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