FOLD HERE
800 Manor Park Drive
Columbus, OH 43228
www.coremt.com
ANNUAL REPORT
2015
CMT-027 AnnualReport.2015.FA.indd 1-2
3/30/16 10:57 AM
CORE MOLDING TECHNOLOGIES, INC.
CREATIVE • RELIABLE • COMPOSITES
FOLD HERE
2015
CORE MOLDING TECHNOLOGIES, INC.
ANNUAL REPORT TO SHAREHOLDERS
Core Molding Technologies, Inc. is a manufacturer of sheet molding compound (SMC) and molder of
fiberglass-reinforced plastics. The Company produces high quality fiberglass-reinforced, molded products and
SMC materials for varied markets, including medium and heavy-duty trucks, automotive, marine, agriculture,
construction and other commercial products. The Company offers customers a wide range of manufacturing
processes to fit various volume and capital requirements. These processes include compression molding of
SMC, glass mat thermoplastics (GMT), direct long-fiber thermoplastics (D-LFT) and bulk molding compounds
(BMC); resin transfer molding (RTM), liquid molding of dicyclopentadiene (DCPD), spray-up and hand-lay-
up. Core Molding Technologies has its headquarters in Columbus, Ohio, and operates production facilities
in Columbus and Batavia, Ohio; Gaffney, South Carolina; Winona, Minnesota; and Matamoros, Mexico. Core’s
common stock is traded on the NYSE MKT LLC under the symbol “CMT.”
NET SALES
(Dollars in millions)
199.1
162.5
143.4
144.1
175.2
$200
$150
$100
$50
$0
INCOME BEFORE INTEREST AND TAXES
(Dollars in millions)
NET INCOME PER SHARE
(Basic)
16.9
18.5
14.6
12.5
10.1
$20
$15
$10
$5
$0
$1.75
$1.50
$1.25
$1.00
$0.75
$0.50
$0.25
$0.00
1.51
1.59
1.15
1.28
0.95
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
SELECTED FINANCIAL HIGHLIGHTS (dollars in millions except per share numbers)
YEARS ENDED DECEMBER 31
Net Sales
Income before interest and taxes
Net Income
Net Income per common share: Basic
Net Income per common share: Diluted
Long-term debt
Stockholders’ equity
2015
199.1
18.5
12.1
1.59
1.58
9.8
88.7
2014
175.2
14.6
9.6
1.28
1.28
0.7
76.1
2013
144.1
10.1
6.9
0.95
0.92
2.4
67.4
2012
162.5
12.5
8.2
1.15
1.11
5.7
2011
143.4
16.9
10.5
1.51
1.44
9.5
58.0
50.1
TO OUR SHAREHOLDERS
We achieved record sales and earnings results in 2015. Our product sales increased by more than 11% for the year, driven by the
launch of several new programs, stronger overall demand throughout much of our customer base and the incremental benefit of
our CPI Binani, Inc. (“CPI”) acquisition. This strong sales growth, coupled with operating cost improvements led to gross margin
expansion of 100 basis points and improvement in net income of 25%. Our performance reflects the efforts of our entire team of
employees, and we’d like to thank them for their dedication and hard work as we endeavor to grow our business and deliver value
to our shareholders.
Significant corporate accomplishments in 2015 included:
• Completed the acquisition of CPI in March 2015 which expanded our thermoplastics capabilities with the addition of
direct long-fiber thermoplastics (D-LFT) products.
• Made a strategic investment in polydicyclopentadiene (pDCPD) production capabilities that led to the award of new
programs with multiple customers representing combined annual revenue of $10 million and provides us with even
greater opportunities for future growth.
• Launched two new automotive underbody shield programs.
• Continued the diversification of our customer base and end markets with sales to customers outside of our four largest
increasing 65% compared to 2014, and reaching 18% of our total sales, up from 13% of our total sales in 2014.
• CMT was added to the Russell 2000 Index of small cap stocks, broadening the Company’s exposure to institutional
investors.
• Strengthened our Board of Directors with the appointment of Andrew Smith who brings extensive experience and
background in manufacturing and polymer sciences.
• Terminated our stockholder rights plan demonstrating our Board’s commitment to best practices in corporate
governance.
• Enhanced our adoption of Lean Six Sigma through training resulting in 18 new certifications.
Financial Results
Total net sales for the year ended December 31, 2015, including tooling, were $199.1 million compared to $175.2 million for the
year ended December 31, 2014. Product sales for 2015 were $189.1 million compared to 2014 product sales of $169.7. Net
income was $12.1 million, or $1.58 per diluted share, compared to $9.6 million, or $1.28 per diluted share.
Our stockholders’ equity of $88.7 million as of December 31, 2015 represents $11.64 per share in book value equity. Our $13.5
million of total debt as of December 31, 2015 is predominantly comprised of a senior secured five-year term loan used to finance
our CPI acquisition in March of 2015. With a total debt to trailing twelve month EBITDA leverage ratio of approximately 0.5x
and a total debt to equity ratio of 0.15x we have significant financial flexibility to fund growth in the coming years.
Looking Ahead
Industry sources forecast a decline in production of Class 8 trucks of approximately 20% in 2016. This represents a relatively
moderate down-cycle compared to the cyclical slowdowns experienced by the industry in the past two decades. While truck
sales continue to represent more than 75% of our total sales, we expect our increasing end market diversification efforts, aided
by our CPI acquisition, along with our other strategic investments in new process offerings, to partially offset the impact of the
anticipated decline in truck production in 2016.
Over the longer-term, we are highly enthusiastic about Core’s prospects for future growth, particularly given the enhancements
we made to our business in 2015 which enable us to pursue a broader array of opportunities. We believe we have positioned the
Company to grow profitably with an ongoing focus on our strategic initiatives including material development, process
technology expansion, customer and market expansion, operational excellence and strategic acquisitions.
Ultimately, we realize that our ability to deliver successful results is dependent upon our relationships with our customers,
suppliers, employees and shareholders. We would like to express our gratitude to all of you for your ongoing support and look
forward to updating you on our accomplishments as we progress through 2016.
Sincerely,
Kevin L. Barnett
President and Chief Executive Officer
James L. Simonton
Chairman of the Board
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
(cid:59)(cid:3) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2015
OR
(cid:134)(cid:3) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to ____________
Commission file number 001-12505
CORE MOLDING TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction
incorporation or organization)
31-1481870
(I.R.S. Employer Identification No.)
800 Manor Park Drive, Columbus, Ohio
(Address of principal executive office)
43228-0183
(Zip Code)
Registrant's telephone number, including area code: (614) 870-5000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, par value $0.01
Preferred Stock purchase rights, par value $0.01
Name of each exchange on which registered
NYSE MKT LLC
NYSE MKT LLC
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes (cid:134) No
(cid:59)
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes (cid:134)
No (cid:59)
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 (cid:59) No (cid:134)
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes (cid:59) No (cid:134)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. (cid:59)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer (cid:134)
Accelerated filer (cid:59)
Non-accelerated filer (cid:134)
Smaller reporting company (cid:134)
(Do not check if a smaller
reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes (cid:134) No (cid:59)
As of June 30, 2015, the aggregate market value of the registrant's voting and non-voting common equity held by non-affiliates
of the registrant was approximately $112,509,338, based upon the closing sale price of $22.84 on the NYSE MKT LLC on June
30, 2015, the last business day of registrant's most recently completed second fiscal quarter. As of the close of business on
March 10, 2016, the number of shares of registrant's common stock outstanding was 7,709,407.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's 2016 definitive Proxy Statement to be filed with the Securities and Exchange Commission no later
than 120 days after the end of the registrant's fiscal year are incorporated herein by reference in Part III of this Form 10-K.
CORE MOLDING TECHNOLOGIES, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
Part I
Item 1. Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures
Part II
Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchase of
Equity Securities
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Part III
Item 10. Directors, Executive Officers, and Corporate Governance
Item 11. Executive Compensation
3
12
19
19
20
20
21
23
24
34
35
63
63
64
65
65
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 65
Item 13. Certain Relationships, Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Services
Part IV
Item 15. Exhibits and Financial Statement Schedules
Signatures
Index to Exhibits
65
65
66
67
69
2
PART I
ITEM 1. BUSINESS
HISTORICAL DEVELOPMENT OF BUSINESS OF CORE MOLDING TECHNOLOGIES, INC.
In 1996, RYMAC Mortgage Investment Corporation (“RYMAC”) incorporated Core Molding Technologies, Inc. (“Core Molding
Technologies” or the “Company”), formerly known as Core Materials Corporation before changing its name on August 28, 2002,
for the purpose of acquiring the Columbus Plastics unit of Navistar, Inc. (“Navistar”), formerly known as International Truck &
Engine Corporation. On December 31, 1996, RYMAC merged with and into the Company, with the Company as the surviving
entity. Immediately after the merger, the Company acquired substantially all the assets and liabilities of the Columbus Plastics
unit from Navistar in return for a secured note, which has been repaid, and 4,264,000 shares of newly issued common stock of
the Company. On July 18, 2007, the Company entered into a stock repurchase agreement with Navistar, pursuant to which the
Company repurchased 3,600,000 shares of the Company’s common stock, from Navistar. On August 16, 2013, Navistar sold its
remaining 664,000 shares of common stock in a series of open market sales.
In 1998, the Company opened a second compression molding plant located in Gaffney, South Carolina as part of the Company’s
growth strategy to expand its customer base. This facility provided the Company with additional capacity and a strategic location
to serve both current and prospective customers.
In October 2001, the Company incorporated Core Composites Corporation as a wholly owned subsidiary under the laws of the
State of Delaware. This entity was established for the purpose of holding and establishing operations for Airshield Corporation’s
assets, which the Company acquired on October 16, 2001 (the “Airshield Asset Acquisition”) as part of the Company’s diversified
growth strategy. Airshield Corporation was a privately held manufacturer and marketer of fiberglass reinforced plastic parts
primarily for the truck and automotive aftermarket industries. The Company purchased substantially all of the assets of Airshield
Corporation through the United States Bankruptcy Court as Airshield Corporation had been operating under Chapter 11
bankruptcy protection since March 2001.
In conjunction with establishment of operations for the assets acquired in the Airshield Asset Acquisition, the Company
established a Mexican subsidiary and leased a production facility in Mexico. In October 2001, the Company (5% owner) and
Core Composites Corporation (95% owner) incorporated Corecomposites de Mexico, S. de R.L. de C.V. (“Corecomposites”) in
Matamoros, Mexico. Corecomposites was organized to operate under a maquiladora program whereby substantially all products
produced are exported back to Core Composites Corporation which sells such products to United States based external customers.
In June of 2009, the Company completed construction and took occupancy of a new production facility in Matamoros, Mexico
that replaced its leased facility.
In September 2004, the Company formed Core Automotive Technologies, LLC (“Core Automotive”), a Delaware limited liability
company and wholly owned subsidiary of the Company. This entity was formed for the purpose of establishing operations and
holding assets acquired from Keystone Restyling, Inc., which the Company acquired as part of its diversified growth strategy in
September, 2004. Keystone Restyling, Inc. was a privately held manufacturer and marketer of fiberglass reinforced plastic parts
primarily for the automotive and light truck aftermarket industries. The Company’s facility in Matamoros, Mexico provides
manufacturing services for Core Automotive Technologies.
In August 2005, the Company formed Core Composites Cincinnati, LLC, ("Core Composites Cincinnati") a Delaware limited
liability company and wholly owned subsidiary of the Company. This entity was formed for the purpose of establishing operations
and holding assets acquired from the Cincinnati Fiberglass Division of Diversified Glass Inc., which the Company acquired in
August, 2005. The Cincinnati Fiberglass Division of Diversified Glass, Inc. was a privately held manufacturer and distributor of
fiberglass reinforced plastic components supplied primarily to the heavy-duty truck market. As a result of this acquisition, the
Company leases a manufacturing facility in Batavia, Ohio.
3
In March 2015, the Company acquired substantially all of the assets of CPI Binani, Inc., a Minnesota based manufacturer and
producer of direct long fiber thermoplastic ("D-LFT") products, and a wholly owned subsidiary of Binani Industries Limited,
located in Winona, Minnesota ("CPI"). The purpose of the acquisition was to increase the Company's process capabilities and
diversify the Company's customer base.
DESCRIPTION OF BUSINESS OF CORE MOLDING TECHNOLOGIES, INC.
Certain statements under this caption of this Annual Report on Form 10-K constitute forward-looking statements within the
meaning of the federal securities laws. As a general matter, forward-looking statements are those focused upon future plans,
objectives or performance as opposed to historical items and include statements of anticipated events or trends and expectations
and beliefs relating to matters not historical in nature. Such forward-looking statements involve known and unknown risks and
are subject to uncertainties and factors relating to Core Molding Technologies' operations and business environment, all of which
are difficult to predict and many of which are beyond Core Molding Technologies' control. Words such as “may,” “will,” “could,”
“would,” “should,” “anticipate,” “predict,” “potential,” “continue,” “expect,” “intend,” “plans,” “projects,” “believes,”
“estimates,” “confident” and similar expressions are used to identify these forward-looking statements. These uncertainties and
factors could cause Core Molding Technologies' actual results to differ materially from those matters expressed in or implied by
such forward-looking statements.
Core Molding Technologies believes that the following factors, among others, could affect its future performance and cause
actual results to differ materially from those expressed or implied by forward-looking statements made in this report: business
conditions in the plastics, transportation, marine and commercial product industries (including slowdown in demand for truck
(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:12)(cid:30)(cid:3) (cid:73)(cid:72)(cid:71)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:3) (cid:85)(cid:72)(cid:74)(cid:88)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3) (cid:11)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3) (cid:72)(cid:81)(cid:74)(cid:76)(cid:81)(cid:72)(cid:3) (cid:72)(cid:80)(cid:76)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3) (cid:85)(cid:72)(cid:74)(cid:88)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:12)(cid:30)(cid:3) (cid:74)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3) (cid:72)(cid:70)(cid:82)(cid:81)(cid:82)(cid:80)(cid:76)(cid:70)(cid:15)(cid:3) (cid:86)(cid:82)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:83)(cid:82)(cid:79)(cid:76)(cid:87)(cid:76)(cid:70)(cid:68)(cid:79)(cid:3)
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dependence (cid:88)(cid:83)(cid:82)(cid:81)(cid:3)(cid:70)(cid:72)(cid:85)(cid:87)(cid:68)(cid:76)(cid:81)(cid:3)(cid:80)(cid:68)(cid:77)(cid:82)(cid:85)(cid:3)(cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:86)(cid:3)(cid:68)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:85)(cid:76)(cid:80)(cid:68)(cid:85)(cid:92)(cid:3)(cid:86)(cid:82)(cid:88)(cid:85)(cid:70)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:38)(cid:82)(cid:85)(cid:72)(cid:3)(cid:48)(cid:82)(cid:79)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:55)(cid:72)(cid:70)(cid:75)(cid:81)(cid:82)(cid:79)(cid:82)(cid:74)(cid:76)(cid:72)(cid:86)(cid:182)(cid:3)(cid:86)(cid:68)(cid:79)(cid:72)(cid:86)(cid:3)(cid:85)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:86)(cid:30)(cid:3)(cid:72)(cid:73)(cid:73)(cid:82)(cid:85)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:38)(cid:82)(cid:85)(cid:72)(cid:3)
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identified from time to time in Core Molding Technologies’ other public documents on file with the Securities and Exchange
Commission, including those described in Item 1A of this Annual Report on Form 10-K.
Core Molding Technologies and its subsidiaries operate in the plastics market in a family of products known as “reinforced
plastics.” Reinforced plastics are combinations of resins and reinforcing fibers (typically glass or carbon) that are molded to
shape. Core Molding Technologies is a manufacturer of sheet molding compound ("SMC") and molder of fiberglass reinforced
plastics. The Company specializes in large-format moldings and offers a wide range of fiberglass processes, including
compression molding of SMC, glass mat thermoplastics ("GMT"), bulk molding compounds ("BMC") and D-(cid:47)(cid:41)(cid:55)(cid:30)(cid:3)(cid:86)(cid:83)(cid:85)(cid:68)(cid:92)-up,
hand-lay-up, and resin transfer molding ("RTM"). Additionally, the Company offers reaction injection molding ("RIM"), utilizing
dicyclopentadiene technology.
4
Reinforced plastics compete largely against metals and have the strength to function well during prolonged use. Management
believes that reinforced plastic components offer many advantages over metals, including:
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(cid:70)(cid:82)(cid:85)(cid:85)(cid:82)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:85)(cid:72)(cid:86)(cid:76)(cid:86)(cid:87)(cid:68)(cid:81)(cid:70)(cid:72)(cid:30)
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(cid:79)(cid:82)(cid:90)(cid:72)(cid:85)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:30)
greater flexibility in product desi(cid:74)(cid:81)(cid:30)
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high strength-to-(cid:90)(cid:72)(cid:76)(cid:74)(cid:75)(cid:87)(cid:3)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:30)(cid:3)(cid:68)(cid:81)(cid:71)
dent-resistance in comparison to steel or aluminum.
The largest markets for reinforced plastics are transportation (automotive and truck), agriculture, construction, marine, and
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(cid:54)(cid:82)(cid:88)(cid:87)(cid:75)(cid:3)(cid:38)(cid:68)(cid:85)(cid:82)(cid:79)(cid:76)(cid:81)(cid:68)(cid:30)(cid:3)(cid:58)(cid:76)(cid:81)(cid:82)(cid:81)(cid:68)(cid:15)(cid:3)(cid:48)(cid:76)(cid:81)(cid:81)(cid:72)(cid:86)(cid:82)(cid:87)(cid:68)(cid:30)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:48)(cid:68)(cid:87)(cid:68)(cid:80)(cid:82)(cid:85)(cid:82)(cid:86)(cid:15)(cid:3)(cid:48)(cid:72)(cid:91)(cid:76)(cid:70)(cid:82)(cid:15)(cid:3)(cid:90)hich produce reinforced plastic products. Our manufacturing
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Operating decision makers (officers of the Company) are headquartered in Columbus, Ohio and oversee all manufacturing
operations for all products as well as oversee customer relationships with all customers. The Company supplies reinforced plastic
products to truck manufacturers, automotive suppliers, and manufacturers of marine and other commercial products. In general,
product growth and diversification are achieved in several different ways: (1) resourcing of existing reinforced plastic product
(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:68)(cid:81)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:86)(cid:88)(cid:83)(cid:83)(cid:79)(cid:76)(cid:72)(cid:85)(cid:3)(cid:69)(cid:92)(cid:3)(cid:68)(cid:81)(cid:3)(cid:82)(cid:85)(cid:76)(cid:74)(cid:76)(cid:81)(cid:68)(cid:79)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:83)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:80)(cid:68)(cid:81)(cid:88)(cid:73)(cid:68)(cid:70)(cid:87)(cid:88)(cid:85)(cid:72)(cid:85)(cid:3)(cid:11)(cid:179)(cid:50)(cid:40)(cid:48)(cid:180)(cid:12)(cid:30) (2) obtaining new reinforced plastic products through a
(cid:86)(cid:72)(cid:79)(cid:72)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:83)(cid:85)(cid:82)(cid:70)(cid:72)(cid:86)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3) (cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:68)(cid:81)(cid:3)(cid:50)(cid:40)(cid:48)(cid:3)(cid:86)(cid:82)(cid:79)(cid:76)(cid:70)(cid:76)(cid:87)(cid:86)(cid:3)(cid:69)(cid:76)(cid:71)(cid:86)(cid:30)(cid:3)(cid:11)(cid:22)(cid:12)(cid:3)(cid:86)(cid:88)(cid:70)(cid:70)(cid:72)(cid:86)(cid:86)(cid:73)(cid:88)(cid:79)(cid:3) (cid:80)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:73)(cid:3)(cid:85)(cid:72)(cid:76)(cid:81)(cid:73)(cid:82)(cid:85)(cid:70)(cid:72)(cid:71)(cid:3)(cid:83)(cid:79)(cid:68)(cid:86)(cid:87)(cid:76)(cid:70)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:86)(cid:3) (cid:73)(cid:82)(cid:85)(cid:3)(cid:83)(cid:85)(cid:72)(cid:89)(cid:76)(cid:82)(cid:88)(cid:86)(cid:79)(cid:92)(cid:3) (cid:81)(cid:82)(cid:81)-
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(cid:11)(cid:24)(cid:12)(cid:3) (cid:71)(cid:72)(cid:89)(cid:72)(cid:79)(cid:82)(cid:83)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3) (cid:82)(cid:73)(cid:3) (cid:81)(cid:72)(cid:90)(cid:3) (cid:80)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:86)(cid:15)(cid:3) (cid:87)(cid:72)(cid:70)(cid:75)(cid:81)(cid:82)(cid:79)(cid:82)(cid:74)(cid:92)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:83)(cid:85)(cid:82)(cid:70)(cid:72)(cid:86)(cid:86)(cid:72)(cid:86)(cid:3) (cid:87)(cid:82)(cid:3) (cid:80)(cid:72)(cid:72)(cid:87)(cid:3) (cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:81)(cid:87)(cid:3) (cid:82)(cid:85)(cid:3) (cid:83)(cid:85)(cid:82)(cid:86)(cid:83)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3) (cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:3) (cid:85)(cid:72)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:30)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:11)(cid:25)(cid:12)(cid:3)
acquiring an existing business. The Company's efforts continue to be directed towards all six areas.
MAJOR COMPETITORS
The Company believes that it is one of the three largest compounders and molders of reinforced plastics using the SMC, spray-
up, hand-lay-up, RTM, and D-LFT molding processes in North America. The Company faces competition from a number of
other molders including, most significantly, Molded Fiber Glass Companies, Continental Structural Plastics, Ashley Industrial
Molding, Sigma Industries and The Composites Group. The Company believes that it is well positioned to compete based
primarily on manufacturing capability and location, product quality, engineering capability, cost, and delivery. However, the
industry remains highly competitive and some of the Company's competitors have greater financial resources, research and
development facilities, design engineering, manufacturing, and marketing capabilities.
MAJOR CUSTOMERS
The Company had four major customers, Navistar, Volvo Group ("Volvo"), PACCAR Inc. ("PACCAR") and Yamaha Motor
Manufacturing Corporation of America ("Yamaha"), in 2015. Major customers are defined as customers whose current year sales
individually consist of more than ten percent of total sales during any annual or interim reporting period in the current year. The
loss of a significant portion of sales to Navistar, Volvo, PACCAR, or Yamaha would have a material adverse effect on the business
of the Company.
The North American truck market in which Navistar, Volvo, and PACCAR compete is highly competitive and the demand for
heavy and medium-duty trucks is subject to considerable volatility as it moves in response to cycles in the overall business
environment and is particularly sensitive to the industrial sector, which generates a significant portion of the freight tonnage
hauled. Truck demand also depends on general economic conditions, among other factors.
5
Yamaha Motor Manufacturing Corporation of America, a wholly owned subsidiary of Yamaha Motor Corporation, U.S.A., is a
top manufacturer of recreational vehicles including golf carts, all-terrain vehicles, personal watercraft and side by side utility
vehicles. Demand in the recreational vehicle market is typically influenced by the rapid introduction of new models creating a
short product lifecycle, the brand recognition of the various competitors, general economic conditions, and seasonal effects,
among other factors.
Relationship with Navistar
The Company has historically had a Comprehensive Supply Agreement with Navistar that provides for the Company to be the
primary supplier of Navistar’s original equipment and service requirements for fiberglass reinforced parts, as long as the
Company remains competitive in cost, quality, and delivery. The Company's current Comprehensive Supply Agreement with
Navistar is effective through October 31, 2018.
(cid:55)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:80)(cid:68)(cid:78)(cid:72)(cid:86)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:49)(cid:68)(cid:89)(cid:76)(cid:86)(cid:87)(cid:68)(cid:85)(cid:10)(cid:86)(cid:3)(cid:54)(cid:83)(cid:85)(cid:76)(cid:81)(cid:74)(cid:73)(cid:76)(cid:72)(cid:79)(cid:71)(cid:15)(cid:3)(cid:50)(cid:75)(cid:76)(cid:82)(cid:30)(cid:3)(cid:55)(cid:88)(cid:79)(cid:86)(cid:68)(cid:15)(cid:3)(cid:50)(cid:78)(cid:79)(cid:68)(cid:75)(cid:82)(cid:80)(cid:68)(cid:30)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:40)(cid:86)(cid:70)(cid:82)(cid:69)(cid:72)(cid:71)(cid:82)(cid:15)(cid:3)(cid:48)(cid:72)(cid:91)(cid:76)(cid:70)(cid:82)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:80)(cid:69)(cid:79)(cid:92)(cid:3)(cid:83)(cid:79)(cid:68)(cid:81)(cid:87)(cid:86)(cid:15)(cid:3)(cid:68)(cid:86)(cid:3)
well as aftermarket products for service distribution centers. The Company works closely on new product development with
Navistar's engineering and research personnel. Some of the products sold to Navistar include hoods, roofs, air deflectors, cab
extenders, fender extensions, splash panels, and other components. Sales to Navistar amounted to approximately 28%, 29% and
33% of total sales for 2015, 2014 and 2013, respectively.
Relationship with Volvo
The Company makes products for Volvo’s New River Valley (Dublin, Virginia) and Macungie, Pennsylvania assembly plants, as
well as aftermarket products for service distribution centers. The Company works closely on new product development with
Volvo’s engineering and research teams. Products sold to Volvo include hoods, roofs, sunvisors, air deflectors, cab extenders and
other components. Sales to Volvo amounted to approximately 28%, 28% and 9% of total sales for 2015, 2014 and 2013,
respectively.
Relationship with PACCAR
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Mexicali, Mexico assembly plants, as well as aftermarket products for service distribution centers. The Company also works
closely on new product development with PACCAR's engineering and research personnel. Products sold to PACCAR include
hoods, roofs, back panels, air deflectors, air fairings, fenders, splash panels, cab extenders, and other components. Sales to
PACCAR amounted to approximately 17%, 21% and 35% of total sales for 2015, 2014 and 2013, respectively.
Relationship with Yamaha
The Company manufactures sheet molding compound and molded products for Yamaha’s assembly plant located in Newnan,
GA. The Company also works closely on new product and material development with Yamaha’s engineering and research
personnel. Products include sheet molding compound and various molded components to support the assembly of personal
watercraft. Sales to Yamaha amounted to approximately 8%, 10%, and 9% of total sales in 2015, 2014 and 2013, respectively.
OTHER CUSTOMERS
The Company also produces products for other truck manufacturers, the automotive industry, marine industry, commercial
product industries, automotive aftermarket industries, and various other customers and industries. Sales to these customers
individually were all less than 10% of total annual sales. Sales to these customers amounted to approximately 19%, 13% and
14% of total sales for 2015, 2014 and 2013, respectively.
6
GEOGRAPHIC INFORMATION
All of the Company's products are sold in U.S. dollars. The following table provides information related to the Company's sales
by country, based on the ship to location of customers' production facilities, for the years ended December 31:
United States
Mexico
Canada
Total
2015
129,651,000 $
63,586,000
5,831,000
199,068,000 $
2014
123,317,000 $
47,772,000
4,115,000
175,204,000 $
2013
95,063,000
45,069,000
3,993,000
144,125,000
$
$
The following table provides information related to the location of the Company's property, plant and equipment, net, as of
December 31:
United States
Mexico
Total
2015
44,191,000 $
29,912,000
74,103,000 $
2014
31,674,000
30,321,000
61,995,000
$
$
PRODUCTS
Sheet Molding Compound (“SMC”)
SMC is primarily a combination of resins, fiberglass, fillers, and catalysts compounded and cured in sheet form, which is then
used to manufacture compression-molded products, as discussed below. The Company also sells SMC to other molders.
The Company incorporates a sophisticated computer program in the process of compounding various complex SMC formulations
tailored to meet customer needs. The program provides for the control of information during various production processes and
data for statistical batch controls.
Closed Molded Products
The Company manufactures plastic products using compression molding, resin transfer molding and reaction injection molding.
As of December 31, 2015, the Company owned 50 molding presses in its Columbus, Ohio facility (16), Matamoros, Mexico
facility (19), Gaffney, South Carolina facility (10) and Winona, Minnesota facility (5). The Company's molding presses range in
size from 250 to 5,000 tons.
Compression Molding of SMC - Compression molding is a process whereby SMC is molded to form by matched die steel
molds through which a combination of heat and pressure are applied via a molding press. This process produces high quality,
dimensionally consistent products. This process is typically used for high volume products. Higher volumes justify the
customer's investment in matched die steel molds.
Large platen, high tonnage presses (2,000 tons or greater) provide the ability to mold very large reinforced plastic parts. The
Company believes that it possesses a significant portion of the large platen, high tonnage molding capacity in the industry. To
enhance the surface quality and the paint finish of our products, the Company uses both in-mold coating and vacuum molding
processes.
In-mold coating is the process of injecting a liquid over the molded part surface and then applying pressure at elevated
temperatures during an extended molding cycle. The liquid coating serves to fill and/or bridge surface porosity as well as provide
a barrier against solvent penetration during subsequent top-coating operations.
7
Vacuum molding is the removal of air during the molding cycle for the purpose of reducing the amount of surface porosity. The
Company believes that it is among the industry leaders in in-mold coating and vacuum molding applications, based on the size
and complexity of parts molded.
Resin Transfer Molding (“RTM”) - This process employs two molds, typically a core and a cavity, similar to matched die
molding. The composite is produced by placing glass mat, chopped strand, or continuous strand fiberglass in the mold cavity in
the desired pattern. Parts used for cosmetic purposes typically have a gel coat applied to the mold surface. The core mold is then
fitted to the cavity, and upon a satisfactory seal, a vacuum is applied. When the proper vacuum is achieved, the resin is injected
into the mold to fill the part. Finally, the part is allowed to cure and is then removed from the mold and trimmed to shape.
Fiberglass reinforced products produced from the RTM process exhibit a high quality surface on both sides of the part and
excellent part thickness. The multiple insert tooling technique can be utilized in the RTM process to improve throughput based
upon volume requirements.
Direct Long-Fiber Thermoplastics ("D-LFT") - D-LFT molding employs two molds, typically a core and a cavity, similar to
matched die molding. This is a process for compounding and molding thermoplastic materials with "long" fibers (typically, 0.5
inch or longer). Engineered thermoplastic pellets and performance additives are compounded in a screw extruder, to which
chopped reinforcements (typically, glass fibers) are added and further extruded. A "charge" of material is cut to a precise weight,
and this "charge" is directly moved to a compression or injection-transfer process, where it is molded into a finished part. The
process allows for direct processing of the compounded material, bypassing the expense and delay of producing an intermediate
product (pellets or sheets) as is used in other fiber-reinforced thermoplastic molding processes. The D-LFT process is an attractive
option for products that have complex geometry, require high strength and stiffness and benefit from the recyclability of a
thermoplastic resin.
Reaction Injection Molding (“RIM”) - This is a process whereby a composite is produced through the injection of a two-
component thermoset resin system utilizing dicyclopentadiene (“DCPD”) technology. DCPD technology involves injecting a
liquid compound into matched die aluminum molds to form the part. In this process the mold is prepared, closed and the liquid
compound is injected into the tool then cured. Additional finishing is required when the part is designated for top coat
painting. The RIM process is an alternative to other closed mold processes for mid-volume parts that require a high level of
impact resistance.
Open Molded Products
The Company produces reinforced plastic products using both the hand lay-up and spray-up methods of open molding at our
Batavia, Ohio and Matamoros, Mexico locations. Part sizes weigh from a few pounds to several hundred pounds with surface
quality tailored for the end use application.
Hand Lay-Up - This process utilizes a shell mold, typically the cavity, where glass cloth, either chopped strand or continuous
strand glass mat, is introduced into the cavity. Resin is then applied to the cloth and rolled out to achieve a uniform wet-out from
the glass and to remove any trapped air. The part is then allowed to cure and removed from the mold. After removal, the part
typically undergoes trimming to achieve the shape desired. Parts used for cosmetic purposes typically have a gel coat applied to
the mold surface prior to the lay-up to improve the surface quality of the finished part. Parts produced from this process have a
smooth outer surface and an unfinished or rough interior surface. These fiberglass-reinforced products are typically non-cosmetic
components or structural reinforcements that are sold externally or used internally as components of larger assemblies.
Spray-Up - This process utilizes the same type of shell mold as hand-lay-up, but instead of using glass cloth to produce the
composite part, a chopper/spray system is employed. Glass rovings and resin feed the chopper/spray gun. The resin coated,
chopped glass is sprayed into the mold to the desired thickness. The resin coated glass in the mold is then rolled out to ensure
complete wet-out and to remove any trapped air. The part is then allowed to cure, is removed from the mold and is then trimmed
to the desired shape. Parts used for cosmetic purposes typically have a gel coat applied to the mold surface prior to the resin-
coated glass being sprayed into the mold to improve the surface quality of the finished part. Parts produced from this process
have a smooth outer surface and an unfinished or rough interior surface.
8
Assembly, Machining, and Paint Products
Many of the products molded by the Company are assembled, machined and prime painted or topcoat painted to result in a
completed product used by the Company's customers.
The Company has demonstrated manufacturing flexibility that accommodates a range of low volume hand assembly and
machining work, to high volume, highly automated assembly and machining systems. Robotics are used as deemed productive
for material handling, machining, and adhesive applications. In addition to conventional machining methods, water-jet cutting
technology is also used where appropriate. The Company also utilizes paint booths and batch ovens in its facilities. The Company
generally contracts with outside providers for higher volume applications that require top coat paint.
RAW MATERIALS
The principal raw materials used in the Company's processes are unsaturated polyester, vinyl ester, epoxy, polypropylene and
dicyclopentadiene resins, fiberglass, and filler. Other significant raw materials include adhesives for assembly of molded
components, in-mold coating, gel-coat, prime paint for preparation of cosmetic surfaces, and hardware (primarily metal
components). Many of the raw materials used by the Company are crude oil based, natural gas based and downstream
components, and therefore, the costs of certain raw materials can be affected by changes in costs of these underlying commodities.
Due to fluctuating commodity prices, suppliers are typically reluctant to enter into long-term contracts. The Company generally
has supplier alternatives for each raw material, and regularly evaluates its supplier base for certain supplies, repair items, and
components to improve its overall purchasing position.
BACKLOG
The Company relies on production schedules provided by its customers to plan and implement production. These schedules are
normally provided on a weekly basis and typically considered firm for approximately four weeks. Some customers update these
schedules daily for changes in demand, allowing them to run their inventories on a “just-in-time” basis. The ordered backlog of
four weeks of expected shipments, was approximately $13.1 million (all of which the Company shipped during the first quarter
of 2016) and $15.6 million at December 31, 2015 and 2014, respectively.
CAPACITY CONSTRAINTS
Capacity utilization is measured based on a standard work week of five days per week, three-shifts per day. During times when
demand exceeds a five day, three-shift capacity, the Company will work weekends to create additional capacity, which can provide
capacity utilization percentages greater than 100%.
During the fourth quarter of 2014, the Company put into service a second SMC production line, which approximately doubled
SMC historical production capacity. The approximate SMC production line capacity utilization was 71% and 100% for the years
ended December 31, 2015 and 2014, respectively.
The Company measures facility capacity in terms of its large molding presses (2,000 tons or greater) for the Columbus, Ohio,
Gaffney, South Carolina, Winona, Minnesota and the SMC molding at the Matamoros, Mexico facility.
The Company owned 27 large molding presses at December 31, 2015. The combined approximate large press capacity utilization
in these production facilities was 84% and 79% for the years ended December 31, 2015 and 2014, respectively. The increased
utilization mainly resulted from increase in demand from Volvo, partially offset by increased capacity provided by three new
large molding presses acquired in the Company's purchase of CPI in the first quarter of 2015.
The capacity of production in the Batavia, Ohio facility and the spray-up, hand-lay-up and RTM at the Matamoros, Mexico
facility are not linked directly to equipment capacities, due to the nature of the products produced. Capacity of these operations
9
is tied to available floor space. The approximate capacity utilization for these operations was 46% and 49% for the years ended
December 31, 2015 and 2014, respectively.
The Company has been required at times to run up to a three shift/seven day operation to meet its customers' production
requirements. The Company has used various methods from overtime to a weekend manpower crew to support the customers'
production requirements. Based on industry analysts' forecasts for medium and heavy-duty truck production levels, recent and
forecasted customer requirements, the Company anticipates running a three shift/seven day schedule, from time to time, to meet
customer production requirements in 2016.
CAPITAL EXPENDITURES AND RESEARCH AND DEVELOPMENT
Capital expenditures totaled approximately $5.7 million, $10.7 million and $9.3 million in 2015, 2014 and 2013 respectively.
These capital expenditures primarily consisted of building improvements, compression molding presses, a new SMC production
line and purchases of production equipment to manufacture parts.
The Company continuously engages in product development. Research and development activities focus on developing new
material formulations, new structural plastic products, new production capabilities and processes, and improving existing
products and manufacturing processes. The Company does not maintain a separate research and development organization or
facility, but uses its production equipment, as necessary, to support these efforts and cooperates with its customers and its suppliers
in research and development efforts. Likewise, manpower to direct and advance research and development is integrated with the
existing manufacturing, engineering, production, and quality organizations. Management of the Company has estimated that
costs related to research and development were approximately $719,000, $475,000 and $466,000 in 2015, 2014 and 2013,
respectively.
ENVIRONMENTAL COMPLIANCE
The Company's manufacturing operations are subject to federal, state, and local environmental laws and regulations, which
impose limitations on the discharge of hazardous and non-hazardous pollutants into the air and waterways. The Company has
established and implemented standards for the treatment, storage, and disposal of hazardous waste. The Company's policy is to
conduct its business with due regard for the preservation and protection of the environment. The Company's environmental waste
management process involves the regular auditing of hazardous waste accumulation points, hazardous waste activities and
authorized treatment, storage and disposal facilities. As part of the Company's environmental policy, all manufacturing
employees are trained on waste management and other environmental issues.
The Ohio Environmental Protection Agency has issued Core Molding Technologies Title V Operating Permits for its Columbus,
Ohio facility and its Batavia, Ohio facility. The South Carolina Department of Health and Environmental Control has issued a
Title V Operating Permit for the Gaffney, South Carolina facility. Core Molding Technologies has substantially complied with
these and all other environmental compliance permits at its U.S. production facilities.
The Company holds various environmental operating permits for its production facility in Matamoros, Mexico as required by
U.S. and Mexican state and federal regulations. The Company has substantially complied with all requirements of these operating
permits.
EMPLOYEES
As of December 31, 2015, the Company employed a total of 1,525 employees, which consists of 685 employees in its United
States operations and 840 employees in its Mexico operations. Of these 1,525 employees, 293 employees at the Company's
Columbus, Ohio facility are covered by a collective bargaining agreement with the International Association of Machinists and
Aerospace Workers (“IAM”), which extends to August 7, 2016, and 731 employees at the Company's Matamoros, Mexico facility
are covered by a collective bargaining agreement with Sindicato de Jorneleros y Obreros, which extends to January 16, 2017.
10
PATENTS, TRADE NAMES, AND TRADEMARKS
The Company will evaluate, apply for, and maintain patents, trade names, and trademarks where it believes that such patents,
trade names, and trademarks are reasonably required to protect its rights in its products. The Company has increased its
activity related to trademark protection in recent years, including the federal registration of the trademarks N-sulGuard®,
Featherlite®, Airilite®, FeatherliteXL® and Econolite®. However, the Company does not believe that any single patent,
trade name, or trademark or related group of such rights is materially important to its business or its ability to compete.
SEASONALITY & BUSINESS CYCLE
The Company's business is affected annually by the production schedules of its customers. Certain of the Company's customers
typically shut down their operations on an annual basis for a period of one to several weeks during the Company's third quarter.
Certain customers also typically shut down their operations during the last week of December. As a result, demand for the
Company's products typically decreases during the third and fourth quarters. Demand for medium and heavy-duty trucks, marine,
and automotive products also fluctuate on an economic, cyclical and seasonal basis, causing a corresponding fluctuation for
demand of the Company's products.
AVAILABLE INFORMATION
We maintain a website at www.coremt.com. Annual reports on Form 10-k, quarterly reports on Form 10-Q, current reports on
Form 8-K, all amendments to those reports and other information about us are available free of charge through this website as
soon as reasonably practicable after the reports are electronically filed with the SEC. These materials are also available from the
SEC’s website at www.sec.gov.
11
ITEM 1A. RISK FACTORS
The following risk factors describe various risks that may affect our business, financial condition, and operations. References to
“we,” “us,” and “our” in this “Risk Factors” section refer to Core Molding Technologies and its subsidiaries, unless otherwise
specified or unless the context otherwise requires.
Our business has concentration risks associated with significant customers.
Sales to four customers constituted approximately 82% of our 2015 total sales. No other customer accounted for more than 10%
of our total sales for this period. The loss of any significant portion of sales to any of our significant customers could have a
material adverse effect on our business, results of operations, and financial condition.
Accounts receivable balances with four customers accounted for 88% of accounts receivable at December 31, 2015. The
Company performs ongoing credit evaluations of its customers’ financial condition and maintains reserves for potential bad debt
losses. If the financial conditions of any of these customers were to deteriorate impacting their ability to pay their receivables,
our reserves may not be adequate which could have a material adverse effect on our business, results of operations, or financial
condition.
We are continuing to engage in efforts intended to strengthen and expand our relations with significant customers, as well as
provide support for our entire customer base. We have supported our position with customers through direct and active contact
through our sales, quality, engineering, and operational personnel. We cannot make any assurances that we will maintain or
improve our customer relationships, whether these customers will continue to do business with us as they have in the past or
whether we will be able to supply these customers or any of our other customers at current levels.
Our business is affected by the cyclical and overall nature of the industries and markets that we serve.
The North American heavy and medium-duty truck industries are highly cyclical. In 2015, approximately 78% of our product
sales were in these industries. These industries and markets fluctuate in response to factors that are beyond our control, such as
general economic conditions, interest rates, federal and state regulations (including engine emissions regulations, tariffs, import
regulations, and other taxes), consumer spending, fuel costs, and our customers' inventory levels and production rates. Our
manufacturing operations have a significant fixed cost component. Accordingly, during periods of changing demands, including
an increase or slowdown in truck demand, the profitability of our operations may change proportionately more than revenues
from operations. In addition, our operations are typically seasonal as a result of regular customer maintenance shutdowns, which
typically vary from year to year based on production demands and occur in the third and fourth quarter of each calendar year.
This seasonality may result in decreased net sales and profitability during the third and fourth fiscal quarters of each calendar
year. Weakness in overall economic conditions or in the markets that we serve, or significant reductions by our customers in their
inventory levels or future production rates, could result in decreased demand for our products and could have a material adverse
effect on our business, results of operations, or financial condition.
Price increases in raw materials and availability of raw materials could adversely affect our operating results and financial
condition.
We purchase resins and fiberglass for use in production as well as hardware and other components for product assembly. The
prices for purchased materials are affected by the prices of material feed stocks such as crude oil, natural gas, and downstream
components, as well as processing capacity versus demand. We attempt to reduce our exposure to increases by working with
suppliers, evaluating new suppliers, improving material efficiencies, and when necessary through sales price adjustments to
customers. If we are unsuccessful in developing ways to mitigate these raw material increases we may not be able to improve
productivity or realize savings from cost reduction programs sufficiently to help offset the impact of these increased raw material
costs. As a result, higher raw material costs could result in declining margins and operating results.
12
Cost reduction and quality improvement initiatives by original equipment manufacturers could have a material adverse
effect on our business, results of operations, or financial condition.
We are primarily a components supplier to the heavy and medium-duty truck industries, which are characterized by a small
number of original equipment manufacturers (“OEMs”) that are able to exert considerable pressure on components suppliers to
reduce costs, improve quality, and provide additional design and engineering capabilities. Given the fragmented nature of the
industry, OEMs continue to demand and receive price reductions and measurable increases in quality through their use of
competitive selection processes, rating programs, and various other arrangements. We may be unable to generate sufficient
production cost savings in the future to offset such price reductions. OEMs may also seek to save costs by purchasing components
from suppliers that are geographically closer to their production facilities or relocating production to locations with lower cost
structures and purchasing components from suppliers with lower production costs. These decisions by OEMs could require us to
shift production between our facilities, move production lines between our facilities or open new facilities to remain competitive.
Shifting production, moving production lines or opening new locations could result in significant costs required for capital
investment, transfer expenses and operating costs. Additionally, OEMs have generally required component suppliers to provide
more design engineering input at earlier stages of the product development process, the costs of which have, in some cases, been
absorbed by the suppliers. To the extent that the Company does not meet the quality standards or demands of quality improvement
initiatives sought by OEMs, or does not match the quality of suppliers of comparable products, OEMs may choose to purchase
from these alternative suppliers, and as a result the Company may lose existing or new business with OEMs. Future price
reductions, increased quality standards, and additional engineering capabilities required by OEMs may reduce our profitability
and have a material adverse effect on our business, results of operations, or financial condition.
We may be subject to product liability claims, recalls or warranty claims, which could have a material adverse effect on
our business, results of operations, or financial condition.
As a components supplier to OEMs, we face a business risk of exposure to product liability claims in the event that our products
malfunction and result in personal injury or death. Product liability claims could result in significant losses as a result of expenses
incurred in defending claims or the award of damages. In addition, we may be required to participate in recalls involving
components sold by us if any prove to be defective, or we may voluntarily initiate a recall or make payments related to such
claims in order to maintain positive customer relationships. While we do maintain product liability insurance, it may not be
sufficient to cover all product liability claims, and as a result, any product liability claim brought against us could have a material
adverse effect on our results of operations. Further, we warrant the quality of our products under limited warranties, and as such,
we are subject to risk of warranty claims in the event that our products do not conform to our customers’ specifications. Such
warranty claims may result in costly product recalls, significant repair costs and damage to our reputation, all of which would
adversely affect our results of operations.
We operate in highly competitive markets.
The markets in which we operate are highly competitive. We compete with a number of other manufacturers that produce and
sell similar products. Our products primarily compete on the basis of capability, product quality, cost, and delivery. Some of our
competitors have greater financial resources, research and development facilities, design engineering, manufacturing, and
marketing capabilities. If we are unable to develop new and innovative products, diversity the markets, materials and processes
we utilize and increase operational enhancements, we may fall behind competitors or lose the ability to achieve competitive
advantages. In the highly competitive market in which we operate, this may negatively impact our ability to retain existing
customers or attract new customers, and if that occurs, it may negatively impact future operating results, sales and earnings.
We may be subject to additional shipping expense or late fees if we are not able to meet our customers' on-time demand
for our products.
We must continue to meet our customers' demand for on-time delivery of our products. Factors that could result in our inability
to meet customer demands include a failure by one or more of our suppliers to supply us with the raw materials and other resources
that we need to operate our business effectively and an unforeseen spike in demand for our products which would create capacity
13
constraints, among other factors. If this occurs, we may be required to incur additional shipping expenses to ensure on-time
delivery or otherwise be required to pay late fees, which could have a material adverse effect on our business, results of operations,
or financial condition.
If we fail to attract and retain key personnel our business could be harmed.
Our success largely depends on the efforts and abilities of our key personnel. Their skills, experience, and industry contacts
significantly benefit us. The inability to retain key personnel could have a material adverse effect on our business, results of
operations, or financial condition. Our future success will also depend in part upon our continuing ability to attract and retain
highly qualified personnel.
Work stoppages or other labor issues at our facilities or at our customers' facilities could adversely affect our operations.
As of December 31, 2015, unions at our Columbus, Ohio and Matamoros, Mexico facilities represented approximately 67% of
our entire workforce. As a result, we are subject to the risk of work stoppages and other labor-relations matters. The current
Columbus, Ohio and Matamoros, Mexico union contracts extend through August 7, 2016 and January 16, 2017, respectively.
Any prolonged work stoppage or strike at either our Columbus, Ohio or Matamoros, Mexico unionized facilities could have a
material adverse effect on our business, results of operations, or financial condition. Any failure by us to reach a new agreement
upon expiration of such union contracts may have a material adverse effect on our business, results of operations, or financial
condition.
In addition, if any of our customers or suppliers experiences a material work stoppage, that customer may halt or limit the
purchase of our products or the supplier may interrupt supply of our necessary production components. This could cause us to
shut down production facilities relating to these products, which could have a material adverse effect on our business, results of
operations, or financial condition.
Changes in the legal, regulatory and social responses to climate change, including any possible effect on energy prices,
could adversely affect our business and reduce our profitability.
It is possible that various proposed legislative or regulatory initiatives related to climate changes, such as cap-and-trade systems,
increased limits on emissions of greenhouse gases and fuel efficiency standards, or other measures, could in the future have a
material impact on us, our customers, or the markets we serve, thereby resulting in a material adverse effect on our financial
condition or results of operation. For example, customers in the transportation (automotive and truck) industry could be required
to incur greater costs in order to comply with such initiatives, which could have an adverse impact on their profitability or
viability. This could in turn lead to further changes in the structure of the transportation industry that could reduce demand for
our products. We are also reliant on energy to manufacture our products, with our operating costs being subject to increase if
energy costs rise. During periods of higher energy costs we may not be able to recover our operating cost increases through
production efficiencies and price increases. While we may hedge our exposure to higher prices via future energy purchase
contracts, increases in energy prices for any reason (including as a result of new initiatives related to climate change) will increase
our operating costs and likely reduce our profitability.
Our business is subject to risks associated with manufacturing equipment and infrastructure.
We convert raw materials into molded products through a manufacturing process at each production facility. While we maintain
insurance covering our manufacturing and production facilities, including business interruption insurance, a catastrophic loss of
the use of all or a portion of our facilities due to accident, fire, explosion, or natural disaster, whether short or long-term, could
have a material adverse effect on our business, results of operations, or financial condition.
Unexpected failures of our equipment and machinery may result in production delays, revenue loss, and significant repair costs,
as well as injuries to our employees. Any interruption in production capability may require us to make large capital expenditures
to remedy the situation, which could have a negative impact on our profitability and cash flows. Our business interruption
14
insurance may not be sufficient to offset the lost revenues or increased costs that we may experience during a disruption of our
operations. Because we supply our products to OEMs, a temporary or long-term business disruption could result in a permanent
loss of customers. If this were to occur, our future sales levels and therefore our profitability could be materially adversely
affected.
Our business is subject to risks associated with new business awards. In order to recognize profit from new business, we
must accurately estimate product costs as part of the quoting process and implement effective and efficient manufacturing
processes.
The success of our business relies on our ability to produce products which meet the quality, performance and price expectations
of our customers. Our ability to recognize profit is largely dependent upon accurately identifying the costs associated with the
manufacture of our products, and executing the manufacturing process in a cost effective manner. There can be no assurance that
all costs will be accurately identified during the Company's quoting process, or that the expected level of manufacturing efficiency
will be achieved, and as a result we may not realize the anticipated operating results related to new business awards.
Our insurance coverage may be inadequate to protect against the potential hazards incident to our business.
We maintain property, business interruption, stop loss for healthcare and workers' compensation, director and officer, product
liability, and casualty insurance coverage, but such insurance may not provide adequate coverage against potential claims,
including losses resulting from war risks, terrorist acts, or product liability claims relating to products we manufacture. Consistent
with market conditions in the insurance industry, premiums and deductibles for some of our insurance policies have been
increasing and may continue to increase in the future. In some instances, some types of insurance may become available only
for reduced amounts of coverage, if at all. In addition, there can be no assurance that our insurers would not challenge coverage
for certain claims. If we were to incur a significant liability for which we were not fully insured or that our insurers disputed, it
could have a material adverse effect on our financial position.
We have made acquisitions and may make acquisitions in the future. We may not realize the operating results that we
anticipate from these acquisitions or from acquisitions we may make in the future, and we may experience difficulties in
integrating the acquired businesses or may inherit significant liabilities related to such businesses. At times, we may not
have the ability and resources to identify, evaluate and manage every acquisition opportunity and may miss out on
potentially beneficial ones.
We explore opportunities to acquire businesses that we believe are related to our core competencies from time to time, some of
which may be material to us. We expect such acquisitions will produce operating results consistent with our other operations,
however, we cannot provide assurance that this assumption will prove correct with respect to any acquisition.
Any acquisitions may present significant challenges for our management due to the increased time and resources required to
properly integrate management, employees, information systems, accounting controls, personnel, and administrative functions
of the acquired business with those of ours and to manage the combined company on a going forward basis. The diversion of
management's attention and any delays or difficulties encountered in connection with the integration of these businesses could
adversely impact our business, results of operations, and liquidity, and the benefits we anticipate may never materialize.
Expected future sales from business awards may not materialize. We may not realize the sales or operating results that
we anticipate from new business awards, and we may experience difficulties in meeting the production demands of new
business awards.
We will continue to pursue, and may be awarded, new business from existing or new customers. The Company may make capital
investments, which may be material to the Company, in order to meet the expected production requirements of existing or new
customers related to these business awards, and to support the potential production demands which may result from continued
sales growth. The anticipated impact on the Company's sales and operating results related to these business awards, for various
reasons, may not materialize. Any delays or production difficulties encountered in connection with these business awards, and
15
any change in customer demand, could adversely impact our business, results of operations, and liquidity, and the benefits we
anticipate may never materialize.
If we are unable to meet future capital requirements, our business may be adversely affected.
As we grow our business, we may have to incur significant capital expenditures. We may make capital investments to, among
other things, build new or upgrade our facilities, purchase leased facilities and equipment, and enhance our production processes.
We cannot assure you that we will have, or be able to obtain, adequate funds to make all necessary capital expenditures when
required, or that the amount of future capital expenditures will not be materially in excess of our anticipated or current
expenditures. If we are unable to make necessary capital expenditures we may not have the capability to support our customer
demands, which, in turn could reduce our sales and profitability and impair our ability to satisfy our customers' expectations. In
addition, even if we are able to invest sufficient resources, these investments may not generate net sales that exceed our expenses,
generate any net sales at all, or result in any commercially acceptable products.
Our failure to comply with our debt covenants could have a material adverse effect on our business, financial condition
or results of operations.
Our debt agreements contain certain covenants. A breach of any of these covenants could result in a default under the applicable
agreement. If a default were to occur, we would likely seek a waiver of that default, attempt to reset the covenant, or refinance
the instrument and accompanying obligations. If we were unable to obtain this relief, the default could result in the acceleration
of the total due related to that debt obligation. If a default were to occur, we may not be able to pay our debts or borrow sufficient
funds to refinance them. Any of these events, if they occur, could materially adversely affect our results of operations, financial
condition, and cash flows.
We may not achieve expected efficiencies related to the proximity of our customers' production facilities to our
manufacturing facilities, or with respect to existing or future production relocation plans.
Our facilities are located in close proximity to our customers in order to minimize both our customer's and our own costs. If any
of our customers were to move or if nearby facilities are closed, that may impact our ability to remain competitive. Additionally,
our competitors could build a facility that is closer to our customers' facilities which may provide them with a geographic
advantage. Any of these events might require us to move closer to our customers, build new facilities or shift production between
our current facilities to meet our customers' needs, resulting in additional cost and expense.
Our products may be rendered obsolete or less attractive if there are changes in technology, regulatory requirements, or
competitive processes.
Changes in technology, regulatory requirements, and competitive processes may render certain products obsolete or less
attractive. Future chemical regulations may restrict our ability to manufacture products, cause us to incur substantial expenditures
to comply with them, and subject us to liability for adverse environmental or health effects linked to the manufacture of our
products. Failure to comply with future regulations may subject us to penalties or other enforcement actions. Our ability to
anticipate changes in these areas will be a significant factor in our ability to remain competitive. If we are unable to identify or
compensate for any one of these changes it may have a material adverse effect on our business, results of operations, or financial
condition.
Our stock price can be volatile.
Our stock price can fluctuate widely in response to a variety of factors. Factors include actual or anticipated variations in our
quarterly operating results, our relatively small public float, changes in securities analysts' estimates of our future earnings, and
the loss of major customers or significant business developments relating to us or our competitors, and other factors, including
those described in this “Risk Factors” section. Our common stock also has a low average daily trading volume, which limits a
16
person's ability to quickly accumulate or quickly divest themselves of large blocks of our stock. In addition, a low average trading
volume can lead to significant price swings even when a relatively few number of shares are being traded.
We are subject to environmental, occupational health and safety rules and regulations that may require us to make
substantial expenditures or expose us to financial or other obligations including substantial damages, penalties, fines, civil
or criminal sanctions and remediation costs that could adversely affect our results.
Our operations, facilities, and personnel are subject to extensive and evolving laws and regulations pertaining to air emissions,
wastewater discharges, the handling and disposal of solid and hazardous materials and wastes, health and safety, the investigation
and remediation of contamination, and the protection of the environment and natural resources. It is difficult to predict the future
interpretations and developments of environmental and health and safety laws and regulations or their impact on our future results
and cash flows. Continued compliance could result in significant increases in capital expenditures and operating costs. In
addition, we may be exposed to obligations or involved from time to time in administrative or legal proceedings relating to
environmental, health and safety or other regulatory matters, and may incur financial and other obligations relating to such
matters.
Although we do not presently anticipate terminating any senior management employees, certain senior management
employees have entered into potentially costly severance arrangements with us if terminated after a change in control.
We have entered into executive severance agreements with executive officers that provide for significant severance payments in
the event such employee's employment with us is terminated within two years of a change in control (as defined in the severance
agreement) either by the employee for good reason (as defined in the severance agreement) or by us for any reason other than
cause (as defined in the severance agreement), death or disability. A change in control under these agreements includes any
transaction or series of related transactions as a result of which less than fifty percent (50%) of the combined voting power of the
then-outstanding securities immediately after such transaction are held in the aggregate by the holders of our voting stock
(cid:76)(cid:80)(cid:80)(cid:72)(cid:71)(cid:76)(cid:68)(cid:87)(cid:72)(cid:79)(cid:92)(cid:3)(cid:83)(cid:85)(cid:76)(cid:82)(cid:85)(cid:3)(cid:87)(cid:82)(cid:3)(cid:86)(cid:88)(cid:70)(cid:75)(cid:3)(cid:87)(cid:85)(cid:68)(cid:81)(cid:86)(cid:68)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:30)(cid:3)(cid:68)(cid:81)(cid:92)(cid:3)(cid:83)(cid:72)(cid:85)(cid:86)(cid:82)(cid:81)(cid:3)(cid:75)(cid:68)(cid:86)(cid:3)(cid:69)(cid:72)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:69)(cid:72)(cid:81)eficial owner of securities representing 50% or more of our
(cid:89)(cid:82)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:86)(cid:87)(cid:82)(cid:70)(cid:78)(cid:30)(cid:3)(cid:90)(cid:72)(cid:3)(cid:73)(cid:76)(cid:79)(cid:72)(cid:3)(cid:68)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:85)(cid:3)(cid:83)(cid:85)(cid:82)(cid:91)(cid:92)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:54)(cid:40)(cid:38)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:68)(cid:3)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:75)(cid:68)(cid:86)(cid:3)(cid:82)(cid:70)(cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:71)(cid:30)(cid:3)(cid:82)(cid:85)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:76)n
any two year period, the directors at the beginning of the period cease to constitute at least a majority thereof. These agreements
would make it costly for us to terminate certain of our senior management employees and such costs may also discourage potential
acquisition proposals, which may negatively affect our stock price.
Our foreign operations subject us to risks that could negatively affect our business.
We operate a manufacturing facility in Matamoros, Mexico and, as a result, a significant portion of our business and operations
are subject to the risk of changes in economic conditions, tax systems, consumer preferences, social conditions, safety and security
conditions and political conditions inherent in Mexico, including changes in the laws and policies that govern foreign investment,
as well as changes in United States laws and regulations relating to foreign trade and investment. In addition, our results of
operations and the value of certain foreign assets and liabilities are affected by fluctuations in Mexican currency exchange rates,
which may favorably or adversely affect reported earnings. There can be no assurance as to the future effect of any such changes
on our results of operations, financial condition, or cash flows.
Economic conditions and disruptions in the financial markets could have an adverse effect on our business, financial
condition and results of operations.
In recent years, financial markets experienced turmoil and uncertainty. Disruptions in the financial markets could have a material
adverse effect on our liquidity and financial condition if our ability to borrow money from our existing lenders were to be
impaired. Disruptions in the financial markets may also have a material adverse impact on the availability and cost of credit in
the future. Our ability to pay our debt or refinance our obligations will depend on our future performance, which could be affected
by, among other things, prevailing economic conditions. Disruptions in the financial markets may also have an adverse effect on
the U.S. and world economies, which would have a negative impact on demand for our products. In addition, tightening of credit
17
markets may have an adverse impact on our customers' ability to finance the sale of new trucks or our suppliers' ability to provide
us with raw materials, either of which could adversely affect our business and results of operations.
18
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
The Company owns four production facilities that are situated in Columbus, Ohio, Gaffney, South Carolina, Winona Minnesota
and Matamoros, Mexico, and leases a production facility in Batavia, Ohio and a distribution center in Brownsville, Texas.
The Columbus, Ohio plant is located at 800 Manor Park Drive on approximately 28 acres of land. The Company acquired the
property at 800 Manor Park Drive in 1996 as a result of the Asset Purchase Agreement with Navistar. The Company added
approximately 6,000 square feet to the Columbus plant during 2014 in connection with its SMC capacity expansion. The current
338,000 square feet of available floor space at the Columbus, Ohio plant is comprised of the following:
Manufacturing/Warehouse
Office
Total
Approximate
Square Feet
322,000
16,000
338,000
The Gaffney, South Carolina plant, which was opened in 1998, is located at 24 Commerce Drive, Meadow Creek Industrial Park
on approximately 21 acres of land. The approximate 111,000 square feet of available floor space at the Gaffney, South Carolina
plant is comprised of the following:
Manufacturing/Warehouse
Office
Total
Approximate
Square Feet
106,000
5,000
111,000
The Winona, Minnesota plant which was acquired in 2015 is located at 1700 Wilkie Drive. The facility consists of approximately
87,000 square feet on approximately 7 acres comprised of the following:
Manufacturing/Warehouse
Office
Total
Approximate
Square Feet
81,000
6,000
87,000
The Matamoros, Mexico plant which was opened in 2009 is located at Guillermo Gonzalez Camarena y Thomas Alva Edison
Manzana, Matamoros, Tamaulipas, Mexico. The facility consists of approximately 476,000 square feet on approximately 22 acres
comprised of the following:
Manufacturing/Warehouse
Office
Total
Approximate
Square Feet
461,000
15,000
476,000
19
The Columbus, Ohio, Gaffney, South Carolina, Winona, Minnesota and Matamoros, Mexico properties are subject to liens and
security interests as a result of the properties being pledged by the Company as collateral for its debt as described in Note 9 of
the “Notes to Consolidated Financial Statements” in Part II, Item 8 of this Annual Report on Form 10-K.
The Company leases a production plant in Batavia, Ohio located at 4174 Half Acre Road on approximately 9 acres of land. The
current 7-year operating lease agreement expires in July 2019. The approximate 108,000 square feet of available floor space at
the Batavia, Ohio plant is comprised of the following:
Manufacturing/Warehouse
Office
Total
Approximate
Square Feet
104,000
4,000
108,000
The Company leases a warehouse and distribution center in Brownsville, Texas located at 1385 Cheers Street on approximately
2 acres of land. The current 5-year operating lease agreement expires in October 2017. The approximate 42,000 square feet of
available floor space at the Brownsville, Texas location is comprised of the following:
Warehouse/Distribution
Office
Total
Approximate
Square Feet
39,000
3,000
42,000
ITEM 3. LEGAL PROCEEDINGS
From time to time, the Company is involved in litigation incidental to the conduct of its business. The Company is presently not
involved in any legal proceedings which in the opinion of management are likely to have a material adverse effect on the
Company's consolidated financial position or results of operations.
ITEM 4. MINE SAFETY DISCLOSURE
None.
20
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
The Company's common stock is traded on the NYSE MKT LLC under the symbol “CMT”.
The table below sets forth the high and low sale prices of the Company for each full quarterly period within the two most recent
fiscal years for which such stock was traded.
Core Molding Technologies, Inc.
High
Low
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
$
$
2015
2015
2015
2015
2014
2014
2014
2014
22.00 $
23.40
28.95
17.31
14.27 $
14.78
13.95
15.49
11.00
16.86
17.02
13.61
12.47
12.50
10.18
11.21
The Company's common stock was held by 313 holders of record on March 10, 2016.
The Company made no payments of cash dividends during 2015, 2014 and 2013. The Company currently expects that its earnings
will be retained to finance the growth and development of its business and does not anticipate paying dividends on its common
stock in the foreseeable future.
Equity Compensation Plan Information
The following table shows certain information concerning our common stock to be issued in connection with our equity
compensation plans as of December 31, 2015:
Number of Shares
to be Issued Upon
Exercise of
Outstanding
Options or
Vesting of
Restricted Grants
Weighted
Average
Exercise Price
of Outstanding
Options or
Restricted
Grants
Number of
Shares
Remaining
Available for
Future Issuance
112,907
$
16.86
1,542,615
Plan Category
Equity compensation plans approved by
stockholders
There were no stock repurchases during the three months ended December 31, 2015.
21
22
ITEM 6. SELECTED FINANCIAL DATA
The following selected financial data is derived from the audited consolidated financial statements of the Company. The
information set forth below should be read in conjunction with “Management's Discussion and Analysis of Financial Condition
and Results of Operations,” the consolidated financial statements and related notes included elsewhere in this Annual Report on
Form 10-K.
(In thousands, except per share data)
2015
Years Ended December 31,
2013
2012
2014
2011
Operating Data:
Product sales
Tooling sales
Net sales
Gross margin
Income before interest and taxes
Net income
Earnings Per Share Data:
Net income per common share:
Basic
Diluted
Balance Sheet Data:
Total assets
Working capital
Long-term debt
Stockholders' equity
Return on beginning equity
Book value per share
$ 189,103
9,965
199,068
36,252
18,498
12,050
$ 169,744
5,460
175,204
30,186
14,647
9,634
$ 134,096
10,029
144,125
23,574
10,114
6,866
$ 149,698
12,752
162,450
25,848
12,490
8,190
$ 138,845
4,576
143,421
29,883
16,944
10,526
$
$
1.59
1.58
$
$
1.28
1.28
$
$
0.95
0.92
$
$
1.15
1.11
$ 139,803
31,534
9,750
88,733
$ 117,715
23,244
714
76,146
$ 97,121
17,869
2,429
67,448
$ 91,849
18,639
5,743
57,998
$
$
$
1.51
1.44
93,298
16,983
9,477
50,096
16%
14%
$
11.68
$
10.07
$
12 %
9.22
$
16%
8.13
$
28%
7.11
23
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Certain statements under this caption of this Annual Report on Form 10-K constitute forward-looking statements within the
meaning of the federal securities laws. As a general matter, forward-looking statements are those focused upon future plans,
objectives or performance as opposed to historical items and include statements of anticipated events or trends and expectations
and beliefs relating to matters not historical in nature. Such forward-looking statements involve known and unknown risks and
are subject to uncertainties and factors relating to Core Molding Technologies' operations and business environment, all of which
are difficult to predict and many of which are beyond Core Molding Technologies' control. Words such as “may,” “will,” “could,”
“would,” “should,” “anticipate,” “predict,” “potential,” “continue,” “expect,” “intend,” “plans,” “projects,” “believes,”
“estimates,” “confident” and similar expressions are used to identify these forward-looking statements. These uncertainties and
factors could cause Core Molding Technologies' actual results to differ materially from those matters expressed in or implied by
such forward-looking statements.
Core Molding Technologies believes that the following factors, among others, could affect its future performance and cause
actual results to differ materially from those expressed or implied by forward-looking statements made in this report: business
conditions in the plastics, transportation, marine and commercial product industries (including slowdown in demand for truck
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decision to pursue new products or businesses which involve additional costs, risks or capital expendit(cid:88)(cid:85)(cid:72)(cid:86)(cid:30)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3) (cid:85)(cid:76)(cid:86)(cid:78)(cid:86)(cid:3)
identified from time to time in Core Molding Technologies’ other public documents on file with the Securities and Exchange
Commission, including those described in Item 1A of this Annual Report on Form 10-K.
24
OVERVIEW
Core Molding Technologies is a manufacturer of sheet molding compound ("SMC") and molder of fiberglass reinforced plastics.
The Company specializes in large-format moldings and offers a wide range of fiberglass processes, including compression
molding of SMC, glass mat thermoplastics ("GMT"), bulk molding compounds ("BMC") and direct long-fiber thermoplastics
("D-(cid:47)(cid:41)(cid:55)(cid:5)(cid:12)(cid:30)(cid:3)(cid:86)(cid:83)(cid:85)(cid:68)(cid:92)-up, hand lay-up, and resin transfer molding ("RTM"). Additionally, the Company offers reaction injection
molding ("RIM"), utilizing dicyclopentadiene technology. Core Molding Technologies serves a wide variety of markets, including
the medium and heavy-duty truck, marine, automotive, agriculture, construction and other commercial products. Product sales to
medium and heavy-duty truck markets accounted for 78% of the Company’s sales for the year ended December 31, 2015 and
83% of the Company's sales for the year ended December 31, 2014 and 81% of the Company's sales for the year ended December
31, 2013. The demand for Core Molding Technologies’ products is affected by economic conditions in the United States, Mexico,
and Canada. Core Molding Technologies’ manufacturing operations have a significant fixed cost component. Accordingly, during
periods of changing demand, the profitability of Core Molding Technologies’ operations may change proportionately more than
revenues from operations.
In 1996, Core Molding Technologies acquired substantially all of the assets and assumed certain liabilities of Columbus Plastics,
a wholly owned operating unit of Navistar’s truck manufacturing division since its formation in late 1980. Columbus Plastics,
located in Columbus, Ohio, was a compounder and compression molder of SMC. In 1998, Core Molding Technologies began
operations at its second facility in Gaffney, South Carolina, and in 2001, Core Molding Technologies added a production facility
in Matamoros, Mexico by acquiring certain assets of Airshield Corporation. As a result of this acquisition, Core Molding
Technologies expanded its fiberglass molding capabilities to include the spray up, hand-lay-up open mold processes and RTM
closed molding. In 2004, Core Molding Technologies acquired substantially all the operating assets of Keystone Restyling
Products, Inc., a privately held manufacturer and distributor of fiberglass reinforced products for the automotive-aftermarket
industry. In 2005, Core Molding Technologies acquired certain assets of the Cincinnati Fiberglass Division of Diversified Glass,
Inc., a Batavia, Ohio-based, privately held manufacturer and distributor of fiberglass reinforced plastic components supplied
primarily to the heavy-duty truck market. In 2009, the Company completed construction of a new production facility in
Matamoros, Mexico that replaced its leased facility. Most recently, in March 2015, the Company acquired substantially all of the
assets of CPI Binani, Inc., a wholly owned subsidiary of Binani Industries Limited, located in Winona, Minnesota ("CPI"), which
expanded the Company's process capabilities to include D-LFT and diversified the customer base.
Core Molding Technologies recorded net income in 2015 of $12,050,000, or $1.59 per basic and $1.58 per diluted share,
compared with net income of $9,634,000, or $1.28 per basic and diluted share in 2014. Product sales in 2015 increased 11% from
2014, primarily from increased demand from Volvo and new sales from the acquisition of CPI.
Looking forward, the Company anticipates that 2016 sales levels will decrease as compared to 2015, due to lower demand from
medium and heavy duty truck customers. Medium and heavy duty truck customers as well as industry analysts are forecasting
decreases in Class 8 truck production of approximately 20% in 2016 compared to 2015.
RESULTS OF OPERATIONS
2015 COMPARED WITH 2014
Net sales for 2015 totaled $199,068,000, representing a 14% increase from the $175,204,000 reported for 2014. Included in total
sales were tooling project sales of $9,965,000 for 2015 and $5,460,000 for 2014. Tooling project sales result primarily from
customer approval and acceptance of molds and assembly equipment specific to their products as well as other non-production
services. These sales are sporadic in nature and fluctuate in regard to scope and related revenue on a period-to-period basis. Total
product sales for 2015, excluding tooling project sales, totaled $189,103,000, representing an 11% increase from the
$169,744,000 reported for 2014. In 2015, product sales were positively impacted by approximately $17,000,000 as a result of
both the acquisition of CPI and other new business starting production in 2015. Additional changes in customer demand positively
impacted sales by approximately $5,000,000. Partially offsetting these increases were lower product sales to PACCAR associated
with programs nearing the end of their production life of approximately $3,000,000.
25
Sales to Navistar in 2015 totaled $56,415,000, compared to $51,330,000 reported for 2014. Included in total sales are tooling
sales of $6,246,000 and $76,000 for 2015 and 2014, respectively. Product sales to Navistar decreased 2% in 2015 as compared
to 2014, primarily due to a change in demand.
Sales to Volvo in 2015 totaled $55,125,000, compared to $48,859,000 reported for 2014. Included in total sales are tooling sales
of $1,600,000 and $2,519,000 for 2015 and 2014, respectively. Product sales to Volvo increased by 16% in 2015 as compared to
2014, primarily due to a change in demand.
Sales to PACCAR in 2015 totaled $34,430,000, compared to $36,128,000 reported for 2014. Included in total sales are tooling
sales of $978,000 and $526,000 for 2015 and 2014, respectively. Product sales to PACCAR decreased 6% in 2015 as compared
to 2014. This decrease was primarily due to lower sales of products nearing the end of their production life, partially offset by a
change in demand for other products.
Sales to Yamaha in 2015 totaled $16,766,000, compared to $16,911,000 reported for 2014. The 1% decrease in sales was due to
changes in customer demand from Yamaha.
Sales to other customers in 2015 totaled $36,332,000, increasing 65% from $21,976,000 reported for 2014. Included in total sales
are tooling sales of $1,141,000 and $2,339,000 in 2015 and 2014, respectively. Product sales to other customers increased 79%
in 2015 as compared to 2014. In 2015, product sales were positively impacted from the acquisition of CPI and other new business
starting production in 2015. The remaining increase is primarily due to changes in demand from other customers.
Gross margin was approximately 18.2% of sales in 2015 and 17.2% in 2014. The gross margin increase, as a percent of sales,
was due to favorable foreign currency exchange effects of 1.1%, favorable net changes in selling price and material costs of 0.4%
and favorable contribution from CPI of 0.1%. These increases were offset by product mix and production inefficiencies of 0.4%
and higher fixed spending of 0.2%.
Selling, general and administrative expense (“SG&A”) totaled $17,754,000 in 2015, compared to $15,539,000 in 2014.
Contributing to the increase in SG&A expense were SG&A expenses of $993,000 from CPI, increased profit sharing costs of
$603,000, higher labor and benefits of $297,000 and higher travel expenses of $210,000.
Net interest expense totaled $330,000 for the year ended December 31, 2015, compared to net interest expense of $122,000 for
the year ended December 31, 2014. The interest on the term loan related to the acquisition of CPI and lower capitalized interest
resulted in an increase in net interest expense of $301,000. Partially offsetting this increase, were lower interest costs due to the
reductions in Capex loan balance and the revolving line of credit in 2015.
Income tax expense was approximately 34% of total income before income taxes in 2015 and 2014. Net income for 2015 was
$12,050,000 or $1.59 per basic and $1.58 per diluted share, compared with net income of $9,634,000 or $1.28 per basic and
diluted share for 2014.
2014 COMPARED WITH 2013
Net sales for 2014 totaled $175,204,000, representing a 22% increase from the $144,125,000 reported for 2013. Included in total
sales were tooling project sales of $5,460,000 for 2014 and $10,029,000 for 2013. Tooling project sales result primarily from
customer approval and acceptance of molds and assembly equipment specific to their products as well as other non-production
services. These sales are sporadic in nature and fluctuate in regard to scope and related revenue on a period-to-period basis. Total
product sales for 2014, excluding tooling project sales, totaled $169,744,000, representing a 27% increase from the
$134,096,000 reported for 2013. In 2014, sales were positively impacted by approximately $37,000,000 from new business
starting production in 2014 and the full year impact of new business started in 2013. Other customer demand increases positively
impacted sales by approximately $9,000,000. Partially offsetting these increases were lower product sales to PACCAR associated
with programs nearing the end of their production life of approximately $10,000,000.
26
Sales to Navistar in 2014 totaled $51,330,000, compared to $47,356,000 reported for 2013. Included in total sales are tooling
sales of $76,000 and $972,000 for 2014 and 2013, respectively. Product sales to Navistar increased 11% in 2014 as compared
to 2013 primarily due to a change in demand.
Sales to Volvo in 2014 totaled $48,859,000, compared to $12,444,000 reported for 2013. Included in total sales are tooling sales
of $2,519,000 and $936,000 for 2014 and 2013, respectively. Product sales to Volvo increased by $34,832,000 in 2014 as
compared to 2013 primarily due to the full year impact of 2013 business awards, which did not start generating product revenues
for the Company until the third quarter of 2013, and due to a change in demand.
Sales to PACCAR in 2014 totaled $36,128,000, compared to $50,154,000 reported for 2013. Included in total sales are tooling
sales of $526,000 and $7,370,000 for 2014 and 2013, respectively. Product sales to PACCAR decreased 17% in 2014 as
compared to 2013. This decrease was primarily due to lower sales of products nearing the end of their production life of
approximately $10,000,000, partially offset by sales of new products of approximately $2,000,000 and from a change in demand
from PACCAR of approximately $1,000,000.
Sales to Yamaha in 2014 totaled $16,911,000, compared to $13,648,000 reported for 2013. This 24% increase in sales was due
to both Yamaha transitioning additional business to the Company and a change in demand from Yamaha.
Sales to other customers in 2014 totaled $21,976,000, increasing 7% from $20,523,000 reported for 2013. Included in total sales
are tooling sales of $2,339,000 and $751,000 in 2014 and 2013, respectively. Product sales in 2014 totaled $19,637,000, which
remained consistent with 2013 sales of $19,772,000.
Gross margin was approximately 17.2% of sales in 2014 and 16.4% in 2013. Improved fixed cost absorption favorably impacted
gross margin as a percent of sales by 1.5%, due to higher production volumes. In addition, production efficiencies favorably
impacted gross margin as a percent of sales by 1.4%. Partially offsetting these improvements was the change in sales mix, which
resulted in an unfavorable impact on gross margin of 2.1%.
Selling, general and administrative expense (“SG&A”) totaled $15,539,000 in 2014, compared to $13,460,000 in 2013. The
increase is primarily driven by increases in labor and benefit related expenses of $1,049,000, profit sharing of $734,000, and
outside service costs $347,000, which were primarily incurred during the third quarter in connection with certain strategic
initiatives, including an unsuccessful bid for a targeted acquisition.
Net interest expense totaled $122,000 for the year ended December 31, 2014, compared to net interest expense of $214,000 for
the year ended December 31, 2013. Reductions in outstanding term loan balances and higher capitalized interest reduced interest
expense by $130,000. Partially offsetting this reduction was an increase in interest expense of $43,000 due to outstanding revolver
line of credit balance during 2014.
Income tax expense was approximately 34% and 31% of total income before income taxes in 2014 and 2013, respectively.
Income tax as a percent of total income in 2013 was lower, primarily due to a one-time $240,000 favorable credit to deferred
income taxes associated with Mexican tax reform. Net income for 2014 was $9,634,000 or $1.28 per basic and diluted share,
compared with net income of $6,866,000 or $0.95 per basic and $0.92 per diluted share for 2013.
LIQUIDITY AND CAPITAL RESOURCES
The Company’s primary sources of funds have been cash generated from operating activities and borrowings from third parties.
Primary cash requirements are for operating expenses, capital expenditures and acquisition.
In 2008, the Company and its wholly owned subsidiary, Corecomposites de Mexico, S. de R.L. de C.V., entered into a Credit
Agreement to refinance some existing debt and borrow funds to finance the construction of the Company’s manufacturing facility
in Mexico.
27
Under this Credit Agreement, the Company received certain loans, subject to the terms and conditions stated in the agreement,
(cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:72)(cid:71)(cid:3)(cid:11)(cid:20)(cid:12)(cid:3)(cid:68)(cid:3)(cid:7)(cid:20)(cid:21)(cid:15)(cid:19)(cid:19)(cid:19)(cid:15)(cid:19)(cid:19)(cid:19)(cid:3)(cid:38)(cid:68)(cid:83)(cid:72)(cid:91)(cid:3)(cid:79)(cid:82)(cid:68)(cid:81)(cid:30)(cid:3)(cid:11)(cid:21)(cid:12)(cid:3)(cid:68)(cid:81)(cid:3)(cid:7)(cid:27)(cid:15)(cid:19)(cid:19)(cid:19)(cid:15)(cid:19)(cid:19)(cid:19)(cid:3)(cid:48)(cid:72)(cid:91)(cid:76)(cid:70)(cid:68)(cid:81)(cid:3)(cid:79)(cid:82)(cid:68)(cid:81)(cid:30)(cid:3)(cid:11)(cid:22)(cid:12)(cid:3)(cid:68)(cid:81)(cid:3)(cid:7)(cid:27)(cid:15)(cid:19)(cid:19)(cid:19)(cid:15)(cid:19)(cid:19)(cid:19)(cid:3)(cid:85)(cid:72)(cid:89)(cid:82)(cid:79)(cid:89)(cid:76)(cid:81)(cid:74)(cid:3)(cid:79)(cid:76)(cid:81)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:30)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)
(4) a letter of credit in an undrawn face amount of $3,332,493 with respect to the Company’s existing industrial development
revenue bond financing. The Credit Agreement is secured by a guarantee of each U.S. subsidiary of the Company and by a lien
on substantially all of the present and future assets of the Company and its U.S. subsidiaries, except that only 65% of the stock
issued by Corecomposites de Mexico, S. de C.V. has been pledged. The $8,000,000 Mexican loan was also secured by
substantially all of the present and future assets of the Company’s Mexican subsidiary.
On March 27, 2013, the Company and its wholly owned subsidiary, Corecomposites de Mexico, S. de R.L. de C.V., entered into
an eighth amendment (the "Eighth Amendment") to the Credit Agreement. Pursuant to the terms of the Eighth Amendment, the
parties agreed to modify certain terms of the Credit Agreement. These modifications included (1) an increase to the borrowing
(cid:79)(cid:76)(cid:80)(cid:76)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:89)(cid:82)(cid:79)(cid:89)(cid:76)(cid:81)(cid:74)(cid:3)(cid:79)(cid:76)(cid:81)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:7)(cid:27)(cid:15)(cid:19)(cid:19)(cid:19)(cid:15)(cid:19)(cid:19)(cid:19)(cid:3)(cid:87)(cid:82)(cid:3)(cid:7)(cid:20)(cid:27)(cid:15)(cid:19)(cid:19)(cid:19)(cid:15)(cid:19)(cid:19)(cid:19)(cid:30)(cid:3)(cid:11)(cid:21)(cid:12)(cid:3)(cid:80)(cid:82)(cid:71)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:73)(cid:76)(cid:91)(cid:72)(cid:71)(cid:3)(cid:70)(cid:75)(cid:68)(cid:85)(cid:74)(cid:72)(cid:3)(cid:71)(cid:72)(cid:73)(cid:76)(cid:81)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:87)(cid:82)(cid:3)(cid:72)(cid:91)(cid:70)(cid:79)ude
capital expenditures of up to $18,000,000 associated with the Company's compression molding capacity expansion and any sheet
(cid:80)(cid:82)(cid:79)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:82)(cid:88)(cid:81)(cid:71)(cid:3)(cid:80)(cid:68)(cid:81)(cid:88)(cid:73)(cid:68)(cid:70)(cid:87)(cid:88)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:70)(cid:68)(cid:83)(cid:68)(cid:70)(cid:76)(cid:87)(cid:92)(cid:3)(cid:72)(cid:91)(cid:83)(cid:68)(cid:81)(cid:86)(cid:76)(cid:82)(cid:81)(cid:30)(cid:3)(cid:11)(cid:22)(cid:12)(cid:3)(cid:87)(cid:82)(cid:3)(cid:72)(cid:91)(cid:87)(cid:72)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:83)(cid:72)(cid:85)(cid:76)(cid:82)(cid:71)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:89)(cid:82)(cid:79)(cid:89)(cid:76)(cid:81)(cid:74)(cid:3)(cid:79)(cid:76)(cid:81)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:87)(cid:82)(cid:3)
(cid:48)(cid:68)(cid:92)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)(cid:30)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:11)(cid:23)(cid:12)(cid:3)(cid:87)(cid:82)(cid:3)(cid:70)ancel, effective immediately, the unused $10,000,000 Mexican Expansion Revolving Loan.
On October 31, 2013, the Company and its wholly owned subsidiary, Corecomposites de Mexico, S. de R.L. de C.V., entered
into a ninth amendment (the "Ninth Amendment") to the Credit Agreement. Pursuant to the terms of the Ninth Amendment, the
parties agreed to decrease the applicable margin for interest rates on Eurodollar Loans and Daily Libor Loans to 160 basis points
from 175 basis points.
On March 20, 2015, the Company and its wholly owned subsidiary, Corecomposites de Mexico, S. de R.L. de C.V., entered into
a tenth amendment (the "Tenth Amendment") to the Credit Agreement. Pursuant to the terms of the Tenth Amendment, the parties
agreed to modify certain terms of the Credit Agreement. These modifications included an extension of the commitment period
for the revolving line of credit to May 31, 2017 and an agreement to make a term loan in an original amount of $15,500,000, to
finance the acquisition of CPI. On March 30, 2015, the Company repaid $500,000 of unused proceeds from the original term
loan.
Cash provided by operating activities totaled $18,615,000 for the year ended December 31, 2015. Net income of $12,050,000
positively impacted operating cash flows. Non-cash deductions of depreciation and amortization included in net income
amounted to $6,041,000. Changes in working capital decreased cash provided by operating activities by $978,000. Changes in
working capital primarily relate to a decrease in accrued and other liabilities, as well as increases in inventory and accounts
receivable. These were partially offset by an increase in accounts payable, as well as decreases in tax receivables and prepaid
assets.
Cash used in investing activities totaled $20,195,000 for the year ended December 31, 2015, which includes $14,512,000 to
acquire CPI and $5,683,000 related to capacity expansions and equipment purchases at the Company’s production facilities. The
Company anticipates spending approximately $7,000,000 during 2016 on property, plant and equipment purchases for all of the
Company's operations. The Company anticipates using cash from operations and its revolving line of credit to finance this capital
investment. At December 31, 2015, purchase commitments for capital expenditures in progress were approximately $1,102,000.
Cash provided by financing activities totaled $8,211,000 for the year ended December 31, 2015. Net new borrowings of
$15,000,000 were utilized to fund the acquisition of CPI. Cash used in financing activities included net repayments of $2,768,000
on the revolving line of credit and $3,964,000 of scheduled repayments of principal on the Company’s Capex and Term loans.
Additionally reductions in taxes payable due to disqualified dispositions and vesting of restricted stock contributed $211,000 to
cash flow. Purchases of treasury stock to satisfy employee tax withholding requirements on vested restricted stock reduced cash
flow from financing activities by $287,000.
At December 31, 2015, the Company had cash on hand of $8,943,000 and an available revolving line of credit of $18,000,000.
Management believes that cash on hand, cash flow from operating activities and available borrowings under the Credit Agreement
will be sufficient to meet the Company’s current liquidity needs. If a material adverse change in the financial position of the
28
Company should occur, or if actual sales or expenses are substantially different than what has been forecasted, the Company's
liquidity and ability to obtain further financing to fund future operating and capital requirements could be negatively impacted.
The Company is required to meet certain financial covenants included in the Credit Agreement with respect to leverage ratios,
fixed charge ratios, capital expenditures as well as other customary affirmative and negative covenants. As of December 31, 2015,
the Company was in compliance with its financial covenants.
Management regularly evaluates the Company’s ability to effectively meet its debt covenants. Based on the Company’s forecast,
which is primarily based on industry analysts’ estimates of heavy and medium-duty truck production volumes, as well as other
assumptions, management believes that the Company will be able to maintain compliance with its financial covenants for the
next 12 months.
On November 14, 2014 the Company filed a universal shelf Registration Statement on Form S-3 (the “Registration Statement”)
with the SEC in accordance with the Securities Act of 1933, as amended, which became effective on November 25, 2014. The
Registration Statement registered common stock, preferred stock, debt securities, warrants, depositary shares, rights, units and
any combination of the foregoing, for a maximum aggregate offering price of up to $50 million, which may be sold from time to
time. The terms of any securities offered under the Registration Statement and intended use of proceeds will be established at
the times of the offerings and will be described in prospectus supplements filed with the SEC at the times of the offerings. The
Registration Statement has a three year term.
CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET TRANSACTIONS
The Company has the following minimum commitments under contractual obligations, including purchase obligations, as defined
by the SEC. A “purchase obligation” is defined as an agreement to purchase goods or services that is enforceable and legally
(cid:69)(cid:76)(cid:81)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:86)(cid:83)(cid:72)(cid:70)(cid:76)(cid:73)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:79)(cid:79)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:87)(cid:72)(cid:85)(cid:80)(cid:86)(cid:15)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:29)(cid:3)(cid:73)(cid:76)(cid:91)(cid:72)(cid:71)(cid:3)(cid:82)(cid:85)(cid:3)(cid:80)(cid:76)(cid:81)(cid:76)(cid:80)(cid:88)(cid:80)(cid:3)(cid:84)(cid:88)(cid:68)(cid:81)(cid:87)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:69)(cid:72)(cid:3)(cid:83)(cid:88)(cid:85)(cid:70)(cid:75)(cid:68)(cid:86)(cid:72)(cid:71)(cid:30)(cid:3)(cid:73)(cid:76)(cid:91)(cid:72)d,
min(cid:76)(cid:80)(cid:88)(cid:80)(cid:15)(cid:3)(cid:82)(cid:85)(cid:3)(cid:89)(cid:68)(cid:85)(cid:76)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:83)(cid:85)(cid:76)(cid:70)(cid:72)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:86)(cid:76)(cid:82)(cid:81)(cid:86)(cid:30)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:83)(cid:83)(cid:85)(cid:82)(cid:91)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:3)(cid:87)(cid:76)(cid:80)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:87)(cid:85)(cid:68)(cid:81)(cid:86)(cid:68)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:17)(cid:3)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:79)(cid:82)(cid:81)(cid:74)-term liabilities are defined as
long-term liabilities that are reflected on the Company’s balance sheet under accounting principles generally accepted in the
United States. Based on this definition, the table below includes only those contracts which include fixed or minimum obligations.
It does not include normal purchases, which are made in the ordinary course of business.
The following table provides aggregated information about the maturities of contractual obligations and other long-term liabilities
as of December 31, 2015:
Long-term debt
Interest(A)
Operating lease
obligations
Contractual
commitments for
capital expenditures(B)
Post retirement benefits
Total
2016
2017
2018
2019
$ 3,714,000 $ 3,000,000 $ 3,000,000 $ 3,000,000 $
273,000
182,000
115,000
48,000
539,000
486,000
328,000
192,000
1,102,000
—
—
—
2020 and
after
750,000 $ 13,464,000
619,000
1,000
Total
—
—
1,545,000
1,102,000
1,060,000
9,006,000
$ 6,688,000 $ 4,060,000 $ 3,813,000 $ 3,608,000 $ 7,567,000 $ 25,736,000
6,816,000
370,000
392,000
368,000
(A) Variable interest rates were as of December 31, 2015.
(B) Includes $464,000 recorded on the balance sheet in accounts payable at December 31, 2015.
Interest is calculated based on the effective interest rates on the Company’s borrowing arrangements reflective of the interest rate
swap agreement in place for the long-term borrowings. As of December 31, 2015, the Company had no off-balance sheet
arrangements.
29
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Management’s Discussion and Analysis of Financial Condition and Results of Operations discuss the Company’s consolidated
financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.
The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis,
management evaluates its estimates and judgments, including those related to accounts receivable, inventories, goodwill and
other long-lived assets, self-insurance, post retirement benefits, and income taxes. Management bases its estimates and judgments
on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different assumptions or conditions.
Management believes the following critical accounting policies, among others, affect its more significant judgments and estimates
used in the preparation of its consolidated financial statements.
Accounts Receivable Allowances
Management maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make
required payments. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their
ability to make payments, additional allowances may be required. The Company recorded an allowance for doubtful accounts of
$40,000 at December 31, 2015 and $289,000 at December 31, 2014. Management also records estimates for chargebacks for
customer returns and deductions, discounts offered to customers, and price adjustments. Should customer chargebacks fluctuate
from the estimated amounts, additional allowances may be required. The Company has reduced accounts receivable for
chargebacks by $523,000 at December 31, 2015 and $813,000 at December 31, 2014.
Inventories
Inventories, which include material, labor and manufacturing overhead, are valued at the lower of cost or market. The inventories
are accounted for using the first-in, first-out (FIFO) method of determining inventory costs. Inventory quantities on-hand are
regularly reviewed, and where necessary, provisions for excess and obsolete inventory are recorded based on historical and
anticipated usage. The Company has recorded an allowance for excess and obsolete inventory of $863,000 at December 31, 2015
and $940,000 at December 31, 2014.
Long-Lived Assets
Long-lived assets consist primarily of property, plant and equipment and definite-lived intangibles. The Company acquired the
majority of the assets of CPI on March 20, 2015, which resulted in approximately $650,000 of definite-lived intangibles and
$12,474,000 of property, plant and equipment, all of which were recorded at fair value. The recoverability of long-lived assets is
evaluated by an analysis of operating results and consideration of other significant events or changes in the business environment.
The Company evaluates whether impairment exists for long-lived assets on the basis of undiscounted expected future cash flows
from operations before interest. There was no impairment of the Company's long-lived assets for the years ended December 31,
2015, 2014 and 2013.
Goodwill
The Company has recorded $2,403,000 of goodwill as a result of two acquisitions. In 2001, the Company acquired certain assets
of Airshield Corporation, and as a result, recorded goodwill in the amount of $1,097,000. The Company also acquired
substantially all of the assets of CPI on March 20, 2015, which resulted in approximately $1,306,000 of goodwill.
30
The Company evaluates goodwill annually on December 31st to determine whether impairment exists, or at interim periods if an
indicator of possible impairment exists. The Company evaluates goodwill for impairment utilizing the one-step qualitative
assessment. We consider relevant events and circumstances that affect the fair value or carrying amount of the Company. Such
events and circumstances could include macroeconomic conditions, industry and market conditions, cost factors, overall financial
performance, entity specific events and capital markets pricing. The Company places more weight on the events and
circumstances that most affect the Company's fair value or carrying amount. These factors are all considered by management in
reaching its conclusion about whether to perform the first step of the impairment test.
If the Company's fair value is determined to be more likely than not impaired based on the one-step qualitative approach, a
quantitative valuation to estimate the fair value of the Company is performed. Fair value measurements are based on a projected
discounted cash flow valuation model, in accordance with ASC 350, “Intangibles-Goodwill and Other.”
There was no impairment of the Company's goodwill for the years ended December 31, 2015, 2014 and 2013.
Self-Insurance
The Company is self-insured with respect to its Columbus and Batavia, Ohio, Gaffney, South Carolina and Brownsville, Texas
medical, dental and vision claims and Columbus and Batavia, Ohio workers’ compensation claims, all of which are subject to
stop-loss insurance thresholds. The Company has recorded an estimated liability for self-insured medical and dental claims
incurred but not reported and worker’s compensation claims incurred but not reported at December 31, 2015 and December 31,
2014 of $1,074,000 and $1,165,000, respectively.
Post Retirement Benefits
Management records an accrual for post retirement costs associated with the health care plan sponsored by the Company for
certain employees. Should actual results differ from the assumptions used to determine the reserves, additional provisions may
be required. In particular, increases in future healthcare costs above the assumptions could have an adverse effect on the
Company's operations. The effect of a change in healthcare costs is described in Note 12 of the Notes to Consolidated Financial
Statements. Core Molding Technologies had a liability for post retirement healthcare benefits based on actuarially computed
estimates of $9,006,000 at December 31, 2015 and $9,172,000 at December 31, 2014.
Revenue Recognition
Revenue from product sales is recognized at the time products are shipped and title transfers. Allowances for returned products
and other credits are estimated and recorded as revenue is recognized. Tooling revenue is recognized when the customer approves
the tool and accepts ownership. Progress billings and expenses are shown net as an asset or liability on the Company’s
Consolidated Balance Sheet. Tooling in progress can fluctuate significantly from period to period and is dependent upon the stage
of tooling projects and the related billing and expense payment timetable for individual projects and therefore does not necessarily
reflect projected income or loss from tooling projects. At December 31, 2015, the Company had a net liability related to tooling
in progress of $2,271,000, which represents approximately $21,967,000 of progress tooling billings and $19,696,000 of progress
tooling expenses. At December 31, 2014 the Company had a net liability related to tooling in progress of $8,068,000, which
represents approximately $10,407,000 of progress tooling billings and $2,339,000 of progress tooling expenses.
Income Taxes
Management assesses the need for a valuation allowance to reduce its deferred tax assets to the amount that it believes is more
likely than not to be realized. The Company has considered future taxable income in assessing the need for a valuation allowance
and has not recorded a valuation allowance due to anticipating it being more likely than not that the Company will realize these
benefits.
31
An analysis is performed to determine the amount of the deferred tax asset that will be realized. Such analysis is based upon the
premise that the Company is and will continue as a going concern and that it is more likely than not that deferred tax benefits
will be realized through the generation of future taxable income. Management reviews all available evidence, both positive and
negative, to assess the long-term earnings potential of the Company using a number of alternatives to evaluate financial results
in economic cycles at various industry volume conditions. Other factors considered are the Company’s relationships with its
major customers, and any recent customer diversification efforts. The projected availability of taxable income to realize the tax
benefits from the reversal of temporary differences before expiration of these benefits are also considered. Management believes
that, with the combination of available tax planning strategies and the maintenance of its relationships with its key customers,
earnings are achievable in order to realize the net deferred tax asset.
Management recognizes the financial statement effects of a tax position when it is more likely than not the position will be
sustained upon examination.
Recent Accounting Pronouncements
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the
revenue recognition requirements in ASC 605, Revenue Recognition. ASU Topic 606 is based on the principle that revenue is
recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services. The ASU Topic 606 also requires additional disclosure about the
nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant
judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The effective date
for ASU Topic 606 has been delayed until the first quarter of fiscal year 2018 using one of two retrospective application methods.
The Company is currently assessing the transition alternatives and potential impact the pronouncement and adoption of ASU
Topic 606 will have on the Company’s financial statements. Early adoption is permitted, but not before annual periods beginning
after December 15, 2016.
In August 2014, the FASB issued Accounting Standards Update No. 2014-15, "Presentation of Financial Statements-Going
Concern (Topic 205-40)" ("ASU 2014-15"). Under the standard, management is required to evaluate for each annual and interim
reporting period whether it is probable that the entity will not be able to meet its obligations as they become due within one year
after the date that financial statements are issued. ASU 2014-15 is effective for fiscal years, and interim periods within those
years, beginning after December 15, 2016, and early adoption is permitted. Accordingly, the standard is effective for the Company
on January 1, 2017. The Company does not believe that the pronouncement will have an impact on the Company's financial
statements.
In February 2015, the FASB issued ASU No. 2015-03, "Interest-Imputation of Interest (Subtopic 835-30): Simplifying the
Presentation of Debt Issuance Costs ("ASU 2015-03"). Under the standard, debt issuance costs are required to be recorded as a
direct reduction of the debt liability on the balance sheet rather than as an asset. The standard is effective for the Company as of
January 1, 2016 and is not expected to significantly impact the Company's financial statements.
In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory, which changes the measurement
principle for inventory from the lower of cost or market to lower of cost and net realizable value. The amendments in this guidance
do not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. The amendments apply
to all other inventory, which includes inventory that is measured using first-in, first-out or average cost. Within the scope of this
new guidance, an entity should measure inv(cid:72)(cid:81)(cid:87)(cid:82)(cid:85)(cid:92)(cid:3)(cid:68)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:79)(cid:82)(cid:90)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:3)(cid:82)(cid:85)(cid:3)(cid:81)(cid:72)(cid:87)(cid:3)(cid:85)(cid:72)(cid:68)(cid:79)(cid:76)(cid:93)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:30)(cid:3) (cid:90)(cid:75)(cid:72)(cid:85)(cid:72)(cid:15)(cid:3) (cid:81)(cid:72)(cid:87)(cid:3)(cid:85)(cid:72)(cid:68)(cid:79)(cid:76)(cid:93)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3) (cid:76)(cid:86)(cid:3)
defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal,
and transportation. The new guidance is effective for annual periods beginning after December 15, 2016, with early adoption
permitted. The new guidance must be applied on a prospective basis. The Company does not believe that the pronouncement will
have a material impact on the Company's financial statements.
32
In September 2015, the FASB issued ASU No. 2015-16, Business Combinations: Simplifying the Accounting for Measurement-
Period Adjustments, which is an accounting standards update with new guidance that eliminates the requirement in a business
combination to restate prior period financial statements for measurement period adjustments. Instead, measurement period
adjustments will be recognized in the reporting period in which the adjustment is identified. The standards update is effective for
fiscal years and interim periods beginning after December 15, 2015. The amendments should be applied prospectively to
measurement period adjustments that occur after the effective date of this update with early adoption permitted for financial
statements that have not been issued. The Company will adopt this standards update as required and recognize any such future
adjustments accordingly.
In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes (Topic 740). This update
requires all deferred tax assets and liabilities, and any related valuation allowance, to be classified as noncurrent on the balance
sheet. The ASU simplifies the current standard, which requires entities to separately present deferred tax assets and liabilities as
current and noncurrent in a classified balance sheet. The ASU is effective for annual reporting periods beginning on or after
December 15, 2016, and interim periods within those annual periods. Earlier application is permitted for all entities as of the
beginning of an interim or annual reporting period. The Company will adopt this standards update as required and does not expect
the adoption of this ASU to have a material impact on our consolidated financial statements.
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02,
Leases (Topic 842). This update requires organizations to recognize lease assets and lease liabilities on the balance sheet and also
disclose key information about leasing arrangements. This ASU is effective for annual reporting periods beginning on or after
December 15, 2018, and interim periods within those annual periods. Earlier application is permitted for all entities as of the
beginning of an interim or annual period. The Company will adopt this standards update as required and does not expect the
adoption of this ASU to have a material impact on our consolidated financial statements.
33
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Core Molding Technologies’ primary market risk results from changes in the price of commodities used in its manufacturing
operations. Core Molding Technologies is also exposed to fluctuations in interest rates and foreign currency fluctuations
associated with the Mexican Peso. Core Molding Technologies does not hold any material market risk sensitive instruments for
trading purposes.
Core Molding Technologies has the following five items that are sensitive to market risks at December 31, 2015: (1) Revolving
(cid:47)(cid:76)(cid:81)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:38)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:36)(cid:74)(cid:85)(cid:72)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:69)(cid:72)(cid:68)(cid:85)(cid:86)(cid:3)(cid:68)(cid:3)(cid:89)(cid:68)(cid:85)(cid:76)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:85)(cid:68)(cid:87)(cid:72)(cid:30)(cid:3)(cid:11)(cid:21)(cid:12)(cid:3)(cid:38)(cid:68)(cid:83)(cid:72)(cid:91)(cid:3)(cid:47)(cid:82)(cid:68)(cid:81)(cid:3)(cid:83)(cid:68)(cid:92)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:68)(cid:3)(cid:89)(cid:68)(cid:85)(cid:76)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)st
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(cid:56)(cid:81)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:86)(cid:3)(cid:71)(cid:82)(cid:79)(cid:79)(cid:68)(cid:85)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:80)(cid:72)(cid:72)(cid:87)(cid:3)(cid:70)(cid:72)(cid:85)(cid:87)(cid:68)(cid:76)(cid:81)(cid:3)(cid:82)(cid:69)(cid:79)(cid:76)(cid:74)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:68)(cid:85)(cid:76)(cid:86)(cid:72)(cid:3)(cid:71)(cid:88)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:68)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:73)(cid:68)(cid:70)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:79)(cid:82)(cid:70)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:48)(cid:72)(cid:91)(cid:76)(cid:70)(cid:82)(cid:30)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:11)(cid:24)(cid:12)(cid:3)raw material
purchases in which Core Molding Technologies purchases various resins and fiberglass for use in production. The prices and
availability of these materials are affected by the prices of crude oil and natural gas as well as processing capacity versus demand.
Assuming a hypothetical 10% increase in commodity prices, Core Molding Technologies would be impacted by an increase in
raw material costs, which would have an adverse effect on operating margins.
Assuming a hypothetical 10% change in short-term interest rates, interest paid on the Company’s Line of Credit would impact
the interest paid by the Company, as the interest rate on these loans is based upon LIBOR, however, it would not have a material
effect on earnings before taxes.
A 10% change in future interest rate curves would impact the fair value of the Company’s interest rate swap, however, it would
not have a material effect on earnings before taxes.
34
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
Core Molding Technologies, Inc.
Columbus, Ohio
We have audited the accompanying consolidated balance sheets of Core Molding Technologies, Inc. and Subsidiaries as of
December 31, 2015 and 2014, and the related consolidated statements of income, comprehensive income, stockholders' equity,
and cash flows for each of the years in the three-year period ended December 31, 2015. We also have audited the consolidated
financial statement schedule, Schedule II - Valuation and Qualifying Accounts and Reserves, and the Company’s internal control
over financial reporting as of December 31, 2015, based on criteria established in the 2013 Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Core Molding
Technologies, Inc. and Subsidiaries’ management is responsible for these consolidated financial statements and consolidated
financial statement schedule, for maintaining effective internal control over financial reporting, and for its assessment of the
effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control
Over Financial Reporting. Our responsibility is to express an opinion on these consolidated financial statements and consolidated
financial statement schedule and an opinion on the company's internal control over financial reporting based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement and whether effective internal control over financial reporting was
maintained in all material respects. Our audits of the consolidated financial statements included examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of
internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing
the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances.
We believe that our audits provide a reasonable basis for our opinions.
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions
(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:30)(cid:3)(cid:11)(cid:21)(cid:12)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:3)(cid:85)(cid:72)(cid:68)(cid:86)(cid:82)(cid:81)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:68)(cid:86)(cid:86)(cid:88)(cid:85)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:87)(cid:85)(cid:68)(cid:81)(cid:86)(cid:68)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:72)(cid:71)(cid:3)(cid:68)(cid:86)(cid:3)(cid:81)(cid:72)(cid:70)(cid:72)(cid:86)(cid:86)(cid:68)(cid:85)(cid:92)(cid:3)(cid:87)(cid:82)(cid:3)(cid:83)(cid:72)(cid:85)(cid:80)(cid:76)(cid:87)(cid:3)(cid:83)(cid:85)(cid:72)(cid:83)(cid:68)(cid:85)ation
of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the
(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:69)(cid:72)(cid:76)(cid:81)(cid:74)(cid:3)(cid:80)(cid:68)(cid:71)(cid:72)(cid:3)(cid:82)(cid:81)(cid:79)(cid:92)(cid:3)(cid:76)(cid:81)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:85)(cid:71)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:68)(cid:88)(cid:87)(cid:75)(cid:82)(cid:85)(cid:76)(cid:93)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:71)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:30)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:11)(cid:22)(cid:12)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:3)
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As permitted, the Company has excluded the operations of CPI Binani, Inc. acquired during 2015, which is described in Note 7
of the consolidated financial statements, from the scope of management’s report on internal control over financial reporting. As
such, it has also been excluded from the scope of our audit of internal control over financial reporting.
35
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position
of Core Molding Technologies, Inc. and Subsidiaries as of December 31, 2015 and 2014, and the results of their operations and
their cash flows for each of the years in the three-year period ended December 31, 2015 in conformity with accounting principles
generally accepted in the United States of America. Also, in our opinion, the related consolidated financial statement schedule,
when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects,
the information set forth therein. Also, in our opinion, Core Molding Technologies, Inc. and Subsidiaries maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2015, based on criteria established in the
2013 Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission.
/s/ Crowe Horwath LLP
Columbus, Ohio
March 11, 2016
36
Core Molding Technologies, Inc. and Subsidiaries
Consolidated Statements of Income
Years Ended December 31,
2015
2014
2013
$ 189,103,000 $ 169,744,000 $ 134,096,000
10,029,000
144,125,000
9,965,000
199,068,000
5,460,000
175,204,000
162,816,000
145,018,000
120,551,000
36,252,000
30,186,000
23,574,000
Net sales:
Products
Tooling
Total net sales
Total cost of sales
Gross margin
Total selling, general and administrative expense
17,754,000
15,539,000
13,460,000
Income before interest and taxes
18,498,000
14,647,000
10,114,000
Interest expense
330,000
122,000
214,000
Income before income taxes
18,168,000
14,525,000
9,900,000
Income Taxes:
Current
Deferred
Total income taxes
Net income
Net income per common share:
Basic
Diluted
Weighted average shares outstanding:
Basic
Diluted
See notes to consolidated financial statements.
4,889,000
1,229,000
6,118,000
2,370,000
2,521,000
4,891,000
2,755,000
279,000
3,034,000
$ 12,050,000 $
9,634,000 $
6,866,000
$
$
1.59 $
1.58 $
1.28 $
1.28 $
0.95
0.92
7,583,000
7,623,000
7,508,000
7,553,000
7,220,000
7,435,000
37
Core Molding Technologies, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
Net income
Other comprehensive income:
Interest rate swaps:
Adjustment for amortization of
losses included in net income
Income tax expense
Post retirement benefit plan
adjustments:
Net actuarial (loss) gain
Prior service costs
Income tax benefit (expense)
Years Ended December 31,
2015
12,050,000 $
2014
9,634,000 $
2013
6,866,000
$
21,000
(8,000)
21,000
(7,000)
36,000
(12,000)
217,000
(496,000)
81,000
(2,679,000)
(496,000)
1,119,000
3,118,000
(496,000)
(961,000)
Comprehensive income
$
11,865,000 $
7,592,000 $
8,551,000
See notes to consolidated financial statements.
38
Core Molding Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets
December 31,
2015
2014
Assets:
Current assets:
Cash and cash equivalents
Accounts receivable (less allowance for doubtful accounts: December 31,
$
8,943,000 $
2,312,000
2015 - $(cid:23)(cid:19)(cid:15)(cid:19)(cid:19)(cid:19)(cid:30)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)(cid:3)- $289,000)
36,886,000
34,360,000
Inventories:
Finished goods
Work in process
Raw materials and components
Total inventories, net
Deferred tax asset-current portion
Foreign sales tax receivable
Income taxes receivable
Prepaid expenses and other current assets
Total current assets
Property, plant and equipment, net
Goodwill
Intangibles, net
Total Assets
Liabilities and Stockholders’ Equity:
Liabilities:
Current liabilities:
Current portion of long-term debt
Revolving line of credit
Current portion of interest rate swaps
Accounts payable
Tooling in progress
Current portion of post retirement benefits liability
Accrued liabilities:
Compensation and related benefits
Taxes
Other
Total current liabilities
Long-term debt
Interest rate swaps
Deferred tax liability
Post retirement benefits liability
Total Liabilities
Commitments and Contingencies
Stockholders’ Equity:
Preferred stock — $0.01 par value, authorized shares — (cid:20)(cid:19)(cid:15)(cid:19)(cid:19)(cid:19)(cid:15)(cid:19)(cid:19)(cid:19)(cid:30)(cid:3)
1,402,000
1,621,000
8,612,000
11,635,000
1,646,000
1,516,000
10,535,000
13,697,000
1,598,000
280,000
670,000
610,000
62,684,000
74,103,000
2,403,000
613,000
1,868,000
1,447,000
2,286,000
715,000
54,623,000
61,995,000
1,097,000
—
$ 139,803,000 $ 117,715,000
$
3,714,000 $
—
2,000
13,481,000
2,271,000
1,088,000
8,474,000
203,000
1,917,000
31,150,000
9,750,000
—
2,252,000
7,918,000
51,070,000
—
1,714,000
2,768,000
34,000
9,256,000
8,068,000
1,064,000
7,087,000
256,000
1,132,000
31,379,000
714,000
3,000
1,365,000
8,108,000
41,569,000
—
outstanding shares: 0 at December 31, 2015 and December 31, 2014
—
—
Common stock — $0.01 par value, authorized shares – (cid:21)(cid:19)(cid:15)(cid:19)(cid:19)(cid:19)(cid:15)(cid:19)(cid:19)(cid:19)(cid:30)(cid:3)
outstanding shares: 7,596,500 at December 31, 2015 and 7,559,012 at
December 31, 2014
Paid-in capital
Accumulated other comprehensive income, net of income taxes
Treasury stock
Retained earnings
Total Stockholders’ Equity
Total Liabilities and Stockholders’ Equity
76,000
29,147,000
2,645,000
(27,647,000)
84,512,000
88,733,000
76,000
28,138,000
2,830,000
(27,360,000)
72,462,000
76,146,000
$ 139,803,000 $ 117,715,000
See notes to consolidated financial statements.
39
Core Molding Technologies, Inc. and Subsidiaries
Consolidated Statement of Stockholders’ Equity
Common Stock
Outstanding
Amount
Shares
7,130,804 $ 71,000 $ 25,526,000 $
Paid-In
Capital
Accumulated
Other
Comprehensive
Income
Balance at January 1, 2013
Net income
Change in post retirement
benefits, net of tax of
$961,000
Change in interest rate swaps,
net of tax of $12,000
Common stock issued
Excess tax benefit — equity
transactions
Purchase of treasury stock
Restricted stock vested
132,725
1,000
409,000
409,000
(36,329)
91,573
1,000
413,000
Share-based compensation
Balance at December 31, 2013 7,318,773 $ 73,000 $ 26,757,000 $
Net income
Change in post retirement
benefits, net of tax of
$1,119,000
Change in interest rate swaps,
net of tax of $7,000
Common stock issued
Excess tax benefit — equity
transactions
Purchase of treasury stock
Restricted stock vested
186,060
2,000
326,000
311,000
(21,797)
75,976
1,000
744,000
Share-based compensation
Balance at December 31, 2014 7,559,012 $ 76,000 $ 28,138,000 $
Net income
Treasury
Stock
Retained
Earnings
Total
Stockholders’
Equity
3,187,000 $ (26,748,000) $ 55,962,000 $ 57,998,000
6,866,000
6,866,000
1,661,000
24,000
1,661,000
24,000
410,000
409,000
(334,000)
(334,000)
1,000
413,000
4,872,000 $ (27,082,000) $ 62,828,000 $ 67,448,000
9,634,000
9,634,000
(2,056,000)
14,000
(2,056,000)
14,000
328,000
311,000
(278,000)
(278,000)
1,000
744,000
2,830,000 $ (27,360,000) $ 72,462,000 $ 76,146,000
12,050,000
12,050,000
(198,000)
13,000
19,000
205,000
(198,000)
13,000
19,000
205,000
(287,000)
(287,000)
—
785,000
2,645,000 $ (27,647,000) $ 84,512,000 $ 88,733,000
Change in post retirement
benefits, net of tax of $81,000
Change in interest rate swaps,
net of tax of $8,000
Common stock issued
Excess tax benefit — equity
transactions
Purchase of treasury stock
Restricted stock vested
3,000
(12,141)
46,629
785,000
Share-based compensation
Balance at December 31, 2015 7,596,500 $ 76,000 $ 29,147,000 $
See notes to consolidated financial statements.
40
Core Molding Technologies, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
Deferred income taxes
Mark-to-market of interest rate swaps
Share-based compensation
Loss on disposal of assets
(Gain) loss on foreign currency translation and transactions
Change in operating assets and liabilities, net of effects of
acquisition:
Accounts receivable
Inventories
Income taxes receivable
Prepaid and other assets
Accounts payable
Accrued and other liabilities
Post retirement benefits liability
Net cash provided by operating activities
Cash flows from investing activities:
Purchase of property, plant and equipment
Proceeds from sale of property and equipment
Purchase of assets of CPI Binani Inc.
Net cash used in investing activities
Cash flows from financing activities:
Gross repayments on revolving line of credit
Gross borrowings on revolving line of credit
Proceeds from term loan
Payment of principal of term loan
Payment of principal on Mexican loan
Payment of principal on capex loan
Payment of principal on industrial development revenue bond
Excess tax benefit from equity incentive plans
Payments related to the purchase of treasury stock
Proceeds from issuance of common stock
Net cash provided by (used in) financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Cash paid for:
Interest (net of amounts capitalized)
Income taxes
Non Cash:
Fixed asset purchases in accounts payable
See notes to consolidated financial statements.
41
2015
Years Ended
2014
2013
$ 12,050,000 $ 9,634,000 $ 6,866,000
6,041,000
1,229,000
(14,000)
785,000
—
(54,000)
5,023,000
2,521,000
(45,000)
744,000
—
108,000
4,878,000
279,000
(73,000)
413,000
5,000
27,000
(911,000)
(1,387,000)
1,616,000
1,395,000
2,095,000
(3,786,000)
(444,000)
18,615,000
(12,292,000)
(808,000)
(1,959,000)
(78,000)
(275,000)
9,031,000
(777,000)
10,827,000
(7,446,000)
(862,000)
944,000
93,000
2,259,000
125,000
(591,000)
6,917,000
(10,679,000)
(5,683,000)
—
—
—
(14,512,000)
(20,195,000) (10,679,000)
(9,332,000)
92,000
—
(9,240,000)
(10,102,000)
7,334,000
15,500,000
(2,750,000)
—
(1,714,000)
—
211,000
(287,000)
19,000
8,211,000
6,631,000
(67,993,000)
70,761,000
—
—
(1,600,000)
(1,715,000)
—
395,000
(278,000)
328,000
(102,000)
46,000
—
—
—
—
(1,600,000)
(1,714,000)
(420,000)
409,000
(334,000)
410,000
(3,249,000)
(5,572,000)
2,312,000
2,266,000
7,838,000
$ 8,943,000 $ 2,312,000 $ 2,266,000
279,000 $
204,000
$
$ 4,218,000 $ 3,567,000 $ 1,296,000
110,000 $
$
464,000 $
557,000 $
709,000
Core Molding Technologies, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
1. Basis of Presentation
Core Molding Technologies and its subsidiaries operate in the plastics market in a family of products known as “reinforced
plastics.” Reinforced plastics are combinations of resins and reinforcing fibers (typically glass or carbon) that are molded to
shape. Core Molding Technologies is a manufacturer of sheet molding compound ("SMC") and molder of fiberglass reinforced
plastics. The Company specializes in large-format moldings and offers a wide range of fiberglass processes, including
compression molding of SMC, glass mat thermoplastics ("GMT"), bulk molding compounds ("BMC") and direct long-fiber
thermoplastics ("D-(cid:47)(cid:41)(cid:55)(cid:5)(cid:12)(cid:30)(cid:3) (cid:86)(cid:83)(cid:85)(cid:68)(cid:92)-up, hand-lay-up, and resin transfer molding ("RTM"). Additionally, the Company offers
reaction injection molding ("RIM"), utilizing dicyclopentadiene technology. Core Molding Technologies operates five
production faci(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:38)(cid:82)(cid:79)(cid:88)(cid:80)(cid:69)(cid:88)(cid:86)(cid:15)(cid:3)(cid:50)(cid:75)(cid:76)(cid:82)(cid:30)(cid:3)(cid:37)(cid:68)(cid:87)(cid:68)(cid:89)(cid:76)(cid:68)(cid:15)(cid:3)(cid:50)(cid:75)(cid:76)(cid:82)(cid:30)(cid:3)(cid:42)(cid:68)(cid:73)(cid:73)(cid:81)(cid:72)(cid:92)(cid:15)(cid:3)(cid:54)(cid:82)(cid:88)(cid:87)(cid:75)(cid:3)(cid:38)(cid:68)(cid:85)(cid:82)(cid:79)(cid:76)(cid:81)(cid:68)(cid:30)(cid:3)(cid:58)(cid:76)(cid:81)(cid:82)(cid:81)(cid:68)(cid:15)(cid:3)(cid:48)(cid:76)(cid:81)(cid:81)(cid:72)(cid:86)(cid:82)(cid:87)(cid:68)(cid:30)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:48)(cid:68)(cid:87)(cid:68)(cid:80)(cid:82)(cid:85)(cid:82)(cid:86)(cid:15)(cid:3)(cid:48)(cid:72)(cid:91)(cid:76)(cid:70)(cid:82)(cid:17)(cid:3)
The Company operates in one business segment as a manufacturer of SMC and molder of fiberglass reinforced plastics. The
Company produces and sells SMC and molded products for varied markets, including medium and heavy-duty trucks,
automobiles, marine, construction and other commercial markets.
2. Summary of Significant Accounting Policies
Principles of Consolidation - The accompanying consolidated financial statements include the accounts of all subsidiaries after
elimination of all intercompany accounts, transactions, and profits.
Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosures of contingent assets and liabilities, and reported amounts of revenues and expenses during the reporting
period. Significant estimates relate to allowances for doubtful accounts, inventory reserves, self-insurance reserves related to
healthcare and workers compensation, deferred taxes, post retirement benefits, goodwill and long-lived assets. Actual results
could differ from those estimates.
Revenue Recognition - Revenue from product sales is recognized at the time products are shipped and title transfers. Allowances
for returned products and other credits are estimated and recorded as revenue is recognized. Tooling revenue is recognized when
the customer approves the tool and accepts ownership. Progress billings and expenses are shown net as an asset or liability on
the Company’s Consolidated Balance Sheet. Tooling in progress can fluctuate significantly from period to period and is dependent
upon the stage of tooling projects and the related billing and expense payment timetable for individual projects and therefore
does not necessarily reflect projected income or loss from tooling projects. At December 31, 2015, the Company had a net liability
related to tooling in progress of $2,271,000, which represents approximately $21,967,000 of progress tooling billings and
$19,696,000 of progress tooling expenses. At December 31, 2014, the Company had a net liability related to tooling in progress
of $8,068,000 which represents approximately $10,407,000 of progress tooling billings and $2,339,000 of progress tooling
expenses.
Cash and Cash Equivalents - The Company considers all highly liquid investments purchased with an original maturity of three
months or less to be cash equivalents. Cash is held primarily in one bank. The Company had cash on hand of $8,943,000 at
December 31, 2015 and $2,312,000 at December 31, 2014.
Accounts Receivable Allowances - Management maintains allowances for doubtful accounts for estimated losses resulting from
the inability of its customers to make required payments. If the financial condition of the Company’s customers were to
deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. The Company
recorded an allowance for doubtful accounts of $40,000 at December 31, 2015 and $289,000 December 31, 2014. Management
also records estimates for customer returns and deductions, discounts offered to customers, and for price adjustments. Should
customer returns and deductions, discounts, and price adjustments fluctuate from the estimated amounts, additional allowances
42
may be required. The Company had an allowance for estimated chargebacks of $523,000 at December 31, 2015 and $813,000 at
December 31, 2014. There have been no material changes in the methodology of these calculations.
Inventories - Inventories, which include material, labor and manufacturing overhead, are valued at the lower of cost or market.
The inventories are accounted for using the first-in, first-out (FIFO) method of determining inventory costs. Inventory quantities
on-hand are regularly reviewed, and where necessary, provisions for excess and obsolete inventory are recorded based on
historical and anticipated usage. The Company has recorded an allowance for slow moving and obsolete inventory of $863,000
at December 31, 2015 and $940,000 at December 31, 2014.
Property, Plant, and Equipment - Property, plant, and equipment are recorded at cost. Depreciation is provided on a straight-
line method over the estimated useful lives of the assets. The carrying amount of long-lived assets is evaluated annually to
determine if adjustment to the depreciation period or to the unamortized balance is warranted.
Ranges of estimated useful lives for computing depreciation are as follows:
Land improvements
20 years
Buildings and improvements
20 - 40 years
Machinery and equipment
Tools, dies and patterns
3 - 15 years
3 - 5 years
Depreciation expense was $5,955,000, $5,009,000 and $4,783,000 for the years ended December 31, 2015, 2014 and 2013,
respectively. The Company capitalized interest costs of approximately $2,000 and $80,000 for the years ended December 31,
2015 and 2014, respectively.
Long-Lived Assets - Long-lived assets consist primarily of property, plant and equipment and definite-lived intangibles. The
Company acquired substantially all of the assets of CPI on March 20, 2015, which resulted in approximately $650,000 of definite-
lived intangibles and $12,474,000 of property, plant and equipment, all of which were recorded at fair value. The recoverability
of long-lived assets is evaluated by an analysis of operating results and consideration of other significant events or changes in
the business environment. The Company evaluates whether impairment exists for long-lived assets on the basis of undiscounted
expected future cash flows from operations before interest. There was no impairment of the Company's long-lived assets for the
years ended December 31, 2015, 2014 and 2013.
Goodwill - The Company has recorded $2,403,000 of goodwill as a result of two acquisitions. In 2001, the Company acquired
certain assets of Airshield Corporation, and as a result, recorded goodwill in the amount of $1,097,000. The Company also
acquired substantially all of the assets of CPI on March 20, 2015, which resulted in approximately $1,306,000 of goodwill.
The Company evaluates goodwill annually on December 31st to determine whether impairment exists, or at interim periods if an
indicator of possible impairment exists. The Company evaluates goodwill for impairment utilizing the one-step qualitative
assessment. We consider relevant events and circumstances that affect the fair value or carrying amount of the Company. Such
events and circumstances could include macroeconomic conditions, industry and market conditions, cost factors, overall financial
performance, entity specific events and capital markets pricing. The Company places more weight on the events and
circumstances that most affect the Company's fair value or carrying amount. These factors are all considered by management in
reaching its conclusion about whether to perform the first step of the impairment test.
If the Company's carrying amount is determined to be more likely than not impaired based on the one-step qualitative approach,
a quantitative valuation to estimate the fair value of the Company is performed. Fair value measurements are based on a projected
discounted cash flow valuation model, in accordance with ASC 350, “Intangibles-Goodwill and Other.”
There was no impairment of the Company's goodwill for the years ended December 31, 2015, 2014 and 2013.
43
Income Taxes - The Company records deferred income taxes for differences between the financial reporting basis and income
tax basis of assets and liabilities. A detailed breakout is located in Note 11.
Self-Insurance - The Company is self-insured with respect to its Columbus and Batavia, Ohio, Gaffney, South Carolina and
Brownsville, Texas medical, dental and vision claims and Columbus and Batavia, Ohio workers’ compensation claims, all of
which are subject to stop-loss insurance thresholds. The Company has recorded an estimated liability for self-insured medical,
dental and vision claims incurred but not reported and worker’s compensation claims incurred but not reported at December 31,
2015 and December 31, 2014 of $1,074,000 and $1,165,000, respectively.
Post Retirement Benefits - Management records an accrual for post retirement costs associated with the health care plan
sponsored by the Company for certain employees. Should actual results differ from the assumptions used to determine the
reserves, additional provisions may be required. In particular, increases in future healthcare costs above the assumptions could
have an adverse effect on the Company's operations. The effect of a change in healthcare costs is described in Note 12 of the
Notes to Consolidated Financial Statements. Core Molding Technologies had a liability for post retirement healthcare benefits
based on actuarially computed estimates of $9,006,000 at December 31, 2015 and $9,172,000 at December 31, 2014.
Fair Value of Financial Instruments - The Company's financial instruments consist of long-term debt, interest rate swaps,
accounts receivable, and accounts payable. The carrying amount of these financial instruments approximated their fair value.
Further detail is located in Note 15.
Concentration Risks - The Company has concentration risk related to significant amounts of sales and accounts receivable with
certain customers. Sales to four major customers comprised 82%, 87% and 86% of total sales in 2015, 2014 and 2013,
respectively (see Note 4). Concentrations of accounts receivable balances with four customers accounted for 88% and 90% of
accounts receivable at December 31, 2015 and 2014, respectively. The Company performs ongoing credit evaluations of its
customers' financial condition. The Company maintains reserves for potential bad debt losses, and such bad debt losses have
been historically within the Company's expectations. Sales to certain customers' manufacturing and service locations in Mexico
and Canada totaled 35%, 30% and 34% of total sales for 2015, 2014 and 2013, respectively.
As of December 31, 2015, the Company employed a total of 1,525 employees, which consisted of 685 employees in its United
States operations and 840 employees in its Mexican operations. Of these 1,525 employees, 293 are covered by a collective
bargaining agreement with the International Association of Machinists and Aerospace Workers (“IAM”), which extends to August
7, 2016, and 731 are covered by a collective bargaining agreement with Sindicato de Jorneleros y Obreros, which extends to
January 16, 2017.
Earnings Per Common Share - Basic earnings per common share is computed based on the weighted average number of
common shares outstanding during the period. Diluted earnings per common share are computed similarly but include the effect
of the assumed exercise of dilutive stock options and vesting of restricted stock under the treasury stock method. A detailed
computation of earnings per share is located in Note 3.
Research and Development - Research and development activities focus on developing new material formulations, new
products, new production capabilities and processes, and improving existing products and manufacturing processes. The
Company does not maintain a separate research and development organization or facility, but uses its production equipment, as
necessary, to support these efforts and cooperates with its customers and its suppliers in research and development efforts.
Likewise, manpower to direct and advance research and development is integrated with the existing manufacturing, engineering,
production, and quality organizations. Research and development costs, which are expensed as incurred, totaled approximately
$719,000, $475,000 and$466,000 in 2015, 2014 and 2013.
Foreign Currency Adjustments - In conjunction with the Company's acquisition of certain assets of Airshield Corporation, the
Company established operations in Mexico. The functional currency for the Mexican operations is the United States dollar. All
foreign currency asset and liability amounts are remeasured into United States dollars at end-of-period exchange rates. Income
statement accounts are translated at the weighted monthly average rates. Gains and losses resulting from translation of foreign
44
currency financial statements into United States dollars and gains and losses resulting from foreign currency transactions are
included in current results of operations. Net foreign currency translation and transaction activity is included in selling, general
and administrative expense. This activity resulted in a gain of $54,000 in 2015 and losses of $108,000 and $27,000 in 2014 and
2013, respectively.
Recent Accounting Pronouncements - In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with
Customers (Topic 606), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. ASU Topic
606 is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that
reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU Topic 606
also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from
customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain
or fulfill a contract. The effective date for ASU Topic 606 has been delayed until the first quarter of fiscal year 2018 using one of
two retrospective application methods. The Company is currently assessing the transition alternatives and potential impact the
pronouncement and adoption of ASU Topic 606 will have on the Company’s financial statements. Early adoption is permitted,
but not before annual periods beginning after December 15, 2016.
In August 2014, the FASB issued Accounting Standards Update No. 2014-15, "Presentation of Financial Statements-Going
Concern (Topic 205-40)" ("ASU 2014-15"). Under the standard, management is required to evaluate for each annual and interim
reporting period whether it is probable that the entity will not be able to meet its obligations as they become due within one year
after the date that financial statements are issued. ASU 2014-15 is effective for fiscal years, and interim periods within those
years, beginning after December 15, 2016, and early adoption is permitted. Accordingly, the standard is effective for the Company
on January 1, 2017. The Company does not believe that the pronouncement will have an impact on the Company's financial
statements.
In February 2015, the FASB issued ASU No. 2015-03, "Interest-Imputation of Interest (Subtopic 835-30): Simplifying the
Presentation of Debt Issuance Costs ("ASU 2015-03"). Under the standard, debt issuance costs are required to be recorded as a
direct reduction of the debt liability on the balance sheet rather than as an asset. The standard is effective for the Company as of
January 1, 2016 and is not expected to significantly impact the Company's financial statements.
In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory, which changes the measurement
principle for inventory from the lower of cost or market to lower of cost and net realizable value. The amendments in this guidance
do not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. The amendments apply
to all other inventory, which includes inventory that is measured using first-in, first-out or average cost. Within the scope of this
new guidance, an entity should me(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:3)(cid:76)(cid:81)(cid:89)(cid:72)(cid:81)(cid:87)(cid:82)(cid:85)(cid:92)(cid:3)(cid:68)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:79)(cid:82)(cid:90)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:81)(cid:72)(cid:87)(cid:3)(cid:85)(cid:72)(cid:68)(cid:79)(cid:76)(cid:93)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:30)(cid:3)(cid:90)(cid:75)(cid:72)(cid:85)(cid:72)(cid:15)(cid:3)(cid:81)(cid:72)(cid:87)(cid:3)(cid:85)(cid:72)(cid:68)(cid:79)(cid:76)(cid:93)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:76)(cid:86)(cid:3)
defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal,
and transportation. The new guidance is effective for annual periods beginning after December 15, 2016, with early adoption
permitted. The new guidance must be applied on a prospective basis. The Company does not believe that the pronouncement will
have a material impact on the Company's financial statements.
In September 2015, the FASB issued ASU No. 2015-16, Business Combinations: Simplifying the Accounting for Measurement-
Period Adjustments, which is an accounting standards update with new guidance that eliminates the requirement in a business
combination to restate prior period financial statements for measurement period adjustments. Instead, measurement period
adjustments will be recognized in the reporting period in which the adjustment is identified. The standards update is effective for
fiscal years and interim periods beginning after December 15, 2015. The amendments should be applied prospectively to
measurement period adjustments that occur after the effective date of this update with early adoption permitted for financial
statements that have not been issued. We will adopt this standard update as required and recognize any such future adjustments
accordingly.
In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes (Topic 740). This update
requires all deferred tax assets and liabilities, and any related valuation allowance, to be classified as noncurrent on the balance
sheet. The ASU simplifies the current standard, which requires entities to separately present deferred tax assets and liabilities as
45
current and noncurrent in a classified balance sheet. The ASU is effective for annual reporting periods beginning on or after
December 15, 2016, and interim periods within those annual periods. Earlier application is permitted for all entities as of the
beginning of an interim or annual reporting period. The Company will adopt this standards update as required and does not expect
the adoption of this ASU to have a material impact on our consolidated financial statements.
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02,
Leases (Topic 842). This update requires organizations to recognize lease assets and lease liabilities on the balance sheet and also
disclose key information about leasing arrangements. This ASU is effective for annual reporting periods beginning on or after
December 15, 2018, and interim periods within those annual periods. Earlier application is permitted for all entities as of the
beginning of an interim or annual period. The Company will adopt this standards update as required and does not expect the
adoption of this ASU to have a material impact on our consolidated financial statement.
3. Net Income per Common Share
Net income per common share is computed based on the weighted average number of common shares outstanding during the
period. Diluted net income per common share is computed similarly but includes the effect of the assumed exercise of dilutive
stock options and restricted stock under the treasury stock method.
The computation of basic and diluted net income per common share is as follows:
December 31,
Net income
2015
2014
$ 12,050,000 $ 9,634,000 $ 6,866,000
2013
Weighted average common shares outstanding —
basic
Effect of dilutive securities
Weighted average common and potentially issuable
common shares outstanding — diluted
Basic net income per common share
Diluted net income per common share
7,583,000
7,508,000
40,000
45,000
7,220,000
215,000
7,623,000
7,553,000
7,435,000
$
$
1.59 $
1.58 $
1.28 $
1.28 $
0.95
0.92
At December 31, 2015, there were no outstanding stock options. At December 31, 2014 and 2013, all unexercised stock options
were included in diluted earnings per share.
4. Major Customers
The Company had four major customers during 2015, Navistar, Volvo, PACCAR and Yamaha. Major customers are defined as
customers whose current year sales individually consist of more than ten percent of total sales during any annual or interim
reporting period in the current year. The loss of a significant portion of sales to Navistar, Volvo, PACCAR or Yamaha would
have a material adverse effect on the business of the Company.
46
The following table presents sales revenue for the above-mentioned customers for the years ended December 31:
Navistar product sales
Navistar tooling sales
Total Navistar sales
Volvo product sales
Volvo tooling sales
Total Volvo sales
PACCAR product sales
PACCAR tooling sales
Total PACCAR sales
Yamaha product sales
Yamaha tooling sales
Total Yamaha sales
Other product sales
Other tooling sales
Total other sales
Total product sales
Total tooling sales
Total sales
2015
2014
$ 50,169,000 $ 51,254,000 $ 46,384,000
972,000
47,356,000
76,000
51,330,000
6,246,000
56,415,000
2013
53,525,000
1,600,000
55,125,000
33,452,000
978,000
34,430,000
16,766,000
—
16,766,000
35,191,000
1,141,000
36,332,000
46,340,000
2,519,000
48,859,000
35,602,000
526,000
36,128,000
16,911,000
—
16,911,000
19,637,000
2,339,000
21,976,000
11,508,000
936,000
12,444,000
42,784,000
7,370,000
50,154,000
13,648,000
—
13,648,000
19,772,000
751,000
20,523,000
189,103,000
9,965,000
134,096,000
10,029,000
$ 199,068,000 $ 175,204,000 $ 144,125,000
169,744,000
5,460,000
5. Foreign Operations
In conjunction with the Company's acquisition of certain assets of Airshield Corporation on October 16, 2001, the Company
established manufacturing operations in Mexico (under the Maquiladora program). The Mexican operation is a captive
manufacturing facility of the Company and the functional currency is United States dollars. Essentially all sales of the Mexican
operations are made in United States dollars, which totaled $69,235,000, $61,313,000 and $61,612,000 in 2015, 2014 and 2013,
respectively. Expenses are incurred in the United States dollar and the Mexican peso. Expenses incurred in pesos include labor,
utilities, supplies and materials, and amounted to approximately 19%, 22% and 23% of sales produced at the Matamoros
operations in 2015, 2014 and 2013, respectively. The Company's manufacturing operation in Mexico is subject to various
political, economic, and other risks and uncertainties including safety and security concerns inherent to Mexico. Among other
risks, the Company's Mexican operations are subject to domestic and international customs and tariffs, changing taxation policies,
and governmental regulations.
All of the Company's product is sold to U.S. based customers in U.S. dollars. The following table provides information related
to sales by country, based on the ship to location of customers' production facilities, for the years ended December 31:
United States
Mexico
Canada
Total
2015
129,651,000 $
63,586,000
5,831,000
199,068,000 $
2014
123,317,000 $
47,772,000
4,115,000
175,204,000 $
2013
95,063,000
45,069,000
3,993,000
144,125,000
$
$
The following table provides information related to the location of property, plant and equipment, net, as of December 31:
United States
Mexico
Total
2015
44,191,000 $
29,912,000
74,103,000 $
2014
31,674,000
30,321,000
61,995,000
$
$
47
6. Property, Plant, and Equipment
Property, plant, and equipment consisted of the following at December 31:
$
Land and land improvements
Buildings
Machinery and equipment
Tools, dies, and patterns
Additions in progress
Total
Less accumulated depreciation
Property, plant, and equipment - net
$
2015
5,958,000 $
41,417,000
87,482,000
808,000
2,331,000
137,996,000
(63,893,000)
74,103,000 $
2014
5,098,000
37,143,000
75,905,000
808,000
979,000
119,933,000
(57,938,000)
61,995,000
Additions in progress at December 31, 2015 and 2014 relate to building improvements and equipment purchases that were not
yet completed at year end. At December 31, 2015, commitments for capital expenditures in progress were $1,102,000 and
included $464,000 recorded on the balance sheet in accounts payable. At December 31, 2014, commitments for capital
expenditures in progress were $1,682,000, and included $557,000 recorded on the balance sheet in accounts payable. The
Company capitalized interest of $2,000 and $80,000 for the years ended December 31, 2015 and 2014, respectively.
7. Acquisition of CPI
On March 20, 2015, the Company acquired substantially all of the assets of CPI Binani, Inc., a wholly owned subsidiary of Binani
Industries Limited, located in Winona, Minnesota for a cash purchase price of $15,000,000, which expanded the Company's
process capabilities to include D-LFT and diversified the customer base. The purchase price was subject to working capital
adjustments resulting in a reduction in the purchase price of $488,000.
Cash paid at closing was financed through borrowing under the Company's existing credit facility, as amended and further
described in Note 9 below.
Consideration was allocated to assets acquired and liabilities assumed based on their fair values as of the acquisition date as
follows:
Accounts Receivable
$
Inventory
Other Current Assets
Property and Equipment
Intangibles
Goodwill
Accounts Payable
Other Current Liabilities
$
1,615,000
675,000
171,000
12,474,000
650,000
1,306,000
(2,277,000)
(102,000)
14,512,000
The purchase price included consideration for strategic benefits, including an assembled workforce, operational infrastructure
and synergistic revenue opportunities, which resulted in the recognition of goodwill. The goodwill is deductible for income tax
purposes.
The acquisition is not considered significant to the Company's consolidated balance sheet and results of operations. Accordingly,
no pro-forma results are provided prior to the effective date of the acquisition. The Company incurred $303,000 of expenses for
48
the year ended December 31, 2015 associated with the acquisition, which is recorded in selling, general and administrative
expense.
8. Goodwill and Intangibles
Goodwill activity for the year ended December 31, 2015 consisted of the following:
Balance at December 31, 2014
Additions
Impairment
Balance at December 31, 2015
$
$
1,097,000
1,306,000
—
2,403,000
Intangible assets at December 31, 2015 were comprised of the following:
Definite-lived
Intangible Assets
Amortization Period
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Trade Name
Customer Relationships
25 Years
10 Years
$
$
250,000 $
400,000
650,000 $
(7,000) $
(30,000)
(37,000) $
243,000
370,000
613,000
All definite-lived intangible assets were acquired as part of the acquisition of CPI, therefore no definite-lived intangible assets
existed at December 31, 2014. The aggregate intangible asset amortization expense was $37,000 for the year ended December
31, 2015. The Company incurred no amortization expense for the years ended December 31, 2014 and 2013.
9. Debt and Leases
Long-term debt consists of the following at:
Capex loan payable to a bank, interest at a variable rate (2.04% and 1.76% at
December 31, 2015 and 2014, respectively) with monthly payments of
interest and principal over a seven-year period through May 2016.
Term loan payable to a bank, interest at a variable rate (2.24% at December
31, 2015) with monthly payments of interest and principal through March
2020.
Revolving Line of Credit
Total
Less current portion
Long-term debt
Credit Agreement
December 31,
2015
December 31,
2014
$
714,000
$
2,428,000
12,750,000
—
13,464,000
(3,714,000)
9,750,000 $
—
2,768,000
5,196,000
(4,482,000)
714,000
$
In 2008, the Company and its wholly owned subsidiary, Corecomposites de Mexico, S. de R.L. de C.V., entered into a credit
agreement (the “Credit Agreement”) to refinance certain existing debt and borrow funds to finance the construction of the
Company’s manufacturing facility in Mexico.
Under this Credit Agreement, the Company received certain loans, subject to the terms and conditions stated in the agreement,
which included (1) (cid:68)(cid:3)(cid:7)(cid:20)(cid:21)(cid:15)(cid:19)(cid:19)(cid:19)(cid:15)(cid:19)(cid:19)(cid:19)(cid:3)(cid:38)(cid:68)(cid:83)(cid:72)(cid:91)(cid:3)(cid:79)(cid:82)(cid:68)(cid:81)(cid:30)(cid:3)(cid:11)(cid:21)(cid:12) an $8,000,000 Mexi(cid:70)(cid:68)(cid:81)(cid:3)(cid:79)(cid:82)(cid:68)(cid:81)(cid:30)(cid:3)(cid:11)(cid:22)(cid:12) an $8,000,000 variable rate revolving line of
(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:30)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:11)(cid:23)(cid:12) a letter of credit in an undrawn face amount of $3,332,493 with respect to the Company’s existing Industrial
Development Revenue Bond (“IDRB”) financing. The Credit Agreement is secured by a guarantee of each U.S. subsidiary of the
49
Company, and by a lien on substantially all of the present and future assets of the Company and its U.S. subsidiaries, except that
only 65% of the stock issued by Corecomposites de Mexico, S. de C.V. has been pledged. The $8,000,000 Mexican loan was also
secured by substantially all of the present and future assets of the Company’s Mexican subsidiary.
On March 27, 2013, the Company and its wholly owned subsidiary, Corecomposites de Mexico, S. de R.L. de C.V., entered into
an eighth amendment (the "Eighth Amendment") to the Credit Agreement. Pursuant to the terms of the Eighth Amendment, the
parties agreed to modify certain terms of the Credit Agreement. These modifications included (1) an increase to the borrowing
(cid:79)(cid:76)(cid:80)(cid:76)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:89)(cid:82)(cid:79)(cid:89)(cid:76)(cid:81)(cid:74)(cid:3)(cid:79)(cid:76)(cid:81)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:7)(cid:27)(cid:15)(cid:19)(cid:19)(cid:19)(cid:15)(cid:19)(cid:19)(cid:19)(cid:3)(cid:87)(cid:82)(cid:3)(cid:7)(cid:20)(cid:27)(cid:15)(cid:19)(cid:19)(cid:19)(cid:15)(cid:19)(cid:19)(cid:19)(cid:30)(cid:3)(cid:11)(cid:21)(cid:12)(cid:3)(cid:80)(cid:82)(cid:71)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:73)(cid:76)(cid:91)(cid:72)(cid:71)(cid:3)(cid:70)(cid:75)(cid:68)(cid:85)(cid:74)(cid:72)(cid:3)(cid:71)(cid:72)(cid:73)(cid:76)(cid:81)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:87)(cid:82)(cid:3)(cid:72)(cid:91)(cid:70)(cid:79)ude
capital expenditures of up to $18,000,000 associated with the Company's compression molding capacity expansion and any sheet
(cid:80)(cid:82)(cid:79)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:82)(cid:88)(cid:81)(cid:71)(cid:3)(cid:80)(cid:68)(cid:81)(cid:88)(cid:73)(cid:68)(cid:70)(cid:87)(cid:88)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:70)(cid:68)(cid:83)(cid:68)(cid:70)(cid:76)(cid:87)(cid:92)(cid:3)(cid:72)(cid:91)(cid:83)(cid:68)(cid:81)(cid:86)(cid:76)(cid:82)(cid:81)(cid:30)(cid:3)(cid:11)(cid:22)(cid:12)(cid:3)(cid:87)(cid:82)(cid:3)(cid:72)(cid:91)(cid:87)(cid:72)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:83)(cid:72)(cid:85)(cid:76)(cid:82)(cid:71)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:89)(cid:82)(cid:79)(cid:89)(cid:76)(cid:81)(cid:74)(cid:3)(cid:79)(cid:76)(cid:81)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:87)(cid:82)(cid:3)
(cid:48)(cid:68)(cid:92)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)(cid:30)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:11)(cid:23)(cid:12)(cid:3)(cid:87)(cid:82)(cid:3)(cid:70)(cid:68)(cid:81)(cid:70)(cid:72)(cid:79)(cid:15)(cid:3)(cid:72)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:76)(cid:80)(cid:80)(cid:72)(cid:71)(cid:76)(cid:68)(cid:87)(cid:72)(cid:79)(cid:92)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:88)(cid:81)(cid:88)(cid:86)(cid:72)(cid:71)(cid:3)(cid:7)(cid:20)(cid:19)(cid:15)(cid:19)(cid:19)(cid:19)(cid:15)(cid:19)(cid:19)(cid:19)(cid:3)(cid:48)(cid:72)(cid:91)(cid:76)(cid:70)(cid:68)(cid:81)(cid:3)(cid:40)(cid:91)(cid:83)(cid:68)(cid:81)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:53)(cid:72)(cid:89)(cid:82)(cid:79)(cid:89)(cid:76)(cid:81)(cid:74)(cid:3)(cid:47)(cid:82)(cid:68)(cid:81)(cid:17)
On October 31, 2013, the Company and its wholly owned subsidiary, Corecomposites de Mexico, S. de R.L. de C.V., entered
into a ninth amendment (the "Ninth Amendment") to the Credit Agreement. Pursuant to the terms of the Ninth Amendment, the
parties agreed to decrease the applicable margin for interest rates on Eurodollar Loans and Daily Libor Loans to 160 basis points
from 175 basis points.
On March 20, 2015, The Company and its wholly owned subsidiary, Corecomposites de Mexico, S. de R.L. de C.V., entered into
a tenth amendment (the "Tenth Amendment") to the Credit Agreement that the parties originally entered into on December 9,
2008. Pursuant to the terms of the Tenth Amendment, the parties agreed to modify certain terms of the Credit Agreement. These
modificatio(cid:81)(cid:86)(cid:3) (cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:72)(cid:71)(cid:3) (cid:11)(cid:20)(cid:12)(cid:3) (cid:68)(cid:81)(cid:3) (cid:72)(cid:91)(cid:87)(cid:72)(cid:81)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:70)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3) (cid:83)(cid:72)(cid:85)(cid:76)(cid:82)(cid:71)(cid:3) (cid:73)(cid:82)(cid:85)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:85)(cid:72)(cid:89)(cid:82)(cid:79)(cid:89)(cid:76)(cid:81)(cid:74)(cid:3) (cid:79)(cid:76)(cid:81)(cid:72)(cid:3) (cid:82)(cid:73)(cid:3) (cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3) (cid:87)(cid:82)(cid:3) (cid:48)(cid:68)(cid:92)(cid:3) (cid:22)(cid:20)(cid:15)(cid:3) (cid:21)(cid:19)(cid:20)(cid:26)(cid:30)(cid:3) (cid:11)(cid:21)(cid:12)(cid:3) (cid:68)(cid:81)(cid:3)
agreement to make a term loan in an original amount of $15,500,000 with the proceeds to be used to finance the acquisition of
(cid:38)(cid:51)(cid:44)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:30)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:11)(cid:22)(cid:12) modifications to the Credit Agreement's fixed charge definition to exclude (i) certain capital expenditures
that are incurred on or before June 30, 2016, up to an aggregate amount not to exceed $4,400,000, and (ii) certain capital
expenditures that were incurred on or before June 30, 2015, up to an aggregate amount not to exceed $18,000,000. On March 30,
2015, the Company repaid $500,000 of unused proceeds from the original term loan.
Capex Loan
The $12,000,000 Capex loan was a construction draw loan that converted to a seven-year term loan with fixed monthly principal
payments. Borrowings made pursuant to this loan bear interest, payable monthly at 30 day LIBOR plus 160 basis points.
Term Loan
The $15,500,000 Term Loan has fixed monthly principal payments payable over a five-year period. Borrowings made pursuant
to this loan bear interest, payable monthly at 30 day LIBOR plus 180 basis points.
Mexican Loan
The $8,000,000 Mexican loan was also a construction draw loan to finance the production facility in Matamoros, Mexico that
was converted to a five-year term loan with annual payments commencing January 2010. This commitment bore interest at
LIBOR plus 160 basis points and was paid in full in January 2014.
Industrial Development Revenue Bond
In May 1998, the Company borrowed $7,500,000 through the issuance of an Industrial Development Revenue Bond (“IDRB”).
The IDRB bore interest at a weekly adjustable rate and was paid in full in April 2013. As security for the IDRB, the Company
obtained a letter of credit from a commercial bank. The letter of credit expired in April 2013 upon final payment of the loan.
50
Revolving Line of Credit
At December 31, 2015, the Company had available an $18,000,000 variable rate revolving line of credit scheduled to mature on
May 31, 2017. The revolving line of credit bears interest at daily LIBOR plus 160 basis points and is collateralized by all of the
present and future assets of the Company and its U.S. subsidiaries (except that only 65% of the stock issued by Corecomposites
de Mexico, S. de C.V. has been pledged).
Annual maturities of long-term debt are as follows:
2016
2017
2018
2019
2020
Thereafter
Total
$
$
3,714,000
3,000,000
3,000,000
3,000,000
750,000
—
13,464,000
Interest Rate Swaps
In conjunction with its variable rate IDRB, the Company entered into an interest rate swap agreement through April 2013, which
was initially designated as a cash flow hedging instrument. The IDRB interest rate swap expired in April 2013 upon payment in
full of the IDRB. Under this agreement, the Company paid a fixed rate of 4.89% to the counterparty and received 76% of the
30-day commercial paper rate (0.10% at December 31, 2012). During 2010, the Company determined this interest rate swap was
no longer highly effective. As a result, the Company discontinued the use of hedge accounting effective January 1, 2010 related
to this swap, and began recording mark-to-market adjustments within interest expense in the Company’s Consolidated Statements
of Income. The pre-tax loss previously recognized in Accumulated Other Comprehensive Income (Loss), totaling $200,000 as of
December 31, 2009, was amortized as an increase to interest expense of $5,000 per month, or $3,000 net of tax, over the remaining
term of the interest rate swap agreement. The IDRB was paid in full in April 2013.
On December 18, 2008, the Company entered into an interest rate swap agreement that became effective May 1, 2009 and
continues through May 2016, which was designated as a cash flow hedge of the $12,000,000 Capex loan. Under this agreement,
the Company pays a fixed rate of 2.295% to the counterparty and receives 30 day LIBOR (0.44% at December 31, 2015).
Effective March 31, 2009, the interest terms in the Company’s Credit Agreement related to the $12,000,000 Capex loan were
amended. The Company then determined this interest rate swap was no longer highly effective. As a result, the Company
discontinued the use of hedge accounting effective March 31, 2009 related to this swap, and began recording mark-to-market
adjustments within interest expense in the Company’s Consolidated Statements of Income. The pre-tax loss previously recognized
in Accumulated Other Comprehensive Income (Loss), totaling $146,000 as of March 31, 2009, is being amortized as an increase
to interest expense of $2,000 per month, or $1,000 net of tax, over the remaining term of the interest rate swap agreement. The
fair value of the swap as of December 31, 2015 and December 31, 2014 was a liability of $2,000 and $37,000, respectively. The
Company recorded interest income of $35,000, $66,000 and $102,000 for mark-to-market adjustments of fair value related to
this swap for the years ended December 31, 2015, 2014 and 2013, respectively. The notional amount of the swap at December 31,
2015 and December 31, 2014 was $714,000 and $2,428,000, respectively.
For the years ended December 31, 2015, 2014 and 2013, interest expense includes expense of $32,000, $70,000 and $110,000,
respectively, for settlements related to the Company’s swaps.
Bank Covenants
The Company is required to meet certain financial covenants included in the Credit Agreement with respect to leverage ratios,
fixed charge ratios, and capital expenditures, as well as other customary affirmative and negative covenants. As of December 31,
51
2015, the Company was in compliance with its financial covenants associated with the loans made under the Credit Agreement
as described above.
Leases
The Company has entered into an operating lease agreement through July 2019 for the manufacturing facility located in Batavia,
Ohio. Additionally, the Company leases a warehouse and distribution center in Brownsville, Texas under a 5-year operating lease
agreement expiring in October 2017.
Total rental expense was $696,000, $767,000 and $800,000 for 2015, 2014 and 2013, respectively. Included in rental expense
are both operating lease payments and rental costs related to the use of equipment during the normal course of business under
nonbinding terms. Future minimum operating lease payments are as follows:
$
2016
2017
2018
2019
Thereafter
Total minimum lease payments
$
539,000
486,000
328,000
192,000
—
1,545,000
10. Stock Based Compensation
The Company has a Long Term Equity Incentive Plan (the “2006 Plan”), as approved by the Company’s stockholders in
May 2006. The 2006 Plan allows for grants to directors and employees of non-qualified stock options, incentive stock options,
stock appreciation rights, restricted stock, performance shares, performance units and other incentive awards (“Stock Awards”)
up to an aggregate of 3,000,000 awards, each representing a right to buy a share of Core Molding Technologies common stock.
Stock Awards can be granted under the 2006 Plan through the earlier of December 31, 2025, or the date the maximum number of
available awards under the 2006 Plan have been granted. The number of shares remaining available for future issuance is
1,542,615.
The options that were granted under the 2006 Plan had vesting schedules of five or nine and one-half years from the date of grant,
or immediately upon change in ownership, were not exercisable after ten years from the date of grant, and were granted at prices
which equal or exceed the fair market value of Core Molding Technologies common stock at the date of grant. Restricted stock
granted under the 2006 Plan require the individuals receiving the grants to maintain certain common stock ownership thresholds
and vest over three years or upon the date of the participants' sixty-fifth birthday, death, disability or change in control.
Core Molding Technologies follows the provisions of FASB ASC 718 requiring that compensation cost relating to share-based
payment transactions be recognized in the financial statements. The cost is measured at the grant date, based on the calculated
fair value of the award, and is recognized as an expense over the employee's requisite service period (generally the vesting period
of the equity award). Core Molding Technologies adopted FASB ASC 718 using the modified prospective method. Under this
method, FASB ASC 718 applies to all awards granted or modified after the date of adoption. In addition, compensation expense
has been recognized for any unvested stock option awards outstanding as of the date of adoption on a straight-line basis over the
remaining vesting period.
Stock Options
There were no grants of options in the years ended December 31, 2015, 2014 and 2013. Total compensation cost related to
incentive stock options was $0 for the years ended December 31, 2015 and 2014, and $5,000 for the year ended December 31,
2013. Compensation expense from incentive stock options is included in selling, general, and administrative expenses. There
was no tax benefit recorded for this compensation cost as the expense relates to incentive stock options that do not qualify for a
tax deduction until, and only if, a disqualifying disposition occurs.
52
During the years ended December 31, 2015, 2014 and 2013 Core Molding Technologies received approximately $19,000,
$328,000 and $410,000, respectively, in cash from the exercise of stock options. The aggregate intrinsic value of these options
was approximately $26,000, $915,000 and $825,000, respectively, in each of those years. The intrinsic value of a stock option
is the amount by which the market value of the underlying stock exceeds the exercise price of the option.
Tax benefit received as a result of disqualified dispositions related to stock options was $9,000, for the year ended December 31,
2015, which was recorded as a credit to income tax expense of $6,000 and a credit to additional paid in capital of $3,000. For the
year ended December 31, 2014 the tax benefit received as a result of disqualified dispositions related to stock options was
$311,000, which was recorded as a credit to income tax expense of $84,000 and a credit to additional paid in capital of $227,000.
For the year ended December 31, 2013 the tax benefit received as a result of disqualified dispositions related to stock options
was $300,000, which was recorded as a credit to additional paid in capital.
The following summarizes the activity relating to stock options under the plans mentioned above for the years ended
December 31:
2015
2014
2013
Outstanding - beginning of year
Granted
Exercised
Forfeited
Outstanding - end of year
Exercisable at December 31
Vested or expected to vest at
December 31
Number
of
Options
Wtd. Avg.
Exercise
Price
3,000 $
—
(3,000)
—
— $
— $
6.40
—
6.40
—
—
—
Number
of
Options
227,750 $
—
(224,750)
—
3,000 $
3,000 $
Wtd. Avg.
Exercise
Price
Number
of
Options
374,875 $
—
(132,725)
(14,400)
227,750 $
227,750 $
3.57
—
3.53
—
6.40
6.40
Wtd. Avg.
Exercise
Price
3.37
—
3.09
2.75
3.57
3.57
—
$
—
3,000
$
6.40
227,750
$
3.57
The following summarizes the status of, and changes to, unvested options during the years ended December 31:
Unvested at January 1, 2013
Granted
Vested
Forfeited
Unvested at December 31, 2013
Number
of
Options
Wtd. Avg.
Exercise
Price
14,400 $
—
—
(14,400)
—
2.75
—
—
2.75
—
All options fully vested during 2013. There was no unvested stock options and no unrecognized compensation cost related to
stock options during 2014 and 2015.
Restricted Stock
In 2006, the Company began granting shares of its common stock to certain directors, officers, and key managers in the form of
unvested stock (“Restricted Stock”). These awards are recorded at the market value of Core Molding Technologies’ common
stock on the date of issuance and amortized ratably as compensation expense over the applicable vesting period.
53
The following summarizes the status of Restricted Stock and changes during the years ended December 31:
2015
2014
2013
Number
of
Shares
104,068 $
56,662
(46,629)
(1,194)
112,907 $
Wtd. Avg.
Grant Date
Fair Value
10.79
24.39
11.82
24.39
16.86
Number
of
Shares
Wtd. Avg.
Grant Date
Fair Value
98,281 $
81,763
(75,976)
—
104,068 $
8.91
12.04
10.03
—
10.79
Number
of
Shares
139,730 $
63,876
(91,573)
(13,752)
98,281 $
Wtd. Avg.
Grant Date
Fair Value
6.77
9.32
5.95
8.74
8.91
Unvested - beginning of year
Granted
Vested
Forfeited
Unvested - end of year
At December 31, 2015 and 2014, there was $1,263,000 and $775,000, respectively, of total unrecognized compensation expense
related to Restricted Stock granted under the 2006 Plan. That cost is expected to be recognized over the weighted-average period
of 1.6 years. Total compensation expense related to restricted stock grants for the years ended December 31, 2015, 2014 and 2013
was $785,000, $744,000 and $408,000, respectively, and is recorded as selling, general and administrative expense.
Compensation expense for restricted stock is recorded at the fair market value at the time of the grant over vesting period of the
restricted stock grant. The Company does not receive a tax deduction for restricted stock until the restricted stock vests. The tax
deduction for restricted stock is based on the fair market value on the vesting date. Tax benefits received for vested restricted
stock in excess of the fair market value at grant date amounted to $202,000, $84,000 and $109,000 for the years ended
December 31, 2015, 2014 and 2013, respectively.
During 2015 and 2014, employees surrendered 12,141 and 21,797 shares, respectfully, of the Company's common stock to satisfy
income tax withholding obligations in connection with the vesting of restricted stock.
11. Income Taxes
Components of the provision for income taxes are as follows:
$
Current:
Federal - US
Federal - Foreign
State and local
Deferred:
Federal
Federal- Foreign
State and local
Provision for income taxes
$
2015
2014
2013
4,466,000 $
405,000
18,000
4,889,000
1,143,000
27,000
59,000
1,229,000
6,118,000 $
1,875,000 $
453,000
42,000
2,370,000
2,423,000
(29,000)
127,000
2,521,000
4,891,000 $
2,540,000
171,000
44,000
2,755,000
496,000
(240,000)
23,000
279,000
3,034,000
54
A reconciliation of the income tax provision based on the federal statutory income tax rate of 34% to the Company's income tax
provision for the years ended December 31 is as follows:
Provision at federal statutory rate - US
Effect of Mexican tax law change
Effect of foreign taxes
Disqualified stock options
State and local tax expense, net of federal
benefit
Other
Provision for income taxes
2015
6,177,000 $
$
—
(84,000)
(5,000)
2014
4,938,000 $
—
(115,000)
(84,000)
2013
3,366,000
(240,000)
(192,000)
—
76,000
170,000
(46,000)
6,118,000 $
(18,000)
4,891,000 $
$
44,000
56,000
3,034,000
In December 2013, Mexican legislature approved tax reform that became effective for tax years beginning January 1, 2014. The
new tax reform eliminated the Mexican IETU (Flat Rate Business Tax), under which the Company has historically been taxed.
As a result of the approved tax reform in Mexico, the Company will now be subject to taxation under Mexico's income tax
regime. Accordingly, during the fourth quarter of 2013, the Company recorded a net deferred tax asset on its balance sheet and
a credit to deferred tax expense of $240,000 for net deductions expected to be realized in future years as a result of this Mexican
tax reform.
Certain tax benefits related to incentive stock options and vesting of restricted stock totaled $211,000, $395,000 and $409,000
for the years ended December 31, 2015, 2014 and 2013, respectively.
The Company performs analyses to evaluate the balance of deferred tax assets that will be realized. Such analyses are based on
the premise that the Company is, and will continue to be, a going concern and that it is more likely than not that deferred tax
benefits will be realized through the generation of future taxable income. Based on the analyses, the Company has not realized a
valuation allowance on the deferred tax assets as of December 31, 2015 and 2014.
Deferred tax assets consist of the following at December 31:
Current asset (liability):
Accrued liabilities
Accounts receivable
Inventory
Other, net
Total current asset
2015
2014
$
820,000 $
202,000
698,000
(122,000)
1,598,000
808,000
484,000
680,000
(104,000)
1,868,000
Non-current asset (liability):
Property, plant, and equipment
Post retirement benefits
Other, net
Total non-current asset (liability)
Total deferred tax asset (liability) - net $
(4,844,000)
3,350,000
(758,000)
(2,252,000)
(654,000) $
(4,273,000)
3,419,000
(511,000)
(1,365,000)
503,000
At December 31, 2015, a provision has not been made for U.S. taxes on accumulated undistributed earnings of approximately
$7,319,000 of the Company's Mexican subsidiary that would become payable upon repatriation to the United States. It is the
intention of the Company to reinvest all such earnings in operations and facilities outside of the United States.
At December 31, 2015 and 2014 the Company had no liability for unrecognized tax benefits under guidance relating to tax
uncertainties. The Company does not anticipate that the unrecognized tax benefits will significantly change within the next twelve
months.
55
The Company files income tax returns in the U.S. federal jurisdiction, Mexico and various state jurisdictions. The Company is
no longer subject to U.S. federal and state income tax examinations by tax authorities for the years before 2012, and no longer
subject to Mexican income tax examinations by Mexican authorities for the years before 2009.
12. Post Retirement Benefits
The Company provides post retirement benefits to certain of its United States employees, including contributions to a multi-
employer defined benefit pension plan, health care and life insurance benefits, and contributions to three 401(k) defined
contribution plans.
The Company contributes to a multi-employer defined benefit pension plan for its employees represented by the International
Association of Machinists and Aerospace Workers ("IAM") at the Company’s Columbus, Ohio production facility. The Company
does not administer this plan and contributions are determined in accordance with provisions of the collective bargaining
agreement. The risks of participating in this multi-employer plan are different from a single-employer plan in the following
aspects:
• Assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees of other
participating employers.
•
•
If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the
remaining participating employers.
If the Company chooses to stop participating in its multi-employer plan, the Company may be required to pay the plan
an amount based on the underfunded status of the plan, referred to as a withdrawal liability.
The Company’s participation in the multi-employer defined benefit pension plan for the years ended December 31, 2015 and
2014 is outlined in the table below. The most recent Pension Protection Act ("PPA") zone status available in 2015 and 2014 is
for the plan’s year-end at December 31, 2014, and December 31, 2013, respectively. The zone status is based on information the
Company received from the plan and is certified by the plan’s actuary. Among other factors, plans in the red zone are generally
less than 65% funded, plans in the yellow zone are less than 80% funded, and plans in the green zone are at least 80% funded.
The “FIP/RP Status Pending/Implemented” column indicates whether a financial improvement plan ("FIP") or a rehabilitation
plan ("RP") is either pending or has been implemented.
Pension Fund
EIN/Pension
Plan Number
IAM National Pension
Fund/National Pension Plan(A)
51-6031295 - 002
Pension Protection
Act Zone Status
2015
2014
Green
as of
12/31/14
Green
as of
12/31/13
FIP/RP
Status
Pending/
Implemented
Contributions of the
Company
2015
2014
Surcharge
Imposed
Expiration
Date of
Collective
Bargaining
Agreement
No
$863,000 $719,000
No
8/17/2016
Total Contributions: $863,000 $719,000
(A) The National Pension Plan utilized a five year amortization extension in accordance with § 431(d) of the Internal Revenue
Code of 1986 ("the Code") to amortize its losses from 2008. The plan re-certified its zone status after using the
amortization provisions of the Code. The Company's contributions to the plan did not represent more than 5% of total
contributions to the plan as indicated in the plan's most recently available annual report for the plan year ended December
31, 2014. Under the terms of the collective-bargaining agreement, the Company is required to make contributions to the
plan for each hour worked up to a maximum of 40 hours per person, per week, at the following rates: $1.25 per hour from
(cid:36)(cid:88)(cid:74)(cid:88)(cid:86)(cid:87)(cid:3)(cid:20)(cid:22)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:21)(cid:3)(cid:87)(cid:75)(cid:85)(cid:82)(cid:88)(cid:74)(cid:75)(cid:3)(cid:36)(cid:88)(cid:74)(cid:88)(cid:86)(cid:87)(cid:3)(cid:20)(cid:19)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:22)(cid:30)(cid:3)(cid:7)(cid:20)(cid:17)(cid:22)(cid:19)(cid:3)(cid:83)(cid:72)(cid:85)(cid:3)(cid:75)(cid:82)(cid:88)(cid:85)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:36)(cid:88)(cid:74)(cid:88)(cid:86)(cid:87)(cid:3)(cid:20)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:22)(cid:3)(cid:87)(cid:75)(cid:85)(cid:82)(cid:88)(cid:74)(cid:75)(cid:3)(cid:36)(cid:88)(cid:74)(cid:88)(cid:86)(cid:87)(cid:3)(cid:20)(cid:19)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)(cid:30)(cid:3)(cid:7)(cid:20)(cid:17)(cid:22)(cid:24)(cid:3)(cid:83)(cid:72)(cid:85)(cid:3)(cid:75)(cid:82)(cid:88)(cid:85)(cid:3)
(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:36)(cid:88)(cid:74)(cid:88)(cid:86)(cid:87)(cid:3)(cid:20)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)(cid:3)(cid:87)(cid:75)(cid:85)(cid:82)(cid:88)(cid:74)(cid:75)(cid:3)(cid:36)(cid:88)(cid:74)(cid:88)(cid:86)(cid:87)(cid:3)(cid:28)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)(cid:30)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:7)(cid:20)(cid:17)(cid:23)(cid:19)(cid:3)(cid:83)(cid:72)(cid:85)(cid:3)(cid:75)(cid:82)(cid:88)(cid:85)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:36)(cid:88)(cid:74)(cid:88)(cid:86)(cid:87)(cid:3)(cid:20)(cid:19)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)(cid:3)(cid:87)(cid:75)(cid:85)(cid:82)(cid:88)(cid:74)(cid:75)(cid:3)(cid:36)(cid:88)(cid:74)(cid:88)(cid:86)(cid:87)(cid:3)(cid:20)(cid:26)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:25)(cid:17)
Prior to the acquisition of Columbus Plastics, certain of the Company's employees were participants, or were eligible to
participate, in Navistar's post retirement health and life insurance benefit plan. This plan provides healthcare and life insurance
benefits for certain employees upon their retirement, along with their spouses and certain dependents and requires cost sharing
56
between the Company, Navistar and the participants, in the form of premiums, co-payments, and deductibles. The Company and
Navistar share the cost of benefits for these employees, using a formula that allocates the cost based upon the respective portion
of time that the employee was an active service participant after the acquisition of Columbus Plastics to the period of active
service prior to the acquisition of Columbus Plastics.
The Company also sponsors a post retirement health and life insurance benefit plan for certain union retirees of its Columbus,
Ohio production facility. In August 2010, as part of a new collective-bargaining agreement, the post retirement health and life
insurance benefits for all current and future represented employees who were not retired were eliminated in exchange for a one-
time cash payment. Individuals who retired prior to August 2010 remain eligible for post retirement health and life insurance
benefits.
The elimination of post retirement health and life insurance benefits described above resulted in a reduction of the Company’s
post retirement benefits liability of approximately $10,282,000 in 2010. This reduction in post retirement benefits liability was
treated as a negative plan amendment and is being amortized as a reduction to net periodic benefit cost over approximately twenty
years, the actuarial life expectancy of the remaining participants in the plan at the time of the amendment. This negative plan
amendment resulted in net periodic benefit cost reductions of approximately $496,000 in 2015, 2014 and 2013, and will result in
net periodic benefit cost reductions of approximately $496,000 in 2016 and each year thereafter during the amortization period.
The funded status of the Company's post retirement health and life insurance benefits plan as of December 31, 2015 and 2014
and reconciliation with the amounts recognized in the consolidated balance sheets are provided below.
Post Retirement Benefits
2015
2014
$
9,172,000
316,000
(48,000)
(434,000)
9,006,000
$
6,774,000
277,000
2,726,000
(605,000)
9,172,000
—
—
(7,594,000) $
3,939,000
(3,655,000) $
(8,090,000)
4,156,000
(3,934,000)
4.1%
3.8%
Change in benefit obligation:
Benefit obligation at January 1
Interest cost
Unrecognized (gain) loss
Benefits paid
Benefit obligation at December 31
Plan Assets
Amounts recorded in accumulated other comprehensive
income:
Prior service credit
Net loss
Total
Weighted-average assumptions as of December 31:
Discount rate used to determine benefit obligation and net
periodic benefit cost
$
$
$
$
57
The components of expense for all of the Company's post retirement benefit plans for the years ended December 31:
Pension expense:
Multi-employer plan
Defined contribution plans
Total pension expense
Health and life insurance:
Interest cost
Amortization of prior service costs
Amortization of net loss
Net periodic benefit cost
2015
2014
2013
$
863,000 $
836,000
1,699,000
719,000 $
701,000
1,420,000
464,000
571,000
1,035,000
316,000
(496,000)
169,000
(11,000)
277,000
(496,000)
47,000
(172,000)
332,000
(496,000)
201,000
37,000
Total post retirement benefits expense
$
1,688,000
$
1,248,000
$
1,072,000
The Company accounts for post retirement benefits under FASB ASC 715, which requires the recognition of the funded status of
a defined benefit pension or post retirement plan in the consolidated balance sheets. For the year ended December 31, 2015, the
Company recognized a net actuarial gain of $48,000 in other comprehensive gain. For the year ended December 31, 2014, the
Company recognized a net actuarial loss of $2,726,000 in other comprehensive loss.
Amounts not yet recognized as a component of net periodic benefit costs at December 31, 2015 and 2014 were a net credit of
$3,655,000 and $3,934,000, respectively. The amount in accumulated other comprehensive income expected to be recognized
as components of net periodic post retirement cost during 2016 consists of a prior service credit of $496,000, and a net loss of
$155,000. In addition, 2016 interest expense related to post retirement healthcare is expected to be $323,000, for a total post
retirement healthcare net gain of approximately $18,000 in 2016. The Company expects benefits paid in 2016 to be consistent
with estimated future benefit payments as shown in the table below.
The weighted average rate of increase in the per capita cost of covered health care benefits is projected to be 6%. The rate is
projected to decrease gradually to 5% by the year 2021 and remain at that level thereafter. The comparable assumptions for the
prior year were 7% and 5%, respectively.
The effect of changing the health care cost trend rate by one-percentage point for each future year is as follows:
Effect on total of service and interest cost components
Effect on post retirement benefit obligation
$
$
1- Percentage
Point Increase
1-Percentage
Point Decrease
40,000 $
1,028,000 $
(47,000 )
(1,227,000 )
The estimated future benefit payments of the health care plan are as follows:
Year
2016
2017
2018
2019
2020
2021-2025
$
Postretirement
Health Care
Benefits Plan
1,060,000
392,000
370,000
368,000
381,000
2,144,000
58
13. Related Party Transactions
In 1996, the Company acquired substantially all of the assets and liabilities of the Columbus Plastics unit from Navistar, in return
for a secured note, which has been repaid, and 4,264,000 shares of Common Stock of the Company. On July 18, 2007, the
Company entered into a stock repurchase agreement with Navistar, pursuant to which the Company repurchased 3,600,000 shares
of common stock from Navistar. On August 16, 2013, Navistar sold its remaining 664,000 shares in a series of open market
sales.
14. Commitments and Contingencies
From time to time, the Company is involved in litigation incidental to the conduct of its business. However, the Company is
presently not involved in any legal proceedings which in the opinion of management are likely to have a material adverse effect
on the Company's consolidated financial position or results of operations.
15. Fair Value of Financial Instruments
The Company holds certain financial instruments, which are recognized and disclosed at fair value in the financial statements on
a recurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in a
transaction between market participants as of the measurement date. Fair value is measured using the fair value hierarchy and
related valuation methodologies as defined in the authoritative literature. This guidance provides a fair value framework that
requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets
or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management
judgment. The three levels are defined as follows:
Level 1 - Quoted prices in active markets for identical assets and liabilities.
Level 2 - Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in
markets that are not active and model-derived valuations, in which all significant inputs are observable in
active markets.
Level 3 - Significant unobservable inputs reflecting management's own assumptions about the inputs used in pricing the
asset or liability.
The Company’s financial instruments consist of long-term debt, interest rate swaps, accounts receivable, and accounts payable.
The carrying amount of these financial instruments approximated their fair value. The Company's only two Level 2 fair value
instrument relates to interest rate swaps. The Company utilizes interest rate swap contracts to manage its targeted mix of fixed
and floating rate debt, and these swaps are valued using observable benchmark rates at commonly quoted intervals for the full
term of the swaps (market approach). These interest rate swaps are discussed in detail in Note 9.
The following table presents financial liabilities measured and recorded at fair value on the Company’s Consolidated Balance
Sheets on a recurring basis and their level within the fair value hierarchy as of December 31, 2015 and December 31, 2014:
Core Molding Technologies' derivative instruments included on the Consolidated Balance Sheets were as follows:
Derivatives not designated as hedging instruments
Interest rate risk activities
Interest rate swaps $
2,000
$
37,000
Balance Sheet
Location
December 31,
2015 Fair Value
December 31,
2014 Fair Value
At December 31, 2015 the Company's assets measured at fair value on a non-recurring basis related to the acquisition of
substantially all of the assets of CPI, as disclosed in Note 7.
59
The effect of derivative instruments on the Consolidated Statements of Income was as follows:
Derivatives Not
Designated as
Hedging Instruments
Location of Gain (Loss)
Recognized
in Income on Derivative
Year ended
Amount of Realized/Unrealized Gain
(Loss) Recognized in Income on
Derivatives
December 31,
2014
December 31,
2015
December 31,
2013
Interest rate swaps
Interest expense
$
14,000 $
46,000 $
73,000
During 2015 and 2014, the Company did not reclassify any amounts related to its cash flow hedges from accumulated other
comprehensive income (loss) to earnings due to the probability that certain forecasted transactions would not occur. As discussed
in Note 9, the Company discontinued the use of hedge accounting for its interest rate swaps. The Company now records all mark
to market adjustments related to these interest rate swaps within interest expense in the Company’s Consolidated Statements of
Income. It is anticipated that during the next twelve months the expiration and settlement of cash flow hedge contracts along with
the loss amortization on its remaining discontinued hedge will result in income statement recognition of amounts currently
classified in accumulated other comprehensive loss of approximately $5,000, or $2,000 net of taxes.
60
16. Accumulated Other Comprehensive Income
The following table presents changes in Accumulated Other Comprehensive Income by component, net of tax, for the years
ended December 31, 2015 and 2014:
2014:
Balance at January 1, 2014
Other comprehensive income before
reclassifications
Amounts reclassified from accumulated other
comprehensive income
Income tax (expense) benefit
Balance at December 31, 2014
$
(16,000) $
Losses on
Interest Rate
Swaps(A)
Post
Retirement
Benefit Plan
Items(B)
Total
$
(30,000) $
4,902,000 $
4,872,000
—
(2,726,000)
(2,726,000)
21,000
(7,000)
(449,000)
1,119,000
2,846,000 $
(428,000)
1,112,000
2,830,000
2015:
Balance at December 31, 2014
Other comprehensive income before
reclassifications
Amounts reclassified from accumulated other
comprehensive income
Income tax (expense) benefit
$
(16,000) $
2,846,000 $
2,830,000
—
48,000
48,000
21,000
(8,000)
(327,000)
81,000
2,648,000 $
(306,000)
73,000
2,645,000
Balance at December 31, 2015
$
(3,000) $
(A) The losses on interest rate swaps reclassified from Accumulated Other Comprehensive Income is included in interest
expense on the Consolidated Statements of Income. The tax effect of losses on interest rate swaps reclassified from
Accumulated Other Comprehensive Income is included in income tax expense on the Consolidated Statements of
Income.
(B) The effect of post retirement benefit items reclassified from Accumulated Other Comprehensive Income is included in
total cost of sales on the Consolidated Statements of Income. These Accumulated Other Comprehensive Income
components are included in the computation of net periodic benefit cost (see Note 12 Post Retirement Benefits for
additional details). The tax effect of post retirement benefit items reclassified from Accumulated Other Comprehensive
Income is included in income tax expense on the Consolidated Statements of Income.
61
17. Quarterly Results of Operations (Unaudited)
The following is a summary of the unaudited quarterly results of operations for the years ended December 31, 2015, 2014 and
2013.
2015:
Product sales
Tooling sales
Net sales
Gross margin
Income before interest and taxes
Net income
Net income per common share:
Basic (1)
Diluted (1)
2014:
Product sales
Tooling sales
Net sales
Gross margin
Income before interest and taxes
Net income
Net income per common share:
Basic (1)
Diluted (1)
2013:
Product sales
Tooling sales
Net sales
Gross margin
Income before interest and taxes
Net income
Net income per common share:
Basic (1)
Diluted (1)
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Total Year
47,854,000 $
1,745,000
49,599,000
9,025,000
4,890,000
3,196,000
53,514,000 $ 44,243,000 $
1,342,000
54,856,000
10,982,000
6,232,000
4,039,000
3,806,000
48,049,000
8,311,000
3,902,000
2,484,000
43,492,000 $ 189,103,000
3,072,000
9,965,000
199,068,000
46,564,000
36,252,000
7,934,000
18,498,000
3,474,000
12,050,000
2,331,000
0.42 $
0.42 $
0.53 $
0.53 $
0.33 $
0.33 $
0.31 $
0.31 $
1.59
1.58
40,664,000 $
411,000
41,075,000
6,645,000
3,116,000
2,120,000
43,317,000 $ 43,171,000 $
2,807,000
46,124,000
7,599,000
3,873,000
2,520,000
420,000
43,591,000
8,147,000
3,704,000
2,428,000
42,592,000 $ 169,744,000
1,822,000
5,460,000
175,204,000
44,414,000
30,186,000
7,795,000
3,954,000
14,647,000
9,634,000
2,566,000
0.29 $
0.28 $
0.34 $
0.33 $
0.32 $
0.32 $
0.34 $
0.34 $
1.28
1.28
32,858,000 $
1,504,000
34,362,000
5,890,000
2,617,000
1,681,000
32,146,000 $ 32,342,000 $
2,535,000
34,681,000
5,989,000
2,500,000
1,589,000
5,092,000
37,434,000
6,370,000
2,948,000
1,960,000
36,750,000 $ 134,096,000
10,029,000
144,125,000
23,574,000
10,114,000
6,866,000
898,000
37,648,000
5,325,000
2,049,000
1,636,000
0.24 $
0.23 $
0.22 $
0.21 $
0.27 $
0.26 $
0.22 $
0.22 $
0.95
0.92
$
$
$
$
$
$
$
$
$
(1) Sum of the quarters may not sum to total year due to rounding.
62
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
Not Applicable.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
As of the end of the period covered by this report, the Company has carried out an evaluation, under the supervision and with the
participation of its management, including its Chief Executive Officer and its Chief Financial Officer, of the effectiveness of the
design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act). Based upon
this evaluation, the Company’s management, including its Chief Executive Officer and its Chief Financial Officer, concluded
that the Company’s disclosure controls and procedures were (i) effective to ensure that information required to be disclosed in
the Company’s reports filed or submitted under the Exchange Act were accumulated and communicated to the Company’s
management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding
required disclosures, and (ii) effective to ensure that information required to be disclosed in the Company’s reports filed or
submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission’s rules and forms.
Management’s Report on Internal Control over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting.
Internal control over financial reporting is a process designed by, or under the supervision of, the Company’s Chief Executive
Officer and Chief Financial Officer and effected by the Company’s board of directors, management and other personnel, to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial
statements in accordance with accounting principles generally accepted in the United States of America. Because of its inherent
limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of the
Company’s financial statements would be prevented or detected.
The Company’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, conducted an
evaluation of the effectiveness of the Company’s internal controls over financial reporting based on the criteria established in the
2013 Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). This evaluation included a review of the documentation of controls, evaluation of the design effectiveness of controls,
testing of the operating effectiveness of controls and a conclusion on this evaluation. As permitted, the Company has excluded
the operations of CPI Binani, Inc. acquired during 2015, which is described in Note 7 of the consolidated financial statements,
from the scope of management’s report on internal control over financial reporting. As such, it has also been excluded from the
scope of our audit of internal control over financial reporting. Based on this evaluation, management concluded that the
Company’s internal control over financial reporting was effective as of December 31, 2015.
The Company's independent registered public accounting firm, Crowe Horwath LLP, audited our internal control over financial
reporting as of December 31, 2015, as stated in their report in the section entitled "Report of Independent Registered Public
Accounting Firm" included elsewhere in this Form 10-K, which expressed an unqualified opinion on the effectiveness of the
Company's internal control over financial reporting as of December 31, 2015.
Changes In Internal Controls
There were no changes in internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f) and
Rule 15d-15(f)) that occurred in the last fiscal quarter that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
63
ITEM 9B. OTHER INFORMATION
None.
64
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
The information required by this Part III, Item 10 is incorporated by reference from the Company’s definitive proxy statement
for its annual meeting of stockholders to be held on or about May 12, 2016, which is expected to be filed with the SEC pursuant
to Regulation 14A of the Securities Exchange Act of 1934 within 120 days after the end of the fiscal year covered by this report.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Part III, Item 11 is incorporated by reference from the Company’s definitive proxy statement
for its annual meeting of stockholders to be held on or about May 12, 2016, which is expected to be filed with the SEC pursuant
to Regulation 14A of the Securities Exchange Act of 1934 within 120 days after the end of the fiscal year covered by this report.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
The information required by this Part III, Item 12 is incorporated by reference from the Company’s definitive proxy statement
for its annual meeting of stockholders to be held on or about May 12, 2016, which is expected to be filed with the SEC pursuant
to Regulation 14A of the Securities Exchange Act of 1934 within 120 days after the end of the fiscal year covered by this report.
ITEM 13. CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this Part III, Item 13 is incorporated by reference from the Company’s definitive proxy statement
for its annual meeting of stockholders to be held on or about May 12, 2016, which is expected to be filed with the SEC pursuant
to Regulation 14A of the Securities Exchange Act of 1934 within 120 days after the end of the fiscal year covered by this report.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by this Part III, Item 14 is incorporated by reference from the Company’s definitive proxy statement
for its annual meeting of stockholders to be held on or about May 12, 2016, which is expected to be filed with the SEC pursuant
to Regulation 14A of the Securities Exchange Act of 1934 within 120 days after the end of the fiscal year covered by this report.
65
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Documents filed as Part of this Report:
(1) Financial Statements
See Part II, Item 8 hereof.
(2) Financial Statement Schedules and Independent Auditor's Report
The following consolidated financial statement schedules are filed with this Annual Report on Form 10-K:
Schedule II — Valuation and Qualifying Accounts and Reserves for the Years Ended December 31,
2015 and 2014
68
All other schedules are omitted because of the absence of the conditions under which they are required.
(3) Exhibits
See Index to Exhibits filed with this Annual Report on Form 10-K.
66
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
CORE MOLDING TECHNOLOGIES, INC.
By
/s/ Kevin L. Barnett
Kevin L. Barnett
President and Chief Executive Officer
March 11, 2016
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated:
/s/ Kevin L. Barnett
Kevin L. Barnett
/s/ John P. Zimmer
John P. Zimmer
*
President, Chief Executive Officer, and Director
(Principal Executive Officer)
March 11, 2016
Vice President, Secretary, Treasurer, and Chief
Financial Officer (Principal Financial Officer and
Principal Accounting Officer)
March 11, 2016
James L. Simonton
Director
March 11, 2016
*
Thomas R. Cellitti
Director
March 11, 2016
*
James F. Crowley
Director
March 11, 2016
*
Ralph O. Hellmold
Director
March 11, 2016
*
Matthew Jauchius
Director
March 11, 2016
*
Andrew O. Smith
Director
March 11, 2016
*By /s/ John P. Zimmer
John P. Zimmer
Attorney-In-Fact
March 11, 2016
67
Core Molding Technologies, Inc. and Subsidiaries
Schedule II
Consolidated valuation and qualifying accounts and reserves for the years ended December 31, 2015 and 2014.
Reserves deducted from asset to which it applies — allowance for doubtful accounts.
Additions
Balance at
Beginning of
Year
(Recovered)/
Charged to
Costs &
Expenses
Charged to
Other
Accounts
Deductions (A)
Balance at End
of Year
Year Ended December 31, 2015
Year Ended December 31, 2014
Year Ended December 31, 2013
$
$
$
289,000 $
141,000 $
258,000 $
(159,000) $
197,000 $
51,000 $
— $
— $
— $
90,000 $
49,000 $
168,000 $
40,000
289,000
141,000
(A) Amount represents uncollectible accounts written off.
68
Exhibit No.
2(a)(1)
2(a)(2)
2(b)(1)
2(b)(2)
2(c)
2(d)
3(a)(1)
3(a)(2)
3(a)(3)
3(a)(4)
3(b)(1)
3(b)(2)
4(a)(1)
4(a)(2)
4(a)(3)
4(a)(4)
Index to Exhibits
Description
Location
Asset Purchase Agreement Dated as of September 12,
1996, As amended October 31, 1996, between
Navistar and RYMAC Mortgage Investment
Corporation1
Second Amendment to Asset Purchase Agreement
dated December 16, 19961
Incorporated by reference to Exhibit 2-A to
Registration Statement on Form S-4 (Registration No.
333-15809)
Incorporated by reference to Exhibit 2(a)(2) to
Annual Report on Form 10-K for the year-ended
December 31, 2001
Agreement and Plan of Merger dated as of November
1, 1996, between Core Molding Technologies, Inc.
and RYMAC Mortgage Investment Corporation
Incorporated by reference to Exhibit 2-B to
Registration Statement on Form S-4 (Registration No.
333-15809)
First Amendment to Agreement and Plan of Merger
dated as of December 27, 1996 Between Core
Molding Technologies, Inc. and RYMAC Mortgage
Investment Corporation
Asset Purchase Agreement dated as of October 10,
2001, between Core Molding Technologies, Inc. and
Airshield Corporation
Asset Purchase Agreement dated as of March
20,2015, between Core Molding Technologies, Inc.
and CPI Binani, Inc.
Certificate of Incorporation of Core Molding
Technologies, Inc. as filed with the Secretary of State
of Delaware on October 8, 1996
Certificate of Amendment of Certificate of
Incorporation of Core Molding Technologies, Inc. as
filed with the Secretary of State of Delaware on
November 6, 1996
Certificate of Amendment of Certificate of
Incorporation as filed with the Secretary of State of
Delaware on August 28, 2002
Certificate of Designation, Preferences and Rights of
Series A Junior Participating Preferred Stock as filed
with the Secretary of State of Delaware on July 18,
2007
Incorporated by reference to Exhibit 2(b)(2) to
Annual Report on Form 10-K for the year ended
December 31, 2002
Incorporated by reference to Exhibit 1 to Form 8-K
filed October 31, 2001
Incorporated by reference to Exhibit 2.1 to Form 8-K
filed March 23, 2015
Incorporated by reference to Exhibit 4(a) to
Registration Statement on Form S-8 (Registration No.
333-29203)
Incorporated by reference to Exhibit 4(b) to
Registration Statement on Form S-8 (Registration No.
333-29203)
Incorporated by reference to Exhibit 3(a)(4) to
Quarterly Report on Form 10-Q for the quarter ended
September 30, 2002
Incorporated by reference to Exhibit 3.1 to Form 8-K
filed July 19, 2007
Amended and Restated By-Laws of Core Molding
Technologies, Inc.
Incorporated by reference to Exhibit 3.1 to Current
Report on Form 8-K filed January 4, 2008
Amendment No. 1 to the Amended and Restated By-
Laws of Core Molding Technologies, Inc.
Certificate of Incorporation of Core Molding
Technologies, Inc. as filed with the Secretary of State
of Delaware on October 8, 1996
Certificate of Amendment of Certificate of
Incorporation of Core Molding Technologies, Inc. as
filed with the Secretary of State of Delaware on
November 6, 1996
Certificate of Amendment of Certificate of
Incorporation as filed with the Secretary of State of
Delaware on August 28, 2002
Certificate of Designation, Preferences and Rights of
Series A Junior Participating Preferred Stock as filed
with the Secretary of State of Delaware on July 18,
2007
69
Incorporated by reference to Exhibit 3.1 to Current
Report on Form 8-K filed December 17, 2013
Incorporated by reference to Exhibit 4(a) to
Registration Statement on Form S-8 (Registration
No. 333-29203)
Incorporated by reference to Exhibit 4(b) to
Registration Statement on Form S-8 (Registration
No. 333-29203)
Incorporated by reference to Exhibit 3(a)(4) to
Quarterly Report on Form 10-Q for the quarter ended
September 30, 2002
Incorporated by reference to Exhibit 3.1 to Form 8-K
filed July 19, 2007
Exhibit No.
Description
Location
4(b)
10(a)
10(c)
10(c)(1)
10(c)(2)
10(c)(3)
10(c)(4)
10(c)(5)
10(c)(6)
10(c)(7)
10(c)(8)
10(c)(9)
10(c)(10)
10(e)
Stockholder Rights Agreement dated as of July 18, 2007,
between Core Molding Technologies, Inc. and American
Stock Transfer & Trust Company
Incorporated by reference to Exhibit 4.1 to
Current Report Form 8-K filed July 19, 2007
Supply Agreement, dated August 4, 2014 between Core
Molding Technologies, Inc. and Core Composites
Corporation and Navistar, Inc.3
Incorporated by reference to Exhibit 10(a) to
Quarterly Report on Form 10-Q for the quarter
ended September 30, 2014
Credit agreement, dated December 9, 2008, by and between
Core Molding Technologies, Inc. and Corecomposites de
Mexico, S De. R.L. de C.V. and KeyBank National
Association
First Amendment Agreement, dated March 31, 2009, to the
Credit Agreement dated December 9, 2008, among Core
Molding Technologies, Inc., Corecomposites de Mexico, S.
De R.L. de C.V. and KeyBank National Association
Second Amendment Agreement, dated June 30, 2009, to the
Credit Agreement dated December 9, 2008, among Core
Molding Technologies, Inc., Corecomposites de Mexico, S.
De R.L. de C.V. and KeyBank National Association
Third Amendment Agreement, dated December 1, 2009, to
the Credit Agreement dated December 9, 2008, among Core
Molding Technologies, Inc., Corecomposites de Mexico, S.
De R.L. de C.V. and KeyBank National Association
Fourth Amendment Agreement, dated March 8, 2010, to the
Credit Agreement dated December 9, 2008, among Core
Molding Technologies, Inc., Corecomposites de Mexico, S.
De R.L. de C.V. and KeyBank National Association
Fifth Amendment Agreement, dated May 11, 2010, to the
Credit Agreement dated December 9, 2008, among Core
Molding Technologies, Inc., Corecomposites de Mexico, S.
De R.L. de C.V. and KeyBank National Association
Sixth Amendment Agreement, dated June 1, 2011, to the
Credit Agreement dated December 9, 2008, among Core
Molding Technologies, Inc., Corecomposites de Mexico, S.
De R.L. de C.V. and Keybank National Association
Seventh Amendment Agreement, dated July 9, 2012, to the
Credit Agreement dated December 9, 2008, among Core
Molding Technologies, Inc., Corecomposites de Mexico, S.
De R.L. de C.V. and Keybank National Association
Eighth Amendment Agreement, dated March 27, 2013, to
the Credit Agreement dated December 9, 2008, among Core
Molding Technologies, Inc., Corecomposites de Mexico, S.
De R.L. de C.V. and Keybank National Association
Ninth Amendment Agreement, dated October 31, 2013, to
the Credit Agreement dated December 9, 2008, among Core
Molding Technologies, Inc., Corecomposites de Mexico, S.
De R.L. de C.V. and Keybank National Association
Tenth Amendment Agreement, dated March 20, 2015, to the
Credit Agreement dated December 9, 2008, among Core
Molding Technologies, Inc., Corecomposites de Mexico, S.
De R.L. de C.V. and Keybank National Association
Reimbursement Agreement, dated April 1, 1998, by and
between Core Molding Technologies, Inc. and KeyBank
National Association
Incorporated by reference to Exhibit 10(b) to
Quarterly Report on Form 10-Q for the quarter
ended September 30, 2010
Incorporated by reference to Exhibit 10.1 to
Current Report on Form 8-K filed April 2, 2009
Incorporated by reference to Exhibit 10.1 to
Current Report on Form 8-K filed July 2, 2009
Incorporated by reference to Exhibit 10.1 to
Current Report on Form 8-K filed December 7,
2009
Incorporated by reference to Exhibit 10.1 to
Current Report on Form 8-K dated March 10,
2010
Incorporated by reference to Exhibit 10.1 to
Current Report on Form 8-K dated May 14,
2010
Incorporated by reference to Exhibit 10.1 to
Current Report on Form 8-K filed June 21, 2011
Incorporated by reference to Exhibit 10.1 to
Current Report on Form 8-K filed July 10, 2012
Incorporated by reference to Exhibit 10.1 to
Current Report on Form 8-K filed March 27,
2013
Incorporated by reference to Exhibit 10.1 to
Current Report on Form 8-K filed November 4,
2013
Incorporated by reference to Exhibit 10.1 to
Current Report on Form 8-K filed March 23,
2015
Incorporated by reference to Exhibit 10(h) to
Annual Report on Form 10-K for the year ended
December 31, 2003
70
Exhibit No.
10(f)
Core Molding Technologies, Inc. Employee Stock Purchase
Plan2
Description
Location
10(f)(1)
2002 Core Molding Technologies, Inc. Employee Stock
Purchase Plan (as amended May 17, 2006) 2
Incorporated by reference to Exhibit 10(i) to
Annual Report on Form 10-K for the year ended
December 31, 2013.
Incorporated by reference to Exhibit 10.3 to
Current Report on Form 8-K dated May 23,
2006
10(g)
10(g)(1)
Letter Agreement Regarding Terms and Conditions of
Interest Rate Swap Agreement between KeyBank National
Association and Core Molding Technologies, Inc.
Letter Agreement Regarding Terms and Conditions of
Interest Rate Swap Agreement between KeyBank National
Association and Core Molding Technologies, Inc.
Incorporated by reference to Exhibit 10(j) to
Annual Report on Form 10-K for the year ended
December 31, 2003
Incorporated by reference to Exhibit 10(i)(1) to
Annual Report on Form 10-K for the year ended
December 31, 2008
10(h)
2006 Core Molding Technologies, Inc. Long Term Equity
Incentive Plan2
10(i)
Core Molding Technologies, Inc. Cash Profit Sharing Plan2
Incorporated by reference to Exhibit 10.1 to
Current Report on Form 8-K dated May 23,
2006
Incorporated by reference to Exhibit 10(i) to
Annual Report on Form 10-K for the year ended
December 31, 2013.
Form of Amended and Restated Executive Severance
Agreement between Core Molding Technologies, Inc. and
certain executive officers2
Incorporated by reference to Exhibit 10.2 to
Current Report on Form 8-K dated December
29, 2008
Form of Amended and Restated Restricted Stock Agreement
between Core Molding Technologies, Inc. and certain
executive officers2
Incorporated by reference to Exhibit 10.1 to
Current Report on Form 8-K dated January 4,
2008
10(j)
10(k)
10(l)
Form of Executive Severance Agreement between Core
Molding Technologies, Inc. and certain executive officers2
10(m)
Form of Restricted Stock Agreement between Core Molding
Technologies, Inc. and certain executive officers2
11
Computation of Net Income per Share
Incorporated by reference to Exhibit 10.4 to
Current Report on Form 8-K dated May 23,
2006
Incorporated by reference to Exhibit 10.2 to
Current Report on Form 8-K dated May 15,
2012
Exhibit 11 omitted because the required
information is Included in Notes to Financial
Statements in Part II, Item 8 of this Annual
Report on Form 10-K
23
24
31(a)
31(b)
32(a)
32(b)
Consent of Crowe Horwath LLP
Powers of Attorney
Section 302 Certification by Kevin L. Barnett, President,
Chief Executive Officer, and Director
Filed Herein
Filed Herein
Filed Herein
Section 302 Certification by John P. Zimmer, Vice President,
Secretary, Treasurer, and Chief Financial Officer
Filed Herein
Certification of Kevin L. Barnett, Chief Executive Officer of
Core Molding Technologies, Inc., dated March 11, 2016,
pursuant to 18 U.S.C. Section 1350
Filed Herein
Certification of John P. Zimmer, Chief Financial Officer of
Core Molding Technologies, Inc., dated March 11, 2016,
pursuant to 18 U.S.C. Section 1350
Filed Herein
71
Exhibit No.
Description
Location
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema Document
Filed Herein
Filed Herein
101.CAL
XBRL Taxonomy Extension Calculation Linkbase
Filed Herein
101.LAB
XBRL Taxonomy Extension Label Linkbase
Filed Herein
101.PRE
XBRL Taxonomy Extension Presentation Linkbase
Filed Herein
101.DEF
XBRL Taxonomy Extension Definition Linkbase
Filed Herein
1. The Asset Purchase Agreement, as filed with the Securities and Exchange Commission at Exhibit 2-A to Registration
Statement on Form S-4 (Registration No. 333-15809), omits the exhibits (including, the Buyer Note, Special Warranty Deed,
Supply Agreement, Registration Rights Agreement and Transition Services Agreement, identified in the Asset Purchase
Agreement) and schedules (including, those identified in Sections 1, 3, 4, 5, 6, 8 and 30 of the Asset Purchase Agreement.
Core Molding Technologies, Inc. will provide any omitted exhibit or schedule to the Securities and Exchange Commission
upon request.
2.
Indicates management contracts or compensatory plans that are required to be filed as an exhibit to this Annual Report on
Form 10-K.
3. Certain portions of this Exhibit have been omitted intentionally subject to a confidentiality treatment request. A complete
version of the Exhibit has been filed separately with the Securities and Exchange Commission.
72
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statements No. 333-105819, No. 333-107143, No. 333-136123, and
No. 333-174349 on Forms S-8 and Registration Statement No. 333-200215 on Form S-3 of Core Molding Technologies, Inc. of
our report dated March 11, 2016, relating to the consolidated financial statements and financial statement schedule and the
effectiveness of internal control over financial reporting, appearing in this Annual Report on Form 10-K.
Exhibit 23
Columbus, Ohio
March 11, 2016
/s/ Crowe Horwath LLP
73
Exhibit 31(a)
I, Kevin L. Barnett, certify that:
1.
I have reviewed this annual report on Form 10-(cid:46)(cid:3)(cid:82)(cid:73)(cid:3)(cid:38)(cid:82)(cid:85)(cid:72)(cid:3)(cid:48)(cid:82)(cid:79)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:55)(cid:72)(cid:70)(cid:75)(cid:81)(cid:82)(cid:79)(cid:82)(cid:74)(cid:76)(cid:72)(cid:86)(cid:15)(cid:3)(cid:44)(cid:81)(cid:70)(cid:17)(cid:30)(cid:3)
SECTION 302 CERTIFICATION
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were
(cid:80)(cid:68)(cid:71)(cid:72)(cid:15)(cid:3)(cid:81)(cid:82)(cid:87)(cid:3)(cid:80)(cid:76)(cid:86)(cid:79)(cid:72)(cid:68)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:85)(cid:72)(cid:86)(cid:83)(cid:72)(cid:70)(cid:87)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:72)(cid:85)(cid:76)(cid:82)(cid:71)(cid:3)(cid:70)(cid:82)(cid:89)(cid:72)(cid:85)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:68)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:30)(cid:3)
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for,
(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:72)(cid:85)(cid:76)(cid:82)(cid:71)(cid:86)(cid:3)(cid:83)(cid:85)(cid:72)(cid:86)(cid:72)(cid:81)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:68)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:30)(cid:3)
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
(cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:68)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:76)(cid:86)(cid:3)(cid:69)(cid:72)(cid:76)(cid:81)(cid:74)(cid:3)(cid:83)(cid:85)(cid:72)(cid:83)(cid:68)(cid:85)(cid:72)(cid:71)(cid:30)
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to
be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted
(cid:68)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:83)(cid:85)(cid:76)(cid:81)(cid:70)(cid:76)(cid:83)(cid:79)(cid:72)(cid:86)(cid:30)
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered
(cid:69)(cid:92)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:68)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:86)(cid:88)(cid:70)(cid:75)(cid:3)(cid:72)(cid:89)(cid:68)(cid:79)(cid:88)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:30)(cid:3)(cid:68)(cid:81)(cid:71)
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during
the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that
has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting.
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons
performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:76)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:30)(cid:3)(cid:68)(cid:81)(cid:71)
b) any fraud, whether or not material, that involves management or other employees who have a significant role in
the registrant’s internal control over financial reporting.
Date: March 11, 2016
/s/ Kevin L. Barnett
Kevin L. Barnett
President, Chief Executive Officer, and Director
74
Exhibit 31(b)
I, John P. Zimmer, certify that:
1.
I have reviewed this annual report on Form 10-(cid:46)(cid:3)(cid:82)(cid:73)(cid:3)(cid:38)(cid:82)(cid:85)(cid:72)(cid:3)(cid:48)(cid:82)(cid:79)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:55)(cid:72)(cid:70)(cid:75)(cid:81)(cid:82)(cid:79)(cid:82)(cid:74)(cid:76)(cid:72)(cid:86)(cid:15)(cid:3)(cid:44)(cid:81)(cid:70)(cid:17)(cid:30)(cid:3)
SECTION 302 CERTIFICATION
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were
(cid:80)(cid:68)(cid:71)(cid:72)(cid:15)(cid:3)(cid:81)(cid:82)(cid:87)(cid:3)(cid:80)(cid:76)(cid:86)(cid:79)(cid:72)(cid:68)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:85)(cid:72)(cid:86)(cid:83)(cid:72)(cid:70)(cid:87)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:72)(cid:85)(cid:76)(cid:82)(cid:71)(cid:3)(cid:70)(cid:82)(cid:89)(cid:72)(cid:85)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:68)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:30)(cid:3)
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for,
(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:72)(cid:85)(cid:76)(cid:82)(cid:71)(cid:86)(cid:3)(cid:83)(cid:85)(cid:72)(cid:86)(cid:72)(cid:81)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:68)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:30)(cid:3)
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
(cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:68)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:76)(cid:86)(cid:3)(cid:69)(cid:72)(cid:76)(cid:81)(cid:74)(cid:3)(cid:83)(cid:85)(cid:72)(cid:83)(cid:68)(cid:85)(cid:72)(cid:71)(cid:30)
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to
be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted
(cid:68)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:83)(cid:85)(cid:76)(cid:81)(cid:70)(cid:76)(cid:83)(cid:79)(cid:72)(cid:86)(cid:30)
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered
(cid:69)(cid:92)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:68)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:86)(cid:88)(cid:70)(cid:75)(cid:3)(cid:72)(cid:89)(cid:68)(cid:79)(cid:88)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:30)(cid:3)(cid:68)(cid:81)(cid:71)
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during
the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that
has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting.
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons
performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:76)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:30)(cid:3)(cid:68)(cid:81)(cid:71)
b) any fraud, whether or not material, that involves management or other employees who have a significant role in
the registrant’s internal control over financial reporting.
Date: March 11, 2016
/s/ John P. Zimmer
John P. Zimmer
Vice President, Secretary, Treasurer and Chief Financial
Officer
75
CORE MOLDING TECHNOLOGIES, INC.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32(a)
In connection with the Annual Report of Core Molding Technologies, Inc. (the “Company”) on Form 10-K for the period ended
December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kevin L. Barnett,
President, Chief Executive Officer, and Director of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934(cid:30)(cid:3)(cid:68)(cid:81)(cid:71)
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
/s/ Kevin L. Barnett
Kevin L. Barnett
President, Chief Executive Officer, and Director
March 11, 2016
CORE MOLDING TECHNOLOGIES, INC.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32(b)
In connection with the Annual Report of Core Molding Technologies, Inc. (the “Company”) on Form 10-K for the period ended
December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John P. Zimmer,
Vice President, Secretary, Treasurer, and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934(cid:30)(cid:3)(cid:68)(cid:81)(cid:71)
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
/s/ John P. Zimmer
John P. Zimmer
Vice President, Secretary, Treasurer and Chief Financial Officer
March 11, 2016
76
INVESTOR INFORMATION
Share Trading
Shares of Core Molding Technologies common stock are traded on the NYSE MKT LLC under
the symbol “CMT.”
Notice of Annual Meeting
The Company’s 2016 annual meeting will be held on May 12, 2016. The meeting will be held at
the Company’s Columbus, Ohio facility, 800 Manor Park Drive, Columbus, Ohio 43228 and will
convene at 9:00 a.m.
Investor Relations
Investor inquiries, including requests to obtain copies without charge of the Company’s annual
report as filed with the Securities & Exchange Commission, should be directed to:
Core Molding Technologies, Inc.
Investor Relations
800 Manor Park Drive
Columbus, OH 43228
Website: www.coremt.com
Stockholder Inquiries
Questions such as changes of address, name changes or lost certificates should be directed to
the Company’s stock transfer agent:
American Stock Transfer & Trust Co., LLC
6201 15th Avenue
Brooklyn, NY 11219
(800) 937-5449
info@amstock.com
CORPORATE OFFICERS
BOARD OF DIRECTORS
Kevin L. Barnett
President and Chief Executive Officer
Terrence J. O’Donovan
Vice President, Marketing and Sales
William R. Ringling
Vice President of Operations
John P. Zimmer
Vice President, Secretary, Treasurer
and Chief Financial Officer
James L. Simonton, Chairman
Thomas R. Cellitti
James F. Crowley
Ralph O. Hellmold
Matthew E. Jauchius
Andrew O. Smith
Kevin L. Barnett
FOLD HERE
800 Manor Park Drive
Columbus, OH 43228
www.coremt.com
ANNUAL REPORT
2015
CMT-027 AnnualReport.2015.FA.indd 1-2
3/30/16 10:57 AM
CORE MOLDING TECHNOLOGIES, INC.
CREATIVE • RELIABLE • COMPOSITES
FOLD HERE