Table of Contents

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 11-K

 


 

ANNUAL REPORT

Pursuant to Section 15(d) of the

Securities Exchange Act of 1934

 

For the fiscal year ended December 31, 2013

 

Commission File Number 1-5828

 


 

SAVINGS PLAN OF CARPENTER TECHNOLOGY
CORPORATION EFFECTIVE JANUARY 1, 2012

(Full title of the plan)

 

CARPENTER TECHNOLOGY CORPORATION

(Name of issuer of the securities held pursuant to the plan)

 


 

P.O. Box 14662

Reading, Pennsylvania, 19610

(Address of principal executive office of the issuer)

 

 

 



Table of Contents

 

Savings Plan of Carpenter Technology Corporation Effective January 1, 2012

Table of Contents

December 31, 2013 and 2012

 

 

 

Page

 

 

 

Report of Independent Registered Public Accounting Firm

 

1

 

 

 

Financial Statements:

 

 

 

 

 

Statements of Net Assets Available for Benefits as of December 31, 2013 and 2012

 

2

 

 

 

Statement of Changes in Net Assets Available for Benefits for the Year Ended December 31, 2013

 

3

 

 

 

Notes to Financial Statements

 

4-17

 

 

 

Supplementary Information:

 

 

 

 

 

Schedule H, Line 4(i) - Schedule of Assets (Held at End of Year) as of December 31, 2013

 

18

 



Table of Contents

 

Report of Independent Registered Public Accounting Firm on the

Financial Statements and Supplementary Schedule

 

To the Participants and Administrator of the Savings Plan of Carpenter Technology Corporation Effective January 1, 2012

 

We have audited the accompanying statements of net assets available for benefits of the Savings Plan of Carpenter Technology Corporation Effective January 1, 2012 (the “Plan”) as of December 31, 2013 and 2012, and the related statement of changes in net assets available for benefits for the year ended December 31, 2013.  These financial statements are the responsibility of the Plan’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2013 and 2012, and the changes in net assets available for benefits for the year ended December 31, 2013, in conformity with accounting principles generally accepted in the United States of America.

 

Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole.  The supplementary schedule of assets (held at end of year) as of December 31, 2013 is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974.  The supplementary schedule is the responsibility of the Plan’s management.  The supplementary schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

 

/s/ ParenteBeard LLC

 

 

 

Reading, Pennsylvania

 

June 27, 2014

 

 

1



Table of Contents

 

Savings Plan of Carpenter Technology Corporation Effective January 1, 2012

Statements of Net Assets Available for Benefits

December 31, 2013 and 2012

 

 

 

2013

 

2012

 

Investments, at fair value:

 

 

 

 

 

Registered investment companies

 

$

39,275,212

 

$

27,939,457

 

Interest in Carpenter Technology Master Trust Fund

 

5,868,757

 

5,528,752

 

Total investments

 

45,143,969

 

33,468,209

 

Notes receivable from participants

 

1,207,580

 

921,189

 

Net assets reflecting investments at fair value

 

46,351,549

 

34,389,398

 

Adjustment from fair value to contract value for fully benefit-responsive investment contracts

 

(51,770

)

(197,871

)

Net assets available for benefits

 

$

46,299,779

 

$

34,191,527

 

 

See accompanying notes to financial statements.

 

2



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Savings Plan of Carpenter Technology Corporation Effective January 1, 2012

Statement of Changes in Net Assets Available for Benefits

Year Ended December 31, 2013

 

Investment income:

 

 

 

Net appreciation in fair value of registered investment companies

 

$

5,750,466

 

Interest in Carpenter Technology Master Trust Fund income

 

134,781

 

Dividends

 

734,143

 

Total investment income

 

6,619,390

 

Interest income from notes receivable from participants

 

46,217

 

Contributions:

 

 

 

Participant

 

3,320,340

 

Participant rollover

 

1,403,307

 

Employer

 

4,078,952

 

Total contributions

 

8,802,599

 

Transfers in

 

221,866

 

Benefits paid to participants

 

(3,556,192

)

Administrative expenses

 

(25,628

)

Net increase

 

12,108,252

 

Net assets available for benefits, beginning of year

 

34,191,527

 

Net assets available for benefits, end of year

 

$

46,299,779

 

 

See accompanying notes to financial statements.

 

3



Table of Contents

 

Savings Plan of Carpenter Technology Corporation Effective January 1, 2012

Notes to Financial Statements

December 31, 2013 and 2012

 

1.              Description of the Plan

 

The following description of the Savings Plan of Carpenter Technology Corporation Effective January 1, 2012 (the “Plan”) provides general information.  A more complete description of the Plan’s provisions can be found in the plan document, which is available to participants upon request from Carpenter Technology Corporation, or any participating affiliate (collectively referred to as the “Company”).

 

General

 

The Plan is a profit-sharing and stock bonus plan which covers substantially all domestic non-union employees of the Company hired or rehired after December 31, 2011.  The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).

 

Contributions

 

Each year, participants may contribute up to 100% of annual compensation on a pre-tax basis, and up to 100% of annual compensation on an after-tax basis, as defined by the plan document.  The combined contributions cannot exceed 100% of annual compensation on both a pre-tax and after-tax basis.  Participants who have attained age 50 before the end of the plan year are eligible to make “catch-up contributions”, which are additional pre-tax contributions.  Participants may also contribute amounts representing rollover distributions from other qualified pension plans.  Participant contributions to the Plan are recorded in the period that payroll deductions are made from the participants.  The Company contributes an amount equal to 3% of each employee’s base pay, as well as a matching contribution of up to 6% of each employee’s base pay, as defined by the plan document.  Participants direct the investment of all contributions into various investment options offered by the Plan.  Contributions are subject to certain limitations.

 

Participant Accounts

 

Each participant’s account is credited with the participant’s contribution, the Company’s contribution on behalf of the participant and an allocation of plan earnings based on account balances, as defined.  Effective July 1, 2012, each participant’s account is charged with a $20 annual fee for recordkeeping administration, and participants invested in the Carpenter Technology Stock Fund are charged an administrative fee based on the fund balance.  The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

 

4



Table of Contents

 

Savings Plan of Carpenter Technology Corporation Effective January 1, 2012

Notes to Financial Statements

December 31, 2013 and 2012

 

1.              Description of the Plan (continued)

 

Vesting

 

All contributions and plan earnings thereon are immediately and fully vested and non-forfeitable.

 

Notes Receivable from Participants

 

Participants may borrow from their accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 minus the amount of the highest outstanding loan balance on any plan loan during the preceding twelve months, or 50% of their vested account balance minus the current outstanding balance on any other plan loan.  Terms range from one to five years for a general purpose loan, and one to ten years for a primary residence loan.  The loans are secured by the balance in the participant’s account and bear interest at rates that range from 4.25% to 5.50% at December 31, 2013, which represents the Prime Rate on the last business day of the month preceding the month in which the loan was distributed plus 1%.  Principal and interest are paid ratably through semi-monthly payroll deductions.

 

Payment of Benefits

 

Benefits paid to participants include participant withdrawals and participant distributions.  Participant withdrawals include hardship withdrawals, non-hardship withdrawals and withdrawals after age 59½.  Participant withdrawals are subject to certain restrictions as defined by the plan document.  Upon termination of service due to death, disability, retirement, or other reasons, participants are eligible to receive a lump sum distribution.  A participant may elect to defer such distribution provided the account balance is at least $5,000.  The total distribution of benefits to all separated participants must occur by April 1st of the year following the year in which the participant attains age 70½.  The payment of benefits from the Carpenter Technology Stock Fund is made in shares of the Company’s common stock or cash, at the participant’s option.  All other payments of benefits are made in cash.

 

Transfers

 

Transfers represent transfers to or from one or more other qualified benefit plans of the Company.

 

5



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Savings Plan of Carpenter Technology Corporation Effective January 1, 2012

Notes to Financial Statements

December 31, 2013 and 2012

 

2.              Summary of Significant Accounting Policies

 

Basis of Accounting

 

The financial statements of the Plan are prepared on the accrual method of accounting

 

Investment contracts held by a defined contribution plan are required to be reported at fair value.  However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan.  A portion of the Plan’s assets are invested in fully benefit-responsive investment contracts through its investment in the Standish Mellon Stable Value Fund within the Carpenter Technology Master Trust Fund.

 

The Statements of Net Assets Available for Benefits present the fair value of the investment contracts as well as the adjustment of the fully benefit-responsive contracts from fair value to contract value.  The Statement of Changes in Net Assets Available for Benefits is prepared on a contract value basis.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and changes therein, and disclosure of contingent assets and liabilities.  Actual results could differ from those estimates.

 

Investment Valuation and Income Recognition

 

The Plan’s investments are stated at fair value.  Fair value is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  See Note 3 for a detailed discussion of fair value measurements.

 

Purchases and sales of investments are recorded on a trade-date basis.  Interest income is recorded on the accrual basis.  Dividends are recorded on the ex-dividend date.  Net appreciation includes the gains and losses on investments bought and sold as well as held during the year.

 

Notes Receivable from Participants

 

Notes receivable from participants are measured at their unpaid principal balance plus any accrued but unpaid interest.  Delinquent notes receivable are recorded as distributions based upon the terms of the plan document.

 

6



Table of Contents

 

Savings Plan of Carpenter Technology Corporation Effective January 1, 2012

Notes to Financial Statements

December 31, 2013 and 2012

 

2.              Summary of Significant Accounting Policies (continued)

 

Administrative Expenses

 

The Plan’s assets are administered under a contract with The Vanguard Group (the “Trustee”).  The Trustee invests funds received from contributions, investment sales, interest and dividend income and makes benefit payments to participants.  Transaction fees and certain administrative fees are paid by the participant.  The remaining administrative fees are netted against investment income in the Statement of Changes in Net Assets Available for Benefits.  All other fees are paid by the Company.

 

Payment of Benefits

 

Benefit payments to participants are recorded when paid.

 

3.     Fair Value Measurements

 

The Plan measures its investments at fair value on a recurring basis in accordance with accounting principles generally accepted in the United States of America.  Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  The framework that the authoritative guidance establishes for measuring fair value includes a hierarchy used to classify the inputs used in measuring fair value.  The hierarchy prioritizes the inputs used in determining valuations into three levels.  The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement.  The levels of the fair value hierarchy are as follows:

 

Level 1 — Fair value is based on unadjusted quoted prices in active markets that are accessible to the Plan for identical assets.  These generally provide the most reliable evidence and are used to measure fair value whenever available.

 

Level 2 — Fair value is based on significant inputs, other than Level 1 inputs, that are observable either directly or indirectly for substantially the full term of the asset through corroboration with observable market data.  Level 2 inputs include quoted market prices in active markets for similar assets or liabilities, quoted market prices in inactive markets for identical or similar assets and other observable inputs.

 

Level 3 — Fair value is based on significant unobservable inputs.  Examples of valuation methodologies that result in Level 3 classification include option pricing models, discounted cash flows and similar techniques.

 

7



Table of Contents

 

Savings Plan of Carpenter Technology Corporation Effective January 1, 2012

Notes to Financial Statements

December 31, 2013 and 2012

 

3.              Fair Value Measurements (continued)

 

Following is a description of the valuation methodologies used for assets measured at fair value.  There have been no changes in the methodologies used at December 31, 2013 and 2012.

 

Registered Investment Companies:  Valued at closing price reported on the active market on which the individual securities are traded.  These funds are required to publish their daily net asset value (NAV) and to transact at that price.

 

Carpenter Technology Master Trust Fund:

 

Carpenter Technology Stock Fund - Valued at closing price of the Company’s common stock as reported on the active market on which the securities are traded.

 

Standish Mellon Stable Value Fund - Valued at the NAV of units of the fund.  This fund invests in high credit quality fixed income securities within contracts that are intended to minimize market volatility and guaranteed investment contracts (“GICs”) issued by financial institutions which are backed by investment-grade, fixed-income securities and bond mutual funds and money market securities.  There are no unfunded commitments or significant redemption restrictions.  The NAV is based on the fair value of the underlying assets which consists of short-term investment funds, Traditional GICs, Fixed Maturity Synthetic GICs and Constant Duration Synthetic GICs as follows:

 

·                  Short-term investment funds are valued based on quoted market values reported on active markets on which the individual securities are traded.

 

·                  Traditional GICs are unsecured, general account obligations of insurance companies backed by the general account assets of the insurance company that writes the investment contract. The fair values for traditional GICs are calculated using the present value for the contract’s future cash flows discounted by comparable duration.

 

·                  Fixed maturity synthetic GICs consist of an asset or collection of assets that are owned by the fund and a benefit responsive, book value wrap contract purchased for the portfolio. The fair values of the book value wrap contracts are not considered material to the overall valuation of the underlying contracts.  Underlying assets consist of bond funds, U.S. Government securities, mortgage backed securities and other securities.  The fair values for fixed maturity GICs are calculated using the sum, of all the underlying assets market values based on market values reported on active markets on which the individual securities are traded.  However, the individual contracts are not actively traded.

 

8



Table of Contents

 

Savings Plan of Carpenter Technology Corporation Effective January 1, 2012

Notes to Financial Statements

December 31, 2013 and 2012

 

3.              Fair Value Measurements (continued)

 

·                  Constant duration synthetic GICs consist of a portfolio of securities owned by the fund and a benefit responsive, book value wrap contract purchased for the portfolio.  The fair values of the book value wrap contracts are not considered material to the overall valuation of the underlying contracts.  Underlying assets consist of bond funds, U.S. Government securities, mortgage backed securities and asset backed securities.  The fair values for constant duration synthetic GICs are determined by reference to the net asset values reported by the investment managers holding the funds.

 

The preceding methods may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values.  Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

 

The following table sets forth by level, within the fair value hierarchy, the Plan’s assets at fair value as of December 31, 2013 and 2012.  Information for the Plan’s investment in the Carpenter Technology Master Trust can be found in Note 5.

 

2013

 

Level 1

 

Balanced funds

 

$

23,626,624

 

Bond funds

 

1,606,785

 

Domestic equity funds

 

10,474,559

 

International equity funds

 

2,958,488

 

Money market funds

 

608,756

 

Total assets excluding plan interest in Master Trust, at fair value

 

$

39,275,212

 

 

2012

 

Level 1

 

Balanced funds

 

$

16,812,779

 

Bond funds

 

1,386,811

 

Domestic equity funds

 

7,791,812

 

International equity funds

 

1,948,026

 

Money market funds

 

29

 

Total assets excluding plan interest in Master Trust, at fair value

 

$

27,939,457

 

 

9



Table of Contents

 

Savings Plan of Carpenter Technology Corporation Effective January 1, 2012

Notes to Financial Statements

December 31, 2013 and 2012

 

4.              Investments

 

The following table presents investments that represent 5% or more of the Plan’s net assets at December 31:

 

 

 

2013

 

2012

 

Vanguard Target Retirement 2020 Fund

 

$

4,730,905

 

$

3,779,117

 

Vanguard Target Retirement 2030 Fund

 

$

4,517,906

 

$

3,459,691

 

Vanguard Target Retirement 2035 Fund

 

$

3,011,180

 

*

 

Vanguard Institutional Index Fund; Institutional Shares

 

$

2,934,313

 

$

2,059,239

 

Vanguard Target Retirement 2025 Fund

 

$

2,765,513

 

$

2,104,793

 

Wasatch Core Growth Fund; Institutional Class Shares

 

$

2,484,775

 

$

2,880,049

 

Vanguard Target Retirement 2040 Fund

 

$

2,337,600

 

*

 

American Funds EuroPacific Growth Fund; Class R-6

 

*

 

$

1,910,249

 

 


* does not represent 5% of investments for this year

 

5.              Investment in the Carpenter Technology Master Trust Fund

 

The Carpenter Technology Master Trust Fund (the “Master Trust”) holds certain investments of the Company’s participating plans, which include the Plan, the Savings Plan of Carpenter Technology Corporation, the Savings Plan of Amega West Services, LLC, and the Latrobe Steel Company Voluntary Investment Program.  The Master Trust maintains a separate account for each of the participating Plans’ assets and liabilities held.  As of December 31, 2013 and 2012, the Plan’s undivided interest in the net assets of the Master Trust was 3.9% and 3.2%, respectively.

 

The Master Trust is invested in two funds — the Carpenter Technology Stock Fund and the Standish Mellon Stable Value Fund.

 

Carpenter Technology Stock Fund:  The Carpenter Technology Stock Fund holds investments in the common stock of the Company.

 

Standish Mellon Stable Value Fund:  This fund is invested in fully benefit-responsive investment contracts.  There were no reserves against contract value for credit risk of the underlying investments of the fund.  The crediting interest rate was based on a formula agreed upon with the various issuers.  The fully benefit-responsive investments had minimum crediting interest rates, which reset periodically.

 

10



Table of Contents

 

Savings Plan of Carpenter Technology Corporation Effective January 1, 2012

Notes to Financial Statements

December 31, 2013 and 2012

 

5.              Investment in the Carpenter Technology Master Trust Fund (continued)

 

Certain events limited the ability to transact at contract value with the various issuers.  Such events included the following: (1) amendments to the plan documents (including complete or partial plan termination or merger with another plan), (2) changes to plan’s prohibition on competing investment options or deletion of equity wash provisions, (3) bankruptcy of the plan sponsor or other plan sponsor events (for example, divestitures or spin-offs of a subsidiary) that cause a significant withdrawal from the plan, or (4) the failure of the trust to qualify for exemption from federal income taxes or any required prohibited transaction exemption under ERISA.  The Company does not believe that any events which would limit the plan’s ability to transact at contract value with participants are probable of occurring.

 

The underlying fully benefit-responsive investment contracts did not permit the insurance companies to terminate the agreements prior to the scheduled maturity dates.

 

Average Yields of Standish Mellon Stable Value Fund:

 

2013

 

2012

 

Based on actual earnings

 

1.90

%

2.07

%

Based on interest rate credited to participants

 

1.88

%

2.18

%

 

11



Table of Contents

 

Savings Plan of Carpenter Technology Corporation Effective January 1, 2012

Notes to Financial Statements

December 31, 2013 and 2012

 

5.              Investment in the Carpenter Technology Master Trust Fund (continued)

 

The total assets of the Master Trust were as follows as of December 31, 2013 and 2012:

 

 

 

2013

 

2012

 

Investments, at fair value:

 

 

 

 

 

Standish Mellon Stable Value Fund

 

 

 

 

 

Monumental Life (Aegon)

 

$

28,675,049

*

$

30,416,690

*

ING Life & Annuity Co (MCA 60410)

 

17,848,456

*

 

Prudential (GA-62204)

 

17,759,487

*

9,449,061

*

United of Omaha

 

17,041,490

*

10,348,107

*

Bank of New York Mellon

 

5,597,222

 

19,080,500

*

Prudential (GA-62222)

 

2,521,232

 

 

Natixis Financial Products

 

 

29,536,032

*

ING Life & Annuity Co (IUS0410)

 

 

1,617,345

 

Total Standish Mellon Stable Value Fund

 

89,442,936

 

100,447,735

 

Carpenter Technology Corporation Stock Fund

 

59,929,603

*

67,848,968

*

Assets in Master Trust, reflecting investments at fair value

 

149,372,539

 

168,296,703

 

Adjustment from fair value to contract value for fully benefit-responsive investment contracts

 

(819,122

)

(3,627,785

)

Net assets in Master Trust

 

$

148,553,417

 

$

164,668,918

 

 


* represents 5% of investments

 

Plan interest in Master Trust, at fair value

 

$

5,868,757

 

$

5,528,752

 

Adjustment from fair value to contract value for fully benefit-responsive investment contracts

 

(51,770

)

(197,871

)

Plan interest in Master Trust

 

$

5,816,987

 

$

5,330,881

 

 

12



Table of Contents

 

Savings Plan of Carpenter Technology Corporation Effective January 1, 2012

Notes to Financial Statements

December 31, 2013 and 2012

 

5.              Investment in the Carpenter Technology Master Trust Fund (continued)

 

The total investment income of the Master Trust for the year ended December 31, 2013 was as follows:

 

Net appreciation in fair value of investments:

 

 

 

Carpenter Technology Corporation Stock Fund

 

$

11,373,746

 

Interest and dividends:

 

 

 

Standish Mellon Stable Value Fund

 

1,553,478

 

Carpenter Technology Corporation Stock Fund

 

802,052

 

Total investment income

 

$

13,729,276

 

 

The change in the total assets of the Master Trust for 2013 was as follows:

 

Investment income:

 

 

 

Net appreciation in fair value of investments

 

$

11,373,746

 

Interest and dividends

 

2,355,530

 

Total investment income

 

13,729,276

 

Net transfers

 

(29,844,777

)

Net decrease

 

(16,115,501

)

Net assets available for benefits, beginning of year

 

164,668,918

 

Net assets available for benefits, end of year

 

$

148,553,417

 

 

13



Table of Contents

 

Savings Plan of Carpenter Technology Corporation Effective January 1, 2012

Notes to Financial Statements

December 31, 2013 and 2012

 

5.              Investment in the Carpenter Technology Master Trust Fund (continued)

 

The following tables set forth by level, within the fair value hierarchy, the Master Trust’s assets at fair value as of December 31, 2013 and 2012:

 

2013 

 

Level 1

 

Level 2

 

Total

 

Carpenter Technology Stock Fund

 

$

59,929,603

 

$

 

$

59,929,603

 

Standish Mellon Stable Value Fund

 

 

 

 

 

 

 

Short-term investment funds

 

5,597,222

 

 

5,597,222

 

Traditional GICs

 

 

2,521,232

 

2,521,232

 

Fixed maturity synthetic GICs:

 

 

 

 

 

 

 

Corporate bonds

 

 

351,890

 

351,890

 

U.S. Government securities

 

 

14,690,493

 

14,690,493

 

Mortgage backed securities

 

 

945,924

 

945,924

 

Other securities

 

 

1,053,183

 

1,053,183

 

Constant duration synthetic GICs:

 

 

 

 

 

 

 

Corporate bonds

 

 

33,844,614

 

33,844,614

 

U.S. Government securities

 

 

10,225,683

 

10,225,683

 

Mortgage backed securities

 

 

11,835,572

 

11,835,572

 

Asset backed securities

 

 

8,377,123

 

8,377,123

 

Total Standish Mellon Stable Value Fund

 

5,597,222

 

83,845,714

 

89,442,936

 

Total Carpenter Technology Master Trust

 

$

65,526,825

 

$

83,845,714

 

$

149,372,539

 

 

14



Table of Contents

 

Savings Plan of Carpenter Technology Corporation Effective January 1, 2012

Notes to Financial Statements

December 31, 2013 and 2012

 

5.              Investment in the Carpenter Technology Master Trust Fund (continued)

 

2012 

 

Level 1

 

Level 2

 

Total

 

Carpenter Technology Stock Fund

 

$

67,848,968

 

$

 

$

67,848,968

 

Standish Mellon Stable Value Fund

 

 

 

 

 

 

 

Short-term investment funds

 

19,080,500

 

 

19,080,500

 

Traditional GICs

 

 

1,617,345

 

1,617,345

 

Fixed maturity synthetic GICs:

 

 

 

 

 

 

 

Corporate bonds

 

 

475,549

 

475,549

 

U.S. Government securities

 

 

6,542,926

 

6,542,926

 

Mortgage backed securities

 

 

2,194,907

 

2,194,907

 

Other securities

 

 

1,134,725

 

1,134,725

 

Constant duration synthetic GICs:

 

 

 

 

 

 

 

Corporate bonds

 

 

31,133,787

 

31,133,787

 

U.S. Government securities

 

 

11,367,401

 

11,367,401

 

Mortgage backed securities

 

 

14,908,744

 

14,908,744

 

Asset backed securities

 

 

11,991,851

 

11,991,851

 

Total Standish Mellon Stable Value Fund

 

19,080,500

 

81,367,235

 

100,447,735

 

Total Carpenter Technology Master Trust

 

$

86,929,468

 

$

81,367,235

 

$

168,296,703

 

 

6.              Related Party and Party-in-Interest Transactions

 

Certain of the Plan’s investments are managed by the Trustee, and therefore, these transactions qualify as party-in-interest transactions.  Additionally, the Plan issues loans to participants, which are secured by the participants’ account balances.  These transactions qualify as party-in-interest.  Fees paid by the Plan in 2013 to the Trustee for investment management services related to these funds totaled $18,380.

 

The Carpenter Technology Stock Fund held in the Master Trust at December 31, 2013 is invested in shares of Carpenter Technology Corporation, the Plan Sponsor, therefore these transactions qualify as related party and party-in-interest transactions.  Fees paid to the Trustee by the Plan in 2013 for investment management services related to this fund totaled $269.  In addition, total purchases and sales, at market value, for 2013 were $168,103 and $42,958 respectively.  The Carpenter Technology Stock Fund included 3,469 and 969 of equivalent shares with a share price of $62.20 and $51.63 as of December 31, 2013 and 2012, respectively.

 

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Table of Contents

 

Savings Plan of Carpenter Technology Corporation Effective January 1, 2012

Notes to Financial Statements

December 31, 2013 and 2012

 

6.              Related Party and Party-in-Interest Transactions (continued)

 

Certain administrative functions of the Plan are performed by officers or employees of the Company.  No such officer or employee receives compensation from the Plan.

 

7.              Plan Termination

 

Although it has not expressed any intent to do so, the Company has the right to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA.  In the event of plan termination, participants will remain fully vested in their accounts.

 

8.              Tax Status

 

The determination letter for the Plan is due to be filed no later than January 2016.  Although the Plan has not received a determination letter, the plan administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code and therefore believes that the Plan is qualified and the related trust is tax exempt.

 

Accounting principles generally accepted in the United States of America require management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the Internal Revenue Service.  The plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2013, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements.  The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.

 

9.              Risks and Uncertainties

 

The Plan invests in various investment securities.  Investment securities are exposed to various risks such as interest rate, market, and credit risks.  Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the Statements of Net Assets Available for Benefits.

 

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Table of Contents

 

Savings Plan of Carpenter Technology Corporation Effective January 1, 2012

Notes to Financial Statements

December 31, 2013 and 2012

 

10.       Reconciliation of Financial Statements to Form 5500

 

The following is a reconciliation of net assets available and total investment income per the financial statements to the Form 5500:

 

 

 

December 31,

 

December 31,

 

 

 

2013

 

2012

 

Net assets available for benefits, at contract value, per the financial statements

 

$

46,299,779

 

$

34,191,527

 

Adjustment from contract value to fair value for fully benefit-responsive investment contracts

 

51,770

 

197,871

 

Net assets available for benefits, at fair value, per Form 5500

 

$

46,351,549

 

$

34,389,398

 

 

 

 

Year Ended

 

 

 

 

 

December 31,

 

 

 

 

 

2013

 

 

 

Investment income, per the financial statements

 

$

6,619,390

 

 

 

Interest from notes receivable from participants

 

46,217

 

 

 

Change in adjustment from contract value to fair value for fully benefit-responsive investment contracts

 

(146,101

)

 

 

Investment income, per Form 5500

 

$

6,519,506

 

 

 

 

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Table of Contents

 

Savings Plan of Carpenter Technology Corporation Effective January 1, 2012

Schedule of Assets (Held at End of Year)                                                                                                              EIN: 23-0458500

Form 5500 - Schedule H - Line 4(i)                                                                                                                                              PN: 027

December 31, 2013

 

Schedule of Assets Held, page 1

 

 

 

(b)

 

(c)

 

(e)

 

(a)

 

Identity of Issue, Borrower,
Lessor or Similar Party

 

Description of Investment, including Maturity Date, Interest Rate,
Collateral, Par or Maturity Value

 

Current
Value

 

 

 

Registered Investment Companies:

 

 

 

 

 

 

 

American Funds

 

American Funds EuroPacific Growth Fund; Class R-6

 

$

2,197,357

 

 

 

Loomis Sayles

 

Loomis Sayles Value Fund; Class N

 

1,533,016

 

 

 

T. Rowe Price

 

PIMCO Total Return Fund; Institutional Class

 

1,321,028

 

 

 

T. Rowe Price

 

T. Rowe Price Inst Large Cap Growth Fund; Inst Class

 

2,233,955

 

*

 

Vanguard

 

Vanguard Institutional Index Fund; Institutional Shares

 

2,934,313

 

*

 

Vanguard

 

Vanguard Mid-Cap Index Fund; Institutional Shares

 

785,149

 

*

 

Vanguard

 

Vanguard Prime Money Market Fund

 

608,756

 

*

 

Vanguard

 

Vanguard Small-Cap Index Fund; Institutional Shares

 

503,351

 

*

 

Vanguard

 

Vanguard Target Retirement 2010 Fund

 

1,126,020

 

*

 

Vanguard

 

Vanguard Target Retirement 2015 Fund

 

1,958,708

 

*

 

Vanguard

 

Vanguard Target Retirement 2020 Fund

 

4,730,905

 

*

 

Vanguard

 

Vanguard Target Retirement 2025 Fund

 

2,765,513

 

*

 

Vanguard

 

Vanguard Target Retirement 2030 Fund

 

4,517,906

 

*

 

Vanguard

 

Vanguard Target Retirement 2035 Fund

 

3,011,180

 

*

 

Vanguard

 

Vanguard Target Retirement 2040 Fund

 

2,337,600

 

*

 

Vanguard

 

Vanguard Target Retirement 2045 Fund

 

1,281,284

 

*

 

Vanguard

 

Vanguard Target Retirement 2050 Fund

 

325,968

 

*

 

Vanguard

 

Vanguard Target Retirement 2055 Fund

 

779,796

 

*

 

Vanguard

 

Vanguard Target Retirement 2060 Fund

 

31,063

 

*

 

Vanguard

 

Vanguard Target Retirement Income

 

760,681

 

*

 

Vanguard

 

Vanguard Total Bond Market Index Fund; Signal Shares

 

285,757

 

*

 

Vanguard

 

Vanguard Total International Stock Index Fund; Inst Shares

 

761,131

 

 

 

Wasatch Computer Technology

 

Wasatch Core Growth Fund; Institutional Class Shares

 

2,484,775

 

 

 

Total Registered Investment Companies

 

$

39,275,212

 

*

 

Participant Loans

 

Loans to Participants
Interest rate range 4.25% - 5.50%

 

$

1,207,580

 

 

 

Total

 

 

 

$

40,482,792

 

 

Historical cost has not been presented for investment funds, as all investments are participant directed

 


*

 

indicates Party-in-Interest

 

 

 

 

 

 

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Table of Contents

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, Carpenter Technology Corporation has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

Savings Plan Carpenter

 

 

Technology Corporation Effective

 

 

 

 January 1, 2012

 

 

 

(Name of Plan)

 

 

 

 

 

 

Date: June 27, 2014

By:

/s/ Tony R. Thene

 

 

Tony R. Thene

 

 

Senior Vice President and

 

 

Chief Financial Officer

 

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Table of Contents

 

EXHIBIT INDEX

 

Exhibit
No.

 

Description

23.1

 

Consent of Independent Registered Public Accounting Firm

 

20