In this analysis, you will discuss the financial health of two companies (ZCL and Linamar) with the ultimate goal of recommending one of the companies to an investor. Your paper should consist of the following sections: introduction, company overview, vertical and horizontal analysis, ratio analysis, final recommendation, and conclusions. You may use scholarly resources and your textbook as references. Here is a breakdown of the sections: Company Overview Provide a brief overview of the two companies (two to three paragraphs at most) and indicate their industry. What are the main products or services? Who are their competitors? Vertical and Horizontal Analysis of Income Statement and Balance Sheet Prepare a two-year vertical and horizontal analysis of the income statement and balance sheet of the two companies. Discuss the importance and meaning of horizontal analysis. Discuss both the positive and negative trends. Ratio Analysis Calculate the current ratio, quick ratio, net working capital, debt-to equity ratio, times-interest earned, financial leverage, asset turnover, Receivables Turnover, Average collection period, Inventory Turnover, Average days in Inventory, profit margin, return on assets (ROA) and return on equity (ROE) for 2014. Discuss and interpret the ratios that you calculated and compare the liquidity, efficiency and productivity of PPE and Total assets, receivables and inventory management and solvency of the two companies. Discuss any potential issues based on your calculations of the ratios for the two companies. Use the Dupont framework to analyze any difference in the ROE of the two companies. Are there any factors that could be erroneously influencing the results of the ratios? Recommendation Based on your analysis, which of the two companies would you recommend as an investment to a prospective investor? What strengths do you see? What risks do you see? You must provide justification for your recommendation.

1. Must begin with an introductory paragraph that has a succinct thesis statement. 2. Must address the topic of the paper with critical thought. 3. Must end with a conclusion that reaffirms your thesis.

APA syle

ANNUAL REPORT 2014 Linamar Corporation TABLE OF CONTENTS 1. Letter to Our Shareholders 2. Management Discussion & Analysis 11 3. Consolidated Financial Statements 35 (a) (b) 5 Management's Responsibility for the Consolidated Financial Statements Independent Auditor's Report to the Shareholders of Linamar Corporation 36 37 4. Annual Meeting of Shareholders 79 5. Officers and Directors 79 6. Auditors, Transfer Agent & Registrar 79 3 4 LETTER TO OUR SHAREHOLDERS Linamar Corporation 5 LETTER TO OUR SHAREHOLDERS We are pleased to report to you on another very successful year at Linamar, another record in our history in terms of both sales and earnings performance. We would characterize 2014 as a year of strong growth, great performance, team building and development at Linamar, exactly what we set out to accomplish at the outset of the year. Growth -- Innovation and Process Diversification We enjoyed a very successful year in 2014 in terms of both outstanding performance for our customers and securing targeted business wins to continue to support our growth into the future. Innovation continues to play a key role in meeting customer needs and enabling our growth. Our innovation agenda has 2 key paths; product innovation to develop products our customers need and process innovation to find ways to produce those products as cost effectively as possible. Clearly, our product innovation agenda on the vehicle side is about light weighting, fuel efficiency and noise reduction. At Skyjack it continues to focus on simple, high quality, easy to use designs that our customers can rely on. Both have been winning strategies in helping us to grow market share. Process innovation happens every day in every plant and office as we continually challenge ourselves to find a better, quicker, more reliable, less costly way to do the work we do. We set new levels of achievement for ourselves this year in terms of our improvement systems and goals with great success which we saw in terrific bottom line performance. In our vehicle business, our E-Axle product innovation, continues to catch customer attention. We have successfully integrated the system into another high end vehicle for a key customer on a prototype basis. It remains to be seen if we move into a production mode but at a minimum customers are enthusiastic about the design, the performance and the feel of the system when driving the vehicle. The design is compact, lightweight, quiet and can be easily adapted to a variety of vehicle architectures to basically turn almost any vehicle into a hybrid. We hope to see this product in production over the next 3 to 4 years. Developing technology roadmaps for every priority product at Linamar is a key project for 2015. We only stay competitive if we can be continually delivering product innovation for our customers and that means putting a plan together for a variety of technology innovations over the coming years. Stay tuned for exciting plans on how we plan to take our camshafts, gears, heads and blocks to name a few to greater levels of performance and value. Skyjack also continues to innovate on the product side by continuing to develop and launch new boom products and telehandlers which are helping to deepen our market share in these products globally. Process diversification was another key focus for 2014 in which we made significant progress. We acquired a forging company in 2014 and a second forging company in early 2015. The aggregate revenue of both acquisitions will contribute approximately $450 million with a capability to manufacture over 200 million forgings a year. The businesses are in both the US and Europe giving us a great start to a global footprint in high volume Hatebur type forgings. This capability is a huge complement to our gear machining capability which is world class. Linamar is the largest independent supplier of machined gears today with programs running or launching that will take us to almost 50 million machined gears produced annually within the next few years. With in-house forging and machining we open up great possibilities in terms of design optimization for our customers to minimize weight and maximize system performance. We are very excited to welcome these companies into the Linamar family! Our customer performance was exceptional in 2014 with mature plants running at world class quality and delivery levels and more than 150 programs launching representing more than $550 million of additional business launched during the year. Continued business wins have resulted in a backlog of more than $3.4 billion in annualized sales still under launch at Linamar. In fact, 2014 was close to a record year in new business wins and we continue to quote a large book of opportunities. New business wins in total for the year exceeded $1.1 billion, with particular success seen around products for new 9 and 10 speed transmissions launching in North America to drive improved fuel efficiency, complex gear machining programs and continued penetration around global engine platforms in key products such as cylinder heads, blocks, camshafts and connecting rods. All in all, we have secured enough new business to see us well on our way to longer term growth goals; in fact we have nearly $5.8 billion of annual sales based on booked business already lined up to be reached in the next 3 to 4 years. 6 Accountability and Teamwork -- Training and Deepening the Bench We have continued to build our global employee base, now over 19,500 strong, through a focus on readiness of our people in targeted areas, accountability and focus. We have continued to focus on Leadership Development as a key priority through intensive internally developed programs. Equally important is developing a deep bench of skilled tradespeople to guide technical improvements in our plants. With more than 480 apprentices in our plants globally, continued setup training and international recruitment efforts we are definitely growing that bench and gaining some momentum. We spend a lot of time and considerable investment in this area as process innovation is absolutely tied to the strength of our technical people and a key driver in our competitiveness. Programs are mainly developed for the internal employees, but we also focus externally to attract young people to a career in trades, technology and engineering. Our Linamar Entrepreneurial Advancement Program, LEAP, continues to deliver in terms of developing young enthusiastic team members for managing our facilities. Each year we pick a handful of talented future leaders to put through a comprehensive cross functional multiyear training program designed to make them our General Managers of the future. Our first graduate has just taken on his first plant with 5 more people highly engaged in the program. LEAP is a pivotal part of helping us to deepen our leadership bench strength to support future growth. Succession overall has been a key focus for us. We spent considerable time developing and launching a new program this year called Each One Teach One in which literally every manager in our company takes on the formal responsibility of teaching at least one person to perform their job, improve in the role they are already in, or take on an enhanced assignment. We are each responsible for grooming our own successor and it is key we all realize we are only truly successful if those who follow us are at least as successful as we were! Turnover is at record lows, employee engagement is up and motivation levels high as we continue to strengthen and build the employee base. Driving Improvements to Financial Performance -- Lean Systems, Cash Generation and Continued Earnings Growth 2014 was a year of exceptional financial performance and sales and earnings growth and cash generation at Linamar. Sales reached a new record at $4.2 billion, up 16% or more than $575 million thanks to new program launches, a moderately growing global vehicle market and Skyjack's solid performance. Earnings also reached record levels at $320 million up an incredible $91 million or 40% driving another year of great margin improvements. This contributed to another solid year of cash generation of more than $170 million to bring our balance sheet to one of the strongest in our industry and giving us lots of flexibility to invest in further growth. It also meant great margin expansion to a level also at the high end of our peer group. 2014 was a year to really focus on waste elimination. We dug into new areas to find ways to improve, reiterated lean concepts globally and pushed hard to really engage every single person in the company on our lean journey. Our results exceeded even high expectations around cost reduction and streamlining our processes and systems. Return on Capital Employed improved dramatically to 23.4% compared to 18.3% last year and Return on Equity hit 21.2%, the highest level seen in more than a decade. Earnings growth exceeded sales growth in both the Powertrain/Driveline segment and the Industrial segment to drive great margin improvement which of course drove our terrific improvements to return. Return on Capital and Return on Equity remain the key driving metrics for us as a business - we must improve earnings but they must do so in proportion to the capital we utilize in order to build a strong business capable of continued growth. Our strategy at Linamar is the formula to this success. Strategy Our enterprise strategy is to focus on \"Diversified Manufactured Products to Power Vehicles, Motion, Work and Lives\". Our business basically splits into 2 buckets - Precision Products where we make precision metallic forged or machined components, modules and systems for global vehicle, industrial and energy markets and Mobile Products where we make fabricated assemblies and vehicles for global access, industrial, agricultural, consumer and construction markets. These markets are hugely opportunistic. Take the global vehicle machined component and assembly business as an example. There is roughly $3,000 of content in the engine, transmission and driveline systems of a passenger car, much more in a 7 commercial vehicle. Coupled with global vehicle production volumes this represents a market that today is north of $450 billion and will grow to more than $600 billion over the next 5 years. 70-80% of this work is still done by our OEM customers themselves but they are increasingly looking to tap into great supplier technology and efficiency by outsourcing this work. Powertrain/Driveline is the last major area of the vehicle to undergo this transition. This outsourcing won't happen overnight; it will take a decade or two to manifest itself. This is exciting because it means a sustained period of time where Linamar can enjoy superior growth to what will come strictly from market growth. Linamar is perfectly aligned to be the supplier of choice to these companies given our outstanding processing and product technology in every machined part in these systems and our unparalleled performance on quality and delivery for such. The access market where our Skyjack business is based is also highly opportunistic. Although a smaller market at $10 billion globally, the number of players in this business is much smaller meaning the potential for a much larger slice of the market is very real. Our growth strategy at Linamar remains focused in three key areas - Diversification, Globalization, and Green Technologies. Diversification has taken many forms for us over the years at Linamar. It has meant expanding our product offering in our targeted markets as well as finding new customers and markets for the products we already make. Increasingly diversification is translating into process diversification as we vertically integrate forwards into more complex modules or assemblies of the products we already make and backwards into selective, strategic types of castings or forgings. That vertical integration can come through a variety of vehicles, from strategic partnerships to direct investments or joint ventures. Having more control over our material means having more influence in terms of product design and closer relationships with customers to drive value add solutions. A more integrated casting or forging and machining operation for certain types of products can also mean improved quality and efficiency to drive more competitiveness and opportunity. Our recent forging acquisitions are a great example of how we can optimize design and cost for our customers through a focus on light weighting to drive fuel efficiency and process optimization. Should the forging be net formed to minimize machining or extra material left to optimize quality and minimize fallout when the product is machined? An integrated approach means a faster answer to that question and more opportunity to optimize the full end to end processing. We continue to explore other opportunities in this important area of diversification. Our priority continues to be in the forging area as well as in aluminum products mainly thanks to their alignment with weight reduction and near net shape products. We have been steadily diversifying our product lineup at Skyjack as we add to our growing boom offering. Building out our telehandler lineup is under way and will be the next step in diversifying the Skyjack offering happening over the next few years. We have seen great success here with market share gains in booms and telehandlers seen in every global market in 2014. Globalization is really just an element of diversification in terms of finding new geographic markets but is important to separately identify in light of the huge impact that growing globally can bring us. Look at the on highway vehicle business as an example. In 2014 the industry made approximately 17.5 million vehicles in North America while Europe made 20.0 million and Asia 44.4 million. Markets outside of North America are vastly larger than the markets within it. Growth is prioritized in Europe and Asia. In Europe the economy has stabilized and we are seeing opportunities for healthy suppliers with available cash such as ourselves needed to start to ramp production back up and to help launch new programs. In China continued strong growth is creating many exciting opportunities for suppliers such as ourselves with proven technology and quality performance. In India the auto market is really just starting to build to more meaningful levels which is creating opportunities in a variety of areas as our customers look for suppliers to help them put needed capacity in place. In Europe our newest German plant is busy launching a variety of new programs. With the newly acquired forging business we jump to 7 manufacturing plants in Germany and now 4 in Hungary. Including our 3 facilities in France, there are a total of 14 in the region. We now have great critical mass in the region to help drive continued growth. In 2014 we also established our first foothold in India. We have rented and renovated a small facility in India, built a team and started launching some business; production will start late 2015. We are starting slowly in the region in order to build our understanding of the culture and business environment there. We have a new plant getting ready to launch in North Carolina to manufacture a variety of gear products. This will be a state of the art gear manufacturing facility putting us at the leading edge of global technology on gears. 8 Our home base in Guelph is growing as well with a large book of new business launching over the next several years. A new plant will be established in Guelph in an existing building to house some of the new programs. We continue to keep Brazil on the radar as an area of future expansion but are cautious about moving too quickly into the market given challenges there today. We will continue to monitor market conditions and opportunities to ensure we time our entry into the region properly and are carefully mitigating risks. Global expansion continues to play out very successfully as well for Skyjack who saw great market share growth in both Europe and Asia in 2014. We now have half of our plants and employee base and almost half of our revenue located outside of Canada reflecting our growing global footprint even as the Canadian operations expand as well! Our goal is to continue to grow every region we are in as we drive towards long term growth goals. Finally focusing on Green Technologies is important because developing products that are more fuel efficient, drive lower emissions or are environmentally beneficial in some other way are the products the market is looking for. These are the markets of the future, whether it is more fuel efficient vehicles, rail products, wind energy installations or more efficient access equipment, and we want to be a key part of them. Today we have more content in smaller, more fuel efficient vehicles such as cars, electric cars and crossovers than we do in less fuel efficient large pickups or SUVs. We have specifically targeted the smaller engines and multi speed or dual clutch technology transmissions. Our priority in product development is around light weighting, smaller packages and noise reduction, all to drive better fuel economy. A customer in our AWD system business recently called our product \"the global benchmark\" in terms of technology and capability. What a fantastic acknowledgement to the capabilities of our hard working R&D team! Our new forging business plays a key role in light weighting and fuel efficiency design opportunities that our customers are excited to acquire. Our balance shaft assembly designs allow for more efficient use of smaller engines with fewer cylinders. Our AWD business is absolutely making great progress in this area as well with our disconnect technology allowing the vehicle to disconnect the AWD systems when it is not needed thus significantly reducing parasitic losses. And of course our E-axle allows for immediately fuel improvement by shifting any vehicle into hybrid mode. We continue to develop our gear manufacturing capabilities to drive superior gears with better fit to drive out noise, another key issue in fuel efficiency. Our design ideas for clutch modules and differential assemblies are also playing an important role in helping us win business on new 9 and 10 speed transmissions, another key driver of improved fuel efficiency. These transmissions are key to the future in North America where they will eventually displace the 4, 5 and 6 speed transmissions currently in production. Our target is to significantly increase our content on these platforms compared to existing ones, a strategy that is playing out extremely well given important contracts already won in 2014 for the 9 and 10 speed transmissions. We continue to quote a significant amount of business for these platforms as we enter 2015. As we turn to 2015, our focus turns to: Growth through a continued focus on Innovation and Process Diversification for our Customers with a special focus on integrating our new forging business and developing robust technology roadmaps for our products; Accountability through Challenging and Enabling our Employees with a special focus on Global Mobility, Bench Strength and Teamwork; and Improvement on the Financial side through Simplification of our systems and processes, a continued focus on Living Lean, and a focus on driving continued Solid Margin performance. Grow It, Own It and Improve It are the key simple messages we are focusing on. At Linamar we are very excited about our future growth plans. We have the business in hand to drive meaningful growth in the next couple of years, a market focus and strategy in massive growing markets to drive substantial opportunities for the longer term, the perfect combination for meeting both short and long term shareholder growth goals. We have a 1 year plan, a 5 year plan and a 50 year plan all centred on success, growth and balance. 9 We have the business, we have the markets, we have the innovation, we have a talented and growing group of people and we will continue to turn that into consistent sustainable growth for you our shareholders. Sincerely, Linda Hasenfratz Chief Executive Officer Jim Jarrell President and Chief Operating Officer 10 MANAGEMENT DISCUSSION & ANALYSIS Linamar Corporation December 31, 2014 and December 31, 2013 (in millions of dollars) 11 LINAMAR CORPORATION Management's Discussion and Analysis For the Year Ended December 31, 2014 This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") of Linamar Corporation (\"Linamar\" or the \"Company\") should be read in conjunction with its consolidated financial statements for the year ended December 31, 2014. This MD&A has been prepared as at March 4, 2015. The financial information presented herein has been prepared on the basis of International Financial Reporting Standards (\"IFRS\"). All amounts in this MD&A are in millions of Canadian dollars, unless otherwise noted. Additional information regarding Linamar, including copies of its continuous disclosure materials such as its annual information form, is available on its website at www.linamar.com or through the SEDAR website at www.sedar.com. OVERALL CORPORATE PERFORMANCE Overview of the Business Linamar Corporation (TSX:LNR) is a diversified global manufacturing company of highly engineered products powering vehicles, motion, work and lives. The Company is made up of 2 operating segments - the Powertrain/Driveline segment and the Industrial segment which are further divided into 3 operating groups - Machining & Assembly, Forging, and Skyjack, all world leaders in the design, development and production of highly engineered products. The Company's Machining & Assembly and Forging operating groups focus on precision metallic components, modules and systems for engine, transmission and driveline systems designed for global vehicle and industrial markets. The Company's Skyjack operating group is noted for its innovative, high quality mobile industrial equipment, notably its classleading aerial work platforms and telehandlers. With more than 19,500 employees in 48 manufacturing locations, 5 R&D centers and 15 sales offices in 14 countries in North and South America, Europe and Asia, Linamar generated sales of $4.2 billion in 2014. For more information about Linamar Corporation and its industry leading products and services, visit www.linamar.com. Overall Corporate Results The following table sets out certain highlights of the Company's performance in 2014 and 2013: (in millions of dollars, except content per vehicle numbers) Sales Gross Margin Operating Earnings (Loss)1 Earnings (Loss) from Continuing Operations Net Earnings (Loss) Earnings (Loss) per Share Unusual Items1 Net Earnings (Loss) - Adjusted1 Earnings (Loss) per Share - Adjusted1 Content per Vehicle - North America Content per Vehicle - Europe Content per Vehicle - Asia Pacific 2014 $ 1,003.0 152.4 101.1 71.8 71.8 1.11 71.8 1.11 130.02 21.97 2013 $ 926.1 136.7 84.8 68.7 68.7 1.06 (13.7) 55.0 0.85 129.91 17.38 6.35 6.12 Three Months Ended December 31 +/+/$ % 76.9 8.3% 15.7 11.5% 16.3 19.2% 3.1 4.5% 3.1 4.5% 0.05 4.7% 13.7 100.0% 16.8 30.5% 0.26 30.6% 0.11 0.1% 4.59 26.4% 0.23 3.8% 2014 $ 4,171.6 664.4 447.4 320.6 320.6 4.95 320.6 4.95 129.54 19.85 2013 $ 3,595.5 506.1 320.1 229.8 229.8 3.55 (13.7) 216.1 3.34 125.15 14.45 6.80 5.40 The changes in these financial highlights are discussed in detail in the following sections of this analysis. 1 For more information refer to the \"Non-GAAP and Additional GAAP Measures\" section of this MD&A. 12 Year Ended December 31 +/+/$ % 576.1 16.0% 158.3 31.3% 127.3 39.8% 90.8 39.5% 90.8 39.5% 1.40 39.4% 13.7 100.0% 104.5 48.4% 1.61 48.2% 4.39 3.5% 5.40 37.4% 1.40 25.9% Certain unusual items affected earnings in 2014 and 2013 as noted in the table below: Three Months Ended December 31 2014 2013 $ $ 71.8 68.7 1.11 1.06 (in millions of dollars, except per share figures) Net Earnings (Loss) Earnings (Loss) per Share Adjustments due to unusual items: Taxable Items before Tax 1) Premature ending of a customer program Tax Impact Non-Taxable Items 2) Bargain purchase gain on the acquisition of MMKG's business Adjusted Net Earnings (Loss) As a percentage of Sales Change over Prior Year Adjusted Earnings (Loss) per Share 2014 $ 320.6 4.95 Year Ended December 31 2013 $ 229.8 3.55 - (6.3) 1.4 (4.9) - (6.3) 1.4 (4.9) 71.8 7.2% 30.5% 1.11 (8.8) 55.0 5.9% 320.6 7.7% 48.4% 4.95 (8.8) 216.1 6.0% 0.85 3.34 1) In 2013, a customer program ended prematurely and an appropriate settlement for the sale of certain capital assets back to the customer and recovery of certain start-up costs previously incurred was negotiated. As a result, the company recorded a recovery of $6.3 million related to start-up costs previously incurred on the program. 2) During the fourth quarter of 2013 (\"Q4 2013\"), Linamar acquired certain assets from Muhr und Bender KG (\"MKG\") and Mubea Motorkomponenten GmbH (\"MMKG\") for MMKG's business of manufacturing and distributing assembled camshafts, in Germany, which resulted in a bargain purchase gain that was recognized during Q4 2013. The purchase price allocation method used for accounting determined that the fair value of assets were in excess of the purchase price. This difference is considered to be a bargain purchase gain which is required to be reported in the income statement under IFRS. 13 BUSINESS SEGMENT REVIEW The Company reports its results of operations in two business segments: Powertrain/Driveline and Industrial. The segments are differentiated by the products that each produces and reflects how the chief decision makers of the Company manage the business. The following should be read in conjunction with Note 28 to the Company's consolidated financial statements for the year ended December 31, 2014. Three Months Ended December 31 2014 (in millions of dollars) Sales Operating Earnings (Loss) Unusual Items Operating Earnings (Loss) - Adjusted Powertrain /Driveline $ 879.9 87.1 87.1 Industrial $ 123.1 14.0 14.0 Linamar $ 1,003.0 101.1 101.1 Three Months Ended December 31 2013 Powertrain /Driveline $ 812.5 79.6 (15.1) 64.5 Industrial $ 113.6 5.2 5.2 Year Ended December 31 2014 (in millions of dollars) Sales Operating Earnings (Loss) Unusual Items Operating Earnings (Loss) - Adjusted Powertrain /Driveline $ 3,479.3 337.7 337.7 Industrial $ 692.3 109.7 109.7 Linamar $ 4,171.6 447.4 447.4 Linamar $ 926.1 84.8 (15.1) 69.7 Year Ended December 31 2013 Powertrain /Driveline $ 3,034.0 268.1 (15.1) 253.0 Industrial $ 561.5 52.0 52.0 Linamar $ 3,595.5 320.1 (15.1) 305.0 Powertrain/Driveline Highlights (in millions of dollars) Sales Operating Earnings (Loss) Unusual Items: Premature ending of a customer program Bargain purchase gain on the acquisition of MMKG's business Operating Earnings (Loss) - Adjusted 2014 $ 879.9 87.1 Three Months Ended December 31 2013 +/+/$ $ % 812.5 67.4 8.3% 79.6 7.5 9.4% 2014 $ 3,479.3 337.7 2013 $ 3,034.0 268.1 Year Ended December 31 +/+/$ % 445.3 14.7% 69.6 26.0% - (6.3) 6.3 - (6.3) 6.3 87.1 (8.8) (15.1) 64.5 8.8 15.1 22.6 337.7 (8.8) (15.1) 253.0 8.8 15.1 84.7 35.0% 33.5% Sales for the Powertrain/Driveline segment (\"Powertrain/Driveline\") increased by $67.4 million, or 8.3% in the fourth quarter of 2014 (\"Q4 2014\") compared with Q4 2013. The sales increase in Q4 2014 was impacted by: higher sales resulting from favourable changes in foreign exchange rates; the significant levels of newly launched programs in North America; the acquisition of our new forging business in North Carolina acquired in Q4 2014; the ramp up of launching programs in Europe; the ramp up of launching programs and volume increases on mature programs in Asia; and increased volumes from the Company's commercial vehicle and power generation business in Europe. The 2014 sales for Powertrain/Driveline increased by $445.3 million, or 14.7% compared with 2013. The sales increase for 2014 was impacted by the same factors as Q4 2014 and were also affected by: additional increased European sales due to volume increases on mature programs; and our new German camshaft business acquired in Q4 2013. 14 Q4 2014 adjusted operating earnings for Powertrain/Driveline were higher by $22.6 million or 35.0% over Q4 2013. The Powertrain/Driveline segment experienced the following in Q4 2014: improved margins as production volumes increased on launching and mature programs; higher margins as a result of a favourable sales mix to highly capital intensive programs, which inherently have higher margins to meet return expectations; and better margins as a result of productivity and efficiency improvements; partially offset by increased management and sales costs supporting growth. The changes in foreign exchange rates increased both sales and costs, which when combined, had an immaterial impact to operating earnings. The 2014 operating earnings increased by $69.6 million or 26.0% compared with 2013. The same factors that impacted Q4 2014 also impacted the 2014 year-to-date (\"YTD\") results. Industrial Highlights (in millions of dollars) Sales Operating Earnings (Loss) 2014 $ 123.1 14.0 2013 $ 113.6 5.2 Three Months Ended December 31 +/+/$ % 9.5 8.4% 8.8 169.2% 2014 $ 692.3 109.7 2013 $ 561.5 52.0 Year Ended December 31 +/+/$ % 130.8 23.3% 57.7 111.0% The Industrial segment (\"Industrial\") product sales increased 8.4% or $9.5 million to $123.1 million in Q4 2014 from Q4 2013. The sales increase was due to: higher sales resulting from favourable changes in foreign exchange rates; increased North American, Asian and European sales from higher market demand for access equipment; market share growth for booms in Europe; and market share growth for scissor lifts in Asia; partially offset by lower demand for agricultural equipment in Europe. The 2014 sales for Industrial increased by $130.8 million, or 23.3% compared with 2013. The sales increase for 2014 was impacted by the same factors as Q4 2014 and were also affected by: market share growth for scissor lifts in Europe; and market share growth for booms in North America and Asia. Industrial segment operating earnings in Q4 2014 increased $8.8 million or 169.2% over Q4 2013. The increase in Industrial operating earnings was predominantly driven by: higher margins resulting from favourable changes in foreign exchange rates; increased demand and market share growth in the access equipment markets; and favourable product mix to higher margin products; partially offset by increased management and sales costs supporting growth. The 2014 operating earnings increased by $57.7 million or 111.0% compared with 2013. The same factors that impacted Q4 2014 also impacted YTD 2014. 15 AUTOMOTIVE SALES AND CONTENT PER VEHICLE1 Automotive sales by region in the following discussion are determined by the final vehicle production location and, as such, there are differences between these figures and those reported under the geographic segment disclosure, which are based primarily on the Company's location of manufacturing and include both automotive and non-automotive sales. These differences are the result of products being sold directly to one continent, and the final vehicle being assembled on another continent. It is necessary to show the sales based on the vehicle build location to provide accurate comparisons to the production vehicle units for each continent. In addition to automotive Original Equipment Manufacturers (\"OEMs\"), the Company sells powertrain parts to a mix of automotive and non-automotive manufacturers that service various industries such as power generation, construction equipment, marine and automotive. The final application of some parts sold to these manufacturers is not always clear; however the Company estimates the automotive portion of the sales for inclusion in its content per vehicle calculations. The allocation of sales to regions is based on vehicle production volume estimates from industry sources, published closest to the quarter end date. As these estimates are updated, the Company's sales classifications can be impacted. (in millions of dollars, except content per vehicle numbers) North America Vehicle Production Units2 Automotive Sales Content Per Vehicle Three Months Ended December 31 +/% 0.21 5.1% $27.5 5.1% $0.11 0.1% 2014 4.35 $565.1 $130.02 2013 4.14 $537.6 $129.91 Europe Vehicle Production Units 2 Automotive Sales Content Per Vehicle 4.87 $106.9 $21.97 4.77 $82.8 $17.38 0.10 $24.1 $4.59 Asia Pacific Vehicle Production Units 2 Automotive Sales Content Per Vehicle 11.53 $73.2 $6.35 11.15 $68.2 $6.12 0.38 $5.0 $0.23 Year Ended December 31 +/% 0.88 5.3% $186.7 9.0% $4.39 3.5% 2014 17.49 $2,265.2 $129.54 2013 16.61 $2,078.5 $125.15 2.1% 29.1% 26.4% 20.01 397.2 $19.85 19.27 $278.4 $14.45 0.74 $118.8 $5.40 3.8% 42.7% 37.4% 3.4% 7.3% 3.8% 44.42 $302.0 $6.80 42.61 $230.1 $5.40 1.81 $71.9 $1.40 4.2% 31.2% 25.9% North American automotive sales for Q4 2014 increased 5.1% from Q4 2013 in a market that saw an increase of 5.1% in production volumes for the same period. As a result, content per vehicle in Q4 2014 increased marginally from $129.91 in Q4 2013 to $130.02. The increase in content per vehicle was a result of increases on launching programs that was partially offset by lower production volumes from OEM's that the company has significant business with. European automotive sales increased 29.1% or $24.1 million in a market that increased 2.1% compared to Q4 2013. As a result, content per vehicle increased 26.4% to $21.97 from $17.38 in Q4 2013. The increase in European content per vehicle was mainly the result of significant volume increases on launching programs. Asia Pacific automotive sales increased $5.0 million or 7.3% to $73.2 million as compared to Q4 2013. Vehicle production volumes increased 0.38 million to 11.53 million, a 3.4% increase, and as a result, content per vehicle increased 3.8% to $6.35 from $6.12 in Q4 2013. The increase in Asia Pacific content per vehicle was a result of increases on launching programs that was partially offset by lower production volumes from OEM's that the company has significant business with. Automotive Sales are measured as the amount of the Company's automotive sales dollars per vehicle, not including tooling sales. Content per vehicle (\"CPV\") does not have a standardized meaning and therefore is unlikely to be comparable to similar measures presented by other issuers. CPV is an indicator of the Company's market share for the automotive markets that it operates in. 2 Vehicle production units are derived from industry sources and are shown in millions of units. North American vehicle production units used by the Company for the determination of the Company's CPV include medium and heavy truck volumes. European and Asia Pacific vehicle production units exclude medium and heavy trucks and the off-road (heavy equipment) market. All vehicle production volume information is as regularly reported by industry sources. Industry sources release vehicle production volume estimates based on the latest information from the Automotive Manufacturers and update these estimates as more accurate information is obtained. The Company will, on a quarterly basis, update CPV for the current fiscal year in its MD&A as these volume estimates are revised by the industry sources. The CPV figures in this MD&A reflect the volume estimates that were published closest to the quarter end date by the industry sources. These updates to vehicle production units have no effect on the Company's financial statements for those periods. 1 16 SELECTED ANNUAL INFORMATION The following table sets out selected financial data relating to the Company's years ended December 31, 2014, 2013 and 2012. This financial data should be read in conjunction with the Company's audited consolidated financial statements for these years: (in millions of dollars, except per share amounts) Sales Earnings (Loss) from Continuing Operations Net Earnings (Loss) Unusual Items Net Earnings (Loss) - Adjusted Total Assets Total Long-term Liabilities Cash Dividends declared per share Earnings Per Share From Continuing Operations: Basic Diluted Earnings Per Share From Net Earnings: Basic Diluted 2014 $ 4,171.6 320.6 320.6 320.6 2,948.4 509.6 0.40 2013 $ 3,595.5 229.8 229.8 (13.7) 216.1 2,629.1 567.2 0.32 2012 $ 3,221.9 146.1 146.1 (1.2) 144.9 2,411.8 789.8 0.32 4.95 4.90 3.55 3.52 2.26 2.25 4.95 4.90 3.55 3.52 2.26 2.25 The unusual items in the above table were previously discussed in this analysis for 2014 and 2013. The unusual items for 2012 consisted of the weakening U.S. dollar against the Canadian dollar in the fourth quarter of 2011 (\"Q4 2011\") and the first quarter of 2012 (\"Q1 2012\") resulted in a foreign exchange gain on the translation of the USD $130 million Private Placement Notes due in 2021 that were issued on September 15, 2011. During Q1 2012, the Company entered into a series of forward exchange contracts to lock in the exchange rate related to the 2021 Notes. RESULTS OF OPERATIONS Gross Margin Three Months Ended December 31 2014 2013 $1,003.0 $926.1 789.0 731.5 61.6 57.9 850.6 789.4 $152.4 $136.7 15.2% 14.8% (in millions of dollars) Sales Cost of sales before amortization Amortization Cost of Sales Gross Margin Gross Margin Percentage 2014 $4,171.6 3,267.8 239.4 3,507.2 $664.4 15.9% Year Ended December 31 2013 $3,595.5 2,874.1 215.3 3,089.4 $506.1 14.1% Gross margin percentage increased to 15.2% in Q4 2014 from 14.8% in Q4 2013. Cost of sales before amortization as a percentage of sales decreased in Q4 2014 to 78.7% compared to 79.0% for the same quarter of last year. The decrease in cost of sales before amortization as a percentage of sales between Q4 2014 and Q4 2013 is a result of the items discussed earlier in this analysis such as: improved margins as production volumes increased on launching and mature programs; higher margins as a result of a favourable sales mix to highly capital intensive programs; better margins as a result of productivity and efficiency improvements; and higher margins resulting from favourable changes in foreign exchange rates; partially offset by Q4 2013 unusual items that did not recur such as: the bargain purchase gain recognized as a result of acquiring MMKG's business of manufacturing and distributing assembled camshafts; and the recovery related to premature ending of a customer program. 17 Q4 2014 amortization increased to $61.6 million from $57.9 million in Q4 2013 due to the significant number of programs that have been launching over the past year. Amortization as a percentage of sales decreased to 6.1% of sales as compared to 6.3% in Q4 2013, which reflects the improved utilization of fixed assets. 2014 gross margin increased to 15.9% from 14.1% in 2013. The increase in the annual gross margin was a result of the same factors that impacted Q4 2014. Selling, General and Administration Three Months Ended December 31 2014 2013 $54.2 $51.2 5.4% 5.5% (in millions of dollars) Selling, general and administrative SG&A Percentage 2014 $218.5 5.2% Year Ended December 31 2013 $183.2 5.1% Selling, general and administrative (\"SG&A\") costs increased to $54.2 million from $51.2 million in Q4 2013, and decreased as a percentage of sales to 5.4% in Q4 2014 from 5.5% when compared to Q4 2013. Included in SG&A costs for the quarter were the following impacts: increased management and sales costs supporting growth; and additional costs from new and expanded facilities. On an annual basis, SG&A costs reflected a similar pattern of higher dollar costs due to investments made to support launches, future growth and new facilities, driving slightly higher costs as a percent of sales to 5.2% from 5.1% a year ago. Finance Expense and Income Taxes Three Months Ended December 31 2014 2013 $ $ 101.1 84.8 4.8 6.1 24.5 10.0 71.8 68.7 71.8 68.7 (in millions of dollars) Operating Earnings (Loss) Finance Expenses Provision for (Recovery of) Income Taxes Earnings (Loss) from Continuing Operations Net Earnings (Loss) 2014 $ 447.4 21.5 105.3 320.6 320.6 Year Ended December 31 2013 $ 320.1 29.5 60.8 229.8 229.8 Finance Expenses Finance costs during Q4 2014 decreased $1.3 million over Q4 2013 to $4.8 million due to reduced borrowing levels, lower borrowing rates, the impact of foreign exchange on debt and derivatives and increased interest earned. In 2014, finance costs decreased $8.0 million from 2013 to $21.5 million as a result of the same factors as Q4 2014. Interest on long-term debt during Q4 2014 decreased $1.9 million over Q4 2013 to $5.6 million. Interest on long-term debt in the quarter was decreased due to: lower borrowing levels; the expiration of the $60 million interest rate swap in Q4 2013; the maturity of U.S. $40 million Private Placement Notes on October 15, 2014; and reductions in borrowing rates on the revolving credit facility in Q1 2014 arising from the Company's improved covenant ratios. Interest on long-term debt decreased $6.2 million in 2014 over 2013 to $24.4 million due to the same factors that impacted the quarter. Foreign exchange on debt and derivatives increased finance costs by $0.6 million in Q4 2014 versus Q4 2013. The primary factor was the foreign exchange impact on the hedges of the coupon payments on the U.S. $130 million Private Placement Notes due in 2017 and the U.S. $130 million Private Placement Notes due in 2021. Foreign exchange on debt and derivatives decreased finance costs by $0.8 million in 2014 versus 2013. The primary factors were: favourable foreign exchange impact on the revaluation of unhedged foreign denominated debt balances; and favourable foreign exchange impact on the 2014 Notes fair value hedge. 18 Interest earned during Q4 2014 increased $0.1 million over Q4 2013 to $1.5 million and increased $1.2 million in 2014 over 2013 to $5.6 million. Interest earned in both the quarter and YTD periods were increased due to: higher levels of long-term receivables financed in the Industrial segment; and higher cash levels. The consolidated effective interest rate for Q4 2014 decreased to 4.2% (4.6% in 2014) compared to 4.4% in Q4 2013 (4.3% in 2013) as the Company's mix of debt changed with the expiration of the U.S. $40 million Private Placement Notes on October 15, 2014 and lower average borrowings on the revolving credit facility. The ineffective interest rate swap expired in Q4 2013. Without the impacts of the ineffective portion of the interest rate swaps, the effective rate would have remained at 4.2% in Q4 2014 (4.6% in 2014) and increased to 4.6% in Q4 2013 (4.5% in 2013). Provision for Income Taxes The effective tax rate for Q4 2014 was 25.5%, an increase from the 12.7% rate in the same quarter of 2013. The low effective tax rate in Q4 2013 was primarily the result of various one-time adjustments including: the Q4 2013 bargain purchase gain related to the acquisition of MKKG's business; the impact on deferred tax assets due to the 2013 Mexican tax rate change; and the downward adjustments recognized in Q4 2013 in relation to the tax of prior years. The effective tax rate in Q4 2014 was: increased based on a less favourable mix of foreign tax rates in Q4 2014 compared to Q4 2013; increased based on adjustments recognized in the quarter related to the tax of prior years; partially offset by a reduction in non-deductible expenses in the quarter. The effective tax rate for 2014 was 24.7% compared to 20.9% in 2013. The increase is a result of the same factors that impacted the quarter. TOTAL EQUITY Book value per share1 increased to $25.67 per share at December 31, 2014 as compared to $20.88 per share at December 31, 2013. During the year no options expired unexercised, 6,800 options were forfeited and 320,062 options were exercised for proceeds of $4.9 million. OUTSTANDING SHARE DATA The Company is authorized to issue an unlimited number of common shares, of which 65,089,610 common shares were outstanding as of March 4, 2015. The Company's common shares constitute its only class of voting securities. As of March 4, 2015, there were 1,569,034 options to acquire common shares outstanding and 4,450,000 options still available to be granted under the Company's share option plan. 1 For more information refer to the \"Non-GAAP and Additional GAAP Measures\" section of this MD&A. 19 SUMMARY OF QUARTERLY RESULTS OF OPERATIONS The following table sets forth unaudited information for each of the eight quarters ended March 31, 2013 through December 31, 2014. This information has been derived from the Company's unaudited consolidated financial statements which, in the opinion of management, have been prepared on a basis consistent with the audited consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments, necessary for fair presentation of the financial position and results of operations for those periods. (in millions of dollars, except per share figures) Sales Earnings (Loss) from Continuing Operations Net Earnings (Loss) Earnings (Loss) per Share from Continuing Operations: Basic Diluted Net Earnings (Loss) per Share: Basic Diluted Mar 31 2013 $ 846.6 48.4 48.4 Jun 30 2013 $ 929.4 60.7 60.7 Sep 30 2013 $ 893.3 52.0 52.0 Dec 31 2013 $ 926.1 68.7 68.7 Mar 31 2014 $ 1,042.7 79.7 79.7 Jun 30 2014 $ 1,105.1 89.7 89.7 Sep 30 2014 $ 1,020.7 79.4 79.4 Dec 31 2014 $ 1,003.0 71.8 71.8 0.75 0.74 0.94 0.93 0.80 0.80 1.06 1.05 1.23 1.22 1.38 1.37 1.23 1.21 1.11 1.09 0.75 0.74 0.94 0.93 0.80 0.80 1.06 1.05 1.23 1.22 1.38 1.37 1.23 1.21 1.11 1.09 The quarterly results of the Company are impacted by the seasonality of certain operational units. Earnings in the second quarter are generally positively impacted by the high selling season for the aerial work platform, other industrial and agricultural businesses. The third and fourth quarters are generally negatively impacted by the scheduled shutdowns at automotive customers and seasonal slowdowns in the aerial work platform and agricultural businesses. The Company takes advantage of shutdowns for maintenance activities that would otherwise disrupt normal production schedules. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES Cash Flows Three Months Ended December 31 2014 2013 $ $ (in millions of dollars) Cash provided by (used in): Operating Activities Financing Activities Investing Activities Effect of Translation Adjustment Net Increase/(Decrease) in Cash Position Cash and Cash Equivalents - Beginning of Period Cash and Cash Equivalents - End of Period Comprised of: Cash on hand Short-term deposits Unpresented Cheques 2014 $ Year Ended December 31 2013 $ 197.8 (51.3) (69.0) 1.4 78.9 115.2 194.1 251.2 (150.9) (92.3) 4.4 12.4 117.4 129.8 546.5 (193.0) (295.4) 6.2 64.3 129.8 194.1 583.7 (272.3) (270.9) 7.7 48.2 81.6 129.8 188.1 15.0 (9.0) 194.1 145.0 (15.2) 129.8 188.1 15.0 (9.0) 194.1 145.0 (15.2) 129.8 The Company's cash and cash equivalents (net of unpresented cheques) at December 31, 2014 were $194.1 million, an increase of $64.3 million compared to December 31, 2013. Cash provided by operating activities was $197.8 million, a decrease of $53.4 million from Q4 2013 mainly due to more cash being used to fund non-cash working capital than in Q4 2013. Cash provided by operating activities in 2014 was $546.5 million, $37.2 million less than was provided in 2013 due to more cash being used to fund non-cash working capital than in 2013 partially offset by an increase in net earnings. 20 During the quarter, financing activities used $51.3 million due to repayments on long-term debt. Financing activities used $193.0 million in 2014 which was also used for the same purpose. Investing activities used $69.0 million in Q4 2014 mainly for the purchase of property, plant and equipment. Investing activities in 2014 used $295.4 million for the same purpose and the acquisition of Carolina Forge Company, LLC's (\"CFC\") business of high volume hot forged products, located in Wilson, North Carolina. Operating Activities Three Months Ended December 31 2014 2013 $ $ 71.8 68.7 59.5 60.7 131.3 129.4 66.5 121.8 197.8 251.2 (in millions of dollars) Net earnings (loss) for the period Adjustments to earnings Changes in non-cash working capital Cash provided by (used in) operating activities 2014 $ 320.6 263.9 584.5 (38.0) 546.5 Year Ended December 31 2013 $ 229.8 242.8 472.6 111.1 583.7 Cash provided by operations before the effect of changes in non-cash working capital increased $1.9 million in Q4 2014 to $131.3 million, compared to $129.4 million in Q4 2013. The annual cash provided by operations before the effect of changes in non-cash working capital increased $111.9 million to $584.5 million in 2014 compared to $472.6 million in 2013. Non-cash working capital for Q4 2014 decreased $66.5 million, compared to a decrease of $121.8 million in Q4 2013. The Company continues to become more efficient in its use of non-cash working capital as indicated by the lower level of non-cash working capital relative to the level of sales for Q4 2014 compared to Q4 2013. This improvement reflects the Company's continued focus on decreasing non-cash working capital levels. Non-cash working capital increased $38.0 million in 2014, compared to a decrease of $111.1 million in 2013. 2014 experienced increases due to the acquisition of CFC, whereas 2013 experienced decreases in inventory along with increases in accounts and taxes payable. Financing Activities Three Months Ended December 31 2014 2013 $ $ (46.0) (123.6) 2.8 4.5 0.4 (4.8) (19.4) (6.5) (5.2) (1.3) (3.1) (51.3) (150.9) (in millions of dollars) Net (repayments of)/proceeds from long-term debt Proceeds from government long-term debt Proceeds from exercise of stock options (Increase) decrease in long-term receivables Dividends to shareholders Interest received (paid) Cash provided by (used in) financing activities 2014 $ (154.2) 16.8 4.9 (15.7) (25.9) (18.9) (193.0) Year Ended December 31 2013 $ (196.5) 4.3 0.8 (34.2) (20.7) (26.0) (272.3) Financing activities for Q4 2014 used $51.3 million of cash compared to $150.9 million used in Q4 2013. During the quarter, the U.S. $40 million Private Placement Notes expired and were repaid. Financing activities in 2014 used $193.0 million of cash compared to $272.3 million in 2013. 21 Investing Activities Three Months Ended December 31 2014 2013 $ $ (67.4) (64.7) 0.7 5.7 (1.4) (15.0) (0.9) (18.3) (69.0) (92.3) (in millions of dollars) Payments for purchase of property, plant and equipment Proceeds from disposal of property, plant and equipment Payments for purchase of intangible assets Business acquisitions Cash used in investing activities 2014 $ (263.5) 22.8 (6.3) (48.4) (295.4) Year Ended December 31 2013 $ (244.9) 7.5 (15.2) (18.3) (270.9) Cash spent on investing activities for Q4 2014 was $69.0 million, down from Q4 2013 levels of $92.3 million, primarily due to the acquisition of the MMKG's business in Q4 2013 and less expenditures related to intangible assets. Cash spent on investing activities in 2014 was $295.4 million compared to $270.9 million in 2013. The increase of $24.5 million was due to the increased cost of acquiring CFC's business as compared to the cost of acquiring MMKG's business in 2013. Capital Resources The Company's financial condition remains solid given its strong balance sheet, which can be attributed to the Company's low cost structure, reasonable level of debt, prospects for growth and significant new program launches. Management expects that all future capital expenditures will be financed by cash flow from operations or utilization of existing financing facilities. At December 31, 2014, cash on hand was $188.1 million, and the Company's credit facility had available credit of $603.9 million. Commitments and Contingencies The following table summarizes contractual obligations by category and the associated payments for the next five years: (in millions of dollars) Long-Term Debt Principal, excluding Capital Leases Capital Lease Obligations1 Operating Leases Purchase Obligations2 Total Contractual Obligations Total $ 434.8 2.3 18.8 114.6 570.5 Not later than 1 year $ 2.3 0.3 8.0 114.6 125.2 Later than 1 year and not later than 5 years $ 251.2 1.2 9.3 261.7 Later than 5 years $ 181.3 0.8 1.5 183.6 The Company occasionally provides guarantees to third parties who, in turn, provide financing to credit worthy Linamar customers under finance leases for certain industrial access products as discussed in Note 8 of the December 31, 2014 consolidated financial statements which are hereby incorporated by reference herein. From time to time, the Company may be contingently liable for litigation, legal and/or regulatory actions and proceedings and other claims. Note 15 of the December 31, 2014 consolidated financial statements, which are hereby incorporated by reference herein, describes these claims. Foreign Currency Activities The Company pursues a strategy of balancing its foreign currency cash flows, to the largest extent possible, in each region in which it operates. The Company's foreign currency outflows for the purchases of materials and capital equipment denominated in foreign currencies are naturally hedged when contracts to sell products are denominated in those same foreign currencies. To manage the residual exposure, the Company employs hedging programs, where rate-appropriate, through the use of forward exchange contracts. The contracts are purchased based on the projected net foreign cash flows from operations. 1 2 Capital Lease Obligations includes the interest component in accordance with the definition of minimum lease payments under IFRS. Purchase Obligations means an agreement to purchase goods or services that is enforceable and legally binding that specifies all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. 22 The amount and timing of forward contracts is dependent upon a number of factors, including anticipated production delivery schedules, anticipated customer payment dates, anticipated foreign currency costs, and expectations with respect to future foreign exchange rates. The Company is exposed to credit risk from potential default by counterparties on its foreign exchange contracts and attempts to mitigate this risk by dealing only with relationship banks in our credit facility. Despite these measures, significant long-term movements in relative currency values could affect the Company's results of operations. The Company does not hedge the business activities of its foreign subsidiaries and, accordingly, results of operations could be further affected by a significant change in the relative values of the Canadian dollar, U.S. dollar, Euro, British pound, Hungarian forint, Mexican peso, Chinese renminbi, Japanese yen, Australian dollar, South Korean won, Swedish krona, Brazilian real and Indian rupee. The Company is committed to long-dated forward contracts to buy U.S. dollars to hedge the changes in exchange rates on the principal portion of the U.S. $130 million Private Placement Notes (\"2017 Notes\") that were placed during 2010 and the U.S. $130 million Private Placement Notes (\"2021 Notes\") that were placed during 2011. These forward exchange contracts qualify as cash flow hedges for accounting purposes and any fair value unrealized gains and losses are included in other comprehensive earnings with reclassifications to net earnings for the effective portion to match the net earnings impact of the principal portion. The Company is committed to a series of forward exchange contracts to lock in the exchange rate on the semi-annual coupon payments related to the 2017 Notes and the 2021 Notes. These forward exchange contracts qualify as cash flow hedges for accounting purposes and any fair value unrealized gains and losses are included in other comprehensive earnings with reclassifications to net earnings for the effective portion to match the net earnings impact of the coupon portion. The Company was committed to long-dated forward contracts to buy U.S. dollars to hedge the changes in exchange rates on the principal portion of the U.S. $40 million Private Placement Notes (\"2014 Notes\") that were placed during 2004. These forward exchange contracts qualified as fair value hedges for accounting purposes and any fair value unrealized gains and losses were included in net earnings. These forward contracts expired on October 15, 2014, with the maturity of the 2014 Notes on the same date. Off Balance Sheet Arrangements The Company leases various land and buildings under cancellable and non-cancellable operating lease arrangements. The lease terms are between 1 and 20 years, and the majority of lease arrangements are renewable at the end of the lease period at market rates. The Company also leases various machinery and transportation equipment under non-cancellable operating lease arrangements. The lease terms are between 1 and 5 years and require notice for termination of the agreements. The Company expects that existing leases will either be renewed or replaced, or alternatively, capital expenditures will be incurred to acquire equivalent capacity. Please see Note 26 of the December 31, 2014 consolidated financial statements. TRANSACTIONS WITH RELATED PARTIES Included in the costs of property, plant and equipment is the construction of buildings, building additions and building improvements in the aggregate amount of $6.8 million at December 31, 2014 ($4.3 million at December 31, 2013) paid to a company owned by the spouse of an officer and director. Included in the cost of sales is maintenance costs and rent of $1.0 for 2014 ($0.8 million for 2013) paid to the same company. The maintenance and construction costs represent general contracting and construction activities related to plant construction, improvements, additions and maintenance for a number of facilities. Amounts owed to this company at December 31, 2014 were $2.4 million ($1.3 million as of December 31, 2013). The Company has designed an independent process to ensure all related party transactions are transacted at estimated fair value. CURRENT AND PROPOSED TRANSACTIONS On September 26, 2014, Linamar, CFC and the majority shareholders of Seissenschmidt AG (\"Seissenschmidt\") signed separate definitive agreements for Linamar's purchase of CFC's business of high volume hot forged products, located in Wilson, North Carolina and 66% of the shares of Seissenschmidt, which also specializes in high volume hot forgings. Seissenschmidt has 3 primary locations in Germany, Hungary, and the United States. On November 21, 2014, Linamar and the minority shareholders of Seissenschmidt signed separate definitive agreements for the remaining 34% of Seissenschmidt. The Company has pursued these acquisitions because of the fit with its strategy of offering integrated metal forming/machined solutions to its customers in certain targeted products such as gears. The acquisitions will supplement the Company's core powertrain business, 23 leverage its business in driveline, gear based products and enable Linamar to address the market trends in light weighting and Noise, Vibration & Harshness design for products like gears, differentials, wheel bearings, hubs and sprockets with high speed forging processes. The CFC transaction closed on September 30, 2014. The purchase price of the net assets acquired amounted to $46.6 million. The Seissenschmidt transaction closed on January 15, 2015. The preliminary purchase price of 100% of Seissenschmidt amounts to $105.5 million. Due to the timing of the close and complexities associated with this transaction, the determination of the fair value of consideration, assets acquired and liabilities assumed, is subject to further adjustments. RISK MANAGEMENT The following risk factors, as well as the other information contained in this MD&A, and the Company's Annual Information Form for the year ended December 31, 2014 or otherwise incorporated herein by reference, should be considered carefully. These risk factors could materially and adversely affect the Company's future operating results and could cause actual events to differ materially from those described in forward-looking statements related to the Company. Dependence on Certain Customers The Company's Powertrain/Driveline segment has a limited number of customers that individually account for more than 10% of its consolidated revenues or receivables at any given time. For 2014, the Company's four largest Powertrain/Driveline customers accounted for 56.5% of consolidated revenue (67.7% of revenue for the Powertrain/Driveline segment). The global precision machining industry is characterized by a large number of manufacturers. As a result, manufacturers such as the Company tend to have a relatively small share of the markets they serve. Nonetheless, the Company believes that it is currently the sole supplier being used by its customers worldwide for products that represent more than half of the Company's consolidated sales. Typically, sales are similarly concentrated for the Industrial segment as product distribution is largely through major rental companies. In 2014, sales to the two largest Industrial customers were 1.2% of consolidated revenue (7.5% of revenue for the Industrial segment). Through its Skyjack subsidiary, the Company engages in the production and sale of aerial work platforms and telehandlers. There is a relatively defined sales cycle in this industry segment, as it is closely related to, and affected by, product life cycle and the construction sector. Therefore, the risks and fluctuations in the construction industry in the countries that Skyjack operates in also affect Skyjack's sales. Any disruption in the Company's relationships with these major customers or any decrease in revenue from these major customers, as a consequence of current or future conditions or events in the economy or markets in general or in the automotive (including medium/heavy duty trucks) and industrial industries in particular, could have a material adverse effect on the Company's business, financial condition, or results of operations. Sources and Availability of Raw Materials The primary raw materials utilized by the precision machining operations are iron and aluminum castings and forgings, which are readily obtained from a variety of suppliers globally that support the Company's operations. The Company is not dependent on any one supplier. Occasionally, raw material is consigned to the Company by its customers and any disruption in supply is the responsibility of that customer. A disruption in the supply of components could cause the temporary shut-down and a prolonged supply disruption, including the inability to re-source or in-source production of a critical component, could have a material adverse effect on the Company's business. Raw materials supply f