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, 2001
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
Hawk Corporation 401(k) Savings and Retirement Plan
Helsel, Inc. Employees' Savings and Investment Plan
Helsel, Inc. Employees' Retirement Plan
S. K. Wellman Retirement Savings and Profit Sharing Plan
Hawk Motors Employees' 401(k) Plan
Quarter Master Industries, Inc. Profit Sharing Plan and Trust
Sinterloy Corporation 401(k) 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
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
Hawk Corporation 401(k) Savings and Retirement Plan
Helsel, Inc. Employees' Savings and Investment Plan
Helsel, Inc. Employees' Retirement Plan
S. K. Wellman Retirement Savings and Profit Sharing Plan
Hawk Motors Employees' 401(k)
Quarter Master Industries, Inc. Profit Sharing Plan and Trust
Sinterloy Corporation 401(k) Plan
Date: June 25, 2002
By: /s/ Thomas A. Gilbride
----------------------
Thomas A. Gilbride
Plan Administrator
AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL
SCHEDULE
Friction Products Co. Profit Sharing Plan
December 31, 2001 and 2000 and Year Ended December 31, 2001
with Report of Independent Auditors
Friction Products Co. Profit Sharing Plan
Audited Financial Statements and Supplemental Schedule
December 31, 2001 and 2000 and
Year Ended December 31, 2001
TABLE OF CONTENTS
Report of Independent Auditors ......................................... 1
AUDITED 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 at End of Year)........... 8
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, 2001 and
2000, and the related statement of changes in net assets available for benefits
for the year ended December 31, 2001. 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, 2001 and 2000, and the changes in its net assets available for
benefits for the year ended December 31, 2001, 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 at end of year) as of December 31, 2001 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 21, 2002
1
Friction Products Co. Profit Sharing Plan
Statements of Net Assets Available for Benefits
DECEMBER 31
2001 2000
----------------------------------
ASSETS
Investments, at fair value:
Pooled separate accounts $ 2,900,297 $ 3,407,507
Hawk Corporation Stock Fund 15,159 13,952
Guaranteed Income Fund, at contract value 2,643,266 2,249,864
----------------------------------
Total investments 5,558,722 5,671,323
Employer contributions receivable - 307,598
----------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 5,558,722 $ 5,978,921
==================================
See notes to financial statements.
2
Friction Products Co. Profit Sharing Plan
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2001
Additions:
Interest $ 130,852
Contributions:
Employee 402,893
Employee Rollovers 141,044
-----------
543,937
-----------
Total additions 674,789
Deductions:
Benefit payments 313,548
Fees and expenses 512
-----------
Total deductions 314,060
Net realized and unrealized (depreciation)
in fair value of investments (980,221)
Transfers from other plans 199,293
-----------
Net (decrease) (420,199)
Net assets available for benefits at beginning of year 5,978,921
-----------
NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 5,558,722
===========
See notes to financial statements.
3
Friction Products Co. Profit Sharing Plan
Notes to Financial Statements
December 31, 2001 and 2000 and
Year Ended December 31, 2001
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 thirty days 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 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. The Plan Sponsor did not
make a discretionary profit sharing contribution for the 2001 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
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 profit sharing 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, including 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 ACCOUNTING POLICIES
INVESTMENT VALUATION
Investments in the Guaranteed Income Fund are stated at contract value as
determined by CIGNA, which approximates fair 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.
5
Friction Products Co. Profit Sharing Plan
Notes to Financial Statements--Continued
B. SUMMARY OF ACCOUNTING POLICIES--CONTINUED
All other investments are stated at fair value 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 accounting principles
generally accepted in the United States 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 2001, the Plan's investments (including investments purchased, sold, as
well as held, during the year) depreciated in fair value as follows:
Net Realized
and Unrealized
Depreciation
in Fair Value
of Investments
--------------------
Pooled separate accounts $ 971,137
Hawk Corporation Stock Fund 9,084
--------------------
$ 980,221
====================
The fair value of individual investments that represent 5% or
more of the Plan's net assets are as follows:
DECEMBER 31
2001 2000
-----------------------
Guaranteed Income Fund $2,643,266 $2,249,864
Stock Market Index Fund 527,621
Fidelity Advisor Growth Opportunity Fund 367,738
Warburg Advisor Emerging Growth Fund 537,168
White Oak Growth Stock Fund 636,262 1,046,241
S&P 500 Index Fund 703,338
Janus Fund 352,281
Janus Worldwide Fund 299,562
Mid Cap Growth/Artisan Partners 371,635
6
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 is qualified under Section 401(a) of
the Internal Revenue Code (the "IRC") and, therefore, the related trust is
exempt from taxation. Subsequent to the issuance of the determination letter,
the Plan was amended. 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, as amended, is
qualified and the related trust is tax exempt.
7
Friction Products Co. Profit Sharing Plan
Employer Identification Number: 34-1608009
Plan Number: 005
Schedule H, Line 4i--Schedule of Assets (Held At End of Year)
December 31, 2001
Identity of Issue, Borrower, Current
Lessor, or Similar Party/Description of Investment Value
- ---------------------------------------------------------------------------------------------
* Connecticut General Life Insurance
Company--Group Annuity Contract:
Guaranteed Income Fund $ 2,643,266
CIGNA Lifetime 20 Fund 45,445
CIGNA Lifetime 30 Fund 75,449
CIGNA Lifetime 40 Fund 34,776
CIGNA Lifetime 50 Fund 3,801
CIGNA Lifetime 60 Fund 44,892
S&P 500 Index Fund 703,338
Janus Fund 352,281
Janus Worldwide Fund 299,562
White Oak Growth Stock Fund 636,262
Hawk Corporation Stock Fund 15,159
Large Cap Value/John A. Levin & Co. Fund 44,830
Mid Cap Value/Wellington Management 91,876
Mid Cap Growth/Artisan Partners 371,635
Small Cap Value/Berger Fund 106,254
Small Cap Growth/TimesSquare Fund 995
State Street Global Advisors Intermediate Bond Account 88,901
---------------------
$ 5,558,722
=====================
* Indicates a party-in-interest to the Plan.
AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL
SCHEDULE
Hawk Corporation 401(k) Savings and Retirement Plan
December 31, 2001 and 2000 and Year Ended December 31, 2001
with Report of Independent Auditors
Hawk Corporation 401(k) Savings and Retirement Plan
Audited Financial Statements and Supplemental Schedule
December 31, 2001 and 2000 and
Year Ended December 31, 2001
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 at End of Year)........... 9
Report of Independent Auditors
Plan Administrator
Hawk Corporation 401(k) Savings and Retirement Plan
We have audited the accompanying statements of net assets available for benefits
of the Hawk Corporation 401(k) Savings and Retirement Plan as of December 31,
2001 and 2000, and the related statement of changes in net assets available for
benefits for the year ended December 31, 2001. 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, 2001 and 2000, and the changes in its net assets available for
benefits for the year ended December 31, 2001, 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 at end of year) as of December 31, 2001 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 21, 2002
1
Hawk Corporation 401(k) Savings and Retirement Plan
Statements of Net Assets Available for Benefits
DECEMBER 31
2001 2000
--------------------------------
ASSETS
Investments, at fair value:
Pooled separate accounts $ 1,279,129 $ 1,274,102
Hawk Corporation Stock Fund 75,109 47,292
Guaranteed Income Fund, at contract value 221,591 101,017
Participant loans 95,431 73,357
--------------------------------
Total investments 1,671,260 1,495,768
Contributions receivable:
Employer 3,844 159,437
Employee 14,417 2,573
--------------------------------
18,261 162,010
--------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 1,689,521 $ 1,657,778
================================
See notes to financial statements.
2
Hawk Corporation 401(k) Savings and Retirement Plan
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2001
Additions:
Investment income:
Interest $ 14,619
Contributions:
Employer 84,646
Employee 242,467
Employee rollovers 104,389
-----------
431,502
-----------
Total additions 446,121
Deductions:
Benefit payments 90,050
Fees and expenses 2,784
-----------
Total deductions 92,834
Net realized and unrealized (depreciation)
in fair value of investments (321,544)
-----------
Net increase 31,743
Net assets available for benefits at beginning of year 1,657,778
-----------
NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 1,689,521
===========
See notes to financial statements.
3
Hawk Corporation 401(k) Savings and Retirement Plan
Notes to Financial Statements
December 31, 2001 and 2000 and
Year Ended December 31, 2001
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 the 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 six
months 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, as
defined. Prior to 2001, the Company also contributed to the Plan additional
amounts equal to 2.5% of each eligible participants' compensation, as defined.
During 2001, the Plan was amended to make the additional Company contribution
discretionary. There were no discretionary Company contributions made in 2001.
Forfeited balances of terminated participants' non-vested accounts are used to
reduce future Company contributions. At December 31, 2001 and 2000, there were
$4,328 and $1,644 in forfeitures 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.
4
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, including the Hawk Corporation Stock Fund. During 2001 the
Plan expanded its investment options available to plan participants.
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.
5
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 contract value as
determined by CIGNA, which approximates fair 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 as determined by the Trustee, on
the last business day of the Plan year. The participant loans are valued at
their outstanding balance, which approximates fair value.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United Sates 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 2001, the Plan's investments (including investments purchased, sold, as
well as held, during the year) depreciated in fair value as follows:
Net Realized
And Unrealized
Depreciation
in Fair Value
of Investments
-------------------
Pooled separate accounts $ 284,171
Hawk Corporation Stock Fund 37,373
-------------------
$ 321,544
===================
6
Hawk Corporation 401(k) Savings and Retirement 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,
2001 2000
------------------------
Janus Fund $489,765 $ 93,963
S&P 500 Index 275,915
Guaranteed Income Fund 221,591 101,017
Janus Worldwide Fund 166,717 130,706
CIGNA Lifetime 40 Fund 92,857 93,773
White Oak Growth Stock Fund 84,378 89,811
American Century Ultra Fund 528,694
Fidelity Advisor Growth Opportunity Fund 163,749
Participant Loans 95,431
7
Hawk Corporation 401(k) Savings and Retirement 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 not received a determination letter from the Internal Revenue
Service stating that the Plan is qualified under Section 401(a) of the Internal
Revenue Code (the "IRC"). However, the Plan Administrator believes that the Plan
is qualified and therefore, the related trust is exempt from taxation.
8
Hawk Corporation 401(k) Savings and Retirement Plan
Employer Identification Number: 34-1608156
Plan Number: 005
Schedule H, Line 4i--Schedule of Assets (Held at End of Year)
December 31, 2001
Identity of Issue, Borrower, Lessor, or Current
Similar Party/ Description of Investment Value
- -------------------------------------------------------------------------------------------------
* Connecticut General Life Insurance
Company--Group Annuity Contract:
Guaranteed Income Fund $ 221,591
State Street Global Advisors Intermediate Bond Account 442
Small Cap Growth/TimesSquare Fund 109
S&P 500 Index 275,915
Large Cap Value/John A. Levin Fund 4,686
Mid Cap Value/Wellington Management 4,973
Mid Cap Growth/Artisan Partners 13,417
Small Cap Value/Berger Fund 27,242
CIGNA Lifetime 20 Fund 41,142
CIGNA Lifetime 30 Fund 50,561
CIGNA Lifetime 40 Fund 92,857
CIGNA Lifetime 50 Fund 13,585
CIGNA Lifetime 60 Fund 13,340
Janus Worldwide Fund 166,717
Janus Fund 489,765
White Oak Growth Stock Fund 84,378
Hawk Corporation Stock Fund 75,109
* Participant Loans, (Interest rates from 7.00% to 10.50%) 95,431
---------------------
$ 1,671,260
=====================
* Indicates a party-in-interest to the Plan.
9
AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL
SCHEDULE
Helsel, Inc. Employees' Savings and Investment Plan
December 31, 2001 and 2000 and Year Ended December 31, 2001
with Report of Independent Auditors
Helsel, Inc. Employees' Savings and Investment Plan
Financial Statements and Supplemental Schedule
December 31, 2001 and 2000 and
Year Ended December 31, 2001
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 at End of Year)............ 8
1
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,
2001 and 2000, and the related statement of changes in net assets available for
benefits for the year ended December 31, 2001. 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, 2001 and 2000, and the changes in its net assets available for
benefits for the year ended December 31, 2001, 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 at end of year) as of December 31, 2001 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 21, 2002
1
Helsel, Inc. Employees' Savings and Investment Plan
Statements of Net Assets Available for Benefits
DECEMBER 31
2001 2000
--------------------------
ASSETS
Investments, at fair value:
Pooled separate accounts $1,733,873 $2,044,840
Hawk Corporation Stock Fund 2,682 1,407
Guaranteed Income Fund, at contract value 481,160 185,003
Participant loans 91,478 112,674
--------------------------
Total investments 2,309,193 2,343,924
Contributions receivable:
Employer 7,062 3,563
Employee - 12,871
--------------------------
Total receivables 7,062 16,434
--------------------------
NET ASSETS AVAILABLE FOR BENEFITS $2,316,255 $2,360,358
==========================
See notes to financial statements.
2
Helsel, Inc. Employees' Savings and Investment Plan
Statement of changes in Net Assets Available for Benefits
For the Year Ended December 31, 2001
Additions:
Investment income:
Interest $ 26,208
Contributions:
Employer 103,761
Employee 283,020
Employee rollovers 118,869
-----------
505,650
-----------
Total additions 531,858
Deductions:
Benefit payments 414,915
Fees and expenses 1,190
-----------
Total deductions 416,105
Net realized and unrealized (depreciation)
in fair value of investments (159,856)
-----------
Net (decrease) (44,103)
Net assets available for benefits at beginning of year 2,360,358
-----------
NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 2,316,255
===========
See notes to financial statements.
3
Helsel, Inc. Employees' Savings and Investment Plan
Notes to Financial Statements
December 31, 2001 and 2000 and
Year Ended December 31, 2001
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 sixty days 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
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 2001. Forfeited balances of terminated participants' nonvested
accounts are used to reduce future Company contributions. Forfeitures available
to reduce the Company's future contributions were $4,805 and $3,791 at December
31, 2001 and 2000, 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.
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 five years of credited service based on a graded vesting
schedule.
4
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 including 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 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
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 contract value as
determined by CIGNA, which approximates fair 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. Participant loans are
valued at their outstanding balance, which approximates fair value.
All other investments are stated at fair value 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.
C. INVESTMENTS
During 2001, the Plan's investments (including investments purchased, sold as
well as held during the year) depreciated in fair value as follows:
Net Realized
and Unrealized
Depreciation
in Fair Value
of Investments
-------------------
Pooled separate accounts $ 158,395
Hawk Corporation Stock Fund 1,461
----------
$ 159,856
==========
6
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
2001 2000
----------------------------------------
Guaranteed Income Fund $ 481,160 $ 185,003
CIGNA Lifetime 30 Fund 128,970 147,390
CIGNA Lifetime 40 Fund 381,754 554,565
CIGNA Lifetime 50 Fund 765,749 955,480
Janus Fund 142,713
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. Subsequent to the issuance of the determination letter,
the Plan was amended. 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, as amended, is
qualified and the related trust is tax exempt.
7
Helsel, Inc. Employees' Savings and Investment Plan
EIN--35-1957561 Plan--002
Schedule H, Line 4i--Schedule of Assets (Held at End of Year)
December 31, 2001
Identity of Issue, Borrower, Current
Lessor, or Similar Party/Description of Investment Value
- -------------------------------------------------------------------------------------------
* Connecticut General Life Insurance
Company--Group Annuity Contract:
Guaranteed Income Fund $ 481,160
CIGNA Lifetime 20 Fund 11,678
CIGNA Lifetime 30 Fund 128,970
CIGNA Lifetime 40 Fund 381,754
CIGNA Lifetime 50 Fund 765,750
CIGNA Lifetime 60 Fund 95,114
State Street Global Adv Interim Bond 10,305
S&P 500 Index 58,609
Large Cap Value/John A. Levin 41,857
Mid Cap Value/Wellington Management 27,707
Mid Cap Growth/Artisan Partners 20,424
Small Cap Value/Berger Fund 32,040
Small Cap Growth/TimesSquare Fund 562
Janus Fund 85,974
Janus Worldwide Fund 66,264
White Oak Growth Stock Fund 6,865
Hawk Corporation Stock Fund 2,682
* Participant Loans (Interest rates of 8.75% to 10.50%) 91,478
--------------------
$ 2,309,193
====================
* Represents a party-in-interest to the Plan.
8
AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL
SCHEDULE
Helsel, Inc. Employees' Retirement Plan
December 31, 2001 and 2000 and Year Ended December 31, 2001
with Report of Independent Auditors
Helsel, Inc. Employees' Retirement Plan
Audited Financial Statements and Supplemental Schedule
December 31, 2001 and 2000 and
Year Ended December 31, 2001
TABLE OF CONTENTS
Report of Independent Auditors.......................................... 1
AUDITED 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 at End of Year)........... 8
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, 2001 and 2000,
and the related statement of changes in net assets available for benefits for
the year ended December 31, 2001. 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, 2001 and 2000, and the changes in its net assets available for
benefits for the year ended December 31, 2001, 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 at end of year) as of December 31, 2001, 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 21, 2002
1
Helsel, Inc. Employees' Retirement Plan
Statements of Net Assets Available for Benefits
DECEMBER 31
2001 2000
--------------------------
ASSETS
Investments, at fair value:
Pooled separate accounts $3,364,507 $4,305,596
Hawk Corporation Stock Fund 1,558 324
Guaranteed Income Fund, at contract value 1,078,842 229,605
--------------------------
Total investments 4,444,907 4,535,525
Employer contribution receivable - 470,153
--------------------------
NET ASSETS AVAILABLE FOR BENEFITS $4,444,907 $5,005,678
==========================
See notes to financial statements.
2
Helsel, Inc. Employees' Retirement Plan
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2001
Additions:
Interest $ 25,338
Employer contributions 283,970
-----------
Total additions 309,308
Deductions:
Benefit payments 621,340
Fees and expenses 450
-----------
Total deductions 621,790
Net realized and unrealized (depreciation)
in fair value of investments (248,289)
-----------
Net (decrease) (560,771)
Net assets available for benefits at beginning of year 5,005,678
-----------
NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 4,444,907
===========
See notes to financial statements.
3
Helsel, Inc. Employees' Retirement Plan
Notes to Financial Statements
December 31, 2001 and 2000 and
Year Ended December 31, 2001
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
For the period January 1, 2001 to October 31, 2001, the Company contributed to
the Plan an amount equal to 7% of each eligible participant's compensation, as
defined. Effective November 1, 2001 the Plan was amended to eliminate Company
contributions. Forfeited balances of terminated participants' non-vested
accounts are used to reduce future Company contributions. To the extent any
forfeitured balances remain, the excess would be reallocated to participant
accounts. Forfeitures available to reduce the Company's future contributions
were $0 and $62,541 at December 31, 2001 and 2000, 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 five years of credited service based on a graded vesting
schedule.
4
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,
including 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. 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 contract value as
determined by CIGNA, which approximates fair 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 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 accounting principles
generally accepted in the United States 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
Helsel, Inc. Employees' Retirement Plan
Notes to Financial Statements--Continued
C. INVESTMENTS
During 2001, the Plan's investments (including investments purchased, sold, as
well as held, during the year) depreciated in fair value as follows:
Net Realized
and Unrealized
Depreciation
in Fair Value
of Investments
------------------
Pooled separate accounts $ 248,031
Hawk Corporation Stock Fund 258
------------------
$ 248,289
==================
The fair value of individual investments that represent 5% or more of the Plan's
net assets are as follows:
DECEMBER 31
2001 2000
------------------------------
CIGNA Lifetime 40 Fund $ 397,138 $ 594,733
CIGNA Lifetime 50 Fund 2,164,253 2,817,288
CIGNA Lifetime 60 Fund 289,561 442,125
Guaranteed Income Fund 1,078,842
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
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. Subsequent to the issuance of the determination letter,
the Plan was amended. 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, as amended is
qualified and the related trust is tax exempt.
7
Helsel, Inc. Employees' Retirement Plan
EIN--35-1957561 Plan--001
Schedule H, Line 4i--Schedule of Assets (Held At End of Year)
December 31, 2001
Identity of Issue, Borrower, Current
Lessor, or Similar Party/Description of Investment Value
- --------------------------------------------------------------------------------------------------
* Connecticut General Life Insurance
Company--Group Annuity Contract:
Guaranteed Income Fund $1,078,842
CIGNA Lifetime 20 Fund 6,706
CIGNA Lifetime 30 Fund 208,018
CIGNA Lifetime 40 Fund 397,138
CIGNA Lifetime 50 Fund 2,164,253
CIGNA Lifetime 60 Fund 289,561
Janus Worldwide Fund 17,434
Janus Fund 70,284
White Oak Growth Stock Fund 10,490
Small Cap Value/Berger Fund 87,648
Small Cap Growth/TimesSquare Fund 154
State Street Global Advisors Intermediate Bond Account 13,831
S&P 500 Index 72,208
Large Cap Value/John A. Levin 26,782
Hawk Corporation Stock Fund 1,558
-----------------
$4,444,907
=================
* Indicates a party-in-interest to the Plan.
8
AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL
SCHEDULE
S. K. Wellman Retirement Savings and Profit Sharing Plan
December 31, 2001 and 2000 and Year Ended December 31, 2001
with Report of Independent Auditors
S. K. Wellman Retirement Savings and Profit Sharing Plan
Audited Financial Statements and Supplemental Schedule
December 31, 2001 and 2000 and
Year Ended December 31,2001
TABLE OF CONTENTS
Report of Independent Auditors ........................................ 1
AUDITED 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 at End of Year).......... 8
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, 2001 and 2000, and the related statement of changes in net assets available
for benefits for the year ended December 31, 2001. 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, 2001 and 2000, and the changes in its net assets available for
benefits for the year ended December 31, 2001, 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 at end of year) as of December 31, 2001 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 21, 2002
1
S. K. Wellman Retirement Savings and Profit Sharing Plan
Statements of Net Assets Available for Benefits
DECEMBER 31
2001 2000
--------------------------
ASSETS
Investments, at fair value:
Pooled separate accounts $4,696,779 $5,963,327
Hawk Corporation Stock Fund 23,353 34,113
Guaranteed Income Fund, at contract value 1,637,495 1,685,952
--------------------------
Total investments 6,357,627 7,683,392
Employer contribution receivable - 187,371
--------------------------
NET ASSETS AVAILABLE FOR BENEFITS $6,357,627 $7,870,763
==========================
See notes to financial statements.
2
S. K. Wellman Retirement Savings and Profit Sharing Plan
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2001
Additions:
Interest $ 89,026
Contributions:
Employer 17,973
Employee 288,166
-----------
306,139
-----------
Total additions 395,165
Deductions:
Benefit payments 436,896
Fees and expenses 789
-----------
Total deductions 437,685
Net realized and unrealized (depreciation)
in fair value of investments (1,273,356)
Transfers to other plans (197,260)
-----------
Net (decrease) (1,513,136)
Net assets available for benefits at beginning of year 7,870,763
-----------
NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 6,357,627
===========
See notes to financial statements.
3
S. K. Wellman Retirement Savings and Profit Sharing Plan
Notes to Financial Statements
December 31, 2001 and 2000 and
Year Ended December 31, 2001
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
30 days of service. 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. The Plan Sponsor did not make a
discretionary profit sharing contribution for the 2001 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 $4,797 and $808 as
of December 31, 2001 and 2000, 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.
4
S. K. Wellman Retirement Savings and Profit Sharing Plan
Notes to Financial Statements--Continued
A. DESCRIPTION OF THE PLAN--CONTINUED
VESTING
Participants are immediately vested in their contributions and in the Plan
Sponsor's matching contributions.
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. If
the Plan were to terminate at some future time, each participant will become
fully vested in his or her entire account balance.
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, including 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 ACCOUNTING POLICIES
INVESTMENT VALUATION
Investments in the Guaranteed Income Fund are stated at contract value as
determined by CIGNA, which approximates fair 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.
5
S. K. Wellman Retirement Savings and Profit Sharing Plan
Notes to Financial Statements--Continued
B. SUMMARY OF ACCOUNTING POLICIES--CONTINUED
All other investments are stated at fair value 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 accounting principles
generally accepted in the United States 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 2001, the Plan's investments (including investments purchased, sold, as
well as held, during the year) depreciated in fair value as follows:
Net Realized
and Unrealized
Depreciation
in Fair Value
of Investments
----------------------
Pooled separate accounts $ 1,261,549
Hawk Corporation Stock Fund 11,807
----------------------
$ 1,273,356
======================
The fair value of individual investments that represent 5% or more of the Plan's
net assets are as follows:
DECEMBER 31
2001 2000
---------------------------
Guaranteed Income Fund $1,637,495 $1,685,952
CIGNA Lifetime 40 Fund 719,913 1,070,114
Janus Fund 673,416 854,218
Fidelity Advisor Growth Opportunity Fund 1,702,909
S&P 500 Index Fund 1,314,686
Janus Worldwide Fund 582,911 871,247
White Oak Growth Stock Fund 782,183 715,268
6
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. Subsequent to the issuance of the determination letter,
the Plan was amended. 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, as amended is
qualified and the related trust is tax exempt.
7
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 At End of Year)
December 31, 2001
Identity of Issue, Borrower, Current
Lessor, or Similar Party/Description of Investment Value
- ---------------------------------------------------------------------------------------------
* Connecticut General Life Insurance Company:
Guaranteed Income Fund $ 1,637,495
CIGNA Lifetime 20 Fund 27,468
CIGNA Lifetime 30 Fund 76,252
CIGNA Lifetime 40 Fund 719,913
CIGNA Lifetime 50 Fund 94,972
CIGNA Lifetime 60 Fund 144,595
S&P 500 Index Fund 1,314,686
Janus Fund 673,416
Janus Worldwide Fund 582,911
White Oak Growth Stock Fund 782,183
Hawk Corporation Stock Fund 23,353
Large Cap Value/John A. Levin & Co. Fund 30,878
Mid Cap Value/Wellington Management 19,600
Mid Cap Growth/Artisan Partners 59,139
Small Cap Value/Berger Fund 49,639
Small Cap Growth/TimesSquare Fund 24,791
State Street Global Advisors Intermediate Bond Account 96,336
--------------------
$ 6,357,627
====================
* Indicates party-in-interest to the Plan.
8
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE (UNAUDITED)
Hawk Motors Employees' 401(k) Plan
December 31, 2001 and 2000 and Year Ended December 31, 2001
Hawk Motors Employees' 401(k) Plan
Financial Statements and Supplemental Schedule
December 31, 2001 and 2000 and
Year Ended December 31, 2001
(UNAUDITED)
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 at End of Year).............. 7
Hawk Motors Employees' 401(k) Plan
Statements of Net Assets Available for Benefits
DECEMBER 31
2001 2000
--------------------------
ASSETS
Investments, at fair value:
Pooled separate accounts $1,871,780 $2,569,550
Hawk Corporation Stock Fund 6,735 30
Guaranteed Income Fund, at contract fund 550,170 463,689
--------------------------
Total investments 2,428,685 3,033,269
Employer contribution receivable: 8,031 5,000
--------------------------
NET ASSETS AVAILABLE FOR BENEFITS $2,436,716 $3,038,269
==========================
See notes to financial statements.
1
Hawk Motors Employees' 401(k) Plan
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2001
Additions:
Interest and dividends $ 27,618
Contributions:
Employer 7,449
Employee 123,050
-----------
105,500
-----------
Total additions 158,117
Deductions:
Benefit payments 105,500
Fees and expenses 451
-----------
Total deductions 105,951
Net realized and unrealized (depreciation)
in fair value of investments (653,719)
Net decrease 601,553
Net assets available for benefits at beginning of year 3,038,269
-----------
NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 2,436,716
===========
See notes to financial statements.
2
Hawk Motors Employees' 401(k) Plan
Notes to Financial Statements
December 31, 2001 and 2000 and
Year Ended December 31, 2001
A. DESCRIPTION OF THE PLAN
The following description of the Hawk Motors, Inc. 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 Hawk Motors, Inc (the "Company" and "Plan Sponsor")
who have completed three months of service, as defined. Hawk Motors, 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
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 2001, the Plan Sponsor made a discretionary profit sharing contribution of
$5,000 for the 2000 Plan year. Effective June 9, 2001, the Company contribution
was amended to equal $0.15 per hour worked, for those employees who elect to
contribute through the payroll withholding election. Forfeited balances of
terminated participants' non-vested accounts are used to reduce future Company
contributions. At December 31, 2001, there was $742 in forfeitures 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
Hawk Motors 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, including 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 contract value as
determined by CIGNA, which approximates fair 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 as determined by the Trustee, on
the last business day of the Plan year.
4
Hawk Motors 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 accounting principles
generally accepted in the United States 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 2001, the Plan's investments (including investments purchased, sold, as
well as held, during the year) depreciated in fair value as follows:
NET REALIZED
AND UNREALIZED
DEPRECIATION
IN FAIR VALUE
OF INVESTMENTS
----------------
Pooled separate accounts $ 651,028
Hawk Corporation Stock Fund 2,691
----------------
$ 653,719
================
The fair value of individual investments that represent 5% or more of the Plan's
net assets are as follows:
DECEMBER 31
2001 2000
-------------------------
Guaranteed Long-Term Fund $ 550,170 $ 463,689
Fidelity Advisor Growth Opportunity Fund 151,985
Janus Fund 1,268,017 545,312
American Century Ultra Fund 1,348,682
White Oak Growth Stock Fund 300,997
S&P 500 Index Fund 128,328
5
Hawk Motors Employees' 401(k) 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 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. Subsequent to the issuance of the determination letter,
the Plan was amended. 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
Hawk Motors Employees' 401(k) Plan
Employer Identification Number: 34-1608009
Plan Number: 005
Schedule H, Line 4i--Schedule of Assets (Held at End of Year)
December 31, 2001
Identity of Issue, Borrower, Lessor or Current
Similar Party/Description of Investment Value
- --------------------------------------------------------------------------------------------------
* Connecticut General Life Insurance
Company--Group Annuity Contract:
Guaranteed Income Fund $ 550,170
CIGNA Lifetime 20 Fund 3,231
CIGNA Lifetime 30 Fund 12,358
CIGNA Lifetime 40 Fund 73,158
CIGNA Lifetime 50 Fund 806
S&P 500 Index Fund 128,328
Janus Fund 1,268,017
Janus Worldwide Fund 111,453
White Oak Growth Stock Fund 91,950
Hawk Corporation Stock Fund 6,735
Mid Cap Value/Wellington Management 74,624
Mid Cap Growth/Artisan Partners 33,312
Small Cap Value/Berger Fund 71,215
Small Cap Growth/TimesSquare Fund 3,328
---------------------
$ 2,428,685
=====================
* Indicates a party-in-interest to the Plan.
7
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE (UNAUDITED)
Quarter Master Industries, Inc. Profit Sharing Plan and Trust
December 31, 2001 and 2000 and Year Ended December 31, 2001
Quarter Master Industries, Inc. Profit Sharing Plan and Trust
Financial Statements and Supplemental Schedule
December 31, 2001 and 2000 and
Year Ended December 31, 2001
(UNAUDITED)
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 at End of Year)............ 7
Quarter Master Industries, Inc. Profit Sharing Plan and Trust
Statements of Net Assets Available for Benefits
DECEMBER 31
2001 2000
--------------------------
ASSETS
Investments, at fair value:
Pooled separate accounts $1,532,581 $1,667,751
Separate contract accounts 7,405 7,571
Hawk Corporation Stock Fund 617 5
Guaranteed Income Fund, at contract fund 30,374 2,611
--------------------------
Total investments 1,570,977 1,677,938
Contribution receivable:
Employer 444 103,224
Employee 1,108 6,709
--------------------------
NET ASSETS AVAILABLE FOR BENEFITS $1,572,529 $1,787,871
==========================
See notes to financial statements.
1
Quarter Master Industries, Inc. Profit Sharing Plan and Trust
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2001
Additions:
Interest and dividends $ 1,296
Contributions:
Employer 9,786
Employee 30,926
-----------
40,712
-----------
Total additions 42,008
Deductions:
Benefit payments 2,880
Fees and expenses 65
-----------
Total deductions 2,945
Net realized and unrealized (depreciation)
in fair value of investments (254,405)
Net decrease (215,342)
Net assets available for benefits at beginning of year 1,787,871
-----------
-----------
NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 1,572,529
===========
See notes to financial statements.
2
Quarter Master Industries, Inc. Profit Sharing Plan and Trust
Notes to Financial Statements
December 31, 2001 and 2000
and Year Ended December 31, 2001
A. DESCRIPTION OF THE PLAN
The following description of the Quarter Master Industries, Inc. Profit Sharing
Plan and Trust (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, 1985 as a profit sharing plan covering all
full time employees of Quarter Master Industries, Inc. (the "Company" and "Plan
Sponsor") who have completed one year of service, as defined. Effective November
1, 2000, the Plan was amended to include a 401(k) provision covering all
full-time employees who have completed three months of service, as defined.
Effective November 1, 2000, substantially all the Plan assets were transferred
from Penn Mutual to Connecticut General Life Insurance Company ("CIGNA" or the
"Trustee"). Quarter Master Industries, 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
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 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. The Plan Sponsor did not make a discretionary
profit sharing contribution for the 2001 Plan year. Forfeited balances of
terminated participants' non-vested employer matching contributions are used to
reduce future Company 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
Quarter Master Industries, Inc. Profit Sharing Plan and Trust
Notes to Financial Statements (continued)
A. DESCRIPTION OF THE PLAN - CONTINUED
VESTING AND DISTRIBUTIONS
Participants are immediately vested in their contributions and discretionary
profit sharing 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.
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 November 2000, 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 contract value as
determined by CIGNA, which approximates fair 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 as determined by the Trustee, on
the last business day of the Plan year.
4
Quarter Master Industries, Inc. Profit Sharing Plan and Trust
Notes to Financial Statements (continued)
B. SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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 2001, the Plan's investments (including investments purchased, sold, as
well as held, during the year) appreciated (depreciated) in fair value as
follows:
NET REALIZED
AND UNREALIZED
DEPRECIATION
IN FAIR VALUE
OF INVESTMENTS
----------------------
Pooled separate accounts $ 253,937
Separate contract accounts 136
Hawk Corporation Stock Fund 332
----------------------
$ 254,405
======================
The fair value of individual investments that represent 5% or more of the Plan's
net assets are as follows:
DECEMBER 31
2001 2000
------------------------
Mid Cap Growth/Artisan Partners $204,717
CIGNA Lifetime 50 Fund 377,277 $378,771
Janus Worldwide Fund 158,777 224,634
S&P 500 Index Fund 580,618
Stock Market Index Fund 750,993
Warburg Pincus Emerging Growth Fund 268,895
5
Quarter Master Industries, Inc. Profit Sharing Plan and Trust
Notes to Financial Statements
December 31, 2001
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
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
Quarter Master Industries, Inc. Profit Sharing Plan and Trust
Employer Identification Number: 34-1608009
Plan Number: 005
Schedule H, Line 4i--Schedule of Assets (Held at End of Year)
December 31, 2001
Identity of Issue, Borrower, Lessor or Current
Similar Party/Description of Investment Value
- --------------------------------------------------------------------------------------------------
* Penn Mutual
Separate contract accounts $ 7,405
* Connecticut General Life Insurance
Company--Group Annuity Contract:
Guaranteed Income Fund 30,374
State Street Global Advisors Intermediate Bond 22,754
CIGNA Lifetime 20 Fund 18,790
CIGNA Lifetime 30 Fund 12,150
CIGNA Lifetime 40 Fund 24,063
CIGNA Lifetime 50 Fund 377,277
Janus Worldwide Fund 158,777
Janus Fund 1,940
S&P 500 Index Fund 580,618
Large Cap Value/John A. Levin & Co. Fund 47,462
Mid Cap Value/Wellington Management 11,301
Mid Cap Growth/Artisan Partners 204,717
Small Cap Value/Berger Fund 22,407
Small Cap Growth/TimesSquare Fund 22,580
White Oak Growth Stock Fund 27,745
Hawk Corporation Stock Fund 617
---------------------
$ 1,570,977
=====================
* Indicates a party-in-interest to the Plan.
7
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE (UNAUDITED)
Sinterloy Corporation 401(k) Plan
December 31, 2001 and 2000 and Year Ended December 31, 2001
Sinterloy Corporation 401(k) Plan
Financial Statements and Supplemental Schedule
December 31, 2001 and 2000 and
Year Ended December 31, 2001
(UNAUDITED)
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 at End of Year)........... 7
Sinterloy Corporation 401(k) Plan
Statements of Net Assets Available for Benefits
DECEMBER 31
2001 2000
-----------------------
ASSETS
Investments, at fair value:
Pooled separate accounts $297,521 $287,856
Hawk Corporation Stock Fund 27,828 29,146
Guaranteed Income Fund, at contract value 453,560 447,306
Participant loans 87,891 90,857
-----------------------
Total investments 866,800 855,165
Employer contribution receivable 20,000
NET ASSETS AVAILABLE FOR BENEFITS $866,800 $875,165
=======================
See notes to financial statements.
1
Sinterloy Corporation 401(k) Plan
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2001
Additions:
Interest and dividends 32,835
Contributions:
Employer 29,052
Employee 58,100
---------
87,152
---------
Total additions 119,987
Deductions:
Benefit payments 61,039
Fees and expenses 7,403
---------
Total deductions 68,442
Net realized and unrealized (depreciation) in fair value
of investments (59,910)
Net decrease 8,365
Net assets available for benefits at beginning of year 875,165
---------
NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 866,800
=========
See notes to financial statements.
2
Sinterloy Corporation 401(k) Plan
Notes to Financial Statements
December 31, 2001 and 2000 and
Year Ended December 31, 2001
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. 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. The Plan Sponsor did not make a discretionary profit
sharing contribution for the 2001 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, 2001, 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
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 including 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
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 contract value as
determined by CIGNA, which approximates fair 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 as determined by the Trustee, on
the last business day of the Plan year. The participant loans are valued at the
outstanding balance, which approximates fair value.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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 2001, the Plan's investments (including investments purchased, sold, as
well as held, during the year) depreciated in fair value as follows:
Net Realized
and Unrealized
Depreciation
in Fair Value
of Investments
-------------------
Pooled separate accounts $ 46,248
Hawk Corporation Stock Fund 13,662
-------------------
$ 59,910
===================
5
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
2001 2000
-------------------------
Guaranteed Income Fund $453,560 $447,306
White Oak Growth Stock Fund 60,340
Stock Market Index Fund 59,266
S&P 500 Index Fund 63,206
CIGNA Lifetime 30 61,394
Participant Loans 87,891 90,857
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. Subsequent to the issuance of the determination letter,
the Plan was amended. 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
Sinterloy Corporation 401(k) Plan
Employer Identification Number: 31-1549254
Plan Number: 005
Schedule H, Line 4i--Schedule of Assets (Held at End of Year)
December 31, 2001
Identity of Issue, Borrower, Lessor, or Current
Similar Party/Description of Investment Value
- -----------------------------------------------------------------------------------------------------
* Connecticut General Life Insurance
Company--Group Annuity Contract:
Guaranteed Income Fund $ 453,560
CIGNA Lifetime 20 Fund 6,368
CIGNA Lifetime 30 Fund 61,394
CIGNA Lifetime 40 Fund 17,261
CIGNA Lifetime 50 Fund 4,479
S&P 500 Index Fund 63,206
Janus Fund 16,885
Janus Worldwide Fund 21,191
White Oak Growth Stock Fund 27,673
Hawk Corporation Stock Fund 27,828
Large Cap Value/John A. Levin & Co. Fund 3,237
Mid Cap Value/Wellington Management 16,005
Mid Cap Growth/Artisan Partners 22,060
Small Cap Value/Berger Fund 36,421
Small Cap Growth/TimesSquare Fund 1,341
* Participant loans (Interest rates from 8.75% to 10.50%) 87,891
------------------------
TOTAL ASSETS HELD FOR INVESTMENT PURPOSES $ 866,800
========================
* Indicates a party-in-interest to the Plan.
7