UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2015
OR
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o | 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)
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| | |
Delaware | | 31-1481870 |
(State or other jurisdiction incorporation or organization) | | (I.R.S. Employer Identification No.) |
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800 Manor Park Drive, Columbus, Ohio | | 43228-0183 |
(Address of principal executive office) | | (Zip Code) |
Registrant’s telephone number, including area code (614) 870-5000
N/A
_______________________________________________________________
Former name, former address and former fiscal year, if changed since last report.
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 þ No o
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 þ No o
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 definition of “accelerated filer,” “large accelerated filer,” and “smaller reporting company,” in Rule 12b-2 of the Exchange Act (Check one).
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Large accelerated filer o | | Accelerated filer þ | | Non-accelerated filer o | | Smaller reporting company o |
| | | | (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 Exchange Act. Yes o No þ
As of August 7, 2015, the latest practicable date, 7,708,968 shares of the registrant’s common stock were issued and outstanding.
Table of Contents
Part I — Financial Information
Core Molding Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets |
| | | | | | | |
| June 30, 2015 | | December 31, 2014 |
| (Unaudited) | |
|
Assets: | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 4,117,000 |
| | $ | 2,312,000 |
|
Accounts receivable (less allowance for doubtful accounts: June 30, 2015 - $304,000; December 31, 2014 - $289,000) | 35,367,000 |
| | 34,360,000 |
|
Inventories: | | | |
Finished goods, net | 1,392,000 |
| | 1,402,000 |
|
Work in process, net | 1,392,000 |
| | 1,621,000 |
|
Stores, net | 10,022,000 |
| | 8,612,000 |
|
Total inventories, net | 12,806,000 |
| | 11,635,000 |
|
| | | |
Deferred tax asset-current portion | 1,868,000 |
| | 1,868,000 |
|
Foreign sales tax receivable | 271,000 |
| | 1,447,000 |
|
Income taxes receivable | — |
| | 2,286,000 |
|
Prepaid expenses and other current assets | 1,216,000 |
| | 715,000 |
|
Tooling in progress | 181,000 |
| | — |
|
Total current assets | 55,826,000 |
| | 54,623,000 |
|
| | | |
Property, plant and equipment — net | 73,524,000 |
| | 61,995,000 |
|
Goodwill | 2,403,000 |
| | 1,097,000 |
|
Intangibles, net | 638,000 |
| | — |
|
Total Assets | $ | 132,391,000 |
| | $ | 117,715,000 |
|
| | | |
Liabilities and Stockholders’ Equity: | | | |
Current liabilities: | | | |
Revolving line of credit | $ | — |
| | $ | 2,768,000 |
|
Current portion of long-term debt | 4,571,000 |
| | 1,714,000 |
|
Current portion of interest rate swaps | 16,000 |
| | 34,000 |
|
Accounts payable | 12,634,000 |
| | 9,256,000 |
|
Tooling in progress | — |
|
| 8,068,000 |
|
Current portion of post retirement benefits liability | 1,064,000 |
| | 1,064,000 |
|
Accrued liabilities: | | | |
Compensation and related benefits | 7,379,000 |
| | 7,087,000 |
|
Taxes | 740,000 |
| | 256,000 |
|
Other | 1,758,000 |
| | 1,132,000 |
|
Total current liabilities | 28,162,000 |
| | 31,379,000 |
|
| | | |
Long-term debt | 11,250,000 |
| | 714,000 |
|
Interest rate swaps | — |
| | 3,000 |
|
Deferred tax liability | 1,365,000 |
| | 1,365,000 |
|
Post retirement benefits liability | 8,022,000 |
| | 8,108,000 |
|
Total Liabilities | 48,799,000 |
| | 41,569,000 |
|
Commitments and Contingencies | — |
| | — |
|
Stockholders’ Equity: | | | |
Preferred stock — $0.01 par value, authorized shares — 10,000,000; outstanding shares: 0 at June 30, 2015 and December 31, 2014 | — |
| | — |
|
Common stock — $0.01 par value, authorized shares – 20,000,000; outstanding shares: 7,591,000 at June 30, 2015 and 7,559,000 at December 31, 2014 | 76,000 |
| | 76,000 |
|
Paid-in capital | 28,701,000 |
| | 28,138,000 |
|
Accumulated other comprehensive income, net of income taxes | 2,722,000 |
| | 2,830,000 |
|
Treasury stock | (27,604,000 | ) | | (27,360,000 | ) |
Retained earnings | 79,697,000 |
| | 72,462,000 |
|
Total Stockholders’ Equity | 83,592,000 |
| | 76,146,000 |
|
Total Liabilities and Stockholders’ Equity | $ | 132,391,000 |
| | $ | 117,715,000 |
|
See notes to unaudited consolidated financial statements.
Core Molding Technologies, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
|
| | | | | | | | | | | | | | | |
| Three Months Ended |
| Six Months Ended |
| June 30, |
| June 30, |
| 2015 |
| 2014 |
| 2015 | | 2014 |
Net sales: | | |
| | | | |
Products | $ | 53,514,000 |
| | $ | 43,317,000 |
| | $ | 101,368,000 |
| | $ | 83,981,000 |
|
Tooling | 1,342,000 |
| | 2,807,000 |
| | 3,087,000 |
| | 3,218,000 |
|
Total net sales | 54,856,000 |
| | 46,124,000 |
| | 104,455,000 |
| | 87,199,000 |
|
| | | | | | | |
Total cost of sales | 43,874,000 |
| | 38,525,000 |
| | 84,448,000 |
| | 72,955,000 |
|
| | | | | | | |
Gross margin | 10,982,000 |
|
| 7,599,000 |
|
| 20,007,000 |
|
| 14,244,000 |
|
| | | | | | | |
Total selling, general and administrative expense | 4,750,000 |
| | 3,726,000 |
| | 8,885,000 |
| | 7,255,000 |
|
| | | | | | | |
Income before interest and taxes | 6,232,000 |
| | 3,873,000 |
| | 11,122,000 |
| | 6,989,000 |
|
| | | | | | | |
Interest expense | 100,000 |
| | 40,000 |
| | 141,000 |
| | 72,000 |
|
| | | | | | | |
Income before income taxes | 6,132,000 |
| | 3,833,000 |
| | 10,981,000 |
| | 6,917,000 |
|
| | | | | | | |
Income tax expense | 2,093,000 |
|
| 1,313,000 |
|
| 3,746,000 |
|
| 2,277,000 |
|
| | | | | | | |
Net income | $ | 4,039,000 |
|
| $ | 2,520,000 |
|
| $ | 7,235,000 |
|
| $ | 4,640,000 |
|
| | | | | | | |
Net income per common share: | | | | | | | |
Basic | $ | 0.53 |
|
| $ | 0.34 |
|
| $ | 0.96 |
|
| $ | 0.62 |
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Diluted | $ | 0.53 |
|
| $ | 0.33 |
|
| $ | 0.95 |
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| $ | 0.62 |
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Weighted average shares outstanding: | | | | | | | |
Basic | 7,578,000 |
|
| 7,519,000 |
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| 7,570,000 |
|
| 7,467,000 |
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Diluted | 7,637,000 |
|
| 7,616,000 |
|
| 7,622,000 |
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| 7,542,000 |
|
See notes to unaudited consolidated financial statements.
Core Molding Technologies, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
(Unaudited)
|
| | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended |
| June 30, | | June 30, |
| 2015 | | 2014 | | 2015 | | 2014 |
Net income | $ | 4,039,000 |
| | $ | 2,520,000 |
| | $ | 7,235,000 |
| | $ | 4,640,000 |
|
| | | | | | | |
Other comprehensive income: | | | | | | | |
| | | | | | | |
Interest rate swaps: | | | | | | | |
Adjustment for amortization of losses included in net income | 6,000 |
| | 5,000 |
| | 11,000 |
| | 10,000 |
|
Income tax expense | (2,000 | ) | | (2,000 | ) | | (4,000 | ) | | (4,000 | ) |
| | | | | | | |
Post retirement benefit plan adjustments: | | | | | | | |
Net actuarial loss | 42,000 |
| | 12,000 |
| | 84,000 |
| | 24,000 |
|
Prior service costs | (124,000 | ) | | (124,000 | ) | | (248,000 | ) | | (248,000 | ) |
Income tax benefit | 24,000 |
| | 35,000 |
| | 49,000 |
| | 70,000 |
|
| | | | | | | |
Comprehensive income | $ | 3,985,000 |
| | $ | 2,446,000 |
| | $ | 7,127,000 |
| | $ | 4,492,000 |
|
See notes to unaudited consolidated financial statements.
Core Molding Technologies, Inc. and Subsidiaries
Consolidated Statement of Stockholders’ Equity
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common Stock Outstanding | | Paid-In Capital | | Accumulated Other Comprehensive Income | | Treasury Stock | | Retained
Earnings | | Total Stockholders’ Equity |
| Shares | | Amount | | | | |
Balance at December 31, 2014 | 7,559,000 |
| | $ | 76,000 |
| | $ | 28,138,000 |
| | $ | 2,830,000 |
| | $ | (27,360,000 | ) | | $ | 72,462,000 |
| | $ | 76,146,000 |
|
Net income | | | | | | | | | | | 7,235,000 |
| | 7,235,000 |
|
Change in post retirement benefits, net of tax of $49,000 | | | | | | | (115,000 | ) | | | | | | (115,000 | ) |
Change in interest rate swaps, net of tax of $4,000 | | | | | | | 7,000 |
| | | | | | 7,000 |
|
Common stock issued | 3,000 |
| |
|
| | 19,000 |
| | | | | | | | 19,000 |
|
Purchase of treasury stock | (10,000 | ) | | | | | | | | (244,000 | ) | | | | (244,000 | ) |
Excess tax benefit - equity transaction | | | | | 122,000 |
| | | | | | | | 122,000 |
|
Restricted stock vested | 39,000 |
| | | | | | | | | | | | — |
|
Share-based compensation | | | | | 422,000 |
| | | | | | | | 422,000 |
|
Balance at June 30, 2015 | 7,591,000 |
| | $ | 76,000 |
| | $ | 28,701,000 |
| | $ | 2,722,000 |
| | $ | (27,604,000 | ) | | $ | 79,697,000 |
| | $ | 83,592,000 |
|
See notes to unaudited consolidated financial statements.
Core Molding Technologies, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
|
| | | | | | | |
| Six Months Ended |
| June 30, |
| 2015 | | 2014 |
Cash flows from operating activities: | | | |
Net income | $ | 7,235,000 |
| | $ | 4,640,000 |
|
| | | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | |
Depreciation and amortization | 2,902,000 |
| | 2,717,000 |
|
Interest rate swaps — mark-to-market and amortization of losses | (14,000 | ) | | (25,000 | ) |
Share-based compensation | 422,000 |
| | 304,000 |
|
Loss on foreign currency translation and transaction | 30,000 |
| | 17,000 |
|
Change in operating assets and liabilities: |
| | |
Accounts receivable | 608,000 |
| | (6,357,000 | ) |
Inventories | (496,000 | ) | | (92,000 | ) |
Prepaid and other assets | 835,000 |
| | (492,000 | ) |
Accounts payable | 1,546,000 |
| | 119,000 |
|
Taxes receivable | 2,285,000 |
| | 327,000 |
|
Accrued and other liabilities | (6,900,000 | ) | | 408,000 |
|
Post retirement benefits liability | (250,000 | ) | | (438,000 | ) |
Net cash provided by operating activities | 8,203,000 |
| | 1,128,000 |
|
| | | |
Cash flows from investing activities: | | | |
Purchase of property, plant and equipment | (2,408,000 | ) | | (7,480,000 | ) |
Purchase of assets of CPI Binani Inc. | (14,512,000 | ) | | — |
|
Net cash used in investing activities | (16,920,000 | ) | | (7,480,000 | ) |
| | | |
Cash flows from financing activities: | | | |
Gross repayments on revolving line of credit | (10,102,000 | ) | | (26,212,000 | ) |
Gross borrowings on revolving line of credit | 7,334,000 |
| | 33,824,000 |
|
Proceeds from term loan | 15,500,000 |
| | — |
|
Payment of principal on term loan | (1,250,000 | ) | | — |
|
Payment of principal on capex loan | (857,000 | ) | | (857,000 | ) |
Payment of principal on Mexican loan | — |
| | (1,600,000 | ) |
Excess tax benefit from equity plans | 122,000 |
| | 272,000 |
|
Payments related to the purchase of treasury stock | (244,000 | ) | | (150,000 | ) |
Proceeds from issuance of common stock | 19,000 |
| | 287,000 |
|
Net cash provided by financing activities | 10,522,000 |
| | 5,564,000 |
|
| | | |
Net change in cash and cash equivalents | 1,805,000 |
| | (788,000 | ) |
| | | |
Cash and cash equivalents at beginning of period | 2,312,000 |
| | 2,266,000 |
|
| | | |
Cash and cash equivalents at end of period | $ | 4,117,000 |
| | $ | 1,478,000 |
|
| | | |
Cash paid for: | | | |
Interest (net of amounts capitalized) | $ | 107,000 |
| | $ | 46,000 |
|
Income taxes | $ | 2,090,000 |
| | $ | 1,409,000 |
|
Non Cash: | | | |
Fixed asset purchases in accounts payable | $ | 95,000 |
| | $ | 710,000 |
|
See notes to unaudited consolidated financial statements.
Core Molding Technologies, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and include all of the information and disclosures required by accounting principles generally accepted in the United States of America for interim reporting, which are less than those required for annual reporting. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (all of which are normal and recurring in nature) necessary to present fairly the financial position of Core Molding Technologies, Inc. and its subsidiaries (“Core Molding Technologies” or the “Company”) at June 30, 2015, and the results of operations and cash flows for the six months ended June 30, 2015. The “Notes to Consolidated Financial Statements,” which are contained in the Company's 2014 Annual Report to Shareholders, should be read in conjunction with these consolidated financial statements.
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-LFT), spray-up, hand-lay-up, and resin transfer molding ("RTM"). Additionally, the Company offers reaction injection molding ("RIM"), utilizing dicyclopentadiene technology. Core Molding Technologies maintains five production facilities in Columbus, Ohio; Batavia, Ohio; Gaffney, South Carolina; Winona, Minnesota and Matamoros, Mexico.
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 light, medium and heavy-duty trucks, automobiles and automotive aftermarket, marine, construction and other commercial products.
2. 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:
|
| | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended |
| June 30, | | June 30, |
| 2015 | | 2014 | | 2015 | | 2014 |
Net income | $ | 4,039,000 |
| | $ | 2,520,000 |
| | $ | 7,235,000 |
| | $ | 4,640,000 |
|
| | | | | | | |
Weighted average common shares outstanding — basic | 7,578,000 |
| | 7,519,000 |
| | 7,570,000 |
| | 7,467,000 |
|
Effect of dilutive securities | 59,000 |
| | 97,000 |
| | 52,000 |
| | 75,000 |
|
Weighted average common and potentially issuable common shares outstanding — diluted | 7,637,000 |
| | 7,616,000 |
| | 7,622,000 |
| | 7,542,000 |
|
| | | | | | | |
Basic net income per common share | $ | 0.53 |
| | $ | 0.34 |
| | $ | 0.96 |
| | $ | 0.62 |
|
Diluted net income per common share | $ | 0.53 |
| | $ | 0.33 |
| | $ | 0.95 |
| | $ | 0.62 |
|
There were no unexercised stock options as of June 30, 2015, and all unexercised stock options were included in diluted earnings per share for the three and six months ended June 30, 2014.
3. Major Customers
Core Molding Technologies has four major customers, Volvo Group North America, LLC ("Volvo"), Navistar, Inc. (“Navistar”), PACCAR, Inc. (“PACCAR”) and Yamaha Motor Manufacturing Corporation ("Yamaha") as of June 30, 2015. Major customers are defined as customers whose sales individually consist of more than ten percent of total sales during any reporting period in the current year. The following table presents sales revenue for the above-mentioned customers for the three and six months ended June 30, 2015 and 2014:
|
| | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended |
| June 30, | | June 30, |
| 2015 | | 2014 | | 2015 | | 2014 |
Volvo product sales | $ | 15,011,000 |
| | $ | 11,781,000 |
| | $ | 28,640,000 |
| | $ | 21,856,000 |
|
Volvo tooling sales | 179,000 |
| | 978,000 |
| | 1,198,000 |
| | 1,149,000 |
|
Total Volvo sales | 15,190,000 |
| | 12,759,000 |
| | $ | 29,838,000 |
| | $ | 23,005,000 |
|
| | | | | | | |
Navistar product sales | 13,493,000 |
| | 13,919,000 |
| | $ | 26,301,000 |
| | $ | 26,621,000 |
|
Navistar tooling sales | 1,033,000 |
| | 39,000 |
| | 1,048,000 |
| | 50,000 |
|
Total Navistar sales | 14,526,000 |
| | 13,958,000 |
| | 27,349,000 |
| | 26,671,000 |
|
| | | | | | | |
PACCAR product sales | 9,444,000 |
| | 8,484,000 |
| | 19,158,000 |
| | 16,671,000 |
|
PACCAR tooling sales | 121,000 |
| | 84,000 |
| | 756,000 |
| | 289,000 |
|
Total PACCAR sales | 9,565,000 |
| | 8,568,000 |
| | 19,914,000 |
| | 16,960,000 |
|
| | | | | | | |
Yamaha product sales | 4,251,000 |
| | 4,228,000 |
| | 9,484,000 |
| | 9,228,000 |
|
Yamaha tooling sales | — |
| | — |
| | — |
| | — |
|
Total Yamaha sales | 4,251,000 |
| | 4,228,000 |
| | 9,484,000 |
| | 9,228,000 |
|
| | | | | | | |
Other product sales | 11,315,000 |
| | 4,905,000 |
| | 17,785,000 |
| | 9,605,000 |
|
Other tooling sales | 9,000 |
| | 1,706,000 |
| | 85,000 |
| | 1,730,000 |
|
Total other sales | 11,324,000 |
| | 6,611,000 |
| | 17,870,000 |
| | 11,335,000 |
|
| | | | | | | |
Total product sales | 53,514,000 |
| | 43,317,000 |
| | 101,368,000 |
| | 83,981,000 |
|
Total tooling sales | 1,342,000 |
| | 2,807,000 |
| | 3,087,000 |
| | 3,218,000 |
|
Total sales | $ | 54,856,000 |
| | $ | 46,124,000 |
| | $ | 104,455,000 |
| | $ | 87,199,000 |
|
4. Property, Plant & Equipment
Property, plant and equipment consisted of the following at June 30, 2015 and December 31, 2014:
|
| | | | | | | |
| June 30, 2015 | | December 31, 2014 |
Property, plant and equipment | $ | 134,353,000 |
| | $ | 119,933,000 |
|
Accumulated depreciation | (60,829,000 | ) | | (57,938,000 | ) |
Property, plant and equipment — net | $ | 73,524,000 |
| | $ | 61,995,000 |
|
Property, plant, and equipment are recorded at cost, unless obtained through acquisition, then assets are recorded at estimated fair market value at the date of acquisition. 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 an adjustment to the depreciation period or to the unamortized balance is warranted. Additions in progress were $1,909,000 and $979,000 at June 30, 2015 and December 31, 2014, respectively. The Company capitalized $2,000 and $45,000 of interest expense for the six months ended June 30, 2015 and 2014, respectively. At June 30, 2015 and December 31, 2014, purchase commitments for capital expenditures in progress were $1,412,000 and $1,682,000, respectively.
5. Acquisition of CPI
To further increase process capabilities and to diversify the customer base, 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 (“CPI”) for a cash purchase price $15,000,000. 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 borrowings under the Company's existing credit facility, as amended and further described in Note 8 below.
Consideration was allocated to assets acquired and liabilities assumed based on their fair values as of the acquisition date as follows:
|
| | | | |
Accounts Receivable | | $ | 1,615,000 |
|
Inventory | | 675,000 |
|
Other Current Assets | | 171,000 |
|
Property and Equipment | | 12,474,000 |
|
Intangibles | | 650,000 |
|
Goodwill | | 1,306,000 |
|
Accounts Payable | | (2,277,000 | ) |
Other Current Liabilities | | (102,000 | ) |
| | $ | 14,512,000 |
|
The purchase price includes 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 expense for the six months ended June 30, 2015 associated with the acquisition, which is recorded in selling general and administrative expense.
6. Goodwill and Intangibles
Goodwill activity for the six months ended June 30, 2015 consisted of the following:
|
| | | | |
Balance at December 31, 2014 | | $ | 1,097,000 |
|
Additions | | 1,306,000 |
|
Impairment | | — |
|
Balance at June 30, 2015 | | $ | 2,403,000 |
|
Intangible assets at June 30, 2015 were comprised of the following:
|
| | | | | | | | | | | | | | |
Definite-lived Intangible Assets | | Amortization Period | | Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Amount |
Trade Name | | 25 years | | $ | 250,000 |
| | $ | (2,000 | ) | | $ | 248,000 |
|
Customer Relationships | | 10 years | | 400,000 |
| | (10,000 | ) | | 390,000 |
|
| | | | $ | 650,000 |
| | $ | (12,000 | ) | | $ | 638,000 |
|
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 $12,000 for the three and six months ended June 30, 2015. The Company did not incur any amortization expense for the three and six months ended June 30, 2014.
7. Post Retirement Benefits
The components of expense for Core Molding Technologies’ post retirement benefit plans for the three and six months ended June 30, 2015 and 2014 are as follows:
|
| | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended |
| June 30, | | June 30, |
| 2015 | | 2014 | | 2015 | | 2014 |
Pension expense: | | | | | | | |
Multi-employer plan | $ | 217,000 |
| | $ | 171,000 |
| | $ | 428,000 |
| | $ | 336,000 |
|
Defined contribution plan | 173,000 |
| | 148,000 |
| | 407,000 |
| | 361,000 |
|
Total pension expense | 390,000 |
| | 319,000 |
| | 835,000 |
| | 697,000 |
|
| | | | | | | |
Health and life insurance: | | | | | | | |
Interest cost | 79,000 |
| | 69,000 |
| | 158,000 |
| | 138,000 |
|
Amortization of prior service costs | (124,000 | ) | | (124,000 | ) | | (248,000 | ) | | (248,000 | ) |
Amortization of net loss | 42,000 |
| | 12,000 |
| | 84,000 |
| | 24,000 |
|
Net periodic benefit cost | (3,000 | ) | | (43,000 | ) | | (6,000 | ) | | (86,000 | ) |
| | | | | | | |
Total post retirement benefits expense | $ | 387,000 |
| | $ | 276,000 |
| | $ | 829,000 |
| | $ | 611,000 |
|
The Company made payments of $1,108,000 to pension plans and $244,000 for post retirement healthcare and life insurance during the six months ended June 30, 2015. For the remainder of 2015, the Company expects to make approximately $514,000 of pension plan payments, none of which was accrued at June 30, 2015. The Company also expects to make approximately $820,000 of post retirement healthcare and life insurance payments for the remainder of 2015, all of which were accrued at June 30, 2015.
8. Debt
Debt consists of the following at:
|
| | | | | | | |
| June 30,
2015 | | December 31,
2014 |
Term loan payable to a bank, interest at a variable rate (1.99% at June 30, 2015) with monthly payments of interest and principal through March 2020. | $ | 14,250,000 |
| | $ | — |
|
Capex loan payable to a bank, interest at a variable rate (1.78% at June 30, 2015 and 1.76% at December 31, 2014) with monthly payments of interest and principal through May 2016. | 1,571,000 |
| | 2,428,000 |
|
Revolving line of credit (1.73% at December 31, 2014) | — |
| | 2,768,000 |
|
Total | 15,821,000 |
| | 5,196,000 |
|
Less current portion | (4,571,000 | ) | | (4,482,000 | ) |
Long-term debt | $ | 11,250,000 |
| | $ | 714,000 |
|
Credit Agreement
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, as amended, the Company received certain loans, subject to the terms and conditions stated in the agreement, which included (1) a $12,000,000 Capex loan; (2) a $8,000,000 Mexican loan, which was paid in full in January 2014; and (3) a $18,000,000 variable rate revolving line of credit. 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.
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 assets. On March 30, 2015, the Company repaid $500,000 of unused proceeds from the original term loan.
Revolving Line of Credit
The $18,000,000 revolving line of credit 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). The revolving line of credit, as amended, is scheduled to mature on May 31, 2017.
Bank Covenants
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 June 30, 2015, the Company was in compliance with its financial covenants associated with the loans made under the Credit Agreement as described above.
Interest Rate Swap
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 LIBOR (0.19% at June 30, 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 that 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, totaling $146,000 as of March 31, 2009, is being amortized as an increase to interest expense of approximately $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 June 30, 2015 and December 31, 2014 was a liability of $16,000 and $37,000, respectively. The Company recorded interest income of $9,000 and $17,000 for a mark-to-market adjustment of swap fair value for the three months ended June 30, 2015 and 2014, respectively related to this swap. The Company recorded interest income for the six months ended June 30, 2015 and 2014, of $21,000 and $35,000, respectively, for mark-to-market adjustments of this swap. The notional amount of the swap at June 30, 2015 and December 31, 2014 was $1,571,000 and $2,428,000, respectively.
Interest expense included $9,000 and $20,000 of expense for settlements related to the Company's swaps for the three months ended June 30, 2015 and 2014, respectively. For the six months ended June 30, 2015 and 2014, interest expense included $20,000 and $41,000, respectively, of expense for settlements related to the Company's swap.
9. Income Taxes
The Company’s consolidated balance sheets include a net current deferred tax asset of $1,868,000 and a net non-current deferred tax liability of $1,365,000 at June 30, 2015 and December 31, 2014. The Company evaluates the balance of deferred tax assets that will be realized. Such evaluations 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.
Income tax expense for the six months ended June 30, 2015 is estimated to be $3,746,000, or 34% of income before income taxes. Income tax expense for the six months ended June 30, 2014 was estimated to be $2,277,000, or 33% of income before income taxes.
As of June 30, 2015 and December 31, 2014, the Company had no liability for unrecognized tax benefits. The Company does not anticipate that unrecognized tax benefits will significantly change within the next twelve months.
The Company files income tax returns in the U.S., Mexico and various state jurisdictions. The Company is no longer subject to U.S. federal and state income tax examinations by tax authorities for years prior to 2011, and no longer subject to Mexican income tax examinations by Mexican authorities for years prior to 2008.
10. Share Based Compensation
The Company has a Long Term Equity Incentive Plan (the “2006 Plan”), as approved by the Company’s stockholders in May 2006 and as amended in May 2015. This 2006 Plan replaced the Long Term Equity Incentive Plan (the “Original Plan”) as originally approved by the stockholders in May 1997 and as amended in May 2000. 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.
Stock Options
The following summarizes the activity relating to stock options under the plans mentioned above for the six months ended June 30, 2015:
|
| | | | | | |
| Number of Options | | Weighted Average Exercise Price |
Outstanding at December 31, 2014 | 3,000 |
| | $ | 6.40 |
|
Exercised | (3,000 | ) | | 6.40 |
|
Granted | — |
| | — |
|
Forfeited | — |
| | — |
|
Outstanding at June 30, 2015 | — |
| | $ | — |
|
There was no compensation cost related to incentive stock options for the six months ended June 30, 2015 and 2014, as all options were fully vested.
Tax benefits received as a result of disqualified dispositions related to stock options were $8,000 during the six months ended June 30, 2015, which was recorded as a credit to income tax expense of $5,000 and credit to additional paid in capital of $3,000. Tax benefits received as a result of disqualified dispositions related to stock options were $299,000 during the six months ended June 30, 2014, which was recorded as a credit to income tax expense of $77,000 and a credit to additional paid in capital of $222,000.
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.
The following summarizes the status of Restricted Stock and changes during the six months ended June 30, 2015:
|
| | | | | | |
| Number of Shares | | Weighted Average Grant Date Fair Value |
Unvested balance at December 31, 2014 | 104,068 |
| | $ | 10.79 |
|
Granted | 55,029 |
| | 24.39 |
|
Vested | (39,303 | ) | | 12.12 |
|
Forfeited | — |
| | — |
|
Unvested balance at June 30, 2015 | 119,794 |
| | $ | 16.60 |
|
At June 30, 2015 and 2014, there was $1,634,000 and $1,215,000, 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 1.8 years. Total compensation cost related to restricted stock grants for the three months ended June 30, 2015 and 2014 was $313,000 and $213,000, respectively, all of which was recorded to selling, general and administrative expense. Compensation cost related to restricted stock grants for the six months ended June 30, 2015 and 2014 was $422,000 and $304,000, respectively, all of which was recorded to selling, general and administrative expense.
Compensation expense for restricted stock is recorded at the fair market value at the time of the grant over the 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 as of the vesting date. Tax benefits received for vested restricted stock in excess of the fair market value as of the grant date was $119,000 and $50,000 for the six month ended June 30, 2015 and 2014, respectively.
During the six months ended June 30, 2015 and 2014, employees surrendered 9,989 and 12,407 shares, respectively, of the Company's common stock to satisfy income tax withholding obligations in connection with the vesting of restricted stock.
11. 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 has one Level 2 fair value measurement, which relates to the Company’s interest rate swap. 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 8. 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 June 30, 2015 and December 31, 2014:
|
| | | | | | | | | |
| | | (Level 2) |
| Balance Sheet Location | | June 30, 2015 Fair Value | | December 31, 2014 Fair Value |
Derivatives not designated as hedging instruments Interest rate risk activities | Interest rate swap | | $ | 16,000 |
| | $ | 37,000 |
|
There were no non-recurring fair value measurements for the six months ended June 30, 2015.
The effect of derivative instruments on the Consolidated Statements of Income was as follows:
|
| | | | | | | | | | |
Derivatives Not Designated as Hedging Instruments | | Location of Gain Recognized in Income on Derivative | | Amount of Realized/Unrealized Gain Recognized in Income on Derivatives |
Three months ended | | | | June 30,
2015 | | June 30,
2014 |
Interest rate swap | | Interest expense | | $ | 3,000 |
| | $ | 12,000 |
|
Six Months Ended | | | | | | |
Interest rate swap | | Interest expense | | $ | 10,000 |
| | $ | 25,000 |
|
As discussed in Note 8, the Company discontinued the use of hedge accounting for its interest rate swap, effective March 31, 2009 for the Capex swap. The Company has recorded all mark-to-market adjustments within interest expense in the Company’s Consolidated Statements of Income, since the date the Company discontinued hedge accounting for the swap. It is anticipated that during the next twelve months the expiration and settlement of cash flow hedge contracts along with the amortization of losses on discontinued hedges will result in income statement recognition of amounts currently classified in accumulated other comprehensive loss of approximately $15,000, or $9,000 net of taxes.
12. Accumulated Other Comprehensive Income
The following table presents changes in Accumulated Other Comprehensive Income by component, net of tax, for the six months ended June 30, 2015 and 2014:
|
| | | | | | | | | | | |
| Losses on Interest Rate Swaps(A) | | Post Retirement Benefit Plan Items(B) | | Total |
2014: | | | | | |
Balance at December 31, 2013 | $ | (30,000 | ) | | $ | 4,902,000 |
| | $ | 4,872,000 |
|
Amounts reclassified from accumulated other comprehensive income | 10,000 |
| | (224,000 | ) | | (214,000 | ) |
Income tax (expense) benefit | (4,000 | ) | | 70,000 |
| | 66,000 |
|
Balance at June 30, 2014 | $ | (24,000 | ) | | $ | 4,748,000 |
| | $ | 4,724,000 |
|
| | | | | |
2015: | | | | | |
Balance at December 31, 2014 | $ | (16,000 | ) | | $ | 2,846,000 |
| | $ | 2,830,000 |
|
Amounts reclassified from accumulated other comprehensive income | 11,000 |
| | (164,000 | ) | | (153,000 | ) |
Income tax (expense) benefit | (4,000 | ) | | 49,000 |
| | 45,000 |
|
Balance at June 30, 2015 | $ | (9,000 | ) | | $ | 2,731,000 |
| | $ | 2,722,000 |
|
(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 7 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.
13. 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 inventory at the lower of cost and net realizable value; where, net realizable value is 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. We are evaluating the effect that the new guidance will have on our consolidated financial statements and related disclosures.
Part I — Financial Information
| |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains 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. 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; federal and state regulations (including engine emission regulations); general economic, social and political environments in the countries in which Core Molding Technologies operates; safety and security conditions in Mexico; dependence upon certain major customers as the primary source of Core Molding Technologies’ sales revenues; efforts of Core Molding Technologies to expand its customer base; the actions of competitors, customers, and suppliers; failure of Core Molding Technologies’ suppliers to perform their obligations; the availability of raw materials; inflationary pressures; new technologies; regulatory matters; labor relations; the loss or inability of Core Molding Technologies to attract and retain key personnel; federal, state and local environmental laws and regulations; the availability of capital; the ability of Core Molding Technologies to provide on-time delivery to customers, which may require additional shipping expenses to ensure on-time delivery or otherwise result in late fees; risk of cancellation or rescheduling of orders; management’s decision to pursue new products or businesses which involve additional costs, risks or capital expenditures; and other risks 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 the 2014 Annual Report to Shareholders on Form 10-K.
Description of the Company
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-LFT); spray-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 medium and heavy-duty truck, marine, automotive, agriculture, construction and other commercial products. Product sales to heavy and medium-duty truck markets accounted for 77% and 82% of the Company’s sales for the six months ended June 30, 2015 and 2014, respectively. The demand for Core Molding Technologies’ products is primarily affected by economic conditions in the United States, Canada, and Mexico. 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, the Company established a manufacturing presence in 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, the Company 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 production facility in Matamoros, Mexico that replaced its leased facility. Most recently in 2015, the Company acquired substantially all of the assets of CPI Binani, Inc., a wholly-owned subsidiary of Binani Industries Limited expanding its molding capability to include D-LFT.
Overview
For the six months ended June 30, 2015, the Company recorded net income of $7,235,000, or $0.96 per basic and $0.95 per diluted share, compared with net income of $4,640,000, or $0.62 per basic and diluted share for the six months ended June 30, 2014. Product sales for the six months ended June 30, 2015 increased approximately 21% to $101,368,000 as compared to $83,981,000 for the same period in 2014, primarily due to increased demand from Volvo and PACCAR and new sales resulting from the acquisition of substantially all of the assets of CPI Binani, Inc. (“CPI”).
Looking forward, the Company remains optimistic regarding our overall business in 2015. Based on industry analyst and customer forecasts, we expect sales in the second half of the year to beat sales over the same period in 2014. However, we anticipate the third quarter to be impacted by seasonality and customer summer shut-downs.
Results of Operations
Three Months Ended June 30, 2015, as Compared to Three Months Ended June 30, 2014
Net sales for the three months ended June 30, 2015 and 2014 totaled $54,856,000 and $46,124,000, respectively. Included in total sales were tooling project sales of $1,342,000 and $2,807,000 for the three months ended June 30, 2015 and 2014, respectively. 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, excluding tooling project sales, were approximately 24% higher for the three months ended June 30, 2015, as compared to the same period a year ago. The increased sales are primarily the result of new sales as a result of the acquisition of CPI in March 2015 and increased demand from Volvo and PACCAR.
Sales to Volvo totaled $15,190,000 for the three months ended June 30, 2015, compared to $12,759,000 for the three months ended June 30, 2014. Included in total sales was $179,000 of tooling sales for the three months ended June 30, 2015 compared to $978,000 for the same three months in 2014. Product sales to Volvo increased 27% for the three months ended June 30, 2015 as compared to the same period in the prior year due to increased demand from Volvo.
Sales to Navistar totaled $14,526,000 for the three months ended June 30, 2015, compared to $13,958,000 for the three months ended June 30, 2014. Included in total sales was $1,033,000 of tooling sales for the three months ended June 30, 2015 compared to $39,000 for the same three months in 2014. Due to lower demand from Navistar, product sales decreased 3% for the three months ended June 30, 2015 as compared to the same period in the prior year.
Sales to PACCAR totaled $9,565,000 for the three months ended June 30, 2015, compared to $8,568,000 for the three months ended June 30, 2014. Included in total sales was $121,000 of tooling sales for the three months ended June 30, 2015 compared to $84,000 for the same three months in 2014. Product sales to PACCAR increased 11% for the three months ended June 30, 2015 as compared to the same period in the prior year, due to increased demand for both new and existing PACCAR products.
Sales to Yamaha totaled $4,251,000 for the three months ended June 30, 2015, compared to $4,228,000 for the three months ended June 30, 2014. Product sales to Yamaha were flat for the three months ended June 30, 2015 as compared to the same period in the prior year.
Sales to other customers for the three months ended June 30, 2015 totaled $11,324,000 compared to $6,611,000 for the three months ended June 30, 2014. Included in total sales was $9,000 of tooling sales for the three months ended June 30, 2015 compared to $1,706,000 for the same three months in 2014. Product sales to other customers increased 131% for the three months ended June 30, 2015 as compared to the same period in the prior year. The increase primarily relates to new sales as a result of the acquisition of CPI.
Gross margin was approximately 20.0% of sales for the three months ended June 30, 2015, compared with 16.5% for the three months ended June 30, 2014. The gross margin improvement as a percent of sales was due to net favorable product mix and production efficiencies of 0.9%, favorable foreign exchange rate effect of 0.9%, favorable net changes in selling price and material costs of .8%, favorable contribution from CPI of .7% and improved fixed cost absorption due to higher production volumes of 0.2%.
Selling, general and administrative expense (“SG&A”) was $4,750,000 for the three months ended June 30, 2015, compared to $3,726,000 for the three months ended June 30, 2014. Contributing to the increase in SG&A expense were CPI SG&A expenses of $302,000, increased profit sharing costs of $286,000, higher outside service and professional fees of $172,000 and higher labor and benefits of $132,000.
Net interest expense totaled $100,000 for the three months ended June 30, 2015, compared to net interest expense of $40,000 for the three months ended June 30, 2014. Included in net interest expense is capitalized interest associated with capital projects of $0 and $23,000 for the three months ended June 30, 2015 and 2014, respectively. The increase in interest expense, after considering capitalized interest, was primarily due to a higher average outstanding debt balance in 2015.
Income tax expense for both the three months ended June 30, 2015 and 2014 was approximately 34% of total income before income taxes.
The Company recorded net income for the three months ended June 30, 2015 of $4,039,000, or $0.53 per basic and diluted share, compared with net income of $2,520,000, or $0.34 per basic and $0.33 per diluted share, for the three months ended June 30, 2014.
Six Months Ended June 30, 2015, as Compared to Six Months Ended June 30, 2014
Net sales for the six months ended June 30, 2015 and 2014 totaled $104,455,000 and $87,199,000, respectively. Included in total sales were tooling project sales of $3,087,000 and $3,218,000 for the six months ended June 30, 2015 and 2014, respectively. 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, excluding tooling project sales, were approximately 21% higher for the six months ended June 30, 2015, as compared to the same period a year ago. The increased sales are primarily the result of increased demand from Volvo and PACCAR and new sales as a result of the acquisition of CPI in March 2015.
Sales to Volvo totaled $29,838,000 for the six months ended June 30, 2015, compared to $23,005,000 for the six months ended June 30, 2014. Included in total sales was $1,198,000 of tooling sales for the six months ended June 30, 2015 compared to $1,149,000 for the same six months in 2014. Product sales to Volvo increased 31% for the six months ended June 30, 2015 as compared to the same period in the prior year due to increased demand.
Sales to Navistar totaled $27,349,000 for the six months ended June 30, 2015, compared to $26,671,000 for the six months ended June 30, 2014. Included in total sales was $1,048,000 of tooling sales for the six months ended June 30, 2015 compared to $50,000 for the same six months in 2014. Product sales to Navistar decreased 1% for the six months ended June 30, 2015 as compared to the same period in the prior year.
Sales to PACCAR totaled $19,914,000 for the six months ended June 30, 2015, compared to $16,960,000 for the six months ended June 30, 2014. Included in total sales was $756,000 of tooling sales for the six months ended June 30, 2015 compared to $289,000 for the same six months in 2014. Product sales to PACCAR increased 15% for the six months ended June 30, 2015 as compared to the same period in the prior year, due to increased demand for both new and existing PACCAR products.
Sales to Yamaha totaled $9,484,000 for the six months ended June 30, 2015, compared to $9,228,000 for the six months ended June 30, 2014. Product sales to Yamaha increased 3% for the six months ended June 30, 2015 as compared to the same period in the prior year due to increased demand.
Sales to other customers for the six months ended June 30, 2015 totaled $17,870,000 compared to $11,335,000 for the six months ended June 30, 2014. Included in total sales was $85,000 of tooling sales for the six months ended June 30, 2015 compared to $1,730,000 for the same six months in 2014. Product sales to other customers increased 85% for the six months ended June 30, 2015 as compared to the same period in the prior year. The increase primarily relates to new sales as a result of the acquisition of CPI.
Gross margin was approximately 19.2% of sales for the six months ended June 30, 2015, compared with 16.3% for the six months ended June 30, 2014. The gross margin improvement as a percent of sales was due to net favorable product mix and production efficiencies of 0.9%, favorable foreign exchange rate effect of 0.8%, favorable net changes in selling price and material costs of .5%, favorable contribution from CPI of .4% and improved fixed cost absorption due to higher production volumes of 0.3%.
Selling, general and administrative expense (“SG&A”) was $8,885,000 for the six months ended June 30, 2015, compared to $7,255,000 for the six months ended June 30, 2014. Contributing to the increase in SG&A expense were increased profit sharing costs of $557,000, higher outside service and professional fees of $406,000 incurred primarily related to the acquisition of CPI, CPI SG&A expenses of $345,000 and higher labor and benefits of $229,000.
Net interest expense totaled $141,000 for the six months ended June 30, 2015, compared to net interest expense of $72,000 for the six months ended June 30, 2014. Included in net interest expense is capitalized interest associated with capital projects of $2,000 and $45,000 for the six months ended June 30, 2015 and 2014, respectively. The increase in interest expense, after considering capitalized interest, was primarily due to a higher average outstanding debt balance in 2015.
Income tax expense for the six months ended June 30, 2015 and 2014 was approximately 34% and 33%, respectively, of total income before income taxes.
The Company recorded net income for the six months ended June 30, 2015 of $7,235,000, or $0.96 per basic and $0.95 per diluted share, compared with net income of $4,640,000, or $0.62 per basic and diluted share, for the six months ended June 30, 2014.
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, increases in working capital, capital expenditures, repayment of long-term debt and business acquisitions.
Cash provided by operating activities for the six months ended June 30, 2015 totaled $8,203,000. Net income of $7,235,000 positively impacted operating cash flows. Non-cash expenses of depreciation and amortization contributed $2,902,000 to operating cash flow. Changes in working capital decreased cash provided by operating activities by $2,122,000, which primarily related to payments associated with tooling in progress and profit sharing.
Cash used in investing activities for the six months ended June 30, 2015 was $16,920,000, which includes $14,512,000 to acquire the assets of CPI and $2,408,000 for capital expenditures. The Company anticipates spending up to $7,235,000 during the remainder of 2015 on property, plant and equipment purchases for all of the Company's operations. At June 30, 2015, purchase commitments for capital expenditures in progress were $1,412,000. The Company anticipates using cash from operations and its revolving line of credit to finance the capital investment.
Cash provided by financing activities for the six months ended June 30, 2015 totaled $10,522,000. 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 $1,607,000 of scheduled repayments of principal on the Company's outstanding Capex loan and Term loan.
At June 30, 2015, the Company had $4,117,000 in cash on hand, and an available balance on the revolving line of credit of $18,000,000.
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 assets. On March 30, 2015, the Company repaid $500,000 of unused proceeds from the original term loan.
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 June 30, 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 forecasts, which are 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. Management believes that cash flow from operating activities and available borrowings under the Credit Agreement will be sufficient to meet the Company’s liquidity needs. If a material adverse change in the financial position of Core Molding Technologies should occur, or if actual sales or expenses are substantially different than what has been forecasted, Core Molding
Technologies’ liquidity and ability to obtain further financing to fund future operating and capital requirements could be negatively impacted.
Recent Accounting Pronouncements
For information on the impact of recently issued accounting pronouncements, see Note 13 "Recent Accounting Pronouncements," to the consolidated financial statements included herein.
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, 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 $304,000 and $289,000 at June 30, 2015 and December 31, 2014, respectively. 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 reduced accounts receivable for chargebacks by $737,000 at June 30, 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 slow moving and obsolete inventory of $812,000 at June 30, 2015 and $940,000 at December 31, 2014.
Long-Lived Assets: Long-lived assets consist primarily of property, plant and equipment. 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 property, plant and equipment 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 six months ended June 30, 2015 or June 30, 2014.
Goodwill and Other Intangibles: Core Molding Technologies acquired certain assets of Airshield Corporation in 2001, and as a result, recorded goodwill related to its Matamoros, Mexico operations in the amount of $1,097,000. The Company also acquired the majority of the assets of CPI Binani on March 20, 2015, which resulted in approximately $1,306,000 of goodwill and $650,000 of other intangibles, as further described in Note 6. The Company evaluates goodwill annually on December 31 to determine whether impairment exists, or at interim periods if an indicator of possible impairment exists. The Company evaluates goodwill for impairment using fair value measurements based on a projected discounted cash flow valuation model, in accordance with ASC 350, “Intangibles-Goodwill and Other.” If impairment exists, the carrying amount of the goodwill is reduced to its estimated fair value. There was no impairment of the Company's goodwill for the six months ended June 30, 2015 or June 30, 2014.
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 June 30, 2015 and December 31, 2014 of $1,136,000 and $1,165,000, respectively.
Post retirement benefits: Management records an accrual for post retirement costs associated with the health care plan sponsored by Core Molding Technologies. 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 Core Molding Technologies’ operations. The effect of a change in healthcare costs is described in Note 11 of the Notes to Consolidated Financial Statements, which are contained in the Company's 2014 Annual Report to Shareholders on Form 10-K. Core Molding Technologies had a liability for post retirement healthcare benefits based on actuarially computed estimates of $9,086,000 at June 30, 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 June 30, 2015, the Company had a net asset related to tooling in progress of $181,000, which represented approximately $11,340,000 of progress tooling billings and $11,521,000 of progress tooling expenses. At December 31, 2014, the Company had a net liability related to tooling in progress of $8,068,000, which represented approximately $10,407,000 of progress tooling billings and $2,339,000 of progress tooling expenses.
Income taxes: The Company’s consolidated balance sheets include a net deferred tax asset of $503,000 at June 30, 2015 and December 31, 2014. The Company evaluates the balance of deferred tax assets that will be realized. Such evaluations 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. For more information, refer to Note 10 of the Notes to Consolidated Financial Statements, which are contained in the Company's 2014 Annual Report to Shareholders on Form 10-K.
Part I — Financial Information
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Item 3. | 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 four items that are sensitive to market risks: (1) Revolving Line of Credit and Term Loan under the Credit Agreement, which bears a variable interest rate; (2) Capex Loan payable with a variable interest rate (although the Company has an interest rate swap to fix the variable portion of the applicable interest rate at 2.3%); (3) foreign currency purchases in which the Company purchases Mexican pesos with United States dollars to meet certain obligations that arise due to operations at the facility located in Mexico; and (4) 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 Revolving Line of Credit and the Term Loan would have been impacted, as the interest rate on these loans is based upon LIBOR, however, it would not have a material effect on earnings before tax.
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 tax.
Part I — Financial Information
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Item 4. | 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 was 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 disclosure, 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.
There were no changes in internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-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.
Part II — Other Information
None.
There have been no material changes in Core Molding Technologies’ risk factors from those previously disclosed in Core Molding Technologies' 2014 Annual Report on Form 10-K.
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Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Information concerning our stock repurchases during the three months ended June 30, 2015 is below. All stock was purchased to satisfy tax withholding obligation upon vesting of restricted stock awards.
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| | | | | | | | | | | | |
Period | | Total Number of Shares Purchased | | Average Price Paid per Share | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | Maximum Number that May Yet be Purchased Under the Plans or Programs |
April 1 to 30, 2015 | | — |
| | — |
| | — |
| | — |
|
May 1 to 31, 2015 | | 9,989 |
| | 24.39 |
| | — |
| | — |
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June 1 to 30, 2015 | | — |
| | — |
| | — |
| | — |
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Item 3. | Defaults Upon Senior Securities |
None.
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Item 4. | Mine Safety Disclosures |
None.
None.
Item 6. Exhibits
See Index to Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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| | | | |
| | CORE MOLDINGS TECHNOLOGIES, INC. |
Date: | August 10, 2015 | By: | /s/ Kevin L. Barnett | |
| | | Kevin L. Barnett | |
| | | President, Chief Executive Officer, and Director |
| | | | |
| | | | |
Date: | August 10, 2015 | By: | /s/ John P. Zimmer | |
| | | John P. Zimmer | |
| | | Vice President, Secretary, Treasurer and Chief Financial Officer |
| | | | |
INDEX TO EXHIBIT |
| | | | |
Exhibit No. | | Description | | Location |
| | | | |
2(a)(1) | | Asset Purchase Agreement Dated as of September 12, 1996, As amended October 31, 1996, between Navistar and RYMAC Mortgage Investment Corporation1 | | Incorporated by reference to Exhibit 2-A to Registration Statement on Form S-4 (Registration No. 333-15809) |
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2(a)(2) | | Second Amendment to Asset Purchase Agreement dated December 16, 19961 | | Incorporated by reference to Exhibit 2(a)(2) to Annual Report on Form 10-K for the year-ended December 31, 2001 |
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2(b)(1) | | 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) |
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2(b)(2) | | First Amendment to Agreement and Plan of Merger dated as of December 27, 1996 Between Core Molding Technologies, Inc. and RYMAC Mortgage Investment Corporation | | Incorporated by reference to Exhibit 2(b)(2) to Annual Report on Form 10-K for the year ended December 31, 2002 |
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2(c) | | Asset Purchase Agreement dated as of October 10, 2001, between Core Molding Technologies, Inc. and Airshield Corporation | | Incorporated by reference to Exhibit 1 to Current Report on Form 8-K filed October 31, 2001 |
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2(d) | | Asset Purchase Agreement dated as of March 20, 2015, between Core Molding Technologies, Inc and CPI Binani, Inc. | | Incorporated by reference to Exhibit 2.1 to Current Report on Form 8-K filed March 23, 2015 |
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3(a)(1) | | Certificate of Incorporation of Core Molding Technologies, Inc. as filed with the Secretary of State of Delaware on October 8, 1996 | | Incorporated by reference to Exhibit 4(a) to Registration Statement on Form S-8 (Registration No. 333-29203) |
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3(a)(2) | | 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
| | Incorporated by reference to Exhibit 4(b) to Registration Statement on Form S-8 (Registration No. 333-29203) |
| | | | |
3(a)(3) | | Certificate of Amendment of Certificate of Incorporation as filed with the Secretary of State of Delaware on August 28, 2002
| | Incorporated by reference to Exhibit 3(a)(4) to Quarterly Report on Form 10-Q for the quarter ended September 30, 2002 |
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3(a)(4) | | 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 3.1 to Current Report on Form 8-K filed July 19, 2007 |
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3(a)(5) | | Certificate of Elimination of Series A Junior Participating Preferred Stock, as filed with the Secretary of State of the State of Delaware on April 2, 2015.
| | Incorporated by reference to Exhibit 3(a)(5) to Current Report on Form 8-K filed April 2, 2015 |
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3(b) | | 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 |
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3(b)(1) | | Amendment No. 1 to the 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 December 17, 2013 |
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4(a)(1) | | Certificate of Incorporation of Core Molding Technologies, Inc. as filed with the Secretary of State of Delaware on October 8, 1996
| | Incorporated by reference to Exhibit 4(a) to Registration Statement on Form S-8 (Registration No. 333-29203) |
| | | | |
4(a)(2) | | 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
| | Incorporated by reference to Exhibit 4(b) to Registration Statement on Form S-8 (Registration No. 333-29203) |
| | | | |
4(a)(3) | | Certificate of Amendment of Certificate of Incorporation as filed with the Secretary of State of Delaware on August 28, 2002 | | Incorporated by reference to Exhibit 3(a)(4) to Quarterly Report on Form 10-Q for the quarter ended September 30, 2002 |
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| | | | |
Exhibit No. | | Description | | Location |
4(a)(4) | | 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 3.1 to Current Report on Form 8-K filed July 19, 2007 |
| | | | |
4(b) | | 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 on Form 8-K filed July 19, 2007 |
| | | | |
4(b)(1) | | Amendment No. 1 to Stockholder Rights Agreement, dated as of April 1, 2015, between Core Molding Technologies, Inc. and American Stock Transfer & Trust Company, LLC.
| | Incorporated by reference to Exhibit 4(b)(1) to Current Report on Form 8-K filed April 2, 2015 |
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10(a) | | 2006 Core Molding Technologies, Inc. Long Term Equity Incentive Plan (as amended May 14, 2015). | | Filed Herein |
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11 | | Computation of Net Income per Share | | Exhibit 11 omitted because the required information is Included in Notes to Financial Statement |
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31(a) | | Section 302 Certification by Kevin L. Barnett, President, Chief Executive Officer, and Director | | Filed Herein |
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31(b) | | Section 302 Certification by John P. Zimmer, Vice President, Secretary, Treasurer, and Chief Financial Officer | | Filed Herein |
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32(a) | | Certification of Kevin L. Barnett, Chief Executive Officer of Core Molding Technologies, Inc., dated August 10, 2015, pursuant to 18 U.S.C. Section 1350 | | Filed Herein |
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32(b) | | Certification of John P. Zimmer, Chief Financial Officer of Core Molding Technologies, Inc., dated August 10, 2015, pursuant to 18 U.S.C. Section 1350 | | Filed Herein |
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101.INS | | XBRL Instance Document | | Filed Herein |
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101.SCH | | XBRL Taxonomy Extension Schema Document | | 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 |
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101.DEF | | XBRL Taxonomy Extension Definition Linkbase | | Filed Herein |
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1. | The Asset Purchase Agreement, as filed with the Securities and Exchange Commission as 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. |
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2. | 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. |
CORE MOLDING TECHNOLOGIES, INC.
2006 LONG-TERM EQUITY INCENTIVE PLAN
as amended May 14, 2015
ARTICLE ONE
ESTABLISHMENT, OBJECTIVES AND DURATION
1.1 ESTABLISHMENT OF THE PLAN. Core Molding Technologies, Inc., a Delaware corporation (the "Company"), hereby adopts, effective March 30, 2006, the Core Molding Technologies, Inc. 2006 Long-Term Equity Incentive Plan as set forth in this document. The Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Performance Shares and Performance Units, and Other Incentive Awards.
1.2 OBJECTIVES OF THE PLAN. The objectives of the Plan are to optimize the profitability and growth of the Company through incentives which are consistent with the Company's goals and which link and align the personal interests of Participants with an incentive for excellence in individual performance; and to promote teamwork.
The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract and retain the services of Participants who make significant contributions to the Company's success and to allow Participants to share in the success of the Company.
1.3 DURATION OF THE PLAN. The Plan shall commence on the Effective Date, as described in Section 1.1 hereof, and shall remain in effect, subject to the right of the Board of Directors to amend or terminate the Plan at any time pursuant to Article 16 hereof, until all Shares subject to it shall have been purchased or acquired according to the Plan's provisions. However, in no event may an Award be granted under the Plan on or after December 31, 2025.
ARTICLE TWO
DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings set forth below, and when the meaning is intended, the initial letter of the word shall be capitalized:
"Award" means, individually or collectively, a grant under this Plan of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Performance Shares or Performance Units, or Other Incentive Awards.
"Award Agreement" means an agreement entered into by the Company and each Participant setting forth the terms and provisions applicable to Awards granted under this Plan.
"Beneficial Owner" or "Beneficial Ownership" shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
"Board" or "Board of Directors" means the Board of Directors of the Company.
"Change in Control" of the Company means any one or more of the following:
(a) The Company is merged, consolidated or reorganized into or with another corporation, partnership, limited liability company, trust, or other legal person (collectively referred herein as a "Business Entity"), and immediately after such merger, consolidation, or reorganization less than fifty percent (50%) of the combined voting power of the then-outstanding securities of such Business Entity immediately after such transaction are held in the aggregate by the holders of voting stock of the Company immediately prior to such transaction;
(b) The Company sells all or substantially all of its assets to any other Business Entity, and less than fifty percent (50%) of the combined voting power of the then-outstanding securities of such Business Entity immediately after such sale are held in the aggregate by the holders of voting stock of the Company immediately prior to such sale; or
(c) There is a report filed on Schedule 13D or Schedule 14D-1 (or any successor schedule, form or report), each as promulgated pursuant to the Securities Exchange Act of 1934 ("Exchange Act"), disclosing that any person (as the term "person" is used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) or group of persons acting in concert has become the beneficial owner (as the term "beneficial owner" is defined under Rule 13d-3 or any successor rule or regulation promulgated under the Exchange Act) of securities representing fifty percent (50%) or more of the voting stock of the Company.
(d) The Company files a report or proxy statement with the Securities and Exchange Commission pursuant to the Exchange Act disclosing in response to Form 8-K or Schedule 14A (or any successor schedule, form or report or item therein) that a change in control of the Company has or may have occurred or will or may occur in the future pursuant to any then-existing
contract or transaction; or
(e) If during any period of two consecutive years, individuals who at the beginning of any such period constitute the Directors of the Company cease for any reason to constitute at least a majority thereof, provided, however, that for purposes of this paragraph (e) each Director who is first elected, or first nominated for election by the Company's stockholders, by a vote of at least two-thirds of the Directors of the Company (or a committee thereof) then still in office who were Directors of the Company at the beginning of any such period will be deemed to have been a Director of the Company at the beginning of such period.
"Code" means the Internal Revenue Code of 1986, as amended from time to time.
"Committee" means the Compensation Committee of the Board, as specified in Article 3 herein, or such other Committee appointed by the Board to administer the Plan with respect to grants of Awards.
"Common Stock" means the common stock of the Company.
"Company" means Core Molding Technologies, Inc., a Delaware corporation, and the Company's Subsidiaries, as well as any successor to any of such entities as provided in Article 19 herein.
"Director" means any individual who is a member of the Board of Directors of the Company.
"Disability" shall have the meaning ascribed to such term in the Participant's governing long-term disability plan. To the extent that a Participant is not covered under a long-term disability plan, the term "Disability" shall have the meaning ascribed to the term "permanent and total disability" under Section 22(e)(3) of the Code, or any successor provision thereto.
"Effective Date" shall have the meaning ascribed to such term in Section 1.1 hereof.
"Employee" means any employee of the Company. Nonemployee Directors shall not be considered Employees under this Plan unless specifically designated otherwise.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.
"Fair Market Value" shall be determined on the basis of the average of the high and low sale prices on the principal securities exchange on which the Shares are publicly traded or, if there is no such sale on the relevant date, then on the last previous day on which a sale was reported.
"Freestanding SAR" means an SAR that is granted independently of any Options, as described in Article 7 herein.
"Incentive Stock Option" or "ISO" means an option to purchase Shares granted under Article 6 herein and which is designated as an Incentive Stock Option and which is intended to meet the requirements of Code Section 422.
"Insider" shall mean an individual who is, on the relevant date, an officer, director or ten percent (10%) beneficial owner of any class of the Company's equity securities that it registered pursuant to Section 12 of the Exchange Act, as defined under Section 16 of the Exchange Act.
"Named Executive Officer" means a Participant who, as of the date of vesting and/or payout of an Award, as applicable, is one of the group of "covered employees," as defined in the regulations promulgated under Code Section 162(m), or any successor statute.
"Nonemployee Director" means an individual who is a member of the Board of Directors of the Company but who is not an Employee of the Company or a Subsidiary.
"Nonqualified Stock Option" or "NQSO" means an option to purchase Shares granted under Article 6 herein and which is not intended to meet the requirements of Code Section 422.
"Option" means an Incentive Stock Option or a Nonqualified Stock Option, as described in Article 6 herein.
"Option Price" means the price at which a Share may be purchased by a Participant pursuant to an Option.
"Other Incentive Award" means an award granted pursuant to Article 10 hereof.
"Participant" means an Employee or Nonemployee Director who has outstanding an Award granted under the Plan.
"Performance-Based Exception" means the performance-based exception from the tax deductibility limitations of Code Section 162(m).
"Performance Period" means the time period during which performance goals must be achieved with respect to an Award, as determined by the Committee.
"Performance Share" means an Award granted to a Participant, as described in Article 9 herein.
"Performance Unit" means an Award granted to a Participant, as described in Article 9 herein.
"Period of Restriction" means the period during which the transfer of Shares of Restricted Stock is limited in some way (based on the passage of time, the achievement of performance goals, and/or upon the occurrence of other events as determined by the Committee at its discretion), and the Shares are subject to a substantial risk of forfeiture, as provided in Article 8 herein.
"Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d) thereof.
"Restricted Stock" means an Award granted to a Participant pursuant to Article 8 herein.
"Retirement" means the normal retirement date on which a Participant qualifies for full retirement benefits under the Company's qualified retirement plan, as identified by the Committee. In the event that a Participant is not covered under any qualified retirement plan maintained by the Company, the term 'Retirement' shall mean the date on which such Participant attains age 65.
"Shares" means the shares of common stock of the Company.
"Share Pool" means the number of shares authorized for issuance under paragraph 4.1, as adjusted for awards and payouts under paragraph 4.2 and as adjusted for changes in corporate capitalization under paragraph 4.3.
"Stock Appreciation Right" or "SAR" means an Award, granted alone or in connection with a related Option, designated as an SAR, pursuant to the terms of Article 7 herein.
"Subsidiary" means any corporation, partnership, joint venture, affiliate or other entity in which the Company has a majority voting interest, and which the Committee designates as a participating entity in the Plan.
"Tandem SAR" means an SAR that is granted in connection with a related Option pursuant to Article 7 herein, the exercise of which shall require forfeiture of the right to purchase a Share under the related Option (and when a Share is purchased under the Option, the Tandem SAR shall similarly be canceled).
ARTICLE THREE
ADMINISTRATION
3.1 THE COMMITTEE. The Plan shall be administered by the Compensation Committee of the Board or by any other Committee appointed by the Board. The members of the Committee shall be appointed from time to time by, and shall serve at the discretion of, the Board of Directors. Notwithstanding any provision contained herein, to the extent that any Award is designed to comply with the Performance-Based Exception, the Committee shall satisfy the requirements contained in Section 1.162-27(c)(4) of the final regulations promulgated by the Internal Revenue Service under Section 162(m) of the Code. For purposes of granting Awards under the Plan, the Committee shall be composed of not less than the minimum number of persons from time to time required by
Rule 16b-3 under the Exchange Act, each of whom shall be a "non-employee director" within the meaning of Rule 16b-3 under the Exchange Act, or any successor rule or regulation.
3.2 AUTHORITY OF THE COMMITTEE. Except as limited by law or by the Certificate of Incorporation or Bylaws. of the Company, and subject to the provisions herein, the Committee shall have full power to select Employees and Nonemployee Directors who shall participate in the Plan; determine the sizes and types of Awards; determine the terms and conditions of Awards in a manner consistent with the Plan; construe and interpret the Plan and any agreement or instrument entered into under the plan; establish, amend or waive rules and regulations for the Plan's administration; and (subject to the provisions of Article 16 herein) amend the terms and conditions of any outstanding Award to the extent such terms and conditions are within the discretion of the Committee as provided in the Plan. Further, the Committee shall make all other determinations which may be necessary or advisable for the administration of the Plan. As permitted by law, the Committee may delegate its authority as
identified herein.
3.3 DECISIONS BINDING. All determinations and decisions made by the Committee pursuant to the provisions of the Plan and all related orders and resolutions of the Board shall be final, conclusive and binding on all persons, including the Company, its stockholders, Employees, Participants and their estates and beneficiaries.
ARTICLE FOUR
SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS
4.1 NUMBER OF SHARES AVAILABLE FOR GRANTS. Subject to adjustment as provided in Section 4.3 herein, the number of Shares hereby reserved for issuance under the Plan shall be Three Million (3,000,000). The Committee shall determine the appropriate methodology for calculating the number of Shares issued pursuant to the Plan.
Unless and until the Committee determines that an Award to a Named Executive Officer shall not be designed to comply with the Performance-Based Exception, the following rules shall apply to grants of such Awards under the Plan:
(a) The maximum aggregate number of Shares (including Options, SARs, Restricted Stock, Performance Units and Performance Shares paid out in Shares, or Other Incentive Awards paid out in Shares) that may be granted or that may vest, as applicable, in any fiscal year pursuant to any Award held by any Named Executive Officer shall be Two Hundred Thousand (200,000). For this purpose, to the extent that any Option is canceled (as described in Section 1.162-27 (e) (2) (vi) (B) of the final regulations under Section 162(m) of the Code, such canceled Option shall continue to be counted against the maximum number of Shares for which Options may be granted to a Named Executive Officer under the Plan; and
(b) The maximum aggregate cash payout (including Performance Units and Performance Shares paid out in cash, or Other Incentive Awards paid out in cash) with respect to Awards granted in any fiscal year which may be made to any Named Executive Officer shall be One Hundred Twenty-Five Thousand Dollars ($125,000).
4.2 LAPSED AWARDS. If any Award granted under this Plan is canceled, terminates, expires, or lapses for any reason (with the exception of the termination of a Tandem SAR upon exercise of the related Option, or the termination of a related Option upon exercise of the corresponding Tandem SAR), any Shares subject to such Award again shall be available for the grant of an Award under the Plan.
4.3 ADJUSTMENTS IN AUTHORIZED SHARES. In the event of any change in corporate capitalization, such as a stock split, or a corporate transaction, such as any merger, consolidation, separation, including a spin-off, or other distribution of stock or property of the Company, any reorganization (whether or not such reorganization comes within the definition of such term in Code Section 368), or any partial or complete liquidation of the Company, such adjustment shall be made in the number and class of Shares available in the Share Pool and in the number and class of and/or price of Shares subject to outstanding Awards granted under the Plan, as may be determined to be appropriate and equitable by the Committee, in its sole discretion, to prevent dilution or enlargement of rights; provided, however, that the number of Shares subject to any Award shall always be a whole number.
ARTICLE FIVE
ELIGIBILITY AND PARTICIPATION
5.1 ELIGIBILITY. Persons eligible to participate in this Plan include (a) all officers and key employees of the Company, as determined by the Committee, including Employees who are members of the Board and Employees who reside in countries other than the United States of America and (b) all Nonemployee Directors.
5.2 ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the Committee may, from time to time, select from all eligible Employees and Nonemployee Directors those to whom Awards shall be granted and shall determine the nature and amount of each Award.
ARTICLE SIX
STOCK OPTIONS
6.1 GRANT OF OPTIONS. Subject to the terms and provisions of the Plan, Options may be granted, either by the Committee or the Board, to one or more Participants in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee. The Committee or the Board shall have the authority to grant Incentive Stock Options or to grant Nonqualified Stock Options or to grant both types of Options. In the case of Incentive Stock Options, the terms and conditions of such grants shall be subject to, and comply with, such rules as may be prescribed by Section 422 of the Code, as from time to time amended, and any regulations implementing such statute, including, without limitation, the requirements of Code Section 422(d) which limit the aggregate Fair Market Value of Shares (determined at the time that such Option is granted) for which Incentive Stock Options are exercisable for the first time to $100,000 per calendar year, and the requirement that Incentive Stock Options may only be granted to Employees. Each provision of the Plan and of each written Award Agreement relating to an Option designated as an Incentive Stock Option shall be construed so that such Option qualifies as an Incentive Stock Option, and any provision that cannot be so construed shall be disregarded.
6.2 AWARD AGREEMENT. Each Option grant shall be evidenced by an Award Agreement that shall specify the Option Price, the duration of the Option, the number of Shares to which the Option pertains, and such other provisions as the Committee shall determine. The Award Agreement also shall specify whether the Option is intended to be an ISO or an NQSO.
6.3 OPTION PRICE. The Option Price for each grant of an Option under this Plan shall be at least equal to one hundred percent (100%) of the Fair Market Value of a Share on the date the Option is granted. Notwithstanding any provision contained herein, in the case of an Incentive Stock Option, the exercise price at the time such Incentive Stock Option is granted to any Employee who, at the time of such grant, owns (within the meaning of Section 424(d) of the Code) more than ten percent of the voting power of all classes of stock of the Company or a Subsidiary, shall not be less than 110% of the per Share Fair Market Value on the date of grant.
6.4 DURATION OF OPTIONS. Each Option shall expire at such time as the Committee shall determine at the time of grant; provided, however, that in the case of an Incentive Stock Option, an Employee may not exercise such Incentive Stock Option after the date which is ten years (five years in the case of a Participant who owns more than ten percent of the voting power of the Company or a Subsidiary) after the date on which such Incentive Stock Option is granted.
6.5 EXERCISE OF OPTIONS. Options granted under this Article 6 shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which need not be the same for each grant or for each Participant.
6.6 PAYMENT. Options granted under this Article 6 shall be exercised by the delivery of a written notice of exercise to the Company, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares.
The Option Price upon exercise of any Option shall be payable to the Company in full either: (a) in cash or its equivalent, or (b) by tendering previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the total Option Price (provided that the Shares that are tendered must have been held by the Participant for at least six (6) months prior to their tender to satisfy the Option Price), or (c) by a combination of (a) and (b).
As soon as practicable after receipt of a written notification of exercise and full payment, the Company shall deliver to the Participant, in the Participant's name, Share certificates in an appropriate amount based upon the number of Shares purchased under the Option(s).
6.7 RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may impose such restrictions on any Shares acquired pursuant to the exercise of an Option granted under this Article 6 as it may deem advisable, including, without limitation, restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, and under any blue sky or state securities laws applicable to such Shares.
6.8 TERMINATION OF EMPLOYMENT. Each Option Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participant's employment with (or service to) the Company and/or its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of employment or service.
6.9 NONTRANSFERABILITY OF OPTIONS.
(a) INCENTIVE STOCK OPTIONS. No ISO granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, all ISOs granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant.
(b) NON-QUALIFIED STOCK OPTIONS. Except as otherwise provided in a Participant's Award Agreement, no NQSO granted under this Article 6 may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided in a Participant's Award Agreement, all NQSOs granted to a Participant under this Article 6 shall be exercisable during his or her lifetime only by such Participant.
ARTICLE SEVEN
STOCK APPRECIATION RIGHTS
7.1 GRANT OF SARs. Subject to the terms and conditions of the Plan, SARs may be granted to Participants at any time and from time to time as shall be determined by the Committee. The Committee may grant Freestanding SARs, Tandem SARs, or any combination of these forms of SAR.
The Committee shall have complete discretion in determining the number of SARs granted to each Participant (subject to Article 4 herein) and, consistent with the provisions of the Plan, in determining the terms and conditions pertaining to such SARs.
Unless otherwise designated by the Committee at the time of grant, the grant price of a Freestanding SAR shall equal the Fair Market Value of a Share on the date of grant of the SAR. The grant price of Tandem SARs shall equal the Option Price of the related Option.
7.2 EXERCISE OF TANDEM SARs. Tandem SARs may be exercised for all or part of the Shares subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option. A Tandem SAR may be exercised only with respect to the Shares for which its related Option is then exercisable.
Notwithstanding any other provision of this Plan to the contrary, with respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem SAR will expire no later than the expiration of the underlying ISO; (ii) the value of the payout with respect to the Tandem SAR may be for no more than one hundred percent (100%) of the difference between the Option Price of the underlying ISO and the Fair Market Value of the Shares subject to the underlying ISO at the time the Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised only when the Fair Market Value of the Shares subject to the ISO exceeds the Option Price of the ISO.
7.3 EXERCISE OF FREESTANDING SARs. Freestanding SARs may be exercised upon whatever terms and conditions the Committee, in its sole discretion, imposes upon them.
7.4 SAR AGREEMENT. Each SAR grant shall be evidenced by an Award Agreement that shall specify the grant price, the term of the SAR, and such other provisions as the Committee shall determine.
7.5 TERM OF SARs. The term of an SAR granted under the Plan shall be determined by the Committee, in its sole discretion; provided, however, that unless otherwise designated by the Committee, such term shall not exceed ten (10) years.
7.6 PAYMENT OF SAR AMOUNT. Upon exercise of an SAR, a Participant shall be entitled to receive payment from the Company in an amount determined by multiplying:
(a) The difference between the Fair Market Value of a Share on the date of exercise over the grant price; by
(b) The number of Shares with respect to which the SAR is exercised.
At the discretion of the Committee, the payment upon SAR exercise may be in cash, in Shares of equivalent value, in Restricted Shares of equivalent value, or in some combination thereof.
7.7 TERMINATION OF EMPLOYMENT. Each SAR Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the SAR following termination of the Participant's employment with (or service to) the Company and/or its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with Participants, need not be uniform among all SARs issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of employment or service.
7.8 NON-TRANSFERABILITY OF SARs. Except as otherwise provided in a Participant's Award Agreement, no SAR granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided in a Participant's Award Agreement, all SARs granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant.
ARTICLE EIGHT
RESTRICTED STOCK
8.1 GRANT OF RESTRICTED STOCK. Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Shares of Restricted Stock to Participants in such amounts as the Committee shall determine.
8.2 RESTRICTED STOCK AGREEMENT. Each Restricted Stock grant shall be evidenced by an Award Agreement that shall specify the Period(s) of Restriction, the number of Shares of Restricted Stock granted, and such other provisions as the Committee shall determine.
8.3 TRANSFERABILITY. Except as provided in this Article 8, the Shares of Restricted Stock granted herein may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction established by the Committee and specified in the Restricted Stock Award Agreement, or upon earlier satisfaction of any other conditions, as specified by the Committee in its sole discretion and set forth in the Restricted Stock Agreement. All rights with respect to the Restricted Stock granted to a Participant under the Plan shall be available during his or her lifetime only to such Participant.
8.4 OTHER RESTRICTIONS. Subject to Article 11 herein, the Committee may impose such other conditions and/or restrictions on any Shares of Restricted Stock granted pursuant to the Plan as it may deem advisable including, without limitation, a requirement that Participants pay a stipulated purchase price for each Share of Restricted Stock, a requirement that Participants own a certain amount of Shares before vesting shall occur, restrictions based upon the achievement of specific performance goals (Company-wide, divisional, and/or individual), time-based restrictions on vesting following the attainment of the performance goals, requirement and/or restrictions under applicable federal or state securities laws.
The Company shall retain the certificates representing Shares of Restricted Stock in the Company's possession until such time as all conditions and/or restrictions applicable to such Shares have been satisfied.
Except as otherwise provided in this Article 8, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan shall become freely transferable by the Participant after the last day of the applicable Period of Restriction.
8.5 VOTING RIGHTS. Unless otherwise designated by the Committee at the time of grant, Participants holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares during the Period of Restriction.
8.6 DIVIDENDS AND OTHER DISTRIBUTIONS. Unless otherwise designated by the Committee at the time of grant, Participants holding Shares of Restricted Stock granted hereunder may be credited with regular cash dividends paid with respect to the underlying Shares while they are so held during the Period of Restriction. The Committee may apply any restrictions to the dividends that the Committee deems appropriate. Without limiting the generality of the preceding sentence, if the grant of vesting of Restricted Stock granted to a Named Executive Officer is designed to comply with the requirements of the Performance-Based Exception, the Committee may apply any restrictions it deems appropriate to the payment of dividends declared with respect to such Restricted Stock, such that the dividends and/or the Restricted Stock maintain eligibility for the Performance-Based Exception.
8.7 TERMINATION OF EMPLOYMENT. Each Restricted Stock Award Agreement shall set forth the extent to which the Participant shall have the right to receive unvested Restricted Shares following termination of the Participant's employment with (or service to) the Company and/or its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee,
shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Shares of Restricted Stock issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of employment or service; provided, however, that, except in the cases of terminations connected with a Change in Control, terminations by reason of death or Disability, and except for Restricted Shares paid to Participants upon SAR exercise, the vesting of Shares of Restricted Stock which qualify for the Performance-Based Exception and which are held by Named Executive Officers shall not occur prior to the time they otherwise would have, but for the employment termination.
ARTICLE NINE
PERFORMANCE UNITS AND PERFORMANCE SHARES
9.1 GRANT OF PERFORMANCE UNITS AND PERFORMANCE SHARES. Subject to the terms of the Plan, Performance Units and/or Performance Shares may be granted to Participants in such amounts and upon such terms, and at any time and from time to time, as shall be determined by the Committee.
9.2 VALUE OF PERFORMANCE UNITS/SHARES. Each Performance Unit shall have an initial value that is established by the Committee at the time of grant. Each Performance Share shall have an initial value equal to the Fair Market Value of a Share on the date of grant. The Committee shall set performance goals in its discretion which, depending on the extent to which they are met, will determine the number and/or value of Performance Units/Shares that will be paid out to the Participant. For purposes of this Article 9, the time period during which the performance goals must be met shall be called a "Performance Period."
9.3 EARNING OF PERFORMANCE UNITS/SHARES. Subject to the terms of this Plan, after the applicable Performance Period has ended, the holder of Performance Units/Shares shall be entitled to receive payout on the number and value of Performance Units/Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance goals have been achieved, as established by the Committee.
9.4 FORM AND TIMING OF PAYMENT OF PERFORMANCE UNITS/SHARES. Subject to the terms of this Plan, the Committee, in its sole discretion, may pay earned Performance Units/Shares in the form of cash or in Shares (or in a combination thereof) which have an aggregate Fair Market Value equal to the value of the earned Performance Units/Shares at the close of the applicable Performance Period. Such Shares may be granted subject to any restrictions deemed appropriate by the Committee.
At the discretion of the Committee, Participants may be entitled to receive any dividends declared with respect to Shares which have been earned in connection with grants of Performance Units and/or Performance Shares which have been earned, but not yet distributed to Participants (such dividends shall be subject to the same accrual, forfeiture, and payout restrictions as apply to dividends earned with respect to Shares of Restricted Stock, as set forth in Section 8.6 herein). In addition, Participants may, at the discretion of the Committee, be entitled to exercise their voting rights with respect to such Shares.
9.5 TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY OR RETIREMENT. Unless otherwise designated by the Committee, and set forth in the Participant's Award Agreement, in the event the employment (or service) of a Participant is terminated due to death, Disability or Retirement during a Performance Period, the Participant shall receive a prorated payout of the Performance Units/Shares. The prorated payout shall be determined by the Committee, shall be based upon the length of time that the Participant held the Performance Units/Shares during the Performance Period and shall further be adjusted based on the achievement of the preestablished performance goals.
Payment of earned Performance Units/Shares shall be made at a time specified by the Committee in its sole discretion and set forth in the Participant's Award Agreement. Notwithstanding the foregoing, with respect to Named Executive Officers who retire during a Performance Period, payments shall be made at the same time as payments are made to Participants who did not terminate employment during the applicable Performance Period.
9.6 TERMINATION OF EMPLOYMENT FOR OTHER REASONS. In the event that a Participant's employment (or service) terminates for any reason other than those reasons set forth in Section 9.5
herein, all Performance Units/Shares shall be forfeited by the Participant to the Company unless determined otherwise by the Committee, as set forth in the Participant's Award Agreement.
9.7 NONTRANSFERABILITY. Except as otherwise provided in a Participant's Award Agreement, Performance Units/Shares may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided in a Participant's Award Agreement, a Participant's rights under the Plan shall be exercisable during the Participant's lifetime only by the Participant or the Participant's legal representative.
ARTICLE TEN
OTHER INCENTIVE AWARDS
10.1 GRANT OF OTHER INCENTIVE AWARDS. Subject to the terms and provisions of the Plan, Other Incentive Awards may be granted to Participants in such amount, upon such terms, and at any time and from time to time as shall be determined by the Committee.
10.2 OTHER INCENTIVE AWARD AGREEMENT. Each Other Incentive Award grant shall be evidenced by an Award Agreement that shall specify the amount of the Other Incentive Award granted, the terms and conditions applicable to such grant, the applicable Performance Period and performance goals, and such other provisions as the Committee shall determine, subject to the terms and provisions of the Plan.
10.3 NONTRANSFERABILITY. Except as otherwise provided in a Participant's Award Agreement, Other Incentive Awards may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.
10.4 FORM AND TIMING OF PAYMENT OF OTHER INCENTIVE AWARDS. Payment of Other Incentive Awards shall be made at such times and in such form, in cash, in Shares, or in Restricted Shares (or a combination thereof), as established by the Committee subject to the terms of the Plan. Such Shares may be granted subject to any restrictions deemed appropriate by the Committee. Without limiting the generality of the foregoing, annual incentive awards may be paid in the form of Shares and/or Other Incentive Awards (which may or may not be subject to restrictions, at the discretion of the Committee).
ARTICLE ELEVEN
PERFORMANCE MEASURES
Unless and until the Committee proposes for shareholder vote and shareholders approve a change in the general performance measures set forth in this Article 11, the attainment of which may determine the degree of payout and/or vesting with respect to Awards to Named Executive Officers which are designed to qualify for the Performance-Based Exception, the performance measure(s) to be used for purposes of such grants shall be chosen from among the following alternatives, as reported on the Company's annual 10-K report:
(a) Return on Assets ("ROA") which equals net income divided by total assets.
(b) Return on Sales ("ROS") which equals net income divided by net sales.
(c) Return on Equity ("ROE") which equals net income divided by total equity.
(d) Cash Flow Return on Investment ("CFROI") which equals net cash flows divided by owners' equity.
(e) Operating Income.
(f) Earnings Before Income Taxes ("EBIT") which equals net income plus taxes.
(g) Net Earnings which equals net earnings as reported.
(h) Earnings Per Share.
The Committee shall have the discretion to adjust the determinations of the degree of attainment of the preestablished performance goals; provided, however, that Awards which are designed to qualify for the Performance-Based Exception, and which are held by Named Executive Officers, may not be adjusted upward (the Committee shall retain the discretion to adjust such Awards downward).
In the event that applicable tax and/or securities laws change to permit Committee discretion to alter the governing performance measures without obtaining shareholder approval of such changes, the Committee shall have sole discretion to make such changes
without obtaining shareholder approval. In addition, in the event that the Committee may make such grants for the Performance-Based Exception, the Committee may make such grants without satisfying the requirements of Code Section 162(m) and, thus, which use performance measures other than those specified above. To the extent that the Committee determines that it is advisable to grant Awards in compliance with the Performance-Based Exception, the Committee must certify, in writing, prior to the payment of any compensation under the Award, that the performance goals and any other material terms were in fact satisfied.
ARTICLE TWELVE
BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of his or her death before he or she receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed the Company, and will be effective only when filed by the Participant in writing with the Company during the Participant's lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant's death shall be paid to the Participant's estate.
ARTICLE THIRTEEN
DEFERRALS
The Committee may permit a Participant to defer such Participant's receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant by virtue of the exercise of an Option or SAR, the lapse or waiver of restrictions with respect to Restricted Stock, or the satisfaction of any requirements or goals with respect to Performance Units/Shares or Other Incentive Awards. If any such deferral election is required or permitted, the Committee shall, in its sole discretion, establish rules and procedures for such payment deferrals. Any such deferral shall be made in a manner consistent with the requirements of Section 409A of the Code.
ARTICLE FOURTEEN
RIGHTS OF EMPLOYEES AND NONEMPLOYEE DIRECTORS
14.1 EMPLOYMENT. Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Participant's employment at any time, nor confer upon any Participant any right to continue in the employ of the Company.
14.2 PARTICIPATION. No Employee or Nonemployee Director shall have the right to be selected to receive an Award under this Plan or, having been so selected, to be selected to receive a future Award.
ARTICLE FIFTEEN
CHANGE IN CONTROL
15.1 TREATMENT OF OUTSTANDING AWARDS. Upon the occurrence of a Change in Control, unless otherwise specifically prohibited under applicable laws, or by the rules and regulations of any governing governmental agencies or national securities exchanges:
(a) Any and all Options and SARs granted hereunder shall become immediately exercisable, and shall remain exercisable throughout their entire term, and any cash or property received upon exercise of any Option or SAR shall be free from further restriction;
(b) Any restriction periods and restrictions imposed on Restricted Shares shall lapse; and
(c) Unless otherwise specified in Participant's Award Agreement at time of grant, the target payout opportunities attainable under all outstanding Awards of Performance Units and Performance Shares and Other Incentive Awards shall be deemed to have been fully earned for the entire Performance period(s) as of the effective date of the Change in Control. The vesting of all such Awards shall be accelerated as of the effective date of the Change in Control and, in full settlement of such Awards, there shall be paid out to Participants (in Shares for Awards normally paid in Shares and in cash for Awards normally paid in cash) within thirty (30) days following the effective date of the Change in Control a pro rata portion of all targeted Award opportunities associated with such outstanding Awards, based on the number of complete and partial calendar months within the Performance Period which had elapsed as of such effective date.
15.2 TERMINATION, AMENDMENT AND MODIFICATIONS OF CHANGE IN CONTROL PROVISIONS. Notwithstanding any other provision of this Plan or any Award Agreement provision, the provisions of this Article 15 may not be terminated, amended or modified to affect adversely any Award theretofore granted under the Plan without the prior written consent of the Participant with respect to said Participant's outstanding Awards.
ARTICLE SIXTEEN
AMENDMENT, MODIFICATION AND TERMINATION
16.1 AMENDMENT, MODIFICATION AND TERMINATION. The Board may at any time and from time to time alter, amend, suspend or terminate the Plan in whole or in part.
16.2 AWARDS PREVIOUSLY GRANTED. No termination, amendment or modification of the Plan shall adversely affect in any material way any Award previously granted under the Plan, without the written consent of the Participant holding such Award.
16.3 COMPLIANCE WITH CODE SECTION 162(m). At all times when Code Section 162(m) is applicable, all Awards granted under this Plan to Named Executive Officers shall comply with the requirements of Code Section 162(m); provided, however, that in the event the Committee determines that such compliance is not desired with respect to any Award or Awards available for grant under the Plan, then compliance with Code Section 162(m) will not be required. In addition, in the event that changes are made to Code Section 162(m) to permit greater flexibility with respect to any Award or Awards available under the Plan, the Committee may, subject to this Article 16, make any adjustments it deems appropriate.
ARTICLE SEVENTEEN
WITHHOLDING
17.1 TAX WITHHOLDING. The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this Plan.
17.2 SHARE WITHHOLDING. With respect to withholding required upon the exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock, or upon any other taxable event arising as a result of Awards granted hereunder, Participants may elect, subject to the approval of the Committee, to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax which could be imposed on the transaction. All such elections shall be irrevocable, made in writing, signed by the Participant, and shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.
ARTICLE EIGHTEEN
INDEMNIFICATION
Each person who is or shall have been a member of the Committee, or of the Board, shall be indemnified by the Company against and from any loss, cost, liability or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan. Such person shall be indemnified by the Company for all amounts paid by him or her in settlement thereof, with the Company's approval, or paid by him or her in satisfaction of any judgment in any such action, suit or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.
ARTICLE NINETEEN
SUCCESSORS
All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the business and/or assets of the Company.
ARTICLE TWENTY
LEGAL CONSTRUCTION
20.1 GENDER AND NUMBER. Except where otherwise indicated by the context, any masculine term used herein shall also include the feminine, the plural shall include the singular, and the singular shall include the plural.
20.2 SEVERABILITY. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
20.3 REQUIREMENTS OF LAW. The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
20.4 GOVERNING LAW. To the extent not preempted by federal law, the Plan, and all agreements hereunder, shall be construed in accordance with and governed by the laws of the State of Delaware, without giving effect to the conflict of laws principles thereof.
Exhibit 31(a)
SECTION 302 CERTIFICATION
I, Kevin L. Barnett, certify that:
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1. | I have reviewed this quarterly report on Form 10-Q of Core Molding Technologies, Inc.; |
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2. | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; |
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3. | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; |
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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: |
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a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; |
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b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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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. |
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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): |
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a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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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: August 10, 2015
|
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| /s/ Kevin L. Barnett |
| Kevin L. Barnett |
| President, Chief Executive Officer, and Director |
Exhibit 31(b)
SECTION 302 CERTIFICATION
I, John P. Zimmer, certify that:
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1. | I have reviewed this quarterly report on Form 10-Q of Core Molding Technologies, Inc.; |
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2. | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; |
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3. | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; |
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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 which this annual report is being prepared; |
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b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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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. |
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1. | 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 report financial information; and |
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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: August 10, 2015
|
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| /s/ John P. Zimmer |
| John P. Zimmer |
| Vice President, Secretary, Treasurer and Chief Financial Officer |
Exhibit 32(a)
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
In connection with the Quarterly Report of Core Molding Technologies, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 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:
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(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
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(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 |
| August 10, 2015 |
Exhibit 32(b)
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
In connection with the Quarterly Report of Core Molding Technologies, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 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:
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(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| |
(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
|
| August 10, 2015 |
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