-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RoyiPUNLefzbFX0+oDFYv3Cge9PY94hCBTUlC95c/gTfWoW1lXQB+VuaOFDgnwVU bbk1Qald1g74cEs6qXxBbw== /in/edgar/work/20000628/0000950152-00-005002/0000950152-00-005002.txt : 20000920 0000950152-00-005002.hdr.sgml : 20000920 ACCESSION NUMBER: 0000950152-00-005002 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000628 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HAWK CORP CENTRAL INDEX KEY: 0000849240 STANDARD INDUSTRIAL CLASSIFICATION: [3728 ] IRS NUMBER: 341608156 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-13797 FILM NUMBER: 663035 BUSINESS ADDRESS: STREET 1: 200 PUBLIC SQ STE 30-5000 STREET 2: STE 29-2500 CITY: CLEVELAND STATE: OH ZIP: 44114 BUSINESS PHONE: 2168613553 MAIL ADDRESS: STREET 1: 200 PUBLIC SQUARE STREET 2: STE 29-2500 CITY: CLEVELAND STATE: OH ZIP: 44114-2301 FORMER COMPANY: FORMER CONFORMED NAME: HAWK GROUP OF COMPANIES INC DATE OF NAME CHANGE: 19950417 11-K 1 e11-k.txt HAWK GROUP 11-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [X]ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 OR [ ]TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________ TO ___________ COMMISSION FILE NUMBER: 333-68583 A. Full title of the plans and the addresses of the plans, if different from that of the issuer named below: Friction Products Co. Profit Sharing Plan S. K. Wellman Retirement Savings and Profit Sharing Plan Helsel, Inc. Employee's Retirement Plan Helsel, Inc. Employee's Savings and Investment Plan Sinterloy Corporation 401(k) Plan Hutchinson Products LLC Employees' 401(k) Plan Hawk Corporation 401(k) Savings and Retirement Plan B. Name of issuer of the securities held pursuant to the plans and the address of its principal executive office: Hawk Corporation 200 Public Square, Suite 30-5000 Cleveland, Ohio 44114 2 SIGNATURES The Plans. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plans) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. Friction Products Co. Profit Sharing Plan S. K. Wellman Retirement Savings and Profit Sharing Plan Helsel, Inc. Employee's Retirement Plan Helsel, Inc. Employee's Savings and Investment Plan Sinterloy Corporation 401(k) Plan Hutchinson Products LLC Employees' 401(k) Plan Hawk Corporation 401(k) Savings and Retirement Plan Date: June 28, 2000 By: /s/ Thomas A. Gilbride ---------------------- Thomas A. Gilbride Plan Administrator 3 AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE Friction Products Co. Profit Sharing Plan December 31, 1999 with Report of Independent Auditors 4 Friction Products Co. Profit Sharing Plan Financial Statements and Supplemental Schedule December 31, 1999 TABLE OF CONTENTS Report of Independent Auditors ........................................... 1 FINANCIAL STATEMENTS Statements of Net Assets Available for Benefits........................... 2 Statement of Changes in Net Assets Available for Benefits................. 3 Notes to Financial Statements............................................. 4 SUPPLEMENTAL SCHEDULE Schedule H, Line 4i--Schedule of Assets Held for Investment Purposes at End of Year.................................... 8 5 Report of Independent Auditors Plan Administrator Friction Products Co. Profit Sharing Plan We have audited the accompanying statements of net assets available for benefits of the Friction Products Co. Profit Sharing Plan as of December 31, 1999 and 1998, and the related statement of changes in net assets available for benefits for the year ended December 31 1999. 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 auditing standards generally accepted in the 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 statements 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 the benefits of the Plan at December 31, 1999 and 1998, and the changes in its net assets available for benefits for the year ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets held for investment purposes at end of year as of December 31, 1999 is presented for purposes of additional analysis and is not a required part of the 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. This supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. /s/ Ernst & Young LLP Cleveland, Ohio June 14, 2000 1 6 Friction Products Co. Profit Sharing Plan Statements of Net Assets Available for Benefits DECEMBER 31 1999 1998 -------------------------------- ASSETS Investments, at fair value: Pooled separate accounts $ 2,778,338 $ 1,909,897 Guaranteed Income Fund 2,309,282 1,958,524 Hawk Corporation Stock Fund 14,578 -------------------------------- Total investments 5,102,198 3,868,421 Contributions receivable: Employee 127,534 126,537 Employer 271,897 256,480 -------------------------------- Total receivables 399,431 383,017 -------------------------------- NET ASSETS AVAILABLE FOR BENEFITS $ 5,501,629 $ 4,251,438 ================================ See notes to financial statements. 2 7 Friction Products Co. Profit Sharing Plan Statement of Changes in Net Assets Available for Benefits Year Ended December 31, 1999
Additions: Investment income: Net realized and unrealized appreciation in fair value of investments $ 671,825 Interest 112,619 -------------- 784,444 Contributions: Employer 271,897 Employee 278,774 -------------- 550,671 -------------- Total additions 1,335,115 Deductions: Benefit payments 75,756 Fees and expenses 269 -------------- Total deductions 76,025 Transfers to other plans 8,899 -------------- Net increase 1,250,191 Net assets available for benefits at beginning of year 4,251,438 -------------- NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 5,501,629 ==============
See notes to financial statements. 3 8 Friction Products Co. Profit Sharing Plan Notes to Financial Statements December 31, 1999 A. DESCRIPTION OF THE PLAN The following description of the Friction Products Co. Profit Sharing Plan (the "Plan") provides only general information. Participants should refer to the summary plan description for a more complete description of the Plan's provisions. GENERAL The Plan was established August 1, 1981 as a defined contribution plan covering all non-union employees of Friction Products Co. (the "Company" and "Plan Sponsor") who have completed seven months of service. Friction Products Co. is a wholly-owned subsidiary of Hawk Corporation. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). CONTRIBUTIONS Participants may elect to contribute not less than 1% nor more than 10% of their pretax compensation to the Plan subject to maximum limitations set by the Internal Revenue Code. The Plan allows for discretionary contributions by the Plan Sponsor from available business profits. Employer contributions are allocated based on the proportion a participant's compensation bears to the total compensation paid to all eligible participants. During the first quarter of 2000, the Plan Sponsor made a discretionary profit sharing contribution of $271,897 for the 1999 Plan year. PARTICIPANT ACCOUNTS Each participant's account is credited with the participant's contributions and allocations of (a) the Plan Sponsor's contributions and (b) Plan earnings. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account. 4 9 Friction Products Co. Profit Sharing Plan Notes to Financial Statements--Continued A. DESCRIPTION OF THE PLAN--CONTINUED VESTING AND DISTRIBUTIONS The Plan provides for 100% immediate vesting of a participant's account balance, including employer contributions. In the event of termination of the Plan, the assets of the Plan will be distributed to the participants based on the amounts in the respective participants' accounts. Withdrawals from a participant's account are limited to termination of employment, death, retirement or proven hardship. INVESTMENT OPTIONS The Plan's funds are primarily held in a group annuity contract issued by Connecticut General Life Insurance Company ("CIGNA" or the "Trustee"). A participant may direct employer and employee contributions in any of several investment options. Effective January 1, 1999, the Plan was amended to allow participants to invest in the Hawk Corporation Stock Fund. EXPENSES The Plan Sponsor pays substantially all costs of Plan administration. B. SUMMARY OF ACCOUNTING POLICIES INVESTMENT VALUATION Investments in the Guaranteed Income Fund are stated at fair value as determined by CIGNA, which approximates contract value. CIGNA has the right to defer certain disbursements (excluding retirement, termination, and death or disability disbursements) or transfers from the Guaranteed Income Fund when total amounts disbursed from the pool in a given calendar year exceed 10% of the total assets in that pool on January 1 of that year. All other investments are stated at fair value based on quoted market prices, as determined by the Trustee, on the last business day of the Plan year. 5 10 B. SUMMARY OF ACCOUNTING POLICIES--CONTINUED USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. RECLASSIFICATION Certain amounts in the 1998 financial statements have been reclassified to conform to the 1999 presentation. C. INVESTMENTS During 1999, the Plan's investments (including investments purchased, sold, as well as held, during the year) appreciated in fair value as follows: Net Realized and Unrealized Appreciation in Fair Value of Investments -------------- Pooled separate accounts $ 669,806 Hawk Corporation Stock Fund 2,019 ------------ $ 671,825 ============ The fair value of individual investments that represent 5% or more of the Plan's net assets are as follows:
DECEMBER 31 1999 1998 ----------------------------- Guaranteed Income Fund $2,309,282 $ 1,958,524 Stock Market Index Fund 332,483 294,333 Fidelity Advisor Growth Opportunity Fund 509,072 457,306 Warburg Advisor Emerging Growth Fund 657,841 508,681 White Oak Growth Stock Fund 721,284 432,589
6 11 Friction Products Co. Profit Sharing Plan Notes to Financial Statements--Continued D. PLAN TERMINATION Although it has not expressed any intent to do so, the Plan Sponsor has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination all participant accounts will be distributed based upon the value of the participant's account on the termination date. E. INCOME TAX STATUS The Plan has received a determination letter from the Internal Revenue Service dated May 30, 1996, stating that the Plan qualifies under Section 401(a) of the Internal Revenue Code (the "IRC") and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification. The Plan Administrator believes the Plan is being operated in compliance with the applicable requirements of the IRC and therefore believes that the Plan is qualified and the related trust is tax exempt. 7 12 Friction Products Co. Profit Sharing Plan Employer Identification Number: 34-1608009 Plan Number: 005 Schedule H, Line 4i--Schedule of Assets Held for Investment Purposes at End of Year December 31, 1999
Identity of Issue, Borrower, Current Lessor, or Similar Party/Description of Investment Cost Value - -------------------------------------------------------------------------------------------------------------- * Connecticut General Life Insurance Company--Group Annuity Contract: Guaranteed Income Fund $ 2,309,282 $ 2,309,282 Stock Market Index Fund 185,895 332,483 Fidelity Advisor Growth Opportunity Fund 274,317 509,072 Warburg Advisor Emerging Growth Fund 332,185 657,841 CIGNA Lifetime 20 Fund 19,723 24,390 CIGNA Lifetime 30 Fund 44,245 56,374 CIGNA Lifetime 40 Fund 4,963 5,933 CIGNA Lifetime 50 Fund 420 489 CIGNA Lifetime 60 Fund 270 284 Janus Worldwide Fund 87,223 136,278 Janus Fund 123,162 196,228 White Oak Growth Stock Fund 432,883 721,284 American Century Ultra Fund 95,129 137,682 Hawk Corporation Stock Fund 12,617 14,578 ---------------------------------------- TOTAL ASSETS HELD FOR INVESTMENT PURPOSES $ 3,922,314 $ 5,102,198 ========================================
* Represents a party-in-interest to the Plan. 8 13 AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE S. K. Wellman Retirement Savings and Profit Sharing Plan December 31, 1999 with Report of Independent Auditors 14 S. K. Wellman Retirement Savings and Profit Sharing Plan Financial Statements and Supplemental Schedule December 31, 1999 TABLE OF CONTENTS Report of Independent Auditors ........................................ 1 FINANCIAL STATEMENTS Statements of Net Assets Available for Benefits........................ 2 Statement of Changes in Net Assets Available for Benefits.............. 3 Notes to Financial Statements.......................................... 4 SUPPLEMENTAL SCHEDULE Schedule H, Line 4i--Schedule of Assets Held for Investment Purposes at End of Year................................. 8 15 Report of Independent Auditors Plan Administrator S. K. Wellman Retirement Savings and Profit Sharing Plan We have audited the accompanying statements of net assets available for benefits of the S.K. Wellman Retirement Savings and Profit Sharing Plan as of December 31, 1999 and 1998, and the related statement of changes in net assets available for benefits for the year ended December 31, 1999. 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 auditing standards generally accepted in the 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 at December 31, 1999 and 1998, and the changes in its net assets available for benefits for the year ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets held for investment purposes at end of year as of December 31, 1999 is presented for purposes of additional analysis and is not a required part of the 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. This supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. /s/ Ernst & Young LLP Cleveland, Ohio June 14, 2000 1 16 S. K. Wellman Retirement Savings and Profit Sharing Plan Statements of Net Assets Available for Benefits DECEMBER 31 1999 1998 --------------------------------- ASSETS Investments, at fair value: Pooled separate accounts $ 6,631,315 $ 7,003,700 Guaranteed Income Fund 3,211,161 1,826,859 Hawk Corporation Stock Fund 53,777 -------------------------------- Total investments 9,896,253 8,830,559 Employer contribution receivable 217,012 189,092 -------------------------------- NET ASSETS AVAILABLE FOR BENEFITS $ 10,113,265 $ 9,019,651 ================================= See notes to financial statements. 2 17 S. K. Wellman Retirement Savings and Profit Sharing Plan Statement of Changes in Net Assets Available for Benefits Year Ended December 31, 1999 Additions: Investment income: Net realized and unrealized appreciation in fair value of investments $ 963,953 Interest 130,694 --------------- 1,094,647 Contributions: Employer 238,363 Employee 345,315 --------------- 583,678 --------------- Total additions 1,678,325 Deductions: Benefit payments 589,192 Fees and expenses 4,418 --------------- Total deductions 593,610 Transfers from other plans 8,899 --------------- Net increase 1,093,614 Net assets available for benefits at beginning of year 9,019,651 --------------- NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 10,113,265 =============== See notes to financial statements. 3 18 S. K. Wellman Retirement Savings and Profit Sharing Plan Notes to Financial Statements December 31, 1999 A. DESCRIPTION OF THE PLAN The following description of the S. K. Wellman Retirement Savings and Profit Sharing Plan (the "Plan") provides only general information. Participants should refer to the summary plan description for a more complete description of the Plan's provisions. GENERAL The Plan is a defined contribution plan covering all non-union employees of the S. K. Wellman Corporation (the "Company" and "Plan Sponsor") who have at least 90 days of service and are age twenty-one or older. S. K. Wellman Corporation is a wholly-owned subsidiary of Hawk Corporation. The Plan is subject to the provisions of the Employee Retirement Security Act of 1974 (ERISA). CONTRIBUTIONS Participants may contribute not less than 1% nor more than 15% of their pretax compensation subject to maximum limitations set by the Internal Revenue Code. The Plan Sponsor matches participant contributions at the rate of 10% of the first 6% of the employee's contribution. The Plan Sponsor may also contribute a profit sharing contribution at its discretion. During the first quarter of 2000 the Plan Sponsor made a discretionary profit sharing contribution of $217,012 for the 1999 Plan year. Forfeitures are used to reduce the amount of matching or profit sharing contributions by the Plan Sponsor. The balance of forfeited nonvested accounts was $1,990 and $0 as of December 31, 1999 and 1998, respectively. PARTICIPANT ACCOUNTS Each participant's account is credited with the participant's contributions and allocations of (a) the Plan Sponsor's contributions and (b) Plan earnings. Allocations are based on participant earnings or account balances, as defined. Forfeited balances of terminated participants' nonvested accounts are used to reduce future Plan Sponsor contributions. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account. VESTING Participants are immediately vested in their contributions and in the Plan Sponsor's matching contributions. If the Plan were to terminate at some future time, each participant will become fully vested in his or her entire account balance. 4 19 S. K. Wellman Retirement Savings and Profit Sharing Plan Notes to Financial Statements--Continued A. DESCRIPTION OF THE PLAN--CONTINUED Participants become vested in their allocated share of any profit sharing contributions at the rate of 33-1/3% after two years of service and 33-1/3% per year thereafter, reaching 100% at the completion of four years of service. INVESTMENT OPTIONS The Plan's funds are primarily held in a group annuity contract issued by Connecticut General Life Insurance Company ("CIGNA" or the "Trustee"). A participant may direct employer and employee contributions in any of several investment options. Effective January 1, 1999, the Plan was amended to allow participants to invest in the Hawk Corporation Stock Fund. PAYMENT OF BENEFITS On the normal retirement date, a participant may elect to receive either a lump sum amount equal to the vested account balance or elect installment payments. Hardship withdrawals are available for withdrawal of the participant's voluntary contribution if certain specified conditions are met. EXPENSES The Plan Sponsor pays substantially all costs of Plan administration. B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES INVESTMENT VALUATION Investments in the Guaranteed Income Fund are stated at fair value as determined by CIGNA, which approximates contract value. CIGNA has the right to defer certain disbursements (excluding retirement, termination, and death or disability disbursements) or transfers from the Guaranteed Income Fund when total amounts disbursed from the pool in a given calendar year exceed 10% of the total assets in that pool on January 1 of that year. All other investments are stated at fair value based on quoted market prices, as determined by the Trustee, on the last business day of the Plan year. 5 20 S. K. Wellman Retirement Savings and Profit Sharing Plan Notes to Financial Statements--Continued B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--CONTINUED USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. RECLASSIFICATION Certain amounts in the 1998 financial statements have been reclassified to conform to the 1999 presentation. C. INVESTMENTS During 1999, the Plan's investments (including investments purchased, sold, as well as held, during the year) appreciated in fair value as follows: Net Realized and Unrealized Appreciation in Fair Value of Investments -------------- Pooled separate accounts $ 907,748 Hawk Corporation Stock Fund 56,205 ------------- $ 963,953 ============= The fair value of individual investments that represent 5% or more of the Plan's net assets are as follows: DECEMBER 31 1999 1998 -------------------------------- Guaranteed Income Fund $ 3,211,161 $ 1,826,859 CIGNA Lifetime 40 Fund 1,458,232 1,606,429 Janus Fund 602,085 Fidelity Advisor Growth Opportunity Fund 3,464,058 4,528,671 6 21 S. K. Wellman Retirement Savings and Profit Sharing Plan Notes to Financial Statements--Continued D. PLAN TERMINATION Although it has not expressed any intent to do so, the Plan Sponsor has the right under the Plan 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 become 100% vested in their accounts. E. INCOME TAX STATUS The Plan has received a determination letter from the Internal Revenue Service dated January 24, 1994, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the "IRC") and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification. The Plan Administrator believes the Plan is being operated in compliance with the applicable requirements of the IRC and, therefore, believes that the Plan is qualified and the related trust is tax exempt. 7 22 S. K. Wellman Retirement Savings and Profit Sharing Plan Employer Identification Number 34-1804995 Plan Number 003 Schedule H, Line 4i--Schedule of Assets Held for Investment Purposes at End of Year December 31, 1999
Identity of Issue, Borrower, Current Lessor, or Similar Party/Description of Investment Cost Value - ---------------------------------------------------------------------------------------------------------------- * Connecticut General Life Insurance Company: Guaranteed Income Fund $ 3,211,161 $ 3,211,161 CIGNA Lifetime 20 Fund 77,838 96,390 CIGNA Lifetime 30 Fund 46,170 61,279 CIGNA Lifetime 40 Fund 1,053,587 1,458,232 CIGNA Lifetime 50 Fund 49,592 58,983 CIGNA Lifetime 60 Fund 90,882 102,302 CIGNA Stock Market Index Fund 93,888 116,335 Fidelity Advisor Growth Opportunity Fund 2,576,058 3,464,058 Warburg Pincus Emerging Growth Fund 70,360 98,500 American Century Ultra Fund 103,044 132,676 Janus Fund 393,160 602,085 Janus Worldwide Fund 104,110 149,856 White Oak Growth Stock Fund 216,135 290,619 Hawk Corporation Stock Fund 39,366 53,777 ----------------------------------- $ 8,125,351 $ 9,896,253 ===================================
* Indicates party-in-interest to the Plan. 8 23 AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE Helsel, Inc. Employees' Retirement Plan December 31, 1999 with Report of Independent Auditors 24 Helsel, Inc. Employees' Retirement Plan Financial Statements and Supplemental Schedule December 31, 1999 TABLE OF CONTENTS Report of Independent Auditors......................................... 1 FINANCIAL STATEMENTS Statements of Net Assets Available for Benefits........................ 2 Statement of Changes in Net Assets Available for Benefits.............. 3 Notes to Financial Statements.......................................... 4 SUPPLEMENTAL SCHEDULE Schedule H, Line 4i--Schedule of Assets Held for Investment Purposes at End of Year............................................. 8 25 Report of Independent Auditors Plan Administrator Helsel, Inc. Employees' Retirement Plan We have audited the accompanying statements of net assets available for benefits of the Helsel, Inc. Employees' Retirement Plan as of December 31, 1999 and 1998, and the related statement of changes in net assets available for benefits for the year ended December 31, 1999. 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 auditing standards generally accepted in the 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 at December 31, 1999 and 1998, and changes in its net assets available for benefits for the year ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets held for investment purposes at end of year as of December 31, 1999, is presented for purposes of additional analysis and is not a required part of the 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. This supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. /s/ Ernst & Young LLP Cleveland, Ohio June 14, 2000 1 26 Helsel, Inc. Employees' Retirement Plan Statements of Net Assets Available for Benefits DECEMBER 31 1999 1998 --------------------------------- ASSETS Investments, at fair value: Pooled separate accounts $4,748,539 $ 4,064,823 Guaranteed Income Fund 349,927 61,677 --------------------------------- Total Investments 5,098,466 4,126,500 Contribution receivable: Employer 169,912 --------------------------------- NET ASSETS AVAILABLE FOR BENEFITS $5,098,466 $ 4,296,412 ================================ See notes to financial statements. 2 27 Helsel, Inc. Employees' Retirement Plan Statement of Changes in Net Assets Available for Benefits Year Ended December 31, 1999 Additions: Investment income: Net realized and unrealized appreciation in fair value of investments $ 575,527 Interest 6,637 --------------- 582,164 Employer contributions 415,331 --------------- Total additions 997,495 Deductions: Benefit payments 195,060 Fees and expenses 381 --------------- Total deductions 195,441 --------------- Net increase 802,054 Net assets available for benefits at beginning of year 4,296,412 --------------- NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 5,098,466 =============== See notes to financial statements. 3 28 Helsel, Inc. Employees' Retirement Plan Notes to Financial Statements December 31, 1999 A. DESCRIPTION OF PLAN The following description of the Helsel, Inc. Employees' Retirement Plan (the "Plan") provides only general information. Participants should refer to the summary plan description for a more complete description of the Plan's provisions. GENERAL The Plan is a money-purchase pension plan established by Helsel, Inc. (the "Company" and "Plan Sponsor") effective as of July 1, 1978, covering all non-union employees of the Company who have completed one year of service. Helsel, Inc. is a wholly-owned subsidiary of Hawk Corporation. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). CONTRIBUTIONS Each Plan year, the Company contributes to the Plan an amount equal to 7% of each eligible participant's compensation, as defined. Forfeited balances of terminated participants' non-vested accounts are used to reduce future Company contributions. Forfeitures available to reduce the Company's future contributions were $39,268 and $20,025 at December 31, 1999 and 1998, respectively. PARTICIPANT ACCOUNTS Each participant's account is credited with allocations of (a) the Plan Sponsor's contributions and (b) Plan earnings. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account. VESTING Vesting of participant accounts is based upon years of service. A participant is 100% vested after six years of credited service based on a graded vesting schedule. 4 29 Helsel, Inc. Employees' Retirement Plan Notes to Financial Statements--Continued A. DESCRIPTION OF PLAN--CONTINUED INVESTMENT OPTIONS The Plan's funds are primarily held in a group annuity contract issued by Connecticut General Life Insurance Company ("CIGNA" or the "Trustee"). A participant may direct contributions in any of several investment options. Effective January 1, 1999, the Plan was amended to allow participants to invest in the Hawk Corporation Stock Fund. The Plan did not hold any Hawk Corporation stock at December 31, 1999. PAYMENT OF BENEFITS In the case of normal retirement, death, permanent disability or termination prior to retirement, a participant may elect to receive the payout of his or her vested account balance in the form of installments, an annuity or a lump sum. A participant may elect to defer payment of benefits until attainment of age 65. EXPENSES The Plan Sponsor pays substantially all costs of Plan administration. B. SUMMARY OF ACCOUNTING POLICIES INVESTMENT VALUATION Investments in the Guaranteed Income Fund are stated at fair value as determined by CIGNA, which approximates contract value. CIGNA has the right to defer certain disbursements (excluding retirement, termination, and death or disability disbursements) or transfers from the Guaranteed Income Fund when total amounts disbursed from the pool in a given calendar year exceed 10% of the total assets in that pool on January 1 of that year. All other investments are stated at fair value based on quoted market prices, as determined by the Trustee, on the last business day of the Plan year. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. 5 30 Helsel, Inc. Employees' Retirement Plan Notes to Financial Statements--Continued B. SUMMARY OF ACCOUNTING POLICIES--CONTINUED RECLASSIFICATION Certain amounts in the 1998 financial statements have been reclassified to conform to the 1999 presentation. C. INVESTMENTS During 1999, the Plan's investments (including investments purchased, sold, as well as held, during the year) appreciated in fair value as follows: Net Realized and Unrealized Appreciation in Fair Value of Investments -------------- Pooled separate accounts $ 575,527 ============= The fair value of individual investments that represent 5% or more of the Plan's net assets are as follows: DECEMBER 31 1999 1998 --------------------------------- Guaranteed Income Fund $ 349,927 CIGNA Lifetime 40 Fund 625,507 $ 471,015 CIGNA Lifetime 50 Fund 3,213,977 2,941,666 CIGNA Lifetime 60 Fund 512,425 405,986 D. PLAN TERMINATION Although it has not expressed any intent to do so, the Plan Sponsor has the right under the Plan 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 become 100% vested in their accounts. 6 31 Helsel, Inc. Employees' Retirement Plan Notes to Financial Statements--Continued E. INCOME TAX STATUS The Plan has received a determination letter from the Internal Revenue Service dated January 12, 1996, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the "IRC") and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification. The Plan Administrator believes the Plan is being operated in compliance with the applicable requirements of the IRC and, therefore, believes that the Plan is qualified and the related trust is tax exempt. 7 32 Helsel, Inc. Employees' Retirement Plan EIN--35-1957561 Plan--001 Schedule H, Line 4i--Schedule of Assets Held for Investment Purposes at End of Year December 31, 1999
Identity of Issue, Borrower, Current Lessor, or Similar Party/Description of Investment Cost Value - ---------------------------------------------------------------------------------------------------------------------- * Connecticut General Life Insurance Company--Group Annuity Contract: Guaranteed Income Fund $ 349,927 $ 349,927 Stock Market Index Fund 93,591 115,443 Fidelity Advisor Growth Opportunity Fund 272 504 CIGNA Lifetime 20 Fund 3,090 3,784 CIGNA Lifetime 30 Fund 131,737 216,278 CIGNA Lifetime 40 Fund 431,175 625,507 CIGNA Lifetime 50 Fund 2,388,132 3,213,977 CIGNA Lifetime 60 Fund 414,848 512,425 Janus Worldwide Fund 5,392 6,473 Janus Fund 27,938 46,637 White Oak Growth Stock Fund 5,130 6,860 American Century Ultra Fund 450 651 --------------------------------- TOTAL ASSETS HELD FOR INVESTMENT PURPOSES $ 3,851,682 $ 5,098,466 =================================
* Represents a party-in-interest to the Plan. 8 33 AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE Helsel, Inc. Employees' Savings and Investment Plan December 31, 1999 with Report of Independent Auditors 34 Helsel, Inc. Employees' Savings and Investment Plan Financial Statements and Supplemental Schedule December 31, 1999 TABLE OF CONTENTS Report of Independent Auditors......................................... 1 FINANCIAL STATEMENTS Statements of Net Assets Available for Benefits ....................... 2 Statement of Changes in Net Assets Available for Benefits ............. 3 Notes to financial statements.......................................... 4 SUPPLEMENTAL SCHEDULE Schedule H, Line 4i--Schedule of Assets Held for Investment Purposes at End of Year............................................. 8 35 Report of Independent Auditors Plan Administrator Helsel, Inc. Employees' Savings and Investment Plan We have audited the accompanying statements of net assets available for benefits of the Helsel, Inc. Employees' Savings and Investment Plan as of December 31, 1999 and 1998, and the related statement of changes in net assets available for benefits for the year ended December 31, 1999. 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 auditing standards generally accepted in the 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 at December 31, 1999 and 1998, and the changes in its net available for benefits for the year ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets held for investment purposes at end of year as of December 31, 1999 is presented for purposes of additional analysis and is not a required part of the 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. This supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. /s/ Ernst & Young LLP Cleveland, Ohio June 14, 2000 1 36 Helsel, Inc. Employees' Savings and Investment Plan Statements of Net Assets Available for Benefits DECEMBER 31 1999 1998 -------------------------------- ASSETS Investments, at fair value: Pooled separate accounts $ 1,822,670 $ 1,801,872 Guaranteed Income Fund 242,744 64,164 Participant loans 102,624 69,393 -------------------------------- Total investments 2,168,038 1,935,429 Contributions receivable: Employer 3,866 Employee 9,809 -------------------------------- Total receivables 13,675 -------------------------------- NET ASSETS AVAILABLE FOR BENEFITS $ 2,168,038 $ 1,949,104 ================================ See notes to financial statements. 2 37 Helsel, Inc. Employees' Savings and Investment Plan Statement of changes in Net Assets Available for Benefits For the Year Ended December 31, 1999 Additions: Investment income: Net realized and unrealized appreciation in fair value of investments $ 292,445 Interest 12,828 --------------- 305,273 Contributions: Employer 83,484 Employee 257,281 --------------- 340,765 --------------- Total additions 646,038 Deductions: Benefit payments 425,170 Fees and expenses 1,934 --------------- Total deductions 427,104 --------------- Net increase 218,934 Net assets available for benefits at beginning of year 1,949,104 --------------- NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 2,168,038 =============== See notes to financial statements. 3 38 Helsel, Inc. Employees' Savings and Investment Plan Notes to Financial Statements December 31, 1999 A. DESCRIPTION OF PLAN The following description of the Helsel, Inc. Employees' Savings and Investment Plan (the "Plan") provides only general information. Participants should refer to the summary plan description for a more complete description of the Plan's provisions. GENERAL The Plan is a defined contribution plan with a cash or deferred arrangement provision established by Helsel, Inc. (the "Company" and "Plan Sponsor") effective as of January 1, 1985, covering all non-union employees of the Company who have completed six months of service. Helsel, Inc. is a wholly-owned subsidiary of Hawk Corporation. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Effective July 1, 1998, the Plan changed its plan year from June 30 to December 31. CONTRIBUTIONS Eligible participants may make contributions in any amount up to 15% of their compensation for the Plan year. The Plan Sponsor makes a matching contribution equal to 50% of the participant's contribution up to 4% of the participant's compensation. Additional discretionary amounts may be contributed at the option of the Company's management. No additional discretionary amounts were contributed in 1998 and 1999. PARTICIPANT ACCOUNTS Each participant's account is credited with the participant's contributions and allocations of (a) the Plan Sponsor's contributions and (b) Plan earnings. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account. VESTING Participants are immediately vested in their contributions. Vesting of employer matching contributions is based upon years of continuous service. A participant is 100% vested after six years of credited service based on a graded vesting schedule. 4 39 Helsel, Inc. Employees' Savings and Investment Plan Notes to Financial Statements--Continued A. DESCRIPTION OF PLAN--CONTINUED INVESTMENT OPTIONS The Plan's funds are primarily held in a group annuity contract issued by Connecticut General Life Insurance Company ("CIGNA" or the "Trustee"). A participant may direct employer and employee contributions in any of several investment options. Effective January 1, 1999, the Plan was amended to allow participants to invest in the Hawk Corporation Stock Fund. The Plan did not hold any Hawk Corporation stock at December 31, 1999. PARTICIPANT LOANS Participants may borrow from their fund accounts up to the lesser of $50,000 or 50% of their vested balance. Loan terms range from 1 to 5 years except for the purchase of a primary residence. The terms of such a loan are determined by the Company based on maturity dates quoted by commercial banks for a similar loan. The loans are secured by the balance in the participant's account and bear interest at a rate commensurate with local prevailing rates at the time of application. Principal and interest is paid through monthly payroll deductions. PAYMENT OF BENEFITS In the case of normal retirement, death, permanent disability or termination prior to retirement, a participant may elect to receive the payout of his or her vested account balance in the form of installments, an annuity or a lump sum. A participant may elect to defer payment of benefits until attainment of age 65. EXPENSES The Plan Sponsor pays substantially all costs of Plan administration. 5 40 Helsel, Inc. Employees' Savings and Investment Plan Notes to Financial Statements--Continued B. SUMMARY OF ACCOUNTING POLICIES INVESTMENT VALUATION Investments in the Guaranteed Income Fund are stated at fair value as determined by CIGNA, which approximates contract value. CIGNA has the right to defer certain disbursements (excluding retirement, termination, and death or disability disbursements) or transfers from the Guaranteed Income Fund when total amounts disbursed from the pool in a given calendar year exceed 10% of the total assets in that pool on January 1 of that year. All other investments are stated at fair value based on quoted market prices, as determined by the Trustee on the last business day of the Plan year. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that effect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. RECLASSIFICATION Certain amounts in the 1998 financial statements have been reclassified to conform to the 1999 presentation. C. INVESTMENTS During 1999, the Plan's investments (including investments purchased, sold as well as held during the year) appreciated in fair value as follows: Net Realized and Unrealized Appreciation in Fair Value of Investments -------------- Pooled separate accounts $ 292,445 ============= 6 41 Helsel, Inc. Employees' Savings and Investment Plan Notes to Financial Statements--Continued C. INVESTMENTS--CONTINUED The fair value of individual investments that represent 5% or more of the Plan's net assets are as follows: DECEMBER 31 1999 1998 --------------------------------- Guaranteed Income Fund $ 242,744 CIGNA Lifetime 30 Fund 139,428 $ 166,626 CIGNA Lifetime 40 Fund 482,196 579,231 CIGNA Lifetime 50 Fund 973,008 919,126 CIGNA Lifetime 60 Fund 115,670 D. PLAN TERMINATION Although it has not expressed any intent to do so, the Plan Sponsor has the right under the Plan 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 become 100% vested in their accounts. E. INCOME TAX STATUS The Plan has received a determination letter from the Internal Revenue Service, dated January 11, 1996, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the "IRC") and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification. The Plan Administrator believes the Plan is being operated in compliance with the applicable requirements of the IRC and, therefore, believes that the Plan is qualified and the related trust is tax exempt. 7 42 Helsel, Inc. Employees' Savings and Investment Plan EIN--35-1957561 Plan--002 Schedule H, Line 4i--Schedule of Assets Held for Investment Purposes at End of Year December 31, 1999
Identity of Issue, Borrower, Current Lessor, or Similar Party/Description of Investment Cost Value - -------------------------------------------------------------------------------------------------------------- * Connecticut General Life Insurance Company--Group Annuity Contract: Guaranteed Income Fund $ 242,744 $ 242,744 CIGNA Lifetime 20 Fund 4,857 5,948 CIGNA Lifetime 30 Fund 110,507 139,428 CIGNA Lifetime 40 Fund 372,025 482,196 CIGNA Lifetime 50 Fund 781,050 973,008 CIGNA Lifetime 60 Fund 70,882 79,650 CIGNA Stock Market Index Fund 25,507 32,857 Fidelity Advisor Growth Opportunity Fund 410 454 Warburg Pincus Emerging Growth Fund 2,003 2,104 American Century Ultra Fund 1,766 2,006 Janus Fund 44,083 52,919 Janus Worldwide Fund 45,082 51,082 White Oak Growth Stock Fund 762 1,018 * Participant Loans 102,624 --------------------------------- TOTAL ASSETS HELD FOR INVESTMENT PURPOSES $ 1,701,678 $ 2,168,038 =================================
* Represents a party-in-interest to the Plan. 8 43 FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE Sinterloy Corporation 401(k) Plan December 31, 1999 44 Sinterloy Corporation 401(k) Plan Financial Statements and Supplemental Schedule December 31, 1999 TABLE OF CONTENTS FINANCIAL STATEMENTS Statements of Net Assets Available for Benefits........................ 1 Statement of Changes in Net Assets Available for Benefits............... 2 Notes to Financial Statements........................................... 3 SUPPLEMENTAL SCHEDULE Schedule H, Line 4i--Schedule of Assets Held for Investment Purposes at End of Year.................................. 7 45 Sinterloy Corporation 401(k) Plan Statements of Net Assets Available for Benefits DECEMBER 31 1999 1998 -------------------------------- ASSETS Investments, at fair value: Cash and cash equivalents $ 779,413 Pooled separate accounts $ 356,502 Guaranteed Income Fund 598,803 Hawk Corporation Stock Fund 22,410 Participant loans 43,254 50,199 -------------------------------- Total investments 1,020,969 829,612 Contribution receivable: Employer 20,000 20,000 -------------------------------- NET ASSETS AVAILABLE FOR BENEFITS $ 1,040,969 $ 849,612 ================================ See notes to financial statements. 1 46 Sinterloy Corporation 401(k) Plan Statement of Changes in Net Assets Available for Benefits Year Ended December 31, 1999 Additions: Investment income: Net realized and unrealized appreciation in fair value of investments $ 50,224 Interest 41,115 -------------- 91,339 Contributions: Employer 47,225 Employee 91,291 -------------- 138,516 -------------- Total additions 229,855 Deductions: Benefit payments 32,772 Fees and expenses 5,726 -------------- Total deductions 38,498 Net increase 191,357 Net assets available for benefits at beginning of year 849,612 -------------- NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 1,040,969 ============== See notes to financial statements. 2 47 Sinterloy Corporation 401(k) Plan Notes to Financial Statements December 31, 1999 A. DESCRIPTION OF THE PLAN The following description of the Sinterloy Corporation 401(k) Plan (the "Plan") provides only general information. Participants should refer to the summary plan description for a more complete description of the Plan's provisions. GENERAL The Plan was established January 1, 1995 as a defined contribution plan covering all non-union employees of Sinterloy Corporation (the "Company" and "Plan Sponsor") who have completed one year of service, as defined. Sinterloy Corporation is a wholly owned subsidiary of Hawk Corporation. Effective January 1999, the Plan assets were transferred from Trust Company of Illinois to Connecticut General Life Insurance Company ("CIGNA" or the "Trustee"). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). CONTRIBUTIONS Participants may elect to contribute not less than 1% nor more than 10% of their pretax compensation to the Plan subject to maximum limitations set by the Internal Revenue Code. The Plan Sponsor matches participant contributions at the rate of 50%. The Plan Sponsor may also make a discretionary profit sharing contribution. Employer discretionary contributions are allocated based on the proportion a participant's compensation bears to the total compensation paid to all eligible participants. During the first quarter of 2000, the Plan Sponsor made a discretionary profit sharing contribution of $20,000 for the 1999 Plan year. Forfeited balances of terminated participants' non-vested accounts are allocated to participants under the same manner as the employer discretionary contribution. At December 31, 1999, there were no forfeitures available to allocate to participants. PARTICIPANT ACCOUNTS Each participant's account is credited with the participant's contributions and allocations of (a) the Plan Sponsor's contributions and (b) Plan earnings. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account. 3 48 Sinterloy Corporation 401(k) Plan Notes to Financial Statements--Continued A. DESCRIPTION OF THE PLAN--CONTINUED VESTING AND DISTRIBUTIONS Participants are immediately vested in their contributions. Prior to January 1, 1999, participants were 100% vested in employer matching contributions. Beginning January 1, 1999, vesting of employer discretionary and matching contributions is based upon years of continuous service. A participant is 100% vested after six years of credited service based on a graded vesting schedule. INVESTMENT OPTIONS The Plan's funds are primarily held in a group annuity contract issued by CIGNA. A participant may direct employer and employee contributions in any of several investment options. Effective January 1999, the Plan was amended to allow participants to invest in the Hawk Corporation Stock Fund. PARTICIPANT LOANS Participants may borrow from their fund accounts up to the lesser of $50,000 or 50% of their vested balance. Loan terms range from 1 to 5 years. The terms of such a loan are determined by the Company based on maturity dates quoted by commercial banks for a similar loan. The loans are secured by the balance in the participant's account and bear interest at a rate commensurate with local prevailing rates at the time of application. Principal and interest is paid through monthly payroll deductions. PAYMENT OF BENEFITS In the case of normal retirement, death, permanent disability or termination prior to retirement, a participant may elect to receive the payout of his or her vested account balance in the form of installments, an annuity or lump sum. EXPENSES The Plan Sponsor pays substantially all costs of Plan administration. 4 49 Sinterloy Corporation 401(k) Plan Notes to Financial Statements--Continued B. SUMMARY OF ACCOUNTING POLICIES INVESTMENT VALUATION Investments in the Guaranteed Income Fund are stated at fair value as determined by CIGNA, which approximates contract value. CIGNA has the right to defer certain disbursements (excluding retirement, termination, and death or disability disbursements) or transfers from the Guaranteed Income Fund when total amounts disbursed from the pool in a given calendar year exceed 10% of the total assets in that pool on January 1 of that year. All other investments are stated at fair value based on quoted market prices, as determined by the Trustee, on the last business day of the Plan year. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. C. INVESTMENTS During 1999, the Plan's investments (including investments purchased, sold, as well as held, during the year) appreciated in fair value as follows: Net Realized and Unrealized Appreciation in Fair Value of Investments -------------- Pooled separate accounts $ 47,593 Hawk Corporation Stock Fund 2,631 ------------- $ 50,224 ============= 5 50 Sinterloy Corporation 401(k) Plan Notes to Financial Statements--Continued The fair value of individual investments that represent 5% or more of the Plan's net assets are as follows: DECEMBER 31 1999 1998 --------------------------------- Guaranteed Income Fund $ 598,804 Stock Market Index Fund 160,309 White Oak Growth Stock Fund 52,931 Cash and cash equivalents $ 779,413 D. PLAN TERMINATION Although it has not expressed any intent to do so, the Plan Sponsor has the right under the Plan 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 become 100% vested in their accounts. E. INCOME TAX STATUS The Plan has received a determination letter from the Internal Revenue Service dated March 28, 1995, stating that the Plan qualifies under Section 401(a) of the Internal Revenue Code (the "IRC") and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification. The Plan Sponsor believes the Plan is being operated in compliance with the applicable requirements of the IRC and therefore believes that the Plan is qualified and the related trust is tax exempt. 6 51 Sinterloy Corporation 401(k) Plan Employer Identification Number: 31-1549254 Plan Number: 005 Schedule H, Line 4i--Schedule of Assets Held for Investment Purposes at End of Year December 31, 1999
Identity of Issue, Borrower, Lessor, or Current Similar Party/Description of Investment Cost Value - ---------------------------------------------------------------------------------------------------------------------- * Connecticut General Life Insurance Company--Group Annuity Contract: Guaranteed Income Fund $ 598,804 $ 598,804 Stock Market Index Fund 142,317 160,309 Fidelity Advisor Growth Opportunity Fund 5,935 6,065 Warburg Pincus Emerging Growth Fund 4,844 5,785 CIGNA Lifetime 20 Fund 5,835 6,747 CIGNA Lifetime 30 Fund 23,680 26,478 CIGNA Lifetime 40 Fund 10,878 12,426 CIGNA Lifetime 50 Fund 2,833 3,067 CIGNA Lifetime 60 Fund 602 625 Janus Worldwide Fund 16,123 20,549 Janus Fund 38,517 44,791 White Oak Growth Stock Fund 46,184 52,931 American Century Ultra Fund 14,801 16,728 Hawk Corporation Stock Fund 19,233 22,410 * Participant loans - 43,254 --------------------------------- TOTAL ASSETS HELD FOR INVESTMENT PURPOSES $ 930,586 $ 1,020,969 =================================
* Represents a party-in-interest to the Plan. 7 52 FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE Hutchinson Products LLC Employees' 401(k) Plan December 31, 1999 53 Hutchinson Products LLC Employees' 401(k) Plan Financial Statements and Supplemental Schedule December 31, 1999 TABLE OF CONTENTS FINANCIAL STATEMENTS Statements of Net Assets Available for Benefits.......................... 1 Statement of Changes in Net Assets Available for Benefits................ 2 Notes to Financial Statements............................................ 3 SUPPLEMENTAL SCHEDULE Schedule H, Line 4i--Schedule of Assets Held for Investment Purposes at End of Year................................... 7 54 Hutchinson Products LLC Employees' 401(k) Plan Statements of Net Assets Available for Benefits DECEMBER 31 1999 1998 --------------------------------- ASSETS Investments, at fair value: Pooled separate accounts $ 3,116,275 $ 2,289,154 Guaranteed Income Fund 600,844 623,595 --------------------------------- Total investments 3,717,119 2,912,749 Contribution receivable: Employer 5,000 5,000 --------------------------------- Net assets available for benefits $ 3,722,119 $ 2,917,749 ================================= See notes to financial statements. 1 55 Hutchinson Products LLC Employees' 401(k) Plan Statement of Changes in Net Assets Available for Benefits Year Ended December 31, 1999 Additions: Investment income: Net realized and unrealized appreciation in fair value of investments $ 917,440 Interest 23,406 -------------- 940,846 Contributions: Employer 5,000 Employee 131,528 -------------- 136,528 -------------- Total additions 1,077,374 Deductions: Benefit payments 272,754 Fees and expenses 250 -------------- Total deductions 273,004 Net increase 804,370 Net assets available for benefits at beginning of year 2,917,749 -------------- NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 3,722,119 ============== See notes to financial statements. 2 56 Hutchinson Products LLC Employees' 401(k) Plan Notes to Financial Statements December 31, 1999 A. DESCRIPTION OF THE PLAN The following description of the Hutchinson Products LLC Employees' 401(k) plan (the "Plan") provides only general information. Participants should refer to summary plan description for a more complete description of the Plan's provisions. GENERAL The Plan was established January 1, 1993 as a defined contribution plan covering all full-time employees of Hutchinson Products LLC (the "Company" and "Plan Sponsor") who have completed three months of service, as defined. Hutchinson Products LLC is a wholly owned subsidiary of Hawk Corporation. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). CONTRIBUTIONS Participants may elect to contribute not less than 1% nor more than 15% of their pretax compensation to the Plan subject to maximum limitations set by the Internal Revenue Code. The Plan allows for discretionary contributions by the Plan Sponsor from available business profits. Employer contributions are allocated based on the proportion a participant's compensation bears to the total compensation paid to all eligible participants. During the first quarter of 2000, the Plan Sponsor made a discretionary profit sharing contribution of $5,000 for the 1999 Plan year. Forfeited balances of terminated participants' non-vested accounts are used to reduce future Company contributions. At December 31, 1999, $ 1,079 in forfeitures was available to reduce the Company's future contributions. PARTICIPANT ACCOUNTS Each participant's account is credited with the participant's contributions and allocations of (a) the Plan Sponsor's contributions and (b) Plan earnings. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account. 3 57 Hutchinson Products LLC Employees' 401(k) Plan Notes to Financial Statements (continued) A. DESCRIPTION OF THE PLAN (CONTINUED) VESTING AND DISTRIBUTIONS Participants are immediately vested in their contributions. Vesting of employer discretionary contributions is based upon years of continuous service. A participant is 100% vested after six years of credited service based on a graded vesting schedule. INVESTMENT OPTIONS The Plan's funds are primarily held in a group annuity contract issued by Connecticut General Life Insurance Company ("CIGNA" or the "Trustee"). A participant may direct employer and employee contributions in any of several investment options. Effective January 1999, the Plan was amended to allow participants to invest in the Hawk Corporation Stock Fund. PAYMENT OF BENEFITS In the case of normal retirement, death, permanent disability or termination prior to retirement, a participant may elect to receive the payout of his or her vested account balance in the form of installments, an annuity or a lump sum. EXPENSES The Plan Sponsor pays substantially all costs of Plan administration. B. SUMMARY OF ACCOUNTING POLICIES INVESTMENT VALUATION Investments in the Guaranteed Income Fund are stated at fair value as determined by CIGNA, which approximates contract value. CIGNA has the right to defer certain disbursements (excluding retirement, termination, and death or disability disbursements) or transfers from the Guaranteed Income Fund when total amounts disbursed from the pool in a given calendar year exceed 10% of the total assets in that pool on January 1 of that year. All other investments are stated at fair value based on quoted market prices, as determined by the Trustee, on the last business day of the Plan year. 4 58 Hutchinson Products LLC Employees' 401(k) Plan Notes to Financial Statements (continued) B. SUMMARY OF ACCOUNTING POLICIES (CONTINUED) USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. C. INVESTMENTS During 1999, the Plan's investments (including investments purchased, sold, as well as held, during the year) appreciated in fair value as follows: NET REALIZED AND UNREALIZED APPRECIATION IN FAIR VALUE OF INVESTMENTS -------------- Pooled separate accounts $ 917,440 ============= The fair value of individual investments that represent 5% or more of the Plan's net assets are as follows: DECEMBER 31 1999 1998 --------------------------------- Guaranteed Long-Term Fund $ 600,844 $ 623,595 Fidelity Advisor Growth Opportunity Fund 256,881 245,778 Janus Fund 754,424 499,874 American Century Ultra Fund 1,716,479 1,262,743 Janus Worldwide Fund 188,456 5 59 Hutchinson Products LLC Employees' 401(k) Plan Notes to Financial Statements December 31, 1999 D. PLAN TERMINATION Although it has not expressed any intent to do so, the Plan Sponsor has the right under the Plan 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 become 100% vested in their accounts. E. INCOME TAX STATUS The Plan has received a determination letter from the Internal Revenue Service dated September 23, 1994, stating that the Plan qualifies under Section 401(a) of the Internal Revenue Code (the "IRC") and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification. The Plan Administrator believes the Plan is being operated in compliance with the applicable requirements of the IRC and therefore believes that the Plan is qualified and the related trust is tax exempt. 6 60 Hutchinson Products LLC Employees' 401(k) Plan Employer Identification Number: 34-1608009 Plan Number: 005 Schedule H, Line 4i--Schedule of Assets Held for Investment Purposes at End of Year December 31, 1999
Identity of Issue, Borrower, Lessor or Current Similar Party/Description of Investment Cost Value - --------------------------------------------------------------------------------------------------------------------- * Connecticut General Life Insurance Company--Group Annuity Contract: Guaranteed Income Fund $ 600,844 $ 600,844 Stock Market Index Fund 8,434 12,870 Fidelity Advisor Growth Opportunity Fund 190,907 256,881 Warburg Pincus Emerging Growth Fund 959 1,450 CIGNA Lifetime 20 Fund 1,361 1,818 CIGNA Lifetime 40 Fund 45,643 63,356 Janus Worldwide Fund 103,161 188,456 Janus Fund 391,502 754,424 White Oak Growth Stock Fund 93,582 120,541 American Century Ultra Fund 882,154 1,716,479 ------------------------------- Total assets held for investment purposes $ 2,318,547 $ 3,717,119 ===============================
* Represents a party-in-interest to the Plan. 7 61 FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE Hawk Corporation 401(k) Savings and Retirement Plan December 31, 1999 62 Hawk Corporation 401(k) Savings and Retirement Plan Financial Statements and Supplemental Schedule December 31, 1999 TABLE OF CONTENTS FINANCIAL STATEMENTS Statements of Net Assets Available for Benefits........................... 1 Statement of Changes in Net Assets Available for Benefits................. 2 Notes to Financial Statements............................................. 3 SUPPLEMENTAL SCHEDULE Schedule H, Line 4i--Schedule of Assets Held for Investment Purposes at End of Year.................................... 7 63 Hawk Corporation 401(k) Savings and Retirement Plan Statements of Net Assets Available for Benefits DECEMBER 31, 1999 --------------- ASSETS Investments, at fair value: Pooled separate accounts $ 1,123,486 Guaranteed Income Fund 41,075 Hawk Corporation Stock Fund 15,474 Participant loans 44,306 ------------ Total investments 1,224,341 Contribution receivable: Employer 91,320 ------------ NET ASSETS AVAILABLE FOR BENEFITS $ 1,315,661 ============ See notes to financial statements. 1 64 Hawk Corporation 401(k) Savings and Retirement Plan Statement of Changes in Net Assets Available for Benefits Year Ended December 31, 1999 Additions: Investment income: Net realized and unrealized appreciation in fair value of investments $ 210,073 Interest 3,254 -------------- 213,327 Contributions: Employer 146,137 Employee 151,810 -------------- 297,947 -------------- Total additions 511,274 Deductions: Benefit payments 576 Fees and expenses 542 -------------- Total deductions 1,118 Transfers from other plans 805,505 -------------- Net increase 1,315,661 Net assets available for benefits at beginning of year - -------------- NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 1,315,661 ============== See notes to financial statements. 2 65 Hawk Corporation 401(k) Savings and Retirement Plan Notes to Financial Statements December 31, 1999 A. DESCRIPTION OF THE PLAN The following description of the Hawk Corporation 401(k) Savings and Retirement Plan (the "Plan") provides only general information. Participants should refer to summary plan description for a more complete description of the Plan's provisions. GENERAL The Plan was established January 1, 1999 as a defined contribution plan. The participating employers of the Hawk Corporation 401(k) Savings and Retirement Plan are Clearfield Powdered Metals, Inc. ("Clearfield") and Allegheny Powder Metallurgy, Inc. ("Allegheny") (collectively the "Company" and "Plan Sponsor"). The Plan covers all non-union employees of the Company who have completed one year of service, as defined. Clearfield and Allegheny are wholly owned subsidiaries of Hawk Corporation. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). CONTRIBUTIONS Participants may elect to contribute not less than 1% nor more than 15% of their pretax compensation to the Plan subject to maximum limitations set by the Internal Revenue Code. The Company makes a matching contribution equal to 50% of the participant's contributions up to 4% of the participant's compensation. The Company contributes to the Plan an amount equal to 2.5% of each eligible participant's compensation, as defined. Forfeited balances of terminated participants' non-vested accounts are used to reduce future Company contributions. At December 31, 1999, $602 in forfeitures was available to reduce the Company's future contributions. PARTICIPANT ACCOUNTS Each participant's account is credited with the participant's contributions and allocations of (a) the Plan Sponsor's contributions and (b) Plan earnings. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account. 3 66 Hawk Corporation 401(k) Savings and Retirement Plan Notes to Financial Statements (continued) A. DESCRIPTION OF THE PLAN (CONTINUED) VESTING Participants are immediately vested in their contributions. Vesting of employer contributions is based upon years of continuous service. A participant is 100% vested after five years of credited service based on a graded vesting schedule. INVESTMENT OPTIONS The Plan's funds are primarily held in a group annuity contract issued by Connecticut General Life Insurance Company ("CIGNA" or the "Trustee"). A participant may direct employer and employee contributions in any of several investment options. PARTICIPANT LOANS Participants may borrow from their fund accounts up to the lesser of $50,000 or 50% of their vested balance attributable to employee pre-tax, employer matching and rollover contributions. Loan terms range from 1 to 5 years. The terms of such a loan are determined by the Company based on maturity dates quoted by commercial banks for a similar loan. The loans are secured by the balance in the participant's account and bear interest at a rate commensurate with local prevailing rates at the time of application. Principal and interest is paid through monthly payroll deductions. PAYMENT OF BENEFITS In the case of normal retirement, death, permanent disability or termination prior to retirement, a participant may elect to receive the payout of his or her vested account balance in the form of installments, an annuity or lump sum. EXPENSES The Plan Sponsor pays substantially all costs of Plan administration. 4 67 Hawk Corporation 401(k) Savings and Retirement Plan Notes to Financial Statements (continued) B. SUMMARY OF ACCOUNTING POLICIES INVESTMENT VALUATION Investments in the Guaranteed Income Fund are stated at fair value as determined by CIGNA, which approximates contract value. CIGNA has the right to defer certain disbursements (excluding retirement, termination, and death or disability disbursements) or transfers from the Guaranteed Income Fund when total amounts disbursed from the pool in a given calendar year exceed 10% of the total assets in that pool on January 1 of that year. All other investments are stated at fair value based on quoted market prices, as determined by the Trustee, on the last business day of the Plan year. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. C. INVESTMENTS During 1999, the Plan's investments (including investments purchased, sold, as well as held, during the year) appreciated in fair value as follows: Net Realized and Unrealized Appreciation in Fair Value of Investments -------------- Pooled separate accounts $ 213,223 Hawk Corporation Stock Fund (3,150) -------------- $ 210,073 ============= 5 68 Hawk Corporation 401(k) Savings and Retirement Plan Notes to Financial Statements (continued) The fair value of individual investments that represent 5% or more of the Plan's net assets are as follows: DECEMBER 31, 1999 ------------ American Century Ultra Fund $ 712,513 Fidelity Advisor Growth Opportunity Fund 189,396 CIGNA Lifetime 40 Fund 63,000 D. PLAN TERMINATION Although it has not expressed any intent to do so, the Plan Sponsor has the right under the Plan 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 become 100% vested in their accounts. E. INCOME TAX STATUS The Plan has applied for a determination letter from the Internal Revenue Service, stating that the Plan qualifies under Section 401(a) of the Internal Revenue Code (the "IRC") and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification. The Plan Sponsor believes the Plan is being operated in compliance with the applicable requirements of the IRC and therefore believes that the Plan will be qualified and that the related trust is tax exempt. 6 69 Hawk Corporation 401(k) Savings and Retirement Plan Employer Identification Number: 34-1608156 Plan Number: 005 Schedule H, Line 4i--Schedule of Assets Held for Investment Purposes at End of Year December 31, 1999
Identity of Issue, Borrower, Lessor, or Current Similar Party/ Description of Investment Cost Value - ----------------------------------------------------------------------------------------------------------------------- * Connecticut General Life Insurance Company--Group Annuity Contract: Guaranteed Income Fund $ 41,075 $ 41,075 Stock Market Index Fund 30,848 36,989 Fidelity Advisor Growth Opportunity Fund 183,442 189,396 Warburg Pincus Emerging Growth Fund 1,855 2,777 CIGNA Lifetime 20 Fund 8,289 10,443 CIGNA Lifetime 30 Fund 7,791 9,573 CIGNA Lifetime 40 Fund 54,476 63,000 CIGNA Lifetime 50 Fund 2,117 2,595 CIGNA Lifetime 60 Fund 1,851 2,348 Janus Worldwide Fund 25,516 38,281 Janus Fund 21,916 30,260 White Oak Growth Stock Fund 18,775 25,311 American Century Ultra Fund 531,447 712,513 Hawk Corporation Stock Fund 17,554 15,474 * Participant Loans - 44,306 ----------------------------------- TOTAL ASSETS HELD FOR INVESTMENT PURPOSES $ 946,952 $ 1,224,341 ===================================
* Represents a party-in-interest to the Plan. 7 EX-23 2 ex23.txt EXHIBIT 23 1 EXHIBIT 23 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-68583) pertaining to the Friction Products Co. Profit Sharing Plan, the S.K. Wellman Retirement Savings and Profit Sharing Plan, the Helsel, Inc. Employees' Retirement Plan and the Helsel, Inc. Employees' Savings and Investment Plan of our reports dated June 14, 2000, with respect to the financial statements and schedule of the Friction Products Co. Profit Sharing Plan, the S.K. Wellman Retirement Savings and Profit Sharing Plan, the Helsel, Inc. Employees' Retirement Plan and the Helsel, Inc. Employees' Savings and Investment Plan included in this Annual Report (Form 11-K) for the year ended December 31, 1999. /s/ ERNST & YOUNG LLP Cleveland, Ohio June 26, 2000 -----END PRIVACY-ENHANCED MESSAGE-----