-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BURzTrtKEwlHk2QLLYrtNtNaHgLZoxT8S/ABMRmWUH5O81XD6281EiYd4HgJfh0F GKbv8+AcxFR88PcKIpfeHQ== 0000950152-97-007201.txt : 19971015 0000950152-97-007201.hdr.sgml : 19971015 ACCESSION NUMBER: 0000950152-97-007201 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970801 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19971014 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HAWK CORP CENTRAL INDEX KEY: 0000849240 STANDARD INDUSTRIAL CLASSIFICATION: AIRCRAFT PART & AUXILIARY EQUIPMENT, NEC [3728] IRS NUMBER: 341610236 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 333-18433 FILM NUMBER: 97695198 BUSINESS ADDRESS: STREET 1: 200 PUBLIC SQUARE STREET 2: STE 29-2500 CITY: CLEVELAND STATE: OH ZIP: 44114-2301 BUSINESS PHONE: 2167367216 MAIL ADDRESS: STREET 1: 200 PUBLIC SQUARE STREET 2: STE 29-2500 CITY: CLEVELAND STATE: OH ZIP: 44114-2301 FORMER COMPANY: FORMER CONFORMED NAME: HAWK GROUP OF COMPANIES INC DATE OF NAME CHANGE: 19950417 8-K/A 1 HAWK CORPORATION FORM 8-K/AMENDMENT NO. 1 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A AMENDMENT NO. 1 CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) AUGUST 1, 1997 HAWK CORPORATION ---------------- (Exact name of Registrant as specified in its charter) Delaware -------- (State of incorporation) 333-18433 34-1608156 --------- ---------- (Commission file number) (I.R.S. Employer Identification No.) 200 Public Square, Suite 30-5000, Cleveland, Ohio 44114 ------------------------------------------------------- (Address of principal executive offices) (Zip Code) (216) 861-3553 -------------- (Registrant's telephone number, including area code) 2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS On August 1, 1997, a subsidiary of Hawk Corporation the ("Company") acquired substantially all of the assets and assumed certain liabilities of Sinterloy, Inc., a privately-held Illinois corporation ("Sinterloy"). The Company paid $15.0 million, subject to adjustment based on Sinterloy's net equity at closing. Sinterloy, located in Solon Mills, Illinois, is a powder metal components manufacturer primarily serving the business equipment and automotive replacement markets. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Financial Statements of the Business Acquired Page ---- Report of Ernst and Young LLP, Independent Auditors 3 Balance Sheets of Sinterloy, Inc. as of December 31, 1996 and 1995 and (Unaudited) as of June 30, 1997 4 Statements of Income of Sinterloy, Inc. for the years ended December 31, 1996 and 1995 and (Unaudited) as of the six months ended June 30, 1997 6 Statements of Shareholder's Equity for the years ended December 31, 1996 and 1995 7 Statements of Cash Flows of Sinterloy, Inc. for the years ended December 31, 1996 and 1995 and (Unaudited) as of the six months ended June 30, 1997 8 Notes to Financial Statements 9 (b) Unaudited Pro Forma Financial Information of Hawk Corporation and Sinterloy, Inc. Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 1997 13 Unaudited Pro Forma Condensed Consolidated Statement of Operations of Hawk Corporation for the year ended December 31, 1996 and the six months ended June 30, 1997 15 2 3 Report of Independent Auditors Shareholder Sinterloy, Inc. Solon Mills, Illinois We have audited the accompanying balance sheets of Sinterloy, Inc. as of December 31, 1996 and 1995, and the related statements of income, shareholder's equity, and cash flows for the years then ended. 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 generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Sinterloy, Inc. at December 31, 1996 and 1995, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/ Ernst & Young, LLP Cleveland, Ohio August 22, 1997 3 4
Sinterloy, Inc. Balance Sheets DECEMBER 31 JUNE 30 1996 1995 1997 ---- ---- ---- Assets (UNAUDITED) Current assets: Cash and cash equivalents $1,552,611 $ 545,412 $2,301,628 Accounts receivable 1,294,066 965,982 1,666,361 Inventories 506,835 316,640 407,256 Prepaid expenses 10,642 64,750 18,353 ---------- ---------- ---------- Total current assets 3,364,154 $1,892,784 $4,393,598 Property and equipment: Machinery and equipment 3,410,892 1,706,700 3,662,128 Office furniture and fixtures 65,314 91,642 72,324 ---------- ---------- ---------- 3,476,206 1,798,342 3,734,452 Less accumulated depreciation 1,350,392 869,347 1,569,425 ---------- ---------- ---------- $2,125,814 $ 928,995 $2,165,027 ---------- ---------- ---------- Total assets $5,489,968 $2,821,779 $6,558,625 ========== ========== ==========
See notes to financial statements. 4 5
Sinterloy, Inc. Balance Sheets - (Continued) DECEMBER 31 JUNE 30 1996 1995 1997 ---- ---- ---- (UNAUDITED) Liabilities and shareholder's equity Current liabilities: Accounts payable $ 755,503 $ 232,075 $ 298,043 Accrued expenses 222,513 135,758 52,230 Accrued income taxes 30,000 16,000 -- Current portion of note payable 23,687 22,174 24,482 ---------- ---------- ---------- Total current liabilities $1,031,703 $ 406,007 $ 374,755 Note payable 86,209 109,896 73,766 Shareholder's equity: Common stock, no par value, 100,000 shares authorized, issued and outstanding 10,000 10,000 10,000 Retained earnings 4,362,056 2,295,876 6,100,104 ---------- ---------- ---------- Total shareholder's equity 4,372,056 2,305,876 6,110,104 ---------- ---------- ---------- Total liabilities and shareholder's equity $5,489,968 $2,821,779 $6,558,625 ========== ========== ==========
See notes to financial statements. 5 6
Sinterloy, Inc. Statements of Income SIX MONTHS ENDED YEARS ENDED DECEMBER 31 JUNE 30 1996 1995 1997 ---------------- ------------------- ---------------- (Unaudited) Net sales $ 11,596,950 $ 7,586,030 $ 7,734,875 Cost of sales 7,422,194 5,215,868 4,091,492 ------------ ------------ ------------ Gross profit 4,174,756 2,370,162 3,643,383 General and administrative expenses 1,053,213 868,970 515,804 ------------ ------------ ------------ Operating income 3,121,543 1,501,192 3,127,579 Other income (expense): Miscellaneous income 783 5,720 7,638 Loss on sale of equipment (1,628) -- -- Interest income 32,485 12,604 42,860 Interest expense (8,668) (18,733) (3,575) ------------ ------------ ------------ Other income (expense)--net 22,972 (409) 46,923 ------------ ------------ ------------ Income before income taxes 3,144,515 1,500,783 3,174,502 Income taxes 33,767 36,077 -- ------------ ------------ ------------ Net income $ 3,110,748 $ 1,464,706 $ 3,174,502 ============ ============ ============
See notes to financial statements. 6 7
Sinterloy, Inc. Statements of Shareholder's Equity Common Retained Stock Earnings Total ----------- ------------ ----------- Balance at January 1, 1995 $ 10,000 $ 1,223,233 $ 1,233,233 Net income 1,464,706 1,464,706 Cash distribution to shareholder (392,063) (392,063) ----------- ----------- ----------- Balance at December 31, 1995 10,000 2,295,876 2,305,876 Net income 3,110,748 3,110,748 Cash distributions to shareholder (1,044,568) (1,044,568) ----------- ----------- ----------- Balance at December 31, 1996 $ 10,000 $ 4,362,056 $ 4,372,056 =========== =========== ===========
See notes to financial statements. 7 8
Sinterloy, Inc. Statements of Cash Flows SIX MONTHS ENDED DECEMBER 31 JUNE 30 1996 1995 1997 ------------- ----------- ----------- (UNAUDITED) Operating activities Net income $ 3,110,748 $ 1,464,706 $ 3,174,502 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 509,276 267,539 219,033 Loss on sale of equipment 1,628 -- -- Change in operating assets and liabilities: Accounts receivable (328,084) (262,316) (372,295) Inventories (190,195) (65,321) 99,579 Prepaid expenses (10,642) (53,983) (7,711) Accounts payable 523,428 83,207 (457,460) Accrued expenses and other 86,755 112,943 (64,611) Accrued income taxes 14,000 11,500 -- ----------- ----------- ----------- Net cash provided by operating activities 3,716,914 1,558,275 2,591,037 Investing activities Purchases of property and equipment (1,642,973) (536,543) (258,246) Financing activities Payments on line of credit -- (200,000) -- Payments on note payable (22,174) (20,758) (11,648) Shareholder distributions (1,044,568) (392,063) (1,572,126) ----------- ----------- ----------- Net cash used in financing activities (1,066,742) (612,821) (1,583,774) ----------- ----------- ----------- Net increase in cash 1,007,199 408,911 749,017 Cash and cash equivalents at beginning of year 545,412 136,501 1,552,611 ----------- ----------- ----------- Cash and cash equivalents at end of period $ 1,552,611 $ 545,412 $ 2,301,628 =========== =========== ===========
See notes to financial statements. 8 9 Sinterloy, Inc. Notes to Financial Statements December 31, 1996 and 1995 A. BASIS OF PRESENTATION Sinterloy, Inc. (the Company) is primarily engaged in the production of structural sintered metal parts. The plant facility is located in Solon Mills, Illinois. The Company was incorporated in Illinois on March 23, 1988. UNAUDITED INTERIM FINANCIAL INFORMATION The accompanying unaudited consolidated financial statements at June 30, 1997 and for the six months ended June 30, 1997 have been prepared in accordance with generally accepted accounting principles for the interim financial information and with Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six-month period ended June 30 1997 are not necessarily indicative of the results that may be expected for the year ending December 31, 1997. B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. INVENTORIES Inventories are carried at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method. Inventories consisted of the following:
DECEMBER 31 JUNE 30 1996 1995 1997 ----------------------- ---------- (Unaudited) Raw material and supplies $242,791 $ 92,799 $297,042 Work in process 148,789 126,135 68,787 Finished goods 115,255 97,706 41,427 -------- -------- -------- $506,835 $316,640 $407,256 ======== ======== ========
9 10 Sinterloy, Inc. Notes to Financial Statements - Continued B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--CONTINUED PROPERTY AND EQUIPMENT Property and equipment has been recorded at cost. Depreciation is provided by using an accelerated method or the straight-line method over the useful lives of the assets. Estimated useful lives range from 3 to 7 years. INCOME TAXES Effective October 1, 1994, the Company elected S Corporation status. Under those provisions, the shareholder is liable for individual income taxes on the Company's taxable income. The Company is responsible for paying Illinois Replacement Tax of 1.5% of taxable income. States taxes paid in 1996 and 1995 were $19,767 and $24,577, respectively. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ form those estimates. C. NOTE PAYABLE
DECEMBER 31 JUNE 30 1996 1995 1997 ------------------------- --------- (Unaudited) Payable to a former shareholder, in monthly installments of $2,621 principal and interest, bearing interest at 6.62%, due February, 2001, unsecured. $109,896 $132,070 $ 98,248 Less current portion 23,687 22,174 24,482 ------------ ------------ -------- LONG-TERM NOTE PAYABLE $ 86,209 $109,896 $ 73,766 ============ ============ ========
10 11 Sinterloy, Inc. Notes to Financial Statements - Continued C. NOTE PAYABLE - CONTINUED Aggregate maturities of long-term debt are as follows:
DECEMBER 31, 1996 ----------------- 1997 $ 23,687 1998 25,304 1999 27,081 2000 28,875 2001 4,949 ----------- $ 109,896 ===========
During 1995, 1996 and 1997, the Company had a revolving line of credit with a maximum of $500,000 bearing interest at prime. There were no borrowings on the line of credit at December 31, 1996 and 1995. Interest paid in 1996 and 1995 was $8,668 and $18,733, respectively. D. LEASE COMMITMENT In 1995, the Company leased its facilities from a third party with monthly rental payments of $5,429. In February 1996 the facilities were purchased by the Company's sole shareholder who leases the facilities to the Company under a five year operating lease through January 31, 2001. Beginning March 1996, monthly rental payments were increased to $13,150 due to a significant addition to the facility in 1996. The Company also has operating leases for two vehicles and other miscellaneous equipment. Rent expense was $148,650 and $56,288 for the years ended December 31, 1996 and 1995, respectively. Future minimum lease commitments are as follows:
DECEMBER 31, 1996 ------------------- 1997 $ 166,206 1998 157,800 1999 157,800 2000 157,800 2001 13,150 ----------- $ 652,756 ===========
11 12 Sinterloy, Inc. Notes to Financial Statements - Continued E. PROFIT SHARING PLAN On September 1, 1993, the Company established a 401(k) profit sharing plan. Eligible employees may elect to defer up to 10% of their total compensation or as prescribed by the Internal Revenue Service regulations. The Company contributes a matching fifty percent (50%) of each employee's elective deferral. Additionally, the plan allows for the Company to make discretionary contributions. Company contributions for the years ended December 31, 1996 and 1995 were $59,203 and $53,375, respectively. The discretionary portion of the contributions was $20,000 for the years ended December 31, 1996 and 1995. F. MAJOR CUSTOMERS For the years ended December 31, 1996 and 1995, the Company generated approximately 72% and 60%, respectively, of its revenue from three major customers. Accounts receivable from the three customers was $887,525 and $684,687, as of December 31, 1996 and 1995, respectively. G. SUBSEQUENT EVENT Effective August 1, 1997, the Company sold substantially all of its assets except cash, and certain liabilities for $15,000,000 (the purchase price). The purchase price will be adjusted dollar for dollar based on the adjusted net equity position of the Company at closing compared to the net equity position of the Company at December 31, 1996. 12 13 The unaudited pro forma condensed consolidated balance sheet as of June 30, 1997 includes the historical accounts of the Company and gives effect to the acquisition of Sinterloy, Inc. as if it occurred as of June 30, 1997. The unaudited pro forma condensed consolidated statements of operations of the Company for the year ended December 31, 1996 and the six months ended June 30, 1997, include the historical operations of the Company and give effect to the Sinterloy, Inc. acquisition as if it occurred as of January 1, 1996. The unaudited pro forma consolidated financial information has been prepared by the Company's management. The information is not designed to represent and does not represent what the Company's results of operations actually would have been had the aforementioned transaction been completed as of the beginning of the period indicated, or to project the Company's results of operations for any future period. The pro forma adjustments are based on available information and certain assumptions that the Company currently believes are reasonable in the circumstances. HAWK CORPORATION UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET JUNE 30, 1997 (in thousands)
HISTORICAL HAWK SINTERLOY, INC. PRO FORMA PRO FORMA CORPORATION ACQUISITION ADJUSTMENTS AS ADJUSTED -------------- ----------- ----------- ----------- Assets Current assets Cash and cash equivalents $ 13,586 $ 2,302 $(15,888)(a) $ -- Accounts receivable less allowance of $180 23,043 1,666 -- 24,709 Inventories 23,322 408 -- 23,730 Deferred income taxes and other current assets 2,908 18 -- 2,926 --------- ------- -------- -------- Total current assets 62,859 4,394 (15,888) 51,365 Property, plant and equipment 66,303 3,734 114(b) 70,151 Less accumulated depreciation (17,886) (1,569) 1,569(c) (17,886) --------- ------- -------- -------- Total property, plant and equipment 48,417 2,165 1,683 52,265 Other assets: Intangible assets 46,772 -- 9,509(d) 56,281 Net assets for sale and other assets 6,853 -- -- 6,853 --------- ------- -------- -------- Total other assets 53,625 -- 9,509 63,134 Total assets $ 164,901 $ 6,559 $ (4,696) $166,764 ========= ======= ======== ========
13 14
HAWK CORPORATION UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET - CONTINUED JUNE 30, 1997 (in thousands) Historical Hawk Sinterloy, Inc. Pro Forma Pro Forma Liabilities and shareholders' equity Corporation Acquisitions Adjustments As Adjusted ----------- --------------- ----------- ----------- Current liabilities: Accounts payable $ 10,087 $ 298 $ -- $ 10,385 Accrued compensation 6,189 35 -- 6,224 Other accrued expenses 3,920 42 -- 3,962 -------- -------- ------ -------- Total current liabilities 20,196 375 -- 20,571 Long-term liabilities: Long-term debt 130,543 74 1,414 (a) 132,031 Deferred income taxes 4,711 -- -- 4,711 Other 1,963 -- -- 1,963 -------- -------- ------- -------- Total long-term liabilities 137,217 74 1,414 138,705 Detachable stock warrants, subject to put option 4,600 -- -- 4,600 Total shareholders' equity 2,888 6,110 (6,110)(e) 2,888 Total liabilities and shareholders' equity $164,901 $ 6,559 $ (4,696) $166,764 ======== ======== ======== ======== - ------------------------------------------- (a) Represents the net adjustment to cash as a result of the following: Purchase of assets and certain liabilities of Sinterloy, Inc. This amount does not include an estimate for the purchase price adjustment which is not known at this time. $(15.000) Cash as of June 30, 1997 not acquired in connection with the Sinterloy, Inc. acquisition. (2,302) Imputed funding required to effect the acquisition of Sinterloy, Inc. as of June 30, 1997. 1,414 -------- $(15,000) ======== (b) Represents the adjustment to plant, property and equipment based on fair market values under the purchase method of accounting. $114 ==== (c) Represents the elimination of accumulated depreciation as of June 30, 1997 under the purchase method of accounting. $1,569 ====== (d) Represents the net increase in intangible assets due to the application of purchase price accounting for assets acquired in the Sinterloy, Inc. acquisition. $9,509 ====== (e) Elimination of shareholder's equity in connection with the Sinterloy, Inc. acquisition. $6,110 ======
14 15
HAWK CORPORATION UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1996 (in thousands, except share and per share data) PRO FORMA HISTORICAL ADJUSTMENTS FOR HAWK SINTERLOY, INC. SINTERLOY, INC. PRO FORMA CORPORATION (A) ACQUISITION ACQUISITION AS ADJUSTED --------------- ----------- ----------- ----------- Net sales $ 132,618 $ 11,597 $ -- $ 144,215 Cost of sales 97,660 7,422 -- 105,082 ----------- ----------- --------- ----------- Gross profit 34,958 4,175 -- 39,133 Expenses: Selling, technical, and administrative expenses 16,262 1,053 11 (C) 17,326 Amortization of intangibles 3,205 -- 317 (D) 3,522 Plant consolidation expense 4,028 -- -- 4,028 ----------- ----------- --------- ----------- Total expenses 23,495 1,053 328 24,876 Income (loss) from operations 11,463 3,122 (328) 14,257 Interest expense 11,717 (B) 9 1,801 (E) 13,527 Other (income) expense, net 236 (32) -- 204 ----------- ----------- --------- ----------- 11,953 (23) 1,801 13,731 Income (loss) before income taxes and extraordinary item (490) 3,145 (2,129) 526 Income taxes 1,580 34 393 (F) 2,007 Income (loss) before extraordinary item $ (2,070) $ 3,111 $ (2,522) $ (1,481) =========== =========== ========= =========== Preferred stock dividend requirements $ (226) $ (226) Income (loss) applicable to common shareholders $ (2,296) $ (1,707) Income (loss) per share applicable to common shareholders $ (1.30) $ (0.97) Number of shares used to compute per share data 1,760,946 1,760,946 - ---------------- (A) Hawk Corporation for the year ended December 31, 1996 includes Pro Forma results of operations of Hutchinson Foundry Products Company (Hutchinson) for the year ended December 31, 1996. Hutchinson was acquired by the Company on January 2, 1997. (B) Includes Pro Forma interest expense based on the imputed funding required to effect the acquisition of Hutchinson as of January 1, 1996. (C) Represents incremental depreciation expense due to the write up of plant, property and equipment to fair market value under the purchase method of accounting in the acquisition of Sinterloy, Inc. $ 11 ====== (D) Represents the incremental amortization due to the application of purchase accounting in the Sinterloy, Inc. acquisition resulting from an increase in the basis of net assets acquired. Intangible assets include deductible goodwill that is amortized over 30 years. $ 317 ====== (E) Represents the net adjustment to interest as a result of the following: Elimination of interest income based on the imputed funding required to effect the acquisition of Sinterloy, Inc. as of January 1, 1996. $ 119 Incremental interest expense, assuming an interest rate of 10.25%, based on the imputed funding required to effect the acquisition of Sinterloy, Inc. $1,682 ------ $1,801 ====== (F) Represents income taxes that would have been incurred had Sinterloy, Inc. been included in the Company's consolidated group for tax reporting purposes. $ 393 ======
15 16
HAWK CORPORATION UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1997 (in thousands, except share and per share data) HISTORICAL HAWK SINTERLOY, INC. PRO FORMA PRO FORMA CORPORATION ACQUISITION ADJUSTMENTS AS ADJUSTED ----------- ----------- ----------- ----------- Net sales $ 76,981 $ 7,735 $ -- $ 84,716 Cost of sales 54,045 4,091 -- 58,136 ----------- ----------- ----------- ----------- Gross profit 22,936 3,644 -- 26,580 Expenses: Selling, technical, and administrative expenses 9,447 519 5 (1) 9,971 Amortization of intangibles 1,626 -- 159 (2) 1,785 ----------- ----------- ----------- ----------- Total expenses 11,073 519 164 11,756 Income from operations 11,863 3,125 (164) 14,824 Interest expense 7,059 -- 262 (3) 7,321 Other (income) expense, net 30 (51) -- (21) ----------- ----------- ----------- ----------- Income before income taxes 4,774 3,176 (426) 7,524 Income taxes 1,989 -- 1,100 4) 3,089 ----------- ----------- ----------- ----------- Net income $ 2,785 $ 3,176 $ (1,526) $ 4,435 Preferred stock dividend requirements $ (160) $ (160) Net Income (loss) applicable to common shareholders $ 2,625 $ 4,275 Net income (loss) per share applicable to common shareholders $ 1.49 $ 2.43 Number of shares used to compute per share data 1,760,946 1,760,946 (1) Represents incremental depreciation expense due to the write up of plant, property and equipment to fair market value under the purchase method of accounting in the acquisition of Sinterloy, Inc. $ 5 ====== (2) Represents the incremental amortization due to the application of purchase accounting in the Sinterloy, Inc. acquisition resulting from an increase in the basis of net assets acquired. Intangible assets include deductible goodwill that is amortized over 30 years. $ 159 ====== (3) Represents incremental interest expense, assuming an interest rate of 10.25%, based on the imputed funding required to effect the acquisition of Sinterloy, Inc. $ 262 ====== (4) Represents income taxes that would have been incurred had Sinterloy, Inc. been included in the Company's consolidated group for tax reporting purposes. $1,100 ======
16 17 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: October 14, 1997 HAWK CORPORATION By: /s/ Thomas A. Gilbride --------------------------- Thomas A. Gilbride, Vice President-Finance 17 -----END PRIVACY-ENHANCED MESSAGE-----