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:
Helsel, Inc. Employees' Savings and Investment 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
Helsel, Inc. Employees' Savings and Investment Plan
December 31, 2002 and 2001 and Year Ended December 31, 2002
with Report of Independent Auditors
Helsel, Inc. Employees' Savings and Investment Plan
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
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,
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
Helsel, Inc. Employees' Savings and Investment Plan
Statements of Net Assets Available for Benefits
DECEMBER 31
2002 2001
---------- ----------
ASSETS
Investments, at fair value:
Pooled separate accounts $1,478,431 $1,733,873
Hawk Corporation common stock 4,219 2,682
Guaranteed Income Fund, at contract value 692,794 481,160
Participant loans 141,029 91,478
---------- ----------
2,316,473 2,309,193
Contributions receivable:
Employer 977 7,062
Employee 3,535
---------- ----------
4,512 7,062
---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $2,320,985 $2,316,255
========== ==========
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, 2002
Additions:
Interest income $ 34,471
Contributions:
Employer 89,288
Employee 270,826
Employee rollovers 11,643
-----------
371,757
-----------
Total additions 406,228
Deductions:
Benefit payments 193,303
Fees and expenses 2,636
-----------
Total deductions 195,939
Net realized and unrealized depreciation
in fair value of investments (205,559)
-----------
Net increase 4,730
Net assets available for benefits at beginning of year 2,316,255
-----------
NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 2,320,985
===========
See notes to financial statements.
3
Helsel, Inc. Employees' Savings and Investment Plan
Notes to Financial Statements
December 31, 2002 and 2001 and
Year Ended December 31, 2002
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. 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 Sponsor makes a matching contribution equal to
50% of the participant's contribution up to 4% of the participant's
compensation. The Plan allows for discretionary contributions by the Plan
Sponsor. The Plan Sponsor did not make a discretionary contribution for the 2002
Plan year. Forfeited balances are allocated back to participant's accounts under
the same manner as discretionary contributions. Forfeitures available to
allocate back to participant's accounts amounted to $7,818 and $4,805 at
December 31, 2002 and 2001, 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 AND DISTRIBUTION
Participants are immediately vested in their contributions. Vesting of Plan
Sponsor 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. Distributions from a participant's account are limited
to termination of employment, death, retirement or proven hardship.
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 Plan Sponsor and employee contributions in any of several investment
options, including the Hawk Corporation common stock.
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 a lump sum.
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 accounting principles
generally accepted in the United States 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 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 $202,505
Hawk Corporation common stock 3,054
--------
$205,559
========
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
2002 2001
-------- --------
Guaranteed Income Fund $692,794 $481,160
CIGNA Lifetime 30 Fund 143,116 128,970
CIGNA Lifetime 40 Fund 299,251 381,754
CIGNA Lifetime 50 Fund 580,020 765,749
Participant Loans 141,029
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 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
Helsel, Inc. Employees' Savings and Investment Plan
Employer Identification Number: 35-1957561
Plan Number: 002
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 $ 692,794
CIGNA Lifetime 20 Fund 15,819
CIGNA Lifetime 30 Fund 143,116
CIGNA Lifetime 40 Fund 299,251
CIGNA Lifetime 50 Fund 580,020
CIGNA Lifetime 60 Fund 101,100
State Street Global Advisors Intermediate Bond 66,923
S&P 500 Index 54,270
Large Cap Value/John A. Levin 30,713
Mid Cap Value/Wellington Management 1,159
Mid Cap Growth/Artisan Partners 17,756
Small Cap Value/Berger Fund 70,503
Small Cap Growth/TimesSquare Fund 1,823
Janus Fund 54,104
Janus Worldwide Fund 36,206
White Oak Growth Stock Fund 5,668
Hawk Corporation common stock 4,219
* Participant Loans (interest rates of 5.25% to 10.50%) 141,029
----------
$2,316,473
==========
* Represents 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.
Helsel, Inc. Employees' Savings and Investment Plan
Date: June 25, 2003
By: /s/ Thomas A. Gilbride
----------------------
Thomas A. Gilbride
Plan Administrator