UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

Annual Report Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 20102013

Commission No. 333-128166-10

Affinia Group Intermediate Holdings Inc.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of

incorporation or organization)

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

1101 Technology Drive

Ann Arbor, MI 48108

(734) 827-5400

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

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

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

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

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

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

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

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

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

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

There were 1,000 shares outstanding of the registrant’s common stock as of March 11, 201131, 2014 (all of which are privately owned and not traded on a public market).

TABLE OF CONTENTS

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ii

Cautionary Note Regarding Forward-Looking Statements

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

There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in this report. Such risks, uncertainties and other important factors include, among others, continued volatility indomestic and disruption to the global economyeconomic conditions and the resulting impact on the availability and cost of credit; financial viability of key customers and key suppliers; our dependence on our largest customers; increased crude oil and gasoline prices and resulting reductions in global demand for the use of automobiles; the shift in demand from premium to economy products; pricing and pressures from imports; increasing costs for manufactured components;components, raw materials and energy; the expansion of return policies or the extension of payment terms; risks associated with our non-U.S. operations; risks related to our receivables factoring arrangements; product liability and warranty and recall claims;claims brought against us; reduced inventory levels by our distributors resulting from consolidation and increased efficiency; environmental and automotive safety regulations; the availability of raw materials, manufactured components or equipment from our suppliers; challenges to our intellectual property portfolio; our ability to develop improved products; the introduction of improved products and services that extend replacement cycles otherwise reduce demand for our products; our ability to achieve cost savings from our restructuring plans; work stoppages, labor disputes or similar difficulties that could significantly disrupt our operations;ability to successfully effect dispositions of existing lines of business; our ability to successfully combine our operations with any businesses we have acquired or may acquire; risk of impairment charges to our long-lived assets; risk of impairment to intangibles and goodwill; the risk of business disruptions;disruptions related to a variety of events or conditions including natural and man-made disasters; risks associated with foreign exchange rate fluctuations; risks associated with our expansion into new markets; risks associated with increased levels of drug-related violence in Juarez, Mexico; the impact on our tax rate resulting from the mix of our profits and losses in various jurisdictions; reductions in the value of our deferred tax assets; difficulties in developing, maintaining or upgrading information technology systems; risks associated with doing business in corrupting environments; our ability to effectively transition our corporate office to our Filtration segment headquarters; our ability to complete the sale our Chassis group; and our substantial leverage and limitations on flexibility in operating our business contained in our debt agreements. Additionally, there may be other factors that could cause our actual results to differ materially from the forward-looking statements.

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PART I.

OurThe Company

We areAffinia Group Intermediate Holdings Inc. (“Affinia”) is a global leader in the lightmanufacturing and commercial vehicledistribution of global filtration products (“Filtration segment”) and replacement products in South America (“Affinia South America segment”). We operate in the Filtration and services industry, which also is referred to as the aftermarket. Our extensive aftermarket product offering consists principally of filtration, brakeAffinia South America operating segments. The Filtration segment, Affinia’s largest, manufactures and chassis products. Ourdistributes filtration products fit heavyfor medium and mediumheavy-duty trucks, construction, agriculture, mining, and forestry vehicles, and light duty, trucks, light vehicles, equipment in the off-highway market (i.e., construction, mining, forestry and agricultural) and equipment for industrial, and marine applications. Our brake and chassis products fit light vehicles and heavy and medium duty trucks. In addition, we provide aftermarket products and distribution services in South America. We believe that the growth of the global aftermarket, from which we derived approximately 98% of our net sales in 2010, is predominantly driven by the size, age and use of the population of vehicles and equipment in operation. We design, manufacture, distribute and market a broad range of aftermarket products in North America,The Affinia South America Europe, Asiasegment manufactures and Africadistributes replacement products for on-road and generate salesoff-road vehicles, principally in over 70 countries.Brazil. Based on managementmanagement’s estimates and certain information from third parties, we believeManagement believes that we hold for the year ended 2013, Affinia holds:

Affinia’s continuing net sales for 2013 were approximately $1.4 billion. The following charts illustrate Affinia’s net sales by geography and segment for continuing operations for the fiscal year ended December 31, 2010.2013.

Our aftermarket products can be classified into two primary groups:

We have successfully entered new markets in Europe and in Central and South America and have grown existing market share in North America, South America and Europe. Additionally, our Affinia South America segment has grown significantly over the past several years. The following chart illustrates the sales growth of Affinia’s continuing operations since our inception.

Contributing to our growth is our long-standing relationship with leading commercial vehicle and automotive parts retailers and wholesale distributors. We have supplied the automotive aftermarket industry for over 70 years and we have supplied our largest customer, NAPA, for over 40 years. We believe that theseemphasis on our customer service, coupled with the breadth of our product offerings, are the most attractive product groupskey factors in maintaining our leading market positions.

Filtration Segment

The Filtration segment is one of the world’s leading designers, manufacturers, marketers, and distributors of a broad range of filtration replacement products . Our filtration business includes manufacturing operations in the U.S., Mexico, Europe, South America and China. It benefits from industry-leading brands, long-standing customer relationships and a global low-cost manufacturing and distribution footprint, along with the all-makes / all-models product line of oil, air, fuel, cabin air, coolant, hydraulic and other filters. For further information about our Filtration segment, refer to “Note 18. Segment Information,” which is included in Item 8. Financial Statements and Supplementary Data.

The Filtration segment products are used in on-road and off-road vehicles, in addition to various industrial, locomotive, and marine applications. The numerous strengths of the Filtration segment have led to a #1 market position in the North America aftermarket givenand a leading market position in the higher frequency of replacement for filtersEastern Europe aftermarket. The following charts illustrate the historical sales growth, heavy duty and brake productslight duty product mix and the historicalsales by geographical location.

Approximately half of the Filtration segment sales are in heavy-duty products. The Filtration segment is among the leading global manufacturers and expected growthdistributors of aftermarket filters for heavy-duty and off-highway applications, including on-highway trucks, residential and non-residential construction equipment, agricultural, mining, forestry and industrial equipment, severe service vehicles, medium-duty vehicles and marine applications. With over 70 years of experience, Filtration’s heavy-duty filters are designed to withstand harsh elements and provide for optimal filtration and engine protection in these product groups dueless-than-optimal work environments.

Filtration’s full line of heavy-duty products is a key differentiator versus its light duty filtration competitors. In contrast to increasing regulatory and consumer focus on the environmental and safety benefitsmost light duty competitors, we are able to provide customers with a full suite of these products. Ourfiltration options. Customers, particularly distributors, derive value from having a one-stop-shop supplier that is capable of providing products for a diverse range of end markets. Furthermore, heavy-duty filtration products are generally more technologically advanced and systems are critical to the efficient operations of the enginethus typically priced higher than similar light duty products.

The Filtration segment’s automotive and passenger air quality, while our brake and chassislight truck products are essentialat the forefront of filter technology and performance. It’s portfolio of premium line and value line products is designed to exceed performance demands for the safetya variety of the vehicle.applications, including passenger vehicles, sport utility vehicles, motorcycles and ATVs.

We market our Filtration products under a variety of well-known brands, including WIX^®, RaybestosFiltron™ and ecoLAST^®, Nakata^®, Brake-Pro^®, Filtron™, AIMCO^® and McQuay-Norris^®. Additionally, we provide private label products to large aftermarket distributors, including NAPA^®, CARQUEST^® and ACDelco^®, as well as co-branded products for Federated and ADN.. We believe that we havethe Filtration segment has achieved ourits leading market positions due to the quality and reputation of ourits brands and products among professional installers, who are the primary decision makers for the purchase of the products that we supply to the aftermarket. Professional installers are highly incentivized to order reliable, well-known aftermarket products when repairing a vehicle because the cost of the products is passed through to the end consumer and, once the repair is made, installers are expected to stand behind their work by replacing any malfunctioning products without charging for the replacement or for the additional labor required. We believe that the reputation of our brands and products for form, fit, function and quality promotes significant demand for our products from these installers and throughout the aftermarket supply chain. Our reputation for reliability has helped us penetrate retailers whose customers have become increasingly sophisticated about the quality of the products they install in their vehicles.

In addition to servicing the

Filtration Products

Our Filtration segment product lines include oil, air, fuel, hydraulic and other filters for light, vehicle population, we sell to medium and heavy duty on and off-highway vehicle, industrial and marine applications. The following chart illustrates the major categories of filter products.

The following summarizes a few of our key filter products:

Filtration Sales Channels and Customers

Our extensive filter product offering fits nearly every car, truck, fleetsoff-highway and repair facilities through manyagricultural make and model on the road, allowing us to serve as a full line supplier to our customers for our product categories. These customers primarily comprise large aftermarket distributors and retailers selling to professional technicians or installers. Our customer base also includes original equipment service (“OES”) participants such as ACDelco. Many of our customers such asare leading aftermarket participants, including NAPA, CARQUEST, Aftermarket Auto Parts Alliance (“the AllianceAlliance”), Uni-Select Inc. and other independent warehouse distributors. We also serveO’Reilly Auto Parts. As an active participant in the off-highway market throughaftermarket for more than 60 years, we have many long-standing customer relationships.

Approximately 22% and 6% of our large2013 net sales from continuing operations were derived from our two largest customers, NAPA and have successfully developed products for new non-vehicle related opportunities in stationary equipmentCARQUEST, respectively. See “Risk Factors—Our business would be materially and wind generation applications.

Our principal product areas are described below:The following table provides a description of the primary sales channels to which we supply our products:

The traditional channel is important to us because it is the primary source of products for professional installers. We believe that the quality and reputation of our brands for form, fit, and function promotes significant demand for our products from these installers and throughout the aftermarket supply chain. We have many long-standing relationships with leading distributors in the traditional channel such as NAPA and CARQUEST, for whom we have manufactured products for approximately 40 and 20 years, respectively.

As retailers become increasingly focused on consolidating their supplier base, we believe that our broad product offering, product quality, sales and marketing support and customer service capabilities make us more valuable to these customers.

Affinia South America Segment

Our net sales for 2010 were approximately $2.0 billion.Affinia South America segment is a market leader in the distribution and manufacturing of replacement products throughout South America. The following charts illustrate our net salessegment focuses on distributing and manufacturing products through its operations in Argentina, Brazil, Uruguay and Venezuela. The Affinia South America segment consists of two major operating units: Pellegrino and Automotiva South America (“Automotiva”). The two units are strategically aligned and are operated by geography and product type for the fiscal year ended December 31, 2010, excluding our Commercial Distribution Europe business unit, which we sold on February 2, 2010.same management team. For further information about our segments and our sales by geographic region,Affinia South America segment, refer to “Note 21.18. Segment Information,” which is included in Item 8. Financial Statements and Supplementary Data. The following charts show the growth of the Affinia South America segment in U.S. dollars and sales by geography.

Automotiva manufactures shock absorbers in Brazil, brake fluids, antifreeze, and coolants in Argentina, and brake pads and blocks in Uruguay. Automotiva also acts as a master distributor in Brazil, Argentina, and Venezuela. In addition to direct manufacturing, Automotiva is a leader in the supply of chassis components and driveshaft products, assembling, packaging and branding various components from third-party manufacturers. Automotiva’s manufactured and outsourced products are shipped to warehouse distributors both in Brazil and internationally. Pellegrino is Automotiva’s largest customer. In addition, Automotiva exports to Argentina and to 28 other countries around the world. It has a market leading position in a number of products including CV Joints, rear axle sets, chassis parts, universal joint kits, shock absorbers, fuel pumps, and oil pumps. Products are sold under the Nakata®, Spicer® and Power Engine® names.

Pellegrino is a warehouse distributor that sources products from master distributors and other sources including Automotiva, TRW, Bosch, Philips and Mahle. The product portfolio is composed of leading brands for light and heavy-duty vehicles, motorcycle parts and accessories. Pellegrino sells these products to over 22,000 customers including jobber stores, fleets, and independent repair shops in Brazil. Pellegrino has recently expanded its light duty and heavy-duty product offering to include motorcycle and automotive electronics (e.g. GPS systems, speakers). Pellegrino uses its 20 warehouse locations with over 360,000 square feet of warehouse space to service customers in the northeast, midwest, and southern portions of Brazil. Management believes that Pellegrino’s geographic presence and robust product offering have led it to a #2 market share among warehouse distributors in Brazil.

Affinia South America products

We manufacture and/or distribute products in Brazil, Argentina, Uruguay and Venezuela, including fuel and water pumps, universal joint kits, axle sets, shocks, steering, filtration products, CV joints, brake products, suspension parts, motorcycle parts, electronics and other aftermarket products.

Affinia South America Sales Channel and Customers

Automotiva’s products are sold to warehouse distributors, which includes Pellegrino, within Brazil, Argentina, Venezuela and internationally. Pellegrino, a warehouse distributor, sells the majority of its products to retailers and jobber stores, with the balance sold to parties such as auto centers, diesel injection centers, motorcycle retailers, heavy-duty fleets and engine rebuilders. Pellegrino and Automotiva do not distribute to installers or end-consumers.

Discontinued Operations

In addition to our Filtration and Affinia South America segments we have a Chassis group, which manufactures and distributes a broad range of chassis products for the aftermarket. In the fourth quarter of 2013, we made the decision to engage in a plan to sell our Chassis group. An agreement was signed in January 2014 to divest our Chassis operations and the group qualified as discontinued operations (refer to Note 3. Discontinued Operation—Chassis).

History and Ownership

The registrant is a Delaware corporation formed on October 18, 2004 and controlled by affiliates of The Cypress Group L.L.C. (“Cypress”). The registrant’s direct wholly-owned subsidiary Affinia Group Inc., a Delaware corporation formed on June 28, 2004, entered into a stock and asset purchase agreement, as amended (the “Purchase Agreement”), with Dana Corporation (“Dana”) on July 8, 2004. The Purchase Agreement provided for the acquisition by Affinia Group Inc. of substantially all of Dana’s aftermarket business operations (the “Acquisition”). The Acquisition was completed on November 30, 2004, for a purchase price of $1.0 billion.2004.

All references in this report to “Affinia,” “Company,” “we,” “our,” and “us” mean, unless the context indicates otherwise, Affinia Group Intermediate Holdings Inc. and its subsidiaries on a consolidated basis.

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

On December 15, 2005, Holdings, our parent company, entered into stockholder and other agreements with certain officers, directors and key employees (collectively, the “Executives”) of the Company, pursuant to which those Executives purchased an aggregate of 9,520 shares of Holdings common stock for $100 per Share in cash. Holdings received aggregate proceeds of $952,000 as a result of the offering, which was made pursuant to the Affinia Group Holdings Inc. 2005 Stock Incentive Plan (“2005 Stock Plan”). Since 2005, Holdings has re-purchased some of those shares and has issued a small amount of additional shares (including pursuant to our deferred compensation program), and a shareholder ceased to be an Executive of the Company, as a result of which there were 5,46314,106 shares of Holdings common stock held by Executives outstanding as of December 31, 20102013 (excluding shares that may be issued pursuant to our non-qualified deferred compensation plan).

We have divested three groups since 2010. On October 30, 2008, Holdings authorized 9.5% Class A Convertible preferred stock, with an initial issuance price of $1,000 per share, consisting of 150,000 shares. Holdings issued 51,475 shares of its preferred stock on October 31, 2008 to its investors and certainFebruary 2, 2010, as part of our executives. Asstrategic plan, we sold our Commercial Distribution Europe business unit. Our Commercial Distribution Europe business unit, also known as Quinton Hazell, was a diverse aftermarket manufacturer and distributor of December 31, 2010 there were 51,450 sharesautomotive components throughout Europe. On November 30, 2012, we distributed our Brake North America and Asia group to the shareholders of Holdings, preferred stock outstanding (excluding accrued dividends).

Ownership Structure

Overview

Our extensive product offering fits nearly every car, truck, off-highwaythe Company’s parent company and agricultural makesole stockholder, and modelit was subsequently sold on March 25, 2013 to a new investor. In December 2013, we made the road, allowing usdecision to serve asengage in a full line supplierplan to sell our customers forChassis group. An agreement was signed in January 2014 to divest our product categories. These customers primarily comprise large aftermarket distributors and retailers selling to professional technicians or installers. Our customer base also includes original equipment service (“OES”) participants such as ACDelco. Many of our customers are leading aftermarket companies, including NAPA, CARQUEST, Aftermarket Auto Parts Alliance (“the Alliance”), Uni-Select Inc., O’Reilly Auto Parts, and Federated Auto Parts. As an active participant in the aftermarket for more than 60 years, we have many long-standing customer relationships.

We derived approximately 98% of our 2010 net sales from the on and off-highway replacement products and services industry, which is also referred to as the aftermarket. We believe that the aftermarket will continue to grow as a result of the increase in the light vehicle populationChassis operations and the average age of light vehicles. Accordinggroup qualified as discontinued operations (refer to the Automotive Aftermarket Industry Association (“AAIA”), the U.S. aftermarket decreased by 2.4% during 2009. In 2010, the industry was forecasted to increase by 3.8% and continue in 2011 with 3.4% growth.Note 3. Discontinued Operation—Chassis).

Sales by Region

Our broad range of brake, chassisfiltration and filtrationother products are primarily sold in North America, Europe, South America and South America.Asia. We are also focusing on expanding manufacturing capabilities globally to position us to take advantage of global growth opportunities. With our current operations in China and India and two additional facilities being constructed in China we believe we are well positioned in Asia. In the future we plan to sell our broad product offering in China and other Asian markets. The percentage of sales by geographic region has changed over the last five years as outlined in the chart below. For information about our segments and our sales by geographic region, refer to “Note 21.18. Segment Information,” which is included in Item 8. Financial Statements and Supplementary Data. Excluded from the charts is our Commercial Distribution Europe segment which is classified as a discontinued operation and was sold on February 2, 2010 (refer to Note 4 Discontinued Operation, which is included in Item 8 of this report).

Acquisitions

On December 16, 2010, the Company, through its subsidiary Affinia Products Corp LLC, acquired substantially all the assets of North American Parts Distributors, Inc. (“NAPD”), which is located in Ramsey, New Jersey. NAPD designs and engineers chassis products, which are manufactured by contractors in low labor cost countries. The NAPD acquisition expands our product offering of chassis parts to one of the broadest in the industry. We acquired NAPD’s assets and liabilities for cash consideration of $52 million, subject to an adjustment based on the difference between targeted working capital and actual working capital at the closing date. We accounted for this acquisition under the purchase method of accounting and the results of operations are included in our consolidated financial statements from the date of acquisition. This acquisition was considered immaterial for disclosure of supplemental pro forma information and revenues and earnings of the acquiree since the acquisition date. We financed this acquisition with available borrowings under our ABL Revolver, which borrowings were repaid with the proceeds from our completed offering on December 9, 2010 of the Additional Notes.

In December 2010, the Company acquired the remaining 50% ownership interest in Affinia India Private Limited (formerly known as Affinia MAT India Braking Private Limited), the Company’s India joint venture, for $24 million in cash, increasing our ownership interest from 50% to 100%. The acquisition was not subject to any post closing purchase price adjustments or earn-outs. We had a controlling financial interest in Affinia India Private Limited prior to the purchase of the remaining 50% interest. Since we had control prior to the purchase, we accounted for the transaction as an equity transaction consistent with ASC Topic 810, “Consolidation.” We financed this acquisition with available borrowings under our ABL Revolver, which borrowings were repaid with proceeds from our completed offering on December 9, 2010 of the Additional Notes.

Restructuring

Comprehensive Restructuring

In 2005, we announced two restructuring plans: (i) a restructuring plan that we announced at the beginning of 2005 as part of the Acquisition, also referred to herein as the “acquisition restructuring” and (ii) a restructuring plan that we announced at the end of 2005, also referred to herein as the “comprehensive restructuring” (collectively, the “restructuring plans”). We have completed the acquisition restructuring and we are in the process of completing the comprehensive restructuring. We have closed 36 facilities during the last five years and have shifted some of our manufacturing base to lower labor cost countries such as China, India, Ukraine and Mexico.

In connection with the comprehensive restructuring, we modified our hydraulic product offering from a premium line and a value line to one distinct product offering that most resembles the value line in cost but the premium line in product attributes. In addition, for our drum and rotor product offering, we have retained the premium line but have expanded the coverage in our value line product offering. Lastly, for our friction product offerings we have reduced the product offerings from multiple lines to three product offerings. Even with the reduction in offerings we still retain what we believe is one of our key advantages over our competitors, which is a diverse product offering.

In connection with the comprehensive restructuring, we have recorded $167 million in restructuring costs to date and we expect to record an additional $4 million in restructuring costs for the remainder of the comprehensive restructuring.

Other Restructuring

At the end of 2009, we approved the closure of our distribution operations located in Mississauga, Ontario, Canada. The operations closed at the end of the first quarter of 2010. The closure of this operation was part of the Company’s continuing effort to improve its distribution system and serve the replacement parts market effectively and efficiently. The charges were comprised of employee severance costs of approximately $1 million and other trailing liabilities of approximately $4 million. We incurred approximately $4 million in 2010 and $1 million in 2009 related to the closure of this facility. We anticipate another $2 million in restructuring costs in 2011 related to the closure of the facility.

On May 3, 2010, we announced the closure of our brake manufacturing operations located in Maracay, Edo Aragua, Venezuela. The operations closed during the second quarter of 2010. We incurred pre-tax charges of approximately $7 million, of which approximately $4 million were cash expenditures. The charges were comprised of employee severance costs of $3 million, asset impairments of $3 million, and other trailing liabilities of $1 million. We will still continue to distribute brake products in Venezuela, which we import from other low cost manufacturing sources. Our Venezuelan filter operation was unaffected by the closure of the brake manufacturing operation.

Our Industry

Statements regarding industry outlook, our expectations regarding the performance of our business and other non-historical statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described under “Forward-Looking Statements.Statements” and “Risk Factors.” Our actual results may differ materially from those contained in or implied by any forward-looking statements. You should read the following discussion together with “Forward-Looking Statements,” “Item 6. Selected Consolidated and Combined Financial Data” and “Item 8. Financial Statements and Supplementary Data.”

We derived approximately 97% of our 2013 net sales from the on and off-highway replacement products and services industry, which is also referred to as the aftermarket. According to JD Power,AAIA, there were a total ofapproximately one billion light, medium and heavy dutyheavy-duty vehicles registered worldwide in 2009.2012. Approximately 259254 million, or 25%, of these vehicles were registered in the United States. According to the AAIA, the overall size of the U.S. aftermarket was approximately $274$307.7 billion in 2009. We are one2012. In addition, according to AAIA, the overall size of the largest independent participantsU.S. medium and heavy-duty aftermarket was approximately $76.5 billion in 2012 and is expected to grow by a CAGR of 3.4% from 2012 through 2016. According to the Automotive Aftermarket Industry Association (“AAIA”) 2014 Automotive Aftermarket Factbook, the U.S. motor vehicle aftermarket has increased by 3.5% during 2012. In 2013, the industry was forecasted to increase by 3.4% and to continue in 2014 with 3.3% growth.

We believe that the aftermarket will continue to grow as a result of the increase in the global aftermarket, based on our salesaverage age of light vehicles and the increase in over 70 countries and offer whatmiles driven. According to AAIA, in 2012 the average light vehicle age in the United States was 11.1 years, compared to an average of 9.6 years in 2002. As the average vehicle age continues to rise, we believe isthat the broadest line within our product categories. use of aftermarket products will generally increase as well. In the United States, the total miles driven rose from 2.29 trillion in 1993 to 2.97 trillion in 2013, an increase of approximately 30%. Since 1980, annual miles driven in the United States have increased every year except for 2008 and 2011, when the combination of a recession and high retail fuel prices curtailed driving habits. We expect miles driven in the United States to return to historic growth rates in the future.

To facilitate efficient inventory management and timely vehicle owner customer service, many of our customers and professional installers rely on larger suppliers like us to have full line product offerings, consistent value-added services and timely delivery. There are important advantages to having meaningful size and scale in the aftermarket, including the ability to support significant distribution operations, offer sophisticated supply chain management capabilities and provide a broad line of quality products.

In general, aftermarket industry participants can be categorized into three major groups: (1) manufacturers of parts, (2) distributors of replacement parts (without manufacturing capabilities) and (3) installers, both professional and do-it-yourself (“DIY”) customers. Distributors purchase products from manufacturers and sell them to wholesale or retail operations, which in turn sell them to installers.

The distribution business is comprised of the (1) traditional, (2) retail and (3) OES channels. channels as illustrated by the chart below.

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

We believe that future growth in aftermarket product sales will be driven by the following key factors:

Growth in global vehicle population. JD Power estimates that the world’s total vehicle population in 2009 was approximately 1.0 billion and expects it to continue to grow at a compound annual growth rate (“CAGR”) of 3.2% from 2009 to 2015. In particular, JD Power expects that the total vehicle populations of several key emerging markets will grow significantly over the next several years, as indicated by the forecasted CAGRs in vehicle population from 2009 to 2015 for the following geographic areas:

Growth in global commercial vehicle population. JD Power estimates that there were approximately 170 million commercial vehicles registered globally in 2009 and expects the commercial vehicle population to continue to grow at a CAGR of 2.9% from 2009 to 2015. In particular, JD Power expects that the U.S. commercial vehicle population will grow at a CAGR of 1.4% from 2009 to 2015 and that the commercial vehicle populations of several key emerging markets will grow significantly over the next several years, as indicated by the forecasted CAGRs in commercial vehicle population from 2009 to 2015 for the following geographic areas:

Increase in total miles driven in the United States. In the United States, the total miles driven rose from 2.15 trillion in 1990 to 3.00 trillion in 2010, an increase of approximately 40%. Since 1980, annual miles driven in the United States have increased every year except for 2008.

Increase in average age of light vehicles in the United States. As of 2009, the average light vehicle age in the United States was 10.2 years, compared to an average of 8.8 years in 1999. As the average light vehicle age continues to rise, we believe that the use of aftermarket products will generally increase as well.

Increase in vehicle related regulation and legislation. Increase in environmental and safety legislation that is being adopted on a global basis has led to an increase in demand for high value filtration and brake products.

Products

Our principal product areas are described below:

Filtration Products. We are a leading designer, manufacturer, marketer and distributor of a broad range of filtration products for the aftermarket and we are one of the few aftermarket suppliers of both heavy duty and light duty filters. Our filtration business includes manufacturing operations in Europe and South America. Our filtration product lines include oil, air, fuel, hydraulic and other filters for light, medium and heavy duty on and off-highway vehicle, industrial and marine applications.

Brake Products. We are a leading designer, manufacturer, marketer and distributor of a broad range of brake products for the aftermarket. We have an extensive offering of high quality, premium brake products. Our brake products include master cylinders, wheel cylinders, hardware and hydraulics, drums, shoes, linings, bonded/riveted segments, rotors, brake pads, calipers and castings.

Commercial DistributionAffinia South America Products. We manufacture and/or distribute products in Brazil, Argentina, Uruguay and Venezuela, including fuel and water pumps, universal joint kits, axle sets, shocks, steering, filtration products, brake products, suspension parts and other aftermarket products.

Chassis Products.We are a leading designer, manufacturer, marketer and distributor of a broad range of chassis products for the aftermarket. Our chassis products include steering, suspension and driveline products such as ball joints, tie rods, Pitman arms, idler arms, drag links, control arms, center links, stabilizers and other related parts.

Sales Channels and Customers

We distribute our products across several sales channels, including traditional, retail and OES channels. Approximately 27% and 8% of our 2010 net sales from continuing operations were derived from our two largest customers, NAPA and CARQUEST, respectively. See “Risk Factors”—Our Business would be materially and adversely affected if we lost any of our larger customers.” During 2010, we derived approximately 58% of our net sales from the United States and approximately 42% of our net sales from other countries.

We have maintained long-standing relationships with many of our top customers. Some of our most significant customers include NAPA, CARQUEST, ADN, ACDelco, Federated, ADN, Uni-Select, Les Schwab, the Alliance and O’Reilly Auto Parts, each of which is a key player in the aftermarket.

The following table provides a description of the primary sales channels to which we supply our products:

The traditional channel is important to us because it is the primary source of products for professional installers. We believe that the quality and reputation of our brands for form, fit, and function promotes significant demand for our products from these installers and throughout the aftermarket supply chain. We have many long-standing relationships with leading distributors insegment mainly serves the traditional channel such as NAPA and CARQUEST, for whom we have manufactured products for approximately 40 and 20 years, respectively.retail channels.

As retailers become increasingly focused on consolidating their supplier base, we believe that our broad product offering, product quality, sales and marketing support and customer service capabilities make us more valuable to these customers.

Recently, automobile dealerships have begun providing “all-makes” service whereby dealers will service a vehicle even if they do not sell the make or model being serviced. These dealerships can choose to purchase competitive components from aftermarket suppliers. We believe the volumes generated by OES customers, especially in brakes, may provide an opportunity for sales growth.

Customer Support

We believe that our emphasis on customer support has been a key factor in maintaining our leading market positions. We continuously seek to improve service, order turnaround time, product coverage and order accuracy. Our ability to replenish inventory quickly is important to customers as it enables them to maximize their sales while carrying reduced inventory levels. For these reasons, we ship the vast majority of orders within 24 to 48 hours of receipt.

In order to maintain the competitiveness of our existing customers and maximize new sales opportunities, we have extensive product coverage. In turn, this has allowed our customers to develop a reputation for carrying the parts their customers need, especially for newer vehicles for which warranties may not have expired and aftermarket parts are not generally available.

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

Intellectual Property

We strategically manage our portfolio of patents, trade secrets, copyrights, trademarks and other intellectual property.

As of December 31, 2010,2013, we maintain and have pending in excess ofapproximately 250 patents and patent applications on a worldwide basis.basis of which 64 relate to the Chassis group. These patents expire over various periods up to the year 2030.2033. We do not materially rely on any single patent or group of patents. In addition, we believe that the expiration of any single patent or group of patents will not materially affect our business. We have proprietary trade secrets, technology, know-how, processes and other intellectual property rights that are not registered.

Trademarks are important to our business activities. We have a robust worldwide program of trademark registration and enforcement to maintain and strengthen the value of the trademarks and prevent the unauthorized use of our trademarks. The Raybestos and WIX trade names arename is highly recognizable to the public and areis a valuable assets.asset. Additionally, we use numerous other trademarks which are registered worldwide or for which we claim common law rights. As of December 31, 2010,2013, we had in excess of 750approximately 800 active trademark registrations and applications worldwide.worldwide of which 32 related to the Chassis group.

Raw Materials and Manufactured Components

We use a broad range of manufactured components and raw materials in our products, including steel, steel-related components, filtration media, aluminum, brass, iron, rubber, resins, plastics, paper and packaging materials. We purchase raw materials from a wide variety of domestic and international suppliers, and we have not, in recent years, experienced any significant shortages of these items and normally do not carry inventories of these items in excess of those reasonably required to meet our production and shipping schedule. Raw materials comprise the largest component of our manufactured goods cost structure. Commodity prices were generally flat during 2013 in comparison to 2012. We also purchase finished goods from a wide variety of sources for both of our segments. Our costs of purchased filters decreased slightly in 2013 in comparison to 2012.

With our commitment to globalization, we are subject to increases in freight costs due to increased oil prices. During 2010, oil prices increased in comparisonWe try to the prior year. The increase in oil prices during 2010 increasedrecover or offset material cost increases through price increases to our container costs from Asia, which mainly affected our brake product operations. Steel prices increased in 2010 which caused certain of our manufacturedcustomers and purchased parts costs to increase. Commodity prices for pulp increased in 2010 which increased our costs of packaging and filtration media in 2010.We will continue to review our purchasing and sourcing strategies for opportunitiesthrough initiatives to reduce costs.costs, including material substitution, process improvement and product redesigns. The Company experienced no significant supply problems in the purchase of its major raw materials.

Seasonality

In a typical year, we build inventory during the first and second quarters to accommodate our peak sales during the second and third quarters. Our working capital requirements therefore tend to be highest from March through August. In periods of weak sales, inventory can increase beyond typical levels, as our product delivery lead times are less than two days while certain components we purchase from overseas require lead times of approximately 90 days.

Backlog

Substantially all of the orders on hand at December 31, 20102013 are expected to be filled during 2011.2014. We do not view our backlog as being insufficient, excessive or problematic, or a significant indication of 20112014 sales.

Research and Development Activities

We provide information regarding our research and development activities in Note 7.“Note 2. Summary of Significant Accounting PoliciesPolicies” to our consolidated financial statements, which is included in Item  8 of this report.“Item  8. Financial Statements and Supplementary Data.”

Competition

The light duty filter aftermarket is comprised of several large U.S. manufacturers that compete with us, including United Components, Inc. under the brand name Champ, Honeywell International Inc.FRAM Group, LLC under the brand name FRAM and Purolator Filters NA LLC under the brand name Purolator, along with several international light duty filter suppliers. The heavy dutyheavy-duty filter aftermarket is comprised of several manufacturers that compete with us, including Cummins, Inc. under the brand name Fleetguard, CLARCOR Inc. under the brand name Baldwin and Donaldson Company Inc. under the brand name Donaldson. The brake aftermarket is comprised of several large manufacturers that compete with us, including Federal Mogul Corp. under the brand name Wagner, Honeywell International Inc. under the brand name Bendix and Cardone Industries, Inc. under the brand name A1 Cardone. The chassis aftermarket is comprised primarily of one large U.S. manufacturer that competes with us, Federal Mogul Corp. under the brand name Moog, along with some international chassis suppliers. The Commercial DistributionAffinia South America productssegment competitors include Dpk Distribuidora de Pecas, Ltda, Pacaembu Autopeças, Polipeças Comercial e Importadora Ltda and Comdip Comercial Distribuidora de Peças Ltda. We compete on, among other things, quality, price, service, brand reputation, delivery, technology and product offerings.

Employees

As of December 31, 2010,2013, we had 11,8356,266 employees, of whom 6,0412,813 were employed in North America, 2,976 were employed in Asia, 1,6501,768 were employed in South America, and 1,1681,510 were employed in Europe.Europe and 175 were employed in Asia. Approximately 22%31% of our employees are salaried and the remaining approximately 78%69% of our employees are hourly. As of December 31, 2010, approximately 3% of our 4,350 U.S. employees and approximately 2% of our 246 Canadian employees were represented by unions. We consider our relations with our employees to be good. Included in our headcount are 354 Chassis group employees in North America.

The U.S. collective bargaining agreement covers approximately 139 employees and expires in October 2011. The Canadian collective bargaining agreement covers approximately 5 employees and expires in March 2013.

Environmental Matters

We are subject to a variety of federal, state, local and foreign environmental laws and regulations, including those governing the discharge of pollutants into the air or water, the emission of noise and odors, the management and disposal of hazardous substances or wastes, the clean-up of contaminated sites and human health and safety. Some of our operations require environmental permits and controls to prevent or reduce air and water pollution, and these permits are subject to modification, renewal and revocation by issuing authorities. Contamination has been discovered at certain of our owned properties, which is currently being monitored and/or remediated. We are not aware of any contaminated sites which we believe will result in material liabilities; however, the discovery of additional remedial obligations at these or other sites could result in significant liabilities.ASC Topic 410, “Asset Retirement and Environmental Obligations,” requires that a liability for the fair value of an Asset Retirement Obligation (“ARO”) be recognized in the period in which it is incurred if it can be reasonably estimated, with the offsetting associated asset retirement costs capitalized as part of the carrying amount of the long-lived asset.

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

We are also subject to the U.S. Occupational Safety and Health Act and similar state and foreign laws regarding worker safety. We believe that we are in substantial compliance with all applicable environmental, health and safety laws and regulations. Historically, our costs of achieving and maintaining compliance with environmental and health and safety requirements have not been material to our operations.

Internet Availability

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

If any of the following events discussed in the following risks were to occur, our results of operations, financial conditions, or cash flows could be materially affected. Additional risks and uncertainties not presently known by us may also constrain our business operations.

Risks Relating to Our Industry and Our Business

Continued volatilityDomestic and global economic conditions, including conditions in and disruption to the global economy, including the global capital and credit markets, hashave affected and may continue to materially and adversely affect our business, financial condition and results of operations, as well as our ability to access credit and hashave affected and may continue to materially and adversely affect the financial soundness of our customers and suppliers.

TheOur business and operating results have been, and will continue to be, affected by domestic and global economy,economic conditions, including conditions in the global capital and credit markets, has been experiencingmarkets. Domestic and global economies had until recently experienced a period of significant uncertainty, characterized by very weak or negative economic growth, high unemployment, reduced spending by consumers and businesses, the bankruptcy, failure, collapse or sale of various financial institutions and a considerable level of intervention from the United States federal government and various foreign governments. These recessionaryDowngrades of long-term sovereign debt issued by the United States and various European countries by Standard & Poor’s, Moody’s and other rating agencies could also affect global and domestic financial markets and economic conditions. Recessionary conditions have materially and adversely affected the demand for our products and services and, therefore, reduced purchases by our customers, which has negatively affected our revenue growth and caused a decrease in our profitability.

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

If these economic conditions do not improve or continue to deteriorate, our results of operations or financial condition could limit our ability to take actions pursuant to certain covenants in our debt agreements that are tied to ratios based on our financial performance. Such covenants include our ability to incur additional indebtedness, make investments or pay dividends.

Our business would be materially and adversely affected if we lost any of our larger customers.

For the year ended December 31, 2010,2013, approximately 27%22% and 8%6% of our net sales from continuing operations were to NAPA and CARQUEST, respectively. To compete effectively, we must continue to satisfy these and other customers’ pricing, service, technology and increasingly stringent quality and reliability requirements. Additionally, our revenues may be affected by decreases in NAPA’s or CARQUEST’s business or market share. Consolidation among our customers may also negatively impact our business. We cannot provide any assurance as to the amount of future business with these or any other customers. While we intend to continue to focus on retaining and winning these and other customers’ business, we may not succeed in doing so. Although business with any given customer is typically split among numerous contracts, the loss of, or significant reduction in purchases by, one of those major customers could materially and adversely affect our business, financial condition and results of operations.

CARQUEST represented our second largest customer for the year ended December 31, 2013. On January 2, 2014, General Parts International, Inc., which owned and operated stores under the CARQUEST brand and also provided services to independently owned stores that operated under the CARQUEST brand, was acquired by Advance Auto Parts, Inc. This merger could materially and adversely affect our business, financial condition and results of operations.

Increased crude oil and gasoline prices could reduce global demand for and use of automobiles and increase our costs, which could have a material and adverse effect on our business, financial condition and results of operations.

Material increases in the price of crude oil have historically been a contributing factor to the periodic reduction in the global demand for and use of automobiles. An increase in the price of crude oil could reduce global demand for and use of automobiles and continue to shift customer demand away from larger cars and light trucks (including sport utility vehicles (“SUVs”), which we believe have more frequent replacement intervals for our products, which could have a material and adverse effect on our business, financial condition and results of operations. Demand for traditional SUVs and vans hashave declined in the past due, in part, to higher gasoline prices. If this trend were to continue, or if total miles driven were to decrease for a number of years, it could have a material and adverse effect on our business, financial condition and results of operations. Further, as higher gasoline prices result in a reduction in discretionary spending for auto repair by the end users of our products, our results of operations have been, and could continue to be, impacted. Additionally, higher gasoline prices have a material and adverse impact on our freight expenses.

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

We estimate that a majority of our net sales are currently derived from products we consider to be premium products. There has been, and may continue to be, a shift in demand from premium products, on which we can generally command premium pricing and generate enhanced margins, to value products. If such a trend continues, we may be forced to expand our production and/or purchases of value products at competitive prices. In addition, we could be forced to further reduce our prices to remain competitive, in which case our margins will decrease unless we make corresponding reductions in our cost structure.

We are subject to increasing pricing pressure from imports, particularly from lower labor cost countries.

Price competition from other aftermarket manufacturers particularly those based in lower labor cost countries, such as China, have historically played a role and may play an increasing role in the aftermarket sectors in which we compete. Pricing pressures have historically been more prevalent with respect to our brake products than our other products. While aftermarket manufacturers in these locations have historically competed primarily in markets for less technologically advanced products and manufactured a limited number of products, many are expanding their manufacturing capabilities to produce a broad range of lower labor cost, higher quality products and provide an expanded product offering. In the future, competitors in Asia or other lower labor cost sources may be able to effectively compete in our premium markets and produce a wider range of products which may force us to move additional manufacturing capacity offshore and/or lower our prices, reducing our margins and/or decreasing our net sales.

Increasing costs for manufactured components, raw materials and energy prices may materially and adversely affect our business, financial condition and results of operations.

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

If our customers seek more expansive return policies or practices, such as extended payment terms, our cash flows and results of operations could be materially and adversely affected.

We are subject to product returns from customers, some of which manage their excess inventory by returning product to us. Our contracts with our customers typically include provisions that permit our customers to return specified levels of their purchases. Returns on a continuing operations basis have historically represented approximately 2%less than 1% of our sales. If returns from our customers significantly increase, our business, financial condition and results of operations may be materially and adversely affected. In addition, some customers in the aftermarket are pursuing ways to shift their costs of working capital, including extending payment terms. To the extent customers extend payment terms, our cash flows and results of operations may be materially and adversely affected.

We are subject to other risks associated with our non-U.S. operations.

We have significant manufacturing operations outside the United States, including joint ventures and other alliances.States. In 2010,2013, approximately 42%58% of our net sales from continuing operations originated outside the United States. Risks inherent in international operations include:

These and other factors may have a material and adverse effect on our international operations or on our business, financial condition and results of operations. In addition, we may experience net foreign exchange losses due to currency fluctuations.

We are exposed to risks related to our receivables factoring arrangements.

We have entered into agreements with third-party financial institutions to factor on a non-recourse basis certain receivables. The terms of the factoring arrangements provide for the factoring of certain U.S. Dollar-denominated or Canadian Dollar-denominated receivables, which are purchased at the face amount of the receivable discounted at the annual rate of LIBOR plus a bank-determined spread on the purchase date. The amount factored is not contractually defined by the factoring arrangements and our use will vary each month based on the amount of underlying receivables and our cash flow needs. We began factoring certain of our receivables during 2010. For the yearyears ended December 31, 2010, the total amount2012 and 2013, we factored $668 million and $541 million of receivables, factored was $156respectively, and incurred costs on factoring of $5 million and the cost incurred on factoring was $2 million. Receivables$4 million, respectively, which included our Chassis group and our Brake North America and Asia group. Accounts receivable factored by us will beare accounted for as a sale and removed from the balance sheet at the time of factoring and the cost of the factoring will beis accounted for in either other income.income or discontinued operations if it relates to our Chassis group and our Brake North America and Asia group. If any of the financial institutions we have factoring arrangements with experiencesexperience financial difficulties or isare otherwise unable or unwilling to honor the terms of, or otherwise terminates,terminate, our factoring arrangements, we may experience material and adverse economic losses due to the failure of such factoring arrangements and the impact of such failure on our liquidity, which could have a material and adverse effect upon our financial condition, results of operations and cash flows.

We may incur material losses and costs as a result of product liability and warranty and recall claims that may be brought against us.

We may be exposed to product liability and warranty claims in the event that our products actually or allegedly fail to perform as expected or the use of our products results, or is alleged to result, in bodily injury and/or property damage. Accordingly, we could experience material warranty or product liability losses in the future and incur significant costs to defend these claims.

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

As a result of the consolidation driven by improved logistics and data management, distributors have reduced their inventory levels, which have reduced and could continue to reduce our sales.

Warehouse distributors have consolidated through acquisition and rationalized inventories, while streamlining their distribution systems through more timely deliveries and better data management. The corresponding reduction in purchases by distributors has negatively impacted our sales. Further consolidation or improvements in distribution systems could have a similar material and adverse impact on our sales.

We are subject to costly regulation, particularly in relation to environmental, health and safety matters, which could materially and adversely affect our business, financial condition and results of operations.

We are subject to a substantial number of costly regulations. In particular, we are required to comply with frequently changing and increasingly stringent requirements of federal, state and local environmental and occupational safety and health laws and regulations in the United States and other countries, including those governing emissions to air, discharges to air and water, and the creation and emission of noise and odor; the generation, handling, storage, transportation, treatment and disposal of waste materials; and the cleanup of contaminated properties and occupational health and safety. We could incur substantial costs, including cleanup costs, fines and civil or criminal sanctions, third-party property damage or personal injury claims, or costs to upgrade or replace existing equipment, as a result of violations of or liabilities under environmental, health and safety laws or non-compliance with environmental permits required at our facilities. In addition, many of our current and former facilities are located on properties with long histories of industrial or commercial operations. Because some environmental laws can impose joint and several liability for the entire cost of cleanup upon any of the current or former owners or operators, regardless of fault, we could become liable for investigating and/or remediating contamination at these properties if contamination requiring such activities is discovered in the future. We cannot assure that we have been, or will at all times be, in complete compliance with all environmental requirements, or

that we will not incur material costs or liabilities in connection with these requirements in excess of amounts we have reserved. In addition, environmental requirements are complex, change frequently and have tended to become more stringent over time. These requirements may change in the future in a manner that could have a material and adverse effect on our business, financial condition and results of operations. We have made and will continue to make expenditures to comply with environmental requirements. These requirements, responsibilities and associated expenses and expenditures, if they continue to increase, could have a material and adverse effect on our business and results of operations. While our costs to defend and settle claims arising under environmental laws in the past have not been material, we cannot assure you that this will remain the case in the future. For more information about our environmental compliance and potential environmental liabilities, see “Item 1. Business—Environmental Matters” and “Item 3. Business—Legal Proceedings.”

Our operations would be materially and adversely affected if we are unable to purchase raw materials, manufactured components or equipment from our suppliers.

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

Our intellectual property portfolio could be subject to legal challenges and we may be subject to certain intellectual property claims.

We have developed and actively pursue developing a considerable amount of proprietary technology in the replacement products industry and rely on intellectual property laws of the United States and other countries to protect such technology. In doing so, we incur ongoing costs to enforce and defend our intellectual property. We have from time to time been involved in litigation regarding patents and other intellectual property. We may be subject to material intellectual property claims in the future or we may incur significant costs or losses related to such claims, including payments for licenses that may not be available on reasonable terms, if at all. Our proprietary rights may be challenged, invalidated or circumvented. Moreover, third parties may independently develop technology or other intellectual property that is comparable with or similar to our own, and we may not be able to prevent the use of it.

Our success depends in part on our development of improved products, and our efforts may fail to meet the needs of customers on a timely or cost-effective basis.

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

The introduction of new and improved products and services may reduce our future sales.

Improvements in technology and product quality may extend the longevity of vehicle component parts and delay aftermarket sales. In particular, in our oil filter business the introduction of oil change indicators and the use of synthetic motor oils may further extend oil filter replacement cycles. The introduction of electric, fuel cell and hybrid automobiles may pose a long-term risk to our business because these vehicles may alter demand for our primary product lines. In addition, the introduction by OEMs of increased warranty and maintenance service initiatives, which are gaining popularity, have the potential to decrease the demand for our products in the traditional and retail sales channels.

We may not be able to achieverealize the cost savings that we expect from the restructuring of our operations.

At the end of 2005 we announced the comprehensive restructuring through which we seeksought to lower costs and improve profitability by rationalizing manufacturing operations and to focus on low-cost sourcing opportunities. We have completed the comprehensive restructuring plan and have realized approximately $98$100 million in cost savings as a result of the comprehensive restructuring to date. However, weWe recently announced the consolidation of our corporate office into our Filtration headquarters in 2014. We may not be able to achieve the level of benefits that we expectexpected to realize or we may not be able to realize these benefits within the timeframes we currently expect. Our expectations regarding cost savings are also predicated upon maintaining our sales levels. Changes inFurthermore, the amount, timing and charactermajority of chargesour comprehensive restructuring related to our Brake North America and Asia group, which was distributed from the restructuring, failure to complete or a substantial delay in completingCompany on November 30, 2012, and the restructuring and planned divestitures or the receipt of lower proceeds from such divestitures than currently is anticipated could have a material and adverse effect onrelated cost savings will no longer benefit us. We expect to record an additional $4 million in comprehensive restructuring costs for the remainder of the comprehensive restructuring.

Work stoppages, labor disputes or similar difficulties could significantly disrupt our operations.

As of December 31, 2010, 139The consolidation of our U.S. employees and 5 ofcorporate office into our Canadian employees were represented by unions. It is possible that our workforce will become more unionized in the future. We may be subject to work stoppages and may be affected by other labor disputes. A work stoppage at one or more of our plants may have a material and adverse effect on our business. Unionization activitiesFiltration headquarters could also increase our costs, which could have an adverse effect on our business, financial condition and results of operations.

Additionally, a work stoppage at one of our suppliers could materially and adversely affect our operations if an alternative sourcebusiness in the current year.

During 2014, we will begin the process of supply were not readily available. Stoppages bytransitioning our corporate office to our Filtration headquarters. This will involve hiring new employees and consolidating certain functions. This may occupy the attention and focus of our customers also could result in reduced demand for our products.management, primarily during the first half of 2014, as the transition occurs. The transition involves numerous risks due to significant turnover and the potential diversion of management’s attention from other business concerns.

Any acquisitionsdispositions we make could disrupt our business and materially and adversely affect our business, financial condition and results of operations.

We may, from time to time, consider acquisitionsdispositions of complementary companies, products or technologies. Acquisitionsexisting lines of business. For example, we distributed our Brake North America and Asia group to the shareholders of Holdings in 2012, and we entered into a purchase agreement to sell our Chassis group in January 2014. Dispositions involve numerous risks, including difficulties in the assimilation of the acquired businesses, the diversion of our management’s attention from other business concerns and potential adverse effects on existing business relationships with current customers and suppliers. In addition, anyAdditionally, there are risks associated with our chassis products group successfully segregating from the Brake North America and Asia group. Any of these factors could materially and adversely affect our business, financial condition and results of operations.

Any acquisitions we make could disrupt our business and materially and adversely affect our business, financial condition and results of operations.

We may, from time to time, consider acquisitions of complementary companies, products or technologies. Acquisitions involve numerous risks, including the diversion of our management’s attention from other business concerns and potential adverse effects on existing business relationships with current customers and suppliers. Any acquisitions could present difficulties in the assimilation of the acquired business and involve the incurrence of substantial additional indebtedness. We cannot assure that we will be able to successfully integrate any acquisitions that we pursue or that such acquisitions will perform as planned or prove to be beneficial to our operations and cash flow. Any such failureof these factors could materially and adversely affect our business, financial condition and results of operations.

Cypress controls us and may have conflicts of interest with us or the holders of our notes in the future.

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

Our ability to maintain our ongoing operations could be impaired.

To be successful and achieve our objectives under our strategic plan, we must retain qualified personnel. The sale of our Chassis group could create uncertainty for our employees and this uncertainty may adversely affect our ability to retain key employees, including our senior management, and to hire new talent necessary to maintain our ongoing operations which could have a material adverse effect on our business. Accordingly, we may fail to maintain our ongoing operations, or execute our strategic plan if we are unable to manage such changes effectively.

We may be required to recognize impairment charges for our long-lived assets.assets, which include fixed assets, intangible assets, and goodwill.

At December 31, 2010,2013, the net carrying value of long-lived assets (property, plant and equipment) totaled $217$123 million. In accordance with GAAP, we periodically assess our long-lived assets to determine if they are impaired. Significantshall be tested for recoverability whenever events or changes in circumstances, such as, significant negative industry or economic trends, disruptions to our business, unexpected significant changes or planned changes in use of the assets, divestitures and market capitalization declines indicate that its carrying amount may not be recoverable and may result in charges to long-lived asset impairments. Future impairment charges could significantly affect our results of operations in the periods recognized. Impairment charges would also reduce our consolidated net worth and increase our debt to total capitalization ratio, which could negatively impact our access to the public debt and equity markets.

We could be required to record a material non-cash charge to income if our recorded intangible assets or goodwill is impaired, or if we shorten intangible asset useful lives.

We have $215$63 million of recorded intangible assets and goodwill on our consolidated balance sheet as of December 31, 2010.2013. These assets may become impaired with the loss of significant customers or a decline of profitability. In assessing the recoverability of goodwill, projections regarding estimated future cash flows and other factors are made to determine the fair value of the respective reporting unit. If these estimates or related projections change in the future, we may be required to record impairment charges for goodwill at that time. If our trade names carrying values exceed fair value we will be required to record an impairment charge.

While our intangibles with definite lives may not be impaired, the useful lives are subject to continual assessment, taking into account historical and expected losses of relationships that were in the base at time of acquisition. This assessment may result in a reduction of the remaining useful life of these assets, resulting in potentially significant increases to non-cash amortization expense that is charged to our consolidated statement of operations. An intangible asset or goodwill impairment charge, or a reduction of amortization lives, could have a material and adverse effect on our results of operations.

Business disruptions could materially and adversely affect our future sales and financial condition or increase our costs and expenses.

Our business may be disrupted by a variety of events or conditions, including, but not limited to, threats to physical security, acts of terrorism, labor stoppages or disruptions, raw material shortages, natural and man-made disasters, information technology failures and public health crises. Any of these disruptions could affect our internal operations or services provided to customers, and could impact our sales, increase our expenses or materially and adversely affect our reputation.

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

As a result of our international operations, we are subject to risk because we generate a significant portion of our revenues and incur a significant portion of our expenses in currencies other than the U.S. Dollar. Our international presence is most significant in Brazil, Canada, China, Mexico and Poland. To the extent that we have significantly more costs than revenues generated in a foreign currency, we are subject to risk if the foreign currency appreciates because the appreciation effectively increases our cost in that country to a greater extent than our revenues. To the extent that we are unable to match revenues received in foreign currencies with costs paid in the same currency, foreign exchange rate fluctuations in that currency could have a material and adverse effect on our financial condition, results of operations and cash flows. In addition, the financial condition, results of operations and cash flows of some of our operating entities are reported in foreign currencies and then translated into U.S. Dollars at the applicable foreign exchange rate for inclusion in our consolidated financial statements. As a result, appreciation of the U.S. Dollar against these foreign currencies generally will have a negative impact on our reported sales and profits.

For example, on January 11, 2010, the Venezuelan government devalued the country’s currency, bolivar fuerteBolivar Fuerte (“VEF”), in 2010 and changed to a two-tier exchange structure.2013. The official exchange rate moved from 2.15 VEF per U.S. Dollar to 2.60 VEF for essential goods and 4.30 VEF for non-essential goods and services, with our products falling into the non-essential category. A Venezuelan currency control board is responsible for foreign exchange procedures, including approval of requests for exchanges of VEF for

U.S. Dollars at the official, government established exchange rate. We use the parallel market rate, which ranged between 5.30 to 7.70 VEF to the U.S. Dollar, to translate the financial statements of our Venezuelan subsidiary because we expect to obtain U.S. Dollars at the parallel market rate for future dividend remittances. The one-time2010 devaluation had a $2 million negative impact on our pre-tax net income in 2010. The 2013 devaluation had a $3 million negative impact on our pre-tax net income in 2013. Further depreciation of the VEF, or depreciation of the currencies of other countries in which we do business, could materially and adversely affect our business, financial condition, results of operations and cash flows. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Business Environment.”

We use a combination of natural hedging techniques and financial derivatives to protect against certain foreign currency exchange rate risks. Such hedging activities may be ineffective or may not offset more than a portion of the adverse financial impact resulting from foreign currency variations. Gains or losses associated with hedging activities also may negatively impact operating results.

Entering new markets poses new competitive threats and commercial risks.

In recent years we have sought to expand our manufacturing and sales into new markets. Expanding into new markets requires investments and resources that may not be available as needed. We cannot guarantee that we will be successful in leveraging our capabilities to compete favorably in new markets or that we will be able to recoup our significant investments in expansion projects. If our customers in new markets experience reduced demand for their products or financial difficulties, our future prospects will be negatively affected as well.

We conduct significant operations at our facility in Juarez, Mexico, which could be materially and adversely affected as a result of the increased levels of drug-related violence in that city.

Recently, fighting among rival drug cartels has led to unprecedented levels of violent crime in Juarez, Mexico and elsewhere along the U.S.-Mexico border despite increased law-enforcement efforts by the Mexican and the U.S. governments. This situation presents several risks to our operations in Juarez, including, among others, that our employees may be directly affected by the violence, that our employees may elect to relocate out of the Juarez region in order to avoid the risk of violent crime to themselves or their families, and that our customers may become increasingly reluctant to visit our Juarez facility, which could delay new business opportunities and other important aspects of our business. If any of these risks materializes, our business may be materially and adversely affected.

The mix of profits and losses in various jurisdictions may have an impact on our overall tax rate, which in turn, may materially and adversely affect our profitability.

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

The value of our deferred tax assets could become impaired, which could materially and adversely affect our operating results.

As of December 31, 2010,2013, we had $85$117 million in net deferred income tax assets. These deferred tax assets include net operating loss carryforwards that can be used to offset taxable income in future periods and reduce income taxes payable in those future periods. We periodically determine the probability of the realization of deferred tax assets, using significant judgments and estimates with respect to, among other things, historical operating results, expectations of future earnings and tax planning strategies. If we determine in the future that there is not sufficient positive evidence to support the valuation of these assets, due to the factors described above or other factors, we may be required to further adjust the valuation allowance to reduce our deferred tax assets. Such a reduction could result in material non-cash expenses in the period in which the valuation allowance is adjusted and could have a material and adverse effect on our results of operations.

Our ability to utilize our net operating loss carryforwards may be limited and delayed. As of December 31, 2010,2013, we had U.S. net operating loss carryforwards of $266$301 million. Certain provisions of the Internal Revenue Code of 1986, as amended (the “Code”) could limit our annual utilization of the net operating loss carryforwards. There can be no assurance that we will be able to utilize all of our net operating loss carryforwards and any subsequent net operating loss carryforwards in the future.

We must successfully maintain and/or upgrade our information technology systems.

We rely on various information technology systems to manage our operations. We are currently implementing modifications and upgrades to our systems, including making changes to legacy systems, replacing legacy systems with successor systems with new functionality and acquiring new systems with new functionality. These types of activities subject us to inherent costs and risks associated with replacing and changing these systems, including impairment of our ability to fulfill customer orders, potential disruption of our internal control structure, substantial capital expenditures, additional administration and operating expenses, retention of sufficiently skilled personnel to implement and operate the new systems, demands on management time, and other risks and costs of delays or difficulties in transitioning to new systems or of integrating new systems into our current systems. Our system implementations may not result in productivity improvements at a level that outweighs the costs of implementation, or at all. In addition, the implementation of new technology systems may cause disruptions in our business operations and have an adverse effect on our business and operations, if not anticipated and appropriately mitigated.

Our international operations are subject to political and economic risks of developing countries and special risks associated with doing business in corrupting environments.

We design, manufacture, distribute and market a broad range of aftermarket products in various regions, some of which are less developed, have less stability in legal systems and financial markets and are generally recognized as potentially more corrupt business environments than the United States, and therefore present greater political, economic and operational risks. We have in place certain policies, procedures and certain ongoing training of employees with regard to business ethics and many key legal requirements, such as applicable anti-corruption laws, including the U.S. Foreign Corrupt Practices Act (the “FCPA”), which make it illegal for us to give anything of value to foreign officials in order to obtain or retain any business or other advantages; however, there can be no assurance that our employees will adhere to our code of business conduct and ethics or any other of our policies, applicable anti-corruption laws, including the FCPA, or other legal requirements. If we fail to enforce our policies and procedures properly or fail to maintain adequate record-keeping and internal accounting practices to accurately record our transactions, we may be subject to regulatory sanctions. In the event that we believe or have reason to believe that our employees have or may have violated applicable anti-corruption laws, including the FCPA, or other laws or regulations, we are required to investigate or have outside counsel investigate the relevant facts and circumstances, and if violations are found or suspected we could face civil and criminal penalties, and significant costs for investigations, litigation, fees, settlements and judgments, which in turn could have a material and adverse effect on our business.

Risks Relating to Our Indebtedness

Our substantial leverage could harm our business by limiting our available cash and our access to additional capital and, to the extent of our variable rate indebtedness, exposing us to interest rate risk.

On April 25, 2013, we refinanced our existing notes and credit facilities and made a distribution to Holdings, our shareholder. The refinancing consisted of the issuance of $250 million aggregate principal amount 7.75% Senior Notes due May 1, 2021 (the “Senior Notes”), a $200 million term loan due April 25, 2016 (“Term Loan B-1”), a $470 million term loan due April 25, 2020 (“Term Loan B-2,” and together with Term Loan B-1, the “Term Loans”), the proceeds of which we used, together with $31 million of cash on hand, to redeem our 10.75% Senior Secured Notes due 2016 (the “Secured Notes”), redeem our 9% Senior Subordinated Notes due 2014 (the “Subordinated Notes”), pay fees and expenses in connection with the refinancing transaction and make a $350 million distribution to Holdings. As a result of the Acquisition in 2004, thethis refinancing, in 2009 and the issuance of additional Subordinated Notes in 2010, we are highly leveraged. This leverage may limit our ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, acquisitions, restructuring and general corporate or other purposes, limit our ability to adjust to changing market conditions and place us at a competitive disadvantage compared to our less leveraged competitors. Further volatility in the credit markets could adversely impact our ability to obtain favorable terms on financing in the future. In addition, a substantial portion of our cash flows from operations must be dedicated to the payment of principal and interest on our indebtedness and is not available for other purposes, including our operations, capital expenditures and future business opportunities. We may be more vulnerable than a less leveraged company to a downturn in the general economic conditions or in our business, or we may be unable to carry out capital spending that is important to our growth. We may be vulnerable to interest rate increases, as certain of our borrowings, including those under our ABL Revolver, are at variable rates. We can give no assurance that our business will generate sufficient cash flow from operations, that revenue growth or operating improvements will be realized, or that future borrowings will be available under our ABL Revolver in an amount sufficient to enable us to service our indebtedness or to fund other liquidity needs.

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

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

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

Despite our current indebtedness levels, we may still be able to incur substantially more debt, which could further exacerbate the risks associated with our substantial leverage.

We and our subsidiaries may be able to incur substantial additional indebtedness in the future. Although the terms of the agreements governing our debt instruments contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the indebtedness incurred in compliance with these restrictions could be substantial. As of December 31, 2010,2013, we had $191$117 million of borrowing capacity available under the ABL Revolver after giving effect to $15$10 million in outstanding letters of credit, none of which was drawn against, and $3less than $1 million for borrowing base reserves. If we incur additional debt above the levels currently in effect, the risks associated with our leverage, including those described above, would increase.

The terms of our debt covenants could limit how we conduct our business and our ability to raise additional funds.

The agreements that govern the terms of our debt, including the indenturesindenture governing our notes and the credit agreementagreements that governsgovern our ABL Revolver,Senior Credit Facilities, contain, and the agreements that govern our future indebtedness may contain, certain covenants that, among other things, limit or restrict our ability and the ability of our subsidiaries to (subject to certain qualifications and exceptions):to:

There are limitations on our ability to incur the full $315$175 million of commitments under the ABL Revolver. The borrowers organized in the United States are limited to $295 million and the borrower organized in Canada may borrow up to the remaining $20 million. In each case, borrowingsBorrowings under our ABL Revolver are limited by a specified borrowing base consisting of, among other things, a percentage of eligible accounts receivable and inventory, less customary reserves. Subject to certain conditions, the commitments under the ABL Revolver may be increased by up to $160$50 million.

In addition, under the ABL Revolver, as amended and restated, a covenant trigger would occur if an event of default occurs or excess availability under the ABL Revolver is at any time less than the greater of 12.5%10.0% of the total revolving loan commitmentsborrowing base at such time and $39.5$15.0 million, and shall continue until such time thereafter as no event of default shall have existed and as excess availability shall have exceeded asuch threshold amount, in each case, at all times during a 6030 consecutive day period. If the covenant trigger were to occur, we would be required to satisfy and maintain a fixed charge coverage ratio of at least 1.10x,1.0x, measured for the last twelve-month period. Our ability to meet the required fixed charge coverage ratio can be affected by events beyond our control, and we cannot assure you that we will meet this ratio. A breach of this covenant or of any of these covenantsother covenant applicable to the ABL Revolver could result in a default under the ABL Revolver.thereunder.

Moreover, the ABL Revolver provides the lenders considerable discretion to impose reserves, which could materially impair the amount of borrowings that would otherwise be available to us. There can be no assurance that the lenders under the ABL Revolver will not impose such actions during the term of the ABL Revolver.Revolver and further, were they to do so, the resulting impact of this action could materially and adversely impair our ability to make interest payments on the notes.

A breach of the covenants or restrictions under the indenturesindenture governing ourthe notes or the credit agreementagreements that governsgovern the ABL RevolverSenior Credit Facilities could result in a default under the applicable indebtedness. Such default may allow the creditors to accelerate the related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. In addition, an event of default under our ABL Revolver would permit the lenders under our ABL Revolver to terminate all commitments to extend further credit under that facility. Furthermore, if we were unable to repay the amounts due and payable under our ABL Revolver,Senior Credit Facilities, those lenders could proceed against the collateral granted to them to secure that indebtedness. In the event our lenders and noteholders accelerate the repayment of our borrowings, we cannot assure that we and our subsidiaries would have sufficient assets to repay such indebtedness. As a result of these restrictions, we may be:

These restrictions may affect our ability to grow in accordance with our plans.

Our variable rate indebtedness exposes us to interest rate risk, which could cause our debt costs to increase significantly.

A portion of our borrowings is at variable rates of interest and exposes us to interest rate risks. We are exposed to the risk of rising interest rates to the extent that we fund our operations with short-term or variable-rate borrowings. As of December 31, 2010,2013, the Company’s $696$937 million of aggregate debt outstanding consisted of $105$687 million of floating-rate debt and $591$250 million of fixed-rate debt. Fixed rate debt comprised approximately 85%27% of our total debt as of December 31, 2010.2013. Any borrowings we incur under our ABL Revolver will be at floating interest rates and will expose us to interest rate risk. Based on the amount of floating-rate debt outstanding at December 31, 20102013 a 1% rise in interest rates would result in approximately $1$7 million in incremental interest expense. If the LIBOR rates increase in the future then the floating-rate debt could have a material effect on our interest expense.

In April 2013, the Company entered into interest rate swaps having an aggregate notional value of $300 million to effectively fix the rate of interest on a portion of our variable rate Term Loan B-2 until April 2020. Each of these transactions contains an embedded benchmark-rate floor of 1.25%, which mirrors the terms contained in the Term Loan B-2. Based on the amount of floating-rate debt outstanding at December 31, 2013, the interest rate swaps would reduce the incremental interest expense from a 1% rise in interest rates from $7 million to $4 million. As of December 31, 2013, the aggregate fair value of the interest rate swap was an asset of $11 million.

Item 1B.

Unresolved Staff Comments.Comments

None.

Our principal executive offices are currently located in Ann Arbor, Michigan;Michigan, and will be consolidated into our Filtration headquarters in 2014; our operations include numerous manufacturing, research and development and warehousing facilities as well as offices. The table below summarizes the number of facilities by geographical region for our manufacturing, distribution and warehouse and other facilities (excluding the Commercial Distribution Europe business unit).facilities.

The other facilities around the globe include sixtwo facilities that have been closed as part of our restructuring programs, ten sales and administration offices four under construction facilities, one research and development facility and twofive non-operational storage sites. Approximately 52%Of our manufacturing facilities approximately 67% are part of our principal manufacturing facilities are brake productionFiltration segment facilities, approximately 29%8% are filtration production facilities, approximately 5% are chassispart of our Chassis group production facilities and approximately 14%25% relates to other production facilities.our Affinia South America segment. Of the total number of principal manufacturing facilities, approximately 76% of such facilities75% are owned and approximately 24%25% are leased. The table above excludes the Commercial Distribution Europe segment that we sold on February 2, 2010,There are five facilities related to our Chassis group, which included four manufacturing facilities, 16 distribution and warehouse facilities and one other facility.is classified as a discontinued operation.

Various claims, lawsuits and administrative proceedings are pending or threatened against us and our subsidiaries, arising from the ordinary course of business with respect to commercial, intellectual property, product liability and environmental matters. We believe that the ultimate resolution of the foregoing matters will not have a material effect on our financial condition or results of operations.

On September 30, 2011, we entered into a settlement agreement with Satisfied Brake Products Inc. (“Satisfied”) for $10 million to settle our claims against Satisfied for their theft of our trade secrets. Upon execution of the settlement agreement, $2.5 million was due immediately and up to an additional $7.5 million is to be provided after liquidation of Satisfied’s business. On September 30, 2011, we recorded a gain of $2.5 million in continuing operations in our consolidated financial statements. Additionally, we recorded $4 million as a gain in continuing operations in the first quarter of 2012. The remaining claim against Satisfied was included in the distribution of the Brake North America and Asia Group to our shareholders.

On January 28, 2013, Walker Morris, counsel for Neovia Logistics Services (U.K.) Limited (“Neovia”) (formerly known as Caterpillar Logistics Services (U.K.) Limited) notified us that Quinton Hazell Automotive Limited (“QHAL”) intended to appoint administrators (comparable to a bankruptcy filing in the United States) and that Neovia may pursue a claim against us for liabilities arising out of a Logistics Services Agreement dated May 5, 2006 among Neovia, QHAL and Affinia Group Inc. (the “LSA”). In connection with our prior sale of QHAL and its related companies to Klarius Group Ltd. (“KGL”), Affinia Group Inc. assigned the LSA to KGL, KGL agreed to indemnify Affinia Group Inc. against any liability under the LSA and the other companies in the QHAL group agreed to provide a guarantee to Affinia Group Inc. against these liabilities. KGL and QHAL have both appointed administrators. By letter dated February 15, 2013, Neovia, through its counsel Walker Morris, notified us that Neovia is asserting a claim against Affinia Group Inc. for liabilities arising under the LSA, including asserted unpaid invoices totaling 5.7 million pounds. On March 31, 2008, a class action lawsuit was filed by S&E Quick Lube Distributors, Inc. of Utah against several auto parts manufacturers for allegedly conspiring to fix prices for replacement oil, air, fuel and transmission filters. Several auto parts companies are named as defendants, including Champion Laboratories, Inc., Purolator Filters NA LLC, Honeywell International Inc., Cummins Filtration Inc., Donaldson Company, Baldwin Filters Inc., Bosch USA., Mann + Hummel USA Inc., ArvinMeritor Inc., United Components Inc. and Wix Filtration Corp LLC (“Wix Filtration”), one of our subsidiaries. The lawsuit is currently pending as a consolidated Multi-District Litigation (“MDL”) Proceeding in Chicago, IL because of multiple “tag-along” filings in several jurisdictions. Two suits have also been filed in the Canadian provinces of Ontario and Quebec. Wix Filtration, along with other named defendants, has filed various motions to dismiss plaintiffs’ complaints, which28, 2013, we were denied by the court in December 2009. Several defendants, including Wix Filtration, have refiled motions to dismiss based upon plaintiffs’ most recent amended complaint. The court denied those motions in September 2010. Discovery in the action continues. Despite the U.S. Department of Justice closing its investigation in this matter, the State of Washington Attorney General has also issued Civil Investigative Demands to all defendants. We believe that Wix Filtration did not have significant sales in this particular market at the relevant time periods so we do not expect the lawsuit to have a material adverse effect on our financial condition or results of operations. We intend to vigorously defend this matter.

DPH Holdings Corp., a successor to Delphi Corporation and certain of its affiliates (“Delphi”), served Affinia and certain of our other subsidiaries with a complaint to avoid over $17 million in allegedly preferential transfers, substantially alldemand for arbitration by Neovia. We filed our response on April 29, 2013. In the first quarter of which relate to allegedly preferential transfers involving our non-U.S. subsidiaries. On February 4, 2011,2014, we settled with Delphithe claim for $0.1 million.approximately $11 million including legal expenses.

We haveThe Company has various accruals for civil liability, including product liability, and other costs. If there is a range of equally probable outcomes, we accrue at the lower end of the range. The Company had $1 million and $2$13 million accrued as of December 31, 20092012 and December 31, 2010,2013, respectively. In addition, we have various other claims that are reasonably possible of occurrence that range from less than $1 million to $10 million in the aggregate. There are no recoveries expected from third parties.

The Company has commenced a review of certain allegations that have arisen in connection with business operations involving our subsidiaries in Poland and Ukraine. The allegations raise issues involving potential improper payments in connection with governmental approvals, permits, or other regulatory areas and possible conflicts of interest. The review is being supervised by the Audit Committee of our Board of Directors, and is being conducted with the assistance of outside professionals. The review is at an early stage and no determination can yet be made as to whether the Company, in connection with the circumstances surrounding the review, may become subject to any fines, penalties and/or other charges imposed by any governmental authority, or any other damages or costs that may arise in connection with those circumstances. The Company has voluntarily self-reported on these matters to the U.S. Department of Justice and the U.S. Securities and Exchange Commission and intends to fully cooperate with these agencies in their review.

None.

PART II.

No trading market for our common stock currently exists. As of March 11, 2011,31, 2014, our parent, Holdings, was the sole holder of our common stock. The Company haspaid $352 million to its shareholder in 2013. Prior to 2013 the Company had never declared or paid any cash dividends on its common stock. We intend to retain all current and foreseeable future earnings to support operations. Our senior credit facilities and our notes indenturesindenture restrict our ability to pay cash dividends on our common stock. For information in respect of securities authorized under our equity compensation plan, see “Item 11. Executive Compensation.”

The financial statements included in this report are the consolidated financial statements of Affinia Group Intermediate Holdings Inc. The selected financial data are derived from our financial statements. The financial data as of December 31, 20092012 and 20102013 and for the years ended December 31, 2008, 2009,2011, 2012, and 20102013 are derived from the audited financial statements contained under “Item 8. Financial Statements and Supplementary Data.” The selected financial data as of December 31, 2006,2009, December 31, 20072010 and December 31, 2008;2011; and for the years ended December 31, 20062009 and 2007,2010, are derived from our financial statements.statements that are not contained within this report.

You should read the following data in conjunction with “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 8. Financial Statements and Supplementary Data.”

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Statements in the discussion and analysis regarding industry outlook, our expectations regarding the performance of our business and other non-historical statements in the discussion and analysis are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described under “Forward-Looking Statements.” Our actual results may differ materially from those contained in or implied by any forward-looking statements. You should read the following discussion together with “Forward-Looking Statements,” “Item 6. Selected Consolidated and Combined Financial Data” and “Item 8. Financial Statements and Supplementary Data.”

Company Overview

We areAffinia is a global leader in the lightmanufacturing and commercial vehicledistribution of global filtration products and replacement products in South America. We operate in the Filtration and services industry, which also is referredthe Affinia South America operating segments. In December 2013, we made the decision to engage in a plan to sell our Chassis group. An agreement was signed in January 2014 to divest our Chassis operations and the group qualified as the aftermarket. Our extensive aftermarket product offering consists principally of filtration, brakediscontinued operations (refer to Note 3. Discontinued Operation—Chassis).

The Filtration segment, Affinia’s largest, manufactures and chassis products. Ourdistributes filtration products fit heavyfor medium and mediumheavy-duty trucks, construction, agriculture, mining, and forestry vehicles, and light duty, trucks, light vehicles, equipment in the off-highway market (i.e., construction, mining, forestry and agricultural) and equipment for industrial, and marine applications. Our brakeThe Affinia South America segment has two operating divisions which manufacture and chassisdistribute replacement products fit lightfor on-road and off-road vehicles principally in Brazil. Based on Management’s estimates and heavy and medium duty trucks. In addition, we provide aftermarket products and distribution services in South America. We believe thatcertain information from third parties, Management believes for the growth of year ended 2013, Affinia holds:

Affinia’s continuing net sales in over 70 countries.for 2013 were approximately $1.4 billion. The following charts illustrate ourAffinia’s net sales by product grouping, together with major brandsgeography and the concentration of on and off-highway replacement product sales and OEM salessegment for continuing operations for the fiscal year ended December 31, 2010.2013.

We have successfully entered new markets in Europe and in Central and South America and have grown existing global market share in North America, Europe and South America. Additionally, our Affinia South America segment has grown significantly over the past several years.

We market our continuing products under a variety of well-known brands, including WIX^®, RaybestosFiltron^TM, Nakata^®, NakataecoLAST^®, Brake-Pro and ACDelco^®, Filtron™, AIMCO^® and McQuay-Norris^®. Additionally, we provide private label products to large aftermarket distributors, including NAPA^®, and CARQUEST^® and ACDelco^®, as well as co-branded products for Federated and ADN.. We believe that we have achieved our leading market positions due to the quality and reputation of our brands and products among professional installers, who are the primary decision makers for the purchase of the products we supply to the aftermarket.

We provide our primary customers with an extensive range of services which help build customer loyalty and generate repeat business while differentiating us from our competitors. These services include detailed product catalogs, e-catalogs, technical services, electronic data interchange, direct shipments of products and point-of-sale marketing materials. The depth of our value added services has led to numerous customer awards.

Our Filtration and Affinia South America segments fit with our strategic initiatives of growth and profitability. As shown in the chart below, the continuing operation net sales have grown significantly since our acquisition in November 2004.

Our Filtration segment has seen significant growth since 2004 as we have successfully entered new markets in Europe and in Central and South America and grown existing market share in North America, Europe and South America. We believe that we hold the #1 market position in North America for filtration products by net sales for the year ended December 31, 2013, and we also have a strong presence in Eastern Europe, including the #1 market position for filtration products in Poland.

Our Affinia South America segment has experienced rapid growth since 2004 in its distribution operations as we have invested to grow this business. Based on management estimates and certain information from third parties, we believe that we hold the #2 market position in Brazilian aftermarket parts distribution by net sales for the year ended December 31, 2013.

TransformationStrategic Focus

InWith the last five years,sale of the diversificationCommercial Distribution Europe group in 2010 and the distribution of the Brake North America and Asia group in 2012 to our shareholders, and the announced signing of an agreement to sell the Chassis group we have positioned ourselves to be a Filtration segment and Affinia South America segment company. With the realignment of our manufacturing locations has transformed us from a domesticcompany we are strategically aligned to a global manufacturergrow our presence in premium products in the industrial and automotive end markets. Additionally, we will expand our sales in our Affinia South America segment with a significant portionthe expansion of our manufacturing base in lower labor cost countries. We have accomplished this transformation by acquiring or opening new locations in low labor cost countriesadditional distribution capabilities and closing or selling our operations (i.e. Commercial Distribution Europe) in high labor cost countries. We are continuing to focus on growing our business in emerging markets as we continue to diversify our global manufacturing and distribution capabilities.further product expansion. We intend to continue expandinganalyze and pursue acquisition opportunities and joint ventures where we believe that we can add value and realize synergies by improving operating results through application of our global capabilitiesprocesses, as we pursuedemonstrated in our objective of becoming a world class on and off-highway replacement products and services company.existing businesses.

The charts below illustrate our global change in square footage and number of locations from January 1, 2005 to December 31, 2010.

The following are major transformation projectsexamples of some strategic initiatives we have completed orin our continuing operations:

Restructuring Activities

Comprehensive Restructuring

In 2005, we announced two restructuring plans: (i) a restructuring plan that we announced at the beginning of 2005 as part of the Acquisition, also referred to herein as the “acquisition restructuring” and (ii) a restructuring plan that we announced at the end of 2005, also referred to herein as the “comprehensive restructuring” (collectively, the “restructuring plans”). We have completed the acquisition restructuring and we are in the process of completing the comprehensive restructuring. We have closed or sold 71 facilities during the last six years and have shifted some of our manufacturing base to lower labor cost countries such as China, India, Ukraine and Mexico. Refer to the chart below for a breakout of the closed or sold facilities during the last six years.

We initiated the acquisition restructuring to take advantage of opportunities that we identified prior to the Acquisition but that were difficult to actively pursue as part of Dana (i.e., consolidation of distribution facilities and manufacturing plants). Through the comprehensive restructuring we seek to lower costs and improve profitability by rationalizing manufacturing operations and to focus on low-cost sourcing opportunities. Such initiatives included the movement of manufacturing to lower cost facilities. The acquisition restructuring was completed at the end of 2005 and the comprehensive restructuring was essentially completed at the end of 2010. We anticipate $4 million additional comprehensive restructuring costs over the next couple of years related to the closure of the final facility, which was previously announced, and other costs related to closed facilities which we still own or lease. The major components of the comprehensive restructuring through 2010 were employee severance costs, asset impairment charges, and other costs (i.e. moving costs, environmental remediation, site clearance and repair costs) each of which we expect to represent approximately 41%, 18% and 41% respectively, of the total cost of the restructuring. The comprehensive restructuring will result in approximately $171 million in restructuring costs, which exceeds preliminary expectations of $152 million.

Our gross margin has grown over the last five years mainly due to the comprehensive restructuring as shown in the chart.

Other Restructuring

At the end of 2009, we approved the closure of our distribution operations located in Mississauga, Ontario, Canada. The operations closed at the end of the first quarter of 2010. The closure of this operation was part of the Company’s continuing effort to improve its distribution system and serve the replacement parts market effectively and efficiently. The charges were comprised of employee severance costs of $1 million and other trailing liabilities of $4 million. We incurred approximately $4 million in 2010 and $1 million in 2009 related to the closure of this facility. We anticipate another $2 million in restructuring costs in 2011 related to the closure of the facility.

On May 3, 2010, we announced the closure of our brake manufacturing operations located in Maracay, Edo Aragua, Venezuela. The operations closed during the second quarter of 2010. These actions resulted in the Company incurring pre-tax charges of approximately $7 million, of which approximately $4 million were cash expenditures. The charges were comprised of employee severance costs of $3 million, asset impairments of $3 million, and other trailing liabilities of $1 million.

The following chart summarizes our restructuring activities for the comprehensive restructuring plan and other restructuring plans.

Strategic Focus

Since we have essentially completed our comprehensive restructuring plan we have shifted our focus to global growth. We recently unveiled our World Smart^TM business philosophy, which emphasizes a unique transformational approach to global manufacturing. The World Smart direction assures consistent product quality regardless of where a product is manufactured globally. As a World Smart company, we not only manufacture competitively priced products off-shore, but we do so in a manner that assures the highest possible quality. Our World Smart business strategy is based on four keys strategic elements: customer-centric focus, involved Affinia people, continual improvement and supplier relationships. The World Smart model vertically integrates manufacturing from product development to distribution.

Acquisitions and New Technology

On December 16, 2010, the Company, through its subsidiary Affinia Products Corp LLC, acquired substantially all the assets of NAPD, which is located in Ramsey, New Jersey. NAPD designs and engineers chassis products, which are manufactured by contractors in low labor cost countries. The NAPD acquisition expands our product offering of chassis parts to one of broadest in the industry. We acquired NAPD’s assets and liabilities for cash consideration of $52 million.

On December 3, 2010, the Company acquired the remaining 50% ownership interest in Affinia India Private Limited, the Company’s India joint venture, for $24 million in cash, increasing our ownership interest from 50% to 100%.

In January 2011, we introduced ecoLAST™ oil filters, a revolutionary line of heavy duty oil filters that has proven to double oil life. WIX ecoLAST oil filters capture dirt and soot like a traditional filter, while utilizing media to sequester the acids in the oil. WIX’s ecoLAST oil filters are a direct replacement with no changes or modification required to the vehicle. We expect the first ecoLAST oil filters to become available by April 2011.

Disposition

On February 2, 2010, as part of our strategic plan, we sold our Commercial Distribution Europe business unit for approximately $12 million reduced by post-closing purchase price adjustments of $1 million. Our Commercial Distribution Europe business unit, also known as Quinton Hazell, is a diverse aftermarket manufacturer and distributor of automotive components throughout Europe. Quinton Hazell’s financial performance did not meet our strategic financial metrics, as evidenced by a 2009 pre-tax loss of $84 million, of which $75 million related to an impairment of assets.

Amendment to ABL Revolver

On November 30, 2010, we entered into an amendment to the credit agreement governing the ABL Revolver. The ABL Revolver has been amended to, among other things, (a) increase the amount of additional unsecured indebtedness that we may incur from $100 million to $300 million and provide certain conditions to any issuance of such indebtedness in excess of $100 million, (b) amend the covenants with respect to: making certain dividends, distributions, restricted payments and investments; extending, renewing and refinancing certain existing indebtedness; amending certain material documents; and issuing and disposing of certain equity interests, (c) reduce the pricing spread applicable to each type of loan by 150 basis points at each level of average aggregate availability and remove the floor formerly applicable to the LIBOR rate and the BA rate, (d) extend the maturity date from August 13, 2013 to November 30, 2015 (subject to early termination under certain limited circumstances), (e) allow for prepayments of certain outstanding indebtedness with the proceeds of an initial public offering (if Holdings undertakes an initial public offering) and permit the merger of Affinia Group Intermediate Holdings Inc. with and into Holdings upon satisfaction of certain preconditions to such merger and (f) modify certain other provisions thereof.

Issuance of Senior Subordinated Notes

On December 9, 2010, we completed an offering of the Additional Notes. The Additional Notes have been issued at a price equal to 100% of their face value. The Additional Notes were issued pursuant to the Indenture, dated November 30, 2004, relating to our then outstanding $267 million aggregate principal amount of 9% Senior Subordinated Notes due 2014 (the “Initial Notes”). Other than with respect to the date of issuance and issue price, the Additional Notes have the same terms as, and are treated as a single class with, the Initial Notes. Affinia Group Inc.’s obligations under the Additional Notes are guaranteed on an unsecured senior subordinated basis by Affinia Group Intermediate Holdings Inc. and certain of our current and future wholly-owned domestic subsidiaries. The outstanding balance of the Subordinated Notes at December 31, 2010 was $367 million. We utilized the ABL Revolver to finance our purchase of the NAPD business and the remaining 50% interest in Affinia India Private Limited but subsequently used the proceeds of this note offering to repay the ABL Revolver borrowings that we incurred to finance these acquisitions. The proceeds of the note offering were also used to redeem $22.5 million in Secured Notes.

Redemption of Secured Notes

On December 31, 2010, we redeemed $22.5 million in aggregate principal amount of our Secured Notes, pursuant to their terms at a redemption price equal to 103% of the principal amount of such notes being redeemed, plus accrued and unpaid interest to the redemption date.

Nature of Business

We typically conduct business with our customers pursuant to short-term contracts andor purchase orders. However, our business is not characterized by frequent customer turnover due to the critical nature of long-term relationships in our industry. The expectation of quick turnaround times for car repairs and the broad proliferation of available part numbers require a large investment in inventory and strong fulfillment capabilities in order to deliver high fill rates and quick cycle times. Large aftermarket distributors typically source their product lines at a particular price point and product category with one “full-line” supplier, such as us, which covers substantially all of their product requirements. Switching to a new supplier typically requires that a distributor or supplier make a substantial investment to purchase, or “changeover” to, the new supplier’s products. In addition, the end user of our products, who is most frequently a professional installer, requires consistently high quality products because it is industry practice to replace, free of any labor or service charge, malfunctioning parts.

Business Environment

Our Markets.We believe that future growth in aftermarket product sales will be driven by the following key factors: (1) growth in global vehicle population; (2) growth in global commercial vehicle population; (3) increase in total miles driven in the United States and other key countries around the world; (4) increase in average age of light vehicles in the United States and other key countries around the world and (5) increase in vehicle related regulation and legislation. Growth in sales in the aftermarket does not always have a direct correlation to sales growth for aftermarket suppliers like us. For example, as automotive parts distributors have consolidated during the past several years, they have reduced purchases from manufacturers as they focused on reducing their combined inventories. The automotive distributors are also focused on reducing inventories due to the recent decline in miles driven.

Raw Materials and Manufactured Components.Our variable costs are proportional to sales volume and mix and are comprised primarily of raw materials, and labor and certain overhead costs. Our fixed costs are not significantly influenced by volume in the short term and consist principally of selling, general and administrative expenses, depreciation and other facility-related costs.

We use a broad range of manufactured components and raw materials in our products, including raw steel, steel-related components, filtration media, aluminum, brass, iron, rubber, resins, plastics, paper and packaging materials. We purchase raw materials from a wide variety of domestic and international suppliers, and we have not, in recent years, experienced any significant shortages of these items and normally do not carry inventories of these items in excess of those reasonably required to meet our production and shipping schedules.

Seasonality.Our working capital requirements are significantly impacted by the seasonality of the aftermarket. In a typical year, we build inventory during the first and second quarters to accommodate our peak sales during the second and third quarters. Our working capital requirements therefore tend to be highest from March through August. In periods of weak sales, inventory can increase beyond typical seasonal levels, as our product delivery lead times are less than two days while certain components we purchase from overseas require lead times of approximately 90 days.

Global Developments. The aftermarket has also experienced increased price competition from manufacturers based in China and other lower labor cost countries. We responded to this challenge by acquiring an 85% controlling interest in Haimeng, one of the largest drum and rotor manufacturers in the world and by expanding our manufacturing capacity in China, India, Mexico, Poland and Ukraine. Additionally, we are meeting this challenge through restructuring and outsourcing initiatives, as well as through ongoing cost reduction programs.

Results of Operations

In accordance with ASC Topic 360,205,“Property, Plant, and Equipment,Presentation of Financial Statements,” the Commercial Distribution Europe segmentChassis group and the Brake North America and Asia group qualified as a discontinued operation.operations. Previously reported consolidated statements of operations for all periods presented have been adjusted to reflect this segment as athe discontinued operation.operations.

Year Ended December 31, 20092012 Compared to the Year Ended December 31, 20102013

Net sales. Consolidated net sales increased by $194$102 million in 20102013 in comparison to 20092012 due mainly to favorable foreign currency translation effects of $26 million, improved market conditions and increased business from new and existing customers.our Filtration segment. The following table summarizes the consolidated net sales results for the years ended December 31, 20092012 and December 31, 2010:2013:

NM (Not Meaningful)

OnFiltration segment sales increased in 2013 in comparison to 2012 due to increased sales of $22 million in our North American and Off-highway segment productsAsia operations driven by increased volume. The increased volume in North America was due to market growth and new business with existing customers. Additionally, our sales increased by $25 million and $24 million in our European and South American operations, respectively. The European sales increased due to higher sales in Poland, sales from our United Kingdom distribution company acquired in the following:

Brake South America sales. Venezuela sales increased due to price increases and new business with existing and new customers partially offset by unfavorable currency translation effects.

Affinia South America segment products sales for 2010 decreasedincreased significantly in 2013 in comparison to 2009 due2012 but were negatively affected by the impact of currency translation. The majority of the sales increase related to our Brazilian master distribution business, warehouse distribution business and Argentinean distribution companies, where sales increased by $75 million before the effects of currency. Unfavorable currency translation effects of $51 million related mainly to the devaluationBrazilian Real and Argentinean Peso offset a large portion of the Venezuelan currency, which resulted in a decrease inAffinia South America segment sales of $10 million for 2010, offset partially by additional volumes in Venezuela and Uruguay.increase.

The following table summarizes the consolidated results for the years ended December 31, 20092012 and December 31, 2010:2013:

NM   (Not Meaningful)

Gross profit/Gross margin.Gross profit increased by $42$26 million during 2010and the gross margin remained at 23% in 2013. Gross profit increased $26 million in 2013 in comparison to 2009. The gross profit in 2010 increased despite a 24% increase in freight costs. The increase in gross profit in during 2010 was primarily2012 due to an increase in sales volume of $36 million and lower material, freight and manufacturing costs of $4 million offset by unfavorable currency effects and thetranslation effects of our comprehensive restructuring. The comprehensive restructuring began at the end of 2005$11 million, and was essentially completed by the end of 2010. Due to the comprehensive restructuring, thean increase in operating costs as a percentageand distribution costs of sales decreased$3 million. The increase in 2010volume was driven by $20 million in comparison to 2009. The improvementour Filtration segment and $16 million in gross profit includes $13 million of favorable currency translation effects.Affinia South America segment.