 
 
Basic net (loss) income per share
 
$
(0.35
)
 
$
0.42

 
$
(0.13
)
 
$
0.61

Diluted net (loss) income per share
 
$
(0.35
)
 
$
0.42

 
$
(0.13
)
 
$
0.60
v3.20.2
Accounts and Notes Receivable, Net (Tables)
 6 Months Ended
Jun. 30, 2020
Receivables [Abstract]  
Schedule of Accounts, Notes, Loans and Financing Receivable
 
 
June 30, 2020
 
December 31, 2019
Accounts receivable - trade, net (1)
 
$
548.7

 
$
718.4

Notes receivable
 
25.0

 
24.7

Other
 
90.3

 
87.0

Total
 
$
664.0

 
$
830.1


(1)
Allowance for doubtful accounts was $25.4 million and $16.0 million at June 30, 2020 and December 31, 2019, respectively.
v3.20.2
Inventories (Tables)
 6 Months Ended
Jun. 30, 2020
Inventory Disclosure [Abstract]  
Schedule of Inventory, Current
 
 
June 30, 2020
 
December 31, 2019
Finished products
 
$
294.8

 
$
327.4

Semi-finished products
 
93.4

 
109.9

Raw materials
 
131.1

 
133.7

Stores and supplies
 
20.0

 
20.6

Total
 
$
539.3

 
$
591.6
v3.20.2
Property, Plant and Equipment, Net (Tables)
 6 Months Ended
Jun. 30, 2020
Property, Plant and Equipment [Abstract]  
Property, Plant and Equipment
 
 
June 30, 2020
 
December 31, 2019
Property, plant and equipment
 
$
2,198.2

 
$
2,231.9

Accumulated depreciation
 
(1,040.0
)
 
(1,008.9
)
Property, plant, and equipment, net
 
$
1,158.2

 
$
1,223.0
v3.20.2
Borrowings (Tables)
 6 Months Ended
Jun. 30, 2020
Debt Disclosure [Abstract]  
Schedule of Debt
Borrowings are summarized as follows:
 
 
June 30, 2020
 
December 31, 2019
2024 Dollar Term Loans
 
$
2,075.3

 
$
2,387.5

2024 Dollar Senior Notes
 
500.0

 
500.0

2024 Euro Senior Notes
 
377.0

 
375.2

2025 Euro Senior Notes
 
506.5

 
504.0

2027 Dollar Senior Notes
 
500.0

 
—

Short-term and other borrowings
 
105.6

 
109.0

Unamortized original issue discount
 
(8.3
)
 
(10.5
)
Unamortized deferred financing costs
 
(34.8
)
 
(31.1
)
Total borrowings, net
 
4,021.3

 
3,834.1

Less:
 

 

Short-term borrowings
 
17.0

 
19.6

Current portion of long-term borrowings
 
24.3

 
24.3

Long-term debt
 
$
3,980.0

 
$
3,790.2
Schedule of Debt Instrument Redemption We have the option to redeem all or part of the 2027 Senior Notes at the following redemption prices (expressed as percentages of principal amount), plus accrued and unpaid interest, if any, on or after June 15th of the years indicated:
Period
 
2027 Senior Notes Percentage
2023
 
102.375
%
2024
 
101.188
%
2025 and thereafter
 
100.000
%
Schedule of Maturities of Long-term Debt
Below is a schedule of required future repayments of all borrowings outstanding at June 30, 2020.
Remainder of 2020
 
$
23.5

2021
 
30.4

2022
 
54.2

2023
 
27.1

2024
 
2,870.3

Thereafter
 
1,058.9

Total borrowings
 
4,064.4

Unamortized original issue discount
 
(8.3
)
Unamortized deferred financing costs
 
(34.8
)
Total borrowings, net
 
$
4,021.3
v3.20.2
Financial Instruments, Hedging Activities and Fair Value Measurements Financial Instruments, Hedging Activities and Fair Value Measurements (Tables)
 6 Months Ended
Jun. 30, 2020
Fair Value Disclosures [Abstract]  
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis
The table below presents the fair values of our financial instruments measured on a recurring basis by level within the fair value hierarchy at June 30, 2020 and December 31, 2019.
 
 
June 30, 2020
 
December 31, 2019
 
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prepaid expenses and other current assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cross-currency swaps (2)
 
$
—

 
$
14.5

 
$
—

 
$
14.5

 
$
—

 
$
14.4

 
$
—

 
$
14.4

Foreign currency forward contracts (1) (3)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Other assets:
 
 
 
 
 
 
 


 
 
 
 
 
 
 


Cross-currency swaps (2)
 
—

 
19.9

 
—

 
19.9

 
—

 
8.0

 
—

 
8.0

Investments in equity securities
 
0.7

 
—

 
—

 
0.7

 
0.6

 
—

 
—

 
0.6

Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other accrued liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate caps (1)
 
—

 
2.0

 
—

 
2.0

 
—

 
1.3

 
—

 
1.3

Interest rate swaps (1)
 
—

 
28.0

 
—

 
28.0

 
—

 
8.9

 
—

 
8.9

Other liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate caps (1)
 
—

 
1.0

 
—

 
1.0

 
—

 
1.2

 
—

 
1.2

Interest rate swaps (1)
 
—

 
44.5

 
—

 
44.5

 
—

 
20.5

 
—

 
20.5

Long-term borrowings:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2024 Dollar Term Loans
 
—

 
2,007.4

 
—

 
2,007.4

 
—

 
2,396.5

 
—

 
2,396.5

2024 Dollar Senior Notes
 
—

 
507.0

 
—

 
507.0

 
—

 
520.2

 
—

 
520.2

2024 Euro Senior Notes
 
—

 
375.6

 
—

 
375.6

 
—

 
388.2

 
—

 
388.2

2025 Euro Senior Notes
 
—

 
501.7

 
—

 
501.7

 
—

 
520.7

 
—

 
520.7

2027 Dollar Senior Notes
 
—

 
503.6

 
—

 
503.6

 
—

 
—

 
—

 
—

(1)
Cash flow hedge
(2)
Net investment hedge
(3)
Balance at June 30, 2020 rounds to zero.
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value
The following table presents the gains (losses) included in AOCI for derivative instruments that qualify and have been designated as cash flow and net investment hedges:
 
 
June 30, 2020
 
December 31, 2019
AOCI:
 
 
 
 
Interest rate caps (cash flow hedges)
 
$
3.7

 
$
3.5

Interest rate swaps (cash flow hedges)
 
72.5

 
29.4

Foreign currency forward contracts (cash flow hedges) (1)
 
—

 
—

Cross-currency swaps (net investment hedges)
 
(34.4
)
 
(22.4
)
Total AOCI
 
$
41.8

 
$
10.5


(1)
Balance at June 30, 2020 rounds to zero.
Schedule of Cash Flow Hedging Instruments, Statements of Financial Performance and Financial Position, Location
The following tables set forth the locations and amounts recognized during the three and six months ended June 30, 2020 and 2019 for these cash flow and net investment hedges.
 
 
 
 
For the Three Months Ended June 30,
 
 
 
 
2020
 
2019
Derivatives in Cash Flow and Net Investment Hedges
 
Location of Loss Recognized in Income on Derivatives
 
Net Amount of Loss Recognized in OCI on Derivatives
 
Amount of Loss (Gain) Recognized in Income
 
Net Amount of Loss (Gain) Recognized in OCI on Derivatives
 
Amount of (Gain) Loss Recognized in Income
Interest rate caps
 
Interest expense, net
 
$
—

 
$
0.6

 
$
3.4

 
$
(0.5
)
Interest rate swaps
 
Interest expense, net
 
6.1

 
2.9

 
16.6

 
0.2

Foreign currency forward contracts (1)
 
Cost of goods sold
 
—

 
—

 
—

 
—

Cross-currency swaps
 
Interest expense, net
 
3.1

 
(3.7
)
 
(1.6
)
 
(3.6
)

(1)
Activity during the three months ended June 30, 2020 rounds to zero.
 
 
 
 
For the Six Months Ended June 30,
 
 
 
 
2020
 
2019
Derivatives in Cash Flow and Net Investment Hedges
 
Location of Loss (Gain) Recognized in Income on Derivatives
 
Net Amount of Loss (Gain) Recognized in OCI on Derivatives
 
Amount of Loss (Gain) Recognized in Income
 
Net Amount of Loss (Gain) Recognized in OCI on Derivatives
 
Amount of (Gain) Loss Recognized in Income
Interest rate caps
 
Interest expense, net
 
$
1.1

 
$
0.9

 
$
5.9

 
$
(1.6
)
Interest rate swaps
 
Interest expense, net
 
47.6

 
4.5

 
27.6

 
0.1

Foreign currency forward contracts (1)
 
Cost of goods sold
 
—

 
—

 
—

 
—

Cross-currency swaps
 
Interest expense, net
 
(19.4
)
 
(7.4
)
 
(14.9
)
 
(7.2
)
(1)
Activity during the six months ended June 30, 2020 rounds to zero.
Derivatives Not Designated as Hedging Instruments
Fair value gains and losses of derivative contracts, as determined using Level 2 inputs, that were not designated for hedge accounting treatment were recorded in earnings as follows:
Derivatives Not Designated as Hedging
Instruments under ASC 815
 
Location of Loss (Gain) Recognized in
Income on Derivatives
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Foreign currency forward contracts
 
Other income, net
 
$
0.8

 
$
0.3

 
$
(0.9
)
 
$
1.8
v3.20.2
Segments (Tables)
 6 Months Ended
Jun. 30, 2020
Segment Reporting [Abstract]  
Schedule of Segment Reporting Information, by Segment The following table presents relevant information of our reportable segments.
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Net sales (1):
 
 
 
 
 
 
 
 
Refinish
 
$
261.9

 
$
447.3

 
$
629.7

 
$
852.8

Industrial
 
220.2

 
309.4

 
500.1

 
617.2

Total Net sales Performance Coatings
 
482.1

 
756.7

 
1,129.8

 
1,470.0

Light Vehicle
 
126.3

 
306.1

 
386.4

 
622.0

Commercial Vehicle
 
44.3

 
94.7

 
120.0

 
184.8

Total Net sales Transportation Coatings
 
170.6

 
400.8

 
506.4

 
806.8

Total Net sales
 
$
652.7

 
$
1,157.5

 
$
1,636.2

 
$
2,276.8

Equity in earnings in unconsolidated affiliates:
 
 
 
 
 
 
 
 
Performance Coatings
 
$
—

 
$
0.1

 
$
—

 
$
0.2

Transportation Coatings
 
(0.2
)
 
0.4

 
(0.1
)
 
—

Total
 
$
(0.2
)
 
$
0.5

 
$
(0.1
)
 
$
0.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2020
 
December 31, 2019
Investment in unconsolidated affiliates:
 
 
 
 
 
 
 
 
Performance Coatings
 
 
 
 
 
$
2.0

 
$
2.4

Transportation Coatings
 
 
 
 
 
12.6

 
12.7

Total
 
 
 
 
 
$
14.6

 
$
15.1


(1)
The Company has no intercompany sales between segments.
Reconciliation of Operating Profit (Loss) from Segments to Consolidated
The following table reconciles our segment operating performance to (loss) income before income taxes for the periods presented:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Segment Adjusted EBIT (1):
 
 
 
 
 
 
 
 
Performance Coatings
 
$
1.5

 
$
127.6

 
$
80.9

 
$
206.2

Transportation Coatings
 
(39.3
)
 
40.4

 
(13.5
)
 
74.6

Total (2)
 
(37.8
)
 
168.0

 
67.4

 
280.8

Interest expense, net
 
36.1

 
41.0

 
72.6

 
82.3

Debt extinguishment and refinancing related costs (a)
 
—

 
0.2

 
2.4

 
0.2

Termination benefits and other employee related costs (b)
 
15.2

 
2.8

 
34.7

 
4.1

Strategic review and retention costs (c)
 
6.7

 
0.8

 
18.2

 
0.8

Offering and transactional costs (d)
 
0.1

 
0.2

 
0.2

 
0.8

Loss (gain) on divestiture and impairments (e)
 
2.7

 
(1.3
)
 
3.2

 
3.9

Pension special event (f)
 
(0.6
)
 
—

 
(1.8
)
 
—

Accelerated depreciation (g)
 
0.4

 
6.7

 
8.5

 
12.8

Indemnity income (h)
 
—

 
(0.2
)
 
—

 
(0.2
)
(Loss) income before income taxes
 
$
(98.4
)
 
$
117.8

 
$
(70.6
)
 
$
176.1

(1)
The primary measure of segment operating performance is Adjusted EBIT, which is defined as net income before interest, taxes and select other items impacting operating results. These other items impacting operating results are items that management has concluded are (1) non-cash items included within net income, (2) items the Company does not believe are indicative of ongoing operating performance or (3) non-recurring, unusual or infrequent items that have not occurred within the last two years or we believe are not reasonably likely to recur within the next two years. Adjusted EBIT is a key metric that is used by management to evaluate business performance in comparison to budgets, forecasts and prior year financial results, providing a measure that management believes reflects the Company’s core operating performance, which represents Adjusted EBIT adjusted for the select items referred to above.
 
 
(2)
Does not represent Axalta’s Adjusted EBIT referenced elsewhere by the Company as there are additional adjustments that are not allocated to the segments.
 
 
(a)
Represents expenses and associated changes to estimates related to the prepayment, restructuring, and refinancing of our indebtedness, which are not considered indicative of our ongoing operating performance.
 
 
(b)
Represents expenses and associated changes to estimates related to employee termination benefits and other employee-related costs. Employee termination benefits are associated with Axalta Way initiatives. These amounts are not considered indicative of our ongoing operating performance.
 
 
(c)
Represents costs for legal, tax and other advisory fees pertaining to our review of strategic alternatives that was concluded in March 2020, as well as retention awards for certain employees which will be earned over a period of 18-24 months. These amounts are not considered indicative of our ongoing performance.
 
 
(d)
Represents acquisition and divestiture-related expenses, all of which are not considered indicative of our ongoing operating performance.
 
 
(e)
Represents expenses and associated changes to estimates related to the sale of our interest in a joint venture business and other impairments, which are not considered indicative of our ongoing operating performance.
 
 
(f)
Represents certain defined benefit pension costs associated with special events, including pension curtailments, which we do not consider indicative of our ongoing operating performance.
 
 
(g)
Represents incremental depreciation expense resulting from truncated useful lives of the assets impacted by our manufacturing footprint assessments, which we do not consider indicative of our ongoing operating performance.
 
 
(h)
Represents indemnity income associated with the acquisition by Axalta of the DuPont Performance Coatings business, which we do not consider indicative of our ongoing operating performance.
v3.20.2
Accumulated Other Comprehensive Loss (Tables)
 6 Months Ended
Jun. 30, 2020
Equity [Abstract]  
Schedule of Accumulated Other Comprehensive Loss
 
 
Unrealized
Currency
Translation
Adjustments
 
Pension
Adjustments
 
Unrealized
(Loss) Gain on
Derivatives
 
Accumulated
Other
Comprehensive
 (Loss) Income
Balance at December 31, 2019
 
$
(297.0
)
 
$
(69.9
)
 
$
(28.6
)
 
$
(395.5
)
Current year deferrals to AOCI
 
(83.3
)
 
—

 
(36.3
)
 
(119.6
)
Reclassifications from AOCI to Net income
 
—

 
(0.4
)
 
1.6

 
1.2

Net Change
 
(83.3
)
 
(0.4
)
 
(34.7
)
 
(118.4
)
Balance at March 31, 2020
 
(380.3
)
 
(70.3
)
 
(63.3
)
 
(513.9
)
Current year deferrals to AOCI
 
6.1

 
—

 
(5.2
)
 
0.9

Reclassifications from AOCI to Net income
 
—

 
0.4

 
3.0

 
3.4

Net Change
 
6.1

 
0.4

 
(2.2
)
 
4.3

Balance at June 30, 2020
 
$
(374.2
)
 
$
(69.9
)
 
$
(65.5
)
 
$
(509.6
)

 
 
Unrealized
Currency
Translation
Adjustments
 
Pension
Adjustments
 
Unrealized
Gain (Loss) on
Derivatives
 
Accumulated
Other
Comprehensive
Income (Loss)
Balance at December 31, 2018
 
$
(299.4
)
 
$
(36.4
)
 
$
(0.3
)
 
$
(336.1
)
Current year deferrals to AOCI
 
12.8

 
—

 
(11.4
)
 
1.4

Reclassifications from AOCI to Net income
 
—

 
—

 
(1.0
)
 
(1.0
)
Net Change
 
12.8

 
—

 
(12.4
)
 
0.4

Balance at March 31, 2019
 
(286.6
)
 
(36.4
)
 
(12.7
)
 
(335.7
)
Current year deferrals to AOCI
 
(5.7
)
 
(0.1
)
 
(17.3
)
 
(23.1
)
Reclassifications from AOCI to Net income
 
2.6

 
0.5

 
(0.3
)
 
2.8

Net Change
 
(3.1
)
 
0.4

 
(17.6
)
 
(20.3
)
Balance at June 30, 2019
 
$
(289.7
)
 
$
(36.0
)
 
$
(30.3
)
 
$
(356.0
)
v3.20.2
Basis of Presentation and Summary of Significant Accounting Policies - Additional Information (Details)
$ in Millions
 6 Months Ended
Jun. 30, 2020
USD ($)
Accounting Standards Update 2016-13  
New Accounting Pronouncements or Change in Accounting Principle [Line Items]  
Loss to retained earnings $ 1.5
v3.20.2
Revenue - Additional Information (Details) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Dec. 31, 2019
Revenue from Contract with Customer [Abstract]          
Contract with customer, asset $ 36.2   $ 36.2   $ 37.5
Capitalized contract cost, net 178.8   178.8   191.2
Capitalized contract cost, amortization 16.4 $ 16.0 33.3 $ 33.1  
Upfront Incentive Payments $ 92.3   $ 92.3   $ 79.0
v3.20.2
Goodwill and Identifiable Intangible Assets - Schedule of Goodwill (Details)
$ in Millions
 6 Months Ended
Jun. 30, 2020
USD ($)
Goodwill [Roll Forward]  
Goodwill, beginning balance $ 1,208.9
Foreign currency translation 0.4
Goodwill, ending balance 1,209.3
Performance Coatings  
Goodwill [Roll Forward]  
Goodwill, beginning balance 1,130.9
Foreign currency translation 0.2
Goodwill, ending balance 1,131.1
Transportation Coatings  
Goodwill [Roll Forward]  
Goodwill, beginning balance 78.0
Foreign currency translation 0.2
Goodwill, ending balance $ 78.2
v3.20.2
Goodwill and Identifiable Intangible Assets - Gross Carrying Amounts and Accumulated Amortization of Identifiable Intangible Assets by Major Class (Details) - USD ($)
$ in Millions
 6 Months Ended 12 Months Ended
Jun. 30, 2020
Dec. 31, 2019
Schedule of Finite-Lived and Indefinite-Lived Intangible Assets by Major Class [Line Items]    
Gross Carrying Amount $ 1,829.1 $ 1,843.8
Accumulated Amortization (671.0) (619.9)
Net Book Value, definite-lived 1,158.1 1,223.9
Trademarks    
Schedule of Finite-Lived and Indefinite-Lived Intangible Assets by Major Class [Line Items]    
Net Book Value, indefinite-lived 265.9 264.9
Technology    
Schedule of Finite-Lived and Indefinite-Lived Intangible Assets by Major Class [Line Items]    
Gross Carrying Amount 541.0 540.2
Accumulated Amortization (338.0) (310.6)
Net Book Value, definite-lived $ 203.0 $ 229.6
Weighted Average Amortization Periods (years) 10 years 4 months 24 days 10 years 4 months 24 days
Trademarks    
Schedule of Finite-Lived and Indefinite-Lived Intangible Assets by Major Class [Line Items]    
Gross Carrying Amount $ 98.9 $ 99.7
Accumulated Amortization (32.8) (30.1)
Net Book Value, definite-lived $ 66.1 $ 69.6
Weighted Average Amortization Periods (years) 15 years 9 months 18 days 15 years 9 months 18 days
Customer relationships    
Schedule of Finite-Lived and Indefinite-Lived Intangible Assets by Major Class [Line Items]    
Gross Carrying Amount $ 908.1 $ 923.8
Accumulated Amortization (290.7) (271.3)
Net Book Value, definite-lived $ 617.4 $ 652.5
Weighted Average Amortization Periods (years) 19 years 19 years 1 month 6 days
Other    
Schedule of Finite-Lived and Indefinite-Lived Intangible Assets by Major Class [Line Items]    
Gross Carrying Amount $ 15.2 $ 15.2
Accumulated Amortization (9.5) (7.9)
Net Book Value, definite-lived $ 5.7 $ 7.3
Weighted Average Amortization Periods (years) 5 years 5 years
v3.20.2
Goodwill and Identifiable Intangible Assets - Schedule of Expected Amortization Expense (Details)
$ in Millions
Jun. 30, 2020
USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]  
Remainder of 2020 $ 57.5
2021 111.7
2022 109.6
2023 70.2
2024 65.4
2025 $ 64.7
v3.20.2
Restructuring - Additional Information (Details) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Restructuring and Related Activities [Abstract]        
Restructuring charges $ 13.7 $ 2.9 $ 32.2 $ 4.2
Payment term (in months)     18 months  
Impairments 2.7   $ 3.2  
Accelerated depreciation $ 0.4 $ 6.7 $ 8.5 $ 12.8
v3.20.2
Restructuring - Restructuring Reserve (Details) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Restructuring Reserve [Roll Forward]        
Beginning balance     $ 78.0  
Expenses, net of changes to estimates $ 13.7 $ 2.9 32.2 $ 4.2
Payments made     (37.9)  
Foreign currency translation     0.1  
Ending balance $ 72.4   $ 72.4  
v3.20.2
Commitments and Contingencies - Additional Information (Details) - USD ($)
Jun. 30, 2020
Dec. 31, 2019
Commitments and Contingencies Disclosure [Abstract]    
Maximum exposure $ 10,900,000 $ 11,600,000
Current carrying value $ 1,000,000.0 $ 0
v3.20.2
Long-term Employee Benefits - Schedule of Net Benefit Cost (Details) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Retirement Benefits [Abstract]        
Service cost $ 1.9 $ 1.7 $ 3.7 $ 3.6
Interest cost 2.3 3.4 4.6 6.6
Expected return on plan assets (3.1) (3.5) (6.3) (7.0)
Amortization of actuarial loss, net 0.8 0.4 1.8 0.9
Plan curtailments (0.6) 0.0 (1.8) 0.0
Net periodic benefit cost $ 1.3 $ 2.0 $ 2.0 $ 4.1
v3.20.2
Stock-based Compensation - Additional Information (Details) - USD ($)
$ / shares in Units, shares in Millions, $ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Stock-based compensation expense (income) $ 6.1 $ (1.4) $ 11.2 $ 5.3
Stock based compensation tax benefit (expense) 1.3 $ (0.2) 1.5 1.1
Cash used to settle award     0.5  
Proceeds from stock options exercised     0.3 $ 25.9
Excess tax benefit     0.1  
Unrecognized compensation cost 1.6   1.6  
Share-based Payment Arrangement, Option        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Proceeds from stock options exercised     $ 0.8  
Period for recognition of compensation not yet recognized     1 year 2 months 12 days  
Restricted Stock and Restricted Stock Units        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Period for recognition of compensation not yet recognized     1 year 6 months  
Tax benefit realized on the vesting of restricted stock     $ 0.3  
Compensation not yet recognized, share-based awards other than options $ 16.2   $ 16.2  
Performance Shares        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Period for recognition of compensation not yet recognized     2 years 2 months 12 days  
Performance stock awards expected to vest (in shares) 0.6   0.6  
Weighted average fair value per share of performance stock awards expected to vest (in usd per share) $ 30.46   $ 30.46  
Compensation not yet recognized, share-based awards other than options $ 13.2   $ 13.2  
v3.20.2
Stock-based Compensation - Schedule of Stock Option Activity (Details) - USD ($)
$ / shares in Units, shares in Millions, $ in Millions
 6 Months Ended
Jun. 30, 2020
Awards (in millions)  
Beginning Balance (in shares) 3.0
Granted (in shares) 0.0
Exercised (in shares) 0.0
Forfeited (in shares) 0.0
Ending Balance (in shares) 3.0
Weighted- Average Exercise Price  
Beginning Balance (in usd per share) $ 25.92
Granted (in usd per share) 0
Exercised (in usd per share) 14.61
Forfeited (in usd per share) 28.24
Ending Balance (in usd per share) $ 26.27
Vested and Expected to Vest  
Vested and expected to vest, awards (in shares) 3.0
Vested and expected to vest, weighted average exercise price (in usd per share) $ 26.27
Vested and expected to vest, aggregate intrinsic value $ 5.4
Vested and expected to vest, weighted average contractual life (in years) 5 years 2 months 26 days
Exercisable  
Exercisable, awards (in shares) 2.4
Exercisable, weighted average exercise price (in usd per share) $ 25.94
Exercisable, aggregate intrinsic value $ 5.4
Exercisable, weighted average contractual life (in years) 4 years 5 months 26 days
v3.20.2
Stock-based Compensation - Schedule of Restricted Stock Awards and Restricted Stock Units (Details) - Restricted Stock and Restricted Stock Units
shares in Millions
 6 Months Ended
Jun. 30, 2020
$ / shares
shares
Awards/Units (millions)  
Beginning Balance (in shares) | shares 1.2
Granted (in shares) | shares 0.4
Vested (in shares) | shares (0.4)
Forfeited (in shares) | shares (0.1)
Ending Balance (in shares) | shares 1.1
Weighted- Average Exercise Price  
Beginning Balance (in usd per share) | $ / shares $ 28.45
Granted (in usd per share) | $ / shares 29.73
Vested (in usd per share) | $ / shares 28.35
Forfeited (in usd per share) | $ / shares 28.13
Ending Balance (in usd per share) | $ / shares $ 29.03
v3.20.2
Stock-based Compensation - Schedule of Performance Shares Award Outstanding Activity (Details) - Performance Shares
shares in Millions
 6 Months Ended
Jun. 30, 2020
$ / shares
shares
Awards/Units (millions)  
Beginning Balance (in shares) | shares 0.5
Granted (in shares) | shares 0.4
Vested (in shares) | shares (0.1)
Forfeited (in shares) | shares (0.1)
Ending Balance (in shares) | shares 0.7
Weighted- Average Exercise Price  
Beginning Balance (in usd per share) | $ / shares $ 32.11
Granted (in usd per share) | $ / shares 31.88
Vested (in usd per share) | $ / shares 38.11
Forfeited (in usd per share) | $ / shares 32.95
Ending Balance (in usd per share) | $ / shares $ 31.14
v3.20.2
Other Income, Net - Schedule of Other Non-operating Income (Details) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Other Income and Expenses [Abstract]        
Foreign exchange (gains) losses, net $ (0.3) $ 2.2 $ 2.0 $ 4.6
Debt extinguishment and refinancing related costs 0.0 0.2 2.4 0.2
Other miscellaneous income, net (1.9) (3.3) (5.8) (6.7)
Total $ (2.2) $ (0.9) $ (1.4) $ (1.9)
v3.20.2
Income Taxes (Details) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Income Tax Disclosure [Abstract]        
Effective Tax Rate     56.40% 18.20%
Tax Benefit on step-up value     $ 50.5  
income tax settlement [Line Items]        
Income Tax settlement $ (15.2) $ 17.9 (39.8) $ 32.1
Settlement with Taxing Authority        
income tax settlement [Line Items]        
Income Tax settlement     $ 14.3  
v3.20.2
Net (Loss) Income Per Common Share (Details) - USD ($)
$ / shares in Units, shares in Millions, $ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Earnings Per Share [Abstract]        
Net (loss) income to common shareholders $ (82.8) $ 98.4 $ (30.6) $ 141.8
Basic weighted average shares outstanding (in shares) 235.2 233.3 235.1 233.7
Diluted weighted average shares outstanding (in shares) 235.2 235.4 235.1 236.0
Net income (loss) per common share:        
Basic net (loss) income per share (in dollars per share) $ (0.35) $ 0.42 $ (0.13) $ 0.61
Diluted net (loss) income per share (in dollars per share) $ (0.35) $ 0.42 $ (0.13) $ 0.60
Antidilutive securities excluded from computation of earnings per share (in shares) 4.6 3.0 4.5 2.9
v3.20.2
Accounts and Notes Receivable, Net - Schedule of Accounts, Notes, Loans, and Financing Receivable (Details) - USD ($)
$ in Millions
Jun. 30, 2020
Dec. 31, 2019
Receivables [Abstract]    
Accounts receivable - trade, net $ 548.7 $ 718.4
Notes receivable 25.0 24.7
Other 90.3 87.0
Total 664.0 830.1
Allowance for doubtful accounts $ 25.4 $ 16.0
v3.20.2
Accounts and Notes Receivable, Net - Additional Information (Details) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Receivables [Abstract]        
Bad debt expense net of recoveries $ 7.0 $ 1.6 $ 10.4 $ 2.6
v3.20.2
Inventories - Schedule of Inventory (Details) - USD ($)
$ in Millions
Jun. 30, 2020
Dec. 31, 2019
Inventory Disclosure [Abstract]    
Finished products $ 294.8 $ 327.4
Semi-finished products 93.4 109.9
Raw materials 131.1 133.7
Stores and supplies 20.0 20.6
Total Inventories $ 539.3 $ 591.6
v3.20.2
Inventories - Additional Information (Details) - USD ($)
$ in Millions
Jun. 30, 2020
Dec. 31, 2019
Inventory Disclosure [Abstract]    
Inventory reserves $ 20.4 $ 13.1
v3.20.2
Property, Plant and Equipment, Net - Schedule of Property, Plant and Equipment (Details) - USD ($)
$ in Millions
Jun. 30, 2020
Dec. 31, 2019
Property, Plant and Equipment [Abstract]    
Property, plant and equipment $ 2,198.2 $ 2,231.9
Accumulated depreciation (1,040.0) (1,008.9)
Property, plant, and equipment, net $ 1,158.2 $ 1,223.0
v3.20.2
Property, Plant and Equipment, Net - Additional Information (Details) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Property, Plant and Equipment [Abstract]        
Depreciation expense $ 31.7 $ 43.7 $ 73.3 $ 89.1
v3.20.2
Borrowings - Schedule of Debt (Details) - USD ($)
$ in Millions
Jun. 30, 2020
Jan. 31, 2020
Dec. 31, 2019
Debt Instrument [Line Items]      
Short-term and other borrowings $ 105.6   $ 109.0
Unamortized original issue discount (8.3)   (10.5)
Unamortized deferred financing costs (34.8)   (31.1)
Total borrowings, net 4,021.3   3,834.1
Short-term borrowings 17.0   19.6
Current portion of long-term borrowings 24.3   24.3
Long-term debt 3,980.0   3,790.2
2024 Dollar Term Loans      
Debt Instrument [Line Items]      
Term loan 2,075.3   2,387.5
2024 Dollar Senior Notes      
Debt Instrument [Line Items]      
Senior Notes 500.0   500.0
2024 Euro Senior Notes      
Debt Instrument [Line Items]      
Senior Notes 377.0   375.2
Unamortized original issue discount   $ (1.2)  
2025 Euro Senior Notes      
Debt Instrument [Line Items]      
Senior Notes 506.5   504.0
2027 Dollar Senior Notes      
Debt Instrument [Line Items]      
Senior Notes $ 500.0   $ 0.0
v3.20.2
Borrowings - Additional Information (Details) - USD ($)
 1 Months Ended 6 Months Ended
Jan. 31, 2020
Jun. 30, 2020
Dec. 31, 2019
Debt Instrument [Line Items]      
Unamortized original issue discount   $ 8,300,000 $ 10,500,000
2024 Euro Senior Notes      
Debt Instrument [Line Items]      
Repurchased face amount $ 300,000,000.0    
Loss on extinguishment of debt 2,700,000    
Write off of deferred debt issuance cost 1,500,000    
Unamortized original issue discount $ 1,200,000    
2027 Dollar Senior Notes      
Debt Instrument [Line Items]      
Aggregate principal amount issued   $ 500,000,000.0  
Senior note stated interest rate   4.75%  
Debt issuance costs   $ 8,300,000  
Percent of principal required to be outstanding   50.00%  
Redemption price, percentage if change in control occurs   101.00%  
2027 Dollar Senior Notes | Present through June 15, 2023      
Debt Instrument [Line Items]      
Aggregate percentage of principal amount redeemed   40.00%  
Redemption price   104.75%  
Revolving Credit Facility      
Debt Instrument [Line Items]      
Letters of credit outstanding, amount   $ 39,000,000.0 38,800,000
Line of credit facility, remaining borrowing capacity   $ 361,000,000.0 $ 361,200,000
v3.20.2
Borrowings - Senior Notes (Details) - 2027 Dollar Senior Notes
 6 Months Ended
Jun. 30, 2020
2023  
Debt Instrument [Line Items]  
Redemption price 102.375%
2024  
Debt Instrument [Line Items]  
Redemption price 101.188%
2025 and thereafter  
Debt Instrument [Line Items]  
Redemption price 100.00%
v3.20.2
Borrowings - Schedule of Maturities of Long-term Debt (Details) - USD ($)
$ in Millions
Jun. 30, 2020
Dec. 31, 2019
Debt Disclosure [Abstract]    
Remainder of 2020 $ 23.5  
2021 30.4  
2022 54.2  
2023 27.1  
2024 2,870.3  
Thereafter 1,058.9  
Total borrowings 4,064.4  
Unamortized original issue discount (8.3) $ (10.5)
Unamortized deferred financing costs (34.8) (31.1)
Total borrowings, net $ 4,021.3 $ 3,834.1
v3.20.2
Financial Instruments, Hedging Activities and Fair Value Measurements - Schedule of Fair Value of Financial Instruments (Details) - USD ($)
$ in Millions
Jun. 30, 2020
Dec. 31, 2019
Other assets    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Investments in equity securities $ 0.7 $ 0.6
Long-term borrowings | 2024 Dollar Term Loans    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans payable, fair value 2,007.4 2,396.5
Long-term borrowings | 2024 Dollar Senior Notes    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Notes payable, fair value 507.0 520.2
Long-term borrowings | 2024 Euro Senior Notes    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Notes payable, fair value 375.6 388.2
Long-term borrowings | 2025 Euro Senior Notes    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Notes payable, fair value 501.7 520.7
Long-term borrowings | 2027 Dollar Senior Notes    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Notes payable, fair value 503.6 0.0
Cross-currency swaps | Prepaid expenses and other current assets | Designated as Hedging Instrument    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative asset 14.5 14.4
Cross-currency swaps | Other assets | Designated as Hedging Instrument    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative asset 19.9 8.0
Foreign currency forward contracts | Prepaid expenses and other current assets | Designated as Hedging Instrument    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative asset 0.0 0.0
Interest rate caps | Other accrued liabilities | Designated as Hedging Instrument    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative liability 2.0 1.3
Interest rate caps | Other liabilities | Designated as Hedging Instrument    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative liability 1.0 1.2
Interest rate swaps | Other accrued liabilities | Designated as Hedging Instrument    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative liability 28.0 8.9
Interest rate swaps | Other liabilities | Designated as Hedging Instrument    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative liability 44.5 20.5
Fair Value, Inputs, Level 1 | Other assets    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Investments in equity securities 0.7 0.6
Fair Value, Inputs, Level 1 | Long-term borrowings | 2024 Dollar Term Loans    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans payable, fair value 0.0 0.0
Fair Value, Inputs, Level 1 | Long-term borrowings | 2024 Dollar Senior Notes    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Notes payable, fair value 0.0 0.0
Fair Value, Inputs, Level 1 | Long-term borrowings | 2024 Euro Senior Notes    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Notes payable, fair value 0.0 0.0
Fair Value, Inputs, Level 1 | Long-term borrowings | 2025 Euro Senior Notes    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Notes payable, fair value 0.0 0.0
Fair Value, Inputs, Level 1 | Long-term borrowings | 2027 Dollar Senior Notes    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Notes payable, fair value 0.0 0.0
Fair Value, Inputs, Level 1 | Cross-currency swaps | Prepaid expenses and other current assets | Designated as Hedging Instrument    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative asset 0.0 0.0
Fair Value, Inputs, Level 1 | Cross-currency swaps | Other assets | Designated as Hedging Instrument    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative asset 0.0 0.0
Fair Value, Inputs, Level 1 | Foreign currency forward contracts | Prepaid expenses and other current assets | Designated as Hedging Instrument    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative asset 0.0 0.0
Fair Value, Inputs, Level 1 | Interest rate caps | Other accrued liabilities | Designated as Hedging Instrument    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative liability 0.0 0.0
Fair Value, Inputs, Level 1 | Interest rate caps | Other liabilities | Designated as Hedging Instrument    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative liability 0.0 0.0
Fair Value, Inputs, Level 1 | Interest rate swaps | Other accrued liabilities | Designated as Hedging Instrument    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative liability 0.0 0.0
Fair Value, Inputs, Level 1 | Interest rate swaps | Other liabilities | Designated as Hedging Instrument    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative liability 0.0 0.0
Fair Value, Inputs, Level 2 | Other assets    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Investments in equity securities 0.0 0.0
Fair Value, Inputs, Level 2 | Long-term borrowings | 2024 Dollar Term Loans    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans payable, fair value 2,007.4 2,396.5
Fair Value, Inputs, Level 2 | Long-term borrowings | 2024 Dollar Senior Notes    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Notes payable, fair value 507.0 520.2
Fair Value, Inputs, Level 2 | Long-term borrowings | 2024 Euro Senior Notes    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Notes payable, fair value 375.6 388.2
Fair Value, Inputs, Level 2 | Long-term borrowings | 2025 Euro Senior Notes    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Notes payable, fair value 501.7 520.7
Fair Value, Inputs, Level 2 | Long-term borrowings | 2027 Dollar Senior Notes    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Notes payable, fair value 503.6 0.0
Fair Value, Inputs, Level 2 | Cross-currency swaps | Prepaid expenses and other current assets | Designated as Hedging Instrument    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative asset 14.5 14.4
Fair Value, Inputs, Level 2 | Cross-currency swaps | Other assets | Designated as Hedging Instrument    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative asset 19.9 8.0
Fair Value, Inputs, Level 2 | Foreign currency forward contracts | Prepaid expenses and other current assets | Designated as Hedging Instrument    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative asset 0.0 0.0
Fair Value, Inputs, Level 2 | Interest rate caps | Other accrued liabilities | Designated as Hedging Instrument    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative liability 2.0 1.3
Fair Value, Inputs, Level 2 | Interest rate caps | Other liabilities | Designated as Hedging Instrument    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative liability 1.0 1.2
Fair Value, Inputs, Level 2 | Interest rate swaps | Other accrued liabilities | Designated as Hedging Instrument    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative liability 28.0 8.9
Fair Value, Inputs, Level 2 | Interest rate swaps | Other liabilities | Designated as Hedging Instrument    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative liability 44.5 20.5
Fair Value, Inputs, Level 3 | Other assets    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Investments in equity securities 0.0 0.0
Fair Value, Inputs, Level 3 | Long-term borrowings | 2024 Dollar Term Loans    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Loans payable, fair value 0.0 0.0
Fair Value, Inputs, Level 3 | Long-term borrowings | 2024 Dollar Senior Notes    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Notes payable, fair value 0.0 0.0
Fair Value, Inputs, Level 3 | Long-term borrowings | 2024 Euro Senior Notes    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Notes payable, fair value 0.0 0.0
Fair Value, Inputs, Level 3 | Long-term borrowings | 2025 Euro Senior Notes    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Notes payable, fair value 0.0 0.0
Fair Value, Inputs, Level 3 | Long-term borrowings | 2027 Dollar Senior Notes    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Notes payable, fair value 0.0 0.0
Fair Value, Inputs, Level 3 | Cross-currency swaps | Prepaid expenses and other current assets | Designated as Hedging Instrument    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative asset 0.0 0.0
Fair Value, Inputs, Level 3 | Cross-currency swaps | Other assets | Designated as Hedging Instrument    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative asset 0.0 0.0
Fair Value, Inputs, Level 3 | Foreign currency forward contracts | Prepaid expenses and other current assets | Designated as Hedging Instrument    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative asset 0.0 0.0
Fair Value, Inputs, Level 3 | Interest rate caps | Other accrued liabilities | Designated as Hedging Instrument    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative liability 0.0 0.0
Fair Value, Inputs, Level 3 | Interest rate caps | Other liabilities | Designated as Hedging Instrument    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative liability 0.0 0.0
Fair Value, Inputs, Level 3 | Interest rate swaps | Other accrued liabilities | Designated as Hedging Instrument    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative liability 0.0 0.0
Fair Value, Inputs, Level 3 | Interest rate swaps | Other liabilities | Designated as Hedging Instrument    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative liability $ 0.0 $ 0.0
v3.20.2
Financial Instruments, Hedging Activities and Fair Value Measurements - Additional Information (Details)
$ in Millions
 6 Months Ended
Jun. 30, 2020
USD ($)
Mar. 31, 2020
USD ($)
interest_rate_swap
Derivatives, Fair Value [Line Items]    
Cash flow hedge loss to be reclassified within twelve months $ 31.8  
Interest rate swaps    
Derivatives, Fair Value [Line Items]    
Number of interest rate swaps | interest_rate_swap   2
Derivative, notional amount   $ 400.0
Interest rate swaps | Interest Rate Swap 1    
Derivatives, Fair Value [Line Items]    
Derivative, notional amount   $ 200.0
Derivative, fixed interest rate   1.61%
Interest rate swaps | Interest Rate Swap 2    
Derivatives, Fair Value [Line Items]    
Derivative, notional amount   $ 200.0
Derivative, fixed interest rate   1.18%
Foreign currency forward contracts    
Derivatives, Fair Value [Line Items]    
Derivative, notional amount   $ 5.0
v3.20.2
Financial Instruments, Hedging Activities and Fair Value Measurements - Accumulated Other Comprehensive (Loss) Income (Details) - Fair Value, Inputs, Level 2 - USD ($)
$ in Millions
 6 Months Ended 12 Months Ended
Jun. 30, 2020
Dec. 31, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total AOCI $ 41.8 $ 10.5
Cash flow hedging | Interest rate caps    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total AOCI 3.7 3.5
Cash flow hedging | Interest rate swaps    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total AOCI 72.5 29.4
Cash flow hedging | Foreign currency forward contracts    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total AOCI 0.0 0.0
Net investment hedging | Cross-currency swaps    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Total AOCI $ (34.4) $ (22.4)
v3.20.2
Financial Instruments, Hedging Activities and Fair Value Measurements - Derivative Locations and Amounts Recognized (Details) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Net Amount of Loss Recognized in OCI on Derivatives $ (2.6) $ (20.3) $ (43.3) $ (34.9)
Interest rate caps        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Net Amount of Loss Recognized in OCI on Derivatives 0.0 3.4 1.1 5.9
Interest rate swaps        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Net Amount of Loss Recognized in OCI on Derivatives 6.1 16.6 47.6 27.6
Foreign currency forward contracts        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Net Amount of Loss Recognized in OCI on Derivatives 0.0 0.0    
Cross-currency swaps        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Net Amount of Loss Recognized in OCI on Derivatives, Cross-currency swaps 3.1 (1.6) (19.4) (14.9)
Interest expense | Interest rate caps        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Amount of (Gain) Loss Recognized in Income 0.6 (0.5) 0.9 (1.6)
Interest expense | Interest rate swaps        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Amount of (Gain) Loss Recognized in Income 2.9 0.2 4.5 0.1
Interest expense | Foreign currency forward contracts        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net 0.8 0.3 (0.9) 1.8
Interest expense | Cross-currency swaps        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Amount of Loss (Gain) Recognized in Income, Cross-currency swaps (3.7) (3.6) (7.4) (7.2)
Cost of goods sold | Foreign currency forward contracts        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Net Amount of Loss Recognized in OCI on Derivatives     0.0 0.0
Amount of (Gain) Loss Recognized in Income $ 0.0 $ 0.0 $ 0.0 $ 0.0
v3.20.2
Segments - Additional Information (Details)
 6 Months Ended
Jun. 30, 2020
Segment
Segment Reporting [Abstract]  
Number of operating segments 2
Number of reportable segments 2
v3.20.2
Segments - Schedule of Segment Reporting Information, by Segment (Details) - USD ($)
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Dec. 31, 2019
Segment Reporting Information [Line Items]          
Net sales $ 652,700,000 $ 1,157,500,000 $ 1,636,200,000 $ 2,276,800,000  
Equity in earnings in unconsolidated affiliates (200,000) 500,000 (100,000) 200,000  
Investment in unconsolidated affiliates 14,600,000   14,600,000   $ 15,100,000
Intercompany sales between segments     0    
Performance Coatings          
Segment Reporting Information [Line Items]          
Net sales 482,100,000 756,700,000 1,129,800,000 1,470,000,000.0  
Equity in earnings in unconsolidated affiliates 0 100,000 0 200,000  
Investment in unconsolidated affiliates 2,000,000.0   2,000,000.0   2,400,000
Transportation Coatings          
Segment Reporting Information [Line Items]          
Net sales 170,600,000 400,800,000 506,400,000 806,800,000  
Equity in earnings in unconsolidated affiliates (200,000) 400,000 (100,000) 0  
Investment in unconsolidated affiliates 12,600,000   12,600,000   $ 12,700,000
Refinish | Performance Coatings          
Segment Reporting Information [Line Items]          
Net sales 261,900,000 447,300,000 629,700,000 852,800,000  
Industrial | Performance Coatings          
Segment Reporting Information [Line Items]          
Net sales 220,200,000 309,400,000 500,100,000 617,200,000  
Light Vehicle | Transportation Coatings          
Segment Reporting Information [Line Items]          
Net sales 126,300,000 306,100,000 386,400,000 622,000,000.0  
Commercial Vehicle | Transportation Coatings          
Segment Reporting Information [Line Items]          
Net sales $ 44,300,000 $ 94,700,000 $ 120,000,000.0 $ 184,800,000  
v3.20.2
Segments - Reconciliation of Operating Profit (Loss) from Segments to Consolidated (Details) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]        
Adjusted EBIT $ (37.8) $ 168.0 $ 67.4 $ 280.8
Interest expense, net 36.1 41.0 72.6 82.3
Debt extinguishment and refinancing related costs 0.0 0.2 2.4 0.2
Termination benefits and other employee related costs 15.2 2.8 34.7 4.1
Strategic review and retention costs 6.7 0.8 18.2 0.8
Offering and transactional costs 0.1 0.2 0.2 0.8
Loss (gain) on divestiture and impairments 2.7 (1.3) 3.2 3.9
Pension special event (0.6) 0.0 (1.8) 0.0
Accelerated depreciation 0.4 6.7 8.5 12.8
(Loss) income before income taxes (98.4) 117.8 (70.6) 176.1
Indemnity income 0.0 (0.2) 0.0 (0.2)
Performance Coatings        
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]        
Adjusted EBIT 1.5 127.6 80.9 206.2
Transportation Coatings        
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]        
Adjusted EBIT $ (39.3) $ 40.4 $ (13.5) $ 74.6
Minimum        
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]        
Retention payment terms 18 months      
Maximum        
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]        
Retention payment terms 24 months      
v3.20.2
Accumulated Other Comprehensive Loss - Schedule of Accumulated Other Comprehensive Income (Details) - USD ($)
$ in Millions
 3 Months Ended
Jun. 30, 2020
Mar. 31, 2020
Jun. 30, 2019
Mar. 31, 2019
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]        
AOCI, beginning balance   $ (395.5)    
AOCI, ending balance $ (509.6)      
Unrealized Currency Translation Adjustments        
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]        
AOCI, beginning balance (380.3) (297.0) $ (286.6) $ (299.4)
Current year deferrals to AOCI 6.1 (83.3) (5.7) 12.8
Reclassifications from AOCI to Net income 0.0 0.0 2.6 0.0
Net Change 6.1 (83.3) (3.1) 12.8
AOCI, ending balance (374.2) (380.3) (289.7) (286.6)
Pension Adjustments        
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]        
AOCI, beginning balance (70.3) (69.9) (36.4) (36.4)
Current year deferrals to AOCI 0.0 0.0 (0.1) 0.0
Reclassifications from AOCI to Net income 0.4 (0.4) 0.5 0.0
Net Change 0.4 (0.4) 0.4 0.0
AOCI, ending balance (69.9) (70.3) (36.0) (36.4)
Unrealized (Loss) Gain on Derivatives        
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]        
AOCI, beginning balance (63.3) (28.6) (12.7) (0.3)
Current year deferrals to AOCI (5.2) (36.3) (17.3) (11.4)
Reclassifications from AOCI to Net income 3.0 1.6 (0.3) (1.0)
Net Change (2.2) (34.7) (17.6) (12.4)
AOCI, ending balance (65.5) (63.3) (30.3) (12.7)
Accumulated Other Comprehensive (Loss) Income        
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]        
AOCI, beginning balance (513.9) (395.5) (335.7) (336.1)
Current year deferrals to AOCI 0.9 (119.6) (23.1) 1.4
Reclassifications from AOCI to Net income 3.4 1.2 2.8 (1.0)
Net Change 4.3 (118.4) (20.3) 0.4
AOCI, ending balance $ (509.6) $ (513.9) $ (356.0) $ (335.7)
v3.20.2
Accumulated Other Comprehensive Loss - Additional Information (Details) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2020
Jun. 30, 2019
Equity [Abstract]      
Curtailment gain (loss) $ 0.6 $ 1.8  
Cumulative income tax expense (benefit) on pension and postretirement benefit plans (27.0) (27.0) $ (14.3)
Cumulative income tax expense (benefit) on derivatives $ (10.7) $ (10.7) $ (4.4)
v3.20.2
Subsequent Events (Details)
$ in Millions
 3 Months Ended 6 Months Ended
Jul. 29, 2020
USD ($)
Employee
Jun. 30, 2020
USD ($)
Jun. 30, 2019
USD ($)
Jun. 30, 2020
USD ($)
Jun. 30, 2019
USD ($)
Subsequent Event [Line Items]          
Approximate accelerated depreciation of assets and other non-cash costs   $ 0.4 $ 6.7 $ 8.5 $ 12.8
Global restructuring, COVID-19 and sustained growth | Subsequent Event          
Subsequent Event [Line Items]          
Approximate accelerated depreciation of assets and other non-cash costs $ 10.0        
Number of employees in workforce reduction | Employee 550        
Global restructuring, COVID-19 and sustained growth | Minimum | Subsequent Event          
Subsequent Event [Line Items]          
Pretax restructuring charges $ 40.0        
Approximate employee severance and other cash costs 30.0        
Anticipated capital expenditures 10.0        
Global restructuring, COVID-19 and sustained growth | Maximum | Subsequent Event          
Subsequent Event [Line Items]          
Pretax restructuring charges 45.0        
Approximate employee severance and other cash costs 35.0        
Anticipated capital expenditures $ 15.0        
v3.20.2
Label Element Value
Cumulative Effect of New Accounting Principle in Period of Adoption us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption $ (3,700,000)
Cumulative Effect of New Accounting Principle in Period of Adoption us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption (700,000)
Cumulative Effect of New Accounting Principle in Period of Adoption us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption (1,500,000)
Retained Earnings [Member]  
Cumulative Effect of New Accounting Principle in Period of Adoption us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption (700,000)
Cumulative Effect of New Accounting Principle in Period of Adoption us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption (1,500,000)
Cumulative Effect of New Accounting Principle in Period of Adoption us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption $ (3,700,000)