8-K

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): November 9, 2009

Hawk Corporation
__________________________________________
(Exact name of registrant as specified in its charter)

Delaware	001-13797	34-1608156
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)
200 Public Square, Suite 1500, Cleveland, Ohio		44114
_________________________________ (Address of principal executive offices)		___________ (Zip Code)

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

Not Applicable
______________________________________________
Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On November 9, 2009, Hawk issued a press release announcing financial results for the third quarter and nine months ended September 30, 2009. A copy of this press release has been posted to Hawk’s website www.hawkcorp.com and a copy is also set forth in Exhibit 99.1.

This press release includes forward-looking statements within the meaning of the federal securities laws with respect to the Company’s future operations and, as such, concerns matters that are not historical facts. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in such statements. Reference is made to Hawk’s filings with the Securities and Exchange Commission, including it’s annual report on Form 10-K for the year ended December 31, 2008, it’s quarterly reports of Form 10-Q, and other periodic filings for a description of the foregoing and other factors that could cause actual results to differ materially from those in the forward-looking statements. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits

99.1 Hawk Corporation Press Release dated November 9, 2009

Pursuant to General Instruction B, subsection 2, of Form 8-K, Exhibit 99.1 is not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, but is instead furnished as required by that section.

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 hereunto duly authorized.

	Hawk Corporation
November 10, 2009	By:	Thomas A. Gilbride
		Name: Thomas A. Gilbride
		Title: Vice President - Finance and Treasurer

Exhibit Index

Exhibit No.	Description
99.1	Hawk Corporation Earnings Release

EX-99.1

Hawk Announces 2009 Third Quarter Results

• Net sales increase 11.3% in third quarter compared to second quarter 2009

• Company reports third quarter net income of $3.8 million or $0.45 per diluted share

CLEVELAND, Ohio – November 9, 2009 – Hawk Corporation (NYSE Amex: HWK) announced today that sales for the third quarter ended September 30, 2009 were $43.5 million, a decrease of $30.7 million or 41.4%, from $74.2 million in the comparable prior year quarter. Net sales for the nine months ended September 30, 2009 were $126.8 million, a decrease of 40.1%, from $211.8 million in the comparable prior year period. The economic downturn was the principal driver of the revenue decline. Despite this downturn, the Company has continued to receive new business awards from new and existing customers, which the Company expects will result in future sales gains as the economy recovers. Total sales were up 11.3% in the third quarter of 2009 when compared to the second quarter of 2009, as a result of sales increases at all of our global facilities.

Income from operations for the third quarter ended September 30, 2009 was $6.1 million, a decrease of $9.5 million, or 60.9%, from $15.6 million in the prior year period. The decrease in income from operations during the quarter was impacted primarily by the sales volume decrease and to a lesser extent, foreign currency exchange rates. This decline was partially offset by reductions in incentive compensation expense, stringent cost controls during the quarter and product mix.

For the nine month period ended September 30, 2009, the Company reported income from operations of $11.8 million, a decrease of $21.9 million, or 65.0%, from $33.7 million in the comparable prior year period primarily caused by sales volumes declines and to a lesser extent, foreign currency exchange rates. This decline was partially offset by reductions in incentive compensation expense, stringent cost controls, pricing actions and product mix. During the nine months ended September 30, 2009, the Company reduced its global labor force by approximately 16% in addition to lesser reduction taken in the last quarter of 2008.

For the third quarter 2009, the Company reported net income of $3.8 million, or $0.45 per diluted share, a decrease of $6.5 million compared to net income of $10.3 million, or $1.09 per diluted share, in the third quarter of 2008. During the third quarter of 2009, the Company reported other income of $1.5 million ($0.9 million after tax), or $0.12 per diluted share related to its decision to accept cash from its partner in lieu of its obligation to develop a potential new product for the Company. The Company decided that the funds could earn a higher return deployed on other projects. During the third quarter of 2008, the Company reported other income of $1.3 million ($0.9 million after tax), or $0.09 per diluted share, as a result of a similar decision. For the nine months ended September 30, 2009, the Company reported net income of $4.8 million, or $0.55 per diluted share, compared to $18.4 million, or $1.95 per diluted share, during the comparable prior year period.

Ronald E. Weinberg, Hawk’s Chairman and CEO, said, “Despite the softness caused by the economic recession, I am pleased with our performance. We have been awarded a steady stream of additional new business during the period and have been successful in controlling costs without diminishing the competitive momentum of our business. During the third quarter, we began to see the very early stages of a recovery in a number of our end-markets. Our sales in the third quarter were up 11.3% compared to the second quarter of 2009. We reacted quickly to the downturn and enacted cost reductions beginning in the fourth quarter of 2008, and expect that a number of these reductions will provide a benefit to our earnings power as the economy continues to improve.” Mr. Weinberg continued, “Our balance sheet remains strong with approximately $86 million in cash and short-term investment as of September 30, 2009. This amount of cash demonstrates a level of financial stability to our customers, suppliers and lenders and allows us to be more proactive in gaining market share and actively reviewing our options for potential acquisitions.”

Working Capital and Liquidity
Cash and short-term investments increased $7.6 million to $86.3 million as of September 30, 2009, compared to $78.7 million as of June 30, 2009. At September 30, 2009, working capital decreased by $8.1 million to $117.9 million from $126.0 million at December 31, 2008. The decrease in working capital was largely the result of decreased accounts receivable and inventory levels partially offset by reductions in accounts payable at September 30, 2009. As a result of the emphasis on working capital reductions and in spite of the economic downturn, cash flow from operations remained positive at $10.2 million for the nine months ended September 30, 2009, compared to $13.8 million for the period ended September 30, 2008.

Mr. Weinberg continued, “We were pleased to have been able to increase our cash balances by $7.6 million from June 30, 2009 and to further reduce inventory levels by an additional $1.7 million during the same period. Our receivables continue to be of excellent quality.”

At September 30, 2009, the Company had no borrowings under its global bank facilities, and $18.8 million was available for borrowings under these facilities.

During the nine months ended September 30, 2009, the Company spent $6.9 million on capital expenditures, compared to $9.2 million during the comparable period of 2008. Depreciation was $5.3 million for the nine months ended September 30, 2009 compared to $5.0 million for the nine months ended September 30, 2008.

Business Outlook
As the calendar year draws to a close, the Company is tightening its expectations for revenues to a range of between $165.0 million and $175.0 million from its previously issued range of between $160.0 million and $180.0 million. The revised range incorporates the Company’s expectation that gradual improvements in order quantities will continue throughout the remainder of the year. However, the potential for year-end working capital actions taken by customers could negatively affect projected revenues.

The Company remains vigilant in controlling its operating expenses in response to economic conditions while at the same time investing globally in its technology and sales efforts. A slight improvement in demand is being experienced, and a portion of the direct workforce has been recalled.  Management believes the earnings benefit of this in the fourth quarter will be tempered by expected product mix changes and the possibility that customers will push shipments into the first quarter of 2010 in order to control their own inventory levels.  As a result of this combination of factors, the Company is refining its range for operating income for the year to between $15.0 million and $17.0 million from its previously issued range of $14.0 million and $18.0 million.

The Company’s previously provided capital spending guidance for 2009 remains unchanged at a range of between $8.0 and $10.0 million. Given the actual results through September 30, 2009 and the Company’s forecasted mix of domestic and foreign earnings in the remainder of 2009, the Company is revising its effective tax rate to 36.0% from its previous guidance of 39.9%.

The Company
Hawk Corporation is a leading supplier of friction materials for brakes, clutches and transmissions used in airplanes, trucks, construction and mining equipment, farm equipment, recreational and performance automotive vehicles. The Company also manufactures fuel cell components. Headquartered in Cleveland, Ohio, Hawk has approximately 930 employees at 12 manufacturing, research, sales and international rep offices and administrative sites in 7 countries.

Forward-Looking Statements
This press release includes forward-looking statements concerning sales, operating earnings and effective tax rates. These forward-looking statements are based upon management’s expectations and beliefs concerning future events. Forward-looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of the Company and which could cause actual results to differ materially from such statements. These risks and uncertainties include, but are not limited to: the effect of regional and global economic and industrial market conditions including our expectations concerning their impact on the markets we serve; the effect of conditions in the financial and credit markets and their impact on the Company and our customers and suppliers; the impact of the Company’s cost reduction initiatives; the Company’s ability to execute its business plan to meet its sales, operating income, cash flow and capital expenditure guidance; the costs and outcome of the ongoing SEC and DOJ investigations; the impact on the Company’s gross profit margins as a result of changes in product mix; the Company’s vulnerability to industry conditions and competition; the effect of any interruption in the Company’s supply of raw materials or a substantial increase in the price of raw materials; work stoppages by union employees; ongoing capital expenditures and investment in research and development; compliance with government regulations; compliance with environmental and health and safety laws and regulations; the effect on the Company’s international operations of unexpected changes in legal and regulatory requirements, export restrictions, currency controls, tariffs and other trade barriers, difficulties in staffing and managing foreign operations, political and economic instability, difficulty in accounts receivable collection and potentially adverse tax consequences; the effect of foreign currency exchange rates on the Company’s non-U.S. sales; reliance for a significant portion of the Company’s total revenues on a limited number of large organizations and the continuity of business relationships with major customers; the loss of key personnel; and control by existing preferred stockholders.

Actual results and events may differ significantly from those projected in the forward-looking statements. Reference is made to Hawk’s filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2008, its quarterly reports on Form 10-Q, and other periodic filings, for a description of the foregoing and other factors that could cause actual results to differ materially from those in the forward-looking statements. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

Investor Conference Call
A live Internet broadcast of the Company’s conference call discussing quarterly and year to date results can be accessed via the investor relations page on Hawk Corporation’s web site (www.hawkcorp.com) on Monday, November 9, 2009 at 11:00 a.m. Eastern time. An archive of the call will be available shortly after the end of the conference call on the investor relations page of the Company’s web site.

Contact Information
Thomas A. Gilbride, Vice President — Finance
(216) 861-3553

Investor Relations Contact Information
John Baldissera, BPC Financial Marketing
(800) 368-1217

Hawk Corporation is online at: http://www.hawkcorp.com/

HAWK CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)

	Three Months Ended September 30						Nine Months Ended September 30
	2009			2008			2009			2008
Net sales	$	43,452		$	74,181		$	126,814		$	211,761
Cost of sales		29,883			49,070			92,856			148,140
Gross profit		13,569			25,111			33,958			63,621
Operating expenses:
Selling, technical and administrative expenses		7,305			9,332			21,764			29,426
Amortization of finite-lived intangible assets		138			139			415			451
Total operating expenses		7,443			9,471			22,179			29,877
Income from operations		6,126			15,640			11,779			33,744
Interest expense		(2,048	)		(2,013	)		(6,078	)		(6,041	)
Interest income		125			488			394			1,679
Other income, net		1,583			1,198			1,706			1,552
Income from continuing operations, before income taxes		5,786			15,313			7,801			30,934
Income tax provision		2,003			5,016			2,806			10,632
Income from continuing operations, after income taxes		3,783			10,297			4,995			20,302
Loss from discontinued operations, after income taxes		(13	)		(41	)		(187	)		(1,883	)
Net income	$	3,770		$	10,256		$	4,808		$	18,419
Diluted earnings per share:
Income from continuing operations, after income taxes	$	0.45		$	1.09		$	0.57		$	2.15
Discontinued operations, after income taxes		—			—			(0.02	)		(0.20	)
Net earnings per diluted share	$	0.45		$	1.09		$	0.55		$	1.95
Average shares and equivalents outstanding — diluted		8,315			9,403			8,566			9,375

HAWK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
(In thousands)

	September 30		December 31
	2009		2008
ASSETS
Current assets:
Cash and cash equivalents	$	52,350	$	62,520
Short-term investments		33,911		30,774
Accounts receivable, net		28,022		38,569
Inventories		28,558		41,377
Deferred income taxes		382		414
Other current assets		4,956		5,521
Total current assets		148,179		179,175
Property, plant and equipment, net		48,667		47,498
Other intangible assets		6,153		6,568
Other assets		8,126		6,751
Total assets	$	211,125	$	239,992
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	14,763	$	30,207
Other accrued expenses		15,489		23,010
Total current liabilities		30,252		53,217
Long-term debt		87,090		87,090
Deferred income taxes		350		338
Other liabilities		18,901		21,956
Shareholders’ equity		74,532		77,391
Total liabilities and shareholders’ equity	$	211,125	$	239,992

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