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  **SECURITIES AND EXCHANGE COMMISSION****Washington, D.C. 20549****FORM 10-Q****(Mark One)**   þ **[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934******For the quarterly period ended****March 31, 2007******OR**   o **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934******for the transition period from                      To**                    ****Commission File Number 001-12505****CORE MOLDING TECHNOLOGIES, INC.**(Exact name of registrant as specified in its charter)   Delaware 31-1481870   (State or other jurisdiction (I.R.S. Employer Identification No.)incorporation or organization)     800 Manor Park Drive, P.O. Box 28183  Columbus, Ohio 43228-0183   (Address of principal executive office) (Zip Code)Registrant’s telephone number, including area code (614) 870-5000N/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 filedby Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (orfor such shorter period that the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days.Yes þ NO o     Indicate by check mark whether the registrant is a large accelerated filer, an acceleratedfiler, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer inRule 12b-2 of the Exchange Act (check one).Large accelerated filer o           Accelerated filer o           Non-accelerated filer þ     Indicateby check mark whether the registrant is a shell company (as definedin Rule 12b-2 of the Act).Yes o NO þ     Asof May 11, 2007, the latest practicable date, 10,326,182 shares of the registrant’s commonshares were issued and outstanding.  
 

 
**Table of Contents**     Part I – Financial Information    Item 1 Financial Statements    Condensed Consolidated Balance Sheets  3 Condensed Consolidated Statements of Income  4 Condensed Consolidated Statement of Stockholders’ Equity  5 Condensed Consolidated Statements of Cash Flows  6 Notes to Condensed Consolidated Financial Statements  7 Item 2 Management’s Discussion and Analysis of Financial Condition and Resultsof Operations  11 Item 3 Quantitative and Qualitative Disclosures About Market Risk  16 Item 4 Controls and Procedures  17 Part II – Other Information  18 Item 1. Legal Proceedings  18 Item 1A. Risk Factors  18 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds  18 Item 3. Defaults Upon Senior Securities  18 Item 4. Submission of Matters to a Vote of Security Holders  18 Item 5. Other Information  18 Item 6. Exhibits  18 Signatures   Index to Exhibits   Ex-31(a)   Ex-31(b)   Ex-32(a)   Ex-32(b)    EX-31(A) EX-31(B) EX-32(A) EX-32(B)
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**Part 1 — Financial Information****Core Molding Technologies, Inc. and Subsidiaries****Condensed Consolidated Balance Sheets**           **March 31,**  **December 31,**   **2007**  **2006**   **(Unaudited)**     **Assets**        Current Assets:        Cash $20,325,989  $16,096,223 Accounts receivable (less allowance for doubtful accounts:        March 31, 2007 - $251,000; December 31, 2006 - $262,000)  19,330,968   22,456,177 Inventories:        Finished and work in process goods  2,600,628   2,793,993 Stores  5,021,718   4,598,983        Total inventories  7,622,346   7,392,976          Deferred tax asset  1,469,756   1,529,592 Foreign sales tax receivable  961,685   1,032,058 Income tax receivable  983,712   1,432,324 Prepaid expenses and other current assets  862,640   730,109        Total current assets  51,557,096   50,669,459          Property, plant and equipment  57,309,630   56,927,053 Accumulated depreciation  (27,230,763)  (26,389,062)       Property, plant and equipment – net  30,078,867   30,537,991          Deferred tax asset  6,928,864   6,916,348 Goodwill  1,097,433   1,097,433 Customer List / Non-compete  126,017   138,814 Other assets  134,577   145,668        **Total** $89,922,854  $89,505,713                 **Liabilities and Stockholders’ EquityLiabilities:**        Current liabilities        Current portion of long-term debt $1,825,716  $1,815,716 Current portion of postretirement benefits liability  247,000   247,000 Accounts payable  12,795,007   10,735,295 Tooling in progress  1,960,457   1,179,684 Accrued liabilities:        Compensation and related benefits  3,857,191   7,111,475 Other  1,014,450   2,005,408        Total current liabilities  21,699,821   23,094,578          Long-term debt  7,317,850   7,779,279 Interest rate swap  63,123   35,848 Graduated lease payments and deferred gain  23,457   41,050 Postretirement benefits liability  16,381,809   15,860,558 **Commitments and ContingenciesStockholders’ Equity:**        Preferred stock – $0.01 par value, authorized shares – 10,000,000;Outstanding shares: March 31, 2007 and December 31, 2006 - 0  —   — Common stock – $0.01 par value, authorized shares – 20,000,000;Outstanding shares: 10,305,863 at March 31, 2007 and10,204,607 at December 31, 2006  103,059   102,046 Paid-in capital  22,350,976   21,872,723 Accumulated other comprehensive loss, net of income tax benefit  (3,037,410)  (3,019,315)Retained earnings  25,020,169   23,738,946        Total stockholders’ equity  44,436,794   42,694,400                 **Total** $89,922,854  $89,505,713        See notes to condensed consolidated financial statements.
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**Core Molding Technologies, Inc. and Subsidiaries****Condensed Consolidated Statements of Income****(Unaudited)**           **Three Months Ended**   **March 31,**   **2007**  **2006** **Net Sales:**        Products $30,650,936  $35,354,658 Tooling  578,155   1,147,656        **Total Sales**  31,229,091   36,502,314                 Cost of sales  25,786,748   29,027,369 Postretirement benefits expense  616,657   646,374        **Total cost of sales**  26,403,405   29,673,743                 **Gross margin**  4,825,686   6,828,571                 Selling, general and administrative expense  2,956,219   3,034,590 Postretirement benefits expense  135,364   141,881        **Total selling, general and administrative expense**  3,091,583   3,176,471          **Income before interest and income taxes**  1,734,103   3,652,100          Interest income  244,773   123,323 Interest expense  (136,689)  (162,301)                **Income before income taxes**  1,842,187   3,613,122          **Income tax expense**  629,417   1,331,216                 **Net income** $1,212,770  $2,281,906                 **Net income per common share:**        **Basic** $0.12  $0.23        **Diluted** $0.11  $0.22                 **Weighted average common shares outstanding:**        **Basic**  10,264,431   10,046,845        **Diluted**  10,596,917   10,448,427        See notesto condensed consolidated financial statements.
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**Core Molding Technologies, Inc. and Subsidiaries****Condensed Consolidated Statement of Stockholders’ Equity****(Unaudited)**                                       **Accumulated**          **Common Stock**      **Other**      **Total**   **Outstanding**  **Paid-in**  **Comprehensive**  **Retained**  **Stockholders’**   **Shares**  **Amount**  **Capital**  **Income (Loss)**  **Earnings**  **Equity** **Balance at January 1, 2007**  10,204,607  $102,046  $21,872,723  $(3,019,315) $23,738,946  $42,694,400  Cumulative impact of change inaccounting for uncertainties inincome taxes (FIN 48 – see Note7)                  68,453   68,453  Net income                  1,212,770   1,212,770  Common shares issued fromexercise of stock options  101,256   1,013   318,719           319,732  Tax benefit from exercise ofstock options          112,217           112,217  Hedge accounting effect ofinterest rate swaps at March31, 2007, net of tax effect of $9,181              (18,095)      (18,095) Share based compensation expense          47,317           47,317                     **Balance at March 31, 2007**  10,305,863  $103,059  $22,350,976   ($3,037,410) $25,020,169  $44,436,794                     See notes to condensed consolidated financial statements.
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**Core Molding Technologies, Inc. and Subsidiaries****Condensed Consolidated Statements of Cash Flows****(Unaudited)**           **Three Months Ended**   **March 31,**   **2007**  **2006** **Cash flows from operating activities:**                 Net income $1,212,770  $2,281,906          Adjustments to reconcile net income to net cash provided byoperating activities:                 Depreciation and amortization  865,591   659,732 Deferred income taxes  (3,242)  — Interest income related to ineffectiveness of swap  (94)  — Share based compensation  47,317   53,353 (Gain) loss on disposal of assets  (1,039)  6,159 Amortization of gain on sale/leaseback transaction  —   (84,528)Loss on translation of foreign currency financial statements  30,933   34,489 Change in operating assets and liabilities:        Accounts receivable  3,125,209   (1,719,867)Inventories  (229,370)  13,963 Prepaid and other assets  (62,158)  (651,115)Accounts payable  1,957,118   3,185,631 Accrued and other liabilities  (2,905,161)  3,062,205 Postretirement benefits liability  521,251   556,304                 **Net cash provided by operating activities**  4,559,125   7,398,232                 **Cash flows from investing activities:**                 Purchase of property, plant and equipment  (310,918)  (1,415,804)Proceeds from sale of property and equipment  1,039   5,200                 **Net cash used in investing activities**  (309,879)  (1,410,604)                **Cash flows from financing activities:**                 Proceeds from issuance of common stock  319,732   93,197 Tax effect from exercise of stock options  112,217   — Payments of principal on secured note payable  (321,429)  (321,428)Payment of principal on industrial revenue bond  (130,000)  (120,000)                **Net cash used in financing activities**  (19,480)  (348,231)                **Net increase in cash and cash equivalents**  4,229,766   5,639,397          **Cash and cash equivalents at beginning of period**  16,096,223   9,413,994                 **Cash and cash equivalents at end of period** $20,325,989  $15,053,391        Cash paid for:        Interest (net of capitalized interest) $124,464  $39,569        Income taxes $86,227  $168,133        See notes to condensed consolidated financial statements.
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**Core Molding Technologies, Inc. and Subsidiaries****Notes to Condensed Consolidated Financial Statements****(Unaudited)****1. Basis of Presentation**     The accompanying unaudited condensed consolidated financial statements have been prepared inaccordance with the instructions to Form 10-Q and include all of the information and disclosuresrequired by accounting principles generally accepted in the United States of America for interimreporting, which are less than those required for annual reporting. In the opinion of management,the accompanying unaudited condensed consolidated financial statements contain all adjustments (allof which are normal and recurring in nature) necessary to present fairly the financial position ofCore Molding Technologies, Inc. and its subsidiaries (“Core Molding Technologies” or the “Company”)at March 31, 2007, and the results of their operations and cash flows for the three months endedMarch 31, 2007. The “Consolidated Notes to Financial Statements,” which are contained in the 2006Annual Report to Shareholders, should be read in conjunction with these condensed consolidatedfinancial statements.     Core Molding Technologies and its subsidiaries operate in the plastics market in a family ofproducts known as “reinforced plastics”. Reinforced plastics are combinations of resins andreinforcing fibers (typically glass or carbon) that are molded to shape. Core Molding Technologiesoperates four production facilities in Columbus, Ohio; Batavia, Ohio; Gaffney, South Carolina; andMatamoros, Mexico. The Columbus and Gaffney facilities produce reinforced plastics by compressionmolding sheet molding compound (“SMC”) in a closed mold process. The Batavia facility producesreinforced plastic products by a robotic spray-up open mold process and resin transfer molding(“RTM”) closed mold process utilizing multiple insert tooling (“MIT”). The Matamoros facilityutilizes spray-up and hand lay-up open mold processes and RTM closed mold process to producereinforced plastic products.**2. Earnings per Common Share**     Basic earnings per common share is computed based on the weighted average number of commonshares outstanding during the period. Diluted earnings per common share are computed similarly butinclude the effect of the assumed exercise of dilutive stock options and restricted stock under thetreasury stock method.     The computation of basic and diluted earnings per common share is as follows:           **Three Months Ended**   **March 31,**   **2007**  **2006** Net income $1,212,770  $2,281,906          Weighted average common shares outstanding  10,264,431   10,046,845 Plus: dilutive options assumed exercised  617,200   928,450 Less: shares assumed repurchased with proceeds fromexercise  (292,127)  (526,868)Plus: dilutive effect of nonvested restricted stock grants  7,413   —        Weighted average common and potentially issuablecommon shares outstanding  10,596,917   10,448,427                 Basic earnings per common share $0.12  $0.23 Diluted earnings per common share $0.11  $0.22      For the three months ended March 31, 2007 and 2006 there were 33,000 and 55,500 antidilutiveoptions, respectively.
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**3. Sales Revenue**     Core Molding Technologies currently has three major customers, International Truck & EngineCorporation (“International”), PACCAR, Inc. (“PACCAR”), and Freightliner, LLC (“Freightliner”).Major customers are defined as customers whose sales individually consist of more than ten percentof total sales. The following table presents sales revenue for the above-mentioned customers forthe three months ended March 31, 2007 and 2006:           **Three Months Ended**   **March 31,**   **2007**  **2006** International $12,704,165  $18,310,825 PACCAR  7,940,978   7,828,737 Freightliner  3,592,157   3,915,014        Subtotal  24,237,300   30,054,576 Other  6,991,791   6,447,738        Total $31,229,091  $36,502,314        **4. Comprehensive Income**     Comprehensive income represents net income plus the results of certain equity changes notreflected in the Statements of Income. The components of comprehensive income, net of tax, are asfollows:           **Three Months Ended**   **March 31,**   **2007**  **2006** Net income $1,212,770  $2,281,906          Hedge accounting effect of interestrate swaps, net of deferred income taxbenefit of $9,181 and deferred taxexpense of $37,709 for the three monthsending March 31, 2007 and 2006respectively  (18,095)  73,200        Comprehensive income $1,194,675  $2,355,106        
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**5. Postretirement Benefits**     The components of expense for all of Core Molding Technologies’ postretirement benefits plansfor the three months ended March 31, 2007 and 2006 are as follows:           **March 31, 2007**  **March 31, 2006** Pension Expense:        Defined contribution plancontributions $120,000  $105,000 Multi-employer plancontributions  110,000   127,000        Total pension expense  230,000   232,000                 Health and Life Insurance:        Service cost  212,000   267,000 Interest cost  229,000   218,000 Amortization of net loss  80,000   71,000        Net periodic benefit cost  521,000   556,000                 Total postretirement benefits expense $751,000  $788,000             Core Molding Technologies has made contributions of approximately $144,000 to pension plansthrough March 31, 2007 and expects to make approximately $836,000 of postretirement benefitpayments through the remainder of 2007 of which $521,000 was accrued at December 31, 2006.**6. Interest Rate Swaps**     In conjunction with its variable rate Industrial Revenue Bond (“IRB”) the Company entered intoan interest rate swap agreement, which is designated as a cash flow hedging instrument. Under thisagreement, the Company pays a fixed rate of 4.89% to the bank and receives 76% of the 30-daycommercial paper rate. The swap term and notional amount matches the payment schedule on the IRBwith final maturity in April 2013. The difference paid or received varies as short-term interestrates change and is accrued and recognized as an adjustment to interest expense. While the Companyis exposed to credit loss on its interest rate swap in the event of non-performance by thecounterparty to the swap, management believes such non-performance is unlikely to occur given thefinancial resources of the counterparty. The effectiveness of the swap is assessed at eachfinancial reporting date by comparing the commercial paper rate of the swap to the benchmark rateunderlying the variable rate of the IRB. In all periods presented this cashflow hedge was highly effective; any ineffectiveness was not material. None of the changes in fairvalue of the interest rate swap have been excluded from the assessment of hedge effectiveness.     Effective January 1, 2004, the Company entered into an interest rate swap agreement, which isdesignated as a cash flow hedge of the bank note payable. Under this agreement, the Company pays afixed rate of 5.75% to the bank and receives LIBOR plus 200 basis points. The swap term andnotional amount match the payment schedule on the secured note payable with final maturity inJanuary 2011. The interest rate swap is a highly effective hedge because the amount, benchmarkinterest rate index, term, and repricing dates of both the interest rate swap and the hedgedvariable interest cash flows are exactly the same. While the Company is exposed to credit loss onits interest rate swap in the event of non-performance by the counterparty to the swap, managementbelieves that such non-performance is unlikely to occur given the financial resources of thecounterparty.**7. Income Taxes**     The Company adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertaintyin Income Taxes an interpretation of FASB Statement No. 109” (“FIN 48”) on January 1, 2007. FIN 48clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financialstatements in accordance with Statement of Financial Accounting Standards No. 109, “Accounting forIncome Taxes” (“FAS 109”). This interpretation prescribes a recognition threshold and measurementattribute for the financial statement recognition and measurement of a tax position taken orexpected to be taken in a tax return. Under FIN 48, the impact of an uncertain income tax positionon the income tax return must be recognized at the largest amount that is more likelythan not to be sustained upon audit by the relevant taxing authoritybased solely on the technical merits of the position. An uncertain taxposition will not be recognized if it has less than a fifty percent likelihood of being sustained.FIN 48 also provides guidance on
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derecognition of tax benefits, classification, interest andpenalties, accounting in interim periods, disclosure, and transition. The Company recognizesaccrued interest and penalties, if any,  related to unrecognized tax benefits in income taxexpense.     The Company recognized a $68,453 increase to retained earnings upon the adoption of FIN 48.This increase is represented by the recognition of state tax benefits of $212,054 and relatedaccrued interest receivable of $15,706. These benefits generate a federal tax liability of $59,833.The Company also recorded a liability for unrecognized tax benefits of $51,775 and $47,699 relatedto uncertain state and foreign tax positions, respectively and the amounts are recorded in income tax receivable in the condensed consolidated balance sheet. The unrecognized tax liabilityat January 1, 2007 of $99,474 was unchanged during the quarter.There are no federal or state income tax audits in process. Duringthe year ended December 31, 2006, the Company recorded no interestexpense or penalties related to unrecognized tax benefits and nointerest or penalties were accrued on the consolidated balance sheetat December 31, 2006.     The Company files income tax returns in the U.S. federal jurisdiction, Mexico and variousstate jurisdictions. The Company is no longer subject to U.S. federal and state income taxexaminations by tax authorities for years before 2003 and is subject to income tax examinations byMexican authorities since the Company began business in Mexico in 2001. The Company does notanticipate that the unrecognized tax benefits will significantly change within the next twelvemonths.**8. Recent Accounting Pronouncements**     In July 2006, the FASB issued Interpretation No. 48 (“FIN 48”), *“Accounting for Uncertainty inIncome Taxes,”*which clarifies the accounting for uncertainty in income taxes recognized in thefinancial statements in accordance with FASB Statement No. 109, *Accounting for Income Taxes*. FIN48 provides guidance on the financial statement recognition and measurement of a tax positiontaken, or expected to be taken, in a tax return. FIN 48 also provides guidance on derecognition,classification, interest and penalties, accounting in interim periods, disclosures, and transition.This interpretation is effective for fiscal years beginning after December 15, 2006, and waseffective for the Company on January 1, 2007. The impact of adopting FIN 48 is discussed in Note7.     In September 2006, the FASB issued SFAS No. 157 *“Fair Value Measurements.”*SFAS No. 157defines fair value, establishes a framework for measuring fair value in generally acceptedaccounting principles, and expands disclosures about fair value measurements. SFAS No. 157 does notrequire any new fair value measurements, rather it applies under existing accounting pronouncementsthat require or permit fair value measurements. SFAS No. 157 is effective for fiscal yearsbeginning after November 15, 2007. The Company is currently evaluating the impact of SFAS No. 157on the consolidated financial statements.     In February 2007, the FASB issued SFAS No. 159, *Establishing the Fair Value Option forFinancial Assets and Liabilities*, to permit all entities to choose to elect to measure eligiblefinancial instruments at fair value. SFAS No. 159 applies to fiscal years beginning after November15, 2007, with early adoption permitted for an entity that has also elected to apply the provisionsof SFAS No. 157, *Fair Value Measurements.*An entity is prohibited from retrospectively applyingSFAS No. 159, unless it chooses early adoption. Management is currently evaluating the impact ofSFAS No. 159 on the consolidated financial statements.
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**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 ofOperations 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 orperformance as opposed to historical items and include statements of anticipated events or trendsand expectations and beliefs relating to matters not historical in nature. Such forward-lookingstatements involve known and unknown risks and are subject to uncertainties and factors relating toCore Molding Technologies’ operations and business environment, all of which are difficult topredict and many of which are beyond Core Molding Technologies’ control. These uncertainties andfactors could cause Core Molding Technologies’ actual results to differ materially from thosematters expressed in or implied by such forward-looking statements.*     *Core Molding Technologies believes that the following factors, among others, could affect itsfuture performance and cause actual results to differ materially from those expressed or implied byforward-looking statements made in this quarterly report: business conditions in the plastics,transportation, watercraft and commercial product industries; general economic conditions in themarkets in which Core Molding Technologies operates; dependence upon three major customers as theprimary source of Core Molding Technologies’ sales revenues; efforts of Core Molding Technologiesto expand its customer base; failure of Core Molding Technologies’ suppliers to perform theircontractual obligations; the availability of raw materials; inflationary pressures; newtechnologies; competitive and regulatory matters; labor relations; the loss or inability of CoreMolding Technologies to attract key personnel; the availability of capital; the ability of CoreMolding Technologies to provide on-time delivery to customers, which may require additionalshipping expenses to ensure on-time delivery or otherwise result in late fees; risk of cancellationor rescheduling of orders; management’s decision to pursue new products or businesses which involveadditional costs, risks or capital expenditures; and other risks identified from time-to-time inCore Molding Technologies other public documents on file with the Securities and ExchangeCommission, including those described in Item 1A of the 2006 Annual Report to Shareholders on Form10-K.***OVERVIEW**     Core Molding Technologies is a compounder of sheet molding composite (“SMC”) and molder offiberglass reinforced plastics. Core Molding Technologies produces high quality fiberglassreinforced molded products and SMC materials for varied markets, including light, medium, andheavy-duty trucks, automobiles and automotive aftermarkets, personal watercraft, and othercommercial products. The demand for Core Molding Technologies’ products is affected by economicconditions in the United States, Canada and Mexico, the cyclicality of markets we serve, regulatoryrequirements, interest rates and other factors. Core Molding Technologies’ manufacturingoperations have a significant fixed cost component. Accordingly, during periods of changingdemands, the profitability of Core Molding Technologies’ operations may change proportionately morethan revenues from operations.     On December 31, 1996, Core Molding Technologies acquired substantially all of the assets andassumed certain liabilities of Columbus Plastics, a wholly owned operating unit of International’struck manufacturing division since its formation in late 1980. Columbus Plastics, located inColumbus, Ohio, was a compounder and compression molder of SMC. In 1998 Core Molding Technologiesbegan compression molding operations at its second facility in Gaffney, South Carolina, and inOctober 2001, Core Molding Technologies acquired certain assets of Airshield Corporation. As aresult of this acquisition, Core Molding Technologies expanded its fiberglass molding capabilitiesto include the spray up, hand-lay-up open mold processes and resin transfer (“RTM”) closed moldprocess. In September 2004, Core Molding Technologies acquired substantially all the operatingassets of Keystone Restyling Products, Inc., a privately held manufacturer and distributor offiberglass reinforced products for the automotive-aftermarket industry. In August 2005, CoreMolding Technologies acquired certain assets of the Cincinnati Fiberglass Division of DiversifiedGlass, Inc. a Batavia, Ohio-based, privately held manufacturer and distributor of fiberglassreinforced plastic components supplied primarily to the heavy-duty truck market. The Batavia, Ohiofacility produces reinforced plastic products by a robotic spray-up open mold process and resintransfer molding (“RTM”) utilizing multiple insert tooling (“MIT”) closed mold process.
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     Core Molding Technologies recorded net income for the three months ended March 31, 2007 of$1,213,000 or $.12 per basic and $.11 per diluted share, compared with $2,282,000, or $.23 perbasic and $.22 per diluted share, for the three months ended March 31, 2006. Net income wasnegatively impacted by decreased sales volumes due to lower demand resulting from an industry widedecline in truck orders. Industry analysts have indicated that stricter federal emission standardsfor 2007 increased demand throughout 2006 for heavy and medium-duty trucks as customers purchasedvehicles in advance of the new 2007 emission standards. Demand in2007 is expected to decline, withindustry analysts estimating a twenty to forty percent decrease in new orders for heavy andmedium-duty trucks for some portion of 2007, as compared to 2006 demand. Also negatively impactingnet income was lower fixed cost absorption. Our manufacturingoperations have a significant fixedcost component and the profitability of Core Molding Technologies’ operations will changeproportionately more than revenues from operations during periods of changing demand. Finally,operating inefficiencies at the Company’s Batavia, Ohio facility also negatively impacted netincome.**Results of Operations****Three Months Ended March 31, 2007, As Compared To Three Months Ended March 31, 2006**     Net sales for the three months ended March 31, 2007, totaled $31,229,000, representing anapproximate 14% decrease from the $36,502,000 reported for the three months ended March 31, 2006.Included in total sales are tooling project revenues of $578,000 and $1,148,000 for the threemonths ended March 31, 2007 and March 31, 2006, respectively. Tooling project revenues aresporadic in nature and do not represent a recurring trend. Total product sales, excluding toolingproject revenue, was lower by approximately 13% for the three months ended March 31, 2007, ascompared to the same period a year ago. The primary reason for this decrease in product sales islower demand resulting from an industry wide general decline in truck orders due to the new federalemissions standards that went into effect on January 1, 2007. Sales to International totaled$12,704,000 for the three months ended March 31, 2007, an approximate 31% decrease from the threemonths ended March 31, 2006 amount of $18,311,000. The primary reason for the decrease is lowerdemand and reduced order volumes resulting from the industry wide decline as noted above. Sales toPACCAR totaled $7,941,000 for the three months ended March 31, 2007, compared to the net sales of$7,829,000 reported for the three months ended March 31, 2006. Lower order volumes and reduceddemand were offset by sales of products for new models launched in 2007. Sales to Freightlinertotaled $3,592,000 for the three months ended March 31, 2007, which was a decrease of approximately8% from the $3,915,000 for the three months ended March 31,2006. The decrease in sales, as notedabove, had less of an impact to our business with Freightliner, due to a greater percentage of ourproduct line with this customer being related to repair parts.     Sales to other customers for the three months ended March 31, 2007, increased approximately 8%to $6,992,000 from $6,448,000 for the three months ended March 31, 2006. The increase in sales toother customers was primarily due to an increase in sales of sheet molding compound to a customer.     Gross margin was approximately 15.5% of sales for the three months ended March 31, 2007,compared with 18.7% for the three months ended March 31, 2006. The decrease in gross margin, as apercentage of sales from the prior year, was due to a combination of several factors includingoperating inefficiencies and lower fixed cost absorption that resulted from the decrease in productsales as well as production inefficiencies at the Company’s Batavia, Ohio facility.     Selling, general and administrative expenses (“SG&A”) totaled $3,092,000 for the three monthsended March 31, 2007, decreasing from $3,176,000 for the three months ended March 31, 2006. Theprimary reasons for this decrease were lower profit sharing amount based on lower earnings andreductions in personnel. Partially offsetting those decreases were increases in professionalservice costs associated with Sarbanes Oxley compliance and costs associated with personnelreductions.     Net interest income totaled $108,000 for the three months ended March 31, 2007, compared tonet interest expense of $39,000 for the three months ended March 31, 2006. Net interest incomeincludes interest income of $245,000 for the three months ended March 31, 2007 compared to $123,000for the three months ended March 31, 2006 primarily resulting from higher investable cash balances.Interest expense decreased to $137,000 at March 31, 2007 from $162,000 at March 31, 2006 due to areduction in debt from regularly scheduled payments. Interest rates experienced by Core MoldingTechnologies with respect to its two long-term borrowing facilities were favorable; however, due tothe interest rate swaps Core Molding Technologies entered into, the interest rate is essentiallyfixed for these two debt instruments.     Income taxes for the three months ended March 31, 2007, are estimated to be approximately 34%of total earnings before taxes or $629,000, compared to $1,331,000 or 37% of total earnings beforetaxes for the three months ended March 31, 2006. The decrease in effective rate at March 31, 2007compared to the same time a year
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ago is due to the effect of foreign income, which is taxed at alower rate, representing a higher percent of total income. Also contributing to the reducedeffective rate is a reduction in the Ohio franchise tax which is phasing out over a five yearperiod.     Net income for the three months ended March 31, 2007, was $1,213,000, or $.12 per basic and$.11 per diluted share, representing a decrease of $1,069,000 over the net income for the threemonths ended March 31, 2006, of $2,282,000, or $.23 per basic share and $0.22 per diluted share.**Liquidity and Capital Resources**     Core Molding Technologies’ primary sources of funds have been cash generated from operatingactivities and borrowings from third parties. Primary cash requirements are for operating expensesand capital expenditures.     Cash provided by operating activities before changes in working capital for the three monthsended March 31, 2007 totaled $2,673,000. Changes in working capital increased cash provided byoperating activities by $1,886,000 to $4,559,000. Net income contributed $1,213,000 to operatingcash flows. Non-cash deductions from net income for depreciation and amortization amounted to$866,000. In addition, the increase in the postretirement healthcare benefits liability of$521,000 is not a significant current cash obligation, and this item will not be a cash obligationuntil retirees begin to utilize their retirement medical benefits. Changes in working capitalprimarily relate to increases in accounts payable due to payment timing differences, decreases inaccounts receivable due to collections and lower sales volumes, and decreases in accrued and otherliabilities.     Cash used for investing activities was $310,000 for the three months ended March 31, 2007, asa result of capital expenditures, which primarily related to the acquisition of machinery andequipment. Core Molding Technologies anticipates spending an additional $4,031,000 for theremainder of the year for capital projects primarily related to facility improvements and equipmentpurchases to support the manufacturing process of both existing and new model programs which willbe funded by existing cash and cash from operations.     Financing activities reduced cash flow by $19,000. Core Molding Technologies made principalrepayments on its bank note payable of $321,000 and its regularly scheduled payment on itsIndustrial Revenue Bond of $130,000. Partially offsetting these payments were proceeds of $320,000from the issuance of common stock related to the exercise of 101,256 stock options, as well as$112,000 of tax benefits from the exercise of these options.     At March 31, 2007, Core Molding Technologies had cash on hand of $20,326,000 and an availableline of credit of $7,500,000 (“Line of Credit”), which is scheduled to mature on April 30, 2009.At March 31, 2007, Core Molding Technologies had no outstanding borrowings on the Line of Credit.Management expects these resources to be adequate to meet Core Molding Technologies’ liquidityneeds. As of March 31, 2007, Core Molding Technologies was in compliance with its financial debtcovenants for the Line of Credit, a Letter of Credit securing the Industrial Revenue Bond andcertain equipment leases. The covenants relate to maintaining certain financial ratios.Management expects Core Molding Technologies to meet these covenants for the year 2007. However,if a material adverse change in the financial position of Core Molding Technologies should occur,Core Molding Technologies’ liquidity and ability to obtain further financing to fund futureoperating and capital requirements could be negatively impacted.**Recently Issued Accounting Standards**     In September 2006, the FASB issued SFAS No. 157 *“Fair Value Measurements.”*SFAS No. 157defines fair value, establishes a framework for measuring fair value in generally acceptedaccounting principles, and expands disclosures about fair value measurements. SFAS No. 157 does notrequire any new fair value measurements, rather it applies under existing accounting pronouncementsthat require or permit fair value measurements. SFAS No. 157 is effective for fiscal yearsbeginning after November 15, 2007. The Company is currently evaluating the impact of SFAS No. 157on the consolidated financial statements.     In February 2007, the FASB issued SFAS No. 159, *Establishing the Fair Value Option forFinancial Assets and Liabilities*, to permit all entities to choose to elect to measure eligiblefinancial instruments at fairvalue. SFAS No. 159 applies to fiscal years beginning after November 15, 2007, with earlyadoption permitted for an entity that has also elected to apply the provisions of SFAS No. 157,*Fair Value Measurements.*An entity is prohibited from retrospectively applying SFAS No. 159, unlessit chooses early adoption. Management is currently evaluating the impact of SFAS No. 159 on theconsolidated financial statements.
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**Critical Accounting Policies and Estimates**     Management’s Discussion and Analysis of Financial Condition and Results of Operations discussCore Molding Technologies’ condensed consolidated financial statements, which have been prepared inaccordance with accounting principles generally accepted in the United States. The preparation ofthese condensed consolidated financial statements requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities and the disclosure ofcontingent assets and liabilities at the date of the consolidated financial statements and thereported 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, post retirement benefits, and income taxes. Management bases its estimates andjudgments on historical experience and on various other factors that are believed to be reasonableunder the circumstances, the results of which form the basis for making judgments about thecarrying value of assets and liabilities that are not readily apparent from other sources. Actualresults may differ from these estimates under different assumptions or conditions.     Management believes the following critical accounting policies, among others, affect its moresignificant judgments and estimates used in the preparation of its consolidated financialstatements.*Accounts receivable allowances:*     Management maintains allowances for doubtful accounts for estimated losses resulting from theinability of its customers to make required payments. If the financial condition of Core MoldingTechnologies’ customers were to deteriorate, resulting in an impairment of their ability to makepayments, additional allowances may be required. Core Molding Technologies recorded an allowancefor doubtful accounts of $251,000 at March 31, 2007 and $262,000 at December 31, 2006. Managementalso records estimates for customer returns and deductions, discounts offered to customers, and forprice adjustments. Should customer returns and deductions, discounts, and price adjustmentsfluctuate from the estimated amounts, additional allowances may be required. Core MoldingTechnologies has reduced accounts receivable for returns and deductions of $1,353,000 at March 31,2007 and $1,426,000 at December 31, 2006.*Inventories:*     Inventories, which include material, labor and manufacturing overhead, are valued at the lowerof cost or market. The inventories are accounted for using the first-in, first-out (FIFO) methodof determining inventory costs. Inventory quantities on-hand are regularly reviewed, and wherenecessary, provisions for excess and obsolete inventory are recorded based on historical andanticipated usage.*Goodwill and Long-Lived Assets:*     Long-lived assets consist primarily of property and equipment, goodwill, and a customer list.The recoverability of long-lived assets is evaluated by an analysis of operating results andconsideration of other significant events or changes in the business environment. The Companyevaluates whether impairment exists for property and equipment and the customer list on the basisof undiscounted expected future cash flows from operations before interest. For goodwill, theCompany evaluates annually on December 31st whether impairment exists on the basis ofestimated fair value of the associated reporting unit. If impairment exists, the carrying amountof the long-lived assets is reduced to its estimated fair value, less any costs associated with thefinal settlement. Core Molding Technologies has not recorded any impairment to goodwill orlong-lived assets for the three months ended March 31, 2007 or the year ended December 31, 2006.*Self-Insurance:*     The Company is self-insured with respect to most of its Columbus and Batavia, Ohio andGaffney, South Carolina medical, dental and vision claims and Columbus, Ohio workers’ compensationclaims. The Company has recorded an estimated liability for self-insured medical, dental andvision claims incurred but not reported and worker’s compensation claims incurred but not reportedat March 31, 2007 and December 31, 2006 of $1,101,000 and $1,036,000, respectively.*Post retirement benefits:*     Management records an accrual for post retirement costs associated with the health care plansponsored by Core Molding Technologies. Should actual results differ from the assumptions used todetermine the reserves,additional provisions may be required. In particular, increases in future healthcare costsabove the assumptions could have an adverse affect on Core Molding Technologies’ operations. Theeffect of a change in healthcare costs is described in Note 11 of the Consolidated Notes toFinancial Statements, which are contained in the 2006 Annual Report to Shareholders. Core MoldingTechnologies recorded a liability for post retirement medical benefits based on actuariallycomputed estimates of $16,629,000 at March 31, 2007 and $16,107,000 at December 31, 2006.
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*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 isrecognized. Tooling revenue is recognized when the customer approves the tool and acceptsownership. Progress billings and expenses are shown net as an asset or liability on the Company’sbalance sheet. Tooling in progress can fluctuate significantly from period to period and isdependent upon the stage of tooling projects and the related billing and expense payment timetablefor individual projects and therefore does not necessarily reflect projected income or loss fromtooling projects. At March 31, 2007 the Company has recorded a net liability related to tooling inprogress of $1,960,000, which represents approximately $20,135,000 of progress tooling billings and$18,175,000 of progress tooling expenses. At December 31, 2006 the Company had recorded a netliability related to tooling in progress of $1,180,000, which represents approximately $15,881,000of progress tooling billings and $14,701,000 of progress tooling expenses.*Income taxes:*     The Consolidated Balance Sheet at March 31, 2007 and December 31, 2006, includes a deferredtax asset of $8,399,000 and $8,446,000, respectively. Core Molding Technologies performs analysesto evaluate the balance of deferred tax assets that will be realized. Such analyses are based onthe premise that the company is, and will continue to be, a going concern and that it is morelikely than not that deferred tax benefits will be realized through the generation of futuretaxable income. For more information, refer to Note 10 in Core Molding Technologies 2006 AnnualReport to Shareholders.
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**Part I — Financial Information****Item 3 Quantitative and Qualitative Disclosures About Market Risk**     Core Molding Technologies’ primary market risk results from changes in the price ofcommodities used in its manufacturing operations. Core Molding Technologies is also exposed tofluctuations 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 tradingpurposes.     Core Molding Technologies has the following five items that are sensitive to market risks: (1)Industrial Revenue Bond (“IRB”) with a variable interest rate. The Company has an interest rateswap to fix the interest rate at 4.89%; (2) revolving line of credit, which bears a variableinterest rate; (3) bank note payable with a variable interest rate. The Company entered into aswap agreement effective January 1, 2004, to fix the interest rate at 5.75%; (4) foreign currencypurchases in which the Company purchases Mexican pesos with United States dollars to meet certainobligations that arise from the Company’s operations in Mexico; and (5) raw material purchases inwhich the Company purchases various resins for use in production. The prices of these resins areaffected 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 beimpacted by an increase in raw material costs, which would have an adverse affect on operatingmargins.     Assuming a hypothetical 10% change in short-term interest rates in both the three monthperiods ended March 31, 2007 and 2006, interest expense would not change significantly, as theinterest rate swap agreements would generally offset the impact.
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**Part I — Financial Information****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 ExecutiveOfficer and its Chief Financial Officer, of the effectiveness of the design and operation of itsdisclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act). Based uponthis evaluation, the Company’s management, including its Chief Executive Officer and its ChiefFinancial 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 orsubmitted 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 timelydecisions regarding required disclosure, and (ii) effective to ensure that information required tobe 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 ExchangeCommissions rules and forms.     There were no changes in internal control over financial reporting (as such term is defined inExchange Act Rule 13a-15(f)) that occurred in the last fiscal quarter that have materiallyaffected, or are reasonably likely to materially affect, our internal control over financialreporting.
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**Part II — Other Information****Item 1. Legal Proceedings** None.**Item 1A. Risk Factors** There have been no material changes in Core Molding Technologies’ risk factors fromthose previously disclosed in Core Molding  Technologies 2006 Annual Report on Form10-K.**Item 2. Unregistered Sales of Equity Securities and Use of Proceeds** None**Item 3. Defaults Upon Senior Securities** None**Item 4. Submission of Matters to a Vote of Security Holders** No submission of matters to a vote of security holders occurred during thethree months ended March 31, 2007.**Item 5. Other Information** None**Item 6. Exhibits** See Index to Exhibits
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**SIGNATURES**     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto duly authorized.      CORE MOLDING TECHNOLOGIES, INC.