TABLE OF CONTENTS

EXPLANATION OF AMENDMENT
	ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
	Audited Consolidated Financial Statements
REPORT OF INDEPENDENT AUDITORS
Part IV
SIGNATURES
EXHIBIT 23.1 CONSENT OF ERNST & YOUNG
EXHIBIT 31.1 302 CERT OF CEO
EXHIBIT 31.2 302 CERT OF CFO
EXHIBIT 32.1 906 CERT OF CEO
EXHIBIT 32.2 906 CERT OF CFO

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K/A
Amendment No. 1

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2003 Commission File No. 001-13797

HAWK CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	34-1608156
(State of Incorporation)	(I.R.S. Employer Identification No.)
200 Public Square, Suite 1500, Cleveland, Ohio	44114-2301
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (216) 861-3553

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Exchange on Which Registered
Class A Common Stock, par value $.01	American Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

      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 report(s)), and (2) has been subject to such filing requirements for the past 90 days.   YES x  NO o

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

      Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).  YES o  NO x

      The aggregate market value of the voting common equity held by non-affiliates as of June 30, 2003 was $19,469,887 (based on the closing price as quoted on the New York Stock Exchange on that date).

      As of February 27, 2004, the Registrant had 8,624,826 shares of Class A Common Stock, net of treasury shares, and 0 shares of Class B non-voting Common Stock outstanding. As of that date, non-affiliates held 5,705,003 shares of Class A Common Stock and 0 shares of Class B non-voting Common Stock.

DOCUMENTS INCORPORATED BY REFERENCE

      As used in this Form 10-K/A, the terms “Company,” “Hawk,” “Registrant,” “we,” “us” and “our” mean Hawk Corporation and its consolidated subsidiaries, taken as a whole, unless the context indicates otherwise. Except as otherwise stated, the information contained in this Form 10-K is as of December 31, 2003.

EXPLANATION OF AMENDMENT

Hawk Corporation is filing this Form 10-K/A as Amendment No. 1 (the “Amendment”) to its Annual Report on Form 10-K for the year ended December 31, 2003 that was filed with the Securities and Exchange Commission on March 26, 2004 for the purpose of correcting immaterial typographical errors which were inadvertently included in the Form 10-K. The typographical errors are summarized below and were included in Hawk’s Consolidated Financial Statements in Item 8 of the Form 10-K.

The corrections made in this Amendment effect only certain line items in segment and supplemental guarantor information in Hawk’s Consolidated Financial Statements and have no effect on the consolidated statement of operations, balance sheets, statements of shareholders’ equity or cash flows, as previously reported. Without limitation, the corrections have no effect on Hawk’s net loss, loss per share, total assets, total liabilities or total equity as previously reported.

Summary of Corrections

1.	Item 8. Note 14 – Business Segments on page 59 in Notes to the Consolidated Financial Statements:
	“Net sales to external customers – precision components” was corrected to “$68,123” from “$68,213.”
2.	Item 8. Note 15 – Supplemental Guarantor Information on page 63 in Notes to the Consolidated Financial Statements:
	The amount of “$793” in “Assets – other current assets” was correctly moved to “Combined Non-Guarantor Subsidiaries” from “Eliminations.”
	The amount of “($794)” in “Assets – Investment in subsidiaries” was correctly moved to “Eliminations” from “Combined Guarantor Subsidiaries.”
	“Assets – Property, plaint and equipment, net” was corrected to “$54,695” from “4,695.”

In connection with the filing of this Amendment and pursuant to Rules 12b-15 and 13a-14 under the Securities Exchange Act of 1934, as amended, we are including with this Amendment certain currently dated certifications and the update of the independent auditors’ consent. Except as described above, no other amendments are being made to the Form 10-K. This Amendment does not reflect events occurring after the March 26, 2004 filing of the Form 10-K, or modify or update the disclosure contained in the Form 10-K in any way other than as required to reflect the corrections discussed above and reflected below.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Hawk Corporation and subsidiaries

December 31, 2003, 2002 and 2001

32

Audited Consolidated Financial Statements

Report of Independent Auditors	34
Consolidated Balance Sheets	35
Consolidated Statements of Operations	37
Consolidated Statements of Shareholders’ Equity	38
Consolidated Statements of Cash Flows	39
Notes to Consolidated Financial Statements	40

33

REPORT OF INDEPENDENT AUDITORS

      Shareholders and Board of Directors

Hawk Corporation

      We have audited the accompanying consolidated balance sheets of Hawk Corporation and subsidiaries as of December 31, 2003 and 2002, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2003. These financial statements are the responsibility of the Company’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 consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Hawk Corporation and subsidiaries at December 31, 2003 and 2002, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States.

      As discussed in Note 2 to the consolidated financial statements, in 2002 the Company changed its method of accounting for goodwill.

/s/ Ernst & Young LLP

Cleveland, Ohio

February 27, 2004

34

HAWK CORPORATION

CONSOLIDATED BALANCE SHEETS

(In Thousands, except share data)

			December 31
			2003		2002
Assets
Current assets:
	Cash and cash equivalents		$	3,365	$	1,702
	Accounts receivable, less allowance of $429 in 2003 and $502 in 2002			32,272		29,475
	Inventories:
		Raw materials and work-in-process		21,277		20,211
		Finished products		14,147		12,470
				35,424		32,681
	Deferred income taxes			3,551		745
	Taxes receivable			521		3,333
	Other current assets			4,032		3,909
	Current assets of discontinued operations			4,302		3,965
Total current assets				83,467		75,810
Property, plant and equipment:
	Land and improvements			1,944		1,676
	Buildings and improvements			19,937		19,415
	Machinery and equipment			104,370		93,180
	Furniture and fixtures			8,405		7,693
	Construction in progress			5,622		6,247
				140,278		128,211
	Less accumulated depreciation and amortization			77,142		66,391
Total property, plant and equipment				63,136		61,820
Other assets:
	Goodwill			32,495		32,495
	Other intangible assets			9,904		10,701
	Shareholder notes			1,000		1,010
	Other			3,547		4,636
	Long-term assets of discontinued operations					6,408
Total other assets				46,946		55,250
Total assets			$	193,549	$	192,880

See notes to consolidated financial statements.

35

HAWK CORPORATION

CONSOLIDATED BALANCE SHEETS — (continued)

		December 31
		2003			2002
Liabilities and shareholders’ equity
Current liabilities:
	Accounts payable	$	21,569		$	16,104
	Accrued compensation		5,736			4,068
	Accrued interest		4,153			372
	Other accrued expenses		8,296			4,655
	Short-term debt		1,326
	Bank Facility		24,059			36,327
	Current portion of long-term debt		1,148			3,103
	Current liabilities of discontinued operations		3,652			2,126
Total current liabilities			69,939			66,755
Long-term liabilities:
	Long-term debt		68,443			68,890
	Deferred income taxes		4,360			5,245
	Other		9,102			6,523
	Long-term debt of discontinued operations					633
Total long-term liabilities			81,905			81,291
Shareholders’ equity:
	Series D preferred stock, $.01 par value; an aggregate liquidation value of $1,530, plus any unpaid dividends with 9.8% cumulative dividend (1,530 shares authorized, issued and outstanding)		1			1
	Series E preferred stock, $.01 par value; 100,000 shares authorized; none issued or outstanding
	Class A common stock, $.01 par value; 75,000,000 shares authorized; 9,187,750 issued; and 8,588,720 and 8,557,990 outstanding in 2003 and 2002, respectively		92			92
	Class B common stock, $.01 par value; 10,000,000 shares authorized; none issued or outstanding
	Additional paid-in capital		54,483			54,616
	Retained (deficit) earnings		(4,344	)		1,228
	Accumulated other comprehensive loss		(4,083	)		(6,436	)
	Treasury stock, at cost, 599,030 and 629,760 shares in 2003 and 2002, respectively		(4,444	)		(4,667	)
Total shareholders’ equity			41,705			44,834
Total liabilities and shareholders’ equity		$	193,549		$	192,880

See notes to consolidated financial statements.

36

HAWK CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, except per share data)

			Year ended December 31
			2003			2002			2001
Net sales			$	202,551		$	185,912		$	176,888
Cost of sales				155,182			141,716			136,140
Gross profit				47,369			44,196			40,748
Operating expenses:
	Selling, technical and administrative expenses			33,731			30,474			28,782
	Restructuring costs									1,055
	Pension curtailment and contractual termination benefit costs			1,920
	Amortization of finite-lived intangible assets			800			767			3,733
Total operating expenses				36,451			31,241			33,570
Income from operations				10,918			12,955			7,178
Interest expense				(10,752	)		(10,366	)		(10,081	)
Interest income				57			116			229
Exchange offer costs							(1,851	)
Other income (expense), net				183			(718	)		(480	)
Income (loss) before income taxes, discontinued operations and cumulative effect of change in accounting principle				406			136			(3,154	)
Income tax provision (benefit)				855			(669	)		(937	)
(Loss) income before discontinued operations and cumulative effect of change in accounting principle				(449	)		805			(2,217	)
Discontinued operations, net of tax of $2,700 in 2003, $825 in 2002 and $921 in 2001				(4,973	)		(1,850	)		(2,119	)
Cumulative effect of change in accounting principle, net of tax of $4,252							(17,200	)
Net loss			$	(5,422	)	$	(18,245	)	$	(4,336	)
(Loss) earnings per share:
	Basic (loss) earnings per share:
		(Loss) earnings before discontinued operations and cumulative effect of change in accounting principle	$	(.07	)	$	.08		$	(.27	)
		Discontinued operations		(.58	)		(.22	)		(.25	)
		Cumulative effect of change in accounting principle					(2.01	)
	Net loss per basic share		$	(.65	)	$	(2.15	)	$	(.52	)
	Diluted (loss) earnings per share:
		(Loss) earnings before discontinued operations and cumulative effect of change in accounting principle	$	(.07	)	$	.08		$	(.27	)
		Discontinued operations		(.58	)		(.22	)		(.25	)
		Cumulative effect of change in accounting principle					(2.00	)
	Net loss per diluted share		$	(.65	)	$	(2.14	)	$	(.52	)

See notes to consolidated financial statements.

37

HAWK CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In Thousands)

													Accumulated Other
													Comprehensive Income
													(Loss)
							Additional			Retained			Foreign			Minimum
			Preferred		Common		Paid-in			Earnings			Currency			Pension			Treasury
			Stock		Stock		Capital			(Deficit)			Translation			Liability			Stock			Total
Balance at January 1, 2001			$	1	$	92	$	54,631		$	24,109		$	(2,326	)	$	(83	)	$	(4,735	)	$	71,689
	Net loss										(4,336	)											(4,336	)
	Other comprehensive loss:
		Minimum pension liability, net of tax of $310															(495	)					(495	)
		Foreign currency translation												(297	)								(297	)
	Total comprehensive loss																						(5,128	)
	Preferred stock dividends										(150	)											(150	)
	Issuance of common stock from treasury as compensation							(5	)											31			26
Balance at December 31, 2001			$	1	$	92	$	54,626		$	19,623		$	(2,623	)	$	(578	)	$	(4,704	)	$	66,437
	Net loss										(1,045	)											(1,045	)
	Other comprehensive income (loss):
		Minimum pension liability, net of tax of $2,435															(3,901	)					(3,901	)
		Foreign currency translation												666									666
	Cumulative change in accounting principle, net of tax										(17,200	)											(17,200	)
	Total comprehensive loss																						(21,480	)
	Preferred stock dividends										(150	)											(150	)
	Issuance of common stock from treasury as compensation							(10	)											37			27
Balance at December 31, 2002			$	1	$	92	$	54,616		$	1,228		$	(1,957	)	$	(4,479	)	$	(4,667	)	$	44,834
	Net loss										(5,422	)											(5,422	)
	Other comprehensive income (loss):
		Minimum pension liability, net of tax of $14															23						23
		Foreign currency translation												2,330									2,330
	Total comprehensive loss																						(3,069	)
	Preferred stock dividends										(150	)											(150	)
	Issuance of common stock from treasury as compensation and exercise of stock options							(133	)											223			90
Balance at December 31, 2003			$	1	$	92	$	54,483		$	(4,344	)	$	373		$	(4,456	)	$	(4,444	)	$	41,705

See notes to consolidated financial statements.

38

HAWK CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

			Year ended December 31
			2003			2002			2001
Cash flows from operating activities
Net loss			$	(5,422	)	$	(18,245	)	$	(4,336	)
Adjustments to reconcile net loss to net cash provided by operating activities:
	Loss from discontinued operations, net of tax			4,973			1,850			2,119
	Cumulative effect of change in accounting principle, net of tax						17,200
	Depreciation and amortization			11,674			11,657			15,071
	Deferred income taxes			(3,699	)		1,406			(637	)
	Loss on fixed assets			204			47			385
	Changes in operating assets and liabilities:
		Accounts receivable		(949	)		(4,047	)		4,063
		Inventories		(1,656	)		(3,110	)		2,552
		Other assets		3,048			(6,962	)		(2,841	)
		Accounts payable		4,494			2,922			1,896
		Accrued expenses		4,090			(7,208	)		830
		Other liabilities and other		6,904			(3,161	)		(2,251	)
Net cash provided by (used in) operating activities of continuing operations				23,661			(7,651	)		16,851
Net cash provided by (used in) operating activities of discontinued operations				2,299			4,861			(2,397	)
Cash flows from investing activities
Purchases of property, plant and equipment				(10,677	)		(9,729	)		(8,053	)
Proceeds from sale of assets				568
Net cash used in investing activities of continuing operations				(10,109	)		(9,729	)		(8,053	)
Net cash used in investing activities of discontinued operations				(308	)		(1,075	)		(1,043	)
Cash flows from financing activities
Proceeds from short-term debt				1,326
Proceeds from long-term debt				627			53,370			40,457
Payments on long-term debt				(2,960	)		(47,615	)		(46,520	)
Payment on Old Senior Notes				(583	)
Pay off of Term Loan and Revolving Credit Facility							(29,784	)
Proceeds from Bank Facility				68,173			52,165
Payments on Bank Facility				(80,441	)		(15,838	)
Proceeds from exercise of stock options				59
Payments of preferred stock dividends				(150	)		(150	)		(150	)
Net cash (used in) provided by financing activities of continuing operations				(13,949	)		12,148			(6,213	)
Effect of exchange rate changes on cash				69			64			(71	)
Net cash (used in) provided by continuing operations				(328	)		(5,168	)		2,514
Net cash provided by (used in) discontinued operations				1,991			3,786			(3,440	)
Net increase (decrease) in cash and cash equivalents				1,663			(1,382	)		(926	)
Cash and cash equivalents at beginning of year				1,702			3,084			4,010
Cash and cash equivalents at end of year			$	3,365		$	1,702		$	3,084
Supplemental cash flow information
Cash payments for interest			$	5,556		$	9,975		$	8,940
Cash (refunds) payments for income taxes, net			$	(1,879	)	$	(2,371	)	$	871
Noncash investing and financing activities:
	Equipment purchased with capital leases and notes payable		$	546		$	20		$	422
	Issuance of common stock from treasury		$	30		$	27		$	26
	Issuance of payment in kind (PIK) payments in the form of Senior Notes		$	124
	Issuance of consent payments in the form of Senior Notes					$	1,642

See notes to consolidated financial statements.

39

HAWK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2003, 2002 and 2001

(In Thousands, Except Share Data)

1. Basis of Presentation

      Hawk Corporation (the Company) designs, engineers, manufactures and markets specialized components used in a wide variety of aerospace, industrial and commercial applications.

      The consolidated financial statements of the Company include its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in the accompanying financial statements.

      Certain amounts have been reclassified in prior periods to conform to the 2003 presentation.

2. Significant Accounting Policies

Use of Estimates

      The preparation of financial statements in conformity with accounting principles generally accepted in the United States (GAAP) 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.

Cash Equivalents

      The Company considers investments in highly liquid investments with an initial maturity of three months or less when purchased to be cash equivalents.

Trade Receivables

      The Company has the intent and the ability to hold all trade receivables until payments are received from customers. Trade receivables are stated at outstanding amounts as adjusted for an allowance for credits and doubtful accounts. Trade receivables are evaluated on an ongoing basis and written off to current operations when collection is no longer reasonable assured.

Inventories

      Inventories are stated at the lower of cost or market. Cost includes materials, labor and overhead and is determined by the first-in, first-out (FIFO) method.

Property, Plant and Equipment

      Property, plant and equipment are stated at cost and include expenditures for additions and major improvements. Expenditures for repairs and maintenance are charged to operations as incurred. The Company uses the straight-line and double declining methods of depreciation for financial reporting purposes. Buildings and improvements are depreciated over periods ranging from 15 to 33 years. Machinery and equipment are depreciated over periods ranging from 4 to 12 years. Furniture and fixtures are depreciated over periods ranging from 3 to 10 years. Accelerated methods of depreciation are used for federal income tax purposes. When assets are sold or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the Statement of Operations. The Company’s depreciation expense was $10,073 in 2003, $10,247 in 2002 and $10,720 in 2001.

      Long-lived assets, except goodwill, are reviewed for impairment whenever events or circumstances indicate the carrying amount may not be recoverable. Events or circumstances that would result in an impairment review primarily include operations reporting losses, a significant change in the use of an asset, or the planned disposal or sale of the asset. The asset would be considered impaired when the future net undiscounted cash flows

40

HAWK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

generated by the asset are less then its carrying value. An impairment loss would be recognized based on the amount by which the carrying value of the asset exceeds its fair value.

Intangible Assets

      In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 142 Goodwill and Other Intangible Assets (SFAS 142). This Statement eliminated the requirement to amortize goodwill and indefinite-lived intangibles for 2002 and future years. The Company adopted SFAS 142 as of January 1, 2002. The effect of applying the non-amortization provisions of SFAS 142 for the year ended December 31, 2001 would have been to decrease amortization expense by approximately $2,928 ($2,354 after tax).

      The following table illustrates the effect of applying the non-amortization provisions of SFAS 142 on net income and earnings per share before discontinued operations and cumulative effect of change in accounting principle as of December 31, 2001:

Loss before discontinued operations, as reported	$	(2,217	)
Add back: Goodwill amortization, net of tax		2,354
Adjusted income before discontinued operations	$	137
Earnings per share (basic and diluted):
Loss per share before discontinued operations, as reported	$	(.27	)
Goodwill amortization, net of tax		.27
Adjusted earnings per share before discontinued operations	$	.00

      Upon adoption of SFAS 142, the Company changed its accounting for goodwill and other indefinite-lived intangible assets from an amortization methodology to an impairment-only methodology. SFAS 142 provided for a six-month transitional period, from the effective date of adoption, for the Company to perform an initial assessment of whether goodwill was impaired. The Company performed the assessment during the second quarter of 2002, by comparing the fair value of each of its reporting units to their respective carrying values as of January 1, 2002. The Company, with the assistance of independent valuation experts, concluded that as of January 1, 2002 certain of its goodwill was impaired by $21,452 ($17,200 after tax) or a loss of $2.01 per basic share and $2.00 per diluted share, and such amount was reflected as a cumulative effect of change in accounting principle. The following is a summary of the pre-tax impairment charge by affected business segment:

Friction products	$	11,100
Performance racing		4,007
Motor		6,345
Total	$	21,452

      The fair value of goodwill was estimated using a combination of a discounted cash flow valuation model and a market approach comparing the Company’s reporting units to similar peer group companies, as well as acquisitions having similar characteristics. The discounted cash flow valuation model was based on future estimated operating cash flows, incorporating a discount rate commensurate with the risks for each reporting unit and assumptions that were consistent with the Company’s operating plans and estimates used to manage each of the underlying reporting units. The impairment resulted from the carrying value exceeding the fair value of certain reporting units, and was primarily due to a shortfall in current and projected sales from levels anticipated at the time of the respective acquisitions and other costs associated with the Company’s global expansion initiatives, as well as market conditions as of January 1, 2002.

41

HAWK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

      In accordance with SFAS No. 121 Accounting for the Impairment of Long-Lived Assets to be Disposed Of (SFAS 121), management concluded that no asset impairment charges were deemed necessary in 2001. The Company determined that the estimated future undiscounted cash flows associated with each unit tested exceeded the carrying values of their respective long-lived assets. Consequently, no impairment existed under SFAS 121.

      SFAS 142 requires a review at least annually of the carrying value of indefinite-lived assets and goodwill. The Company performed the annual impairment test as of October 31, 2003 and 2002 and concluded the fair value of the reporting units exceeded their respective carrying values.

Insurance

      The Company uses a combination of insurance and self-insurance for a number of risks including property, general liability, directors’ and officers’ liability, workers’ compensation, vehicle liability and employee-related health care benefits. Liabilities associated with the risks that are retained are estimated by considering various historical trends and forward-looking assumptions. The estimated accruals for these self-insured liabilities at December 31, 2003 and 2002 of $1,127 and $581, respectively, could be significantly affected if future occurrences and claims differ from these assumptions and historical trends.

Contingencies

      The Company’s treatment of contingent liabilities in the financial statements is based on the expected outcome of the applicable contingency. In the ordinary course of business the Company consults with legal counsel on matters related to litigation and other experts both within and outside of the Company. The Company will accrue a liability if the likelihood of an adverse outcome is probable of occurrence and the amount is estimable. The Company will not accrue a liability if either the likelihood of an adverse outcome is only reasonably possible or an estimate is not determinable.

Foreign Currency

      The Company’s primary functional currency is the U.S. dollar. Assets and liabilities of the Company denominated in foreign currencies are translated into U.S. dollars at the balance sheet date, while revenues and expenses are translated at weighted average exchange rates. Gains and losses from foreign currency transactions are included in the Statement of Operations. Gains and losses resulting from translation are included in accumulated other comprehensive loss, a component of shareholders’ equity.

Revenue Recognition

      Revenue from the sale of the Company’s products is recognized upon shipment to the customer and when title has transferred. Substantially all of the Company’s revenues are derived from fixed price purchase orders. Costs and related expenses to manufacture the products are recorded as costs of sales when the related revenue is recognized. Shipping and handling are included in cost of products sold and are included in the sales price when billed to customers. The Company establishes bad debt reserves based on historical experience and believes that the collection of receivables, net of the bad debt reserves, is reasonably assured.

Significant Concentrations

      The Company provides credit, in the normal course of its business, to original equipment and aftermarket manufacturers. The Company’s customers are not concentrated in any specific geographic region. The Company performs ongoing credit evaluations of its customers and maintains allowances for potential credit losses which, when realized, have been within the range of management’s expectations.

42

HAWK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

Product Research and Development

      Product research and development costs are expensed as incurred. The Company’s expenditures for product research and development and engineering were approximately $4,102 in 2003, $3,470 in 2002, and $3,893 in 2001.

Advertising

      All advertising costs are expensed as incurred. The Company’s expenditures for advertising were approximately $400 in 2003, $610 in 2002, and $670 in 2001.

Income Taxes

      The Company uses the liability method in measuring the provision for income taxes and recognizing deferred tax assets and liabilities in the balance sheet. The liability method requires that deferred income taxes reflect the tax consequences of currently enacted tax laws and rates for differences between the tax and financial reporting basis of assets and liabilities.

Stock Compensation

      In accordance with the provisions of SFAS No. 123, Accounting for Stock-Based Compensation, (SFAS 123) the Company has elected to continue applying the provisions of Accounting Principles Board Opinion No. 25 (APB 25) and related interpretations in accounting for its stock-based compensation plans. Under the provisions of APB 25, because the exercise price of the stock option equals the market price of the underlying stock on the date of grant, no compensation expense is recognized. The following illustrates the pro forma effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS 123 for the years ended 2003, 2002, and 2001:

		Year ended December 31
		2003			2002			2001
Net loss as reported		$	(5,422	)	$	(18,245	)	$	(4,336	)
	Employee stock-based compensation expense determined under fair value based methods, net of tax		663			1,020			822
	Pro forma net loss	$	(6,085	)	$	(19,265	)	$	(5,158	)
Basic loss per share:
	As reported	$	(.65	)	$	(2.15	)	$	(.52	)
	Pro forma	$	(.73	)	$	(2.27	)	$	(.62	)
Diluted loss per share:
	As reported	$	(.65	)	$	(2.14	)	$	(.52	)
	Pro forma	$	(.73	)	$	(2.26	)	$	(.62	)

43

HAWK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

      The fair value of the options granted used to compute pro forma net loss and loss per share is the estimated present value at the grant date using the Black-Scholes option-pricing model with the following assumptions:

	Year ended December 31
	2003		2002		2001
Dividend yield		0%		0%		0%
Expected volatility		54.0%		66.5%		58.4%
Risk free interest rate		4.00%		4.00%		5.00%
Expected average holding period		7.5 years		7.5 years		7 years

Fair Value of Financial Instruments

      The Company’s financial instruments include cash and cash equivalents, short-term trade receivables, long-term notes receivable, notes payable and debt instruments. For short-term instruments, the historical carrying value is a reasonable estimate of fair value. Fair values for long-term financial instruments that are not readily marketable are estimated based upon the discounted future cash flows at prevailing market interest rates. Based on these assumptions, management believes that the fair market values of the Company’s financial instruments are not materially different from their respective carrying values as of December 31, 2003.

Recently Issued Accounting Pronouncements

      In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities (SFAS 146), which addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) No. 94-3, Liability Recognition for Certain Employee termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring) (EITF 94-3). SFAS 146 requires that a liability for a cost associated with an exit or disposal activity be recognized and measured initially at the fair value only when the liability is incurred. Under EITF 94-3, a liability for an exit cost was recognized at the date of an entity’s commitment to an exit plan. SFAS 146 is effective for exit and disposal activities that are initiated after December 31, 2002, with no effect on charges recorded for exit activities begun prior to 2003. The adoption of this statement did not have a material effect on the Company’s financial position or results of operations.

      In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities, an interpretation of Accounting Research Bulletin No. 51 (the Interpretation). The Interpretation requires the consolidation of variable interest entities in which an enterprise is the primary beneficiary. The primary beneficiary absorbs a majority of the entity’s expected losses, receives a majority of the entity’s expected residual returns, or both, as a result of ownership, contractual or other financial interest in the entity. Currently, entities are generally consolidated by an enterprise that has a controlling financial interest through ownership of a majority voting interest in the entity. In December 2003, the FASB issued a revised Interpretation that, among other things, deferred the implementation date of the Interpretation until periods ending after March 15, 2004 for variable interest entities, other than those entities commonly referred to as special purpose entities. The Company does not currently maintain any relationships with variable interest entities and, therefore, does not expect the adoption of FIN 46 to have a material effect on the Company’s financial position or results of operations.

3. Discontinued Operations

      During the fourth quarter of 2003, the Company committed to a plan to sell its motor segment, which has operations in Monterrey, Mexico and Alton, Illinois. This segment, which manufactures die-cast aluminum rotors for fractional and subfractional horsepower electric motors, failed to achieve a certain level of profitability and, after completing an extensive analysis, the Company determined that a divestiture of this segment would allow

44

HAWK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

the Company to concentrate on its major business segments. The Company has initiated an active marketing plan and anticipates selling the segment within the next twelve months.

      Results of operations of the Company have been restated to reclassify the net earnings, assets, and liabilities of the motors segment as discontinued operations for all periods presented. Corporate expenses previously allocated to this segment have been reallocated to the remaining continuing operations, resulting in a restatement of operating profit by segment (see Note 14). The loss from discontinued operations in 2003 includes a pre-tax, non-cash charge of $4,530 to reduce the net assets of this business to its estimated fair value, less costs to sell.

      Operating results from discontinued operations are summarized as follows:

	Year ended December 31
	2003			2002			2001
Net sales	$	14,463		$	11,374		$	7,500
Loss from operations before income taxes	$	(7,673	)	$	(2,675	)	$	(3,040	)
Income tax benefit		2,700			825			921
Loss from operations, net of tax	$	(4,973	)	$	(1,850	)	$	(2,119	)

      The assets and liabilities of this segment, which have been classified as assets and liabilities of discontinued operations in the Consolidated Balance Sheets, consist of the following at December 31, 2003 and 2002:

	2003		2002
Accounts receivable	$	2,801	$	3,286
Inventory		739		580
Other current assets		40		99
Property, plant and equipment		320		6,072
Other long-term assets		402		336
Total assets of discontinued operations	$	4,302	$	10,373
Accounts payable	$	2,870	$	1,747
Other accrued expenses		465		379
Current portion of long-term debt		317
Long-term debt				633
Total liabilities of discontinued operations	$	3,652	$	2,759

4. Restructuring

      In the fourth quarter of 2003, the Company committed to a restructuring program to achieve cost savings in its friction products segment by moving operations at its Brook Park, Ohio location to a new U.S. production facility. The Company has signed a formal, non-binding letter of intent agreeing to the terms on the construction of a new approximately 240,000 square foot leased facility. The letter of intent is subject to due diligence and other customary terms and conditions. In connection with the planned closure of the Brook Park, Ohio facility, the Company recorded a $1,920 charge in the fourth quarter of 2003 related to the curtailment and contractual termination benefit costs of a defined benefit pension plan covering certain union employees of the facility. In addition, the Company anticipates future pre-tax charges of approximately $2,000 in 2004 and $3,000 to $3,500 in 2005 related to the relocation of the Brook Park, Ohio facility and employee severance expense.

45

HAWK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

      In June 2001, the Company announced a restructuring program to reduce its production capacity to meet expected near-term product demand levels in each of its segments. The involuntary severance plan that was part of the restructuring program resulted in employee reductions in almost all areas of the Company, including operations, marketing, sales and administrative areas. As a result of this plan, the Company reduced its work force in the friction products and precision components segments by approximately 160 positions. During 2001, the Company recorded a charge of $1,055 consisting of employee severance and related benefit costs as a result of this restructuring program. The majority of the costs associated with this program were paid in cash and charged against the liability. Employee reductions and related benefit payments under this plan were completed during 2002.

      The following table sets forth the restructuring accrual activity from June 30, 2001 to December 31, 2002:

Amounts recognized as restructuring charges in the consolidated statement of operations	$	1,055
Payments in 2001		605
Accrued restructuring charge as of December 31, 2001	$	450
Payments in 2002		378
Other		72
Accrued restructuring charge as of December 31, 2002	$	0

5. Intangible Assets

      A summary of the Company’s goodwill at December 31, 2003 and 2002 by reportable operating segment is as follows:

Precision components	$	28,109
Performance racing		4,386
Total	$	32,495

      The components of finite-lived intangible assets are as follows:

	December 31, 2003						December 31, 2002
			Accumulated						Accumulated
	Gross		Amortization		Net		Gross		Amortization		Net
Product certifications	$	20,820	$	10,984	$	9,836	$	20,820	$	10,264	$	10,556
Other intangible assets		2,719		2,651		68		2,719		2,574		145
	$	23,539	$	13,635	$	9,904	$	23,539	$	12,838	$	10,701

      Product certifications were acquired and valued based on the acquired company’s position as a certified supplier of friction materials to the major manufacturers of commercial aircraft brakes.

      The Company estimates that amortization expense for finite-lived intangible assets for each of the next five years will be approximately $800.

      The weighted average amortization period for product certifications and other intangible assets is 29 years and 14 years, respectively.

46

HAWK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

6. Financing Arrangements

	December 31
	2003		2002
Short-term debt	$	1,326
Old Senior Notes			$	583
Senior Notes		66,183		66,059
Bank Facility		24,059		36,327
Other		3,408		5,351
		94,976		108,320
Less current portion and short-term debt		26,533		39,430
	$	68,443	$	68,890

      In October 2002, the Company entered into a new senior secured credit facility (Bank Facility). The Bank Facility has a maximum commitment of $53,000, including a letter of credit facility of up to $5,000, comprised of a $50,000 revolving credit component and a $3,000 capital expenditure loan component. The capital expenditure loan component, available to the Company after December 31, 2002, is being used to finance 80% of the cost of new equipment purchased after October 18, 2002. The Bank Facility matures 120 days prior to the maturity of the Senior Notes (described below) in 2006. As of December 31, 2003 and 2002, $24,059 and $36,327 were outstanding under the Bank Facility, respectively, including $2,000 and $0 outstanding under the capital expenditure loan component, respectively.

      The Bank Facility is collateralized by a security interest in the accounts receivable, inventory, equipment and real estate and other assets of the Company and its domestic subsidiaries. The Company has also pledged the stock of all of its domestic subsidiaries and up to 65% of the stock of certain of its foreign subsidiaries as collateral. Restrictive terms of the Bank Facility require that the Company maintain specified financial ratios including leverage and fixed charge ratios, and comply with other loan covenants. The interest rates on the Bank Facility range from 225 to 375 basis points over the London Interbank Offered Rates (“LIBOR”), or alternatively, 0 to 100 basis points over the prime rate. At December 31, 2003 and 2002, the average interest rate on the borrowings outstanding under the Bank Facility was 4.0% and 4.4%, respectively. The Company is required to pay a commitment fee equal to 0.375% per annum on the unused amount of the Bank Facility, payable quarterly, in arrears. As of December 31, 2003 and 2002, the Company had approximately $15,900 and $5,500, respectively, available for future borrowings, as determined under the borrowing base formula. Additionally, as of December 31, 2003, the Company was in compliance with all of the loan covenants under the Bank Facility.

      The revolving credit component of the Bank Facility is subject to a borrowing base formula. The borrowing base formula is comprised of the Company’s domestic accounts receivable, domestic inventory and the Company’s domestic real estate, machinery and equipment. The components of the borrowing base under the Bank Facility are as follows:

•  85% of eligible accounts receivable, plus;

•  65% of the cost of eligible inventory, excluding work-in-process, plus 25% of the cost of eligible work-in-process (limited to $4.0 million), plus;

•  $13,000 — The availability under this component of the borrowing base reduces on a 7 year straight-line amortization basis beginning March 31, 2003. Any reductions in the availability under this component of the borrowing base may be reborrowed, subject to availability, under the receivable and inventory

47

HAWK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

components of the borrowing base. The amortized availability under the borrowing base was $11,607 and $13,000 at December 31, 2003 and 2002.

      Borrowings under the capital expenditure loan component of the Bank Facility are available to the Company in the following increments: a) up to $2,000 through December 31, 2003, beginning January 1, 2003 and, b) up to $1,000 thereafter. At the end of each borrowing period, the principal amount of all borrowings under the capital expenditure loan component borrowed during the applicable borrowing period will begin to amortize monthly over a seven year, straight-line basis. Any remaining unamortized principal balance under the capital expenditure loan component is due and payable on the final maturity date of the Bank Facility.

      Pursuant to the guidance of EITF No. 95-22, Balance Sheet Classification of Borrowings Outstanding under Revolving Credit Agreements That Include both a Subjective Acceleration Clause and a Lock-Box Arrangement, the Company is required to classify all of its outstanding debt under the Bank Facility as a current liability. However, it is the intention of the Company to manage the Bank Facility as long-term debt with a final maturity date in 2006. The Company expects the long-term availability under the revolving credit portion of the Bank Facility to be $50,000 for the next twelve-month period, subject to the borrowing base.

      In October 2002, the Company exchanged $64,417 of its $65,000, 10 1/4% Senior Notes due December 1, 2003 (Old Senior Notes), for 12% Senior Notes due December 1, 2006 (Senior Notes). The Senior Notes were issued on October 23, 2002. The remaining outstanding principal of the Old Senior Notes in the amount of $583 matured and were paid on December 1, 2003. The holders of the Old Senior Notes that participated in the exchange for Senior Notes received a consent payment of $25.63, in the form of Senior Notes, for each $1,000 of Old Senior Notes held as of October 23, 2002. The entire debt refinancing transaction was accounted for as a debt exchange in accordance with EITF 96-19, Debtor’s Accounting for a Modification or Exchange of Debt Instruments. Accordingly, the Company recorded the aggregate consent payments of $1,642 as additional Senior Notes, and is amortizing the consent payments to interest expense over the remaining life of the Senior Notes. In connection with the debt exchange, the Company also expensed $1,851 in third party transaction costs in 2002. The Senior Notes are general unsecured senior obligations of the Company and are fully and unconditionally guaranteed, on a joint and several basis, by all domestic wholly-owned subsidiaries of the Company. The Senior Notes accrue interest at a rate of 12% per annum on the principal amount commencing October 23, 2002. Interest payments are due semi-annually. In addition, in the event that the Company’s leverage ratio (as defined) exceeds 4.0 to 1.0 for the most recently ended four quarters beginning with the semi-annual period ended December 31, 2002, the Company will be required to pay additional payment in kind (PIK) interest at a rate ranging from .25% to 2.00% until the next semi-annual test period. Any interest payment under this test will be made by issuing additional Senior Notes. As of December 31, 2003 and 2002, the leverage ratio test required the Company to issue $82 and $124 of PIK interest as debt in 2004 and 2003, respectively, calculated at a rate of .25% and 1.00%, respectively, in the form of additional Senior Notes.

      The Company has the option to redeem the Senior Notes in whole or in part during the twelve months beginning December 1, 2002 at 105% of the aggregate principal amount thereof, beginning December 1, 2003 at 102.5% of the aggregate principal amount thereof and beginning December 1, 2004 at 100% of the aggregate principal amount thereof together with any interest accrued and unpaid to the redemption date. Upon a change of control as defined in the Senior Note indenture, each holder of the notes will have the right to require the Company to repurchase all or any part of such holder’s notes at a purchase price equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest to the date of purchase.

      The Senior Notes permit the Company and its subsidiaries to incur additional indebtedness without limitation, provided that it meets a cash flow coverage ratio and adjusted consolidated leverage ratio. As of December 31, 2003 and 2002, the Company did not meet these prescribed ratios. The failure to meet these ratios does not constitute a default under the Senior Note indenture. Rather, the Senior Note indenture continues to permit certain other types of indebtedness subject to certain limitations. The Company’s Bank Facility, which is secured by liens on all of the assets and the assets of the subsidiaries, is permitted. The Company does not believe

48

HAWK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

that its operations will be materially impacted by the limitation on indebtedness arising under the Senior Note indenture.

      The Senior Notes prohibit the payment of cash dividends on the Company’s Class A Common Stock. The Senior Notes also contain other covenants limiting the Company’s ability and its subsidiaries to, among other things, make certain other restricted payments, make certain investments, permit liens, incur dividend and other payment restrictions affecting subsidiaries, enter into consolidation, merger, conveyance, lease or transfer transactions, make asset sales, enter into transactions with affiliates or engage in unrelated lines of business. These covenants are subject to certain exceptions and qualifications. The Senior Notes considers non-compliance with the limitations events of default. In addition to non-payment of interest and principal amounts, the Senior Notes also considers default with respect to other indebtedness in excess of $5,000 an event of default. In the event of a default, the principal and interest could be accelerated upon written notice by 25% or more of the holders of the notes.

      At December 31, 2003 and 2002, the Company had issued stand-by Letters of Credit totaling $3,468 and $1,284, respectively.

      Aggregate principal payments due on long-term debt exclusive of the Bank Facility, which matures in 2006, as of December 31, 2003 are as follows: 2004 — $1,148; 2005 — $1,374; 2006 — $66,434; 2007 — $168; 2008 — $50; and thereafter — $417.

7. Shareholders’ Equity

      Dividends on the Series D preferred stock are cumulative at a rate of 9.8%. Each share of Series D preferred stock is (1) entitled to a liquidation preference equal to $1,000 per share plus any accrued or unpaid dividends, (2) not entitled to vote, except in certain circumstances, and (3) redeemable in whole, at the option of the Company, for $1,000 per share plus all accrued dividends to the date of redemption. The Company also has 100,000 authorized shares of $.01 par value, Series E preferred stock, of which no shares are issued or outstanding. Each share of Series E preferred stock is (1) not redeemable and is entitled to dividends in the amount of 1,000 times the per share dividend received by the holders of common stock, (2) entitled to 1,000 votes per share, and (3) entitled to a liquidation right of 1,000 times the aggregate amount distributed per share to the holder of common stock.

      On November 13, 1997, the Board of Directors declared a dividend of one Series E preferred share purchase right (a Right) for each outstanding share of common stock. The dividend was payable to the shareholders of record as of January 16, 1998, and with respect to common stock, issued thereafter until the Distribution Date, as defined in the Rights Agreement, and in certain circumstances, with respect to common stock issued after the Distribution Date. Except as set forth in the Rights Agreement, each Right, when it becomes exercisable, entitles the registered holder to purchase from the Company one one-thousandth of a share of Series E preferred stock at a price of $70 per one one-thousandth share of a Series E preferred stock, subject to adjustment.

8. Employee Stock Option Plan

      The Company grants stock options to certain key employees and non-employee directors under various plans, to purchase shares of Class A common stock. During 2003, there were no stock option grants issued under the Company’s plans. During 2002 and 2001, the Company granted stock options to purchase an aggregate of 53,418, and 701,594 shares, respectively, at exercise prices representing the closing market price of the Company’s common stock at the date of grant. The options vest ratably over specific defined periods. Canceled options are available for future issuance under the provisions of the stock option plans.

49

HAWK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

      The following table summarizes the stock option activity for the years ended December 31, 2003, 2002 and 2001:

	2003					2002					2001
				Weighted					Weighted					Weighted
				Average					Average					Average
				Exercise					Exercise					Exercise
	Options			Price		Options			Price		Options			Price
Options outstanding at beginning of year		1,217,729		$	6.63		1,324,646		$	6.73		766,267		$	10.51
Granted							53,418			4.89		701,594			3.64
Exercised		(17,094	)		3.40
Forfeited or Expired		(378,854	)		11.41		(160,335	)		6.81		(143,215	)		10.45
Options outstanding at end of year		821,781		$	4.54		1,217,729		$	6.62		1,324,646		$	6.73
Exercisable at the end of the year		718,306		$	4.42		636,632		$	7.69		242,169		$	12.36
Weighted average fair value of options granted during the year									$	4.34				$	2.56
Shares available for future grant		578,219					182,271					75,354

      On July 29, 2003, the Company offered its employees who are not members of the Board of Directors the opportunity to cancel all options outstanding with an exercise price greater than $6.00 per share, in exchange for new options to be granted at the closing price of the Company’s common stock as reported by the American Stock Exchange as of January 30, 2004. As of December 31, 2003, 268,850 options had been forfeited and as a result, are included in the caption forfeited or expired and in shares available for future grant in the above table. On January 30, 2004, 254,630 options were granted at an exercise price of $5.05 per share.

      Exercise prices for options outstanding as of December 31, 2003 ranged from $3.40 to $17.94. A summary of the options by range of exercise prices is as follows:

	Outstanding
							Exercisable
					Weighted
			Weighted		Average				Weighted
			Average		Remaining				Average
			Exercise		Contractual				Exercise
Range of Exercise Price	Options		Price		Life (years)		Options		Price
$ 3.40 to $ 3.50		312,542	$	3.40		7.7		312,542	$	3.40
$ 3.51 to $ 5.00		285,177	$	3.85		7.7		263,966	$	3.81
$ 5.01 to $ 6.00		135,362	$	5.42		6.8		66,198	$	5.46
$ 6.01 to $16.99		66,700	$	6.86		5.6		53,600	$	6.87
$17.00 to $17.94		22,000	$	17.09		3.0		22,000	$	17.09

9. Employee Benefits

      The Company has several defined benefit pension plans that cover certain employees. Benefits payable are based primarily on compensation and years of service or a fixed annual benefit for each year of service. Certain hourly employees are also covered under collective bargaining agreements. The Company funds the plans in amounts sufficient to satisfy the minimum amounts required under the Employee Retirement Income Security Act of 1974.

50

HAWK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

      The components of the defined benefit pension plans are as follows:

				December 31
				2003			2002
Accumulated benefit obligation				$	21,208		$	17,925
Change in benefit obligation:
		Benefit obligation at beginning of year		$	19,268		$	17,528
		Service cost			840			732
		Interest cost			1,329			1,292
		Actuarial losses			1,683			406
		Plan amendments			54			152
		Foreign currency exchange rate impact			162			11
		Pension curtailment and contractual termination benefit costs			2,093
		Benefits paid			(1,024	)		(853	)
	Benefit obligation at end of year			$	24,405		$	19,268
Change in plan assets:
		Fair value of plan assets at beginning of year		$	14,170		$	19,399
		Actual return on plan assets			3,516			(5,371	)
		Foreign currency exchange rate impact			193			17
		Company contributions			1,560			978
		Benefits paid			(1,024	)		(853	)
Fair value of plan assets at end of year				$	18,415		$	14,170
Funded status of the plans				$	(5,990	)	$	(5,098	)
Unrecognized net actuarial losses					7,975			8,904
Unrecognized initial net obligation					92			98
Foreign currency exchange rate impact					40
Unamortized prior service cost					440			572
Net prepaid benefit cost				$	2,557		$	4,476
Amounts recognized in the balance sheet consist of the following:
			Prepaid benefit cost	$	701		$	604
			Accrued benefit liability		(5,891	)		(4,069	)
			Intangible asset		502			659
			Cumulative other comprehensive loss		7,245			7,282
Net amount recognized				$	2,557		$	4,476

51

HAWK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

      Amounts applicable to the Company’s under-funded pension plans at December 31, 2003 and 2002 are as follows:

	December 31
	2003		2002
Projected benefit obligation	$	23,415	$	18,522
Accumulated benefit obligation	$	20,435	$	17,333
Fair value of plan assets	$	17,263	$	13,264
Amounts recognized as accrued benefit liabilities	$	5,891	$	4,069
Amounts recognized as intangible asset	$	502	$	659

		Year ended December 31
		2003			2002			2001
Components of net periodic pension cost:
	Service cost	$	840		$	732		$	550
	Interest cost		1,329			1,292			1,148
	Expected return on plan assets		(1,269	)		(1,798	)		(1,585	)
	Amortization of prior service cost		71			80			76
	Contractual termination benefit cost		1,836
	Pension curtailment		386
	Recognized net actuarial loss		362			60			10
		$	3,555		$	366		$	199

      The plans’ assets are primarily invested in fixed income and equity securities. In addition, one of the Company’s defined benefit plans also contains investments in the Company’s stock. As of December 31, 2003, 60,000 shares of the Company’s Class A common stock were held by a defined benefit plan at a cost of $717. The market value of such investment as of December 31, 2003, was $219. The Company does not pay dividends on its Class A common stock.

      The weighted-average plan asset allocation at December 31, 2003 and 2002, by asset category are as follows:

		December 31
		2003			2002
Asset Category
Equity securities			75	%		68	%
Debt securities			21	%		27	%
Hawk Corporation common stock			1	%		1	%
Other			3	%		4	%
	Total		100	%		100	%

      The objectives of the Company’s investment strategies are as follows: (a) to provide a total return that, over the long term, maximizes investment return on assets, at a level of risk deemed appropriate, (b) to maximize return on assets by investing primarily in equity securities, and (c) to diversify investments within asset classes to reduce the impact of losses in any single investment. The range of target asset allocations have been determined after giving consideration to the expected returns of each asset class, the expected variability or volatility of the asset class returns over time, and the complementary nature or correlation of the asset classes within the portfolio. The Company also employs an active management approach for the portfolio. Each asset class is managed by one

52

HAWK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

or more external money managers with the objective of generating returns, net of management fees that exceed market-based benchmarks.

      The following assumptions were used in accounting for the defined benefit plans:

		2003			2002
Weighted average rates used to compute the projected benefit obligation as of December 31:
	Discount rate		6.25	%		6.75	%
	Rate of compensation increase		3.03	%		3.02	%
	Expected long-term return on plan assets		8.59	%		8.59	%
Weighted average rates used to determine the net periodic benefit cost for the years ended December 31:
	Discount rate		6.75	%		7.26	%
	Rate of compensation increase		3.02	%		3.06	%
	Expected long-term return on plan assets		8.59	%		9.34	%

      The measurement date used to determine the pension benefit measurements for all plans in all periods presented is December 31. The Company has reviewed historical rates of return specific to its respective plans to determine the expected long-term rate of return on assets.

      The Company expects to contribute a total of $1,927 to the defined benefit plans in 2004.

      Estimated benefit payments for the next five years and in the aggregate for the five years thereafter are:

Year		Pension Benefits
	2004	$	1,193
	2005	$	1,325
	2006	$	1,368
	2007	$	1,434
	2008	$	1,540
	2009-2013	$	8,876

      The Company also sponsors several defined contribution plans which provide voluntary employee contributions and, in certain plans, matching and discretionary employer contributions. Aggregate defined contribution plan expenses were approximately $1,272 in 2003, which included $992 in discretionary employer contributions, $241 in 2002 and $581 in 2001. In 2002 and 2001, the Company made no discretionary employer contributions.

10. Lease Obligations

      The Company has capital lease commitments for buildings, machinery and equipment. Assets recorded under capital lease agreements included in property, plant and equipment consist of the following:

	December 31
	2003		2002
Buildings and improvements	$	1,026	$	846
Machinery and equipment		1,056		507
Gross assets under capital lease		2,082		1,353
Accumulated amortization		350		250
Net assets under capital lease	$	1,732	$	1,103

53

HAWK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

      Amortization of assets recorded under capital leases is included with depreciation expense. Future minimum annual rentals are: 2004 — $391; 2005 — $320; 2006 — $168; 2007 — $116; 2008 — $50 and thereafter — $0. Amount representing interest is $67. Total capital lease obligations are included in other long-term debt.

      The Company leases certain office and warehouse facilities and equipment under operating leases. Certain of these operating leases provide the Company with a renewal option after the initial lease term. Rental expense was approximately $2,212 in 2003, $2,117 in 2002, and $2,045 in 2001. Future non-cancelable minimum lease commitments under these agreements that have an original or existing term in excess of one year as of December 31, 2003 are as follows: 2004 — $2,577; 2005 — $2,064; 2006 — $1,484; 2007 — $1,048; 2008 — $986; and thereafter — $1,952.

11. Income Taxes

      The provision (benefit) for income taxes from continuing operations consists of the following:

		Year ended December 31
		2003			2002			2001
Current:
	Federal				$	(3,602	)	$	(1,842	)
	State and local	$	45			(38	)		(55	)
	Foreign		1,885			574			297
			1,930			(3,066	)		(1,600	)
Deferred:
	Federal		(1,059	)		2,333			1,118
	State and local		(12	)		18			62
	Foreign		(4	)		46			(517	)
			(1,075	)		2,397			663
Total income tax provision (benefit)		$	855		$	(669	)	$	(937	)

54

HAWK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

      Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes. Significant components of the Company’s deferred tax assets and liabilities as of December 31 are as follows:

		2003		2002
Deferred tax assets:
	NOL and AMT carryforward	$	3,755	$	988
	Accrued vacation		618		555
	Employee benefits		2,616		1,852
	Other accruals		3,484		1,498
	Foreign net operating loss carryforwards				352
	Book over tax goodwill amortization		1,109		2,161
	Inventory		557		527
Total deferred tax assets			12,139		7,933
Deferred tax liabilities:
	Tax over book depreciation		10,066		9,409
	Tax over book intangibles amortization		2,192		1,708
	Foreign leased property		353		340
	Debt financing costs		178		746
	Other		159		230
Total deferred tax liabilities			12,948		12,433
Net deferred tax liabilities		$	809	$	4,500

      As of December 31, 2003 and 2002 the Company had net federal operating loss (NOL) carryforwards of $7,883 and $0, respectively. The NOL expires in 2023. At December 31, 2003 and 2002, the Company had alternative minimum tax carryforwards (AMT) of $1,075 and $988, respectively. The AMT has no date of expiration.

      The provision (benefit) for income taxes from continuing operations differs from the amounts computed by applying the federal statutory rate as follows:

	December 31
	2003			2002			2001
Income tax expense (benefit) at federal statutory rate	$	142		$	47		$	(1,104	)
State and local tax, net of federal tax benefit		21			(16	)		48
Nondeductible goodwill amortization								251
Nondeductible intangible amortization		60			52			55
Taxes on foreign income which differs from United States statutory rate		560			99			81
Foreign tax withholding		87			128
Adjustment to worldwide tax accrual and other		(15	)		(979	)		(268	)
Provision for income taxes	$	855		$	(669	)	$	(937	)

55

HAWK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

      The following table illustrates the domestic and foreign components of the Company’s continuing income (loss) before income taxes:

		Year ended December 31
		2003			2002		2001
Income (loss) before income taxes, discontinued operations and cumulative effect of change in accounting principle:
	Domestic	$	(2,185	)	$	41	$	(1,441	)
	Foreign		2,591			95		(1,713	)
As reported		$	406		$	136	$	(3,154	)

      In accordance with accounting principles generally accepted in the United States, the Company established an accrual prior to 2001, in the amount of $1,041 for tax exposures related to certain deductions taken on its income tax returns. The Company believed that the deductions were valid under applicable tax laws and regulations. During 2002, the applicable statute of limitations expired and the Company reversed the tax accrual, which resulted in substantially all of the $979 adjustment in the Company’s reconciliation of its effective 2002 tax rate.

      Undistributed earnings of the Company’s foreign subsidiaries amounted to approximately $8,885 and $7,053 at December 31, 2003 and 2002. These earnings are considered to be indefinitely reinvested and, accordingly, no provision for U.S. federal and state income taxes has been provided. The Company cannot determine in any practical manner the amount of income tax liability that would result if such earnings would be repatriated. Upon distribution of these earnings in the form of dividends or otherwise, the Company would be subject to both U.S. income taxes, which may be offset by foreign tax credits, and withholding taxes payable to various foreign countries.

56

HAWK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

12. (Loss) Earnings Per Share

      Basic and diluted (loss) earnings per share are computed as follows:

			Year ended December 31
			2003			2002			2001
(Loss) income before discontinued operations and cumulative effect of change in accounting principle			$	(449	)	$	805		$	(2,217	)
Less: Preferred stock dividends				150			150			150
(Loss) income before discontinued operations and cumulative effect of change in accounting principle available to common shareholders			$	(599	)	$	655		$	(2,367	)
Net loss			$	(5,422	)	$	(18,245	)	$	(4,336	)
Less: Preferred stock dividends				150			150			150
Net loss available to common shareholders			$	(5,572	)	$	(18,395	)	$	(4,486	)
Weighted average shares outstanding (in thousands):
Basic weighted average shares outstanding				8,571			8,557			8,552
		Diluted:
		Basic from above outstanding		8,571			8,557			8,552
		Dilutive effect of stock options					40
Diluted weighted average shares outstanding				8,571			8,597			8,552
(Loss) earnings per share:
		Basic (loss) earnings before discontinued operations and cumulative effect of change in accounting principle	$	(.07	)	$	.08		$	(.27	)
		Discontinued operations		(.58	)		(.22	)		(.25	)
		Cumulative effect of change in accounting principle					(2.01	)
	Net loss per basic share		$	(.65	)	$	(2.15	)	$	(.52	)
		Diluted (loss) earnings before discontinued operations and cumulative effect of change in accounting principle	$	(.07	)	$	.08		$	(.27	)
		Discontinued operations		(.58	)		(.22	)		(.25	)
		Cumulative effect of change in accounting principle				$	(2.00	)
	Net loss per diluted share		$	(.65	)	$	(2.14	)	$	(.52	)

      All outstanding stock options at December 31, 2003 and 2001 are antidilutive.

13. Related Parties

      In July 1995, certain shareholders of the Company issued interest-bearing notes to the Company in the amount of $2,000, enabling them to repay certain indebtedness incurred by them with respect to an acquisition. The notes are due and payable on July 1, 2005, with the exception of $10, which is due and payable on July 1, 2004. The notes bear interest at the prime rate. The balance of current and long-term shareholder notes outstanding at December 31, 2003 and 2002 was $1,010.

57

HAWK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

14. Business Segments

      The Company operates in three primary business segments: friction products, precision components and performance racing. The Company’s reportable segments are strategic business units that offer different products and services. They are managed separately based on fundamental differences in their operations.

      The friction products segment engineers, manufactures and markets specialized components, used in a variety of aerospace, industrial and commercial applications. The Company, through this segment, is a worldwide supplier of friction components for brakes, clutches and transmissions.

      The precision components segment engineers, manufactures and markets specialized powder metal components, used primarily in industrial applications. The Company, through this segment, targets four areas of the powder metal component marketplace: high precision components that are used in fluid power applications, large structural powder metal parts used in construction, agricultural and truck applications, smaller high-volume parts and metal injected molded parts for a variety of industries.

      The performance racing segment engineers, manufactures and markets high performance friction material for use in racing car brakes in addition to premium branded clutch and drive train components. The Company, through this segment, targets leading teams in the NASCAR racing series, as well as high-performance street vehicles and other road race and oval track competition cars.

58

HAWK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

      Information by segment is as follows:

		Year ended December 31(1)(4)
		2003		2002		2001
Net sales to external customers:
	Friction products(1)	$	121,569	$	106,134	$	104,127
	Precision components(4)		68,123		67,151		59,794
	Performance racing(1)		12,859		12,627		12,967
Consolidated		$	202,551	$	185,912	$	176,888
Depreciation and amortization:(2)(3)
Friction products(1)		$	7,135	$	7,277	$	8,772
	Precision components(4)		3,511		3,537		4,939
	Performance racing(1)		227		200		742
Consolidated		$	10,873	$	11,014	$	14,453
Gross profit:
	Friction products(1)	$	29,510	$	25,403	$	24,899
	Precision components(4)		14,458		15,082		11,995
	Performance racing(1)		3,401		3,711		3,854
Consolidated		$	47,369	$	44,196	$	40,748
Income from operations:(2)
Friction products(1)		$	8,284	$	7,794	$	6,643
	Precision components(4)		2,254		4,287		282
	Performance racing(1)		380		874		253
Consolidated		$	10,918	$	12,955	$	7,178
Capital expenditures: (including capital leases):
	Friction products(1)	$	5,151	$	5,742	$	5,000
	Precision components(4)		5,889		3,486		3,304
	Performance racing(1)		183		521		171
Consolidated		$	11,223	$	9,749	$	8,475

59

HAWK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

		December 31
		2003		2002
Total assets:
	Friction products(1)	$	101,169	$	95,668
	Precision components(4)		77,026		75,743
	Performance racing(1)		11,052		11,096
Continuing operations			189,247		182,507
	Discontinued operations		4,302		10,373
Consolidated		$	193,549	$	192,880

(1)	An operating unit formerly associated with the Company’s performance racing segment was reclassified as of January 1, 2002 to the Company’s friction products segment as a result of changes in the internal operating responsibility of that unit. All prior periods have been reclassified to reflect this change.
(2)	In accordance with the non-amortization provisions of SFAS 142 (see Note 2), the Company discontinued the amortization of goodwill in 2002.

The following table illustrates the pro forma effect by operating segment, on depreciation and amortization, and income from operations had the Company applied the non-amortization provisions of SFAS 142 for the year ended December 31, 2001:

Pro forma depreciation and amortization:
	Friction products	$	7,620
	Precision components		3,751
	Performance racing		154
Consolidated		$	11,525
Pro forma income (loss) from operations:
	Friction products	$	7,795
	Precision components		1,470
	Performance racing		841
Consolidated		$	10,106

(3)

Depreciation and amortization outlined in this table does not include deferred financing amortization of $801 in 2003, $643 in 2002, and $618 in 2001, which is included in Interest expense on the Statement of Operations.

(4)

A line of business formerly associated with the Company’s motors segment, which was discontinued as of December 31, 2003, will be retained by the Company and has been reclassified to the Company’s precision components segment. Net sales from this line of business were $1,235, $1,341, and $1,522 for the years ended December 31, 2003, 2002, and 2001, respectively. All prior periods have been reclassified to reflect this change.

60

HAWK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

     Geographic information for the years ended December 31, 2003, 2002 and 2001 is as follows:

	2003									2002									2001
	Domestic			Foreign						Domestic			Foreign						Domestic			Foreign
	Operations			Operations			Total			Operations			Operations			Total			Operations			Operations			Total
	(In thousands)
Net sales	$	160,262		$	42,289		$	202,551		$	158,497		$	27,415		$	185,912		$	154,815		$	22,073		$	176,888
Income (loss) from operations		7,818			3,100			10,918			12,163			792			12,955			8,311			(1,133	)		7,178
Discontinued operations, net of tax		(620	)		(4,353	)		(4,973	)		(77	)		(1,773	)		(1,850	)		513			(2,632	)		(2,119	)
Cumulative effect of change in accounting principle, net of tax											(17,200	)					(17,200	)
Net (loss) income		(1,866	)		(3,556	)		(5,422	)		(16,075	)		(2,170	)		(18,245	)		(211	)		(4,125	)		(4,336	)
Total assets of continuing operations	$	159,406		$	29,841		$	189,247		$	165,702		$	16,805		$	182,507		$	167,733		$	21,701		$	189,434

      The Company has continuing foreign operations in Canada, Italy, and China. Included in discontinued operations is the Company’s operation in Mexico.

15. Supplemental Guarantor Information

      As discussed in Note 6, each of the Guarantor Subsidiaries has fully and unconditionally guaranteed, on a joint and several basis, to pay principal, premium, and interest with respect to the Senior Notes. The Guarantor Subsidiaries are direct or indirect wholly-owned subsidiaries of the Company.

      The following supplemental consolidating condensed financial statements present consolidating condensed balance sheets as of December 31, 2003 and December 31, 2002, consolidating condensed statements of operations for the years ended December 31, 2003, 2002 and 2001 and consolidating condensed statements of cash flows for the years ended December 31, 2003, 2002 and 2001.

      Hawk Corporation (Parent), combined Guarantor Subsidiaries and combined Non-Guarantor Subsidiaries consisting of the Company’s subsidiaries in Canada, Italy, and China with their investments in subsidiaries accounted for using the equity method.

      Elimination entries necessary to consolidate the Parent and all of its subsidiaries.

      Management does not believe that separate financial statements of the Guarantor Subsidiaries are material to investors. Therefore, separate financial statements and other disclosures concerning the Guarantor Subsidiaries are not presented.

61

HAWK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

		December 31, 2003
					Combined			Combined
					Guarantor			Non-Guarantor
		Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Assets
Current assets:
	Cash and cash equivalents	$	39		$	129		$	3,197					$	3,365
	Accounts receivable, net					20,718			11,554						32,272
	Inventories					26,036			9,789		$	(401	)		35,424
	Deferred income taxes		3,089						462						3,551
	Taxes receivable		521												521
	Other current assets		1,428			1,690			914						4,032
	Current assets of discontinued operations					1,730			2,572						4,302
Total current assets			5,077			50,303			28,488			(401	)		83,467
Investment in subsidiaries			794									(794	)
Inter-company advances, net			157,379			14,062			(6,322	)		(165,119	)
Property, plant and equipment, net			628			52,962			9,546						63,136
Other assets:
	Goodwill and other intangible assets		72			42,327									42,399
	Other		1,143			3,713			701			(1,010	)		4,547
	Long-term assets of discontinued operations
Total other assets			1,215			46,040			701			(1,010	)		46,946
Total assets		$	165,093		$	163,367		$	32,413		$	(167,324	)	$	193,549
Liabilities and shareholders’ equity
Current liabilities:
	Accounts payable				$	14,100		$	7,469					$	21,569
	Accrued compensation	$	1,099			3,393			1,244						5,736
	Accrued interest		4,153												4,153
	Other accrued expenses		2,410			4,047			1,910		$	(71	)		8,296
	Short-term debt								1,326						1,326
	Bank Facility		24,059												24,059
	Current portion of long-term debt					866			282						1,148
	Current liabilities of discontinued operations					1,437			2,215						3,652
Total current liabilities			31,721			23,843			14,446			(71	)		69,939
Long-term liabilities:
	Long-term debt		66,184			1,040			1,219						68,443
	Deferred income taxes		3,860			1			499						4,360
	Other		(2,782	)		9,594			2,290						9,102
	Long-term liabilities of discontinued operations
	Inter-company advances, net		847			155,978			8,438		$	(165,263	)
Total long-term liabilities			68,109			166,613			12,446			(165,263	)		81,905
Shareholders’ equity			65,263			(27,089	)		5,521			(1,990	)		41,705
Total liabilities and shareholders’ equity		$	165,093		$	163,367		$	32,413		$	(167,324	)	$	193,549

62

HAWK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

		December 31, 2002
				Combined			Combined
				Guarantor			Non-Guarantor
		Parent		Subsidiaries			Subsidiaries			Eliminations			Consolidated
Assets
Current assets:
	Cash and cash equivalents	$	116	$	351		$	1,235					$	1,702
	Accounts receivable, net				20,629			8,846						29,475
	Inventories				24,513			8,412		$	(244	)		32,681
	Deferred income taxes		577					168						745
	Taxes receivable		3,333											3,333
	Other current assets		2,427		689			793						3,909
	Current assets of discontinued operations				2,254			1,711						3,965
Total current assets			6,453		48,436			21,165			(244	)		75,810
Investment in subsidiaries			794								(794	)
Inter-company advances, net			167,162		7,491			(9,725	)		(164,928	)
Property, plant and equipment, net			653		54,695			6,472						61,820
Other assets:
	Goodwill and other intangible assets		72		43,124									43,196
	Other		1,240		4,812			604			(1,010	)		5,646
	Long-term assets of discontinued operations				2,076			4,332						6,408
Total other assets			1,312		50,012			4,936			(1,010	)		55,250
Total assets		$	176,374	$	160,634		$	22,848		$	(166,976	)	$	192,880
Liabilities and shareholders’ equity
Current liabilities:
	Accounts payable			$	12,240		$	3,864					$	16,104
	Accrued compensation	$	4		3,018			1,046						4,068
	Accrued interest		372											372
	Other accrued expenses		986		2,943			820		$	(94	)		4,655
	Short-term debt
	Bank Facility		36,327											36,327
	Current portion of long-term debt		583		2,250			270						3,103
	Current liabilities of discontinued operations				1,360			766						2,126
Total current liabilities			38,272		21,811			6,766			(94	)		66,755
Long-term liabilities:
	Long-term debt		66,059		2,552			279						68,890
	Deferred income taxes		7,813		(2,777	)		209						5,245
	Other		852		4,050			1,621						6,523
	Long-term liabilities of discontinued operations				333			300						633
	Inter-company advances, net		1,754		152,944			10,332			(165,030	)
Total long-term liabilities			76,732		157,102			12,487			(165,030	)		81,291
Shareholders’ equity			61,624		(18,279	)		3,341			(1,852	)		44,834
Total liabilities and shareholders’ equity		$	176,374	$	160,634		$	22,848		$	(166,976	)	$	192,880

63

HAWK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

		Year ended December 31, 2003
					Combined			Combined
					Guarantor			Non-Guarantor
		Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Net sales					$	169,770		$	42,289		$	(9,508	)	$	202,551
Cost of sales						129,655			34,833			(9,306	)		155,182
Gross profit						40,115			7,456			(202	)		47,369
Expenses:
	Selling, technical and administrative expenses	$	(229	)		29,604			4,356						33,731
	Pension curtailment and contractual termination benefit costs					1,920									1,920
	Amortization of finite-lived intangible assets		9			791									800
Total expenses			(220	)		32,315			4,356						36,451
Income from operations			220			7,800			3,100			(202	)		10,918
Interest income (expense), net			3,556			(13,778	)		(473	)					(10,695	)
(Loss) income from equity investee			(9,001	)		(3,556	)					12,557
Other income (expense), net			(278	)		497			(36	)					183
(Loss) income before income taxes and discontinued operations			(5,503	)		(9,037	)		2,591			12,355			406
Income tax provision (benefit)			(201	)		(656	)		1,794			(82	)		855
(Loss) income before discontinued operations			(5,302	)		(8,381	)		797			12,437			(449	)
Discontinued operations, net of tax						(620	)		(4,353	)					(4,973	)
Net loss		$	(5,302	)	$	(9,001	)	$	(3,556	)	$	12,437		$	(5,422	)

64

HAWK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

		Year ended December 31, 2002
					Combined			Combined
					Guarantor			Non-Guarantor
		Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Net sales					$	163,693		$	27,415		$	(5,196	)	$	185,912
Cost of sales						123,942			22,970			(5,196	)		141,716
Gross profit						39,751			4,445						44,196
Expenses:
	Selling, technical and administrative expenses	$	(121	)		26,942			3,653						30,474
	Amortization of finite-lived intangible assets					767									767
Total expenses			(121	)		27,709			3,653						31,241
Income from operations			121			12,042			792						12,955
Interest income (expense), net			3,495			(13,157	)		(588	)					(10,250	)
(Loss) income from equity investee			(20,656	)		(2,170	)					22,826
Other income (expense), net			(2,239	)		(221	)		(109	)					(2,569	)
(Loss) income before income taxes, discontinued operations and cumulative effect of change in accounting principle			(19,279	)		(3,506	)		95			22,826			136
Income tax (provision) benefit			(1,113	)		(48	)		492						(669	)
(Loss) income before discontinued operations			(18,166	)		(3,458	)		(397	)		22,826			805
Discontinued operations, net of tax						(77	)		(1,773	)					(1,850	)
Cumulative effect of change in accounting principle, net of tax			(79	)		(17,121	)								(17,200	)
Net loss		$	(18,245	)	$	(20,656	)	$	(2,170	)	$	22,826		$	(18,245	)

65

HAWK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

		Year ended December 31, 2001
					Combined			Combined
					Guarantor			Non-Guarantor
		Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Net sales					$	158,517		$	22,073		$	(3,702	)	$	176,888
Cost of sales						120,243			19,599			(3,702	)		136,140
Gross profit						38,274			2,474						40,748
Expenses:
	Selling, technical and administrative expenses	$	(545	)		25,720			3,607						28,782
	Restructuring costs					1,055									1,055
	Amortization of finite-lived intangible assets		9			3,724									3,733
Total expenses			(536	)		30,499			3,607						33,570
Income (loss) from operations			536			7,775			(1,133	)					7,178
Interest income (expense), net			3,686			(13,011	)		(527	)					(9,852	)
Loss from equity investees			(7,520	)		(4,125	)					11,645
Other (expense) income			(579	)		152			(53	)					(480	)
Loss before income taxes and discontinued operations			(3,877	)		(9,209	)		(1,713	)		11,645			(3,154	)
Income tax provision (benefit)			459			(1,176	)		(220	)					(937	)
Loss before discontinued operations			(4,336	)		(8,033	)		(1,493	)		11,645			(2,217	)
Discontinued operations, net of tax						513			(2,632	)					(2,119	)
Net loss		$	(4,336	)	$	(7,520	)	$	(4,125	)	$	11,645		$	(4,336	)

66

HAWK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

		Year ended December 31, 2003
					Combined			Combined
					Guarantor			Non-Guarantor
		Parent			Subsidiaries			Subsidiaries			Eliminations	Consolidated
Net cash provided by operating activities of continuing operations		$	13,890		$	8,982		$	789			$	23,661
Net cash provided by operating activities of discontinued operations						912			1,387				2,299
Cash flows from investing activities:
	Proceeds from sale of assets					568							568
	Purchases of property, plant and equipment					(7,818	)		(2,859	)			(10,677	)
Net cash used in investing activities of continuing operations						(7,250	)		(2,859	)			(10,109	)
Net cash used in investing activities of discontinued operations						(116	)		(192	)			(308	)
Cash flows from financing activities:
	Proceeds from short-term debt								1,326				1,326
	Proceeds from long-term debt					25			602				627
	Payments on long-term debt					(2,775	)		(185	)			(2,960	)
	Payment on Old Senior Notes		(583	)									(583	)
	Proceeds from Bank Facility		68,173										68,173
	Payments on Bank Facility		(80,441	)									(80,441	)
	Proceeds from exercise of stock options		59										59
	Payments of preferred stock dividends		(150	)									(150	)
Net cash (used in) provided by financing activities of continuing operations			(12,942	)		(2,750	)		1,743				(13,949	)
Effect of exchange rate changes on cash									69				69
Net cash provided by (used in) continuing operations			948			(1,018	)		(258	)			(328	)
Net cash provided by discontinued operations						796			1,195				1,991
Net increase (decrease) in cash and cash equivalents			948			(222	)		937				1,663
Cash and cash equivalents, at beginning of period			370			351			981				1,702
Cash and cash equivalents, at end of period		$	1,318		$	129		$	1,918			$	3,365

67

HAWK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

		Year ended December 31, 2002
					Combined			Combined
					Guarantor			Non-Guarantor
		Parent			Subsidiaries			Subsidiaries			Eliminations	Consolidated
Net cash provided by (used in) operating activities of continuing operations		$	(14,567	)	$	4,105		$	2,811			$	(7,651	)
Net cash provided by (used in) operating activities of discontinued operations						6,276			(1,415	)			4,861
Cash flows from investing activities:
	Purchases of property, plant and equipment					(8,491	)		(1,238	)			(9,729	)
Net cash used in investing activities of continuing operations						(8,491	)		(1,238	)			(9,729	)
Net cash used in investing activities of discontinued operations						(209	)		(866	)			(1,075	)
Cash flows from financing activities:
	Proceeds from long-term debt		53,160			75			135				53,370
	Payments on long-term debt		(45,825	)		(1,588	)		(202	)			(47,615	)
	Pay off of Term Loan and Revolving Credit Facility		(29,784	)									(29,784	)
	Proceeds from Bank Facility		52,165										52,165
	Payments on Bank Facility		(15,838	)									(15,838	)
	Payments of preferred stock dividends		(150	)									(150	)
Net cash provided by (used in) financing activities of continuing operations			13,728			(1,513	)		(67	)			12,148
Effect of exchange rate changes on cash									64				64
Net cash (used in) provided by continuing operations			(839	)		(5,899	)		1,570				(5,168	)
Net cash provided by discontinued operations						6,067			(2,281	)			3,786
Net (decrease) increase in cash and cash equivalents			(839	)		168			(711	)			(1,382	)
Cash and cash equivalents, at beginning of period			1,209			183			1,692				3,084
Cash and cash equivalents, at end of period		$	370		$	351		$	981			$	1,702

68

HAWK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

		Year ended December 31, 2001
					Combined			Combined
					Guarantor			Non-Guarantor
		Parent			Subsidiaries			Subsidiaries			Eliminations	Consolidated
Net cash provided by (used in) operating activities of continuing operations		$	8,639		$	9,463		$	(1,251	)		$	16,851
Net cash used in operating activities of discontinued operations						(2,079	)		(318	)			(2,397	)
Cash flows from investing activities:
	Purchases of property, plant and equipment					(6,957	)		(1,096	)			(8,053	)
Net cash used in investing activities of continuing operations						(6,957	)		(1,096	)			(8,053	)
Net cash used in investing activities of discontinued operations						(226	)		(817	)			(1,043	)
Cash flows from financing activities:
	Proceeds from long-term debt		35,820			1,126			3,511				40,457
	Payments on long-term debt		(44,015	)		(2,168	)		(337	)			(46,520	)
	Payment of preferred stock dividends		(150	)									(150	)
Net cash (used in) provided by financing activities of continuing operations			(8,345	)		(1,042	)		3,174				(6,213	)
Effect of exchange rate changes on cash									(71	)			(71	)
Net cash provided by continuing operations			294			1,464			756				2,514
Net cash used in discontinued operations						(2,305	)		(1,135	)			(3,440	)
Net increase (decrease) in cash and cash equivalents			294			(841	)		(379	)			(926	)
Cash and cash equivalents, at beginning of period			915			1,024			2,071				4,010
Cash and cash equivalents, at end of period		$	1,209		$	183		$	1,692			$	3,084

69

HAWK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)

16. Summary of Quarterly Results of Operations (Unaudited)

		March 31,			June 30,			September 30,			December 31,			March 31,			June 30,			September 30,			December 31,
		2003			2003			2003			2003			2002			2002			2002			2002
Net sales(1)		$	54,661		$	52,193		$	48,161		$	47,536		$	47,510		$	48,203		$	46,009		$	44,190
Gross profit(1)			12,986			13,202			11,233			9,948			10,730			11,905			10,291			11,270
(Loss) income before discontinued operations and cumulative effect of change in accounting principle(1)			396			1,206			131			(2,182	)		(262	)		740			207			120
Discontinued operations, net of tax			(277	)		(737	)		(48	)		(3,911	)		(338	)		(501	)		(484	)		(527	)
Cumulative effect of change in accounting principle, net of tax															(17,200	)
Net income (loss)(1)		$	119		$	469		$	83		$	(6,093	)	$	(17,800	)	$	239		$	(277	)	$	(407	)
Basic (loss) earnings per share:(1)
	(Loss) earnings per share before discontinued operations and cumulative effect of change in accounting principle	$	.04		$	.14		$	.01		$	(.26	)	$	(.03	)	$	.08		$	.02		$	.01
	Discontinued operations, net of tax		(.03	)		(.09	)		.00			(.45	)		(.04	)		(.06	)		(.06	)		(.06	)
	Cumulative effect of change in accounting principle, net of tax														(2.01	)
	Net (loss) earnings per basic share	$	.01		$	.05		$	.01		$	(.71	)	$	(2.08	)	$	.02		$	(.04	)	$	(.05	)
Diluted (loss) earnings per share:(1)
	(Loss) earnings per share before discontinued operations and cumulative effect of change in accounting principle	$	.04		$	.14		$	.01		$	(.26	)	$	(.03	)	$	.08		$	.02		$	.01
	Discontinued operations, net of tax		(.03	)		(.09	)		.00			(.45	)		(.04	)		(.06	)		(.06	)		(.06	)
	Cumulative effect of change in accounting principle, net of tax														(2.01	)
	Net (loss) earnings per diluted share	$	.01		$	.05		$	.01		$	(.71	)	$	(2.08	)	$	.02		$	(.04	)	$	(.05	)

(1)  Results of operations of the Company have been restated to reclassify the net earnings of the motors segment as discontinued operations for all periods presented. See Note 3.

70

Part IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) Financial Statements

      The following consolidated financial statements of Hawk are included in Item 8:

(i)	Consolidated Balance Sheets at December 31, 2003 and 2002
(ii)	Consolidated Statements of Operations for the years ended December 31, 2003, 2002 and 2001
(iii)	Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2003, 2002 and 2001
(iv)	Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2002 and 2001
(v)	Notes to Consolidated Financial Statements for the years ended December 31, 2003, 2002 and 2001

      All consolidated financial schedules are omitted because they are inapplicable, not required by the instructions or the information is included in the consolidated financial statements or notes thereto.

(b) Reports on Form 8-K:

      We have filed five reports on Form 8-K since September 30, 2003:

      A report dated October 29, 2003 reporting a temporary limitation in distribution and diversification in employees’ individual accounts of various 401(k) plans during the period beginning December 5, 2003, through December 22, 2003, as a result of the consolidation of the plans into a new Hawk Corporation 401(k) Savings and Retirement Plan on January 1, 2004.

      A report dated November 3, 2003 reporting our financial results for the 3rd quarter of 2003 and for the nine months ended September 30, 2003.

      A report dated January 5, 2004, reporting that we had been informed by the American Stock Exchange (AMEX) that our application to list our shares of Class A common stock on the AMEX was approved and that it was expected that shares of our Common Stock would commence trading on Wednesday January 7, 2004.

      A report dated January 7, 2004, announcing a strategic repositioning plan to focus on our two primary business segments, Friction Products and Precision Components.

      A report dated February 17, 2004, reporting our financial results for the 4th quarter of 2003 and for the full year of 2003.

72

(c) Exhibits:

3	.1	Form of the Company’s Second Amended and Restated Certificate of Incorporation (Incorporated by reference to the Company’s Registration Statement on Form S-1 as filed with the Securities and Exchange Commission (Reg. No. 333-40535))
3	.2	The Company’s Amended and Restated By-laws (Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the Securities and Exchange Commission (Reg. No. 001-13797))
4	.1	Form of Rights Agreement between the Company and Continental Stock Transfer & Trust Company, as Rights Agent (Incorporated by reference to the Company’s Registration Statement on Form S-1 as filed with the Securities and Exchange Commission (Reg. No. 333-40535))
4	.2	Form of 10 1/4% Senior Note due 2003 (Incorporated by reference to the Company’s Registration Statement on Form S-4 as filed with the Securities and Exchange Commission(Reg. No. 333-18433))
4	.3	Form of Series B 10 1/4% Senior Note due 2003 (Incorporated by reference to the Company’s Registration Statement on Form S-4 as filed with the Securities and Exchange Commission(Reg. No. 333-18433))
4	.4	Stockholders’ Voting Agreement, effective as of November 27, 1996, by and among the Company, Norman C. Harbert, the Harbert Family Limited Partnership, Ronald E. Weinberg, the Weinberg Family Limited Partnership, Byron S. Krantz and the Krantz Family Limited Partnership (Incorporated by reference to the Company’s Registration Statement on Form S-4 as filed with the Securities and Exchange Commission (Reg. No. 333-18433))
4	.5	Letter agreement, dated January 5, 1998, amending the Stockholders’ Voting Agreement, effective as of November 27, 1996, by and among the Company, Norman C. Harbert, the Harbert Family Limited Partnership, Ronald E. Weinberg, the Weinberg Family Limited Partnership, Byron S. Krantz and the Krantz Family Limited Partnership (Incorporated by reference to the Company’s Registration Statement on Form S-1 as filed with the Securities and Exchange Commission (Reg. No. 333-40535))
4	.6	Supplemental Indenture among the Company, certain of its domestic subsidiaries from time to time a party thereto, as Guarantors, and HSBC Bank USA, as successor trustee to Bank One Trust Company, N.A., relating to the Company’s Series A 10.25% Senior Notes due December 1, 2003, and Series B 10.25% Senior Notes due December 1, 2002 (incorporated herein by reference to Amendment No. 1 to the Registration Statement on Form S-4 (Registration Number 333-90556), as filed with the Commission on August 1, 2002)
4	.7	Indenture among the Company, certain of its domestic subsidiaries from time to time a party thereto, as Guarantors, and HSBC Bank USA, as trustee, relating to the Company’s 12% Senior Notes due 2006 (Incorporated by reference to the Company’s Form 10-K for the period ended December 31, 2002 as filed with the Securities and Exchange Commission)
10	.1	Employment Agreement, dated as of November 1, 1996, between the Company and Norman C. Harbert (Incorporated by reference to the Company’s Registration Statement on Form S-4 as filed with the Securities and Exchange Commission (Reg. No. 333-18433))
10	.2	Form of Amended and Restated Wage Continuation Agreement between the Company and Norman C. Harbert (Incorporated by reference to the Company’s Registration Statement on Form S-1 as filed with the Securities and Exchange Commission (Reg. No. 333-40535))
10	.3	Employment Agreement, dated as of November 1, 1996, between the Company and Ronald E. Weinberg (Incorporated by reference to the Company’s Registration Statement on Form S-4 as filed with the Securities and Exchange Commission (Reg. No. 333-18433))
10	.4	Amendment No. 1 to the Employment Agreement, dated as of October 24, 2000, between the Company and Norman C. Harbert (Incorporated by reference to the Company’s Form 10-Q for the quarterly period ended March 31, 2001 as filed with the Securities and Exchange Commission)
10	.5	Amendment No. 1 to the Employment Agreement, dated as of October 24, 2000, between the Company and Ronald E. Weinberg (Incorporated by reference to the Company’s Form 10-Q for the quarterly period ended March 31, 2001 as filed with the Securities and Exchange Commission)
10	.6	Amended and Restated Employment Agreement, dated as of December 31, 2001, by and among the Company, Friction Products Co. and Ronald E. Weinberg (Incorporated by reference to the Company’s Form 10-K for the period ended December 31, 2001 as filed with the Securities and Exchange Commission)

73

10	.7	Amended and Restated Employment Agreement, dated as of December 31, 2001, by and among the Company, Friction Products Co. and Norman C. Harbert (Incorporated by reference to the Company’s Form 10-K for the period ended December 31, 2001 as filed with the Securities and Exchange Commission)
10	.8	Amended and Restated Wage Continuation Agreement, dated as of December 31, 2001, by and among the Company, Friction Products Co. and Norman C. Harbert (Incorporated by reference to the Company’s Form 10-K for the period ended December 31, 2001 as filed with the Securities and Exchange Commission)
10	.9	Consultant Agreement, dated as of December 31, 2001, by and among the Company, Friction Products Co. and Norman C. Harbert (Incorporated by reference to the Company’s Form 10-K for the period ended December 31, 2001 as filed with the Securities and Exchange Commission)
10	.10	Form of the Promissory Notes, each dated June 30, 1995, issued by of Norman C. Harbert and Ronald E. Weinberg to the Company (Incorporated by reference to the Company’s Registration Statement on Form S-4 as filed with the Securities and Exchange Commission (Reg. No. 333-18433))
10	.11	Letter agreement, dated October 1, 1996, amending the Promissory Notes, dated June 30, 1995, issued by each of Norman C. Harbert and Ronald E. Weinberg to the Company (Incorporated by reference to the Company’s Registration Statement on Form S-4 as filed with the Securities and Exchange Commission (Reg. No. 333-18433))
10	.12	Credit Agreement, dated as of May 1, 1998, among the Company and KeyBank National Association, as Swing Line Lender, Administrative Agent and as Syndication Agent (Incorporated by reference to the Company’s Form 10-Q for the quarterly period ended June 30, 1998 as filed with the Securities and Exchange Commission)
10	.13	Subsidiary Guaranty, dated as of May 1, 1998, among the subsidiaries of the Company, as guarantors, and KeyBank National Association, as Administrative Agent (Incorporated by reference to the Company’s Form 10-Q for the quarterly period ended June 30, 1998 as filed with the Securities and Exchange Commission)
10	.14	Amendment No. 1, dated as of November 22, 2000 to Credit Agreement among the Company and KeyBank National Association, as Lender, the Swing Line Lender, a Letter of Credit Issuer and as the Syndication Agent and the Administrative Agent (Incorporated by reference to the Company’s Form 10-K for the period ended December 31, 2000 as filed with the Securities and Exchange Commission)
10	.15	Hawk Corporation 1997 Stock Option Plan (Incorporated by reference to the Company’s Registration Statement on Form S-1 as filed with the Securities and Exchange Commission (Reg. No. 333-40535))
10	.16	Hawk Corporation 2000 Long Term Incentive Plan (Incorporated by reference to the Company’s Form 10-K for the period ended December 31, 2000 as filed with the Securities and Exchange Commission)
10	.17	Hawk Corporation Annual Incentive Compensation Plan (Incorporated by reference to the Company’s Form 10-K for the period ended December 31, 2000 as filed with the Securities and Exchange Commission)
10	.18	Amendment No. 2 to Credit Agreement, dated as of July 31, 2001, by and among the Company, the Lenders identified therein and KeyBank National Association, a national banking association, as the Administrative Agent under the Credit Agreement (Incorporated by reference to the Company’s Form 10-Q for the quarterly period ended June 30, 2001 as filed with the Securities and Exchange Commission)
10	.19	Form of Security Agreement, dated as of August 10, 2001, by and between KeyBank National Association, the Company and each of the following subsidiaries of the Company: Allegheny Powder Metallurgy, Inc., Clearfield Powdered Metals, Inc., Friction Products Co., Hawk Brake, Inc., Hawk MIM, Inc., Helsel, Inc., Hawk Motors, Inc., Logan Metal Stampings, Inc., Net Shape Technologies LLC, Quarter Master Industries, Inc., S.K. Wellman Corp., S.K. Wellman Holdings, Inc., Sinterloy Corporation, Tex Racing Enterprises, Inc. and Wellman Friction Products U.K. Corp (Incorporated by reference to the Company’s Form 10-Q for the quarterly period ended June 30, 2001 as filed with the Securities and Exchange Commission)

74

10	.20	Form of Pledge Agreement, dated as of August 10, 2001, by and between KeyBank National Association, the Company and each of the following subsidiaries of the Company: Allegheny Powder Metallurgy, Inc., Clearfield Powdered Metals, Inc., Friction Products Co., Hawk Brake, Inc., Hawk MIM, Inc., Helsel, Inc., Hawk Motors, Inc., Logan Metal Stampings, Inc., Net Shape Technologies LLC, Quarter Master Industries, Inc., S.K. Wellman Corp., S.K. Wellman Holdings, Inc., Sinterloy Corporation, Tex Racing Enterprises, Inc. and Wellman Friction Products U.K. Corp (Incorporated by reference to the Company’s Form 10-Q for the quarterly period ended June 30, 2001 as filed with the Securities and Exchange Commission)
10	.21	Form of Intellectual Property Security Agreement, dated as of August 10, 2001, by and between the Company and each of the following subsidiaries of the Company: Allegheny Powder Metallurgy, Inc., Clearfield Powdered Metals, Inc., Friction Products Co., Hawk Brake, Inc., Hawk MIM, Inc., Helsel, Inc., Hawk Motors, Inc., Logan Metal Stampings, Inc., Net Shape Technologies LLC, Quarter Master Industries, Inc., S.K. Wellman Corp., S.K. Wellman Holdings, Inc., Sinterloy Corporation, Tex Racing Enterprises, Inc. and Wellman Friction Products U.K. Corp. (Incorporated by reference to the Company’s Form 10-Q for the quarterly period ended June 30, 2001 as filed with the Securities and Exchange Commission)
10	.22	Form of Guaranty Agreement of Payment of Obligations, dated as of August 10, 2001, by and between KeyBank National Association and each of the following subsidiaries of the Company: Allegheny Powder Metallurgy, Inc., Clearfield Powdered Metals, Inc., Friction Products Co., Hawk Brake, Inc., Hawk MIM, Inc., Helsel, Inc., Hawk Motors, Inc., Logan Metal Stampings, Inc., Net Shape Technologies LLC, Quarter Master Industries, Inc., S.K. Wellman Corp., S.K. Wellman Holdings, Inc., Sinterloy Corporation, Tex Racing Enterprises, Inc. and Wellman Friction Products U.K. Corp. (Incorporated by reference to the Company’s Form 10-Q for the quarterly period ended June 30, 2001 as filed with the Securities and Exchange Commission)
10	.23	Form of Open Ended Ohio Mortgage, executed as of August 10, 2001, in favor of KeyBank National Association by each of the following subsidiaries of the Company: Friction Products Co., Logan Metal Stampings, Inc. and S.K. Wellman Corp. (Incorporated by reference to the Company’s Form 10-Q for the quarterly period ended June 30, 2001 as filed with the Securities and Exchange Commission)
10	.24	Form of Open Ended Pennsylvania Mortgage, executed as of August 10, 2001, in favor of KeyBank National Association by each of the following subsidiaries of the Company: Allegheny Powder Metallurgy, Inc. and Clearfield Powdered Metals, Inc. (Incorporated by reference to the Company’s Form 10-Q for the quarterly period ended June 30, 2001 as filed with the Securities and Exchange Commission)
10	.25	Form of Mortgage, Assignment of Leases and Rents and Fixture Filing, executed as of August 10, 2001, in favor of KeyBank National Association by each of the following subsidiaries of the Company: Hawk Motors, Inc. and Helsel, Inc. (Incorporated by reference to the Company’s Form 10-Q for the quarterly period ended June 30, 2001 as filed with the Securities and Exchange Commission)
10	.26	Common Stock Selling Plan of Thomas A. Gilbride pursuant Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, effective as of June 6, 2001 (Incorporated by reference to the Company’s Form 10-Q for the quarterly period ended June 30, 2001 as filed with the Securities and Exchange Commission)
10	.27	Amendment No. 3 to Credit Agreement, dated as of November 9, 2001, by and among the Company, the Lenders identified therein and KeyBank National Association, a national banking association, as the Administrative Agent under the Credit Agreement (Incorporated by reference to the Company’s Form 10-Q for the quarterly period ended September 30, 2001 as filed with the Securities and Exchange Commission)
10	.28	Form of Pledge Agreement, dated as of November 9, 2001, by and between KeyBank National Association, the Company and each of the following subsidiaries of the Company: Allegheny Powder Metallurgy, Inc., Clearfield Powdered Metals, Inc., Friction Products Co., Hawk Brake, Inc., Hawk MIM, Inc., Helsel, Inc., Hawk Motors, Inc., Logan Metal Stampings, Inc., Net Shape Technologies LLC, Quarter Master Industries, Inc., S.K. Wellman Corp., S.K. Wellman Holdings, Inc., Sinterloy Corporation, Tex Racing Enterprises, Inc. and Wellman Friction Products U.K. Corp (Incorporated by reference to the Company’s Form 10-Q for the quarterly period ended September 30, 2001 as filed with the Securities and Exchange Commission)

75

10	.29	Amendment No. 4 to Credit Agreement, dated as of March 25, 2002, by and among the Company, the Lenders identified therein and KeyBank National Association, a national banking association, as the Administrative Agent under the Credit Agreement (Incorporated by reference to the Company’s Form 10-K for the period ended December 31, 2001 as filed with the Securities and Exchange Commission)
10	.30	Credit Agreement, dated as of October 18, 2002, among the Company, and certain of its domestic subsidiaries from time to time party thereto, as Borrowers and Guarantors, the Lending Institutions party thereto, as Lenders, J.P. Morgan Business Credit Corp., as Advisor, JPMorgan Chase Bank, as Administrative Agent and Collateral Agent, Issuing Bank and Arranger, PNC Bank, National Association as a Documentation Agent and Fleet Capital Corp. as a Documentation Agent (Incorporated by reference to the Company’s Form 10-Q for the quarterly period ended September 30, 2002 as filed with the Securities and Exchange Commission)
10	.31	Security and Pledge Agreement, dated as of October 18, 2002, among the Company, and its certain Subsidiaries as Grantors, the other Grantors from time to time party thereto, and JPMorgan Chase Bank, as Administrative and Collateral Agent (Incorporated by reference to the Company’s Form 10-Q for the quarterly period ended September 30, 2002 as filed with the Securities and Exchange Commission)
10	.32	Form of Ohio Open Ended Mortgage, Assignment of Leases and Rents and Fixture Filing, each dated as of October 18, 2002, issued by each of Friction Products Co., Logan Metal Stampings, Inc. and S.K. Wellman Corp. and in Favor of JPMorgan Chase Bank (Incorporated by reference to the Company’s Form 10-Q for the quarterly period ended September 30, 2002 as filed with the Securities and Exchange Commission)
10	.33	Form of Pennsylvania Open Ended Mortgage Securing Future and/or Revolving Advances up to a Maximum Principal Amount of Fifty Three Million Dollars ($53,000,000) plus accrued interest and other Indebtedness as described in 42 PA. C.S.A.ss.8143, dated as of October 18, 2002, issued by Allegheny Clearfield, Inc. in favor of JPMorgan Chase Bank (Incorporated by reference to the Company’s Form 10-Q for the quarterly period ended September 30, 2002 as filed with the Securities and Exchange Commission)
10	.34	Form of Illinois Mortgage, Assignment of Leases and Rents and Fixture Filing, dated as of October 18, 2002, issued by Hawk Motors, Inc. in favor of JPMorgan Chase Bank (Incorporated by reference to the Company’s Form 10-Q for the quarterly period ended September 30, 2002 as filed with the Securities and Exchange Commission)
10	.35	Form of Indiana Mortgage, Assignment of Leases and Rents and Fixture Filing, dated as of October 18, 2002, issued by Helsel, Inc. in favor of JPMorgan Chase Bank (Incorporated by reference to the Company’s Form 10-Q for the quarterly period ended September 30, 2002 as filed with the Securities and Exchange Commission)
10	.36	Amendment No. 1 to the Credit Agreement, dated as of February 27, 2004, by and among the Company and certain of its domestic subsidiaries from time to time party thereto, as Borrowers and Guarantors, the Lending Institutions party thereto, as Lenders, and JPMorgan Chase Bank, as Administrative Agent and Collateral Agent and issuing Bank (Incorporated by reference to the Company’s Form 10-K for the period ended December 31, 2003 as filed with the Securities and Exchange Commission)
10	.37	Settlement Agreement, Release and Waiver, dated as of October 27, 2003, by and between the Company and Jeffrey H. Berlin (Incorporated by reference to the Company’s Form 10-K for the period ended December 31, 2003 as filed with the Securities and Exchange Commission)
10	.38	Transition Agreement, Release and Waiver, dated as of January 7, 2004, by and between the Company and Michael J. Corkran (Incorporated by reference to the Company’s Form 10-K for the period ended December 31, 2003 as filed with the Securities and Exchange Commission)
10	.39	Common Stock Selling Plan of the Harbert Foundation pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, effective January 9, 2004 (Incorporated by reference to the Company’s Form 10-K for the period ended December 31, 2003 as filed with the Securities and Exchange Commission)
10	.40	Amendment No. 1 to Amended and Restated Employment Agreement, dated as of March 3, 2004, by and among the Company, Friction Products Co. and Ronald E. Weinberg (Incorporated by reference to the Company’s Form 10-K for the period ended December 31, 2003 as filed with the Securities and Exchange Commission)
10	.41	First Amendment to Amended and Restated Employment Agreement, dated as of December 31, 2003, by and among the Company, Friction Products Co. and Norman C. Harbert (Incorporated by reference to the Company’s Form 10-K for the period ended December 31, 2003 as filed with the Securities and Exchange Commission)
14		Code of Business Conduct and Ethics (Incorporated by reference to the Company’s Form 10-K for the period ended December 31, 2003 as filed with the Securities and Exchange Commission)
21	.1	Subsidiaries of the Registrant (Incorporated by reference to the Company’s Form 10-K for the period ended December 31, 2003 as filed with the Securities and Exchange Commission)
23	.1*	Consent of Ernst & Young LLP
31	.1*	Certification of the Chairman of the Board, Chief Executive Officer and President pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

76

31	.2*	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	.1*	Certification of the Chairman of the Board, Chief Executive Officer and President pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32	.2*	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

*  Filed or Furnished herewith

77

SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) 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.

HAWK CORPORATION

BY:  /s/ JOSEPH J. LEVANDUSKI

Joseph J. Levanduski

Chief Financial Officer

Date: May 14, 2004

78