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  **SECURITIES AND EXCHANGE COMMISSION****Washington, D.C. 20549****FORM 10-Q****(Mark One)**   þ **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934****For the quarterly period ended March 31, 2010****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  Columbus, Ohio 43228-0183   (Address of principal executive office) (Zip Code)Registrant’s telephone number, including area code (614) 870-5000N/AFormer 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 oIndicate by check mark whether the registrant has submitted electronically and posted on itscorporate Website, if any, every Interactive Data File required to be submitted and posted pursuantto Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that theregistrant was required to submit and post such files).Yes o     NO oIndicate by check mark whether the registrant is a large accelerated filer, an acceleratedfiler, a non-accelerated filer, or a smaller reporting company. See definition of “largeaccelerated filer,” “accelerated filer,” and “smaller reporting company,” in Rule 12b-2 of theExchange Act.       Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company þ    (do not check if a smaller reporting company)  Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Act.Yes o     NO þAs of May 14, 2010, the latest practicable date, 6,998,086 shares of the registrant’s commonshares were issued and outstanding.  
 
 

 
**Table of Contents**     Part I — Financial Information         Item 1. Financial Statements         Consolidated Balance Sheets  3      Consolidated Statements of Operations  4      Consolidated Statement of Stockholders’ Equity  5      Consolidated Statements of Cash Flows  6      Notes to Consolidated Financial Statements  7      Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations  15      Item 3. Quantitative and Qualitative Disclosures About Market Risk  21      Item 4T. Controls and Procedures  22      Part II — Other Information  23      Item 1. Legal Proceedings  23      Item 1A. Risk Factors  23      Item 2. Unregistered Sales of Equity Securities and Use of Proceeds  23      Item 3. Defaults Upon Senior Securities  23      Item 4. (Removed and Reserved)  23      Item 5. Other Information  23      Item 6. Exhibits  23      Signatures  24      Index to Exhibits  25       Exhibit 31(a) Exhibit 31(b) Exhibit 32(a) Exhibit 32(b)
 
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**Part I — Financial Information****Core Molding Technologies, Inc. and Subsidiaries****Consolidated Balance Sheets**           **March 31,**  **December 31,**   **2010**  **2009**   **(Unaudited)**    **Assets**        Current Assets:        Cash $2,469,730  $4,141,838 Accounts receivable (less allowance for doubtful accounts: March 31, 2010 — $112,000; December 31, 2009 — $113,000)  13,123,588   11,936,335 Inventories:        Finished goods  3,693,735   863,166 Work in process  1,446,409   1,253,975 Stores  5,111,311   4,896,221        Total inventories  10,251,455   7,013,362          Deferred tax asset  1,195,831   1,195,831 Foreign sales tax receivable  641,865   652,155 Prepaid expenses and other current assets — net  1,230,695   1,021,093 Taxes receivable  175,518   562,176        Total current assets  29,088,682   26,522,790          Property, plant and equipment  82,226,401   81,670,080 Accumulated depreciation  (37,454,306)  (36,726,836)       Property, plant and equipment — net  44,772,095   44,943,244          Deferred tax asset  5,536,108   6,570,803 Goodwill  1,097,433   1,097,433 Other assets  32,763   42,028        **Total** $80,527,081  $79,176,298                 **Liabilities and Stockholders’ Equity**                 Current liabilities        Current portion long-term debt $5,070,707  $3,675,005 Current portion of postretirement benefits liability  667,000   667,000 Accounts payable  5,287,831   4,805,468 Tooling in progress  1,389,337   484,786 Accrued liabilities:        Compensation and related benefits  2,942,790   2,400,587 Interest payable  93,098   102,069 Other  821,770   800,912        Total current liabilities  16,272,533   12,935,827          Long-term debt  15,422,140   17,732,842 Interest rate swap  271,716   198,809 Postretirement benefits liability  18,350,348   18,076,696          **Commitments and Contingencies**        **Stockholders’ Equity:**        Preferred stock — $0.01 par value, authorized shares — 10,000,000;Outstanding shares: March 31, 2010 and December 31, 2009 — 0  —   — Common stock — $0.01 par value, authorized shares — 20,000,000;Outstanding shares: 6,799,641 at March 31, 2010 andDecember 31, 2009  67,996   67,996 Paid-in capital  23,412,161   23,336,197 Accumulated other comprehensive loss, net of income tax benefit  (1,766,699)  (1,805,897)Treasury stock  (26,179,054)  (26,179,054)Retained earnings  34,675,940   34,812,882        Total stockholders’ equity  30,210,344   30,232,124        **Total** $80,527,081  $79,176,298        See notes to consolidated financial statements.
 
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**Core Molding Technologies, Inc. and Subsidiaries****Consolidated Statements of Operations****(Unaudited)**           **Three Months Ended**   **March 31,**   **2010**  **2009** **Net sales:**        Products $19,695,932  $17,830,280 Tooling  746,108   553,837        **Total sales**  20,442,040   18,384,117          **Total cost of sales**  16,358,116   16,810,777                 **Gross margin**  4,083,924   1,573,340                 **Total selling, general and administrative expense**  2,325,936   2,500,003                 **Income (loss) before interest and income taxes**  1,757,988   (926,663)         Interest expense  (420,183)  (110,154)                **Income (loss) before income taxes**  1,337,805   (1,036,817)         **Income tax expense (benefit)**  1,474,747   (399,323)                **Net loss** $(136,942) $(637,494)                **Net loss per common share:**        **Basic** $(0.02) $(0.09)       **Diluted** $(0.02) $(0.09)                **Weighted average common shares outstanding:**        **Basic**  6,799,641   6,768,726        **Diluted**  6,799,641   6,768,726        See notes to consolidated financial statements.
 
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**Core Molding Technologies, Inc. and Subsidiaries****Consolidated Statement of Stockholders’ Equity****(Unaudited)**                                               **Accumulated**          **Common Stock**          **Other**      **Total**   **Outstanding**  **Paid-In**  **Retained**  **Comprehensive**  **Treasury**  **Stockholders’**   **Shares**  **Amount**  **Capital**  **Earnings**  **Loss**  **Stock**  **Equity** **Balance at January 1,2010**  6,799,641  $67,996  $23,336,197  $34,812,882  $(1,805,897) $(26,179,054) $30,232,124                              Net loss  —   —   —   (136,942)  —   —   (136,942)Hedge accountingeffect of the interestrate swaps, net ofdeferred income taxexpense of $10,503  —   —   —   —   20,389   —   20,389                              Amortization ofunrecognized net losson post retirementbenefit, net of taxexpense of 9,690  —   —   —   —   18,809   —   18,809                                                          Comprehensiveloss                          (97,744)                             Share-basedcompensation  —   —   75,964   —   —   —   75,964                       **Balance at March 31,2010**  6,799,641  $67,996  $23,412,161  $34,675,940  $(1,766,699) $(26,179,054) $30,210,344                       See notes to consolidated financial statements.
 
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**Core Molding Technologies, Inc. and Subsidiaries****Consolidated Statements of Cash Flows****(Unaudited)**           **Three Months Ended**   **March 31,**   **2010**  **2009** **Cash flows from operating activities:**                 Net loss $(136,942) $(637,494)         Adjustments to reconcile net loss to net cash provided by operatingactivities:                 Depreciation and amortization  989,590   924,434 Deferred income taxes  1,021,501   (22,341)Mark to market adjustment related to interest rate swaps  96,799   — Ineffectiveness of swaps  —   (10,352)Share-based compensation and vested restricted stock  75,964   72,309 (Gain)/loss on translation of foreign currency financial statements  (135,769)  64,609 Change in operating assets and liabilities:        Accounts receivable  (1,187,253)  3,573,791 Inventories  (3,238,093)  522,062 Prepaid and other assets  (222,076)  (1,063,931)Accounts payable  585,125   (1,766,771)Accrued and other liabilities  1,845,299   (1,139,151)Postretirement benefits liability  302,152   211,895                 **Net cash (used in) provided by operating activities**  (3,703)  729,060                 **Cash flows from investing activities:**                 Purchase of property, plant and equipment  (753,405)  (4,579,969)                **Net cash used in investing activities**  (753,405)  (4,579,969)                **Cash flows from financing activities:**                 Financing cost for new credit agreement  —   (158,995)Borrowings on construction loan  —   3,878,663 Gross borrowing on line of credit  —   14,360,842 Gross repayments on line of credit  —   (13,758,172)Payments of principal on capex loan  (428,571)  — Payments of principal on term loan  (321,429)  (321,429)Payment of principal on industrial revenue bond  (165,000)  (150,000)                **Net cash (used in) provided by financing activities**  (915,000)  3,850,909                 **Net decrease in cash and cash equivalents**  (1,672,108)  —          **Cash and cash equivalents at beginning of period**  4,141,838   —                 **Cash and cash equivalents at end of period** $2,469,730  $—        **Cash paid for:**        Interest $284,030  $161,377        Income taxes $37,812  $224,000        **Non Cash:**        Fixed asset purchases in accounts payable $56,953  $81,909        See notes to consolidated financial statements.
 
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**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 withthe instructions to Form 10-Q and include all of the information and disclosures required byaccounting 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, theaccompanying unaudited consolidated financial statements contain all adjustments (all of which arenormal and recurring in nature) necessary to present fairly the financial position of Core MoldingTechnologies, Inc. and its subsidiaries (“Core Molding Technologies” or the “Company”) at March 31,2010, and the results of operations and cash flows for the three months ended March 31, 2010. The“Notes to Consolidated Financial Statements,” which are contained in the 2009 Annual Report toShareholders, should be read in conjunction with these consolidated financial 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, RTM and SMC closed mold process to producereinforced plastic products.The Company has determined that certain of its previously filed financial statements contained anerror related to the understatement of a deferred tax asset for certain retiree drug subsidies(“RDS”) available to sponsors of retiree health benefit plans that provide a benefit that is atleast actuarially equivalent to the benefits under Medicare Part D. In order to assess materialitywith respect to these errors, the Company considered Staff Accounting Bulletin (SAB) 99,Materiality, (SAB 99), and SAB 108, Considering the Effects of Prior Year Misstatements whenQuantifying Misstatements in Current Year Financial Statements and determined that the impact ofthese errors on prior period consolidated financial statements was immaterial. Accordingly, theCompany’s consolidated balance sheet as of December 31, 2009 and the related consolidatedstatements of operations and cash flows for the three months ended March 31, 2009 were revised andreflect the correction of this immaterial error. Correction of this error in the Company’sconsolidated balance sheet as of December 31, 2009 resulted in an increase in deferred tax assetsof approximately $1,035,000, an increase to retained earnings of approximately $618,000 and anincrease to accumulated other comprehensive income of approximately $417,000. The consolidatedresults of operations and other comprehensive loss for the three months ended March 31, 2009reflect an increase in income tax benefit of approximately $22,000.**2. Net Loss per Common Share**Net loss per common share is computed based on the weighted average number of common sharesoutstanding during the period. Diluted net loss per common share is computed similarly butincludes the effect of the assumed exercise of dilutive stock options and restricted stock underthe treasury stock method.The computation of basic and diluted net loss per common share is as follows:           **Three Months Ended**   **March 31,**   **2010**  **2009**          Net loss $(136,942) $(637,494)         Weighted average common shares outstanding  6,799,641   6,768,726 Plus: dilutive options assumed exercised  —   — Less: shares repurchased with proceeds from exercise  —   —        Weighted average common and potentially issuablecommon shares outstanding  6,799,641   6,768,726                 Basic net loss per common share $(0.02) $(0.09)Diluted net loss per common share $(0.02) $(0.09)All 570,225 stock options at March 31, 2010 and 2009 were not included in diluted earnings pershare as they were anti-dilutive.
 
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**3. Sales**Core Molding Technologies currently has two major customers, Navistar, Inc. (“Navistar”) andPACCAR, Inc. (“PACCAR”). Major customers are defined as customers whose sales individually consistof more than ten percent of total sales. The following table presents sales revenue for theabove-mentioned customers for the three months ended March 31, 2010 and 2009:           **Three Months Ended**   **March 31,**   **2010**  **2009**          Navistar product sales $10,896,669  $10,057,223 Navistar tooling sales  428,925   302,795        Total Navistar sales  11,325,594   10,360,018          PACCAR product sales  5,787,110   4,191,729 PACCAR tooling sales  245,495   11,600        Total PACCAR sales  6,032,605   4,203,329          Other product sales  3,012,153   3,581,328 Other tooling sales  71,688   239,442        Total other sales  3,083,841   3,820,770          Total product sales  19,695,932   17,830,280 Total tooling sales  746,108   553,837        Total sales $20,442,040  $18,384,117        **4. Comprehensive Loss**Comprehensive loss represents net loss plus the results of certain equity changes not reflected inthe Consolidated Statements of Operations. The components of comprehensive loss, net of tax, areas follows:           **Three Months Ended**   **March 31,**   **2010**  **2009**          Net loss $(136,942) $(637,494)         Hedge accounting effect ofinterest rate swaps, net ofdeferred income tax expense of$10,503 and tax benefit of $5,591for the three months ended March31, 2010 and 2009 respectively.  20,389   (10,853)         Amortization of unrecognized losson post retirement benefit, net oftax expense of $9,690 for thethree months ended March 31, 2010.  18,809   —                 Comprehensive loss $(97,744) $(648,347)       
 
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**5. Postretirement Benefits**The components of expense for all of Core Molding Technologies’ postretirement benefits plans forthe three months ended March 31, 2010 and 2009 are as follows:           **Three Months Ended**   **March 31,**   **2010**  **2009** Pension expense:        Defined contribution plancontributions $91,000  $103,000 Multi-employer plancontributions  122,000   108,000        Total pension expense  213,000   211,000                 Health and life insurance:        Service cost  93,000   152,000 Interest cost  269,000   237,000 Amortization of net loss  29,000   —        Net periodic benefit cost  391,000   389,000                 Total postretirement benefits expense $604,000  $600,000        Core Molding Technologies has made contributions of approximately $81,000 to pension plans and$89,000 of postretirement healthcare payments through March 31, 2010 and expects to makeapproximately $640,000 of defined contribution and multi-employer pension payments through theremainder of 2010 of which $346,000 was accrued at December 31, 2009. The Company also expects tomake approximately $578,000 of postretirement healthcare payments through the remainder of 2010,all of which are accrued at March 31, 2010.The Company’s liability for post retirement healthcare and life insurance relates primarily to itsColumbus, Ohio employee base. As a result of the shift of production of certain product lines fromthe Company’s Columbus, Ohio facility to the Matamoros facility, the Company expects to recognize areduction in its other post employment benefits liability of approximately $300,000 during thesecond quarter of 2010 due to remeasurement of this liability.**6. Debt****Credit Agreement; Amendment**On December 9, 2008, the Company and its wholly owned subsidiary, CoreComposites de Mexico, S. deR.L. de C.V., entered into a Credit Agreement to refinance some existing debt and borrow funds tofinance the construction of the Company’s new manufacturing facility in Mexico.Under this Credit Agreement, the Company received certain loans, subject to the terms andconditions stated in the agreement, which include (i) a $12,000,000 Capex loan, (ii) an $8,000,000Mexican loan, (iii) an $8,000,000 revolving line of credit, and (iv) a $2,678,563 term loan torefinance an existing term loan. 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 ofthe Company and its U.S. subsidiaries, except that only 65% of the stock issued by CoreCompositesde Mexico, S. de C.V. has been pledged. The $8,000,000 Mexican loan is also secured bysubstantially all of the present and future assets of the Company’s Mexican subsidiary.On March 8, 2010, the Company entered into a fourth amendment (the “Fourth Amendment”) to theCredit Agreement. Pursuant to the terms of the Fourth Amendment, the parties agreed to modifycertain terms of the Credit Agreement. These modifications included (1) modification of thedefinition of EBITDA to add back transition costs of up to $2,000,000 associated with therelocation of certain products from the Company’s Columbus, Ohio facility to its Matamoros, Mexicofacility (2) modification to the fixed charge definition to exclude capital expenditures of up to$2,000,000 associated with the relocation of certain products from the Company’s Columbus, Ohiofacility to its Matamoros, Mexico facility; (3) retroactive modification of the amortizationschedule of the Mexican loan to forgo the principal payment due January 31, 2010 of $1,600,000 as aresult of the Company limiting its borrowing to $6,400,000 instead of the full amount of the loancontemplated ($8,000,000); and (4) consent to transfer certain assets of the Company from Columbus,Ohio to Matamoros, Mexico.
 
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On May 11, 2010, the Company entered into a fifth amendment (the “Fifth Amendment”) to the CreditAgreement. Pursuant to the terms of the Fifth Amendment, the parties agreed to modify certainterms of the Credit Agreement. These modifications included (1) decrease in the applicable marginfor interest rates to 275 basis points from 375 basis points for the Capex and Mexican loans andthe revolving line of credit, effective May 11, 2010 (2) extension of the commitment for therevolving line of credit to April 30, 2012. Previous amendments are disclosed in Core MoldingTechnologies 2009 Annual Report on Form 10-K.**Bank Covenants**The Company is required to meet certain financial covenants included in its debt agreements withrespect to leverage ratios, fixed charge ratios, capital expenditures as well as other customaryaffirmative and negative covenants. As of March 31, 2010, the Company was in compliance with itsfinancial debt covenants for the Line of Credit, the term loan, the Capex loan, the Mexican loanand the letter of credit securing the Industrial Revenue Bond.Based on the Company’s forecasts which are primarily based on industry analysts’ estimates of heavyand medium-duty truck production volumes as well as other assumptions management believes to bereasonable, management believes that the Company will be able to maintain compliance with thecovenants to the Credit Agreement, as amended, for the next 12 months. Management believes thatcash flow from operating activities together with available borrowings under the Credit Agreementwill be sufficient to meet the Company’s liquidity needs. However, if a material adverse change inthe financial position of the Company’s should occur, or if actual sales or expenses aresubstantially different than what has been forecasted, the Company’s liquidity and ability toobtain further financing to fund future operating and capital requirements could be negativelyimpacted.**Interest Rate Swaps**In conjunction with its variable rate Industrial Revenue Bond, the Company entered into an interestrate swap agreement, which was initially 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 Company recently determined this interest rate swap was nolonger highly effective. As a result, the Company discontinued the use of hedge accountingeffective January 1, 2010 related to this swap, and began recording mark-to-market adjustmentswithin interest expense in the Company’s Consolidated Statement of Operations. The pre-tax amountpreviously recognized in Accumulated Other Comprehensive Loss, totaling $199,990 as of December 31,2009, is being amortized as an increase to interest expense of $3,384 per month, net of tax, overthe remaining term of the interest rate swap agreement beginning January 2010. The fair value ofthe swap was a liability of $185,212 and $199,990 as of March 31, 2010 and December 31, 2009,respectively. The Company recorded interest income of $14,779 for a mark-to-market adjustment ofswap fair value for the first three months of 2010 related to this swap. The notional amount atMarch 31, 2010 for this swap was $2,450,000.Effective January 1, 2004, the Company entered into an interest rate swap agreement, which isdesignated as a cash flow hedge of the Term loan. Under this agreement, the Company pays a fixedrate of 5.75% to the bank and receives LIBOR plus 200 basis points. The swap term and notionalamount matches the payment schedule on the secured Term loan with final maturity in January 2011.The interest rate swap is a highly effective hedge because the amount, benchmark interest rateindex, term, and repricing dates of both the interest rate swap and the hedged variable interestcash flows are substantially the same. The fair value of the swap was a liability of $17,187 and$27,492 as of March 31, 2010 and December 31, 2009 respectively. While the Company is exposed tocredit loss on its interest rate swap in the event of non-performance by the counterparty to theswap, management believes that such non-performance is unlikely to occur given the financialresources of the counterparty. The notional amount at March 31, 2010 for this swap was $1,071,418.Effective December 18, 2008, the Company entered into an interest rate swap agreement that becameeffective May 1, 2009, 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 receivesLIBOR. Effective March 31, 2009, the interest terms in the Company’s Credit Agreement related tothe $12,000,000 Capex loan were amended. The Company determined that the interest rate swap was nolonger highly effective. As a result, the Company discontinued the use of hedge accountingeffective March 31, 2009 related to this swap, and began recording mark-to-market adjustmentswithin interest expense in the Company’s Consolidated Statement of Operations. The pre-tax amountpreviously recognized in Accumulated Other Comprehensive Loss, totaling $145,684 as of March 31,2009, is being amortized as an increase to interest expense of $1,145 per month, net of tax, overthe remaining term of the interest rate swap agreement beginning June 2009. The fair value of theswap as of March 31, 2010 and December 31, 2009 was a liability of $69,317 and an asset of $28,673,respectively. The Company recorded interest expenseof $97,990 for a mark-to-market adjustment of swap fair value for the first three months of 2010related to this swap. The notional amount at March 31, 2010 for this swap was $10,571,429.
 
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**Line of Credit**At March 31, 2010, the Company had available an $8,000,000 variable rate bank revolving line ofcredit under the Credit Agreement that is scheduled to mature on April 30, 2011. The line ofcredit bears interest at daily LIBOR plus 375 additional basis points. The line of credit iscollateralized by all the Company’s assets. At March 31, 2010 and December 31, 2009 there was nooutstanding balance on the bank revolving line of credit.**7. Income Taxes**In the first quarter of 2010, the PPACA was signed into law. The PPACA changes the tax treatmentrelated to existing retiree drug subsidies (“RDS”) available to sponsors of retiree health benefit plans that provide abenefit that is at least actuarially equivalent to the benefits under Medicare Part D. As a resultof the PPACA, RDS payments will effectively become taxable in tax years beginning in 2013, byrequiring the amount of the subsidy received to be offset against the Company’s deduction forhealth care expenses. Accordingly, during the first quarter of 2010, the Company recorded a onetime charge to income tax expense of $1,021,000 related to the write down of its deferred taxasset for RDS.Income tax expense for the three months ended March 31, 2010 is estimated to be approximately$1,475,000 or 110% of total earnings before taxes. For the three months ended March 31, 2009 incometax benefit was estimated to be $399,000 or 39% of total earnings before taxes. Without the writedown of the deferred tax asset, the Company’s effective tax rate was 34% for the three months endedMarch 31, 2010.The Company follows the guidance related to the uncertainty in income taxes. As of March 31, 2010,the Company has no liability for unrecognized tax benefit liability under this guidance. TheCompany does not anticipate that the unrecognized tax benefits will significantly change within thenext twelve months.The Company files income tax returns in the U.S. federal jurisdiction, Mexico and various statejurisdictions. The Company is no longer subject to U.S. federal and state income tax examinationsby tax authorities for the years before 2007 and is subject to income tax examinations by Mexicanauthorities since the Company began business in Mexico in 2001. The Company does not anticipatethat the unrecognized tax benefits will significantly change within the next twelve months. Thereare currently no income tax audits in process.**8. Stock Based Compensation**The Company has a Long Term Equity Incentive Plan (the “2006 Plan”), as approved by theshareholders in May 2006. This 2006 Plan replaced the Long Term Equity Incentive Plan (the“Original Plan”) as originally approved by the shareholders in May 1997 and as amended in May 2000.The 2006 Plan allows for grants to directors, officers and key employees of non-qualified stockoptions, incentive stock options, stock appreciation rights, restricted stock, performance shares,performance units and other incentive awards (“Stock Awards”) up to an aggregate of 3,000,000awards, each representing a right to buy a share of Core Molding Technologies common stock. StockAwards can be granted under the 2006 Plan through the earlier of December 31, 2015, or the date themaximum 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 forthe three months ended March 31, 2010:           Number  Weighted   of  Average   Shares  Exercise Price Outstanding at December 31, 2009  558,825  $3.30 Exercised  —   — Granted  —   — Forfeited  (1,000) $2.75        Outstanding at March 31, 2010  557,825  $3.30        Exercisable at March 31, 2010  521,325  $3.30        
 
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The following summarizes the status of, and changes to, unvested options during the three monthsended March 31, 2010:               Weighted   Number  Average   Of  Exercise   Shares  Price Unvested at December 31, 2009  44,500  $3.29 Granted  —   — Vested  (8,000)  3.28 Forfeited  —   —        Unvested at March 31, 2010  36,500  $3.29        At March 31, 2010 and 2009, there was $48,454 and $122,204, respectively, of total unrecognizedcompensation cost, related to unvested stock options granted under the plans. Total compensationcost related to incentive stock options for the three months ended March 31, 2010 and 2009 was$14,048 and $23,576, respectively. This compensation expense is allocated such that $13,288 and$19,783 are included in selling, general and administrative expenses and $760 and $3,793 arerecorded in cost of sales for the three months ended March 31, 2010 and 2009 respectively.*Restricted Stock*In May of 2006, Core Molding Technologies began granting shares of its common stock to certaindirectors, officers, and key managers in the form of unvested stock (“Restricted Stock”). Theseawards are recorded at the market value of Core Molding Technologies’ common stock on the date ofissuance and amortized ratably as compensation expense over the applicable vesting period.The following summarizes the status of Restricted Stock grants as of March 31, 2010 and changesduring the three months ended March 31, 2010:               Weighted   Number  Average   Of  Grant Date   Shares  Fair Value Unvested balance at December 31, 2009  187,445  $3.91 Granted  —   — Vested  —   — Forfeited  —   —        Unvested balance at March 31, 2010  187,445  $3.91        As of March 31, 2010 and 2009, there was $324,494 and $264,670, respectively, of total unrecognizedcompensation cost related to Restricted Stock granted under the 2006 Plan. The total compensationcosts related to restricted stock grants for the three months ended March 31, 2010 and 2009 was$61,916 and $48,733, respectively.**9. Fair Value of Financial Instruments**The Company’s financial instruments consist of long-term debt, interest rate swaps, accountsreceivable, and accounts payable. The carrying amount of these financial instruments approximatedtheir fair value.In September 2006, the Financial Accounting Standards Board (“FASB”) issued a standard to definefair value, establish a framework for measuring fair value and to expand disclosures about fairvalue measurements. This standard does not change the requirements to apply fair value in existingaccounting standards. Under this standard, fair value refers to the price that would be receivedto sell an asset or paid to transfer a liability in an orderly transaction between marketparticipants in the market in which the reporting entity transacts. The standard clarifies thatfair value should be based on the assumptions market participants would use when pricing the assetor liability.
 
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To increase consistency and comparability in fair value measurements, this standard establishes afair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair valueinto three levels. The level in the fair value hierarchy disclosed is based on the lowest level ofinput that is significant to the fair value measurement. The three levels of the fair valuehierarchy are as follows: **•** Level 1 inputs are quoted prices (unadjusted) in active markets foridentical asset or liabilities that the company has the ability toaccess as of the reporting date.  **•** Level 2 inputs are inputs other than quoted prices included withinLevel 1 that are observable for the asset or liability, eitherdirectly or indirectly through corroboration with observable marketdata.  **•** Level 3 inputs are unobservable inputs, such as internally developedpricing models for the asset or liability due to little or no marketactivity for the asset or liability.The Company’s has three Level 2 fair value measurements all of which relate to the Company’sinterest rate swaps. The Company utilizes interest rate swap contracts to manage its targeted mixof fixed and floating rate debt, and these swaps are valued using observable benchmark rates atcommonly quoted intervals for the full term of the swaps. These interest rate swaps are discussedin detail in Note 6.The following table presents financial liabilities measured and recorded at fair value at theCompany’s Consolidated Balance Sheet on a recurring basis and their level within the fair valuehierarchy as of March 31, 2010 and December 31, 2009:                   (Level 1)  (Level 2)  (Level 3)  March 31, 2010                  Liabilities                Interest rate swaps $—  $271,716  $—  $271,716              Total $—  $271,716  $—  $271,716                                 (Level 1)  (Level 2)  (Level 3)  December 31, 2009                  Liabilities                Interest rate swaps $—  $198,809  $—  $198,809              Total $—  $198,809  $—  $198,809              There were no non-recurring fair value measurements for the quarter ended March 31, 2010.In March 2008, the FASB issued a standard to amend and expand the disclosure requirements ofderivative instruments with the intent to provide users of the financial statements with anenhanced understanding of how and why an entity uses derivative instruments, how these derivativesare accounted for and how the respective reporting entity’s financial statements are affected. TheCompany adopted this standard on January 1, 2009.Core Molding Technologies derivative instruments located on the Consolidated Balance Sheets(unaudited) were as follows:             Liability Derivatives     March 31,  December 31,     2010  2009   Balance Sheet Location Fair Value  Fair Value Derivatives designated as hedging instruments          Interest rate risk activities Interest rate swaps $17,187  $227,482            Derivatives not designated as hedging instruments          Interest rate risk activities Interest rate swaps $254,529  $(28,673)                    Total Derivatives   $271,716  $198,809          
 
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The effect of derivative instruments on the Consolidated Statements of Operations (unaudited) wasas follows:Derivatives in Cash Flow Hedging Relationships                     Amount of Gain (Loss) Location of Gain (Loss)  Amount of Gain (Loss)   Recognized in OCI on Reclassified from AOCI  Reclassified from AOCI   Derivative (Effective into Income (Effective  into Expense (Effective   Portion) Portion)  Portion) Derivatives in Cash Flow March 31, March 31,    March 31,  March 31, Hedging Relationships 2010 2009    2010  2009 Interest rate swaps $10,304 $(6,092)Interest expense, net  $(10,373) $(55,050)               Amount of Gain (Loss) Recognized   Location of Gain (Loss) in Income of Derivative   Recognized in Income on (Ineffective Portion and Amount   Derivative (Ineffective Portion Excluded from Effectiveness Derivatives in SFAS No. 133 Cash Flow and Amount Excluded from Testing) Hedging Relationships Effectivness Testing) March 31, 2010  March 31, 2009 Interest rate swaps Interest expense $—  $10,352 Derivatives not designated as hedging instruments               Amount of Realized/Unrealized   Location of Gain (Loss) Gain (Loss) Recognized in Income Derivatives Not Designated as Hedging Recognized in Income on on Derivatives Instruments Derivatives March 31, 2010  March 31, 2009 Interest rate swaps Interest expense $(96,799) $— During the first quarter of 2010 and 2009, the Company did not reclassify any amounts related toits cash flow hedges from accumulated other comprehensive loss to earnings due to the probabilitythat certain forecasted transactions would not occur. As discussed in Note 6, the Companydiscontinued the use of hedge accounting for two of its interest rate swaps, effective March 31,2009 for the Capex swap and January 1, 2010 for the IRB swap. The Company now records all mark tomarket adjustments related to these interest rate swaps within interest expense in the Company’sConsolidated Statement of Operations, since the date the Company discontinued hedge accounting foreach swap. It is anticipated that during the next twelve months the expiration and settlement ofcash flow hedge contracts along with the amortization of losses on discontinued hedges will resultin income statement recognition of amounts currently classified in accumulated other comprehensiveloss of approximately $54,350, net of taxes.**10. Recent Accounting Pronouncements**In January 2010, the Financial Accounting Standards Board (“FASB”) issued authoritative guidancerelated to improving disclosures about fair value measurements. This guidance requires separatedisclosures of the amounts of transfers in and out of Level 1 and Level 2 fair value measurementsand a description of the reason for such transfers. In the reconciliation for Level 3 fair valuemeasurements using significant unobservable inputs, information about purchases, sales, issuancesand settlements shall be presented separately. These disclosures will be required for interim andannual reporting periods effective January 1, 2010, except for the disclosures related to thepurchases, sales, issuances and settlements in the roll forward activity of Level 3 fair valuemeasurements, which are effective on January 1, 2011. The Company only has Level 2 fair valuemeasurements and the application of this guidance for the period ended March 31, 2010 is discussedin Note 9.
 
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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 of Operationscontains forward-looking statements within the meaning of the federal securities laws. As ageneral 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 report: business conditions in the plastics,transportation, watercraft and commercial product industries; federal and state regulations(including engine emission regulations); general economic, social and political environments in thecountries in which Core Molding Technologies operates; dependence upon two major customers as theprimary source of Core Molding Technologies’ sales revenues; recent efforts of Core MoldingTechnologies to expand its customer base; the actions of competitors, customers, and suppliers;failure of Core Molding Technologies’ suppliers to perform their obligations; the availability ofraw materials; inflationary pressures; new technologies; regulatory matters; labor relations; theloss or inability of Core Molding Technologies to attract and retain key personnel; federal, stateand local environmental laws and regulations; 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; risks related to the transfer of production from Core MoldingTechnologies Columbus facility to its Matamoros facility; management’s decision to pursue newproducts or businesses which involve additional costs, risks or capital expenditures; and otherrisks identified from time-to-time in Core Molding Technologies other public documents on file withthe Securities and Exchange Commission, including those described in Item 1A of the 2009 AnnualReport to Shareholders on**Form 10-K**.***OVERVIEW**Core Molding Technologies is a compounder of sheet molding composite (“SMC”) and molder offiberglass reinforced plastics, primarily for the medium and heavy-duty truck market, whichaccounted for 94% of the Company’s first quarter 2010 sales. Core Molding Technologies produceshigh quality fiberglass reinforced molded products and SMC materials for varied markets, includinglight, medium and heavy-duty trucks, automobiles and automotive aftermarkets, personal watercraft,and other commercial products. The demand for Core Molding Technologies’ products is affected byeconomic conditions in the United States, Canada, and Mexico. Core Molding Technologies’manufacturing operations have a significant fixed cost component. Accordingly, during periods ofchanging demands, the profitability of Core Molding Technologies’ operations may changeproportionately more than 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 Navistar’s truckmanufacturing 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 begancompression molding operations at its second facility in Gaffney, South Carolina, and in October2001, Core Molding Technologies acquired certain assets of Airshield Corporation. As a result ofthis acquisition, Core Molding Technologies expanded its fiberglass molding capabilities to includethe spray up, hand-lay-up open mold processes and resin transfer (“RTM”) closed molding utilizing avacuum infusion process. In September 2004, Core Molding Technologies acquired substantially allthe operating assets of Keystone Restyling Products, Inc., a privately held manufacturer anddistributor of fiberglass reinforced products for the automotive-aftermarket industry. In August2005, Core Molding Technologies acquired certain assets of the Cincinnati Fiberglass Division ofDiversified Glass, Inc., a Batavia, Ohio-based, privately held manufacturer and distributor offiberglass reinforced plastic components supplied primarily to the heavy-duty truck market. TheBatavia, Ohio facility produces reinforced plastic products by a spray-up open mold process andresin transfer molding (“RTM”) utilizing multiple insert tooling (“MIT”) closed mold process. InJune of 2009, theCompany completed construction of its new 437,000 square foot production facility in Matamoros,Mexico that replaced its leased facility. In conjunction with the construction of its newfacility, the Company also added compression molding operations in Matamoros, Mexico.
 
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Core Molding Technologies recorded a net loss for the three months ended March 31, 2010 of$137,000, or $(0.02) per basic and diluted share, compared with a net loss of $637,000, or $(0.09)per basic and diluted share, for the three months ended March 31, 2009. In March 2010, Congresspassed the Patient Protection and Affordable Care Act (“PPACA”) which repealed the tax benefits theCompany previously received related to certain retiree prescription drug costs. As a result ofthis change, the Company reduced its deferred tax asset related to that subsidy and recorded acharge to income tax expense of $1,021,000, resulting in a net loss for the quarter. Without thisone time charge, the Company’s net income for the quarter would have been $884,000 or $0.13 perbasic and diluted share.Additionally, during the three months ended March 31, 2010, the Company incurred and recordedapproximately $320,000 of expenses for transfer costs associated with the move of certain productlines from its Columbus, Ohio production facility to its Matamoros, Mexico production facility andexpects to incur up to $1,680,000 of additional costs during the remainder of 2010. During thethree months ended March 31, 2009, the Company incurred and recorded approximately $1,216,000 ofexpenses for transfer and start-up costs associated with the construction of the Company’s newproduction facility in Mexico.Looking forward, the Company anticipates 2010 sales levels to increase over the 2009 levels asindustry analysts continue to forecast some improvement in truck production for 2010. For thefirst three months of 2010 product sales increased 11% as compared to the same period in 2009.**RESULTS OF OPERATIONS****Three Months Ended March 31, 2010, As Compared To Three Months Ended March 31, 2009**Net sales for the three months ended March 31, 2010, totaled $20,442,000, representing anapproximate 11% increase from the $18,384,000 reported for the three months ended March 31, 2009.Included in total sales are tooling project sales of $746,000 and $554,000 for the three monthsended March 31, 2010 and March 31, 2009, respectively. Tooling project sales result from billingsto customers for molds and assembly equipment built specifically for their products. These salesare sporadic in nature. Total product sales, excluding tooling project sales, were approximately11% higher for the three months ended March 31, 2010, as compared to the same period a year ago.The primary reason for the increase is the higher demand for North American medium and heavy-dutytrucks.Sales to Navistar totaled $11,326,000 for the three months ended March 31, 2010, as compared to$10,360,000 reported for the three months ended March 31, 2009. Included in total sales is$429,000 of tooling sales for the three months ended March 31, 2010 compared to $303,000 for thesame three months in 2009. Product sales to Navistar increased by 8% for the three months endedMarch 31, 2010 versus the same period of the prior year. The primary reason for the increase isthe overall higher demand for North American medium and heavy-duty trucks as compared to thevolumes in the first quarter of 2009.Sales to PACCAR totaled $6,033,000 for the three months ended March 31, 2010, as compared to$4,203,000 reported for the three months ended March 31, 2009. Included in total sales is $245,000of tooling sales for the three months ended March 31, 2010 compared to $12,000 for the same threemonths in 2009. Total product sales to PACCAR increased by 38% for the three months ended March 31,2010 compared to the same period of the prior year. The primary reason for the increase in productsales was due to increased demand for truck models for which the Company provides higher content aswell as higher demand for North American medium and heavy-duty trucks as compared to the volumes inthe first quarter of 2009.Sales to other customers for the three months ended March 31, 2010 decreased to $3,084,000 comparedto $3,821,000 for the three months ended March 31, 2009. Included in total sales is $72,000 oftooling sales for the three months ended March 31, 2010 compared to $239,000 for the same threemonths in 2009. The overall decrease in sales was primarily due to decreases in product sales to acustomer in the marine industry of approximately $656,000 as well as decreases in product sales toa customer in the commercial products industry of $709,000. This was offset by increases inproduct sales to other North American medium and heavy-duty truck manufacturers amounting toapproximately $577,000, as well as additional sales of approximately $260,000 related to a newautomotive customer.
 
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Gross margin was approximately 20.0% of sales for the three months ended March 31, 2010, comparedwith 8.6% for the three months ended March 31, 2009. The Company incurred approximately $313,000 intransition costs related to the movement of product lines from its Columbus, Ohio facility to itMatamoros Mexico facility for the three months ended March 31 2010. For the same period in 2009the Company incurred approximately $1,071,000 of transition and start up costs associated with theCompany’s new production facility in Mexico. These costs had an unfavorable impact of 1.5% and5.8% on gross margin for the three months ended March 31, 2010 and 2009, respectively. Alsocontributing to an increase in gross margin in 2010 was better fixed cost absorption due to higherproduction volumes. Production volumes increased due to increasing inventory levels necessary tosupport the transfer of certain products from the Company’s Columbus facility to its Matamorosfacility and due to higher product sales volumes. The Company’s manufacturing operations havesignificant overhead costs such as certain labor, energy, depreciation, lease expense and certainbenefit costs, including post retirement healthcare costs, which do not change proportionately withproduction.Selling, general and administrative expenses (“SG&A”) totaled $2,326,000 for the three months endedMarch 31, 2010, decreasing from $2,500,000 for the three months ended March 31, 2009. The Companyincurred approximately $7,000 in transition costs related to the movement of product lines from itsColumbus, Ohio production facility to it Matamoros Mexico production facility for the three monthsended March 31, 2010, whereas, in the same period in 2009 the Company incurred approximately$145,000 of transition and start up costs associated with the Company’s new production facility inMexico.Interest expense totaled $420,000 for the three months ended March 31, 2010, compared to interestexpense of $110,000 for the three months ended March 31, 2009. The increase in interest expense isprimarily due to increased borrowings throughout 2009 on the Company’s Capex and Mexican loans tofund construction of its new production facility in Mexico. The Company has two interest rateswaps that are no longer highly effective and therefore all mark to market adjustments are recordedto interest expense. For the three months ended March 31, 2010, the Company incurred $97,000 ininterest expense related to these mark to market adjustments.Income tax expense for the three months ended March 31, 2010 is approximately 110% of totalearnings before taxes. In the three months ended March 31, 2009 income tax benefit wasapproximately 39% of total loss before taxes. The increase in the Company’s effective rate in 2010as compared to 2009 is due to the impact of the write off of certain deferred tax assets of$1,021,000. The deferred tax write off was due to the passage of the PPACA which repealed the taxbenefit associated with certain retiree prescription drug subsidies previously recorded by theCompany. Without this charge the Company’s estimated tax rate was 34% for the three months endedMarch 31, 2010.Core Molding Technologies recorded a net loss for the three months ended March 31, 2010 of $137,000or $(0.02) per basic and diluted share, compared with a net loss of $637,000, or $(0.09) per basicand diluted share, for the three months ended March 31, 2009.**Liquidity and Capital Resources**On March 8, 2010, the Company entered into a fourth amendment (the “Fourth Amendment”) to theCredit Agreement. Pursuant to the terms of the Fourth Amendment, the parties agreed to modifycertain terms of the Credit Agreement. These modifications included (1) modification of thedefinition EBITDA to add back transition costs of up to $2,000,000 associated with the relocationof certain products from the Company’s Columbus, Ohio facility to its Matamoros, Mexico facility(2) modification to the fixed charge definition to exclude capital expenditures of up to $2,000,000associated with the relocation of certain products from the Company’s Columbus, Ohio facility toits Matamoros, Mexico facility; (3) retroactive modification of the amortization schedule of theMexican loan to forgo the principal payment due January 31, 2010 of $1,600,000 as a result of theCompany limiting its borrowing to $6,400,000 instead of the full amount of the loan contemplated($8,000,000); and (4) consent to transfer certain assets of the Company from Columbus, Ohio toMatamoros, Mexico.On May 11, 2010, the Company entered into a fifth amendment (the “Fifth Amendment”) to the CreditAgreement. Pursuant to the terms of the Fifth Amendment, the parties agreed to modify certainterms of the Credit Agreement. These modifications included (1) decrease in the applicable marginfor interest rates to 275 basis points from 375 basis points for the Capex and Mexican loans andthe revolving line of credit, effective May 11, 2010 (2) extension of the commitment for therevolving line of credit to April 30, 2012. Previous amendments are disclosed in Core MoldingTechnologies 2009 Annual Report on Form 10-K.
 
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The Company’s primary sources of funds have been cash generated from operating activities andborrowings from third parties. Primary cash requirements are for operating expenses and capitalexpenditures.Cash used in operating activities for the three months ended March 31, 2010 totaled $4,000.Non-cash decreases of deferred tax assets and deductions of depreciation and amortizationcontributed $1,021,000 and $990,000, respectively, to operating cash flow. In addition, the netincrease in the postretirement healthcare benefits liability of $302,000 is not a current cashobligation. Changes in working capital decreased cash provided by operating activities by$2,217,000. Changes in working capital primarily relate to an increase in inventory of $3,238,000,due to increased finished goods inventory on hand at March 31, 2010 built to support customerrequirements during the transition of certain production lines from the Company’s Columbus Ohiofacility to its Matamoros, Mexico facility. Also negatively impacting working capital were higheraccounts receivable balances, due to increases in product sales. Partially offsetting the increasein working capital were increases in other accrued liabilities, primarily related to the timing ofcertain payments in the first quarter of 2010.Cash used in investing activities for the three months ended March 31, 2010 was $753,000, primarilyrepresenting capital improvements to our Matamoros facility to support product lines being movedfrom Columbus, Ohio to that facility. The Company currently plans to spend an additional$3,600,000 of capital expenditures for the remainder of 2010. These capital expenditures will befunded by cash from operations and borrowings on the Company’s line of credit. The Company mayalso undertake other capital improvement projects in the future as deemed necessary andappropriate.Financing activities decreased cash for the three months ended March 31, 2010 by $915,000. Thisdecrease was a result of repayments of principal on the Company’s Capex loan of $429,000, term loanof $321,000 and industrial revenue bond of $165,000.At March 31, 2010, the Company had cash on hand of $2,470,000 and a line of credit of $8,000,000,with a scheduled maturity of April 30, 2011. At March 31, 2010, Core Molding Technologies had nooutstanding borrowings on the line of credit.The Company is required to meet certain financial covenants included in its financing agreementswith respect to leverage ratios, fixed charge ratios, capital expenditures as well as othercustomary affirmative and negative covenants. As of March 31, 2010, the Company was in compliancewith all financial debt covenants.Based on the Company’s forecasts which are primarily based on industry analysts’ estimates of heavyand medium-duty truck production volumes as well as other assumptions management believes to bereasonable, management believes that the Company will be able to maintain compliance with thecovenants included in its financing agreements, as amended, for the next 12 months. Managementbelieves that cash flow from operating activities together with available borrowings under theCredit Agreement will be sufficient to meet the Company’s liquidity needs. However, if a materialadverse change in the financial position of the Company should occur, or if actual sales orexpenses are substantially different than what has been forecasted, the Company’s liquidity andability to obtain further financing to fund future operating and capital requirements could benegatively impacted.**Recent Accounting Pronouncements**In January 2010, the Financial Accounting Standards Board (“FASB”) issued authoritative guidancerelated to improving disclosures about fair value measurements. This guidance requires separatedisclosures of the amounts of transfers in and out of Level 1 and Level 2 fair value measurementsand a description of the reason for such transfers. In the reconciliation for Level 3 fair valuemeasurements using significant unobservable inputs, information about purchases, sales, issuancesand settlements shall be presented separately. These disclosures will be required for interim andannual reporting periods effective January 1, 2010, except for the disclosures related to thepurchases, sales, issuances and settlements in the roll forward activity of Level 3 fair valuemeasurements, which are effective on January 1, 2011. The Company only has Level 2 fair valuemeasurements and the application of this guidance for the period ended March 31, 2010 is discussedin Note 9.
 
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**Critical Accounting Policies and Estimates**The foregoing Management’s Discussion and Analysis of Financial Condition and Results of Operationsdiscusses the Company’s consolidated financial statements, which have been prepared in accordancewith accounting principles generally accepted in the United States. The preparation of theCompany’s consolidated financial statements requires management to make estimates and assumptionsthat affect the reported amounts of assets and liabilities and the disclosure of contingent assetsand liabilities at the date of the consolidated financial statementsand the reported amounts of revenues and expenses during the reporting period. On an on-goingbasis, management evaluates its estimates and judgments, including those related to accountsreceivable, inventories, post retirement benefits, workers compensation reserves, self-insuredhealthcare reserves and income taxes. Management bases its estimates and judgments on historicalexperience 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 andliabilities that are not readily apparent from other sources. Actual results may differ from theseestimates 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 forestimated losses resulting from the inability of its customers to make required payments. If thefinancial condition of the Company’s customers were to deteriorate, resulting in an impairment oftheir ability to make payments, additional allowances may be required. The Company recorded anallowance for doubtful accounts of $112,000 at March 31, 2010 and $113,000 at December 31, 2009.Management also records estimates for customer returns and deductions, discounts offered tocustomers, and for price adjustments. Should customer returns and deductions, discounts, and priceadjustments fluctuate from the estimated amounts, additional allowances may be required. TheCompany has reduced accounts receivable for chargebacks of $608,000 at March 31, 2010 and $519,000at December 31, 2009.***Inventories:***Inventories, which include material, labor and manufacturing overhead, are valued atthe 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 historicaland anticipated usage.***Goodwill and Long-Lived Assets:***Management evaluates whether impairment exists for goodwill andlong-lived assets annually on December 31 or at interim periods if an indicator of impairmentexists. Should actual results differ from the assumptions used to determine impairment, additionalprovisions may be required. If there is a sustained downturn in the economy or the disruption ofthe financial and credit markets continues, demand for our products could fall below our currentexpectations and our forecasts of revenues and operating results could decline. Impairment chargesof our goodwill or long-lived assets may be required in the future if our expected future cashflows decline. The Company has not recorded any impairment to goodwill or long-lived assets forthe three months ended March 31, 2010 or the year ended December 31, 2009. A 10% decrease infuture cash flows would not adversely impact the net book value of goodwill and a 1% increase inthe rate used to discount future cash flows would not adversely impact the net book value ofgoodwill.***Self-Insurance:***The Company is self-insured with respect to most of its Columbus and Batavia, Ohioand Gaffney, South Carolina medical and dental claims and Columbus and Batavia, Ohio workers’compensation claims. The Company has recorded an estimated liability for self-insured medical anddental claims incurred but not reported and worker’s compensation claims incurred but not reportedat March 31, 2010 and December 31, 2009 of $987,000 and $944,000, respectively.***Post retirement benefits:***Management records an accrual for postretirement costs associated withthe health care plan sponsored by Core Molding Technologies. Should actual results differ from theassumptions 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 CoreMolding Technologies’ operations. The effect of a change in healthcare costs is described in Note10 of the Notes to Consolidated Financial Statements, which are contained in the 2009 Annual Reportto Shareholders. Core Molding Technologies recorded a liability for postretirement healthcarebenefits based on actuarially computed estimates of $19,017,000 at March 31, 2010 and $18,744,000at December 31, 2009.
 
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***Revenue Recognition:***Revenue from product sales is recognized at the time products are shippedand title transfers. Allowances for returned products and other credits are estimated and recordedas revenue is recognized. Tooling revenue is recognized when the customer approves the tool andaccepts ownership. Progress billings and expenses are shown net as an asset or liability on theCompany’s balance sheet. Tooling in progress can fluctuate significantly from period to period andis dependent upon the stage of tooling projects and the related billing and expense paymenttimetable for individual projects and therefore does not necessarily reflect projected income orloss from tooling projects. At March 31, 2010 the Company has recorded a net liability related totooling in progress of $1,389,000, which represents approximately $5,094,000 of progress toolingbillings and $3,705,000 of progress tooling expenses. At December 31, 2009 the Company hadrecorded a net liability related to tooling in progress of$485,000, which represents approximately $2,424,000 of progress tooling billings and $1,939,000 ofprogress tooling expenses.***Income taxes:***The Consolidated Balance Sheet at March 31, 2010 and December 31, 2009, includes adeferred tax asset of $6,732,000 and $7,767,000, respectively. The Company performs analyses toevaluate the balance of deferred tax assets that will be realized. Such analyses are based on thepremise that the Company is, and will continue to be, a going concern and that it is more likelythan not that deferred tax benefits will be realized through the generation of future taxableincome. For more information, refer to Note 9 of the Notes to Consolidated Financial Statements,which are contained in the 2009 Annual Report 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 six items that are sensitive to market risks: (1)Industrial Revenue Bond (“IRB”) with a variable interest rate (although the Company has an interestrate swap to fix the interest rate at 4.89%); (2) Revolving Line of Credit and Mexican loan payableunder the Credit Agreement, each of which bears a variable interest rate; (3) Capex loan payablewith a variable interest rate (although the Company has an interest rate swap to fix the variableportion of the applicable interest rate at 2.3%) (4) bank Term loan under the Credit Agreement,with a variable interest rate (although the Company has an interest rate swap to fix the interestrate at 5.75%); (5) foreign currency purchases in which the Company purchases Mexican pesos withUnited States dollars to meet certain obligations that arise due to operations at the facilitylocated in Mexico; and (6) raw material purchases in which Core Molding Technologies purchasesvarious resins for use in production. The prices of these resins are affected by the prices ofcrude 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 effect on operatingmargins.Assuming a hypothetical 10% change in short-term interest rates would impact the Company in both2010 and 2009. It would have impacted the interest paid on the Company’s Line of Credit and theMexican loan payable. The interest rate on these loans is impacted by LIBOR. Although a 10%change in short-term interest rates would impact the interest paid by the Company, it would nothave a material effect on earnings before tax.A 10% change in future interest rate curves would significantly impact the fair value of theCompany’s interest rate swaps.
 
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**Part I — Financial Information****Item 4T****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 2009 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.** **(Removed and Reserved)** **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.