CWGL 10-Q Quarter ended June 30, 2015

UNITED STATES

S ECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

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FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quart erly period ended June 30 , 2015

OR

[ ] TR ANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 000-54866

CRIMSON WINE GROUP, LTD.

(Exact name of registrant as specified in its Charter)

( 800 ) 486-0503

(Registrant’s Telephone N umber, Including Area C ode)

N/A

(Former Name, Former Address and Former Fiscal Year, If Changed Since Last R eport)

______________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this Chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

On August 7 , 201 5 , there were 24,458,368 outstanding shares of the Registrant’s Common Stock, par value $.01 per share.

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CRIMSON WINE GROUP, LTD.

Form 10-Q

For the Quarterly Period Ended June 3 0 , 2015

TABLE OF CONTENTS

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See notes to interim condensed consolidated financial statements.

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See notes to interim condensed consolidated financial statements.

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See notes to interim condensed consolidated financial statements.

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See notes to interim condensed consolidated financial statements.

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CRIMSON WINE GROUP, LTD.

Notes to Interim Condensed Consolidated Financial Statements (Unaudited)

1. Background and Basis of Presentation

Background

Crimson Wine Group, Ltd. (“ Crimson ”) is a Delaware company that has been operating since 1991.  As used herein, the term “Company” refers to Crimson and its wholly-owned subsidiaries, except as the context may otherwise require. Prior to February 25, 2013, Crimson was a wholly-owned subsidiary of Leucadia National Corporation (“ Leucadia ”).  On February 1, 2013, Leucadia declared a pro rata dividend to Leucadia’s common shareholders of all of the outstanding shares of Crimson’s common stock in a manner that was structured to qualify as a tax-free spin-off for U.S. federal income tax purposes (the “ Distribution ”) .  Leucadia’s common shareholders received one share of Crimson common stock for every ten common shares of Leucadia ( 24,458,368 Crimson common shares in the aggregate) , with cash in lieu of fractional shares, on February 25, 2013.

The Company qualifies as an “emerging growth company” as defined in the JOBS Act. Crimson has elected to opt out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act.  This election is irrevocable.

Financial Statement Preparation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information. The unaudited interim condensed consolidated financial statements, which reflect all adjustments (consisting of normal recurring items or items discussed herein) that management believes necessary to fairly state results of interim operations, should be read in conjunction with the Notes to Consolidated Financial Statements (including the Significant Accounting Policies) included in the Company’s audited consolidated financial statements for the year ended December 31, 2014, as filed with the SEC on Form 10-K (the “ 2014 Report ”).  Results of operations for interim periods are not necessarily indicative of annual results of operations.  The condensed consolidated balance sheet at December 31, 2014 was extracted from the audited annual financial statements and does not include all disclosures required by GAAP for annual financial statements .

Reclassifications

Certain reclassifications have been made to the prior period unaudited condensed consolidated financial statements to conform to the current period presentation. The reclassifications have no impact on previously reported net income, cash flow , or equity .

Critical Accounting Policies and Estimates

There have been no material changes to the critical accounting policies and estimates previously disclosed in th e 2014 Report .

Recent Accounting Pronouncements

In April 2014, the Financial Accounting Standards Board ("FASB") issued guidance that changes the criteria for reporting discontinued operations. To qualify as a discontinued operation under the amended guidance, a component or group of components of an entity that has been disposed of or is classified as held for sale must represent a strategic shift that has or will have a major effect on the entity's operations and financial results. These changes became effective for the Company on January 1, 2015. The adoption of this guidance did not have a material impact on our consolidated financial statements .

In May 2014, the FASB issued guidance outlining a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers that supersedes most current revenue

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recognition guidance. This guidance requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additionally, this guidance expands related disclosure requirements.

These changes become effective for the Company on January 1, 201 8 . Management is currently evaluating the potential impact of these changes on the Company’s consolidated financial statements.

In April 2015, the FASB issued guidance on the financial statement presentation of debt issuance costs. This guidance requires debt issuance costs to be presented in the balance sheet as a reduction of the related debt liability rather than an asset. The guidance will become effective for annual reporting periods beginning after December 15, 2015, and early adoption is permitted . Management is currently evaluating the potential impact of these changes on the Company’s consolidated financial statements.

In July 2015, t he FASB issued guidance on the simplification for the measurement of inventory. This guidance requires that an entity should measure in scope inventory at the lower of cost and net realizable value. The guidance will become effective for annual reporting periods b eginning after December 15, 2016 , and early adoption is permitted . Management is currently evaluating the potential impact of these changes on the Company’s consolidated financial statements.

2 . Inventory:

A summary of inventory at June 30 , 2015 and December 31, 2014 is as follows (in thousands):

3 . Property and Equipment:

A summary of property and equipment at June 30 , 2015 and December 31, 2014 is as follows (in thousands):

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4 . Financial Instruments:

The Company’s material financial instruments include cash and cash equivalents and investments classified as available for sale; investments classified as available for sale include certificates of deposit that are the only assets or liabilities that are measured at f air value on a recurring basis. All of the Company’s investments mature within three years or less. The par value, amortized cost, gross unrealized gains and losses and estimated fair value of investments classified as available for sale as of June 3 0 , 2015 and December 31, 2014 are as follows (in thousands):

As of June 3 0 , 2015 and December 31, 2014, the Company did not have any assets or liabilities measured at fair value on a nonrecurring basis.

For cash and cash equivalents, the carrying amounts of such financial instruments approximate their fair values.

5 . Intangible and Other Non-Current Assets:

A summary of intangible and other non-current assets at June 3 0 , 2015 and December 31, 2014 is as follows (in thousands):

T he estimated aggregate future amortization is identified below:

6 . Due to Leucadia and its Affiliates:

Effective March 1, 2013, the Company entered into an administrative service agreement with Leucadia.  Pursuant to this agreement, Leucadia provided certain administrative, SEC, tax filing and accounting services, including providing the services of the Company’s Corporate Secretary.

Effective August 1, 2013, Leucadia and the Company agreed to amend the administrative service agreement to reduce the administrative services provided to the Company by Leucadia and to terminate the agreement effective February 2014 . Administrative services expense was $9 thousand for the first quarter of 2014 and there have been no charges since then .

7. Credit Facilities :

There have been no material changes with respect to the Company’s credit facility as disclosed in the 2014 Report.

The Company has a revolving credit facility for up to $10 million of availability maturing in March 2018 and a term revolving credit facility for up to $50 million maturing in March 2028. As of June 30, 2015, the amounts were fully available and no amounts have been borrowed on the facility to date.

All obligations of the Company under the revolving credit facility are collateralized by certain real property, including vineyards and certain winery facilities of the Company , accounts receivable, inventory and intangible assets.  Covenants include the maintenance of specified debt and equity ratios, limitations on the incurrence of additional indebtedness, limitations on dividends and other distributions to shareholders and restrictions on certain mergers, consolidations and sales of assets.

8 . Stockholders’ Equity:

In March 2014, the Board of Directors of t he Company authorized a share repurchase program that provides for the repurchase of up to $2 .0 million of outstanding common stock. At June 3 0 , 2015, no stock had been repurchased.

9 . Income Taxes:

The Company’s ef fective tax rates for the three- and six - month periods ended June 30, 2015 were 32 .9% and 38 . 1 % , respectively. The Company’s effective tax rates for the three - and six - month period ending June 30, 2014 were 38.6% and 40.1% , respectively. The effective tax rates primarily reflect the impact of federal and state income taxes.

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The Company does not have any amounts in its consolidated balance sheet for unrecognized tax benefits related to uncertain tax positions at June 3 0, 2015 and December 31, 2014. As discussed in the 2014 Report, the Company will not be required to reimburse Leucadia for any payments made by Leucadia for adjustments to taxable periods prior to the Distribution, nor will the Company be entitled to any refunds for adjustments to taxable periods prior to the Distribution.  The Company is responsible for any adjustments or liabilities related to its California state income tax return for all periods, and its Federal income tax return for all periods subsequent to the Distribution. The statute of limitations with respect to California state income tax returns has expired for all years through 2009.

1 0 . Business Segment Information:

The Company has identified two operating segments, Wholesale Sales and Direct to Consumer Sales, based upon their different distribution channels, margins and selling strategies.  Wholesale Sales includes all sales through a third party where prices are given at a wholesale rate whereas Direct to Consumer Sales includes retail sales in the tasting room, remote sites and at on-site events, Wine Club sales, and other sales made directly to the consumer without the use of an intermediary.

The two segments reflect how the Company's operations are evaluated by senior management and the structure of its internal financial reporting. The Company evaluates performance based on the gross profit of the respective business segments. Selling expenses that can be directly attributable to the segment are included, however, centralized selling expenses and general and administrative expenses are not allocated between operating segments. Therefore, net income information for the respective segments is not available.  Based on the nature of the Company’s business, revenue generating assets are utilized across segments.  Therefore, discrete financial information related to segment assets and other balance sheet data is not available and that information continues to be aggregated.

The following table outlines the net sales, cost of sales, gross profit , directly attributable selling expenses, and operating income for the segments for the three- and six - month periods ended June 30, 2015 and June 30, 2014, respectively, and also includes a reconc iliation of consolidated income (loss) from operations. Other/Non-al locable net sales and gross profit include bulk wine and grape sales, event fees and retail sales. Other/Non-allocable expenses include centralized corporate expenses not specific to an identified reporting segment.  S ales figures are net of related excise taxes.

Footnote to table:

Sales are net of excise taxes of $0.3 million for each of the three month periods ended June 30, 2015 and June 30, 2014.  Sales are net of excise taxes of $0.5 million for each of the six month periods ended June 30, 2015 and June 30, 2014.

* The six months ended June 30, 2014 includes $9 paid to Leucadia.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Interim Operations .

Statements included in this Report may contain forward-looking statements. See “Cautionary Statement for Forward-Looking Information” below. The following should be read in conjunction with the Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) included in the 2014 Report.

Quantities or results referred to as “current quarter” and “current six-month period” refer to the three- and six-months ended June 30, 2015, respectively.

Cautionary Statement for Forward-Looking Information

This MD&A and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The unaudited interim condensed consolidated financial statements , that include results of Crimson Wine Group, Ltd . and all its subsidiaries further collectively known as “we”, “Crimson ”, “our”, “us”, or “the Company” , have been prepared in accordance with GAAP for interim financial information and with the general instruction for quarterly reports filed on Form 10-Q and Article 8 of Regulation S-X. All statements, other than statements of historical fact, regarding our strategy, future operations, financial position, prospects, plans, opportunities, and objectives constitute “forward-looking statements.” The words “may,” “will,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “potential,” or “continue” and similar types of expressions identify such statements, although not all forward-looking statements contain these identifying words. These statements are based upon information that is currently available to us and or management’s current expectations, speak only as of the date hereof, and are subject to risks and uncertainties. We expressly disclaim any obligation, except as required by federal securities laws, or undertaking to update or revise any forward-looking statements contained herein to reflect any change or expectations with regard thereto or to reflect any change in events, conditions, or circumstances on which any such forward-looking statement s are based, in whole or in part. Our actual results may differ materially from the results discussed in or implied by such forward-looking statements.

Factors that could cause actual results to differ materially from any results projected, forecasted, estimated or budgeted or that may mate rially and adversely affect our actual results include but are not limited to the following: worsening economic conditions causing a decline in estimated future cash flows; our dependence on certain key personnel; significant increases in operating costs and reduced profitability due to competition for skilled management and staff employees; various diseases, pests and weather conditions affecting the quality and quantity of grapes; our inability to grow or acquire enough fruit for our wines; significant competition adversely affecting our profitability; competition for shelf space in retail stores and for marketing focus by our independent distributors; the contamination of our wines; a reduction in consumer demand for our wines; a decrease in wine score rating by important rating organizations; climate change, or legal, regulatory or market measures to address climate change, negatively affecting our business, operations or financial performance, and water scarcity or poor quality negatively impacting our production costs and capacity, including the continuation or worsening of the drought in California; environmental issues or hazardous substances on our properties resulting in us incurring significant liabilities; indebtedness we may incur materially affecting our financial health; changes in laws and government regulations or in the implementation and/or enforcement of government rules and regulations increasing our costs or restricting our ability to sell our products into certain markets; our inability to insure certain risks economically; being subject to litigation which may have a significant adverse effect on our consolidated financial condition or results of operations; not paying dividends currently or in the future; impairment of our intangible assets; the limited market for our common stock because our stock is not listed on any securities exchange; volatility in our common stock price; future sales of our common stock depressing the market price of our stock; public company compliance costs; loss of our status as an emerging growth company; restrictions on our ability to enter into certain transactions that could jeopardize our tax free spin-off from Leucadia; and the significant influence of certain principal stockholders.  For additional information see Part I, Item 1A. Risk Factors in the 2014 Report.

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Overview of Business

The Company generates revenues from sales of wine to wholesalers and direct to consumers, sales of bulk wine and grapes, special event fees, tasting fees and retail sales.

Our wines are primarily sold to distributors, who then sell to retailers and restaurants.  As permitted under federal and local regulations, we have also been placing increased emphasis on generating revenue from direct sales to consumers which occur through wine clubs, at the wineries’ tasting rooms and through the internet and direct out reach to customers. Direct sales to consumers are more profitable for the Company as it is able to sell its products at a price closer to retail prices rather than the wholesale price sold to distributors. From time to time we may sell grapes or bulk wine, because the wine does not meet the quality standards for the Company ’s products, market conditions have changed resulting in reduced demand for certain products, or because the Company may have produced more of a particular varietal than it can use.  When these sales occur, they may result in a loss.

Cost of sales includes grape and bulk wine costs, whether purchased or produced from the Company ’s controlled vineyards, crush costs, winemaking and processing costs, bottling, packaging , warehousing , a nd shipping and handling costs. For the Company controlled vineyard produced grapes, grape costs include annual farming costs and amortization of vineyard development expenditures. For wines that age longer than one year, winemaking and processing costs continue to be incurred and capitalized to the cost of wine, which can range from 3 to 36 months. Reductions to the carrying value of inventories to estimated net realizable value are also included in costs of sales.

At June 30 , 2015, wine inventory includes approximately 0 .6 million cases of bottled and bulk wine in various stages of the aging process.  Case d wine is expected to be sold over the next 12 to 36 months and generally before the release date of the next vintage.

Seasonality

As discussed in the 2014 Report, the wine industry in general historically experiences seasonal fluctuatio ns in revenues and net income. The Company typically has lower sales and net income during the first quarter and higher sales and net income during the fourth quarter.  We anticipate similar trends in 2015.

Results of Operations :

Net Sales

Wholesale net sales decreased $0.1 million or 1% in the current quarter and increased $0.2 million or 1% in the current six-month period. The decrease in the current quarter was driven by shifts in product mix and increased price support and a decrease of 1% in Export volume, offset by an increase of 4% in Domestic volume. The increase in the current six-month period was driven by increased Domestic and Export volume of 1% and 9% respectively, offset by shifts in both product mix and increase d price support in Domestic and a shift in product mix in Export.

Direct to consumer net sales increased $0.7 million or 15% in the current quarter and $0.9 million or 9% in the current six-month period, respectively, driven by the timing of wine club shipments and shift s toward higher

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priced products.  Wine Club and eCommerce net sales increased in the current quarter 23% and 22%, respectively, offset by decrease s in other smaller Direct to consumer channels. Tasting Room net sales were flat in the current quarter compared with the prior year. Wine Club and Tasting Room net sales increased 16% and 2%, respectively, in the current six-month period, offset by a dec rease of 6% in eCommerce and decreases in other smaller Direct to consumer channels.

Other net sales include bulk wine and grape sales, event fees and retail sales and decreased $0.1 million in both the current quarter and current six-month period, reflecting a decrease of 18% and 7%, respectively . The decrease in the current quarter was driven by a lower average price per gallon on bulk wine sales. The decrease in the current six-month period was also driven by a lower average price per gallon on bulk wine sales but was partially offset by higher special event sales in the first quarter.

Gross Profit

Wholesale gross profit decreased $0.1 million or 3% in the current quarter and increased $0.1 million or 1% in the current six-month period. Gross margin percentage, defined as gross profit as a percentage of net sales, decreased approximately 120 and 20 basis points in the current quarter and current six-month period, respectively. The decreases were driven by shifts in product mix and increased price support.

Direct to consumer gross profit increased $0.6 million or 18% and $0.9 million or 14% in the current quarter and current six-month period, respectively. Gross margin percentage increased approximately 230 and 330 basis points in the current quarter and current s ix-month period, respectively. The increases were driven by shifts toward high er margin brands and channels. The increase in brand margin is driven by both a shift towards higher priced products and lower costs related to the transition to new vintage products that carry a lower average cost.

Other gross profit includes bulk wine and grape sales, event fees, retail sales and inventory write-downs and decreased $0. 6 million or 154 % and $0.4 million or 102% in the current quarter and current s ix-month period, respectively. The decreases were largely driven by lower margin sales of bulk wine due to both reduced pricing and increased cost of gallons sold and a $0.2 million write-down in the current quarter of excess bulk wine inventory and lower quality cased goods , which were slightly offset by increased special event revenue.

Operating Expenses

*June 30, 2014 includes $9 paid to Leucadia.

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Sales and ma rketing expenses decreased $0.1 million or 4% in the current quarter and decreased slightly in the current six-month period. The decreases were primarily driven by the timing of distributor promotional programs.

General and a dminis trative expenses decreased $0.1 million or 3% in the cur rent quarter and increased $0.3 million or 5% in the current six-month period.  The decrease in th e current quarter was driven by reduced printing and mailing costs associated with our proxy statement and Annual Report. The increase in the current six-month period was driven by increased salaries and recruiting costs to manage growth, depreciation and other costs associated with a new corporate office and related leasehold improvements and infrastructure enhancements related to information technology.

Net ( G ain) L oss on Disposal of P roperty and E quipment

Net gain decreased $1.8 million or 95% and $1.7 million or 95% in the current quarter and current s ix-month period, respectively.

In the second quarter of 2014, the Company sold a non-strategic unplanted parcel of land in Washington for cash consideration of $4.2 million, for a net of $3.9 million after expenses . The Company recorded a pre-tax gain of $1.8 million, net of closing costs, during the second quarter of 2014.

Interest Expense was not material in the current quarter and current six-month period.

Other Income (E xpense), N et

Other income increased $0.2 million in the current quarter and current six-month period. The increase is driven primarily by one-time income of $0.1 million associated with a vineyard lease and increased rental and interest income.

Income Tax P rovision

Our income tax provision decreased $0.7 million or 48 % and $0.6 million or 26% in the current quarter and current six-month period , respectively. The effective tax rate was 32.9% a nd 38.1% for the current quarter and current six-month periods, respectively, and 38.6% and 40.1% for the prior year three- and six-month periods, respectively. The effective tax rate in the current quarter includes a cumulative catch up adjustment of 5.2 percentage points to decrease the current six-month period effective tax rate to 38.1%. The higher effective tax rates for 2014 were primarily driven by the valuation allowance ag ainst our deferred tax assets. This valuation allowance was subsequently reduced in the third quarter of 2014 and eliminated by year end 2014 . Our effective tax rates are higher than the federal statutory rate primarily due to state income taxes.

Liquidity and Capital Resources

General

The Company ’s principal sources of liquidity are its available cash, funds generated from operations and its revolving credit facility. The Company ’s primary cash needs are to fund working capital requirements and capital expenditures.

Consolidated Statements of Cash Flows

Net cash provided by operating activities was $5.5 million and $4.1 million for the six months ended June 30, 2015 and 2014, respectively. Cash flows from o perating activities increased $1 . 4 million during the first six months of 2015 as compared to 2014. $1.1 million of the increase is attributa ble to net income excluding one-time gains on disposal of property. The remaining increase resulted from net changes in working capital of $ 0.9 million, partially offset by incre ased depreciation expense of $0. 2 million and a write-down of inventory of $0. 2 million.

Net cash used for investing activities was $ 2 . 8 million for the six months ended J une 30, 2015 and net cash provided was $3.0 million for the same period in the prior year. Cash flows used for investing activities increased primarily d ue to capital expenditures of $3 . 6 million compared to $1.5 million for the same period in the prior

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year. T he increase in capital expenditures reflects investment in infrastructure and leasehold improvement projects, including expansion of the fermentation capacity at Seghesio Family Vineyards and technological enhancements related to growth. Proceeds from the sale of assets were $0.1 million and $3.9 million for the six months ended June 30, 2015 and 2014, respectively. Proceeds in the first six months of 2014 include $3.9 million from the sale of a non-strategic parcel of land.

The Company expects to spend approximately $ 8.8 million in 2015 for capital expenditures. We expect to use our available cash and cash flows generated from operating activities to fund capital expenditures .

Credit Facilities

The Company has a revolving credit facility for up to $10 million of availability maturing in March 2018 and a term revolving credit facility for up to $50 million maturing in March 2028. The facility can be used to fund acquisitions, capital projects and other general corporate purposes. As of June 30, 2015, the amounts were fully available and no amounts have been borrowed on the facility to date.

All obligations of the Company under the revolving credit facility are collateralized by certain real property, including vineyards and certain winery facilities of the Company , accounts receivable, inventory and intangible assets.  Covenants include the maintenance of specified debt and equity ratios, limitations on the incurrence of additional indebtedness, limitations on dividends and other distributions to shareholders and restrictions on certain mergers, consolidations, and sale of assets.

In addition to unused line fees ranging from 0.25% to 0.375%, rates for any borrowings are priced based on a performance grid tied to certain financial ratios and the London Interbank Offered Rate . We are in compliance with the terms and covenants of the facility.

Share Repurchase

In March 2014, the board of directors of the Company authorized a stock repurchase program pursuant to which we may repurchase up to $2 .0 million of the Company ’s common stock.  The repurchases will be funded by available cash. How much common stock, if any, will be repurchased will depend on market conditions, including the price of the common stock. At June 30, 2015, no stock had been repurchased.

Commitments & Contingencies

There have been no significant changes to our contractual obligations table as disclosed in the 2014 Report.

Item 3 . Quantitative and Qualitative Disclosure About Market Risk.

Crimson does not currently have any exposure to financial market risk. Sales to international customers are denominated in U.S. dollars; therefore, Crimson is not exposed to market risk related to changes in f oreign currency exchange rates. Prior to the Distribution, Crimson did not have any significant outstanding debt instruments other than amounts due to Leucadia; therefore, Crimson was not exposed to market risk relating to interest rates. As discussed above under Liquidity and Capital Resources, Crimson has access to a revolving credit facility. Any amount borrowed is expected to bear interest at floating rates.

Item 4 . Controls and Procedures.

The Company's management evaluated, with the participation of the Company's principal executive and principal financial officers, the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act ) as of June 30 , 201 5 .  Based on their evaluation, the Company's principal executive and principal financial officers concluded that the Company's disclosure controls and procedures were effective as of June 30 , 201 5 .

There has been no change in the Company's internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the Company's fiscal quarter ended June 30 , 201 5 , that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1 . Legal Proceedings.

From time to time, the Company may be involved in legal proceedings in the o rdinary course of its business. The Company is not currently involved in any legal or administrative proceedings individually or together that it believes are likely to have a significant adverse effect on its business, results of operations or financial condition.

Item 1A . Risk Factors.

In addition to the other information set forth in this Report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our 2014 Report, which could materially affect our business, results of operations or financial condition.  The risks described in our 2014 Report are not the only risks facing us.  Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may eventually prove to materially adversely affect our business, results of operations or financial condition.

Item 2 . Unregistered Sales of Equity Securities and Use of Proceeds.

None

Item 3 . Defaults Upon Senior Securities.

None

Item 4 . Mine Safety Disclosures.

None

Item 5 . Other Information.

None

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Item 6 . Exhibits.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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EXHIBIT INDEX

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