----

----

| Delaware                      | 34-1608156                                |
|-------------------------------|-------------------------------------------|
| (State      of incorporation) | (I.R.S.      Employer Identification No.) |

| Title of Each Class                       | Name of Exchange on Which      Registered |
|-------------------------------------------|-------------------------------------------|
| Class      A Common Stock, par value $.01 | American      Stock Exchange              |
| 8      3/4% Senior Notes due 2014         | American      Stock Exchange              |

----

----

|   | Friction      Products |
|--------|------------------------|

| ·   | a      leading domestic and international supplier of friction products for      construction and mining equipment, agricultural equipment and      trucks, |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the      leading North American independent supplier of metallic friction materials      for braking systems for new and existing series of many commercial and      military aircraft models, including Boeing, EADS, Lockheed and United      Technologies, as well as the Canadair regional jet  series, |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the      largest supplier of friction materials for the growing general aviation      market, including numerous new and existing series of Cessna, Hawker, Lear      and Pilatus aircrafts, and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a      leading domestic supplier of friction products into performance, defense      and specialty markets such as military vehicles, motorcycles, race cars,      performance automobiles, ATV’s andsnowmobiles. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Performance      Racing |
|--------|-------------------------|

|                                                                 |   | 2007                       |   |   | 2006   |   |   | 2005   |   |
|----------------------------------------------------------------------|--------|----------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                                                 |   | (dollars      in millions) |   |
| Net      sales                                                       |   | $                          | 7.3    |   |   | $      | 98.9   |   |   | $ | 92.5 |   |
| (Loss)      income from discontinued operations, before income taxes |   | $                          | (2.2   | )      |   | $      | 8.6    |   |   | $ | 6.8 |   |
| Gain      on sale of discontinued operations, before income taxes    |   |                       | 15.0   |   |   |   | -      |   |   |   | - |   |
| Income      tax expense                                              |   |                       | 2.7    |   |   |   | 3.7    |   |   |   | 2.6 |   |
| Income      from discontinued operations, after income taxes         |   | $                          | 10.1   |   |   | $      | 4.9    |   |   | $ | 4.2 |   |

| ·   | Continued Product Innovation.      We believe that we are an industry leader in the development of      systems, processes and technologies that enable us to manufacture friction      products with numerous performance advantages, such as greater wear      resistance, increased stopping power, lower noise and smoother engagement.      We are committed to maintaining our technological advantages. As a result,      we are focusing our research and development efforts on improving our      existing products and developing materials and technologies for new      applications for our existing end markets. Across all of our business      segments, we seek new product developments and production techniques that      will enable us to develop new applications for our existing end markets.      For the year ended December 31, 2007, we spent $5.2 million, or 2.3% of      our net sales, on research and development, compared to $4.6 million or      2.2% of our 2006 net sales for the year ended December 31,      2006.  |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Focus on High-Margin,      Specialty Applications. We focus on markets that require      sophisticated engineering and production techniques and in which we have      achieved a significant market share. We seek to compete in markets      requiring a high level of engineering expertise and technical capability,      rather than in markets in which the primary competitive factor is product      pricing. Our gross margins were 23.2% for the year ended December 31, 2007      and 22.0% for the year ended December 31, 2006.  Our gross      margins in 2007 and 2006 were positively impacted by pricing actions that      began during the last half of 2006, strong market conditions in most of      the markets that we serve and operating improvements at our domestic      friction products facilities, including our Tulsa, Oklahoma facility which      began operation in 2005.                                                                                                                                         |

| ·   | Capitalize on Aftermarket      Opportunities. We estimate that total aftermarket sales of our      friction products have comprised approximately 40% to 50% of friction      product sales in recent years. Our aftermarket sales enable us to reduce      our exposure to adverse economic cycles. Sales of our friction products      can offer decades of continued sales for products such as aircraft brakes,      heavy duty trucks and construction equipment. We have expanded our      friction products segment aftermarket sales force to focus on increasing      direct aftermarket sales under our Velvetouchâ      and Hawk PerformanceÒ      brands, to fleets and retail customers.  For the year ended      December 31, 2007 our direct aftermarket sales were $23.9 million, or      10.4% of our friction products sales, a decrease of 1.4% from 2006,      primarily due to reduced sales to the heavy truckaftermarket.  |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Institute Cost-Reduction      Initiatives. To maintain our profit margins in highly competitive      markets and in periods of rising raw material costs, we aggressively      manage our operating cost structure.  Through various cost      reduction programs, lean manufacturing initiatives and Six Sigma projects,      we continue to look for ways to lower the total cost of producing our      products. We use an incentive based compensation system to further align      our employees with our focus on providing products of the highest quality      and at the lowest cost. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Globalization. In      addition to the United States, we have friction manufacturing facilities      in Italy, Canada and China and sales offices in Argentina, Russia and      India. Through the worldwide distribution network of our friction products      segment we continue to selectively expand our international operations in      established markets throughout Europe, Asia, North America, South America      and Australia. We also market to domestic Asian customers from our      facility in China. Our international net sales represented $84.2 million,      or 36.8%, of our consolidated net sales for the year ended December 31,      2007, and $64.5 million, or 30.4%, of our consolidated net sales in      2006.  |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Construction and Mining      Equipment. We supply friction products such as transmission discs,      clutch facings and brake components to manufacturers of construction and      mining equipment, including Caterpillar, Volvo and Carraro. We believe we      are one of the largest suppliers of these types of friction products.      Replacement components for construction equipment are sold through      original equipment manufacturers as well as directly to aftermarket      distributors.                                                                                                                                                                                                                                                         |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Agriculture Equipment.      We supply friction products such as clutch facings, transmission      discs and brake components to manufacturers of agriculture equipment,      including John Deere and CNH. We believe we are the one of the largest      domestic suppliers of these types of friction products. Replacement      components for agricultural equipment are sold through original equipment      manufacturers, as well as directly to aftermarket      distributors.                                                                                                                                                                                                                                                                               |
| ·   | Medium and Heavy Trucks.      We supply friction products for clutch buttons and facings used in      medium and heavy trucks to original equipment manufacturers, such as Eaton      and ZF Sachs. We believe we are the leading domestic supplier of      replacement friction products used in these applications. Replacement      components are sold through original equipment manufacturers and directly      to aftermarket distributors.                                                                                                                                                                                                                                                                                                                  |
| ·   | Performance and Specialty      Friction. We supply friction products for use in specialty      applications, such as brake pads for Bombardier, Polaris and Arctic Cat      snowmobiles, race cars and performance automotive vehicles, fleet vehicles      such as delivery trucks, police cars and ambulances as well as      motorcycles. We believe that these markets are experiencing significant      growth, and that we have increased our market share with our combination      of superior quality and product performance. Our replacement components      are sold through original equipment manufacturers, directly to aftermarket      distributors through relationships with national automotive retailers such      as Pep Boys and Tire Rack.  |

|                                            |   | Year      ended December 31 |   |
|-------------------------------------------------|--------|-----------------------------|--------|
|                                            |   | 2007                        |   |   | 2006 |   |   | 2005 |   |
|                                            |   | (dollars      in millions)  |   |
| Net      sales to external customers:           |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Friction      products                          |   | $                           | 215.9  |   |   |   | 94.4 | % |   | $ | 199.9 |   |   |   | 94.3 | % |   | $ | 167.0 |   |   |   | 91.9 | % |
| Performance      racing                         |   |                        | 12.8   |   |   |   | 5.6 | % |   |   | 12.1 |   |   |   | 5.7 | % |   |   | 14.8 |   |   |   | 8.1 | % |
| Consolidated                                    |   | $                           | 228.7  |   |   |   | 100.0 | % |   | $ | 212.0 |   |   |   | 100.0 | % |   | $ | 181.8 |   |   |   | 100.0 | % |
|                                            |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross      profit:                              |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Friction      products                          |   | $                           | 51.4   |   |   |   | 96.9 | % |   | $ | 44.9 |   |   |   | 96.1 | % |   | $ | 33.2 |   |   |   | 91.7 | % |
| Performance      racing                         |   |                        | 1.6    |   |   |   | 3.1 | % |   |   | 1.8 |   |   |   | 3.9 | % |   |   | 3.0 |   |   |   | 8.3 | % |
| Consolidated                                    |   | $                           | 53.0   |   |   |   | 100.0 | % |   | $ | 46.7 |   |   |   | 100.0 | % |   | $ | 36.2 |   |   |   | 100.0 | % |
|                                            |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations   |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Friction      products                          |   | $                           | 20.0   |   |   |   | 107.8 | % |   | $ | 16.3 |   |   |   | 164.6 | % |   | $ | 3.2 |   |   |   | 133.3 | % |
| Performance      racing                         |   |                        | (1.4   | ) |   |   | -7.8 | % |   |   | (6.4 | ) |   |   | -64.6 | % |   |   | (0.8 | ) |   |   | -33.3 | % |
| Consolidated                                    |   | $                           | 18.6   |   |   |   | 100.0 | % |   | $ | 9.9 |   |   |   | 100.0 | % |   | $ | 2.4 |   |   |   | 100.0 | % |
|                                            |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Adjusted      income (loss) from operations (1) |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Friction      products                          |   | $                           | 20.0   |   |   |   | 107.8 | % |   | $ | 16.3 |   |   |   | 113.2 | % |   | $ | 9.2 |   |   |   | 108.2 | % |
| Performance      racing                         |   |                        | (1.4   | ) |   |   | -7.8 | % |   |   | (1.9 | ) |   |   | -13.2 | % |   |   | (0.7 | ) |   |   | -8.2 | % |
| Consolidated                                    |   | $                           | 18.6   |   |   |   | 100.0 | % |   | $ | 14.4 |   |   |   | 100.0 | % |   | $ | 8.5 |   |   |   | 100.0 | % |

|                         |   | December      31            |    |
|------------------------------|--------|-----------------------------|---------|
|                         |   | 2007                        |    |   | 2006 |   |
|                         |   | (dollars      in thousands) |    |
| Total      assets:           |   |                        |    |   |   |   |
| Friction      products       |   | $                           | 209,350 |   |   | $ | 134,378 |   |
| Performance      racing      |   |                        | 10,554  |   |   |   | 7,563 |   |
| Continuing      operations   |   |                        | 219,904 |   |   |   | 141,941 |   |
| Discontinued      operations |   |                        | -       |   |   |   | 87,313 |   |
| Consolidated                 |   | $                           | 219,904 |   |   | $ | 229,254 |   |

| (1)   | See      the disclosure set forth in the following section captioned “Hawk’s Use of      Non-GAAP Financial Measures” for further  explanation. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                           |   | Year      ended December 31 |   |
|----------------------------------------------------------------|--------|-----------------------------|--------|
|                                                           |   | 2007                        |   |   | 2006 |   |   | 2005 |   |
|                                                           |   | (dollars      in millions)  |   |
| Income      from operations - Friction products:               |   | $                           | 20.0   |   |   | $ | 16.3 |   |   | $ | 3.2 |   |
| Restructuring      costs                                       |   |                        | -      |   |   |   | - |   |   |   | 5.5 |   |
| Employee      benefit curtailment income                       |   |                        | -      |   |   |   | - |   |   |   | (0.6 | ) |
| Loan      forgiveness costs                                    |   |                        | -      |   |   |   | - |   |   |   | 1.1 |   |
| Adjusted      income from operations – Friction products |   | $                           | 20.0   |   |   | $ | 16.3 |   |   | $ | 9.2 |   |
|                                                           |   |                        |   |   |   |   |   |   |   |   |   |   |
| Loss      from operations - Performance racing:                |   | $                           | (1.4   | ) |   | $ | (6.4 | ) |   | $ | (0.8 | ) |
| Goodwill      impairment                                       |   | $                           | -      |   |   | $ | 4.5 |   |   |   |   |   |
| Loan      forgiveness costs                                    |   |                        | -      |   |   |   | - |   |   |   | 0.1 |   |
| Adjusted      loss from operations – Performance racing  |   | $                           | (1.4   | ) |   | $ | (1.9 | ) |   | $ | (0.7 | ) |

| ·   | Blending/compounding:      Composite metal alloys in powder form are blended with lubricants      and other additives according to scientific formulas, many of which are      proprietary. The formulas are designed to produce precise performance      characteristics necessary for a customer’s particular application. We      often work together with our customers to develop new formulas that will      produce materials with greater energy absorption characteristics,      durability and strength.  |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Molding/compacting: At      room temperature, a specific amount of a metal powder alloy and other      materials are compacted under pressure into a desired    shape.                                                                                                                                                                                                                                                                                                                                                         |

| ·   | Sintering: After      compacting, molded parts are heated in furnaces to specific temperatures      slightly below melting, enabling metal powders to metallurgically bond,      harden and strengthen while retaining their desired shape. The friction      composite part is also bonded directly to a steel plate or core, creating      a strong continuous metallic part.  |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Secondary machining/treatment:      If required by customer specifications, a part undergoes additional      processing. This processing is generally necessary to attain increased      hardness or strength, tighter dimensional tolerances or corrosion      resistance. To achieve these specifications, parts are precision coined or      flattened, ground, machined or treated with a corrosion resistant      coating. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | foreign      countries may impose additional withholding taxes or otherwise tax our      foreign income, impose tariffs or adopt other restrictions on foreign      trade or investment, including exchange controls,                                         |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | fluctuations      in exchange rates may affect product demand and may adversely affect the      profitability in U.S. dollars of products and services provided by us in      foreign markets where payment for our products is made in local      currency,  |
| ·   | unexpected      adverse changes in foreign laws or regulatory requirements may      occur,                                                                                                                                                                         |
| ·   | compliance      with a variety of foreign laws and regulations may be difficult,      and                                                                                                                                                                          |
| ·   | overlap      of different tax laws may subject us to additional  taxes.                                                                                                                                                                                            |

| Our      gross profit margins are subject to fluctuation because of product      mix. |
|---------------------------------------------------------------------------------------|

| Work      stoppages by union employees may negatively impact our      business. |
|---------------------------------------------------------------------------------|

| We      are subject to governmental regulations that may affect our ability to      implement our business objectives. |
|------------------------------------------------------------------------------------------------------------------------|

| Environmental      and health and safety liabilities and requirements could require us to      incur material costs. |
|----------------------------------------------------------------------------------------------------------------------|

| ·   | discharges      of pollutants into the air and water,               |
|--------------------|---------------------------------------------------------------------|
| ·   | the      management and disposal of hazardous  substances, and |
| ·   | the      cleanup of contaminated properties.                        |

| ·   | the      discovery of new information concerning past releases of hazardous      substances,      |
|--------------------|---------------------------------------------------------------------------------------------------|
| ·   | the      discovery or occurrence of compliance problems relating to our      operations, and |
| ·   | changes      in existing environmental laws or their  interpretation.                             |

| We      are subject to risks associated with international    operations. |
|---------------------------------------------------------------------------|

| ·   | foreign      countries may impose additional withholding taxes or otherwise tax our      foreign income, impose tariffs or adopt other restrictions on foreign      trade or investment, including exchange controls,                                              |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | fluctuations      in exchange rates may affect product demand and may adversely affect the      profitability in U.S. dollars of products and services provided by us      in foreign markets where payment for our products is made in local      currency,  |
| ·   | unexpected      adverse changes in foreign laws or regulatory requirements may      occur,                                                                                                                                                                              |
| ·   | compliance      with a variety of foreign laws and regulations may be difficult,      and                                                                                                                                                                               |
| ·   | overlap      of different tax laws may subject us to additional  taxes.                                                                                                                                                                                                 |

| We      depend on our key personnel. |
|--------------------------------------|

| Our      existing preferred shareholders have the ability to exert voting control      with respect to the election ofdirectors. |
|----------------------------------------------------------------------------------------------------------------------------------|

|  Location                                | ApproximateSquare Footage | Principal      Functions                                                                                                                                                   |
|-----------------------------------------------|---------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Catoosa      (Tulsa), Oklahoma(1)   | 240,000                   | Manufacturing      of friction products, metal stampings and support                                                                                                            |
|                                          |                      |                                                                                                                                                                            |
| Medina,      Ohio                             | 177,000                   | Manufacturing      of friction products, product engineering, and support                                                                                                       |
|                                          |                      |                                                                                                                                                                            |
| Akron,      Ohio                              | 71,000                    | Manufacturing      of metal stampings                                                                                                                                           |
|                                          |                      |                                                                                                                                                                            |
| Orzinuovi,      Italy                         | 70,000                    | Manufacturing      of friction products, sales and marketing, research and development,      customer service and support and administration                                    |
|                                          |                      |                                                                                                                                                                            |
| Suzhou,      China(1)                         | 74,000                    | Manufacturing      of friction products, sales and marketing, customer service and support,      and administration                                                             |
|                                          |                      |                                                                                                                                                                            |
| Solon,      Ohio(1)                           | 58,000                    | Research      and development, sales and marketing, customer service and support, and      administration                                                                       |
|                                          |                      |                                                                                                                                                                            |
| Lake      Zurich, Illinois(1)                 | 25,000                    | Manufacturing      of automotive clutches and drive-train components, sales and marketing,      product engineering, customer service and support, and      administration      |
|                                          |                      |                                                                                                                                                                            |
| Ether,      North Carolina(1)                 | 23,000                    | Manufacturing      of automotive transmissions and drive-train components, sales and      marketing, product engineering, customer service and support, and      administration |
|                                          |                      |                                                                                                                                                                            |
| Concord,      Ontario, Canada(1)              | 15,000                    | Manufacturing      of friction products, distribution and warehousing, customer service and      support                                                                        |
|                                          |                      |                                                                                                                                                                            |
| Cleveland,      Ohio(1)                       | 9,000                     | Principal      executive offices                                                                                                                                                |

| (1) | Leased. |
|-----|---------|

| Quarter Ended           |   | High   |   |   | Low    |   |
|-------------------------|--------|--------|--------|--------|--------|--------|
| 2007                    |   |   |   |   |   |   |
| December      31, 2007  |   | $      | 18.05  |   |   | $      | 13.56 |   |
| September      30, 2007 |   | $      | 15.20  |   |   | $      | 12.50 |   |
| June      30, 2007      |   | $      | 13.66  |   |   | $      | 10.15 |   |
| March      31, 2007     |   | $      | 11.95  |   |   | $      | 9.45 |   |
| 2006                    |   |   |   |   |   |   |   |   |
| December      31, 2006  |   | $      | 15.68  |   |   | $      | 11.37 |   |
| September      30, 2006 |   | $      | 12.90  |   |   | $      | 11.95 |   |
| June      30, 2006      |   | $      | 15.20  |   |   | $      | 10.27 |   |
| March      31, 2006     |   | $      | 15.40  |   |   | $      | 12.97 |   |

| Period                   |   | TotalNumberof SharesPurchased |   | AveragePricePaid perShare |   | Total Number ofShares Purchased asPart of PubliclyAnnounced Plans orPrograms      (1) |    | Approximate Dollar      Value of Shares that May Yet      Be Purchased Under the Plans      or Programs (2)(in millions) |   |
|--------------------------|--------|------------------------------------|--------|--------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                     |   |                               |   |                           |   |                                                                                                                          |    |                                                                                                                                                                                 |   |
| 10/1/07      to 12/31/07 |   | 45,000                             |   | $                              | 15.98  |                                                                                                                          | 292,865 |                                                                                                                                                                                 | $      | 0.3      million |   |

| (1)    | On      March 5, 2007, we announced that our Board of Directors authorized the      repurchase of an aggregate of $4.0 million of our shares of Class A common      stock in the open market, through privately negotiated transactions or      otherwise in accordance with securities laws and regulations (the      Plan). |
|-----------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)           | The      approximate value of additional shares that may be repurchased pursuant to      the Plan is $0.3 million.  The Plan will expire when the      aggregate repurchase price limit is met, unless terminated earlier by our      Board of Directors. |
|------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Years      ended December 31                                                                |   | 2007                                              |   |   | 2006   |   |   | 2005   |   |   | 2004   |   |   | 2003   |   |
|---------------------------------------------------------------------------------------------|--------|---------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                        |   | (dollars      in millions, except per share data) |   |
| Statement      of Operations Data:                                                          |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      sales                                                                              |   | $                                                 | 228.7  |   |   | $      | 212.1  |   |   | $      | 181.9  |   |   | $      | 162.6  |   |   | $ | 134.4 |   |
| Gross      profit                                                                           |   | $                                                 | 53.0   |   |   | $      | 46.7   |   |   | $      | 36.2   |   |   | $      | 39.7   |   |   | $ | 32.4 |   |
| Goodwill      Impairment (1)                                                                |   |                                              | -      |   |   | $      | 4.5    |   |   |   | -      |   |   |   | -      |   |   |   | - |   |
| Restructuring      costs (2)                                                                |   |                                              | -      |   |   |   | -      |   |   | $      | 5.5    |   |   | $      | 1.1    |   |   |   | - |   |
| Employee      benefit curtailment (income) expense (3)      (4)                             |   |                                              | -      |   |   |   | -      |   |   | $      | (0.4   | )      |   |   | -      |   |   | $ | 1.9 |   |
| Income      from operations                                                                 |   | $                                                 | 18.6   |   |   | $      | 9.9    |   |   | $      | 2.4    |   |   | $      | 11.0   |   |   | $ | 5.8 |   |
| Adjusted      income from operations      (5)                                               |   | $                                                 | 18.6   |   |   | $      | 14.4   |   |   | $      | 8.5    |   |   | $      | 12.8   |   |   | $ | 7.7 |   |
| Income      (loss) from continuing operations after income taxes                            |   | $                                                 | 7.2    |   |   | $      | (2.0   | )      |   | $      | (5.6   | )      |   | $      | (2.4   | ) |   | $ | (3.6 | ) |
| Discontinued      operations, net of tax                                                    |   |                                              | 10.1   |   |   |   | 5.0    |   |   |   | 4.3    |   |   |   | 3.5    |   |   |   | (1.8 | ) |
| Net      income (loss)                                                                      |   | $                                                 | 17.3   |   |   | $      | 3.0    |   |   | $      | (1.3   | )      |   | $      | 1.1    |   |   | $ | (5.4 | ) |
| Earnings      (Loss) Per Share:                                                             |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic      earnings (loss) per share                                                        |   | $                                                 | 1.91   |   |   | $      | 0.31   |   |   | $      | (0.17  | )      |   | $      | 0.11   |   |   | $ | (0.65 | ) |
| Diluted      earnings (loss) per share                                                      |   | $                                                 | 1.83   |   |   | $      | 0.30   |   |   | $      | (0.17  | )      |   | $      | 0.11   |   |   | $ | (0.65 | ) |
| Other      Data:                                                                            |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation                                                                                |   | $                                                 | 6.8    |   |   | $      | 6.8    |   |   | $      | 6.5    |   |   | $      | 6.3    |   |   | $ | 6.6 |   |
| Amortization      (6)                                                                       |   |                                              | 0.7    |   |   |   | 0.5    |   |   |   | 0.7    |   |   |   | 0.7    |   |   |   | 0.8 |   |
| Capital      expenditures (including capital leases and financed capital      expenditures) |   |                                              | 7.9    |   |   |   | 8.1    |   |   |   | 7.8    |   |   |   | 9.3    |   |   |   | 5.4 |   |

| December      31                                   |   | 2007                       |   |   | 2006   |   |   | 2005   |   |   | 2004   |   |   | 2003   |   |
|----------------------------------------------------|--------|----------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                               |   | (dollars      in millions) |   |
| Balance      Sheet Data:                           |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents                     |   | $                          | 80.0   |   |   | $      | 6.2    |   |   | $      | 6.8    |   |   | $      | 5.9    |   |   | $ | 3.2 |   |
| Working      capital (7)                           |   |                       | 113.3  |   |   |   | 115.8  |   |   |   | 50.8   |   |   |   | 50.4   |   |   |   | 12.3 |   |
| Property      plant and equipment, net             |   |                       | 40.7   |   |   |   | 39.4   |   |   |   | 37.5   |   |   |   | 39.0   |   |   |   | 36.9 |   |
| Assets      of discontinued operations             |   |                       | -      |   |   |   | 87.3   |   |   |   | 89.1   |   |   |   | 85.1   |   |   |   | 78.5 |   |
| Total      assets                                  |   |                       | 219.9  |   |   |   | 229.3  |   |   |   | 226.0  |   |   |   | 219.8  |   |   |   | 193.5 |   |
| Liabilities      of discontinued operations        |   |                       | -      |   |   |   | 12.8   |   |   |   | 15.2   |   |   |   | 15.9   |   |   |   | 14.6 |   |
| Total      indebtedness (including capital leases) |   |                       | 87.1   |   |   |   | 111.2  |   |   |   | 116.7  |   |   |   | 112.0  |   |   |   | 93.1 |   |
| Shareholders’      equity                    |   |                       | 67.3   |   |   |   | 46.7   |   |   |   | 40.7   |   |   |   | 45.0   |   |   |   | 41.7 |   |

| (1)   | In      accordance with the provisions of SFAS No. 142 Goodwill and Other Intangible      Assets (SFAS 142) we performed our annual analysis of goodwill      impairment as of October 31, 2006 and determined that there was a full      impairment of the goodwill of our performance racing segment (see Note 2      “Significant Accounting Policies” to the accompanying Consolidated      Financial Statements of this Form10-K). |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | In      2005 and 2004, reflects planning, travel, severance and moving costs      associated with the closure of the Brook Park, Ohio facility and the      construction of the new facility in Tulsa, Oklahoma (see Note 4      "Restructuring” to the accompanying Consolidated Financial Statements of      this Form 10-K). |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | In      2005, reflects a one-time, non-cash gain related to an employee benefit      curtailment as a result of employment terminations at the Brook Park, Ohio      friction segment facility. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4)   | In      2003, reflects a non-cash charge related to the pension curtailment and      contractual termination benefit costs associated with the announced      closure of the Brook Park, Ohio friction segment  facility. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5)   | Adjusted      income from operations is considered to be a “non-GAAP financial measure”      under the rules and regulations of the SEC.  See “Hawk’s Use of      Non-GAAP Financial Measures” of Item 7 of this Form 10-K for more detailed      disclosure and discussion. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6)   | Amortization      outlined in this table does not include deferred financing amortization of      $0.4 million in 2007, $0.4 million in 2006, $0.4 million in 2005, $0.4      million in 2004, and $0.8 million in 2003, which is included in interest      expense on the Consolidated Statements of  Operations. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7)   | Working      capital is defined as current assets less current liabilities. In 2003,      and through most of 2004, our then existing bank facility was included as      a current liability in working capital, as required by EITF      95-22.  As of December 31, 2003 there was $24.1 million      outstanding under the then existing bank  facility. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Marketable      Securities.  Marketable securities other than cash and      cash equivalents included available-for-sale debt      securities.  As of December 31, 2007, we accounted for all of      our marketable securities as available-for-sale.  We report our      available-for-sale securities at fair value in our Consolidated Balance      Sheet with unrealized holding gains and losses, net of tax, included in      Accumulated other comprehensive income (loss).  Dividend and      interest income, including the amortization of any discount or premium, as      well as realized gains or losses, are included in Interest income in our      Consolidated Statement of Operations.  We periodically evaluate      our investments for other-than-temporary  impairment. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Revenue      Recognition.  We recognize revenues when products are      shipped and title has transferred to our  customer. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Long-Lived      Assets.  We review long-lived assets for impairment      whenever events or changes in circumstances indicate that the carrying      amount of an asset may not be recoverable.  In assessing the      recoverability of our long-lived assets, we consider changes in economic      conditions and make assumptions regarding estimated future cash flows and      other factors.  Estimates of future undiscounted cash flows are      highly subjective judgments based on our experience and knowledge of our      operations. These estimates can be significantly impacted by many factors      including changes in global and local business and economic conditions,      operating costs, inflation and competitive trends.  If our      estimates or underlying assumptions change in the future, we may be      required to record impairment charges.  We did not record any      impairment charges to our tangible or indefinite lived intangible assets      in the periods ended December 31, 2007, 2006, or  2005. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Pension      Benefits.  Effective December 31, 2006, we account for      our defined benefit pension plans in accordance with SFAS No. 158, Employers' Accounting for      Defined Benefit Pension and Other Postretirement Plans, (SFAS 158)      an amendment of FASB Statements No. 87, 88, 106 and 132 which requires the      recognition of the overfunded or underfunded status of a plan as an asset      or liability in the statement of financial position and the recognition of      changes in the funded status in the year in which the changes occur      through Accumulated other comprehensive income (loss). Pension expense      continues to be recognized in the financial statements on an actuarial      basis.  The most significant elements in determining our net      pension expense are the expected return on plan assets and appropriate      discount rates.  We assumed that the expected weighted average      long-term rate of return on plan assets would be 8.25% for      2007.  Based on our existing and forecasted asset allocation and      related long-term investment performance results, we believe that our      assumption of future returns is reasonable.  However, should the      rate of return differ materially from our assumed rate, we could      experience a material adverse effect on the funded status of our plans and      our future pension expense.  The assumed long-term rate of      return on assets is applied to a calculated value of plan assets, which      recognizes changes in the fair value of plan assets in a systematic manner      over five years.  This calculation produces the expected return      on plan assets that is included in net pension expense.  The      difference between this expected return and the actual return on plan      assets is recorded to Comprehensive income.  Net periodic      benefit cost was $0.4 million for the period ended December 31, 2007, and      $1.2 million for the period ended December 31,  2006. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Income      Taxes.  Our effective tax rate, taxes payable and other      tax assets and liabilities reflect the current tax rates in the domestic      and foreign tax jurisdictions in which we operate.  Deferred      income taxes reflect the net effect of temporary differences between the      carrying amounts of assets and liabilities for reporting and income tax      purposes.  Our effective tax rate is substantially driven by the      impact of the mix of our foreign and domestic income and losses and the      federal and local tax rate differences oneach. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Foreign Currency Translation      and Transactions.  Assets and liabilities of our foreign      operations are translated using period-end exchange rates and revenues and      expenses are translated using exchange rates as determined throughout the      year. Gains or losses resulting from translation are included in      Accumulated other comprehensive income (loss) in Shareholders’ equity in      our Consolidated Balance Sheet.  Other comprehensive income      (loss) included translation gains of $3.5 million for the period ended      December 31, 2007.  Gains or losses resulting from foreign      currency transactions are translated to local currency at the rates of      exchange prevailing at the dates of the transactions. Sales or purchases      in foreign currencies, other than the subsidiary’s local currency, are      exchanged at the date of the transaction. The effect of transaction gains      or losses is included in Other (expense) income, net in our Consolidated      Statements of Operations.  We reported foreign currency      transaction gains for the period ended December 31, 2007, of $0.4      million.  Foreign currency transaction gains or losses were not      material to the results of operations for the periods ended December 31,      2006, and 2005. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Recent      Accounting Developments |
|--------------------|-------------------------------------|

| •   | In      December 2007, the FASB issued SFAS No. 141(R), Business      Combinations (SFAS 141(R)).   SFAS 141(R) modifies the      accounting for business combinations by requiring that acquired assets and      assumed liabilities be recorded at fair value, contingent consideration      arrangements be recorded at fair value on the date of the acquisition and      pre-acquisition contingencies will generally be accounted for in purchase      accounting at fair value. The pronouncement also requires that transaction      costs be expensed as incurred, acquired research and development be      capitalized as an indefinite-lived intangible asset and the requirements      of SFAS No. 146, Accounting for Costs Associated with Exit or      Disposal Activities be met at the acquisition date in order to accrue for      a restructuring plan in purchase accounting. SFAS 141(R) is required to be      adopted prospectively effective for fiscal years beginning after      December 15, 2008.  SFAS 141(R) may not be adopted      early. |
|---------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | In      September 2006, the FASB issued SFAS No. 157, Fair Value      Measurements (SFAS 157).   SFAS 157 defines      fair value, establishes a framework for measuring fair value in generally      accepted accounting principles, and expands disclosures about fair value      measurements. SFAS 157 does not require any new fair value measurements,      rather it applies whenever existing accounting pronouncements require or      permit fair value measurements. SFAS 157 is effective for fiscal years      beginning after November 15, 2007.  We do not expect the      adoption of SFAS 157 will have a material impact on our financial      statements. |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | In      February 2007, the FASB issued SFAS No. 159, The Fair Value Option for      Financial Assets and Liabilities: Including an amendment of FASB Statement      No. 115 (SFAS 159).  SFAS 159 permits entities to elect      to measure many financial instruments and certain other items at fair      value with changes in fair value reported in earnings.  SFAS 159      is effective for fiscal years beginning after November 15, 2007, with      earlier adoption permitted.  We do not expect the adoption of      SFAS 159 will have a material impact on our financial      statements. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                    |   | Year      Ended December 31 |   |
|-------------------------|--------|-----------------------------|--------|
| Net      Segment Sales: |   | 2007                        |   |   | 2006 |   |   | $      Change |   |   | %      Change |   |
|                    |   | (dollars      in millions)  |   |
| Friction      products  |   | $                           | 215.9  |   |   | $ | 199.9 |   |   | $ | 16.0 |   |   |   | 8.0 | % |
| Performance      racing |   |                        | 12.8   |   |   |   | 12.1 |   |   |   | 0.7 |   |   |   | 5.8 | % |
| Consolidated            |   | $                           | 228.7  |   |   | $ | 212.0 |   |   | $ | 16.7 |   |   |   | 7.9 | % |

| ·   | Friction      Products.  Net sales in the friction products segment      were a record $215.9 million in 2007, an increase of $16.0 million, or      8.0%, compared to $199.9 million in 2006.  As a result of      general economic strength, customer price increases, new business awards,      and the strength of the Euro, we experienced sales increases in most of      our major markets, including construction and mining, aircraft and      defense, agriculture, specialty friction, and performance      automotive.  Our sales to the construction and mining market,      our largest, were up 15.1% in 2007 compared to 2006 as a result of strong      global market conditions.  Sales in the agriculture sector were      up 18.2% in 2007 compared to 2006 as a result of strong market conditions      in North and South America.  Additionally, we experienced      increases in our aircraft and defense, specialty friction and performance      automotive markets in 2007.   Sales to our heavy truck      market declined 18.1% during 2007 compared to 2006 due to the      implementation of the new vehicle emission control standards at the      beginning of 2007.  The friction products segment continued to      experience strong sales growth from our operations in Italy and China and      favorable foreign currency exchange rates during 2007 compared to the      prior year. Sales at our Italian operation, on a local currency basis,      were up 19.8% in 2007 compared to 2006 while sales at our Chinese      operation, on a local currency basis, were up 34.4% during the same      period.  During 2007, we continued to focus our efforts on the      friction direct aftermarket that we service through the Velvetouch® and      Hawk Performance® brand names. Sales in this product category were $23.9      million in 2007 compared to $24.1 million in 2006, a decrease of 1.4%      primarily due to reduced sales to the heavy truck aftermarket.  |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Performance      Racing.  Net sales in our performance racing segment in      2007 were $12.8 million in 2007, an increase of 5.8% when compared to the      same period of 2006.  The increase in revenues was primarily      attributable to sales into the “Car of Tomorrow” concept car which was      introduced on a limited scale by NASCAR for the 2007 race      season.  Over the last few years, we have sought to upgrade the      segment’s engineering and technological expertise which contributed to the      increase in revenues. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                      |   | Year      Ended December 31 |   |
|---------------------------|--------|-----------------------------|--------|
| Gross      Profit Margin: |   | 2007                        |   |   | 2006 |   |   | Change |   |
| Friction      products    |   |                        | 23.8   | % |   |   | 22.4 | % |   |   | 1.4 | % |
| Performance      racing   |   |                        | 12.5   | % |   |   | 14.9 | % |   |   | -2.4 | % |
| Consolidated              |   |                        | 23.2   | % |   |   | 22.0 | % |   |   | 1.2 | % |

| ·   | Friction      Products.  Our friction products segment reported gross      profit of $51.4 million or 23.8% of its net sales for 2007, compared to      $44.9 million or 22.4% of its net sales for 2006. The 1.3% increase in our      gross profit margin was primarily from the result of margin improvements      from volume related absorption of fixed overhead, continued pricing      actions and increased production flow and improved control of      manufacturing expenses at our domestic facilities, particularly      Tulsa. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Performance      Racing.  Our performance racing segment reported gross      profit of $1.6 million for 2007, compared to $1.8 million in      2006.  Our gross margin decreased to 12.5% of net sales for      2007, compared to14.9% for 2006.  The decrease in the gross      margin was primarily the result of unfavorable product mix and increased      material costs. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                           |   | Year      ended December 31 |   |
|------------------------------------------------|--------|-----------------------------|--------|
| Income      (loss) from operations by segment: |   | 2007                        |   |   | 2006 |   |   | $      Change |   |
|                                           |   | (dollars      in millions)  |   |
| Friction      products                         |   | $                           | 20.0   |   |   | $ | 16.3 |   |   | $ | 3.7 |   |
| Performance      racing                        |   |                        | (1.4   | ) |   |   | (6.4 | ) |   |   | 5.0 |   |
| Consolidated                                   |   | $                           | 18.6   |   |   | $ | 9.9 |   |   | $ | 8.7 |   |

|                    |   | Year      ended December 31                                  |       |
|-------------------------|--------|--------------------------------------------------------------|------------|
|                    |   |  Income      (loss) from operations, as reported (GAAP) | Adjustment |   |   | Adjusted      income (loss) from operations |   |
|                    |   | 2007                                                         |       |   | 2006 |   |   | 2007 |   |   | 2006 |   |   | 2007 |   |   | 2006 |   |
|                    |   | (dollars      in millions)                                   |       |
| Friction      products  |   | $                                                            | 20.0       |   |   | $ | 16.3 |   |   | $ | - |   |   | $ | - |   |   | $ | 20.0 |   |   | $ | 16.3 |   |
| Performance      racing |   |                                                         | (1.4       | ) |   |   | (6.4 | ) |   |   | - |   |   |   | 4.5 |   |   |   | (1.4 | ) |   |   | (1.9 | ) |
| Total                   |   | $                                                            | 18.6       |   |   | $ | 9.9 |   |   | $ | - |   |   | $ | 4.5 |   |   | $ | 18.6 |   |   | $ | 14.4 |   |
|                    |   |                                                         |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      margin   |   |                                                         | 8.1        | % |   |   | 4.7 | % |   |   |   |   |   |   |   |   |   |   | 8.1 | % |   |   | 6.8 | % |

|                                                                 |   | 2007                       |   |   | 2006   |   |
|----------------------------------------------------------------------|--------|----------------------------|--------|--------|--------|--------|
|                                                                 |   | (dollars      in millions) |   |
| Net      sales                                                       |   | $                          | 7.3    |   |   | $      | 98.9 |   |
| (Loss)      income from discontinued operations, before income taxes |   | $                          | (2.2   | )      |   | $      | 8.6 |   |
| Gain      on sale of discontinued operations, before income taxes    |   |                       | 15.0   |   |   |   | - |   |
| Income      tax expense                                              |   |                       | 2.7    |   |   |   | 3.7 |   |
| Income      from discontinued operations, after income taxes         |   | $                          | 10.1   |   |   | $      | 4.9 |   |

|                    |   | Year      Ended December 31 |   |
|-------------------------|--------|-----------------------------|--------|
| Net      Segment Sales: |   | 2006                        |   |   | 2005 |   |   | $      Change |   |   | %      Change |   |
|                    |   | (dollars      in millions)  |   |
| Friction      products  |   | $                           | 199.9  |   |   | $ | 167.1 |   |   | $ | 32.8 |   |   |   | 19.6 | % |
| Performance      racing |   |                        | 12.1   |   |   |   | 14.8 |   |   |   | (2.7 | ) |   |   | -18.2 | % |
| Consolidated            |   | $                           | 212.0  |   |   | $ | 181.9 |   |   | $ | 30.1 |   |   |   | 16.5 | % |

| ·   | Friction      Products.  Net sales in the friction products segment,      our largest, were $199.9 million in 2006, an increase of $32.8 million, or      19.6%, compared to $167.1 million in 2005. As a result of pricing actions,      general economic expansion, new product introductions and market share      gains, we experienced increases in most of our major markets, including      construction and mining, aircraft, heavy truck and performance automotive.      This segment continued to experience strong sales growth from our      international operations in 2006. Our sales to the construction and      mining, our largest end market, were up 35.9% in 2006 compared to 2005, as      a result of strong economic conditions in that market as well as market      share gains achieved by us. Our sales to the truck market increased by      9.6% in 2006 compared to 2005 as our customers supported the continued      growth in new truck builds and aftermarket service requirements to      existing truck fleets during the year as well.  The higher than      normal market strength in the truck market in 2006 was due to the      implementation of new truck emission standards in 2007 and customer      purchases of trucks in advance of the new standards. Our sales to the      aircraft market were up 20.2% in 2006 compared to 2005 as a result of      pricing actions and world-wide commercial air travel continued its      positive growth trend.  Our sales to the agriculture market      increased 1.0% during the year as a result of improving farm economies in      the European markets.   |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Performance      Racing.  Net sales in our performance racing segment were      $12.1 million, a decrease of 18.2% compared to net sales of $14.8 million      in 2005. The decrease in revenues was primarily attributable to a      realignment of the segment’s strategic customer focus at our driveline      transmission facility.  At the end of 2005, we made a      significant change in the management of our driveline business      operations.  This enabled us to begin repositioning our      driveline business operations in the marketplace by increasing the level      of engineering and product design capabilities while aligning it with a      new provider of premium gears for the racing market.  These      measures were taken to meet increased competition in the transmission      market. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                      |   | Year      Ended December 31 |   |
|---------------------------|--------|-----------------------------|--------|
| Gross      Profit Margin: |   | 2006                        |   |   | 2005 |   |   | Change |   |
| Friction      products    |   |                        | 22.5   | % |   |   | 19.9 | % |   |   | 2.6 | % |
| Performance      racing   |   |                        | 14.9   | % |   |   | 20.3 | % |   |   | -5.4 | % |
| Consolidated              |   |                        | 22.0   | % |   |   | 19.9 | % |   |   | 2.1 | % |

| ·   | Friction      Products.  Our friction products segment reported gross      profit of $44.9 million or 22.5% of its net sales in 2006 compared to      $33.2 million or 19.9% of its net sales in 2005. The 2.6% increase in our      gross profit margin was primarily the result of pricing actions taken,      increased production flow from our facility in Tulsa, improved control of      manufacturing expenses as the Tulsa facility benefited from improved      manufacturing efficiencies and margin improvements from volume related      absorption of fixed overhead.  The increase was partially offset      by expenses incurred at our new Tulsa facility, including logistic and      scrap expenses, increased raw material costs, and increased medical and      incentive compensation expenses during the  period. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Performance      Racing.  Our performance racing segment reported gross      profit of $1.8 million in 2006 compared to $3.0 million of its net sales      in 2005.  Our gross margin was 14.9% of net sales in 2006      compared to 20.3% in 2005.  The 5.4% decrease in the gross      margin was primarily the result of the reduced sales volumes, increased      inventory reserves and less favorable product  mix. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                           |   | Year      ended December 31 |   |
|------------------------------------------------|--------|-----------------------------|--------|
| Income      (loss) from operations by segment: |   | 2006                        |   |   | 2005 |   |   | $      Change |   |
|                                           |   | (dollars      in millions)  |   |
| Friction      products                         |   | $                           | 16.3   |   |   | $ | 3.2 |   |   | $ | 13.1 |   |
| Performance      racing                        |   |                        | (6.4   | ) |   |   | (0.8 | ) |   |   | (5.6 | ) |
| Consolidated                                   |   | $                           | 9.9    |   |   | $ | 2.4 |   |   | $ | 7.5 |   |

|                    |   | Years      ended December 31                           |   |
|-------------------------|--------|--------------------------------------------------------|--------|
|                    |   | Income      (loss) from operations, as reported (GAAP) |   |   | Restructuring      costs (1) |   |   | Other      (income) costs, net (2) |   |   | Adjusted      income (loss) from operations |   |
|                    |   | 2006                                                   |   |   | 2005 |   |   | 2006 |   |   | 2005 |   |   | 2006 |   |   | 2005 |   |   | 2006 |   |   | 2005 |   |
|                    |   | (dollars      in millions)                             |   |
| Friction      products  |   | $                                                      | 16.3   |   |   | $ | 3.2 |   |   | $ | - |   |   | $ | 5.5 |   |   | $ | - |   |   | $ | 0.6 |   |   | $ | 16.3 |   |   | $ | 9.3 |   |
| Performance      racing |   |                                                   | (6.4   | ) |   |   | (0.8 | )  |   |   |  - |   |   |   |  - |   |   |   | 4.5 |   |   |   |  0.1 |   |   |   | (1.9 | ) |   |   | (0.7 | )  |
| Total                   |   | $                                                      | 9.9    |   |   | $ | 2.4 |   |   | $ | - |   |   | $ | 5.5 |   |   | $ | 4.5 |   |   | $ | 0.7 |   |   | $ | 14.4 |   |   | $ | 8.6 |   |
|                    |   |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      margin   |   |                                                   | 4.7    | % |   |   | 1.3 | % |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 6.8 | % |   |   | 4.7 | % |

| (1)   | Restructuring      costs in this table for the period ended December 31, 2005 include $0.5      million classified in our Consolidated Statements of Operations as cost of      sales items.  |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Other      costs, net includes a goodwill impairment charge of $4.5 million for the      year ended December 31, 2006 and loan forgiveness costs of $1.1 million,      net of employee benefit curtailment income of $0.4 million for the year      ended December 31, 2005. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                          |   | Year      ended December 31 |      |
|---------------------------------------------------------------|--------|-----------------------------|-----------|
|                                                          |   | 2006                        |      |   | 2005 |   |
|                                                          |   | (dollars      in millions)  |      |
| Income      from discontinued operations, before income taxes |   | $                           | 8.6       |   |   | $ | 6.8 |   |
| Income      tax expense                                  |   |                        |  3.7 |   |   |   |  2.6 |   |
| Income      from discontinued operations, after income taxes  |   | $                           | 4.9       |   |   | $ | 4.2 |   |

| ·   | for      capital expenditures for maintenance, replacement and acquisition of      equipment, expansion of capacity, productivity improvements, research and      product development,  |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | for      funding our day-to-day working capital requirements,and                                                                                                                             |
| ·   | to      pay interest on, and to repay principal of, our    indebtedness.                                                                                                                     |

|                                                           |   | December      31           |                  |
|----------------------------------------------------------------|--------|----------------------------|-----------------------|
|                                                           |   | 2007                       |                  |   | 2006 |   |
|                                                           |   | (dollars      in millions) |                  |
| Cash      and cash equivalents                                 |   | $                          | 80.0                  |   |   | $ | 6.2 |   |
| Marketable      securities                                     |   | $                          | 1.0                   |   |   | $ | - |   |
| Working      capital (1)                                       |   | $                          | 113.3                 |   |   | $ | 115.8 |   |
| Current      ratio (2)                                         |   |                       |  3.1      to 1.0 |   |   |   |  3.0      to 1.0 |   |
| Net      debt as a % of capitalization (3)                     |   |                       | 8.4                   | % |   |   | 69.2 | % |
| Average      number of days sales in accounts receivable  |   |                       |  62      days    |   |   |   |  59      days |   |
| Average      number of days sales in inventory            |   |                       |  85      days    |   |   |   |  86      days |   |

| (1)   | Working      capital is defined as current assets minus current      liabilities.  |
|-----------------|-----------------------------------------------------------------------------------------|

| (2)   | Current      ratio is defined as current assets divided by current      liabilities.  |
|-----------------|--------------------------------------------------------------------------------------------|

| (3)   | Net      debt is defined as long-term debt, including current portion, and      short-term borrowings, less cash and marketable      securities.  Capitalization is defined as net debt plus      shareholders’ equity. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                 |   | December      31           |   |
|----------------------|--------|----------------------------|--------|
|                 |   | 2007                       |   |   | 2006 |   |
|                 |   | (dollars      in millions) |   |
| Short-term      debt |   | $                          | -      |   |   | $ | 1.0 |   |
| Senior      notes    |   |                       | 87.1   |   |   |   | 110.0 |   |
| Bank      facility   |   |                       | -      |   |   |   | - |   |
| Other                |   |                       | 0.1    |   |   |   | 0.2 |   |
| Total      debt      |   | $                          | 87.2   |   |   | $ | 111.2 |   |

| For the period below              |   | Percentage |    |
|-----------------------------------|--------|------------|---------|
| On      or after November 1, 2009 |   |       | 104.375 | % |
| On      or after November 1, 2010 |   |       | 103.281 | % |
| On      or after November 1, 2011 |   |       | 102.188 | % |
| On      or after November 1, 2012 |   |       | 101.094 | % |
| On      or after November 1, 2013 |   |       | 100.000 | % |

| ·   | incur      or guarantee additional debt or issue disqualified capital      stock,    |
|--------------------|--------------------------------------------------------------------------------------|
| ·   | pay      dividends, redeem subordinated debt or make other restricted      payments, |
| ·   | issue      preferred stock of our subsidiaries,                                      |
| ·   | transfer      or sell assets, including capital stock of our    subsidiaries,        |

| ·   | incur      dividend or other payment restrictions affecting certain of our      subsidiaries, |
|--------------------|-----------------------------------------------------------------------------------------------|

| ·   | make      certain investments oracquisitions, |
|--------------------|-----------------------------------------------|

| ·   | grant      liens on our assets,                                       |
|--------------------|-----------------------------------------------------------------------|
| ·   | enter      into certain transactions with affiliates, and             |
| ·   | merge,      consolidate or transfer substantially all of our  assets. |

| ·   | there      is no default or event of default,                                                                                                                                                                                                                                                                                     |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | we      meet the cash flow ratio, and                                                                                                                                                                                                                                                                                             |
| ·   | the      amount of the dividend payment plus certain other payments is not in      excess of a formula based on the sum of our consolidated net income after      November 1, 2004, the cash proceeds of certain equity offerings by us      after November 1, 2004, and the return on certain investments made by      us.  |   |

|                                                                               |   | Year      Ended December 31 |   |
|------------------------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                                               |   | 2007                        |   |   | 2006 |   |
|                                                                               |   | (dollars      in millions)  |   |
| Cash      provided by operating activities of continuing operations                |   | $                           | 22.5   |   |   | $ | 5.5 |   |
| Cash      provided by (used in) investing activities of continuing      operations |   |                        | 85.6   |   |   |   | (6.4 | ) |
| Cash      used in financing activities of continuing operations                    |   |                        | (26.2  | ) |   |   | (5.1 | ) |
| Effect      of exchange rates on cash                                              |   |                        | 0.7    |   |   |   | 0.5 |   |
| Cash      (used in) provided by discontinued operations                            |   |                        | (8.8   | ) |   |   | 4.9 |   |
| Net      increase (decrease) in cash and cash equivalents                          |   | $                           | 73.8   |   |   | $ | (0.6 | ) |

| (Dollars      in Thousands)                |   | Total  |    |   | 2008   |   |   |   | 2009      – 2012 |   |   | Thereafter |   |
|--------------------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|------------------------|--------|--------|------------|--------|
| Contractual      obligations (1)      (2): |   |   |    |   |   |   |   |   |                   |   |   |       |   |
| Unrecognized      tax benefit (3)          |   | $      | 1,146   |   |   | $      | 1,146  |   |                   | $      | -      |       |   | $ | - |   |
| Short-term      debt (4)                   |   |   | -       |   |   |   | -      |   |                   |   | -      |       |   |   | - |   |
| Bank      facility (4)                     |   |   | -       |   |   |   | -      |   |                   |   | -      |       |   |   | - |   |
| Senior      notes (5)                      |   |   | 87,090  |   |   |   | -      |   |                   |   | -      |       |   |   | 87,090 |   |
| Capital      leases                        |   |   | 59      |   |   |   | 59     |   |                   |   | -      |       |   |   | - |   |
| Operating      leases                      |   |   | 27,420  |   |   |   | 3,341  |   |                   |   | 10,485 |       |   |   | 13,594 |   |
| Purchase      obligations (6)              |   |   | 31,741  |   |   |   | 28,312 |   |                   |   | 3,429  |       |   |   | - |   |
| Total      contractual obligations         |   | $      | 147,456 |   |   | $      | 32,858 |   |                   | $      | 13,914 |       |   | $ | 100,684 |   |
| Other      commercial commitments:         |   |   |    |   |   |   |   |   |                   |   |   |       |   |   |   |   |
| Stand-by      letters of credit            |   | $      | 1,025   |   |   | $      | 1,025  |   |                   |   |   |       |   |   |   |   |

|  | (1)  | This contractual      obligations table does not include our defined benefit pension      obligations.  An analysis of our obligations under our defined      benefit pension plans is contained in Note 11 “Employee Benefits” in the      accompanying audited Consolidated Financial Statements of this Form      10-K. |
|--|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)  | This contractual      obligations table does not include deferred compensation obligations and      liabilities related to deferred taxes because it is not certain when these      liabilities will become due. |
|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)  | The above table      includes accrued interest and penalties.  The above table table      does not include approximately $670 of unrecognized tax benefits has been      recorded in other long-term accrued expenses in accordance with FIN      48.  These liabilities have not been included in the contractual      obligations table because we cannot reasonably predict whether any      specific taxing jurisdiction will select our tax returns to review so it      is impractical to determine the amounts that may impact future cash      flows.  See Note 13 “Income Taxes” in the accompanying audited      Consolidated Financial Statements of this Form 10-K for further analysis      of our FIN 48 liabilities. |
|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4)  | Variable rate      obligations |
|-----------|--------------------------------|

| (5)  | The senior notes      accrue interest at a fixed rate of 8¾% per annum or $7.6 million per      year. |
|-----------|------------------------------------------------------------------------------------------------------------|

| (6)  | Purchase obligations      primarily represent commitments for inventory purchases, services and      capital expenditures under purchaseorder. |
|-----------|------------------------------------------------------------------------------------------------------------------------------------------------|

| Report      of Ernst & Young LLP, Independent Registered Public Accounting      Firm                           | 35       |
|--------------------------------------------------------------------------------------------------------------------|----------|
| Report      of Ernst & Young LLP, Independent Registered Public Accounting Firm -      Internal Controls  | 36  |
| Consolidated      Balance Sheets                                                                                   | 37       |
| Consolidated      Statements of Operations                                                                         | 39       |
| Consolidated      Statements of Shareholders’ Equity                                                         | 40       |
| Consolidated      Statements of Cash Flows                                                                         | 41       |
| Notes      to Consolidated Financial Statements                                                                    | 43       |

|                                                                               |   | December      31 |    |   | December      31 |   |
|------------------------------------------------------------------------------------|--------|------------------|---------|--------|------------------|--------|
|                                                                               |   | 2007             |    |   | 2006             |   |
|                                                                               |   |             |    |   |             |   |
| Assets                                                                             |   |             |    |   |             |   |
| Current      assets:                                                               |   |             |    |   |             |   |
| Cash      and cash equivalents                                                     |   | $                | 79,995  |   |             | $      | 6,177 |   |
| Marketable      securities                                                         |   |             | 1,019   |   |             |   | - |   |
| Accounts      receivable, less allowance of $1,039 in 2007 and $1,052 in      2006 |   |             | 38,591  |   |             |   | 34,502 |   |
| Inventories:                                                                       |   |             |    |   |             |   |   |   |
| Raw      materials                                                                 |   |             | 10,199  |   |             |   | 10,882 |   |
| Work-in-process                                                                    |   |             | 16,341  |   |             |   | 13,599 |   |
| Finished      products                                                             |   |             | 14,510  |   |             |   | 14,409 |   |
| Total      inventories                                                             |   |             | 41,050  |   |             |   | 38,890 |   |
| Deferred      income taxes                                                         |   |             | 1,355   |   |             |   | 2,472 |   |
| Other      current assets                                                          |   |             | 4,816   |   |             |   | 3,609 |   |
| Current      assets of discontinued operations                                     |   |             | -       |   |             |   | 87,313 |   |
| Total      current assets                                                          |   |             | 166,826 |   |             |   | 172,963 |   |
|                                                                               |   |             |    |   |             |   |   |   |
| Property,      plant and equipment:                                                |   |             |    |   |             |   |   |   |
| Land      and improvements                                                         |   |             | 1,186   |   |             |   | 510 |   |
| Buildings      and improvements                                                    |   |             | 15,752  |   |             |   | 14,406 |   |
| Machinery      and equipment                                                       |   |             | 88,759  |   |             |   | 81,397 |   |
| Furniture      and fixtures                                                        |   |             | 8,689   |   |             |   | 8,087 |   |
| Construction      in progress                                                      |   |             | 2,551   |   |             |   | 2,846 |   |
|                                                                               |   |             | 116,937 |   |             |   | 107,246 |   |
| Less      accumulated depreciation                                                 |   |             | 76,192  |   |             |   | 67,837 |   |
| Total      property, plant and equipment                                           |   |             | 40,745  |   |             |   | 39,409 |   |
|                                                                               |   |             |    |   |             |   |   |   |
| Other      assets:                                                                 |   |             |    |   |             |   |   |   |
| Finite-lived      intangible assets                                                |   |             | 7,157   |   |             |   | 7,884 |   |
| Deferred      income taxes                                                         |   |             | 685     |   |             |   | 3,357 |   |
| Other                                                                              |   |             | 4,491   |   |             |   | 5,641 |   |
| Total      other assets                                                            |   |             | 12,333  |   |             |   | 16,882 |   |
| Total      assets                                                                  |   | $                | 219,904 |   |             | $      | 229,254 |   |

|                                                                                                                                                                                                         |   | December      31 |    |   | December      31 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|---------|--------|------------------|--------|
|                                                                                                                                                                                                         |   | 2007             |    |   | 2006             |   |
|                                                                                                                                                                                                         |   |             |    |   |             |   |
| Liabilities      and shareholders' equity                                                                                                                                                                    |   |             |    |   |             |   |
| Current      liabilities:                                                                                                                                                                                    |   |             |    |   |             |   |
| Accounts      payable                                                                                                                                                                                        |   | $                | 31,449  |   |             | $      | 23,023 |   |
| Accrued      compensation                                                                                                                                                                                    |   |             | 9,068   |   |             |   | 6,678 |   |
| Accrued      interest                                                                                                                                                                                        |   |             | 3,816   |   |             |   | 4,857 |   |
| Accrued      taxes                                                                                                                                                                                           |   |             | 1,762   |   |             |   | 2,558 |   |
| Other      accrued expenses                                                                                                                                                                                  |   |             | 7,404   |   |             |   | 6,176 |   |
| Short-term      debt                                                                                                                                                                                         |   |             | -       |   |             |   | 980 |   |
| Current      portion of long-term debt                                                                                                                                                                       |   |             | 59      |   |             |   | 127 |   |
| Current      liabilities of discontinued operations                                                                                                                                                          |   |             | -       |   |             |   | 12,795 |   |
| Total      current liabilities                                                                                                                                                                               |   |             | 53,558  |   |             |   | 57,194 |   |
|                                                                                                                                                                                                         |   |             |    |   |             |   |   |   |
| Long-term      liabilities:                                                                                                                                                                                  |   |             |    |   |             |   |   |   |
| Long-term      debt                                                                                                                                                                                          |   |             | 87,090  |   |             |   | 110,053 |   |
| Deferred      income taxes                                                                                                                                                                                   |   |             | 922     |   |             |   | 1,025 |   |
| Pension      liabilities                                                                                                                                                                                     |   |             | 679     |   |             |   | 4,727 |   |
| Other      accrued expenses                                                                                                                                                                                  |   |             | 10,331  |   |             |   | 9,526 |   |
| Total      long-term liabilities                                                                                                                                                                             |   |             | 99,022  |   |             |   | 125,331 |   |
|                                                                                                                                                                                                         |   |             |    |   |             |   |   |   |
| Shareholders'      equity                                                                                                                                                                                    |   |             |    |   |             |   |   |   |
| Series      D preferred stock, $.01 par value; an aggregate liquidation value of      $1,530, plus any unpaid dividends with 9.8% cumulative dividend (1,530      shares authorized, issued and outstanding) |   |             | 1       |   |             |   | 1 |   |
| Series      E preferred stock, $.01 par value;  100,000 shares authorized;      none issued or outstanding                                                                                         |   |             | -       |   |             |   | - |   |
| Class      A common stock, $.01 par value; 75,000,000 shares authorized; 9,187,750      issued; 8,966,969 and 9,016,878 outstanding in 2007 and 2006,      respectively                                      |   |             | 92      |   |             |   | 92 |   |
| Class      B common stock, $.01 par value; 10,000,000 shares authorized; none issued      or outstanding                                                                                                     |   |             | -       |   |             |   | - |   |
| Additional      paid-in capital                                                                                                                                                                              |   |             | 53,068  |   |             |   | 53,492 |   |
| Retained      earnings (deficit)                                                                                                                                                                             |   |             | 15,092  |   |             |   | (2,026 | ) |
| Accumulated      other comprehensive income (loss)                                                                                                                                                           |   |             | 2,041   |   |             |   | (3,467 | ) |
| Treasury      stock, at cost, 220,781 and 170,872 shares in 2007 and 2006,      respectively                                                                                                                 |   |             | (2,970  | )      |             |   | (1,363 | ) |
| Total      shareholders' equity                                                                                                                                                                              |   |             | 67,324  |   |             |   | 46,729 |   |
| Total      liabilities and shareholders' equity                                                                                                                                                              |   | $                | 219,904 |   |             | $      | 229,254 |   |

|                                                                                                                       |   | Year      Ended December 31 |    |
|----------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|
|                                                                                                                       |   | 2007                        |    |   | 2006 |   |   | 2005 |   |
| Net      sales                                                                                                             |   | $                           | 228,695 |   |   | $ | 212,050 |   |   | $ | 181,858 |   |
| Cost      of sales                                                                                                         |   |                        | 175,705 |   |   |   | 165,367 |   |   |   | 145,699 |   |
| Gross      profit                                                                                                          |   |                        | 52,990  |   |   |   | 46,683 |   |   |   | 36,159 |   |
|                                                                                                                       |   |                        |    |   |   |   |   |   |   |   |   |   |
| Operating      expenses:                                                                                                   |   |                        |    |   |   |   |   |   |   |   |   |   |
| Selling,      technical and administrative expenses                                                                        |   |                        | 33,710  |   |   |   | 31,822 |   |   |   | 28,450 |   |
| Goodwill      Impairment                                                                                                   |   |                        | -       |   |   |   | 4,465 |   |   |   | - |   |
| Restructuring      costs                                                                                                   |   |                        | -       |   |   |   | - |   |   |   | 4,962 |   |
| Employee      benefit curtailment                                                                                          |   |                        | -       |   |   |   | - |   |   |   | (424 | ) |
| Amortization      of finite-lived intangible assets                                                                        |   |                        | 727     |   |   |   | 495 |   |   |   | 724 |   |
| Total      operating expenses                                                                                              |   |                        | 34,437  |   |   |   | 36,782 |   |   |   | 33,712 |   |
| Income      from operations                                                                                                |   |                        | 18,553  |   |   |   | 9,901 |   |   |   | 2,447 |   |
|                                                                                                                       |   |                        |    |   |   |   |   |   |   |   |   |   |
| Interest      expense                                                                                                      |   |                        | (9,394  | ) |   |   | (11,182 | ) |   |   | (10,562 | ) |
| Interest      income                                                                                                       |   |                        | 3,835   |   |   |   | 98 |   |   |   | 40 |   |
| Other      (expense) income, net                                                                                           |   |                        | (295    | ) |   |   | 106 |   |   |   | 100 |   |
| Income      from continuing operations, before income taxes                                                                |   |                        | 12,699  |   |   |   | (1,077 | ) |   |   | (7,975 | ) |
|                                                                                                                       |   |                        |    |   |   |   |   |   |   |   |   |   |
| Income      tax provision (benefit)                                                                                        |   |                        | 5,509   |   |   |   | 897 |   |   |   | (2,391 | ) |
|                                                                                                                       |   |                        |    |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations, after income taxes                                                          |   |                        | 7,190   |   |   |   | (1,974 | ) |   |   | (5,584 | ) |
| Income      from discontinued operations, net of tax of  $2,734 in 2007,      $3,698 in 2006, and $2,609 in 2005 |   |                        | 10,078  |   |   |   | 4,943 |   |   |   | 4,240 |   |
|                                                                                                                       |   |                        |    |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                                                                                                     |   | $                           | 17,268  |   |   | $ | 2,969 |   |   | $ | (1,344 | ) |
|                                                                                                                       |   |                        |    |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) per share:                                                                                            |   |                        |    |   |   |   |   |   |   |   |   |   |
| Basic      earnings per share:                                                                                             |   |                        |    |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations, after income taxes                                                          |   | $                           | 0.79    |   |   | $ | (0.24 | ) |   | $ | (0.65 | ) |
| Discontinued      operations, after income taxes                                                                           |   |                        | 1.12    |   |   |   | 0.55 |   |   |   | 0.48 |   |
| Net      earnings (loss) per basic share                                                                                   |   | $                           | 1.91    |   |   | $ | 0.31 |   |   | $ | (0.17 | ) |
|                                                                                                                       |   |                        |    |   |   |   |   |   |   |   |   |   |
| Diluted      earnings (loss) per share:                                                                                    |   |                        |    |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations, after income taxes                                                          |   | $                           | 0.75    |   |   | $ | (0.22 | ) |   | $ | (0.65 | ) |
| Discontinued      operations, after income taxes                                                                           |   |                        | 1.08    |   |   |   | 0.52 |   |   |   | 0.48 |   |
| Net      earnings (loss) per diluted share                                                                                 |   | $                           | 1.83    |   |   | $ | 0.30 |   |   | $ | (0.17 | ) |
|                                                                                                                       |   |                        |    |   |   |   |   |   |   |   |   |   |
| Average      shares outstanding - basic                                                                                    |   |                        | 8,967   |   |   |   | 8,993 |   |   |   | 8,869 |   |
|                                                                                                                       |   |                        |    |   |   |   |   |   |   |   |   |   |
| Average      shares and equivalents outstanding - diluted                                                                  |   |                        | 9,360   |   |   |   | 9,514 |   |   |   | 8,869 |   |

|                                                                                            |   |                 |   |   |              |   |   |                            |   |   |                             |    |   | Accumulated      Other Comprehensive Income (Loss) |   |   |                           |   |   |                                                 |   |
|-------------------------------------------------------------------------------------------------|--------|----------------------|--------|--------|-------------------|--------|--------|---------------------------------|--------|--------|----------------------------------|---------|--------|----------------------------------------------------|--------|--------|--------------------------------|--------|--------|------------------------------------------------------|--------|
|                                                                                            |   | Preferred      Stock |   |   | Common      Stock |   |   | Additional      Paid-in Capital |   |   | Retained      Earnings (Deficit) |    |   | Foreign      Currency Translation                  |   |   | Minimum      Pension Liability |   |   | Unrealized      Gain / Loss on Marketable Securities |   |   | Treasury      Stock |   |   | Total |   |
| Balance      at January 1, 2005                                                                 |   | $                    | 1      |   |              | $      | 92     |                            |   | $      | 53,867                           |    |   | $                                                  | (3,353 | )      |                           | $      | 1,420  |                                                 |   | $ | (3,851 | ) |   | $ | - |   |   | $ | (3,149 | ) |   | $ | 45,027 |   |
| Net      loss                                                                                   |   |                 |   |   |              |   |   |                            |   |   |                             |    |   |                                               | (1,344 | )      |                           |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (1,344 | ) |
| Other      comprehensive (loss):                                                                |   |                 |   |   |              |   |   |                            |   |   |                             |    |   |                                               |   |   |                           |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Minimum      pension liability, net of tax of $1,337                                            |   |                 |   |   |              |   |   |                            |   |   |                             |    |   |                                               |   |   |                           |   |   | (2,135                                               | )      |   |   |   |   |   |   |   |   |   |   | (2,135 | ) |
| Foreign      currency translation                                                               |   |                 |   |   |              |   |   |                            |   |   |                             |    |   |                                               |   |   |                           |   | (1,420 | )                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (1,420 | ) |
| Total      comprehensive (loss)                                                                 |   |                 |   |   |              |   |   |                            |   |   |                             |    |   |                                               |   |   |                           |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (3,555 | ) |
| Preferred      stock dividends                                                                  |   |                 |   |   |              |   |   |                            |   |   |                             |    |   |                                               | (148   | )      |                           |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (148 | ) |
| Issuance      of common stock from treasury as compensation and exercise of stock      options  |   |                 |   |   |              |   |   |                            |   |   |  (518                       | )  |   |                                               |   |   |                           |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |  1,254 |   |   |   |  736 |   |
| Balance      at December 31, 2005                                                               |   | $                    | 1      |   |              | $      | 92     |                            |   | $      | 53,349                           |    |   | $                                                  | (4,845 | )      |                           | $      | -      |                                                 |   | $ | (5,986 | ) |   | $ | - |   |   | $ | (1,895 | ) |   | $ | 40,716 |   |
| Net      income                                                                                 |   |                 |   |   |              |   |   |                            |   |   |                             |    |   |                                               | 2,969  |   |                           |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 2,969 |   |
| Other      comprehensive income (loss):                                                         |   |                 |   |   |              |   |   |                            |   |   |                             |    |   |                                               |   |   |                           |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Minimum      pension liability, net of tax of $1,243                                            |   |                 |   |   |              |   |   |                            |   |   |                             |    |   |                                               |   |   |                           |   |   | 2,210                                                |   |   |   |   |   |   |   |   |   |   |   | 2,210 |   |
| Foreign      currency translation                                                               |   |                 |   |   |              |   |   |                            |   |   |                             |    |   |                                               |   |   |                           |   | 2,142  |                                                 |   |   | (2 | ) |   |   |   |   |   |   |   |   |   |   | 2,140 |   |
| Total      comprehensive income                                                                 |   |                 |   |   |              |   |   |                            |   |   |                             |    |   |                                               |   |   |                           |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 4,350 |   |
| Preferred      stock dividends                                                                  |   |                 |   |   |              |   |   |                            |   |   |                             |    |   |                                               | (150   | )      |                           |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (150 | ) |
| Share      based compensation - FAS 123(R)                                                      |   |                 |   |   |              |   |   |                            |   |   | 264                              |    |   |                                               |   |   |                           |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 264 |   |
| Issurance      of common stock from treasury as compensation and exercise of stock      options |   |                 |   |   |              |   |   |                            |   |   |  (121                       | )  |   |                                               |   |   |                           |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |  532 |   |   |   |  411 |   |
| Adjustment      to initially adopt SFAS No. 158, net of tax of $1,140                           |   |                 |   |   |              |   |   |                            |   |   |                             |    |   |                                               |   |   |                           |   |   |                                                 |   |   |  (1,831 | )  |   |   |   |   |   |   |   |   |   |   |  (1,831 | )  |
| Balance      at December 31, 2006                                                               |   | $                    | 1      |   |              | $      | 92     |                            |   | $      | 53,492                           |    |   | $                                                  | (2,026 | )      |                           | $      | 2,142  |                                                 |   | $ | (5,609 | ) |   | $ | - |   |   | $ | (1,363 | ) |   | $ | 46,729 |   |
| Net      income                                                                                 |   |                 |   |   |              |   |   |                            |   |   |                             |    |   |                                               | 17,268 |   |                           |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 17,268 |   |
| Other      comprehensive income (loss):                                                         |   |                 |   |   |              |   |   |                            |   |   |                             |    |   |                                               |   |   |                           |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Minimum      pension liability, net of tax of $1,114                                            |   |                 |   |   |              |   |   |                            |   |   |                             |    |   |                                               |   |   |                           |   |   | 1,980                                                |   |   |   |   |   |   |   |   |   |   |   | 1,980 |   |
| Unrealized      gain / loss on marketable securities,      net of tax of $37                    |   |                 |   |   |              |   |   |                            |   |   |                             |    |   |                                               |   |   |                           |   |   | 65                                                   |   |   |   |   |   |   |   | 65 |   |
| Foreign      currency translation                                                               |   |                 |   |   |              |   |   |                            |   |   |                             |    |   |                                               |   |   |                           |   | 3,545  |                                                 |   |   | (82 | ) |   |   |   |   |   |   |   |   |   |   | 3,463 |   |
| Total      comprehensive income                                                                 |   |                 |   |   |              |   |   |                            |   |   |                             |    |   |                                               |   |   |                           |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 5,508 |   |
| Preferred      stock dividends                                                                  |   |                 |   |   |              |   |   |                            |   |   |                             |    |   |                                               | (150   | )      |                           |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (150 | ) |
| Share      based compensation - FAS 123(R)                                                      |   |                 |   |   |              |   |   |                            |   |   | 390                              |    |   |                                               |   |   |                           |   |   |                                                 |   |   |   |   |   |   |  |   |   |   | 40 |   |   |   | 430 |   |
| Stock      repurchase                                                                           |   |                 |   |   |              |   |   |                            |   |   |                             |    |   |                                               |   |   |                           |   |   |                                                 |   |   |   |   |   |   |   |   |   |   | (3,694 | ) |   |   | (3,694 | ) |
| Issuance      of common stock from treasury as compensation and exercise of stock      options  |   |                 |   |   |              |   |   |                            |   |   |  (814                       | )  |   |                                               |   |   |                           |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |  2,047 |   |   |   |  1,233 |   |
| Balance      at December 31, 2007                                                               |   | $                    | 1      |   |              | $      | 92     |                            |   | $      | 53,068                           |    |   | $                                                  | 15,092 |   |                           | $      | 5,687  |                                                 |   | $ | (3,711 | ) |   | $ | 65 |   |   | $ | (2,970 | ) |   | $ | 67,324 |   |

|                                                                                               |   | Year      ended December 31 |    |
|----------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|
|                                                                                               |   | 2007                        |    |   | 2006 |   |   | 2005 |   |
| Cash      flows from operating activities                                                          |   |                        |    |   |   |   |   |   |   |
| Net      income (loss)                                                                             |   | $                           | 17,268  |   |   | $ | 2,969 |   |   | $ | (1,344 | ) |
| Adjustments      to reconcile net income (loss) to net cash provided by operating      activities: |   |
| Loss      (income) from discontinued operations, net of tax                                        |   |                        | 1,865   |   |   |   | (4,943 | ) |   |   | (4,240 | ) |
| Gain      on sale of discontinued operations, net of tax                                           |   |                        | (11,943 | ) |   |   | - |   |   |   | - |   |
| Depreciation      and amortization                                                                 |   |                        | 7,959   |   |   |   | 7,733 |   |   |   | 7,619 |   |
| Deferred      income taxes                                                                         |   |                        | 2,500   |   |   |   | (653 | ) |   |   | (2,141 | ) |
| Amortization      of discount on held to maturity securities                                       |   |                        | (1,109  | ) |   |   | - |   |   |   | - |   |
| Loss      on sale or disposal of fixed assets                                                      |   |                        | 124     |   |   |   | 157 |   |   |   | 858 |   |
| Loss      on extinguishment of debt - deferred financing fees    write-off                         |   |                        | 583     |   |   |   | - |   |   |   | - |   |
| Stock      option expense                                                                          |   |                        | 390     |   |   |   | 264 |   |   |   | - |   |
| Goodwill      impairment charge                                                                    |   |                        | -       |   |   |   | 4,465 |   |   |   | - |   |
| Changes      in operating assets and liabilites:                                                   |   |                        |    |   |   |   |   |   |   |   |   |   |
| Accounts      receivable                                                                           |   |                        | (1,697  | ) |   |   | (10,235 | ) |   |   | 2,471 |   |
| Inventories                                                                                        |   |                        | (948    | ) |   |   | (876 | ) |   |   | (4,680 | ) |
| Other      assets                                                                                  |   |                        | (691    | ) |   |   | (387 | ) |   |   | (1,620 | ) |
| Accounts      payable                                                                              |   |                        | 7,537   |   |   |   | (592 | ) |   |   | 5,882 |   |
| Accrued      expenses                                                                              |   |                        | 4,344   |   |   |   | 7,713 |   |   |   | (2,977 | ) |
| (Decrease)      increase in pension assets and liabilities, net                                    |   |                        | (4,245  | ) |   |   | (4,752 | ) |   |   | 3,055 |   |
| Other      liabilities and other                                                                   |   |                        | 540     |   |   |   | 4,596 |   |   |   | 1,365 |   |
| Net      cash provided by operating activities of continuing    operations                         |   |                        | 22,477  |   |   |   | 5,459 |   |   |   | 4,248 |   |
| Net      cash (used in) provided by operating activities of discontinued      operations           |   |                        | (7,604  | ) |   |   | 10,254 |   |   |   | 6,210 |   |
|                                                                                               |   |                        |    |   |   |   |   |   |   |   |   |   |
| Cash      flows from investing activities                                                          |   |                        |    |   |   |   |   |   |   |   |   |   |
| Proceeds      from sale of discontinued operations                                                 |   |                        | 93,354  |   |   |   |  - |   |   |   |  - |   |
| Purchases      of held to maturity securities                                                      |   |                        | (44,991 | ) |   |   |  - |   |   |   |  - |   |
| Proceeds      from maturity of held to maturity securities                                         |   |                        | 46,100  |   |   |   |  - |   |   |   |  - |   |
| Purchases      of available for sale securities                                                    |   |                        | (932    | ) |   |   |  - |   |   |   |  - |   |
| Purchases      of property, plant and equipment                                                    |   |                        | (7,931  | ) |   |   | (8,070 | ) |   |   | (7,767 | ) |
| Proceeds      from sale of property, plant and equipment                                           |   |                        | 18      |   |   |   | 1,633 |   |   |   | 104 |   |
| Net      cash provided by (used in) investing activities of continuing      operations             |   |                        | 85,618  |   |   |   | (6,437 | ) |   |   | (7,663 | ) |
| Net      cash used in investing activities of discontinued    operations                           |   |                        | (1,140  | ) |   |   | (5,185 | ) |   |   | (6,509 | ) |
|                                                                                               |   |                        |    |   |   |   |   |   |   |   |   |   |
| Cash      flows from financing activities                                                          |   |                        |    |   |   |   |   |   |   |   |   |   |
| Proceeds      from short-term debt                                                                 |   |                        | -       |   |   |   | 444 |   |   |   | 871 |   |
| Payments      on short-term debt                                                                   |   |                        | (1,057  | ) |   |   | (833 | ) |   |   | (798 | ) |
| Proceeds      from long-term debt                                                                  |   |                        | 10,964  |   |   |   | 82,450 |   |   |   | 84,093 |   |
| Payments      on long-term debt                                                                    |   |                        | (33,929 | ) |   |   | (87,611 | ) |   |   | (79,429 | ) |
| Stock      options and issuance of treasury stock as compensation,net                              |   |                        | 1,663   |   |   |   | 675 |   |   |   | 737 |   |
| Stock      repurchase                                                                              |   |                        | (3,694  | ) |   |   | - |   |   |   | - |   |
| Payments      of preferred stock dividends                                                         |   |                        | (150    | ) |   |   | (150 | ) |   |   | (148 | ) |
| Net      cash (used in) provided by financing activities of continuing      operations             |   |                        | (26,203 | ) |   |   | (5,025 | ) |   |   | 5,326 |   |
| Net      cash used in financing activities of discontinued    operations                           |   |                        | (14     | ) |   |   | (181 | ) |   |   | (144 | ) |
| Effect      of exchange rate changes on cash                                                       |   |                        | 684     |   |   |   | 531 |   |   |   | (575 | ) |
| Net      cash provided by (used in) continuing operations                                          |   |                        | 82,576  |   |   |   | (5,472 | ) |   |   | 1,336 |   |
| Net      cash (used in) provided by discontinued operations                                        |   |                        | (8,758  | ) |   |   | 4,888 |   |   |   | (443 | ) |
| Net      increase (decrease) in cash and cash equivalents                                          |   |                        | 73,818  |   |   |   | (584 | ) |   |   | 893 |   |
| Cash      and cash equivalents at beginning of period                                              |   |                        | 6,177   |   |   |   | 6,761 |   |   |   | 5,868 |   |
| Cash      and cash equivalents at end of period                                                    |   | $                           | 79,995  |   |   | $ | 6,177 |   |   | $ | 6,761 |   |

|                                                           |   | Year      ended December 31 |   |
|----------------------------------------------------------------|--------|-----------------------------|--------|
|                                                           |   | 2007                        |   |   | 2006 |   |   | 2005 |   |
| Supplemental      cash flow information                        |   |                        |   |   |   |   |   |   |   |
| Cash      payments for interest                                |   | $                           | 10,032 |   |   | $ | 10,705 |   |   | $ | 6,849 |   |
| Cash      payments for taxes                                   |   | $                           | 5,602  |   |   | $ | 3,017 |   |   | $ | 4,650 |   |
| Cash      (refunds) for taxes                                  |   | $                           | (544   | ) |   | $ | (130 | ) |   | $ | (110 | ) |
| Noncash      investing and financing activities:               |   |                        |   |   |   |   |   |   |   |   |   |   |
| Equipment      purchased with capital leases and notes payable |   | $                           | -      |   |   | $ | - |   |   | $ | - |   |
| Issuance      of common stock from treasury                    |   | $                           | 40     |   |   | $ | 40 |   |   | $ | 40 |   |

|                                                                 |   | Year      Ended December 31 |   |
|----------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                                 |   | 2007                        |   |   | 2006 |   |   | 2005 |   |
| Net      sales                                                       |   | $                           | 7,277  |   |   | $ | 98,875 |   |   | $ | 92,468 |   |
|                                                                 |   |                        |   |   |   |   |   |   |   |   |   |   |
| (Loss)      income from discontinued operations, before income taxes |   | $                           | (2,211 | ) |   | $ | 8,641 |   |   | $ | 6,849 |   |
| Gain      on sale of discontinued operations, before income taxes    |   | $                           | 15,023 |   |   | $ | - |   |   | $ | - |   |
| Income      tax expense                                              |   |                        | 2,734  |   |   |   | 3,698 |   |   |   | 2,609 |   |
| Income      from discontinued operations, after income taxes         |   | $                           | 10,078 |   |   | $ | 4,943 |   |   | $ | 4,240 |   |

|                                              |   | December      31 |   |
|---------------------------------------------------|--------|------------------|--------|
|                                              |   | 2006             |   |
| Cash                                              |   | $                | 54     |   |
| Accounts      receivable                          |   |             | 13,495 |   |
| Inventory                                         |   |             | 10,484 |   |
| Other      current assets                         |   |             | 1,209  |   |
| Property,      plant and equipment                |   |             | 33,988 |   |
| Intangible      assets                            |   |             | 28,083 |   |
| Total      assets of discontinued operations      |   | $                | 87,313 |   |
|                                              |   |             |   |   |
| Accounts      payable                             |   | $                | 7,724  |   |
| Other      accrued expenses                       |   |             | 4,378  |   |
| Total      debt                                   |   |             | 693    |   |
| Total      liabilities of discontinued operations |   | $                | 12,795 |   |

|                                                      |   |                | Available-for-Sale      Securities |   |                        |   |   |
|-----------------------------------------------------------|--------|---------------------|------------------------------------|--------|-----------------------------|--------|--------|
|                                                      |   | Amortized      Cost |                               |   | Gross      Unrealized Gains |   |   | Gross      Unrealized Losses |   |   | Estimated      Fair Value (Net Carrying Amount) |   |
| Other      debt securities -      due in one year or less |   | $                   | 57,998                             |   |                        | $      | 102    |   |   | $ | - |   |   | $ | 57,980 |   |

|                         |   | December      31, 2007 |   |   | December      31, 2006        |   |
|------------------------------|--------|------------------------|--------|--------|-------------------------------|--------|
|                         |   | Gross                  |   |   | Accumulated      Amortization |   |   | Net |   |   | Gross |   |   | Accumulated      Amortization |   |   | Net |   |
| Product      certifications  |   | $                      | 20,820 |   |                          | $      | 13,663 |   |   | $ | 7,157 |   |   | $ | 20,820 |   |   | $ | 12,936 |   |   | $ | 7,884 |   |
| Other      intangible assets |   |                   | 2,575  |   |                          |   | 2,575 |   |   |   | - |   |   |   | 2,575 |   |   |   | 2,575 |   |   |   | - |   |
|                         |   | $                      | 23,395 |   |                          | $      | 16,238 |   |   | $ | 7,157 |   |   | $ | 23,395 |   |   | $ | 15,511 |   |   | $ | 7,884 |   |

|                                          |   | December      31 |   |
|-----------------------------------------------|--------|------------------|--------|
|                                          |   | 2007             |   |   | 2006 |   |
| Short-term      debt                          |   | $                | -      |   |   | $ | 980 |   |
| Senior      Notes                             |   |             | 87,090 |   |   |   | 110,000 |   |
| Bank      Facility                            |   |             | -      |   |   |   | - |   |
| Other                                         |   |             | 59     |   |   |   | 180 |   |
|                                          |   |             | 87,149 |   |   |   | 111,160 |   |
| Less      current portion and short-term debt |   |             | 59     |   |   |   | 1,107 |   |
|                                          |   | $                | 87,090 |   |   | $ | 110,053 |   |

| For the period below              |   | Percentage |    |
|-----------------------------------|--------|------------|---------|
| On      or after November 1, 2009 |   |       | 104.375 | % |
| On      or after November 1, 2010 |   |       | 103.281 | % |
| On      or after November 1, 2011 |   |       | 102.188 | % |
| On      or after November 1, 2012 |   |       | 101.094 | % |
| On      or after November 1, 2013 |   |       | 100.000 | % |

| ·   | incur      or guarantee additional debt or issue disqualified capital      stock, |
|--------------------|-----------------------------------------------------------------------------------|

| ·   | pay      dividends, redeem subordinated debt or make other restricted      payments., |
|--------------------|---------------------------------------------------------------------------------------|

| ·   | issue      preferred stock of our subsidiaries,                               |
|--------------------|-------------------------------------------------------------------------------|
| ·   | transfer      or sell assets, including capital stock of our    subsidiaries, |

| ·   | incur      dividend or other payment restrictions affecting certain of our      subsidiaries, |
|--------------------|-----------------------------------------------------------------------------------------------|

| ·   | make      certain investments or acquisitions,            |
|--------------------|-----------------------------------------------------------|
| ·   | grant      liens on our assets,                           |
| ·   | enter      into certain transactions with affiliates, and |
| ·   | merge,      consolidate or transfer substantially         |

| ·   | there      is no default or evidence of default, |
|--------------------|--------------------------------------------------|
| ·   | the      Company meets the cash flow ratio,and   |

| ·   | the      amount of the dividend payment plus certain other payments is not in      excess of a formula based on the sum of the Company’s consolidated net      income after November 1, 2004, the cash proceeds of certain equity      offerings by the Company after November 1, 2004, and the return on certain      investments made by the Company. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | there      is no evidence of default, and   |
|--------------------|---------------------------------------------|
| ·   | availability      is not less than $10,000. |

|                                           |   | 2007   |   |   | 2006   |   |   | 2005(1) |   |
|------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|---------|--------|
| Expected      volatility                       |   |   | 87.2   | %      |   |   | 89.5   | %       |   |   | - |   |
| Expected      option life in years             |   |   | 5.5    |   |   |   | 5.7    |    |   |   | - |   |
| Expected      dividend yield                   |   |   | 0.0    | %      |   |   | 0.0    | %       |   |   | - |   |
| Risk-free      interest rate                   |   |   | 5.0    | %      |   |   | 5.0    | %       |   |   | - |   |
| Weighted      average fair value at grant date |   | $      | 8.68   |   |   | $      | 9.72   |    |   |   | - |   |

|                                          |   | Options |     |   | Weighted      AverageExercise      Price |   | Weighted      AverageRemaining      Contractual Term |   | Aggregate      Intrinsic Value (in      thousands) |   |
|-----------------------------------------------|--------|---------|----------|--------|------------------------------------------|--------|------------------------------------------------------|--------|----------------------------------------------------|--------|
| Options      outstanding at January 1, 2007   |   |    | 925,673  |   |                                     | $      | 5.73                                                 |   |                                               |   |   |   |
| Granted                                       |   |    | 59,875   |   |                                     |   | 11.48                                                |   |                                               |   |   |   |
| Exercised                                     |   |    | (239,112 | )      |                                     |   | 5.15                                                 |   |                                               |   |   |   |
| Forfeited                                     |   |    | (89,255  | )      |                                     |   | 7.24                                                 |   |                                               |   | $ | 1.966 |   |
| Expired                                       |   |    | -        |   |                                     |   | -                                                    |   |                                               |   |   |   |   |
|                                          |   |    |     |   |                                     |   |                                                 |   |                                               |   |   |   |   |
| Options      outstanding at December 31, 2007 |   |    | 657,181  |   |                                     | $      | 6.26                                                 |   | 5.0 yrs.                                           |   | $ | 7,727 |   |
|                                          |   |    |     |   |                                     |   |                                                 |   |                                               |   |   |   |   |
| Exercisable      at December 31, 2007         |   |    | 506,981  |   |                                     | $      | 5.08                                                 |   | 4.0 yrs.                                           |   | $ | 6,563 |   |

|                         |                |   | Outstanding |    |    | Exercisable                          |   |
|------------------------------|---------------------|--------|-------------|---------|---------|--------------------------------------|--------|
| Range      of Exercise Price |                |   | Options     |    |    | Weighted      Average Exercise Price |   |   | Weighted      Average Remaining Contractual Life (years) |   |   | Options |   |   | Weighted      Average Exercise Price |   |
| $                            | 3.40      to $ 3.50 |   |        |    | 58,814  |                                 |   | $ | 3.40 |   |   |   | 3.8 |   |   |   | 58,814 |   |   | $ | 3.40 |   |
| $                            | 3.51      to $ 5.00 |   |        |    | 245,559 |                                 |   | $ | 3.75 |   |   |   | 3.8 |   |   |   | 244,359 |   |   | $ | 3.75 |   |
| $                            | 5.01      to $ 6.00 |   |        |    | 111,808 |                                 |   | $ | 5.06 |   |   |   | 5.8 |   |   |   | 87,808 |   |   | $ | 5.07 |   |
| $                            | 6.01      to $17.00 |   |        |    | 241,000 |                                 |   | $ | 10.08 |   |   |   | 6.1 |   |   |   | 116,000 |   |   | $ | 8.73 |   |
| Total                        |                |   |        | 657,181 |    |                                 |   |   |   |   |   |   |   |   |   | 506,981 |   |   |   |   |   |

|                                                                                                           |   | Year      ended December 31 |   |
|----------------------------------------------------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                                                                           |   | 2005                        |   |
| Net      (loss) income as reported                                                                             |   | $                           | (1,344 | ) |
| Employee      stock-based compensation expense determined under fair value      based methods, net of tax |   |                        | 213    |   |
| Pro      forma net (loss) earnings                                                                             |   | $                           | (1,557 | ) |
|                                                                                                           |   |                        |   |   |
| Basic      loss per share:                                                                                     |   |                        |   |   |
| As      reported                                                                                               |   | $                           | (0.17  | ) |
| Pro      forma                                                                                                 |   | $                           | (0.19  | ) |
| Diluted      loss per share:                                                                                   |   |                        |   |   |
| As      reported                                                                                               |   | $                           | (0.17  | ) |
| Pro      forma                                                                                                 |   | $                           | (0.19  | ) |

|                                                                   |   | December      31 |   |
|------------------------------------------------------------------------|--------|------------------|--------|
|                                                                   |   | 2007             |   |   | 2006 |   |
| Accumulated      benefit obligation                                    |   | $                | 28,134 |   |   | $ | 29,899 |   |
|                                                                   |   |             |   |   |   |   |   |   |
| Change      in benefit obligation:                                     |   |             |   |   |   |   |   |   |
| Benefit      obligation at beginning of year                           |   | $                | 30,091 |   |   | $ | 33,163 |   |
| Service      cost                                                      |   |             | 186    |   |   |   | 731 |   |
| Interest      cost                                                     |   |             | 1,703  |   |   |   | 1,751 |   |
| Actuarial      (gains) losses                                          |   |             | (2,057 | ) |   |   | (2,441 | ) |
| Foreign      currency exchange rate impact (1)                         |   |             | 184    |   |   |   | 30 |   |
| Benefits      paid                                                     |   |             | (1,702 | ) |   |   | (2,182 | ) |
| Plan      amendments                                                   |   |             | -      |   |   |   | (961 | ) |
| Benefit      obligation at end of year                                 |   | $                | 28,405 |   |   | $ | 30,091 |   |
|                                                                   |   |             |   |   |   |   |   |   |
| Change      in plan assets:                                            |   |             |   |   |   |   |   |   |
| Fair      value of plan assets at beginning of year                    |   | $                | 25,364 |   |   | $ | 22,828 |   |
| Actual      return on plan assets                                      |   |             | 2,494  |   |   |   | 2,602 |   |
| Foreign      currency exchange rate impact (1)                         |   |             | 165    |   |   |   | 19 |   |
| Company      contributions                                             |   |             | 1,602  |   |   |   | 2,097 |   |
| Benefits      paid                                                     |   |             | (1,702 | ) |   |   | (2,182 | ) |
| Fair      value of plan assets at end of year                          |   | $                | 27,923 |   |   | $ | 25,364 |   |
|                                                                   |   |             |   |   |   |   |   |   |
| Funded      status of the plans                                        |   | $                | (482   | ) |   | $ | (4,727 | ) |
|                                                                   |   |             |   |   |   |   |   |   |
| Amounts      recognized in the balance sheet consist of the following: |   |             |   |   |   |   |   |   |
| Prepaid      benefit liability - non current                           |   | $                | 197    |   |   | $ | - |   |
| Accrued      benefit liability - non current                           |   | $                | (679   | ) |   | $ | (4,727 | ) |

|                                                   |   | December      31 |   |
|--------------------------------------------------------|--------|------------------|--------|
|                                                   |   | 2007             |   |   | 2006 |   |
| Projected      benefit obligation                      |   | $                | 9,949  |   |   | $ | 30,091 |   |
| Accumulated      benefit obligation                    |   | $                | 9,678  |   |   | $ | 29,899 |   |
| Fair      value of plan assets                         |   | $                | 9,270  |   |   | $ | 25,364 |   |
| Amounts      recognized as accrued benefit liabilities |   | $                | 679    |   |   | $ | 4,727 |   |
| Amounts      recognized as prepaid benefit liabilities |   | $                | 197    |   |   | $ | - |   |

|                                                    |   | Year      Ended December 31 |   |
|---------------------------------------------------------|--------|-----------------------------|--------|
| Components      of net periodic pension cost:           |   | 2007                        |   |   | 2006 |   |   | 2005 |   |
| Service      cost                                       |   | $                           | 186    |   |   | $ | 731 |   |   | $ | 1,061 |   |
| Interest      cost                                      |   |                        | 1,703  |   |   |   | 1,751 |   |   |   | 1,516 |   |
| Expected      return on plan assets                     |   |                        | (2,091 | ) |   |   | (1,921 | ) |   |   | (1,813 | ) |
| Amortization      of prior service cost                 |   |                        | 240    |   |   |   | 139 |   |   |   | 9 |   |
| Pension      settlement / curtailment                   |   |                        | -      |   |   |   | 42 |   |   |   | 194 |   |
| Recognized      net actuarial loss                      |   |                        | 400    |   |   |   | 464 |   |   |   | 266 |   |
| Net      periodic pension cost of defined benefit plans |   | $                           | 438    |   |   | $ | 1,206 |   |   | $ | 1,233 |   |

|                               |   | December      31 |   |
|------------------------------------|--------|------------------|--------|
|                               |   | 2007             |   |   | 2006 |   |
| Asset      Category                |   |             |   |   |   |   |
| Equity      securities             |   |             | 66     | % |   |   | 69 | % |
| Debt      securities               |   |             | 25     | % |   |   | 25 | % |
| Hawk      Corporation common stock |   |             | 4      | % |   |   | 3 | % |
| Other                              |   |             | 5      | % |   |   | 3 | % |
| Total                              |   |             | 100    | % |   |   | 100 | % |

|                                                                                                             |   | 2007   |   |   | 2006   |   |   | 2005   |   |
|------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Weighted      average rates used to compute the projected benefit obligation as of      December 31:             |   |
| Discount      rate                                                                                               |   |   | 6.0    | %      |   |   | 5.7    | %      |   |   | 5.5 | % |
| Rate      of compensation increase (1)                                                                           |   |   | 3.5    | %      |   |   | 3.0    | %      |   |   | 3.0 | % |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average rates used to determine the net periodic benefit cost for the      years ended December31: |   |
| Discount      rate                                                                                               |   |   | 5.6    | %      |   |   | 5.5    | %      |   |   | 6.0 | % |
| Rate      of compensation increase (1)                                                                           |   |   | 3.5    | %      |   |   | 3.0    | %      |   |   | 3.0 | % |
| Expected      long-term rate of return on plan assets                                                            |   |   | 8.2    | %      |   |   | 8.2    | %      |   |   | 8.6 | % |

| Year      |   | BenefitPayments |   |
|-----------|--------|-----------------|--------|
| 2008      |   | $               | 1,563  |   |
| 2009      |   | $               | 1,534  |   |
| 2010      |   | $               | 1,554  |   |
| 2011      |   | $               | 1,530  |   |
| 2012      |   | $               | 1,511  |   |
| 2013-2017 |   | $               | 7,402  |   |

|                                |   | December      31 |   |
|-------------------------------------|--------|------------------|--------|
|                                |   | 2007             |   |   | 2006 |   |
| Machinery      and equipment        |   | $                | 714    |   |   | $ | 637 |   |
| Accumulated      amortization       |   |             | 533    |   |   |   | 253 |   |
| Net      assets under capital lease |   | $                | 181    |   |   | $ | 384 |   |

| Balance      at January 1, 2007                                   |   |   |   |   | $      | 1,097  |   |
|-------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| Additions      based on tax positions related to the current year |   | $      | 133    |   |   |   |   |   |
| Additions      for tax positions of prior years                   |   |   | 581    |   |   |   |   |   |
| Reduction      for tax positions of prior years                   |   |   | (118   | )      |   |   |   |   |
| Settlement                                                        |   |   | (536   | )      |   |   |   |   |
| Lapses      in applicable statutes                                |   |   | (44    | )      |   |   |   |   |
|                                                              |   |   |   |   |   |   | 16     |   |
| Balance      at December 31, 2007                                 |   |   |   |   |   | $      | 1,113  |   |

|                            |   | Year      ended December 31 |   |
|---------------------------------|--------|-----------------------------|--------|
|                            |   | 2007                        |   |   | 2006 |   |   | 2005 |   |
| Current:                        |   |                        |   |   |   |   |   |   |   |
| Federal                         |   | $                           | 8      |   |   | $ | - |   |   | $ | - |   |
| State      and local            |   |                        | (97    | ) |   |   | 486 |   |   |   | 56 |   |
| Foreign                         |   |                        | 3,919  |   |   |   | 3,876 |   |   |   | 2,929 |   |
|                            |   |                        | 3,830  |   |   |   | 4,362 |   |   |   | 2,985 |   |
| Deferred:                       |   |                        |   |   |   |   |   |   |   |   |   |   |
| Federal                         |   |                        | 998    |   |   |   | (3,317 | ) |   |   | (5,443 | ) |
| State      and local            |   |                        | 38     |   |   |   | (157 | ) |   |   | (575 | ) |
| Foreign                         |   |                        | 643    |   |   |   | 9 |   |   |   | 642 |   |
|                            |   |                        | 1,679  |   |   |   | (3,465 | ) |   |   | (5,376 | ) |
| Total      income tax provision |   | $                           | 5,509  |   |   | $ | 897 |   |   | $ | (2,391 | ) |

|                                |   | 2007   |   |   | 2006   |   |
|-------------------------------------|--------|--------|--------|--------|--------|--------|
| Deferred      tax assets:           |   |   |   |   |   |   |
| NOL      and AMT carryforward       |   | $      | 2,011  |   |   | $      | 10,672 |   |
| Accrued      vacation               |   |   | 491    |   |   |   | 664 |   |
| Employee      benefits              |   |   | 744    |   |   |   | 3,205 |   |
| Other      accruals                 |   |   | 1,994  |   |   |   | 1,821 |   |
| Book      over tax amortization     |   |   | 525    |   |   |   | - |   |
| Inventory                           |   |   | 1,295  |   |   |   | 1,949 |   |
| Subtotal      deferred tax assets   |   |   | 7,060  |   |   |   | 18,311 |   |
| Valuation      allowances           |   |   | (324   | )      |   |   | - |   |
| Total      deferred tax assets      |   |   | 6,736  |   |   |   | 18,311 |   |
|                                |   |   |   |   |   |   |   |   |
| Deferred      tax liabilities:      |   |   |   |   |   |   |   |   |
| Tax      over book depreciation     |   |   | 5,258  |   |   |   | 9,908 |   |
| Tax      over book amortization     |   |   | -      |   |   |   | 2,930 |   |
| Foreign      leased property        |   |   | 384    |   |   |   | 319 |   |
| Other                               |   |   | 3      |   |   |   | 350 |   |
| Total      deferred tax liabilities |   |   | 5,645  |   |   |   | 13,507 |   |
| Net      deferred tax assets        |   | $      | 1,091  |   |   | $      | 4,804 |   |

|                                                                             |   | December      31 |   |
|----------------------------------------------------------------------------------|--------|------------------|--------|
|                                                                             |   | 2007             |   |   | 2006 |   |   | 2005 |   |
| Income      tax (benefit) expense at federal statutory rate                      |   | $                | 4,444  |   |   | $ | (377 | ) |   | $ | (2,793 | ) |
| State      and local tax, net of federal tax benefit                             |   |             | (38    | ) |   |   | 213 |   |   |   | (335 | ) |
| Nondeductible      intangible amortization                                       |   |             | 38     |   |   |   | 38 |   |   |   | 38 |   |
| Taxes      on foreign income which differ from United States statutory      rate |   |             | 668    |   |   |   | 759 |   |   |   | 595 |   |
| Foreign      tax withholding                                                     |   |             | 232    |   |   |   | 201 |   |   |   | 183 |   |
| Adjustment      to worldwide tax accrual and other                               |   |             | 165    |   |   |   | 63 |   |   |   | (79 | ) |
| Provision      for (benefit from) income taxes                                   |   | $                | 5,509  |   |   | $ | 897 |   |   | $ | (2,391 | ) |

|                                                               |   | Year      ended December 31 |   |
|--------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                               |   | 2007                        |   |   | 2006 |   |   | 2005 |   |
| Income      (loss) from continuing operations before income taxes: |   |                        |   |   |   |   |   |
| Domestic                                                           |   | $                           | 1,990  |   |   | $ | (9,432 | ) |   | $ | (15,988 | ) |
| Foreign                                                            |   |                        | 10,709 |   |   |   | 8,355 |   |   |   | 8,013 |   |
| As      reported                                                   |   | $                           | 12,699 |   |   | $ | (1,077 | ) |   | $ | (7,975 | ) |

|                                                                                                         |   | Year      Ended December 31 |   |
|--------------------------------------------------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                                                                         |   | 2007                        |   |   | 2006 |   |   | 2005 |   |
| Income      (loss) from continuing operations, after income taxes                                            |   | $                           | 7,190  |   |   | $ | (1,974 | ) |   | $ | (5,584 | ) |
| Less:      Preferred stock dividends                                                                         |   |                        | 150    |   |   |   | 150 |   |   |   | 148 |   |
| Income      (loss) from continuing operations, after income taxes available      to common shareholders |   | $                           | 7,040  |   |   | $ | (2,124 | ) |   | $ | (5,732 | ) |
|                                                                                                         |   |                        |   |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                                                                                       |   | $                           | 17,087 |   |   | $ | 2,969 |   |   | $ | (1,344 | ) |
| Less:      Preferred stock dividends                                                                         |   |                        | 150    |   |   |   | 150 |   |   |   | 148 |   |
| Net      income (loss) available to common shareholders                                                      |   | $                           | 16,937 |   |   | $ | 2,819 |   |   | $ | (1,492 | ) |
|                                                                                                         |   |                        |   |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding (in      thousands):                                                |   |                        |   |   |   |   |   |   |   |
| Basic      weighted average shares outstanding                                                               |   |                        | 8,967  |   |   |   | 8,993 |   |   |   | 8,869 |   |
| Diluted:                                                                                                     |   |                        |   |   |   |   |   |   |   |   |   |   |
| Basic      weighted average shares outstanding                                                               |   |                        | 8,967  |   |   |   | 8,993 |   |   |   | 8,869 |   |
| Dilutive      effect of stock option (1)                                                                     |   |                        | 393    |   |   |   | 521 |   |   |   | - |   |
| Diluted      weighted average shares outstanding                                                             |   |                        | 9,360  |   |   |   | 9,514 |   |   |   | 8,869 |   |
|                                                                                                         |   |                        |   |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) per share:                                                                              |   |                        |   |   |   |   |   |   |   |   |   |   |
| Basic      earnings (loss) from continuing operations, after income      taxes                          |   | $                           | 0.79   |   |   | $ | (0.24 | ) |   | $ | (0.65 | ) |
| Discontinued      operations                                                                                 |   |                        | 1.12   |   |   |   | 0.55 |   |   |   | 0.48 |   |
| Net      earnings (loss) per basic share                                                                     |   | $                           | 1.91   |   |   | $ | 0.31 |   |   | $ | (0.17 | ) |
|                                                                                                         |   |                        |   |   |   |   |   |   |   |   |   |   |
| Diluted      earnings (loss) from continuing operations, after income      taxes                        |   | $                           | 0.75   |   |   | $ | (0.22 | ) |   | $ | (0.65 | ) |
| Discontinued      operations                                                                                 |   |                        | 1.08   |   |   |   | 0.52 |   |   |   | 0.48 |   |
| Net      earning (loss) per diluted share                                                                    |   | $                           | 1.83   |   |   | $ | 0.30 |   |   | $ | (0.17 | ) |

|                                                   |   | Year      Ended December 31 |    |
|--------------------------------------------------------|--------|-----------------------------|---------|
|                                                   |   | 2007                        |    |   | 2006 |   |   | 2005 |   |
| Net      sales to external customers:                  |   |                        |    |   |   |   |   |   |   |
| Friction      products                                 |   | $                           | 215,879 |   |   | $ | 199,915 |   |   | $ | 167,059 |   |
| Performance      racing                                |   |                        | 12,816  |   |   |   | 12,135 |   |   |   | 14,799 |   |
| Consolidated                                           |   | $                           | 228,695 |   |   | $ | 212,050 |   |   | $ | 181,858 |   |
|                                                   |   |                        |    |   |   |   |   |   |   |   |   |   |
| Depreciation      and amortization: (1)                |   |                        |    |   |   |   |   |   |   |   |   |   |
| Friction      products                                 |   | $                           | 7,277   |   |   | $ | 7,055 |   |   | $ | 6,955 |   |
| Performance      racing                                |   |                        | 277     |   |   |   | 241 |   |   |   | 229 |   |
| Consolidated                                           |   | $                           | 7,554   |   |   | $ | 7,296 |   |   | $ | 7,184 |   |
|                                                   |   |                        |    |   |   |   |   |   |   |   |   |   |
| Gross      profit:                                     |   |                        |    |   |   |   |   |   |   |   |   |   |
| Friction      products                                 |   | $                           | 51,372  |   |   | $ | 44,867 |   |   | $ | 33,159 |   |
| Performance      racing                                |   |                        | 1,618   |   |   |   | 1,816 |   |   |   | 3,000 |   |
| Consolidated                                           |   | $                           | 52,990  |   |   | $ | 46,683 |   |   | $ | 36,159 |   |
|                                                   |   |                        |    |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations:         |   |                        |    |   |   |   |   |   |   |   |   |   |
| Friction      products                                 |   | $                           | 19,993  |   |   | $ | 16,290 |   |   | $ | 3,203 |   |
| Performance      racing                                |   |                        | (1,440  | ) |   |   | (6,389 | ) |   |   | (756 | ) |
| Consolidated                                           |   | $                           | 18,553  |   |   | $ | 9,901 |   |   | $ | 2,447 |   |
|                                                   |   |                        |    |   |   |   |   |   |   |   |   |   |
| Capital      Expenditures: (including capital leases): |   |                        |    |   |   |   |   |   |   |   |   |   |
| Friction      products                                 |   | $                           | 7,648   |   |   | $ | 7,894 |   |   | $ | 7,482 |   |
| Performance      racing                                |   |                        | 283     |   |   |   | 176 |   |   |   | 285 |   |
| Consolidated                                           |   | $                           | 7,931   |   |   | $ | 8,070 |   |   | $ | 7,767 |   |

|                         |   | December      31 |    |
|------------------------------|--------|------------------|---------|
|                         |   | 2007             |    |   | 2006 |   |
| Total      assets:           |   |             |    |   |   |   |
| Friction      products       |   | $                | 209,350 |   |   | $ | 134,378 |   |
| Performance      racing      |   |             | 10,554  |   |   |   | 7,563 |   |
| Continuing      operations   |   |             | 219,904 |   |   |   | 141,941 |   |
| Discontinued      operations |   |             | -       |   |   |   | 87,313 |   |
| Consolidated                 |   | $                | 219,904 |   |   | $ | 229,254 |   |

| (1)   | Depreciation      and amortization outlined in this table does not include deferred      financing amortization of $405 in 2007, and $437 in 2006, and $435 in 2005      which is included in Interest expense in the Consolidated Statements of      Income. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                |   |  Year      Ended December 31 |    |
|-------------------------------------|--------|-----------------------------------|---------|
|                                |   | 2007                              |    |   | 2006 |   |   | 2005 |   |
|                                |   | (dollars      in thousands)       |    |
| Net      Sales:                     |   |                              |    |   |   |   |   |   |   |
| United      States                  |   | $                                 | 144,467 |   |   | $ | 147,525 |   |   | $ | 126,863 |   |
| Italy                               |   |                              | 73,457  |   |   |   | 56,221 |   |   |   | 47,455 |   |
| All      Other Foreign              |   |                              | 10,771  |   |   |   | 8,304 |   |   |   | 7,540 |   |
| Total                               |   | $                                 | 228,695 |   |   | $ | 212,050 |   |   | $ | 181,858 |   |
|                                |   |                              |    |   |   |   |   |   |   |   |   |   |
| Property,      Plant and Equipment: |   |                              |    |   |   |   |   |   |   |   |   |   |
| United      States                  |   | $                                 | 28,442  |   |   | $ | 29,355 |   |   | $ | 29,335 |   |
| Italy                               |   |                              | 9,729   |   |   |   | 7,475 |   |   |   | 5,208 |   |
| All      Other Foreign              |   |                              | 2,574   |   |   |   | 2,579 |   |   |   | 2,931 |   |
| Total                               |   | $                                 | 40,745  |   |   | $ | 39,409 |   |   | $ | 37,474 |   |

|                                                           |   | Year      ended December 31 |   |
|----------------------------------------------------------------|--------|-----------------------------|--------|
|                                                           |   | 2007                        |   |   | 2006 |   |   | 2005 |   |
| Income      from operations - Friction products:               |   | $                           | 19,993 |   |   | $ | 16,290 |   |   | $ | 3,203 |   |
| Restructuring      costs                                       |   |                        | -      |   |   |   | - |   |   |   | 5,464 |   |
| Employee      benefit curtailment (income) expense             |   |                        | -      |   |   |   | - |   |   |   | (424 | ) |
| Loan      forgiveness costs                                    |   |                        | -      |   |   |   | - |   |   |   | 996 |   |
| Adjusted      income from operations – Friction products |   | $                           | 19,993 |   |   | $ | 16,290 |   |   | $ | 9,239 |   |
|                                                           |   |                        |   |   |   |   |   |   |   |   |   |   |
| Loss      from operations - Performance racing:                |   | $                           | (1,440 | ) |   | $ | (6,389 | ) |   | $ | (756 | ) |
| Goodwill      Impairment                                       |   |                        | -      |   |   |   | 4,465 |   |   |   | - |   |
| Loan      forgiveness costs                                    |   |                        | -      |   |   |   | - |   |   |   | 104 |   |
| Adjusted      loss from operations – Performance racing  |   | $                           | (1,440 | ) |   | $ | (1,924 | ) |   | $ | (652 | ) |

|  | ·   | Consolidating      condensed balance sheets as of December 31, 2007 and December 31, 2006,      consolidating condensed statements of income for the years ended December      31, 2007, 2006, and 2005 and consolidating condensed statements of cash      flows for the years ended December 31, 2007, 2006, and    2005. |
|--|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·   | Hawk      Corporation (Parent), combined Guarantor Subsidiaries and combined      Non-Guarantor Subsidiaries consisting of the Company's subsidiaries in      Italy, Canada and China with their investments in subsidiaries accounted      for using the equity method. |
|--|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ·   | Elimination      entries necessary to consolidate the financial statements of the Parent      and all of its subsidiaries. |
|--|--------------------|----------------------------------------------------------------------------------------------------------------------------|

|                                                  |   | December      31, 2007 |    |
|-------------------------------------------------------|--------|------------------------|---------|
|                                                  |   | Parent                 |    |   | Combined      Guarantor Subsidiaries |   |   | CombinedNon-Guarantor      Subsidiaries |   |   | Eliminations |   |   | Consolidated |   |
| Assets                                                |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Current      assets:                                  |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents                        |   | $                      | 69,944  |   |   | $ | 65 |   |   | $ | 9,986 |   |   | $ | - |   |   | $ | 79,995 |   |
| Marketable      securities                            |   |                   | -       |   |   |   | - |   |   |   | 1,019 |   |   |   | - |   |   |   | 1,019 |   |
| Accounts      receivable, net                         |   |                   | -       |   |   |   | 12,972 |   |   |   | 25,619 |   |   |   | - |   |   |   | 38,591 |   |
| Inventories,      net                                 |   |                   | (402    | ) |   |   | 25,115 |   |   |   | 16,744 |   |   |   | (407 | ) |   |   | 41,050 |   |
| Deferred      income taxes                            |   |                   | 983     |   |   |   | 372 |   |   |   | - |   |   |   | - |   |   |   | 1,355 |   |
| Other      current assets                             |   |                   | 1,828   |   |   |   | 1,230 |   |   |   | 1,758 |   |   |   | - |   |   |   | 4,816 |   |
| Total      current assets                             |   |                   | 72,353  |   |   |   | 39,754 |   |   |   | 55,126 |   |   |   | (407 | ) |   |   | 166,826 |   |
| Investment      in subsidiaries                       |   |                   | 27,267  |   |   |   | - |   |   |   | - |   |   |   | (27,267 | ) |   |   | - |   |
| Inter-company      advances, net                      |   |                   | -       |   |   |   | 16,007 |   |   |   | (16,007 | ) |   |   | - |   |   |   | - |   |
| Property,      plant and equipment, net               |   |                   | -       |   |   |   | 28,442 |   |   |   | 12,303 |   |   |   | - |   |   |   | 40,745 |   |
| Other      assets:                                    |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Finite-lived      intangible assets                   |   |                   | -       |   |   |   | 7,157 |   |   |   | - |   |   |   | - |   |   |   | 7,157 |   |
| Other                                                 |   |                   | 4,184   |   |   |   | 992 |   |   |   | - |   |   |   | - |   |   |   | 5,176 |   |
| Total      other assets                               |   |                   | 4,184   |   |   |   | 8,149 |   |   |   | - |   |   |   | - |   |   |   | 12,333 |   |
| Total      assets                                     |   | $                      | 103,804 |   |   | $ | 92,352 |   |   | $ | 51,422 |   |   | $ | (27,674 | ) |   | $ | 219,904 |   |
| Liabilities      and shareholders’ equity       |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current      liabilities:                             |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts      payable                                 |   | $                      | (141    | ) |   | $ | 14,549 |   |   | $ | 17,041 |   |   | $ | - |   |   | $ | 31,449 |   |
| Accrued      compensation                             |   |                   | 2,532   |   |   |   | 3,823 |   |   |   | 2,713 |   |   |   | - |   |   |   | 9,068 |   |
| Accrued      interest                                 |   |                   | 3,816   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,816 |   |
| Accrued      taxes                                    |   |                   | 948     |   |   |   | 93 |   |   |   | 794 |   |   |   | (73 | ) |   |   | 1,762 |   |
| Other      accrued expenses                           |   |                   | 1,997   |   |   |   | 3,330 |   |   |   | 2,065 |   |   |   | 12 |   |   |   | 7,404 |   |
| Current      portion of long-term debt                |   |                   | -       |   |   |   | - |   |   |   | 59 |   |   |   | - |   |   |   | 59 |   |
| Total      current liabilities                        |   |                   | 9,152   |   |   |   | 21,795 |   |   |   | 22,672 |   |   |   | (61 | ) |   |   | 53,558 |   |
| Long-term      liabilities:                           |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term      debt                                   |   |                   | 87,090  |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 87,090 |   |
| Deferred      income taxes                            |   |                   | -       |   |   |   | - |   |   |   | 922 |   |   |   | - |   |   |   | 922 |   |
| Other                                                 |   |                   | 1,080   |   |   |   | 5,948 |   |   |   | 3,982 |   |   |   | - |   |   |   | 11,010 |   |
| Inter-company      advances, net                      |   |                   | (76,503 | ) |   |   | 70,353 |   |   |   | 6,496 |   |   |   | (346 | ) |   |   | - |   |
| Total      long-term liabilities                      |   |                   | 11,667  |   |   |   | 76,301 |   |   |   | 11,400 |   |   |   | (346 | ) |   |   | 99,022 |   |
| Shareholders’      equity                       |   |                   | 82,985  |   |   |   | (5,744 | ) |   |   | 17,350 |   |   |   | (27,267 | ) |   |   | 67,324 |   |
| Total      liabilities and shareholders’ equity |   | $                      | 103,804 |   |   | $ | 92,352 |   |   | $ | 51,422 |   |   | $ | (27,674 | ) |   | $ | 219,904 |   |

|                                                  |   | December      31, 2006 |     |
|-------------------------------------------------------|--------|------------------------|----------|
|                                                  |   | Parent                 |     |   | Combined      Guarantor Subsidiaries |   |   | CombinedNon-Guarantor      Subsidiaries |   |   | Eliminations |   |   | Consolidated |   |
| Assets                                                |   |                   |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Current      assets:                                  |   |                   |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents                        |   | $                      | 500      |   |   | $ | 55 |   |   | $ | 5,622 |   |   | $ | - |   |   | $ | 6,177 |   |
| Accounts      receivable, net                         |   |                   | -        |   |   |   | 14,500 |   |   |   | 20,002 |   |   |   | - |   |   |   | 34,502 |   |
| Inventories,      net                                 |   |                   | (762     | ) |   |   | 27,431 |   |   |   | 12,862 |   |   |   | (641 | ) |   |   | 38,890 |   |
| Deferred      income taxes                            |   |                   | 2,202    |   |   |   | 1 |   |   |   | 269 |   |   |   | - |   |   |   | 2,472 |   |
| Other      current assets                             |   |                   | 1,678    |   |   |   | 680 |   |   |   | 2,250 |   |   |   | (1 | ) |   |   | 4,607 |   |
| Assets      of discontinued operations                |   |                   | -        |   |   |   | 84,221 |   |   |   | 3,147 |   |   |   | (55 | ) |   |   | 87,313 |   |
| Total      current assets                             |   |                   | 3,618    |   |   |   | 126,888 |   |   |   | 44,152 |   |   |   | (697 | ) |   |   | 173,961 |   |
| Investment      in subsidiaries                       |   |                   | 793      |   |   |   | - |   |   |   | - |   |   |   | (793 | ) |   |   | - |   |
| Inter-company      advances, net                      |   |                   | -        |   |   |   | 12,250 |   |   |   | (12,258 | ) |   |   | 8 |   |   |   | - |   |
| Property,      plant and equipment, net               |   |                   | -        |   |   |   | 29,355 |   |   |   | 10,054 |   |   |   | - |   |   |   | 39,409 |   |
| Other      assets:                                    |   |                   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Finite-lived      intangible assets                   |   |                   | -        |   |   |   | 7,884 |   |   |   | - |   |   |   | - |   |   |   | 7,884 |   |
| Other                                                 |   |                   | 4,713    |   |   |   | 3,017 |   |   |   | 270 |   |   |   | - |   |   |   | 8,000 |   |
| Total      other assets                               |   |                   | 4,713    |   |   |   | 10,901 |   |   |   | 270 |   |   |   | - |   |   |   | 15,884 |   |
| Total      assets                                     |   | $                      | 9,124    |   |   | $ | 179,394 |   |   | $ | 42,218 |   |   | $ | (1,482 | ) |   | $ | 229,254 |   |
| Liabilities      and shareholders’ equity       |   |                   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current      liabilities:                             |   |                   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts      payable                                 |   | $                      | (584     | ) |   | $ | 10,653 |   |   | $ | 12,954 |   |   | $ | - |   |   | $ | 23,023 |   |
| Accrued      compensation                             |   |                   | 1,463    |   |   |   | 3,352 |   |   |   | 1,863 |   |   |   | - |   |   |   | 6,678 |   |
| Accrued      interest                                 |   |                   | 4,858    |   |   |   | (1 | ) |   |   | - |   |   |   | - |   |   |   | 4,857 |   |
| Accrued      taxes                                    |   |                   | 1,671    |   |   |   | 205 |   |   |   | 876 |   |   |   | (194 | ) |   |   | 2,558 |   |
| Other      accrued expenses                           |   |                   | 946      |   |   |   | 4,112 |   |   |   | 1,118 |   |   |   | - |   |   |   | 6,176 |   |
| Short-term      debt                                  |   |                   | -        |   |   |   | - |   |   |   | 980 |   |   |   | - |   |   |   | 980 |   |
| Current      portion of long-term debt                |   |                   | -        |   |   |   | - |   |   |   | 127 |   |   |   | - |   |   |   | 127 |   |
| Liabilities      of discontinued operations           |   |                   | -        |   |   |   | 12,335 |   |   |   | 477 |   |   |   | (17 | ) |   |   | 12,795 |   |
| Total      current liabilities                        |   |                   | 8,354    |   |   |   | 30,656 |   |   |   | 18,395 |   |   |   | (211 | ) |   |   | 57,194 |   |
| Long-term      liabilities:                           |   |                   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term      debt                                   |   |                   | 110,000  |   |   |   | - |   |   |   | 53 |   |   |   | - |   |   |   | 110,053 |   |
| Deferred      income taxes                            |   |                   | -        |   |   |   | - |   |   |   | 1,025 |   |   |   | - |   |   |   | 1,025 |   |
| Other                                                 |   |                   | 305      |   |   |   | 10,427 |   |   |   | 3,521 |   |   |   | - |   |   |   | 14,253 |   |
| Inter-company      advances, net                      |   |                   | (177,580 | ) |   |   | 167,421 |   |   |   | 10,637 |   |   |   | (478 | ) |   |   | - |   |
| Total      long-term liabilities                      |   |                   | (67,275  | ) |   |   | 177,848 |   |   |   | 15,236 |   |   |   | (478 | ) |   |   | 125,331 |   |
| Shareholders’      equity                       |   |                   | 68,045   |   |   |   | (29,110 | ) |   |   | 8,587 |   |   |   | (793 | ) |   |   | 46,729 |   |
| Total      liabilities and shareholders’ equity |   | $                      | 9,124    |   |   | $ | 179,394 |   |   | $ | 42,218 |   |   | $ | (1,482 | ) |   | $ | 229,254 |   |

|                                                                  |   | Year      Ended December 31, 2007 |   |
|-----------------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                                  |   | Parent                            |   |   | Combined      Guarantor Subsidiaries |   |   | CombinedNon-Guarantor      Subsidiaries |   |   | Eliminations |   |   | Consolidated |   |
| Net      sales                                                        |   | $                                 | -      |   |   | $ | 146,351 |   |   | $ | 93,013 |   |   | $ | (10,669 | ) |   | $ | 228,695 |   |
| Cost      of sales                                                    |   |                              | -      |   |   |   | 111,066 |   |   |   | 75,308 |   |   |   | (10,669 | ) |   |   | 175,705 |   |
| Gross      profit                                                     |   |                              | -      |   |   |   | 35,285 |   |   |   | 17,705 |   |   |   | - |   |   |   | 52,990 |   |
| Operating      expenses:                                              |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling,      technical and administrative expenses                   |   |                              | 327    |   |   |   | 26,621 |   |   |   | 6,762 |   |   |   | - |   |   |   | 33,710 |   |
| Amortization      of intangibles                                      |   |                              | -      |   |   |   | 727 |   |   |   | - |   |   |   | - |   |   |   | 727 |   |
| Total      operating expenses                                         |   |                              | 327    |   |   |   | 27,348 |   |   |   | 6,762 |   |   |   | - |   |   |   | 34,437 |   |
| (Loss)      income from operations                                    |   |                              | (327   | ) |   |   | 7,937 |   |   |   | 10,943 |   |   |   | - |   |   |   | 18,553 |   |
| Interest      (expense) income, net                                   |   |                              | (234   | ) |   |   | (5,646 | ) |   |   | 321 |   |   |   | - |   |   |   | (5,559 | ) |
| Income      from equity investee                                      |   |                              | 7,538  |   |   |   | 5,153 |   |   |   | - |   |   |   | (12,691 | ) |   |   | - |   |
| Other      (expense) income, net                                      |   |                              | (530   | ) |   |   | 696 |   |   |   | (461 | ) |   |   | - |   |   |   | (295 | ) |
| Income      from continuing operations, before income      taxes |   |                              | 6,447  |   |   |   | 8,140 |   |   |   | 10,803 |   |   |   | (12,691 | ) |   |   | 12,699 |   |
| Income      tax provision                                             |   |                              | 16     |   |   |   | 1,162 |   |   |   | 4,331 |   |   |   | - |   |   |   | 5,509 |   |
| Income      from continuing operations, after income taxes            |   |                              | 6,431  |   |   |   | 6,978 |   |   |   | 6,472 |   |   |   | (12,691 | ) |   |   | 7,190 |   |
| Discontinued      operations, net of tax                              |   |                              | 10,837 |   |   |   | 560 |   |   |   | (1,319 | ) |   |   | - |   |   |   | 10,078 |   |
| Net      income                                                       |   | $                                 | 17,268 |   |   | $ | 7,538 |   |   | $ | 5,153 |   |   | $ | (12,691 | ) |   | $ | 17,268 |   |

|                                                                         |   | Year      Ended December 31, 2006 |   |
|------------------------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                                         |   | Parent                            |   |   | Combined      Guarantor Subsidiaries |   |   | CombinedNon-Guarantor      Subsidiaries |   |   | Eliminations |   |   | Consolidated |   |
| Net      sales                                                               |   | $                                 | -      |   |   | $ | 150,577 |   |   | $ | 73,419 |   |   | $ | (11,946 | ) |   | $ | 212,050 |   |
| Cost      of sales                                                           |   |                              | 26     |   |   |   | 118,000 |   |   |   | 59,287 |   |   |   | (11,946 | ) |   |   | 165,367 |   |
| Gross      profit                                                            |   |                              | (26    | ) |   |   | 32,577 |   |   |   | 14,132 |   |   |   | - |   |   |   | 46,683 |   |
| Operating      Expenses:                                                     |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling,      technical and administrative expenses                          |   |                              | 713    |   |   |   | 25,407 |   |   |   | 5,702 |   |   |   | - |   |   |   | 31,822 |   |
| Goodwill      Impairment                                                     |   |                              | -      |   |   |   | 4,465 |   |   |   | - |   |   |   | - |   |   |   | 4,465 |   |
| Amortization      of intangibles                                             |   |                              | -      |   |   |   | 495 |   |   |   | - |   |   |   | - |   |   |   | 495 |   |
| Total      operating expenses                                                |   |                              | 713    |   |   |   | 30,367 |   |   |   | 5,702 |   |   |   | - |   |   |   | 36,782 |   |
| (Loss)      income from operations                                           |   |                              | (739   | ) |   |   | 2,210 |   |   |   | 8,430 |   |   |   | - |   |   |   | 9,901 |   |
| Interest      income (expense), net                                          |   |                              | 3,566  |   |   |   | (14,693 | ) |   |   | 43 |   |   |   | - |   |   |   | (11,084 | ) |
| Income      from equity investee                                             |   |                              | 2,622  |   |   |   | 4,675 |   |   |   | - |   |   |   | (7,297 | ) |   |   | - |   |
| Other      (expense) income, net                                             |   |                              | (26    | ) |   |   | 446 |   |   |   | (314 | ) |   |   | - |   |   |   | 106 |   |
| Income      (loss) from continuing operations, before income      taxes |   |                              | 5,423  |   |   |   | (7,362 | ) |   |   | 8,159 |   |   |   | (7,297 | ) |   |   | (1,077 | ) |
| Income      tax provision (benefit)                                          |   |                              | 2,454  |   |   |   | (5,240 | ) |   |   | 3,683 |   |   |   | - |   |   |   | 897 |   |
| Income      (loss) from continuing operations, after income      taxes  |   |                              | 2,969  |   |   |   | (2,122 | ) |   |   | 4,476 |   |   |   | (7,297 | ) |   |   | (1,974 | ) |
| Discontinued      operations, net of tax                                     |   |                              | -      |   |   |   | 4,744 |   |   |   | 199 |   |   |   | - |   |   |   | 4,943 |   |
| Net      income                                                              |   | $                                 | 2,969  |   |   | $ | 2,622 |   |   | $ | 4,675 |   |   | $ | (7,297 | ) |   | $ | 2,969 |   |

|                                                                         |   | Year      Ended December 31, 2005 |   |
|------------------------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                                         |   |   Parent                |   |   | Combined      Guarantor Subsidiaries |   |   | CombinedNon-Guarantor      Subsidiaries |   |   |  Eliminations |   |   |  Consolidated |   |
| Net      sales                                                               |   | $                                 | -      |   |   | $ | 128,764 |   |   | $ | 63,765 |   |   | $ | (10,671 | ) |   | $ | 181,858 |   |
| Cost      of sales                                                           |   |                              | -      |   |   |   | 106,659 |   |   |   | 49,711 |   |   |   | (10,671 | ) |   |   | 145,699 |   |
| Gross      profit                                                            |   |                              | -      |   |   |   | 22,105 |   |   |   | 14,054 |   |   |   | - |   |   |   | 36,159 |   |
| Operating      Expenses:                                                     |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling,      technical and administrative expenses                          |   |                              | 1,005  |   |   |   | 22,459 |   |   |   | 4,986 |   |   |   | - |   |   |   | 28,450 |   |
| Restructuring      costs                                                     |   |                              | -      |   |   |   | 4,962 |   |   |   | - |   |   |   | - |   |   |   | 4,962 |   |
| Employee      benefit curtailment                                            |   |                              | -      |   |   |   | (424 | ) |   |   | - |   |   |   | - |   |   |   | (424 | ) |
| Amortization      of intangibles                                             |   |                              | -      |   |   |   | 724 |   |   |   | - |   |   |   | - |   |   |   | 724 |   |
| Total      operating expenses                                                |   |                              | 1,005  |   |   |   | 27,721 |   |   |   | 4,986 |   |   |   | - |   |   |   | 33,712 |   |
| (Loss)      income from operations                                           |   |                              | (1,005 | ) |   |   | (5,616 | ) |   |   | 9,068 |   |   |   | - |   |   |   | 2,447 |   |
| Interest      income (expense), net                                          |   |                              | 3,577  |   |   |   | (14,035 | ) |   |   | (64 | ) |   |   | - |   |   |   | (10,522 | ) |
| (Loss)      income from equity investee                                      |   |                              | (2,394 | ) |   |   | 4,744 |   |   |   | - |   |   |   | (2,350 | ) |   |   | - |   |
| Other      (expense) income, net                                             |   |                              | (34    | ) |   |   | 679 |   |   |   | (545 | ) |   |   | - |   |   |   | 100 |   |
| Income      (loss) from continuing operations, before income      taxes |   |                              | 144    |   |   |   | (14,228 | ) |   |   | 8,459 |   |   |   | (2,350 | ) |   |   | (7,975 | ) |
| Income      tax provision (benefit)                                          |   |                              | 1,488  |   |   |   | (7,276 | ) |   |   | 3,397 |   |   |   | - |   |   |   | (2,391 | ) |
| Income      (loss) from continuing operations, after income      taxes  |   |                              | (1,344 | ) |   |   | (6,952 | ) |   |   | 5,062 |   |   |   | (2,350 | ) |   |   | (5,584 | ) |
| Discontinued      operations, net of tax                                     |   |                              | -      |   |   |   | 4,558 |   |   |   | (318 | ) |   |   | - |   |   |   | 4,240 |   |
| Net      income                                                              |   | $                                 | (1,344 | ) |   | $ | (2,394 | ) |   | $ | 4,744 |   |   | $ | (2,350 | ) |   | $ | (1,344 | ) |

|                                                                                   |   | Year      ended December 31, 2007 |    |
|----------------------------------------------------------------------------------------|--------|-----------------------------------|---------|
|                                                                                   |   | Parent                            |    |   | Combined      Guarantor Subsidiaries |   |   | CombinedNon-Guarantor      Subsidiaries |   |   | Eliminations |   |   | Consolidated |   |
| Net      cash provided by operating activities      of continuing operations      |   | $                                 | 72      |   |   | $ | 11,595 |   |   | $ | 10,810 |   |   | $ | - |   |   | $ | 22,477 |   |
| Net      cash used in operating activities of discontinued    operations               |   |                              | -       |   |   |   | (6,131 | ) |   |   | (1,473 | ) |   |   | - |   |   |   | (7,604 | ) |
| Cash      flows from investing activities:                                             |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds      from sale of discontinued operations                                     |   |                              | 93,354  |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 93,354 |   |
| Purchases      of held to maturity securities                                          |   |                              | (44,991 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (44,991 | ) |
| Proceeds      from maturity of held to maturity securities                             |   |                              | 46,100  |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 46,100 |   |
| Purchases      of available for sale securities                                        |   |                              | -       |   |   |   | - |   |   |   | (932 | ) |   |   | - |   |   |   | (932 | ) |
| Purchases      of property, plant and equipment                                        |   |                              | -       |   |   |   | (4,316 | ) |   |   | (3,615 | ) |   |   | - |   |   |   | (7,931 | ) |
| Proceeds      from sale of property, plant and equipment                          |   |                              | -       |   |   |   | 16 |   |   |   | 2 |   |   |   | - |   |   |   | 18 |   |
| Net      cash provided by (used in) investing activities of continuing      operations |   |                              | 94,463  |   |   |   | (4,300 | ) |   |   | (4,545 | ) |   |   | - |   |   |   | 85,618 |   |
| Net      cash used in investing activities of discontinued      operations        |   |                              | -       |   |   |   | (1,140 | ) |   |   | - |   |   |   | - |   |   |   | (1,140 | ) |
| Cash      flows from financing activities:                                             |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Payments      on short-term debt                                                       |   |                              | -       |   |   |   | - |   |   |   | (1,057 | ) |   |   | - |   |   |   | (1,057 | ) |
| Proceeds      from long-term debt                                                      |   |                              | 10,964  |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 10,964 |   |
| Payments      on long-term debt                                                        |   |                              | (33,874 | ) |   |   | - |   |   |   | (55 | ) |   |   | - |   |   |   | (33,929 | ) |
| Stock      options and issuance of treasury stock as compensation,net                  |   |                              | 1,663   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,663 |   |
| Stock      repurchase                                                                  |   |                              | (3,694  | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (3,694 | ) |
| Payments      of preferred stock dividend                                              |   |                              | (150    | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (150 | ) |
| Net      cash used in financing activities      of continuing operations          |   |                              | (25,091 | ) |   |   | - |   |   |   | (1,112 | ) |   |   | - |   |   |   | (26,203 | ) |
| Net      cash used in financing activities      of discontinued operations             |   |                              |    | (14 | ) |   |   | - |   |   |   |   |   |   |   | (14 | ) |
| Effect      of exchange rate changes on cash                                           |   |                              | -       |   |   |   | - |   |   |   | 684 |   |   |   | - |   |   |   | 684 |   |
| Net      cash provided by (used in) continuing operations                         |   |                              | 69,444  |   |   |   | 7,295 |   |   |   | 5,837 |   |   |   | - |   |   |   | 82,576 |   |
| Net      cash used in discontinued operations                                     |   |                              | -       |   |   |   | (7,285 | ) |   |   | (1,473 | ) |   |   | - |   |   |   | (8,758 | ) |
| Net  increase      in cash and cash equivalents                         |   |                              | 69,444  |   |   |   | 10 |   |   |   | 4,364 |   |   |   | - |   |   |   | 73,818 |   |
| Cash      and cash equivalents, at beginning of period                                 |   |                              | 500     |   |   |   | 55 |   |   |   | 5,622 |   |   |   | - |   |   |   | 6,177 |   |
| Cash      and cash equivalents, at end of period                                       |   | $                                 | 69,944  |   |   | $ | 65 |   |   | $ | 9,986 |   |   | $ | - |   |   | $ | 79,995 |   |

|                                                                                        |   | Year      ended December 31, 2006 |    |
|---------------------------------------------------------------------------------------------|--------|-----------------------------------|---------|
|                                                                                        |   | Parent                            |    |   | Combined      Guarantor Subsidiaries |   |   | CombinedNon-Guarantor      Subsidiaries |   |   | Eliminations |   |   | Consolidated |   |
| Net      cash provided by (used in) operating activities      of continuing operations |   | $                                 | 5,015   |   |   | $ | (951 | ) |   | $ | 1,395 |   |   | $ | - |   |   | $ | 5,459 |   |
| Net      cash provided by operating activities      of discontinued operations         |   |                              | -       |   |   |   | 9,072 |   |   |   | 1,182 |   |   |   | - |   |   |   | 10,254 |   |
| Cash      flows from investing activities:                                                  |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Purchases      of property, plant and equipment                                             |   |                              | -       |   |   |   | (5,017 | ) |   |   | (3,053 | ) |   |   | - |   |   |   | (8,070 | ) |
| Proceeds      from sale of property, plant and equipment                               |   |                              | -       |   |   |   | 1,633 |   |   |   | - |   |   |   | - |   |   |   | 1,633 |   |
| Net      cash used in investing activities of continuing      operations               |   |                              | -       |   |   |   | (3,384 | ) |   |   | (3,053 | ) |   |   | - |   |   |   | (6,437 | ) |
| Net      cash used in investing activities of discontinued      operations             |   |                              | -       |   |   |   | (4,550 | ) |   |   | (635 | ) |   |   | - |   |   |   | (5,185 | ) |
| Cash      flows from financing activities:                                                  |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds      from short-term debt                                                          |   |                              | -       |   |   |   | - |   |   |   | 444 |   |   |   | - |   |   |   | 444 |   |
| Payments      on short-term debt                                                            |   |                              | -       |   |   |   | - |   |   |   | (833 | ) |   |   | - |   |   |   | (833 | ) |
| Proceeds      from long-term debt                                                           |   |                              | 82,450  |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 82,450 |   |
| Payments      on long-term debt                                                             |   |                              | (87,490 | ) |   |   | - |   |   |   | (121 | ) |   |   | - |   |   |   | (87,611 | ) |
| Stock      options and issuance of treasury stock as compensation,net                       |   |                              | 675     |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 675 |   |
| Payments      of preferred stock dividend                                                   |   |                              | (150    | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (150 | ) |
| Net      cash used in financing activities      of continuing operations               |   |                              | (4,515  | ) |   |   | - |   |   |   | (510 | ) |   |   | - |   |   |   | (5,025 | ) |
| Net      cash used in financing activities      of discontinued operations             |   |                              |    | (171 | ) |   |   | (10 | ) |   |   |   |   |   |   | (181 | ) |
| Effect      of exchange rate changes on cash                                                |   |                              | -       |   |   |   | - |   |   |   | 531 |   |   |   | - |   |   |   | 531 |   |
| Net      cash provided by (used in) continuing operations                              |   |                              | 500     |   |   |   | (4,335 | ) |   |   | (1,637 | ) |   |   | - |   |   |   | (5,472 | ) |
| Net      cash provided by  discontinued operations                           |   |                              | -       |   |   |   | 4,351 |   |   |   | 537 |   |   |   | - |   |   |   | 4,888 |   |
| Net  increase      (decrease) in cash and cash equivalents                   |   |                              | 500     |   |   |   | 16 |   |   |   | (1,100 | ) |   |   | - |   |   |   | (584 | ) |
| Cash      and cash equivalents, at beginning of period                                      |   |                              | -       |   |   |   | 39 |   |   |   | 6,722 |   |   |   | - |   |   |   | 6,761 |   |
| Cash      and cash equivalents, at end of period                                            |   | $                                 | 500     |   |   | $ | 55 |   |   | $ | 5,622 |   |   | $ | - |   |   | $ | 6,177 |   |

|                                                                                            |   | Year      ended December 31, 2005 |    |
|-------------------------------------------------------------------------------------------------|--------|-----------------------------------|---------|
|                                                                                            |   | Parent                            |    |   | Combined      Guarantor Subsidiaries |   |   | CombinedNon-Guarantor      Subsidiaries |   |   | Eliminations |   |   | Consolidated |   |
| Net      cash (used in) provided by operating activities      of continuing operations     |   | $                                 | (6,475  | ) |   | $ | 5,491 |   |   | $ | 5,232 |   |   | $ | - |   |   | $ | 4,248 |   |
| Net      cash provided by (used in) operating activities of discontinued      operations        |   |                              | -       |   |   |   | 6,682 |   |   |   | (472 | ) |   |   | - |   |   |   | 6,210 |   |
| Cash      flows from investing activities                                                       |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Purchases      of property, plant and equipment                                                 |   |                              | -       |   |   |   | (6,270 | ) |   |   | (1,497 | ) |   |   | - |   |   |   | (7,767 | ) |
| Proceeds      from sale or property, plant and equipment                                   |   |                              | -       |   |   |   | 92 |   |   |   | 12 |   |   |   | - |   |   |   | 104 |   |
| Net      cash used in investing activities of continuing operations                             |   |                              | -       |   |   |   | (6,178 | ) |   |   | (1,485 | ) |   |   | - |   |   |   | (7,663 | ) |
| Net      cash used in investing activities of  discontinued      operations           |   |                              | -       |   |   |   | (5,818 | ) |   |   | (691 | ) |   |   | - |   |   |   | (6,509 | ) |
| Cash      flows from financing activities                                                       |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds      on short-term debt                                                                |   |                              | -       |   |   |   | - |   |   |   | 871 |   |   |   | - |   |   |   | 871 |   |
| Payment      on short-term debt                                                                 |   |                              | -       |   |   |   | - |   |   |   | (798 | ) |   |   | - |   |   |   | (798 | ) |
| Proceeds      from long-term debt                                                               |   |                              | 84,093  |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 84,093 |   |
| Payments      on long-term debt                                                                 |   |                              | (79,276 | ) |   |   | (2 | ) |   |   | (151 | ) |   |   | - |   |   |   | (79,429 | ) |
| Net      proceeds from exercise of stock options                                                |   |                              | 737     |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 737 |   |
| Payments      of preferred stock dividends                                                      |   |                              | (148    | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (148 | ) |
| Net      cash provided by (used in) financing activities      of continuing operations     |   |                              | 5,406   |   |   |   | (2 | ) |   |   | (78 | ) |   |   | - |   |   |   | 5,326 |   |
| Net      cash (used in) provided by financing activities of discontinued operations        |   |                              |    |   |   |   |  (169 | )  |   |   |  25 |   |   |   |   |   |   |   |  (144 | )  |
| Effect      of exchange rate changes on cash                                                    |   |                              | -       |   |   |   | - |   |   |   | (575 | ) |   |   | - |   |   |   | (575 | ) |
| Net      cash  (used in) provided by continuing operations                       |   |                              | (1,069  | ) |   |   | (689 | ) |   |   | 3,094 |   |   |   | - |   |   |   | 1,336 |   |
| Net      cash provided by (used in) discontinued operations                                     |   |                              | -       |   |   |   | 695 |   |   |   | (1,138 | ) |   |   | - |   |   |   | (443 | ) |
| Net      (decrease) increase in cash and cash equivalents                                  |   |                              | (1,069  | ) |   |   | 6 |   |   |   | 1,956 |   |   |   | - |   |   |   | 893 |   |
| Cash      and cash equivalents, at beginning of period                                          |   |                              | 1,069   |   |   |   | 33 |   |   |   | 4,766 |   |   |   | - |   |   |   | 5,868 |   |
| Cash      and cash equivalents, at end of period                                                |   | $                                 | -       |   |   | $ | 39 |   |   | $ | 6,722 |   |   | $ | - |   |   | $ | 6,761 |   |

|                                                              |   | March      31, |   |   | June      30, |   |   | September      30, |   |   | December      31, |   |   | March      31, |   |   | June      30, |   |   | September      30, |   |   | December      31, |   |
|-------------------------------------------------------------------|--------|----------------|--------|--------|---------------|--------|--------|--------------------|--------|--------|-------------------|--------|--------|----------------|--------|--------|---------------|--------|--------|--------------------|--------|--------|-------------------|--------|
|                                                              |   | 2007           |   |   | 2007          |   |   | 2007               |   |   | 2007              |   |   | 2006           |   |   | 2006          |   |   | 2006               |   |   | 2006              |   |
| Net      sales                                                    |   | $              | 58,167 |   |          | $      | 58,940 |               |   | $      | 54,349            |   |   | $              | 57,239 |   |          | $      | 52,817 |               |   | $      | 53,496            |   |   | $ | 52,956 |   |   | $ | 52,781 |   |
| Gross profit (1)                                                  |   |           | 14,733 |   |          |   | 14,108 |               |   |   | 11,961            |   |   |           | 12,188 |   |          |   | 8,930  |               |   |   | 11,573            |   |   |   | 14,575 |   |   |   | 11,605 |   |
| Income      (loss) from continuing operations, after income taxes |   |           | 2,048  |   |          |   | 1,913  |               |   |   | 1,686             |   |   |           | 1,543  |   |          |   | (1,496 | )                  |   |   | 482               |   |   |   | 1,401 |   |   |   | (2,361 | ) |
| Discontinued      operations, net of tax                          |   |           | 10,738 |   |          |   | 204    |               |   |   | (25               | )      |   |           | (839   | )      |          |   | 1,900  |               |   |   | 1,423             |   |   |   | 703 |   |   |   | 917 |   |
| Net      income (loss)                                            |   | $              | 12,786 |   |          | $      | 2,117  |               |   | $      | 1,661             |   |   | $              | 704    |   |          | $      | 404    |               |   | $      | 1,905             |   |   | $ | 2,104 |   |   | $ | (1,444 | ) |
| Basic      earnings (loss) per share:                             |   |           |   |   |          |   |   |               |   |   |              |   |   |           |   |   |          |   |   |               |   |   |              |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) per share from continuing operations         |   | $              | 0.22   |   |          | $      | 0.21   |               |   | $      | 0.18              |   |   | $              | 0.18   |   |          | $      | (0.17  | )                  |   | $      | 0.05              |   |   | $ | 0.15 |   |   | $ | (0.26 | ) |
| Discontinued      operations                                      |   |           | 1.19   |   |          |   | 0.02   |               |   |   | -                 |   |   |           | (0.09  | )      |          |   | 0.21   |               |   |   | 0.16              |   |   |   | 0.08 |   |   |   | 0.10 |   |
| Net      earnings (loss) per basic share                          |   | $              | 1.41   |   |          | $      | 0.23   |               |   | $      | 0.18              |   |   | $              | 0.09   |   |          | $      | 0.04   |               |   | $      | 0.21              |   |   | $ | 0.23 |   |   | $ | (0.16 | ) |
| Diluted      earnings (loss) per share:                           |   |           |   |   |          |   |   |               |   |   |              |   |   |           |   |   |          |   |   |               |   |   |              |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) per share from continuing operations         |   | $              | 0.21   |   |          | $      | 0.20   |               |   | $      | 0.18              |   |   | $              | 0.16   |   |          | $      | (0.16  | )                  |   | $      | 0.05              |   |   | $ | 0.14 |   |   | $ | (0.26 | ) |
| Discontinued      operations                                      |   |           | 1.15   |   |          |   | 0.02   |               |   |   | -                 |   |   |           | (0.09  | )      |          |   | 0.20   |               |   |   | 0.15              |   |   |   | 0.08 |   |   |   | 0.10 |   |
| Net      earnings (loss) per diluted share                        |   | $              | 1.36   |   |          | $      | 0.22   |               |   | $      | 0.18              |   |   | $              | 0.07   |   |          | $      | 0.04   |               |   | $      | 0.20              |   |   | $ | 0.22 |   |   | $ | (0.16 | ) |

|                                    |   | March      31,2007 |   |   | March      31,2006 |   |   | June      30,2006 |   |   | September      30,2006 |   |   | December      31,2006 |   |
|-----------------------------------------|--------|--------------------|--------|--------|--------------------|--------|--------|-------------------|--------|--------|------------------------|--------|--------|-----------------------|--------|
| Gross      profit - previously reported |   | $                  | 14,971 |   |               | $      | 9,052  |              |   | $      | 11,664                 |   |   | $                     | 14,758 |   |   | $ | 11,913 |   |
| Italy      freight reclass              |   |               | 238    |   |               |   | 122    |              |   |   | 91                     |   |   |                  | 183    |   |   |   | 308 |   |
| Gross      profit                       |   | $                  | 14,733 |   |               | $      | 8,930  |              |   | $      | 11,573                 |   |   | $                     | 14,575 |   |   | $ | 11,605 |   |

|                                            |   | Balance      at Beginning of Year |   |   | Additions      Charged to Costs and Expenses |   |   | Deductions |   |   |   | Balance      at End of Year |   |
|-------------------------------------------------|--------|-----------------------------------|--------|--------|----------------------------------------------|--------|--------|------------|--------|--------|--------|-----------------------------|--------|
| Year      ended December 31, 2007:              |   |                              |   |   |                                         |   |   |       |   |   |   |                        |   |
| Allowance      for uncollectible accounts       |   | $                                 | 1,052  |   |                                         | $      | 169    |       |   | $      | 182    | (1)                         | (3)    |   | $ | 1,039 |   |
| Slow      moving and obsolete inventory reserve |   |                              | 4,072  |   |                                         |   | 1,042  |       |   |   | 536    | (2)                         | (3)    |   |   | 4,578 |   |
|                                            |   |                              |   |   |                                         |   |   |       |   |   |   |                        |   |   |   |   |   |
| Year      ended December 31, 2006:              |   |                              |   |   |                                         |   |   |       |   |   |   |                        |   |   |   |   |   |
| Allowance      for uncollectible accounts       |   | $                                 | 676    |   |                                         | $      | 683    |       |   | $      | 307    | (1)                         | (3)    |   | $ | 1,052 |   |
| Slow      moving and obsolete inventory reserve |   |                              | 2,902  |   |                                         |   | 1,240  |       |   |   | 70     | (2)                         | (3)    |   |   | 4,072 |   |
|                                            |   |                              |   |   |                                         |   |   |       |   |   |   |                        |   |   |   |   |   |
| Year      ended December 31, 2005:              |   |                              |   |   |                                         |   |   |       |   |   |   |                        |   |   |   |   |   |
| Allowance      for uncollectible accounts       |   | $                                 | 483    |   |                                         | $      | 424    |       |   | $      | 231    | (1)                         | (3)    |   | $ | 676 |   |
| Slow      moving and obsolete inventory reserve |   |                              | 2,244  |   |                                         |   | 1,099  |       |   |   | 441    | (2)                         | (3)    |   |   | 2,902 |   |

| (1)   | Uncollectible      accounts written off, net ofrecoveries. |
|-----------------|------------------------------------------------------------|

| (2)   | Inventory      items written off against the reserveaccount. |
|-----------------|--------------------------------------------------------------|

| (3)   | Impact      of foreign currency on accounts. |
|-----------------|----------------------------------------------|

| (a) | Financial      Statements and Schedules |
|-----|-----------------------------------------|

|  | 1.   | The      following consolidated financial statements of Hawk Corporation are filed      as part of this report under Item 8 – Financial Statements and      Supplementary Data: |
|--|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i)                     |  Consolidated      Balance Sheets at December 31, 2007 and 2006                                                  |
|------------------------------|----------------------------------------------------------------------------------------------------------------------------|
|    (ii)  |  Consolidated      Statements of Operations for the years ended December 31, 2007, 2006 and      2005            |
|  (iii)             | Consolidated      Statements of Shareholders’ Equity for the years ended December 31, 2007,      2006 and 2005  |
|   (iv)        | Consolidated      Statements of Cash Flows for the years ended December 31, 2007, 2006 and      2005                  |
|         (v)   | Notes      to Consolidated Financial Statements for the years ended December 31,      2007, 2006 and 2005             |

|  | 2.   | Schedule      II – Valuation and Qualifying Accounts for the years ended December 31,      2007, 2006 and 2005 |
|--|----------------|----------------------------------------------------------------------------------------------------------------------|

| (b) | Exhibits: |
|-----|-----------|

| 3.1 | Form      of the Company’s Second Amended and Restated Certificate of Incorporation      (Incorporated by reference to the Company’s Registration Statement on Form      S-1 as filed with the Securities and Exchange Commission (Reg. No.      333-40535)) |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.2 | The      Company’s Amended and Restated By-laws (Incorporated by reference to the      Company’s Current Report on Form 8-K as filed with the Securities and      Exchange Commission (Reg. No.001-13797)) |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.1 | Form      of Rights Agreement between the Company and National City Bank as      successor, as Rights Agent (Incorporated by reference to the Company’s      Registration Statement on Form S-1 as filed with the Securities and      Exchange Commission (Reg. No.333-40535)) |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.2 | Stockholders’      Voting Agreement, effective as of November 27, 1996, by and among the      Company, Norman C. Harbert, the Harbert Family Limited Partnership, Ronald      E. Weinberg, the Weinberg Family Limited Partnership, Byron S. Krantz and      the Krantz Family Limited Partnership (Incorporated by reference to the      Company’s Registration Statement on Form S-4 as filed with the Securities      and Exchange Commission (Reg. No.333-18433)) |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.3 | Letter      agreement, dated January 5, 1998, amending the Stockholders’ Voting      Agreement, effective as of November 27, 1996, by and among the Company,      Norman C. Harbert, the Harbert Family Limited Partnership, Ronald E.      Weinberg, the Weinberg Family Limited Partnership, Byron S. Krantz and the      Krantz Family Limited Partnership (Incorporated by reference to the      Company’s Registration Statement on Form S-1 as filed with the Securities      and Exchange Commission (Reg. No.333-40535)) |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.4 | Indenture,      dated as of November 1, 2004, among Hawk Corporation, the Guarantors named      therein, and HSBC Bank USA, National Association, as Trustee (Incorporated      by reference to the Company’s Form 8-K, dated November 1, 2004, as filed      with the Securities and ExchangeCommission) |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.5 | Registration      Rights Agreement, dated as of November 1, 2004, among Hawk Corporation,      the Guarantors named therein, and Jefferies & Company, Inc.      (Incorporated by reference to the Company’s Form 8-K, dated November 1,      2004, as filed with the Securities and Exchange  Commission) |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.6 | Amended      and Restated Rights Agreements dated as of January 4, 2008, by and between      Hawk Corporation and National City Bank, as Rights Agent (Incorporated by      reference to the Company’s Form 8-K, datedJanuary 4, 2008, as filed with      the Securities and ExchangeCommission) |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.7 | Form      of 8 3/4% Senior Exchange Note due 2014 (Incorporated by reference to the      Company’s Registration Statement on Form S-4 as filed with the Securities      and Exchange Commission (Reg. No.333-120991)) |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.1 | Form      of the Promissory Notes, each dated June 30, 1995, issued by of Norman C.      Harbert and Ronald E. Weinberg to the Company (Incorporated by reference      to the Company’s Registration Statement on Form S-4 as filed with the      Securities and Exchange Commission (Reg. No.  333-18433)) |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.2 | Letter      agreement, dated October 1, 1996, amending the Promissory Notes, dated      June 30, 1995, issued by each of Norman C. Harbert and Ronald E. Weinberg      to the Company (Incorporated by reference to the Company’s Registration      Statement on Form S-4 as filed with the Securities and Exchange Commission      (Reg. No. 333-18433)) |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.3 | Hawk      Corporation 1997 Stock Option Plan (Incorporated by reference to the      Company’s Registration Statement on Form S-1 as filed with the Securities      and Exchange Commission (Reg. No.333-40535)) |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.4 | Hawk      Corporation 2000 Long Term Incentive Plan (Incorporated by reference to      the Company’s Form 10-K for the period ended December 31, 2000 as filed      with the Securities and ExchangeCommission) |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.5 | Hawk      Corporation Annual Incentive Compensation Plan (Incorporated by reference      to the Company’s Form 10-K for the period ended December 31, 2000 as filed      with the Securities and ExchangeCommission) |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.6 | Hawk      Corporation Deferred Compensation Plan (Incorporated by reference to the      Company’s Registration Statement of Form S-8 as filed with the Securities      and Exchange Commission (Reg. No.333-147832)) |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.7 | Form      of Intellectual Property Security Agreement, dated as of August 10, 2001,      by and between the Company and each of the following subsidiaries of the      Company: Allegheny Powder Metallurgy, Inc., Clearfield Powdered Metals,      Inc., Friction Products Co., Hawk Brake, Inc., Hawk MIM, Inc., Helsel,      Inc., Hawk Motors, Inc., Logan Metal Stampings, Inc., Net Shape      Technologies LLC, Quarter Master Industries, Inc., S.K. Wellman Corp.,      S.K. Wellman Holdings, Inc., Sinterloy Corporation, Tex Racing      Enterprises, Inc. and Wellman Friction Products U.K. Corp. (Incorporated      by reference to the Company’s Form 10-Q for the quarterly period ended      June 30, 2001 as filed with the Securities and Exchange      Commission) |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.8 | Credit      and Security Agreement, dated November 1, 2004, among Hawk Corporation,      Allegheny Clearfield, Inc., Friction Products Co., Hawk MIM, Inc., Hawk      Motors, Inc., Hawk Precision Components, Inc., Helsel, Inc., Logan Metal      Stampings, Inc., Net Shape Technologies LLC, Quarter Master Industries,      Inc., Sinterloy Corporation, S.K. Wellman Corp., S.K. Wellman Holdings,      Inc., Tex Racing Enterprises, Inc., Wellman Products Group, Inc., and      Wellman Products, LLC, as Borrowers, and KeyBank National Association, as      Administrative Agent and LC Issuer (Incorporated by reference to the      Company’s Form 8-K, dated November 1, 2004, as filed with the Securities      and Exchange Commission) |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.9 | Amendment      No. 1 to Credit and Security Agreement made as of August 31, 2006 among      Hawk Corporation, Allegheny Clearfield, Inc., Friction Products Co., Hawk      MIM, Inc., Hawk Motors, Inc., Hawk Precision Components Group, Inc.,      Helsel, Inc., Logan Metal Stampings, Inc., Net Shape Technologies LLC,      Quarter Master Industries, Inc., Sinterloy Corporation, S.K. Wellman      Corp., S.K. Wellman Holdings, Inc., Tex Racing Enterprises, Inc., Wellman      Products Group, Inc., and Wellman Products, LLC, as borrowers, the Lenders      listed on the signature pages thereto, and KeyBank National Association,      as Administrative Agent and LC Issuer (Incorporated by reference to the      Company’s Form 8-K as filed on September 1, 2006 with the Securities and      Exchange Commission) |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.10 | Amendment      No. 2 to Credit and Security Agreement made as of August 31, 2006 among      Hawk Corporation, Allegheny Clearfield, Inc., Friction Products Co., Hawk      MIM, Inc., Hawk Motors, Inc., Hawk Precision Components Group, Inc.,      Helsel, Inc., Logan Metal Stampings, Inc., Net Shape Technologies LLC,      Quarter Master Industries, Inc., Sinterloy Corporation, S.K. Wellman      Corp., S.K. Wellman Holdings, Inc., Tex Racing Enterprises, Inc., Wellman      Products Group, Inc., and Wellman Products, LLC, as borrowers, the Lenders      listed on the signature pages thereto, and KeyBank National Association,      as Administrative Agent and LC Issuer (Incorporated by reference to the      Company’s Form 8-K as filed on February 8, 2007 with the Securities and      Exchange Commission) |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.11 | Form      of Pledge and Security Agreement — Borrower in favor of KeyBank National      Association (Incorporated by reference to the Company’s Form 10-Q for the      quarterly period ended September 30, 2004 as filed with the Securities and      Exchange Commission) |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.12 | Form      of Collateral Assignment of Security Interest in Trademarks and Licenses,      dated as of November 1, 2004, among Hawk Corporation and the other      Grantors named therein and KeyBank National Association (Incorporated by      reference to the Company’s Form 10-Q for the quarterly period ended      September 30, 2004 as filed with the Securities and Exchange      Commission) |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.13 | Form      of Collateral Assignment of Security Interest in Patents and Patent      Applications, dated as of November 1, 2004, among Hawk Corporation and the      other Grantors named therein and KeyBank National Association      (Incorporated by reference to the Company’s Form 10-Q for the quarterly      period ended September 30, 2004 as filed with the Securities and Exchange      Commission) |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.14 | Form      of Collateral Assignment of Security Interest in Copyrights, dated as of      November 1, 2004, among Hawk Corporation and the other Grantors named      therein and KeyBank National Association (Incorporated by reference to the      Company’s Form 10-Q for the quarterly period ended September 30, 2004 as      filed with the Securities and Exchange  Commission) |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.15 | Form      of Limited License Agreement (Borrower) in favor of KeyBank National      Association (Incorporated by reference to the Company’s Form 10-Q for the      quarterly period ended September 30, 2004 as filed with the Securities and      Exchange Commission) |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.16 | Depositary      Agreement appointing HSBC Bank USA, National Association, as exchange      agent (Incorporated by reference to Amendment No. 1 to the Company’s      Registration Statement on Form S-4 as filed with the Securities and      Exchange Commission (Reg. No.333-120991)) |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.17 | Amended      and Restated Employment Agreement, dated as of December 31, 2001, by and      among the Company, Friction Products Co. and Ronald E. Weinberg      (Incorporated by reference to the Company’s Form 10-K for the period ended      December 31, 2001 as filed with the Securities and Exchange      Commission) |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.18 | Amendment      No. 1 to Amended and Restated Employment Agreement, dated as of March 3,      2004, by and among the Company, Friction Products Co. and Ronald E.      Weinberg (Incorporated by reference to the Company’s Form 10-K for the      period ended December 31, 2003 as filed with the Securities and Exchange      Commission) |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.19 | Amended      and Restated Wage Continuation Agreement, dated as of December 31, 2001,      by and among the Company, Friction Products Co. and Norman C. Harbert      (Incorporated by reference to the Company’s Form 10-K for the quarterly      period ended December 31, 2001 as filed with the Securities and Exchange      Commission) |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  10.20 | Senior      Advisor Agreement, dated as of October 18, 2005 by and between the Company      and Norman C. Harbert  (Incorporated by reference to the      Company’s Form 10-Q for the quarterly period ended June 30, 2005 as filed      with the Securities and ExchangeCommission) |
|-------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.21 | Employment      Agreement, dated August 14, 2006, by and between Hawk Corporation and      Joseph J. Levanduski (Incorporated by reference to the Company’s Form 10-Q      for the quarterly period ended June 30, 2006 as filed with the Securities      and Exchange Commission) |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.22 | Amendment      to Agreements, dated November 10, 2006, between Hawk Corporation and      Joseph J. Levanduski  (Incorporated by reference to the      Company’s Form 10-Q for the quarterly period ended September 30,      2006  as filed with the Securities and Exchange      Commission) |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.23 | Employment      Agreement, dated August 14, 2006, by and between Wellman Products Group,      Inc. and B. Christopher DiSantis (Incorporated by reference to the      Company’s Form 10-Q for the quarterly period ended June 30, 2006 as filed      with the Securities and ExchangeCommission) |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.24 | Amendment      to Agreements, dated November 10, 2006, among Hawk Corporation, Wellman      Products Group, Inc. and B. Christopher DiSantis (Incorporated by      reference to the Company’s Form 10-Q for the quarterly period ended      September 30, 2006  as filed with the Securities and Exchange      Commission) |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.25 | Form      of Change in Control Agreement among Hawk and certain executive officers      (Incorporated by reference to the Company’s Form 10-Q for the quarterly      period ended June 30, 2006 as filed with the Securities and Exchange      Commission) |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.26 | Agreement,      Release and Waiver between Steven J. Campbell and Hawk Corporation dated      January 23, 2007 (Incorporated by reference to the Company’s Form 8-K as      filed on January 30, 2007 with the Securities and Exchange      Commission) |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  14 | Code      of Business Conduct and Ethics (Incorporated by reference to the Company’s      Form 8-K dated May 30, 2007 as filed with the Securities and Exchange      Commission) |
|----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 21.1* | Subsidiaries      of the Registrant |
|-------|-------------------------------------|

| 23.1* | Consent      of Independent Registered Public AccountingFirm |
|-------|--------------------------------------------------------------|

| 31.1* | Certification      of the Chairman of the Board, Chief Executive Officer and President      pursuant to Section 302 of the Sarbanes-Oxley Act of  2002 |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| 31.2* | Certification      of the Chief Financial Officer pursuant to Section 302 of the      Sarbanes-Oxley Act of 2002 |
|-------|------------------------------------------------------------------------------------------------------------------|

| 32.1* | Certification      of the Chairman of the Board, Chief Executive Officer and President      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of      the Sarbanes-Oxley Act of 2002 |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32.2* | Certification      of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of      2002 |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| SIGNATURE                                                                                                                                                                                                                                  | TITLE                                  | DATE                    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------|
| /s/   Ronald      E. Weinberg                                                                                                                                                                                                                                                                                                                                                                                   | Chairman      of the Board, Chief Executive                                                                                                                                                                 | March      17, 2008                                                                                                    |
| Ronald      E. Weinberg                                                                                                                                                                                                                                                                                                                                                                                                                       | Officer,      President and Director                                                                                                                                                                        |                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                          | (principal      executive officer)                                                                                                                                                                          |                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                        |                                                                                                                   |
| /s/   Norman C. Harbert                                                                                                                                                                                                                                                                                                                                                                                                   | Chairman      Emeritus,                                                                                                                                                                                     | March      17, 2008                                                                                                    |
| Norman      C. Harbert                                                                                                                                                                                                                                                                                                                                                                                                                        | Founder      and Director                                                                                                                                                                                   |                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                        |                                                                                                                   |
| /s/   Joseph      J.      Levanduski                                                                | Chief      Financial Officer                                                                                                                                                                                | March      17, 2008                                                                                                    |
| Joseph      J. Levanduski                                                                                                                                                                                                                                                                                                                                                                                                                     | (principal      financial and accounting officer)                                                                                                                                                           |                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                        |                                                                                                                   |
| /s/   Byron S.      Krantz                                                                                                                       | Secretary      and Director                                                                                                                                                                                 | March      17, 2008                                                                                                    |
| Byron      S. Krantz                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                        |                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                        |                                                                                                                   |
| /s/   Paul R.      Bishop                                                                                                                        | Director                                                                                                                                                                                                    | March      17, 2008                                                                                                    |
| Paul      R. Bishop                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                        |                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                        |                                                                                                                   |
| /s/   Jack F.      Kemp                                                                                                                          | Director                                                                                                                                                                                                    | March      17, 2008                                                                                                    |
| Jack      F. Kemp                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                        |                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                        |                                                                                                                   |
| /s/   Dan T. Moore, III                                                                                                                                    | Director                                                                                                                                                                                                    | March      17, 2008                                                                                                    |
| Dan      T. Moore, III                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                        |                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                        |                                                                                                                   |
| /s/   Andrew      Berlin                                                                                                                                        | Director                                                                                                                                                                                                    | March      17, 2008                                                                                                    |
| Andrew      T. Berlin                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                        |                                                                                                                   |