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, 2002
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 plan and the address of the plan, if different from
that of the issuer named below:
Friction Products Co. Profit Sharing Plan
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
Hawk Corporation
200 Public Square, Suite 30-5000
Cleveland, Ohio 44114
AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
Friction Products Co. Profit Sharing Plan
December 31, 2002 and 2001 and Year Ended December 31, 2002
with Report of Independent Auditors
Friction Products Co. Profit Sharing Plan
Audited Financial Statements and Supplemental Schedule
December 31, 2002 and 2001 and
Year Ended December 31, 2002
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, 2002 and
2001, and the related statement of changes in net assets available for benefits
for the year ended December 31, 2002. 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, 2002 and 2001, and the changes in its net assets available for
benefits for the year ended December 31, 2002, 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, 2002 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 13, 2003
1
Friction Products Co. Profit Sharing Plan
Statements of Net Assets Available for Benefits
DECEMBER 31
2002 2001
---------- ----------
ASSETS
Investments, at fair value:
Pooled separate accounts $2,406,300 $2,900,297
Hawk Corporation common stock 43,083 15,159
Guaranteed Income Fund, at contract value 2,667,121 2,643,266
---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $5,116,504 $5,558,722
========== ==========
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, 2002
Additions:
Interest income $ 113,687
Contributions:
Employee 408,351
Employee Rollovers 17,137
-----------
425,488
-----------
Total additions 539,175
Deductions:
Benefit payments 392,861
Fees and expenses 234
-----------
Total deductions 393,095
Net realized and unrealized depreciation
in fair value of investments (807,188)
Net transfers from the S.K. Wellman Retirement Savings and Profit Sharing Plan
218,890
-----------
Net decrease (442,218)
Net assets available for benefits at beginning of year 5,558,722
-----------
NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 5,116,504
===========
See notes to financial statements.
3
Friction Products Co. Profit Sharing Plan
Notes to Financial Statements
December 31, 2002 and 2001 and
Year Ended December 31, 2002
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. and Logan Metal Stampings, Inc.
(the Company and Plan Sponsor) who have completed thirty days of service. The
Company 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. The Plan Sponsor did not make a discretionary contribution for the
2002 Plan year.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contributions and
allocations of (a) the Plan Sponsor's contributions, if any, 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
Participants are immediately vested in their contributions and Plan Sponsor
discretionary 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. Distributions 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 Plan Sponsor and employee contributions in any of several investment
options, including the Hawk Corporation common stock.
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.
TRANSFERS
Net transfers from the S.K. Wellman Retirement Savings and Profit Sharing Plan
represent account balances of participants who had a change in employment status
between the Company and S.K. Wellman Corporation, another Hawk Corporation
subsidiary.
EXPENSES
The Plan Sponsor pays substantially all costs of Plan administration.
5
Friction Products Co. Profit Sharing 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.
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 2002, 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 $ 779,218
Hawk Corporation common stock 27,970
----------
$ 807,188
==========
6
Friction Products Co. Profit Sharing 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
2002 2001
---------- ----------
Guaranteed Income Fund $2,667,121 $2,643,266
S&P 500 Index Fund 574,983 703,338
White Oak Growth Stock Fund 374,558 636,262
Janus Fund 273,816 352,281
Mid Cap Growth/Artisan Partners 273,751 371,635
Janus Worldwide Fund 267,467 299,562
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 an opinion letter from the Internal Revenue Service dated
February 6, 2002, stating that the written form of the underlying prototype plan
document is qualified under Section 401 (a) of the Internal Revenue Code ("the
Code"), and that any employer adopting this form of a plan will be considered to
have a plan qualified under Section 401 (a) of the Code. Therefore, the related
trust is exempt from taxation. Once qualified, the Plan is required to operate
in conformity with the Code to maintain its qualification. The plan
administrator believes the Plan is being operated in compliance with the
applicable requirements of the Code and, therefore, believes that the Plan 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, 2002
Identity of Issue, Borrower, Current
Lessor, or Similar Party/Description of Investment Value
- --------------------------------------------------------- ----------
*Connecticut General Life Insurance
Company--Group Annuity Contract:
Guaranteed Income Fund $2,667,121
S&P 500 Index Fund 574,983
CIGNA Lifetime 20 Fund 39,723
CIGNA Lifetime 30 Fund 57,776
CIGNA Lifetime 40 Fund 87,674
CIGNA Lifetime 50 Fund 4,331
CIGNA Lifetime 60 Fund 44,766
Janus Worldwide Fund 267,467
Janus Fund 273,816
White Oak Growth Stock Fund 374,558
Hawk Corporation common stock 43,083
Large Cap Value/John A. Levin & Co. Fund 36,942
Mid Cap Value/Wellington Management 96,371
Mid Cap Growth/Artisan Partners 273,751
Small Cap Value/Berger Fund 113,372
Small Cap Growth/TimesSquare Fund 3,546
State Street Global Advisors Intermediate Bond Account 157,224
----------
$5,116,504
==========
* Indicates a party-in-interest to the Plan.
8
INDEX TO EXHIBITS
23* Consent of Ernst & Young LLP
99.1* Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
99.2* Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
Friction Products Co. Profit Sharing Plan
Date: June 25, 2003
By: /s/ Thomas A. Gilbride
----------------------
Thomas A. Gilbride
Plan Administrator