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| 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 | NYSE      Alternext US (Formerly American Stock Exchange) |
| 8      3/4% Senior Notes due 2014         | NYSE      Alternext US (Formerly American StockExchange)  |

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| ITEM      1.  BUSINESS |
|----------------------------------|

| ·   | 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, |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| ·   | a      leading supplier of critical stack components used in the manufacture of      phosphoric acid fuel cells.  The fuel cells which use our stack      components dominate the on-site stationary fuel cell market.  We      are working with the State of Ohio to develop manufacturing equipment and      processes which advance the state of fuel cell component      manufacturing. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                        |   | Year      Ended December 31 |   |
|-----------------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                                        |   | 2008                        |   |   | 2007 |   |   | 2006 |   |
|                                                                        |   | (dollars      in millions)  |   |
| Net      sales                                                              |   | $                           | 7.4    |   |   | $ | 20.1 |   |   | $ | 111.0 |   |
|                                                                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| (Loss)      income from discontinued operations, before income taxes        |   | $                           | (1.8   | ) |   | $ | (3.1 | ) |   | $ | 7.6 |   |
| Goodwill      impariment charge                                             |   |                        | -      |   |   |   | - |   |   |   | (4.5 | ) |
| (Loss)      gain on sale of discontinued operations, before income    taxes |   |                        | (1.9   | ) |   |   | 15.0 |   |   |   | - |   |
| Income      tax (benefit) expense                                           |   |                        | (2.0   | ) |   |   | 2.4 |   |   |   | 1.7 |   |
| (Loss)      income from discontinued operations, after income taxes         |   | $                           | (1.7   | ) |   | $ | 9.5 |   |   | $ | 1.4 |   |

| ·   | 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. 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,      2008, we spent $5.4 million, or 2.0% of our net sales, on research and      development, an increase of $0.8 million, or 17.4%, compared to $4.6      million, or 2.1%, of our net sales for the year ended December 31,      2007.  |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | 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 28.6% for the year ended December 31, 2008      and 23.8% for the year ended December 31, 2007.  Our gross      margins in 2008 and 2007 were positively impacted by increased      pricing that began during the last half of 2007 and continued through      2008, strong market conditions during all of 2007 and through the first 10      months of 2008 in most of the markets that we serve and operating      improvements at our domestic friction products  facilities.                                                                                                                     |

| ·   | 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 in the original equipment markets.      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 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, 2008, our direct aftermarket sales were $28.9 million, or      10.7% of our sales, an increase of 11.1% from 2007.  |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | 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 manufacturing 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 Russia, Mexico and India.      Through our worldwide distribution network, 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 $112.2 million, or 41.6%, of our consolidated net      sales for the year ended December 31, 2008, and $84.2 million, or 39.0%,      of our consolidated net sales in 2007.  |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Divestitures/Acquisitions.      During the fourth quarter of 2006, we made a strategic decision to      focus our corporate resources on the friction products business and      committed to a plan to sell our precision components      segment.  The sale of our precision components segment was      finalized during the first quarter of 2007.  During the first      quarter of 2008, we committed to a plan to sell our performance racing      segment.  The sale of our two performance racing segment      businesses were completed in May and December of 2008.  In      keeping with the strategy of focusing on our friction business, we are      reviewing opportunities to acquire additional friction operations that      will support our business plan. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 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. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Aircraft & Defense.      We believe we are a leading independent supplier of friction      products to the manufacturers of aircraft braking systems for Boeing,      EADS, Lockheed, United Technologies and Bombardier for the Canadair      regional jet series used by commuter airlines as well as certain military      aircraft. We believe we are also the largest supplier of metallic friction      products to the general aviation (non-commercial airline, non-military)      market, supplying friction materials for aircraft such as Cessna, Hawker,      Lear and Pilatus. Each      commercial aircraft braking system, including the friction products      supplied by us, must meet stringent Federal Aviation Administration (FAA)      criteria and certification requirements. New model development and FAA      testing for our aircraft braking system customers generally begins two to      five years before full scale production of new braking systems. If we and      our aircraft brake system manufacturing partner are successful in      obtaining the rights to supply a particular model of aircraft, we will      typically supply our friction products for that model’s aircraft braking      system for as long as the model continues to fly because it is generally      not economically feasible to redesign a braking system once it is      certified by the FAA. Moreover, the FAA maintenance requirements mandate      that brake lining components be changed after a specified number of      take-offs and landings, which results in a continuous and steady market      for our aircraft friction products. We      supply brake pads for military vehicles and for a number of military      aircraft applications.  |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | 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 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 we have increased our market share with our      combination of superior quality and product performance. Our replacement      components are sold through original equipment manufacturers and directly      to aftermarket distributors through relationships with national automotive      retailers such as Tire Rack.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

| ·   | Alternative      Energy.  We supply critical stack components used in      manufacture of phosphoric acid fuel cells.  The fuel cells that      use our stack components dominate the on-site stationary fuel cell      market.  We are working with the State of Ohio to develop      manufacturing equipment and processes that advance the state of the fuel      cell component manufacturing. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 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.                                                                                                                                                                                      |

The global economy is currently undergoing a period of unprecedentedvolatility, which has affected the demand for our products in industrial,aircraft and performance automotive equipment markets.  A prolongedperiod of economic decline could have a material adverse effect on our resultsof operations and financial position and exacerbate the other risk factors wehave described below.  Possible effects of current and/or futureadverse economic conditions on our business include: decrease in purchases orusage of our products by customers; reduction in purchases of our products byour customers due to their efforts to reduce inventory and conserve cash ortheir inability to obtain financing; disruption in our business due to ourinability to obtain raw material from our suppliers; decreased profit marginsdue to less demand for our products; and the potential of higher level ofcustomer collection delinquencies due to the current economicenvironment.

| There      has been significant deterioration and instability in the financial      markets. |
|----------------------------------------------------------------------------------------------|

| We      may not fully realize the benefits from our cost reduction initiatives and      our plans may have insufficiently addressed market    conditions. |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| 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. |
|----------------------------------------------------------------------------------------------------------------------------------|

| ITEM      1B.  UNRESOLVED STAFFCOMMENTS |
|---------------------------------------------------|

| ITEM      2.  PROPERTIES |
|------------------------------------|

|  Location                    | ApproximateSquare Footage |  Principal Functions                                                                                                                              |
|-----------------------------------|---------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|
| Catoosa      (Tulsa), Oklahoma(1) | 240,000                   | Manufacturing      of friction products, metal stampings and support                                                                                   |
|                              |                      |                                                                                                                                                   |
| Medina,      Ohio                 | 219,000                   | Manufacturing      of friction products, product engineering, and support                                                                              |
|                              |                      |                                                                                                                                                   |
| Orzinuovi,      Italy             | 106,000                   | Manufacturing      of friction products, sales and marketing, product application      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                                    |
|                              |                      |                                                                                                                                                   |
| Akron,      Ohio             | 71,000                    | Manufacturing      of metal stampings                                                                                                             |
|                              |                      |                                                                                                                                                   |
| Solon,      Ohio(1)               | 58,000                    | Research      and development, sales and marketing, 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. |
|-----|---------|

| ITEM      3.  LEGALPROCEEDINGS |
|------------------------------------------|

| ·   | As      we previously disclosed, the SEC provided Hawk with a formal order of      private investigation that relates to the informal inquiry commenced by      the SEC.  The investigation concerns activity from June 2006 to      the present involving (1) Hawk’s preparations for compliance with Section      404, (2) the maintenance and evaluation of the effectiveness by Hawk of      disclosure controls and procedures and internal controls over financial      reporting, (3) transactions in Hawk’s common stock by a stockholder that      is not affiliated with Hawk, including the impact of those transactions on      the date when Hawk would have been required to comply with Section 404,      (4) the calculation of the amount of Hawk common stock held by      non-affiliates and the effect of the calculation on the date when Hawk      would have been required to comply with Section 404, (5) communications      between Hawk and third parties regarding Section 404 compliance and (6)      Hawk’s periodic disclosure requirements related to the      foregoing.  We cooperated fully with the informal inquiry and      continue to cooperate fully with the formal investigation by the      SEC.  As previously disclosed, Hawk has also been contacted by      the DOJ in connection with the DOJ’s investigation. Wellman has filed an      answer to the amended complaint denying the allegations under the wage and      hour provisions of the Oklahoma labor laws, a motion to dismiss the breach      of contract, tortious breach of contract, and the public policy claims,      and a motion for a more definite statement of the fraud      claim. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|    | On      February 18, 2008, Wellman filed an answer to the amended petition and a      motion to dismiss the breach of contract, tortuous breach of contract, and      public policy claim, and a motion for a more definite statement of the      fraud claim. On      May 2, 2008, the Tulsa County District Court issued an order granting in      part and denying in part Wellman’s motion to dismiss, which dismissed      count 4 – breach of the employment contract in violation of public policy      – from plaintiffs’ first amended petition.  In May 2008, three      plaintiffs filed dismissals without prejudice as to their claims against      Wellman. On      May 19, 2008, Wellman removed this lawsuit to the United States District      Court for the Northern District of Oklahoma.  On May 21, 2008,      plaintiffs filed a motion to remand this matter back to Tulsa County      District Court.  Wellman has opposed this motion.  On      August 20, 2008, the case was remanded back to Tulsa County District      Court, where it currently resides. Discovery      as to the class certification is finished.  Plaintiffs have      filed their Motion for Class Certification, and all briefing on the issue      is also finished.  An evidentiary hearing on Plaintiffs’ Motion      for Class Certification is currently scheduled to take place on March 31      and April 1, 2009, in Tulsa County District  Court. |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ITEM      4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY      HOLDERS |
|----------------------------------------------------------------------------------|

| ITEM      5.  | MARKET      FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS ANDISSUER      PURCHASES OF EQUITYSECURITIES |
|--------------------|----------------------------------------------------------------------------------------------------------------------------|

| Quarter Ended           |   | High   |   |   | Low    |   |
|-------------------------|--------|--------|--------|--------|--------|--------|
| 2008                    |   |   |   |   |   |   |
| December      31, 2008  |   | $      | 20.25  |   |   | $      | 11.40 |   |
| September      30, 2008 |   | $      | 24.70  |   |   | $      | 15.57 |   |
| June      30, 2008      |   | $      | 18.84  |   |   | $      | 15.28 |   |
| March      31, 2008     |   | $      | 20.20  |   |   | $      | 15.32 |   |
| 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 |   |

| 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) |
|--------------------------|------------------------------------|--------|--------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                     |                               |   |                           |   |                                                                                                                          |                                                                                                                                                                                 |
| 10/1/08      to 10/31/08 | -                                  |   |                           | -      |                                                                                                                          | -                                                                                                                                                                                    |   | - |
| 11/1/08      to 11/30/08 | 7,880                              |   | $                              | 12.81  |                                                                                                                          | 7,880                                                                                                                                                                                |           $ | 14.9      million |
| 12/1/08      to 12/31/08 | 135,673                            |   | $                              | 14.22  |                                                                                                                          | 143,553                                                                                                                                                                              |      $ | 13.0      million |

| (1)   | On      November 24, 2008, we announced a plan, approved by our Board of      Directors, to repurchase up to $15.0 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).  Under the terms of our indenture relating to the senior      notes as of December 31, 2008, we are limited to repurchase up to $11.7      million of our shares of Class A common stock based on our cumulative net      income through December 31, 2008. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | The      approximate value of additional shares that may be repurchased pursuant to      the Plan is $13.0 million ($9.7 million under the indenture      limitation).  The Plan will expire when the aggregate repurchase      price limit is met, unless terminated earlier by our Board of      Directors. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ITEM      6.  SELECTED FINANCIALDATA |
|------------------------------------------------|

| Years      ended December 31                                                                          |   | 2008                                              |   |   | 2007      (4) |   |   | 2006      (5) |   |   | 2005   |   |   | 2004   |   |
|-------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------|--------|--------|---------------|--------|--------|---------------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                                  |   | (dollars      in millions, except per share data) |   |
| Statement      of Operations Data:                                                                    |   |                                              |   |   |          |   |   |          |   |   |   |   |   |   |   |
| Net      sales                                                                                        |   | $                                                 | 269.6  |   |          | $      | 215.9  |          |   | $      | 199.9  |   |   | $      | 167.1  |   |   | $ | 148.2 |   |
| Gross      profit                                                                                     |   | $                                                 | 77.1   |   |          | $      | 51.4   |          |   | $      | 44.9   |   |   | $      | 33.7   |   |   | $ | 36.5 |   |
| Restructuring      costs (1)                                                                          |   |                                              | -      |   |          |   | -      |          |   |   | -      |   |   | $      | 5.5    |   |   | $ | 1.1 |   |
| Income      from operations                                                                           |   | $                                                 | 39.2   |   |          | $      | 19.5   |          |   | $      | 15.4   |   |   | $      | 2.3    |   |   | $ | 9.9 |   |
| Income      (loss) from continuing operations,      after income taxes                           |   | $                                                 | 22.5   |   |          | $      | 7.8    |          |   | $      | 1.6    |   |   | $      | (5.7   | ) |   | $ | (3.1 | ) |
| Discontinued      operations, after income taxes                                                 |   |                                              | (1.7   | )      |          |   | 9.5    |          |   |   | 1.4    |   |   |   | 4.4    |   |   |   | 4.2 |   |
| Net      income (loss)                                                                                |   | $                                                 | 20.8   |   |          | $      | 17.3   |          |   | $      | 3.0    |   |   | $      | (1.3   | ) |   | $ | 1.1 |   |
| Earnings      (Loss) Per Share:                                                                       |   |                                              |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic      earnings (loss) per share                                                                  |   | $                                                 | 2.31   |   |          | $      | 1.91   |          |   | $      | 0.31   |   |   | $      | (0.17  | ) |   | $ | 0.11 |   |
| Diluted      earnings (loss) per share                                                                |   | $                                                 | 2.21   |   |          | $      | 1.83   |          |   | $      | 0.30   |   |   | $      | (0.17  | ) |   | $ | 0.11 |   |
| Other      Data:                                                                                      |   |                                              |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation                                                                                          |   | $                                                 | 6.8    |   |          | $      | 6.6    |          |   | $      | 6.6    |   |   | $      | 6.2    |   |   | $ | 6.1 |   |
| Amortization      (2)                                                                                 |   |                                              | 0.6    |   |          |   | 0.7    |          |   |   | 0.5    |   |   |   | 0.7    |   |   |   | 0.7 |   |
| Capital      expenditures (including capital leases      and financed capital expenditures) |   |                                              | 15.2   |   |          |   | 7.6    |          |   |   | 7.9    |   |   |   | 7.5    |   |   |   | 9.1 |   |

| December      31                                        |   | 2008                       |   |   | 2007   |   |   | 2006   |   |   | 2005   |   |   | 2004   |   |
|---------------------------------------------------------|--------|----------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                    |   | (dollars      in millions) |   |
| Balance      Sheet Data:                                |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      and cash equivelants                          |   | $                          | 62.5   |   |   | $      | 22.0   |   |   | $      | 6.2    |   |   | $      | 6.8    |   |   | $ | 5.9 |   |
| Short-term      investments                             |   |                       | 30.8   |   |   |   | 59.0   |   |   |   | -      |   |   |   | -      |   |   |   | - |   |
| Working      capital (3)                                |   |                       | 126.0  |   |   |   | 113.3  |   |   |   | 115.8  |   |   |   | 48.9   |   |   |   | 50.1 |   |
| Property      plant and equipment, net                  |   |                       | 47.5   |   |   |   | 39.6   |   |   |   | 38.2   |   |   |   | 36.3   |   |   |   | 37.8 |   |
| Assets      of discontinued operations                  |   |                       | -      |   |   |   | 6.7    |   |   |   | 94.1   |   |   |   | 100.8  |   |   |   | 96.8 |   |
| Total      assets                                       |   |                       | 240.0  |   |   |   | 219.9  |   |   |   | 229.3  |   |   |   | 226.0  |   |   |   | 219.8 |   |
| Liabilities      of discontinued operations             |   |                       | -      |   |   |   | 1.7    |   |   |   | 14.2   |   |   |   | 16.9   |   |   |   | 17.6 |   |
| Total      indebtedness (including capital leases) |   |                       | 87.1   |   |   |   | 87.1   |   |   |   | 111.2  |   |   |   | 116.7  |   |   |   | 112.0 |   |
| Shareholders’      equity                         |   |                       | 77.4   |   |   |   | 67.3   |   |   |   | 46.7   |   |   |   | 40.7   |   |   |   | 45.0 |   |

| (1)   | In      2005 and 2004, reflects planning, travel, severance and moving costs      associated with the closure of our Brook Park, Ohio facility and the      construction of our new facility in Tulsa,  Oklahoma. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Amortization      outlined in this table does not include deferred financing amortization of      $0.4 million in 2008, $0.4 million in 2007, $0.4 million in 2006, $0.4      million in 2005, and $0.4 million in 2004, which is included in interest      expense on the Consolidated Statements of  Operations. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | Working      capital is defined as current assets less current    liabilities. |
|-----------------|--------------------------------------------------------------------------------|

| (4)   | Effective      January 1, 2007, we adopted Financial Interpretation No. 48, Accounting for Uncertainty in      Income Taxes - an amendment of FASB Statement No. 109 (FIN      48).  The adoption of FIN 48 did not have a significant effect      on our financial position and results of  operations. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5)   | Effective      January 1, 2006, we adopted Statement of Financial Accounting Standards      (SFAS) No. 123(R), Share-Based Payment      (SFAS 123(R)).  In accordance with the provisions of SFAS      123(R), we elected to adopt the standard using the modified prospective      transition method (see Note 10, “Stock Compensation Plan” to the      accompanying Consolidated Financial Statements of this Form      10-K). |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ITEM      7. | MANAGEMENT’S      DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS |  |
|--------------|-------------------------------------------------------------------------------------------------|--|

| ·   | Revenue Recognition.       We recognize revenue from the sale of our products when all of the      following criteria are met: (i) persuasive evidence of an arrangement      exists, (ii) shipment has occurred, (iii) the price to the customer is      fixed or determinable, and (iv) collection of the resulting receivable is      reasonable assured.  Revenue is generally recognized at the      point of shipment; however in certain instances as shipping terms dictate,      revenue is recognized when the product reaches the point of destination,      and title to the customer is transferred. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Accounts Receivable.       We maintain an allowance for doubtful accounts for estimated losses      from the failure of our customers to make required payments for products      delivered.  We estimate this allowance based on the age of the      related receivable, knowledge of the financial condition of our customers,      review of historical receivable and reserve trends and other pertinent      information.  In cases where we are aware of circumstances that      may impair a specific customer’s ability to meets its financial      obligations subsequent to the original sale, we record an allowance      against amounts due, and thereby reduce the net recognized receivable to      the amount we reasonable believe will be collected.  If the      financial condition of our customers deteriorates or we experience an      unfavorable trend in receivable collections in the future, additional      allowances may be required.  Historically, our reserves have      approximated actual experience. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Inventory.       Inventories are stated at the lower of cost or      market.  Cost includes materials, labor and overhead and is      determined by the first-in, first-out (FIFO) method.  We review      the net realizable value of inventory in detail on an on-going basis, with      consideration given to deterioration, obsolescence, and other      factors.  If actual market conditions differ from those      projected by management, and our estimates prove to be inaccurate,      write-downs of inventory values and adjustments to cost of sales may be      required.  Historically, our reserves have approximated actual      experience. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Fair Value      Disclosures.  Our financial instruments include cash and      cash equivalents, short-term investments, accounts receivable, accounts      payable, short-term and long-term notes receivable and debt instruments,      certain of which are recorded at fair value. In accordance with SFAS No.      157, Fair Value      Measurement (SFAS 157), we have classified our financial assets as      Level 1, 2 or 3 within the fair value hierarchy.  The fair value      of our financial assets is determined based on either Level 1 or level 2      inputs.  Fair values determined by Level 1 inputs utilize quoted      prices (unadjusted) in active markets for identical assets or liabilities      that we have the ability to access. Fair values determined by Level 2      inputs utilize data points that are observable such as quoted prices,      interest rates and yield curves.  Excluding cash equivalents,      the largest portion of our short-term investments are comprised of      investments that may be sensitive to changes in economic factors such as      interest rates or credit spreads. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Investments.  As      of December 31, 2008 and December 31, 2007, we accounted for all of our      short-term investments as available-for-sale under SFAS No. 115, Accounting for Certain      Investments in Debt and Equity Securities and FASB Staff Position      No. 115-1, The Meaning      of Other-Than Temporary Impairment and Its Application to Certain      Investments.  We report our available-for-sale securities      at fair value in our Consolidated Balance Sheets with unrealized holding      gains and losses, net of tax, included in Accumulated other comprehensive      income.  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 Statements of      Operations.  We periodically evaluate our investments for      other-than-temporary impairment.  We did not find it necessary      to record any other-than-temporary impairment charges to our short-term      investments in the years ended December 31, 2008, 2007 or      2006. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 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.  In      our continuing operations, we did not find it necessary to record any      impairment charges to our tangible or indefinite lived intangible assets      in the years ended December 31, 2008, 2007 or  2006. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Pension      Benefits.  We maintain a number of defined benefit and      one defined contribution plan to provide retirement benefits for      employees.  These plans are maintained and minimum contributions      are made in accordance with the requirements of the Employee Retirement      Income Security Act of 1974 (ERISA).  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 (loss)      income.  Pension expense continues to be recognized in the      financial statements on an actuarial basis.  |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|    | One      significant element in determining our net pension expense is the expected      return on plan assets.  At the end of each year, the expected      return on plan assets is determined based on the expected return of the      various asset classes in the plan’s portfolio and the targeted allocation      of plan assets.  The asset return is developed using historical      asset return performance as well as current and anticipated market      conditions such as inflation, interest rates and market      performance.  We assumed that the expected weighted average      long-term rate of return on plan assets would be 8.25% for our U.S. plans      at December 31, 2008 and 2007, respectively.  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 and      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 Accumulated other      comprehensive (loss) income, and the amortization of the net deferral of      past losses will increase future pension expense.  Asset returns      for our defined benefit pension plans have been significantly impacted      through December 31, 2008 by the overall decrease in fair market value on      our pension plan assets.  We expect that the net effects of      actual returns based on the lower value of plan assets at December 31,      2008 will lead to a significantly higher pension expense in 2009 of      approximately $1.7 million as compared to 2008.  Net periodic      pension expense was $0.2 million for the year ended December 31, 2008,      $0.4 million for the year ended December 31, 2007, and $1.2 million for      the year ended December 31, 2006. Another      significant element in determining our pension expense is the discount      rate for plan liabilities.  To develop the discount rate      assumption to be used, we match projected pension payments to the yield      derived from a spot-rate yield curve that contains a portfolio of      available non-callable bonds rated AA or higher with comparable      maturities.  At December 31, 2008, we determined this rate to be      6.0%.  Changes in discount rates over the past three years have      not materially affected net pension  expense. |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 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 on each. We      adopted the provisions of FIN 48, on      January 1, 2007.  As a result of the implementation of FIN 48,      we were not required to recognize any change in the liability for      unrecognized tax benefits.  The total amount of unrecognized tax      benefits as of December 31, 2008, was $0.6 million (including $0.05      million of accrued interest and penalties), the recognition of which would      have an effect of $0.03 million on our continuing operations' effective      tax rate. We      recognize interest and penalties related to unrecognized tax benefits as      income tax expense.  The interest and penalties in continuing      operations tax expense for the twelve months ended December 31, 2008 was      immaterial. SFAS      No. 109, Accounting for      Income Taxes (SFAS 109), provides certain guidelines to follow in      making the determination of the need for a valuation allowance. We must      demonstrate that taxable income is expected to be available for future      periods sufficient to realize the benefits of temporary differences and      carryforwards to avoid recording a valuation allowance against deferred      tax assets.  We recorded a valuation allowance for the year      ended December 31, 2008 for deferred taxes attributed to financial      reserves in China.  The valuation allowance was recorded due to      prior history of operating losses and the uncertainty of earnings in      future periods at our China facility.  We also reversed the      valuation allowance previously recorded for minimum pension liability at      our Canadian subsidiary for the year ended December 31,      2008.  We have determined that no additional valuation      allowances are necessary as of December 31,      2008. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Foreign Currency Translation      and Transactions.  We have foreign manufacturing      operations in Italy, China and Canada, and revenue and expenses      from these operations are denominated in local currency, thereby      creating exposures to changes in exchange rates.  For the years      ended December 31, 2008, 2007 and 2006, revenue from non-U.S.      countries represented 41.6%, 39.0% and 32.3% of our consolidated      revenue, respectively. Fluctuations in these operations’      respective currencies may have an impact on our business, results of      operations and financial position. We currently do not use financial      instruments to hedge our exposure to exchange rate fluctuations with      respect to our foreign operations. As a result, we may experience      substantial foreign currency translation gains or losses due to the      volatility of other currencies compared to the U.S. dollar, which      may positively or negatively affect our results of operations      attributed to these operations.  Accumulated other comprehensive      (loss) income included translation (losses) gains of $(2.6) million, $3.5      million and $2.1 million for the years ended December 31, 2008, 2007 and      2006, respectively. 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 income (expense), net in our Consolidated Statements of      Operations.  Foreign currency transaction gains or losses were      not material to the results of operations for the years ended. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| ·   | In      December 2008, the FASB issued FASB Staff Position (FSP) SFAS 132 (R)-1,      Employers’ Disclosures      about Postretirement Benefit Plan Assets (FSP      132R-1).  FSP 132-1 amends the disclosure requirements for      employer’s disclosure of plan assets for defined benefit pensions and      other postretirement plans.  The objective of this FSP is to      provide users of financial statements with an understanding of how      investment allocation decisions are made, the major categories of plan      assets held by the plans, the inputs and valuation techniques used to      measure the fair value of plan assets, significant concentration of risk      within the company’s plan assets, and for fair value measurements      determined using significant unobservable inputs a reconciliation of      changes between the beginning and ending balances.  FSP 132R-1      is effective for fiscal years ending after December 15,      2009.  We are currently evaluating the impact of FSP 132R-1 on      our financial statements and intend to adopt the new disclosure      requirements in the 2009 annual reporting  period. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In      November 2008, the FASB ratified Emerging Issues Task Force (EITF) issue      No. 08-7, Accounting for      Defensive Intangible Assets (EITF 08-7).  EITF 08-7      applies to defensive intangible assets, which are acquired intangible      assets that the acquirer does not intend to actively use but intends to      hold to prevent its competitors from obtaining access to      them.  As these assets are separately identifiable, EITF 08-7      requires an acquiring entity to account for defensive intangible assets as      a separate unit of accounting which should be amortized to expense over      the period the asset diminished in value.  Defensive intangible      assets must be recognized at fair value in accordance with SFAS      No. 141(R), Business Combinations,      (SFAS 141(R)) and SFAS 157.  EITF 08-7 is effective for      financial statements issued for fiscal years beginning after December 15,      2008.  We expect EITF 08-7 could have an impact on our      consolidated financial statements, but the nature and magnitude of the      specific effects will depend on the nature, terms and value of the      intangible assets purchased after the effective  date. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On      October 10, 2008, FASB issued FSP 157-3, Determining the Fair Value of      a Financial Asset When the Market for That Asset Is Not Active (FSP      157-3).  FSP 157-3      clarifies the application of SFAS 157 in a market that is not active and      provides an example to illustrate key considerations in determining the      fair value of a financial asset when the market for that financial asset      is not active. FSP 157-3 was effective upon issuance, including prior      periods for which financial statements have not been      issued.  The provisions of FSP 157-3 did not have an impact on      our financial position or results ofoperations. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In      June 2008, the FASB issued Staff Position EITF No. 03-6-1, Determining Whether      Instruments Granted in Share-based Payment Transactions Are Participating      Securities (FSP 03-6-1).  Under FSP 03-6-1, unvested      share-based payment awards that contain rights to receive non-forfeitable      dividends (whether paid or unpaid) are participating securities, and      should be included in the two-class method of computed earnings per      share.  FSP 03-6-1 is effective for fiscal years beginning after      December 15, 2008, and interim periods within those years, and is not      expected to have any impact on our results of operations, financial      position or liquidity. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In      April 2008, the FASB issued FSP No. 142-3, Determination of the Useful      Life of Intangible Assets (FSP 142-3), which amends the factors      that must be considered in developing renewal or extension assumptions      used to determine the useful life over which to amortize the cost of a      recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible      Assets (SFAS 142). FSP 142-3 requires an entity to consider its own      assumptions about renewal or extension of the term of the arrangement,      consistent with its expected use of the asset, and is an attempt to      improve consistency between the useful life of a recognized intangible      asset under SFAS 142 and the period of expected cash flows used to measure      the fair value of the asset under SFAS No. 141, Business Combinations.      FSP 142-3 is effective for fiscal years beginning after December 15,      2008, and the guidance for determining the useful life of a recognized      intangible asset must be applied prospectively to intangible assets      acquired after the effective date. FSP 142-3 is not expected to have a      material impact on our results of operations, financial position or      liquidity. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In      March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative      Instruments and Hedging Activities, an amendment of FASB Statement No. 133      (SFAS 161).  SFAS 161 requires enhanced disclosures about      an entity’s derivative and hedging activities in order to improve the      transparency of financial reporting. SFAS 161 is effective prospectively      for fiscal years beginning after November 15, 2008. We do not expect the      adoption of SFAS 161 will have any impact on our results of operations,      financial position or liquidity. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In      December 2007, the FASB issued SFAS 141(R), which 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.  We expect SFAS 141(R) could have an impact on our      consolidated financial statements, but the nature and magnitude of the      specific effects will depend on the nature, terms and size of the      acquisitions we consummate after the effective date of January 1,      2009. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Year      Ended December 31, 2008 Compared to Year Ended December 31,      2007 |
|---------------------------------------------------------------------------------|

|                                                       |   | Year      Ended December 31 |   |
|------------------------------------------------------------|--------|-----------------------------|--------|
|                                                       |   | 2008                        |   |   | %      ofSales |   |   | 2007 |   |   | %      ofSales |   |
|                                                       |   | (dollars      in millions)  |   |
| Net      sales                                             |   | $                           | 269.6  |   |   |   | 100.0 | % |   | $ | 215.9 |   |   |   | 100.0 | % |
| Cost      of sales                                         |   | $                           | 192.5  |   |   |   | 71.4 | % |   | $ | 164.5 |   |   |   | 76.2 | % |
| Gross      profit                                          |   | $                           | 77.1   |   |   |   | 28.6 | % |   | $ | 51.4 |   |   |   | 23.8 | % |
| Selling,      technical and administrative expenses        |   | $                           | 37.3   |   |   |   | 13.8 | % |   | $ | 31.2 |   |   |   | 14.5 | % |
| Income      from operations                                |   | $                           | 39.2   |   |   |   | 14.5 | % |   | $ | 19.5 |   |   |   | 9.0 | % |
| Interest      expense                                      |   | $                           | 8.1    |   |   |   | 3.0 | % |   | $ | 9.4 |   |   |   | 4.4 | % |
| Interest      income                                       |   | $                           | 2.1    |   |   |   | 0.8 | % |   | $ | 3.8 |   |   |   | 1.8 | % |
| Other      income (expense), net                           |   | $                           | 1.5    |   |   |   | 0.6 | % |   | $ | (0.3 | ) |   |   | -0.1 | % |
| Income      taxes                                          |   | $                           | 12.1   |   |   |   | 4.5 | % |   | $ | 5.8 |   |   |   | 2.7 | % |
| Income      from continuing operations, after income taxes |   | $                           | 22.6   |   |   |   | 8.4 | % |   | $ | 7.8 |   |   |   | 3.6 | % |
| Discontinued      operations, net of tax                   |   | $                           | (1.7   | ) |   |   | -0.6 | % |   | $ | 9.5 |   |   |   | 4.4 | % |
| Net      income                                            |   | $                           | 20.8   |   |   |   | 7.7 | % |   | $ | 17.3 |   |   |   | 8.0 | % |

|                                                                        |   | Year      Ended December 31 |   |
|-----------------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                                        |   | 2008                        |   |   | 2007 |   |
|                                                                        |   | (dollars      in millions)  |   |
| Net      sales                                                              |   | $                           | 7.4    |   |   | $ | 20.1 |   |
| Loss      from discontinued operations, before income taxes                 |   | $                           | (1.8   | ) |   | $ | (3.1 | ) |
| (Loss)      gain on sale of discontinued operations, before income    taxes |   |                        | (1.9   | ) |   |   | 15.0 |   |
| Income      tax (benefit) expense                                           |   |                        | (2.0   | ) |   |   | 2.4 |   |
| (Loss)      income from discontinued operations, after income taxes         |   | $                           | (1.7   | ) |   | $ | 9.5 |   |

|                                                       |   | Year      Ended December 31 |   |
|------------------------------------------------------------|--------|-----------------------------|--------|
|                                                       |   | 2007      (1)               |   |   | %      ofSales |   |   | 2006      (1) |   |   | %      ofSales |   |
|                                                       |   | (dollars      in millions)  |   |
| Net      sales                                             |   | $                           | 215.9  |   |   |   | 100.0 | % |   | $ | 199.9 |   |   |   | 100.0 | % |
| Cost      of sales                                         |   | $                           | 164.5  |   |   |   | 76.2 | % |   | $ | 155.0 |   |   |   | 77.5 | % |
| Gross      profit                                          |   | $                           | 51.4   |   |   |   | 23.8 | % |   | $ | 44.9 |   |   |   | 22.5 | % |
| Selling,      technical and administrative expenses        |   | $                           | 31.2   |   |   |   | 14.5 | % |   | $ | 29.0 |   |   |   | 14.5 | % |
| Income      from operations                                |   | $                           | 19.5   |   |   |   | 9.0 | % |   | $ | 15.4 |   |   |   | 7.7 | % |
| Interest      expense                                      |   | $                           | 9.4    |   |   |   | 4.4 | % |   | $ | (11.2 | ) |   |   | -5.6 | % |
| Interest      income                                       |   | $                           | 3.8    |   |   |   | 1.8 | % |   | $ | 0.1 |   |   |   | 0.0 | % |
| Other      (expense) income, net                           |   | $                           | (0.3   | ) |   |   | -0.1 | % |   | $ | 0.1 |   |   |   | 0.0 | % |
| Income      taxes                                          |   | $                           | 5.8    |   |   |   | 2.7 | % |   | $ | 2.8 |   |   |   | 1.4 | % |
| Income      from continuing operations, after income taxes |   | $                           | 7.8    |   |   |   | 3.6 | % |   | $ | 1.6 |   |   |   | 0.8 | % |
| Discontinued      operations, net of tax                   |   | $                           | 9.5    |   |   |   | 4.4 | % |   | $ | 1.4 |   |   |   | 0.7 | % |
| Net      income                                            |   | $                           | 17.3   |   |   |   | 8.0 | % |   | $ | 3.0 |   |   |   | 1.5 | % |

| (1)   | Excludes      results of our performance racing segment which was classified as a      discontinued operation in the first quarter of 2008, requiring all prior      periods to be restated. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                 |   | Year      ended December 31 |   |
|----------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                                 |   | 2007(1)                     |   |   | 2006(1) |   |
|                                                                 |   | (dollars      in millions)  |   |
| Net      sales                                                       |   | $                           | 20.1   |   |   | $ | 111.0 |   |
| (Loss)      income from discontinued operations, before income taxes |   | $                           | (3.1   | ) |   | $ | 7.6 |   |
| Goodwill      impairment charge                                      |   |                        | -      |   |   |   | (4.5 | ) |
| Gain      on sale of discontinued operations, before income taxes    |   |                        | 15.0   |   |   |   | - |   |
| Income      tax expense                                              |   |                        | 2.4    |   |   |   | 1.7 |   |
| Income      from discontinued operations, after income taxes         |   | $                           | 9.5    |   |   | $ | 1.4 |   |

| (1)   |  Includes      results of our performance racing segment which was classified as a      discontinued operation in the first quarter of 2008, requiring all prior      periods to be restated. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | for      capital expenditures for maintenance, replacement and acquisition of      equipment, expansion of capacity, productivity improvements and 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           |   |
|----------------------------------------------------------|--------|----------------------------|--------|
|                                                     |   | 2008                       |   |   | 2007 |   |   | 2006 |   |
|                                                     |   | (dollars      in millions) |   |
| Cash      and cash equivalents                           |   | $                          | 62.5   |   |   | $ | 22.0 |   |   | $ | 6.2 |   |
| Short-term      investments                              |   | $                          | 30.8   |   |   | $ | 59.0 |   |   | $ | - |   |
| Working      capital (1)                                 |   | $                          | 126.0  |   |   | $ | 113.3 |   |   | $ | 115.8 |   |
| Current      ratio (2)                                   |   | 3.4      to 1              |   |   | 3.1      to 1 |   |   | 3.0      to 1 |   |
| Net      debt as a % of capitalization (3)      (4)      |   |                       | -      |   |   |   | 8.4 | % |   |   | 69.2 | % |
| Average      number of days sales in accounts receivable |   | 52      days               |   |   | 63      days |   |   | 61      days |   |
| Average      number of days sales in inventory           |   | 78      days               |   |   | 81      days |   |   | 81      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 short-term      investments.  Capitalization is defined as net debt plus      shareholders’ equity. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4)   | We      have zero net debt at December 31, 2008, because our cash, cash      equivalents and short-term investments were $6.2 million higher than total      debt. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                               |   | Year      Ended December 31 |   |
|------------------------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                                               |   | 2008                        |   |   | 2007 |   |   | 2006 |   |
|                                                                               |   | (dollars      in millions)  |   |
| Cash      provided by (used in) operating activities of continuing      operations |   | $                           | 23.6   |   |   | $ | 20.4 |   |   | $ | (1.0 | ) |
| Cash      provided by (used in) investing activities of continuing      operations |   |                        | 16.7   |   |   |   | 29.7 |   |   |   | (6.3 | ) |
| Cash      used in financing activities of continuing operations                    |   |                        | (0.7   | ) |   |   | (26.6 | ) |   |   | (5.3 | ) |
| Effect      of exchange rates on cash                                              |   |                        | (0.9   | ) |   |   | 0.7 |   |   |   | 0.5 |   |
| Cash      provided by (used in) discontinued operations                            |   |                        | 1.8    |   |   |   | (8.4 | ) |   |   | 11.5 |   |
| Net      increase (decrease)  in cash and cash equivalents                    |   | $                           | 40.5   |   |   | $ | 15.8 |   |   | $ | (0.6 | ) |

|               |   | December      31           |   |
|--------------------|--------|----------------------------|--------|
|               |   | 2008                       |   |   | 2007 |   |
|               |   | (dollars      in millions) |   |
| Senior      notes  |   | $                          | 87.1   |   |   | $ | 87.1 |   |
| Bank      facility |   |                       | -      |   |   |   | - |   |
| Other              |   |                       | -      |   |   |   | 0.1 |   |
| Total      debt    |   | $                          | 87.1   |   |   | $ | 87.2 |   |

| 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 substanitally 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. |   |

| ITEM      7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET      RISK |
|------------------------------------------------------------------------------------------|

because of the relatively low rates of inflation experienced byus during the last few years.  During the second and third quarters of2008, we faced inflationary and other pricing pressures with respect to steel,copper and fuel, which have been partially mitigated by pricing adjustments toour customers, though we do usually experience delays between our raw materialcost increases and sales price increases.  
Theability to pass on these expected price increases to our customers is dependenton market conditions.  It is difficult to predict the impact thatpossible future raw material cost decreases might have on ourprofitability.  The effect of deflation in raw material costs woulddepend on the extent to which we had to lower selling prices of our products torespond to sales price competition in the market.  Consequently, it isdifficult for us to accurately predict the impact that inflation or deflationmight have on our operations.  Based on current information, we expectthat neither inflation nor deflation will have a material impact on ouroperations during the next twelve months.

| (Dollars      in Thousands)                    |   | Total  |    |   | 2009   |   |   |   | 2010      - 2012 |   |   |   | 2013-2015 |   |   | Thereafter |   |
|------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|------------------|--------|--------|--------|-----------|--------|--------|------------|--------|
| Contractual      obligations (1) (2)      (3): |   |   |    |   |   |   |   |   |             |   |   |   |      |   |   |       |   |
| Bank      facility (4)                         |   | $      | -       |   |   |   | -      |   |             |   | -      |   |      |   | -      |       |   |   | - |   |
| Senior      notes (5)                          |   |   | 87,090  |   |   |   | -      |   |             |   | -      |   |      |   | 87,090 |       |   |   | - |   |
| Operating      leases                          |   |   | 26,884  |   |   |   | 3,469  |   |             |   | 9,089  |   |      |   | 7,041  |       |   |   | 7,285 |   |
| Purchase      obligations (6)                  |   |   | 34,999  |   |   |   | 34,701 |   |             |   | 228    |   |      |   | 70     |       |   |   | - |   |
| Total      contractual obligations             |   | $      | 148,973 |   |   | $      | 38,170 |   |             | $      | 9,317  |   |      | $      | 94,201 |       |   | $ | 7,285 |   |
| Other      commercial commitments:             |   |   |    |   |   |   |   |   |             |   |   |   |      |   |   |       |   |   |   |   |
| Stand-by      letters of credit                |   | $      | 893     |   |   | $      | 893    |   |             |   |   |   |      |   |   |       |   |   |   |   |

| (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 becomedue. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | The      above table does not include approximately $586 of unrecognized tax      benefits 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 obligation. |
|-----------------|--------------------------------|

| (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 purchase  order. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

| ITEM      8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY  DATA |
|----------------------------------------------------------------------|

| Report      of Ernst & Young LLP, Independent Registered Public Accounting      Firm                           | 31  |
|--------------------------------------------------------------------------------------------------------------------|----------|
| Report      of Ernst & Young LLP, Independent Registered Public Accounting Firm –      Internal Controls | 32  |
| Consolidated      Balance Sheets                                                                                   | 33  |
| Consolidated      Statements of Operations                                                                         | 35  |
| Consolidated      Statements of Shareholders’ Equity                                                         | 36  |
| Consolidated      Statements of Cash Flows                                                                         | 37  |
| Notes      to Consolidated Financial Statements                                                                    | 39       |

|                                                                           |   | December      31 |    |
|--------------------------------------------------------------------------------|--------|------------------|---------|
|                                                                           |   | 2008             |    |   | 2007 |   |
| Assets                                                                         |   |             |    |   |   |   |
| Current      assets:                                                           |   |             |    |   |   |   |
| Cash      and cash equivalents                                                 |   | $                | 62,520  |   |   | $ | 21,992 |   |
| Short-term      investments                                                    |   |             | 30,774  |   |   |   | 58,999 |   |
| Accounts      receivable, less allowance of $1,328 in 2008 and $847 in    2007 |   |             | 38,569  |   |   |   | 37,306 |   |
| Inventories:                                                                   |   |             |    |   |   |   |   |   |
| Raw      materials                                                             |   |             | 10,607  |   |   |   | 9,830 |   |
| Work-in-process                                                                |   |             | 16,967  |   |   |   | 15,882 |   |
| Finished      products                                                         |   |             | 13,803  |   |   |   | 11,007 |   |
| Total      inventories                                                         |   |             | 41,377  |   |   |   | 36,719 |   |
| Deferred      income taxes                                                     |   |             | 414     |   |   |   | 1,355 |   |
| Other      current assets                                                      |   |             | 5,521   |   |   |   | 4,946 |   |
| Current      assets of discontinued operations                                 |   |             | -       |   |   |   | 5,509 |   |
| Total      current assets                                                      |   |             | 179,175 |   |   |   | 166,826 |   |
|                                                                           |   |             |    |   |   |   |   |   |
| Property,      plant and equipment:                                            |   |             |    |   |   |   |   |   |
| Land      and improvements                                                     |   |             | 1,154   |   |   |   | 1,186 |   |
| Buildings      and improvements                                                |   |             | 16,227  |   |   |   | 15,459 |   |
| Machinery      and equipment                                                   |   |             | 94,388  |   |   |   | 86,977 |   |
| Furniture      and fixtures                                                    |   |             | 8,225   |   |   |   | 8,203 |   |
| Construction      in progress                                                  |   |             | 6,638   |   |   |   | 2,524 |   |
|                                                                           |   |             | 126,632 |   |   |   | 114,349 |   |
| Less      accumulated depreciation                                             |   |             | 79,134  |   |   |   | 74,774 |   |
| Total      property, plant and equipment                                       |   |             | 47,498  |   |   |   | 39,575 |   |
|                                                                           |   |             |    |   |   |   |   |   |
| Other      assets:                                                             |   |             |    |   |   |   |   |   |
| Finite-lived      intangible assets                                            |   |             | 6,568   |   |   |   | 7,157 |   |
| Deferred      income taxes                                                     |   |             | 2,381   |   |   |   | 685 |   |
| Other                                                                          |   |             | 4,370   |   |   |   | 4,491 |   |
| Long-term      assets of discontinued operations                               |   |             | -       |   |   |   | 1,170 |   |
| Total      other assets                                                        |   |             | 13,319  |   |   |   | 13,503 |   |
| Total      assets                                                              |   | $                | 239,992 |   |   | $ | 219,904 |   |

|                                                                                                                                                                                                                             |   | December      31 |    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|---------|
|                                                                                                                                                                                                                             |   | 2008             |    |   | 2007 |   |
| Liabilities      and shareholders' equity                                                                                                                                                                                        |   |             |    |   |   |   |
| Current      liabilities:                                                                                                                                                                                                        |   |             |    |   |   |   |
| Accounts      payable                                                                                                                                                                                                            |   | $                | 30,207  |   |   | $ | 30,325 |   |
| Accrued      compensation                                                                                                                                                                                                        |   |             | 9,910   |   |   |   | 8,675 |   |
| Accrued      interest                                                                                                                                                                                                            |   |             | 3,816   |   |   |   | 3,816 |   |
| Accrued      taxes                                                                                                                                                                                                               |   |             | 2,253   |   |   |   | 1,762 |   |
| Other      accrued expenses                                                                                                                                                                                                      |   |             | 7,031   |   |   |   | 7,181 |   |
| Current      portion of long-term debt                                                                                                                                                                                           |   |             | -       |   |   |   | 59 |   |
| Current      liabilities of discontinued operations                                                                                                                                                                              |   |             | -       |   |   |   | 1,740 |   |
| Total      current liabilities                                                                                                                                                                                                   |   |             | 53,217  |   |   |   | 53,558 |   |
|                                                                                                                                                                                                                             |   |             |    |   |   |   |   |   |
| Long-term      liabilities:                                                                                                                                                                                                      |   |             |    |   |   |   |   |   |
| Long-term      debt                                                                                                                                                                                                              |   |             | 87,090  |   |   |   | 87,090 |   |
| Deferred      income taxes                                                                                                                                                                                                       |   |             | 338     |   |   |   | 922 |   |
| Pension      liabilities                                                                                                                                                                                                         |   |             | 11,300  |   |   |   | 679 |   |
| Other      accrued expenses                                                                                                                                                                                                      |   |             | 10,656  |   |   |   | 10,331 |   |
| Total      long-term liabilities                                                                                                                                                                                                 |   |             | 109,384 |   |   |   | 99,022 |   |
|                                                                                                                                                                                                                             |   |             |    |   |   |   |   |   |
| 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; 8,836,424 and 8,966,969 outstanding in 2008 and 2007,      respectively                                           |   |             | 92      |   |   |   | 92 |   |
| Class      B common stock, $.01 par value; 10,000,000 shares      authorized; none      issued or outstanding                                                                                                               |   |             | -       |   |   |   | - |   |
| Additional      paid-in capital                                                                                                                                                                                                  |   |             | 54,738  |   |   |   | 53,068 |   |
| Retained      earnings                                                                                                                                                                                                           |   |             | 35,784  |   |   |   | 15,092 |   |
| Accumulated      other comprehensive (loss) income                                                                                                                                                                               |   |             | (8,232  | ) |   |   | 2,041 |   |
| Treasury      stock, at cost, 351,326 and 220,781 shares in 2008 and 2007,      respectively                                                                                                                                |   |             | (4,992  | ) |   |   | (2,970 | ) |
| Total      shareholders' equity                                                                                                                                                                                                  |   |             | 77,391  |   |   |   | 67,324 |   |
| Total      liabilities and shareholders' equity                                                                                                                                                                                  |   | $                | 239,992 |   |   | $ | 219,904 |   |

|                                                                                                                                                            |   | Year      Ended December 31 |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|
|                                                                                                                                                            |   | 2008                        |    |   | 2007 |   |   | 2006 |   |
| Net      sales                                                                                                                                                  |   | $                           | 269,648 |   |   | $ | 215,879 |   |   | $ | 199,915 |   |
| Cost      of sales                                                                                                                                              |   |                        | 192,552 |   |   |   | 164,509 |   |   |   | 155,046 |   |
| Gross      profit                                                                                                                                               |   |                        | 77,096  |   |   |   | 51,370 |   |   |   | 44,869 |   |
|                                                                                                                                                            |   |                        |    |   |   |   |   |   |   |   |   |   |
| Operating      expenses:                                                                                                                                        |   |                        |    |   |   |   |   |   |   |   |   |   |
| Selling,      technical and administrative expenses                                                                                                             |   |                        | 37,325  |   |   |   | 31,172 |   |   |   | 28,984 |   |
| Amortization      of finite-lived intangible assets                                                                                                             |   |                        | 589     |   |   |   | 727 |   |   |   | 495 |   |
| Total      operating expenses                                                                                                                                   |   |                        | 37,914  |   |   |   | 31,899 |   |   |   | 29,479 |   |
| Income      from operations                                                                                                                                     |   |                        | 39,182  |   |   |   | 19,471 |   |   |   | 15,390 |   |
|                                                                                                                                                            |   |                        |    |   |   |   |   |   |   |   |   |   |
| Interest      expense                                                                                                                                           |   |                        | (8,055  | ) |   |   | (9,394 | ) |   |   | (11,182 | ) |
| Interest      income                                                                                                                                            |   |                        | 2,089   |   |   |   | 3,835 |   |   |   | 98 |   |
| Other      income (expense), net                                                                                                                                |   |                        | 1,503   |   |   |   | (297 | ) |   |   | 106 |   |
| Income      from continuing operations, before income taxes                                                                                                     |   |                        | 34,719  |   |   |   | 13,615 |   |   |   | 4,412 |   |
|                                                                                                                                                            |   |                        |    |   |   |   |   |   |   |   |   |   |
| Income      tax provision                                                                                                                                       |   |                        | 12,139  |   |   |   | 5,829 |   |   |   | 2,819 |   |
|                                                                                                                                                            |   |                        |    |   |   |   |   |   |   |   |   |   |
| Income      from continuing operations, after income taxes                                                                                                      |   |                        | 22,580  |   |   |   | 7,786 |   |   |   | 1,593 |   |
| (Loss)      income from discontinued operations, after income tax (benefit)      expense of ($1,957) in 2008, $2,414 in 2007, and $1,776      in 2006 |   |                        | (1,738  | ) |   |   | 9,482 |   |   |   | 1,376 |   |
|                                                                                                                                                            |   |                        |    |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                                                                                 |   | $                           | 20,842  |   |   | $ | 17,268 |   |   | $ | 2,969 |   |
|                                                                                                                                                            |   |                        |    |   |   |   |   |   |   |   |   |   |
| Earnings      per share:                                                                                                                                        |   |                        |    |   |   |   |   |   |   |   |   |   |
| Basic      earnings per share:                                                                                                                                  |   |                        |    |   |   |   |   |   |   |   |   |   |
| Income      from continuing operations, after income taxes                                                                                                      |   | $                           | 2.50    |   |   | $ | 0.85 |   |   | $ | 0.16 |   |
| Discontinued      operations, after income taxes                                                                                                                |   |                        | (0.19   | ) |   |   | 1.06 |   |   |   | 0.15 |   |
| Net      earnings per basic share                                                                                                                               |   | $                           | 2.31    |   |   | $ | 1.91 |   |   | $ | 0.31 |   |
|                                                                                                                                                            |   |                        |    |   |   |   |   |   |   |   |   |   |
| Diluted      earnings per share:                                                                                                                                |   |                        |    |   |   |   |   |   |   |   |   |   |
| Income      from continuing operations, after income taxes                                                                                                      |   | $                           | 2.40    |   |   | $ | 0.82 |   |   | $ | 0.15 |   |
| Discontinued      operations, after income taxes                                                                                                                |   |                        | (0.19   | ) |   |   | 1.01 |   |   |   | 0.15 |   |
| Net      earnings per diluted share                                                                                                                             |   | $                           | 2.21    |   |   | $ | 1.83 |   |   | $ | 0.30 |   |
|                                                                                                                                                            |   |                        |    |   |   |   |   |   |   |   |   |   |
| Average      shares outstanding - basic                                                                                                                         |   |                        | 8,964   |   |   |   | 8,967 |   |   |   | 8,993 |   |
|                                                                                                                                                            |   |                        |    |   |   |   |   |   |   |   |   |   |
| Average      shares and equivalents outstanding - diluted                                                                                                       |   |                        | 9,356   |   |   |   | 9,360 |   |   |   | 9,514 |   |
|                                                                                                                                                            |   |                        |    |   |   |   |   |   |   |   |   |   |
| Income      available to common shareholders                                                                                                                    |   | $                           | 20,692  |   |   | $ | 17,118 |   |   | $ | 2,819 |   |

|                                                                                           |   |                 |   |   |              |   |   |                            |   |   |                             |   |   | Accumulated      Other Comprehensive (Loss) Income |   |   |                             |   |   |                                                |   |
|------------------------------------------------------------------------------------------------|--------|----------------------|--------|--------|-------------------|--------|--------|---------------------------------|--------|--------|----------------------------------|--------|--------|----------------------------------------------------|--------|--------|----------------------------------|--------|--------|-----------------------------------------------------|--------|
|                                                                                           |   | Preferred      Stock |   |   | Common      Stock |   |   | Additional      Paid-in Capital |   |   | Retained      Earnings (Deficit) |   |   | Foreign      Currency Translation                  |   |   | Change      in Pension Liability |   |   | Unrealized      Gain /Loss on Marketable Securities |   |   | Treasury      Stock |   |   | Total |   |
| Balance      at January 1, 2006                                                                |   | $                    | 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 |   |
| Issuance      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):                                                        |   |                 |   |   |              |   |   |                            |   |   |                             |   |   |                                               |   |   |                             |   |   |                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Change      in funded status of pensions, net of tax of $1,114                                 |   |                 | -      |   |              |   | -      |                            |   |   | -                                |   |   |                                               | -      |   |                             |   | -      |                                                |   |   | 1,980 |   |   |   | - |   |   |   | - |   |   |   | 1,980 |   |
| Unrealized      gain 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                              |   |   |                                               | -      |   |                             |   | -      |                                                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 390 |   |
| Stock      repurchase                                                                          |   |                 | -      |   |              |   | -      |                            |   |   | -                                |   |   |                                               | -      |   |                             |   | -      |                                                |   |   | - |   |   |   | - |   |   |   | (3,694 | ) |   |   | (3,694 | ) |
| Issuance      of common stock from treasury as compensation and exercise of stock      options |   |                 | -      |   |              |   | -      |                            |   |   | (814                             | )      |   |                                               | -      |   |                             |   | -      |                                                |   |   | - |   |   |   | - |   |   |   | 2,087 |   |   |   | 1,273 |   |
| Balance      at December 31, 2007                                                              |   | $                    | 1      |   |              | $      | 92     |                            |   | $      | 53,068                           |   |   | $                                                  | 15,092 |   |                             | $      | 5,687  |                                                |   | $ | (3,711 | ) |   | $ | 65 |   |   | $ | (2,970 | ) |   | $ | 67,324 |   |
| Net      income                                                                                |   |                 | -      |   |              |   | -      |                            |   |   | -                                |   |   |                                               | 20,842 |   |                             |   | -      |                                                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 20,842 |   |
| Other      comprehensive income (loss):                                                        |   |                 |   |   |              |   |   |                            |   |   |                             |   |   |                                               |   |   |                             |   |   |                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Change      in funded status of pensions, net of tax of $4,276                                 |   |                 | -      |   |              |   | -      |                            |   |   | -                                |   |   |                                               | -      |   |                             |   | -      |                                                |   |   | (7,596 | ) |   |   | - |   |   |   | - |   |   |   | (7,596 | ) |
| Unrealized loss      on marketable securities, net of tax of $25                          |   |                 | -      |   |              |   | -      |                            |   |   | -                                |   |   |                                               | -      |   |                             |   | -      |                                                |   |   | - |   |   |   | (44 | ) |   |   | - |   |   |   | (44 | ) |
| Foreign      currency translation                                                              |   |                 | -      |   |              |   | -      |                            |   |   | -                                |   |   |                                               | -      |   |                             |   | (2,744 | )                                                   |   |   | 111 |   |   |   | - |   |   |   | - |   |   |   | (2,633 | ) |
| Total      comprehensive loss                                                                  |   |                 | -      |   |              |   | -      |                            |   |   | -                                |   |   |                                               | -      |   |                             |   | -      |                                                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (10,273 | ) |
| Preferred      stock dividends                                                                 |   |                 | -      |   |              |   | -      |                            |   |   | -                                |   |   |                                               | (150   | )      |                             |   | -      |                                                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (150 | ) |
| Share      based compensation - FAS 123(R)                                                     |   |                 | -      |   |              |   | -      |                            |   |   | 808                              |   |   |                                               | -      |   |                             |   | -      |                                                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 808 |   |
| Stock      repurchase                                                                          |   |                 | -      |   |              |   | -      |                            |   |   | -                                |   |   |                                               | -      |   |                             |   | -      |                                                |   |   | - |   |   |   | - |   |   |   | (2,335 | ) |   |   | (2,335 | ) |
| Tax      benefit from exercise of incentive stock options                                      |   |                 | -      |   |              |   | -      |                            |   |   | 908                              |   |   |                                               | -      |   |                             |   | -      |                                                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 908 |   |
| Issuance      of common stock from treasury as compensation and exercise of stock      options |   |                 | -      |   |              |   | -      |                            |   |   | (46                              | )      |   |                                               | -      |   |                             |   | -      |                                                |   |   | - |   |   |   | - |   |   |   | 313 |   |   |   | 267 |   |
| Balance      at December 31, 2008                                                              |   | $                    | 1      |   |              | $      | 92     |                            |   | $      | 54,738                           |   |   | $                                                  | 35,784 |   |                             | $      | 2,943  |                                                |   | $ | (11,196 | ) |   | $ | 21 |   |   | $ | (4,992 | ) |   | $ | 77,391 |   |

|                                                                                        |   | Year      Ended December 31 |     |
|---------------------------------------------------------------------------------------------|--------|-----------------------------|----------|
|                                                                                        |   | 2008                        |     |   | 2007 |   |   | 2006 |   |
| Cash      flows from operating activities                                                   |   |                        |     |   |   |   |   |   |   |
| Net      income                                                                             |   | $                           | 20,842   |   |   | $ | 17,268 |   |   | $ | 2,969 |   |
| Adjustments      to reconcile net income to net cash provided by operating      activities: |   |                        |     |   |   |
| Loss      (income) from discontinued operations, net of tax                                 |   |                        | 482      |   |   |   | 2,461 |   |   |   | (1,376 | ) |
| Loss      (gain) on sale of discontinued operations, net of tax                             |   |                        | 1,256    |   |   |   | (11,943 | ) |   |   | - |   |
| Depreciation      and amortization                                                          |   |                        | 7,767    |   |   |   | 7,682 |   |   |   | 7,494 |   |
| Deferred      income taxes                                                                  |   |                        | 1,631    |   |   |   | 1,999 |   |   |   | (1,543 | ) |
| Amortization      of discount on investments                                                |   |                        | (1,260   | ) |   |   | (2,753 | ) |   |   | - |   |
| Loss      on sale or disposal of fixed assets                                               |   |                        | 202      |   |   |   | 114 |   |   |   | 166 |   |
| Write-off      of deferred financing fees                                                   |   |                        | -        |   |   |   | 583 |   |   |   | - |   |
| Stock      option expense                                                                   |   |                        | 808      |   |   |   | 390 |   |   |   | 264 |   |
| Changes      in operating assets and liabilites:                                            |   |                        |     |   |   |   |   |   |   |   |   |   |
| Accounts      receivable                                                                    |   |                        | (2,277   | ) |   |   | (1,351 | ) |   |   | (10,652 | ) |
| Inventories                                                                                 |   |                        | (5,255   | ) |   |   | (1,253 | ) |   |   | (894 | ) |
| Other      assets                                                                           |   |                        | (1,082   | ) |   |   | (898 | ) |   |   | (4,934 | ) |
| Accounts      payable                                                                       |   |                        | (473     | ) |   |   | 7,308 |   |   |   | (287 | ) |
| Accrued      expenses                                                                       |   |                        | 2,445    |   |   |   | 1,610 |   |   |   | 3,660 |   |
| Decrease      in pension accounts, net                                                      |   |                        | (1,617   | ) |   |   | (1,621 | ) |   |   | (80 | ) |
| Other                                                                                       |   |                        | 99       |   |   |   | 819 |   |   |   | 4,235 |   |
| Net      cash provided by (used in) operating activities of continuing      operations      |   |                        | 23,568   |   |   |   | 20,415 |   |   |   | (978 | ) |
| Net      cash provided by (used in) operating activities of discontinued      operations    |   |                        | 1,939    |   |   |   | (6,954 | ) |   |   | 16,989 |   |
|                                                                                        |   |                        |     |   |   |   |   |   |   |   |   |   |
| Cash      flows from investing activities                                                   |   |                        |     |   |   |   |   |   |   |   |   |   |
| Proceeds      from sale of discontinued operations                                          |   |                        | 2,650    |   |   |   | 93,355 |   |   |   | - |   |
| Purchases      of held to maturity securities                                               |   |                        | -        |   |   |   | (78,969 | ) |   |   | - |   |
| Proceeds      from maturity of held to maturity securities                                  |   |                        | -        |   |   |   | 80,475 |   |   |   | - |   |
| Purchases      of available for sale securities                                             |   |                        | (311,355 | ) |   |   | (263,869 | ) |   |   | - |   |
| Proceeds      from available for sale securities                                            |   |                        | 340,571  |   |   |   | 206,306 |   |   |   | - |   |
| Purchases      of property, plant and equipment                                             |   |                        | (15,204  | ) |   |   | (7,648 | ) |   |   | (7,894 | ) |
| Proceeds      from sale of property, plant and equipment                                    |   |                        | 18       |   |   |   | 17 |   |   |   | 1,624 |   |
| Net      cash provided by (used in) investing activities of continuing      operations      |   |                        | 16,680   |   |   |   | 29,667 |   |   |   | (6,270 | ) |
| Net      cash used in investing activities of discontinued    operations                    |   |                        | (51      | ) |   |   | (1,423 | ) |   |   | (5,352 | ) |
|                                                                                        |   |                        |     |   |   |   |   |   |   |   |   |   |
| Cash      flows from financing activities                                                   |   |                        |     |   |   |   |   |   |   |   |   |   |
| Proceeds      from short-term debt                                                          |   |                        | -        |   |   |   | - |   |   |   | 444 |   |
| Payments      on short-term debt                                                            |   |                        | -        |   |   |   | (980 | ) |   |   | (804 | ) |
| Proceeds      from long-term debt                                                           |   |                        | -        |   |   |   | 10,964 |   |   |   | 82,450 |   |
| Payments      on long-term debt                                                             |   |                        | (59      | ) |   |   | (34,006 | ) |   |   | (87,640 | ) |
| Receipts      from government grants                                                        |   |                        | 675      |   |   |   | - |   |   |   | - |   |
| Proceeds      from stock options                                                            |   |                        | 221      |   |   |   | 1,233 |   |   |   | 371 |   |
| Stock      repurchase                                                                       |   |                        | (2,335   | ) |   |   | (3,694 | ) |   |   | - |   |
| Tax      benefit from exercise of incentive stock options                                   |   |                        | 908      |   |   |   | - |   |   |   | - |   |
| Payments      of preferred stock dividends                                                  |   |                        | (150     | ) |   |   | (150 | ) |   |   | (150 | ) |
| Net      cash used in financing activities of continuing operations                         |   |                        | (740     | ) |   |   | (26,633 | ) |   |   | (5,329 | ) |
| Net      cash used in financing activities of discontinued    operations                    |   |                        | -        |   |   |   | (14 | ) |   |   | (181 | ) |
| Effect      of exchange rate changes on cash                                                |   |                        | (868     | ) |   |   | 771 |   |   |   | 531 |   |
| Net      cash provided by (used in) continuing operations                                   |   |                        | 38,640   |   |   |   | 24,220 |   |   |   | (12,046 | ) |
| Net      cash provided by (used in) discontinued operations                                 |   |                        | 1,888    |   |   |   | (8,391 | ) |   |   | 11,456 |   |
| Net      increase (decrease) in cash and cash equivalents                                   |   |                        | 40,528   |   |   |   | 15,829 |   |   |   | (590 | ) |
| Cash      and cash equivalents at beginning of period                                       |   |                        | 21,992   |   |   |   | 6,163 |   |   |   | 6,753 |   |
| Cash      and cash equivalents at end of period                                             |   | $                           | 62,520   |   |   | $ | 21,992 |   |   | $ | 6,163 |   |

|                                                                              |   | Year      ended December 31 |   |
|-----------------------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                                              |   | 2008                        |   |   | 2007 |   |   | 2006 |   |
| Supplemental      cash flow information                                           |   |                        |   |   |   |   |   |   |   |
| Cash      payments for interest                                                   |   | $                           | 7,697  |   |   | $ | 10,032 |   |   | $ | 10,705 |   |
| Cash      payments for taxes                                                      |   | $                           | 5,797  |   |   | $ | 5,602 |   |   | $ | 3,017 |   |
| Cash      refunds for taxes                                                       |   | $                           | (580   | ) |   | $ | (544 | ) |   | $ | (130 | ) |
| Noncash      investing and financing activities:                                  |   |                        |   |   |   |   |   |   |   |   |   |   |
|     Tax      benefit from exercise of incentive stock options |   | $                           | 908    |   |   | $ | - |   |   | $ | - |   |

|                                                                        |   | Year      Ended December 31 |   |
|-----------------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                                        |   | 2008                        |   |   | 2007 |   |   | 2006 |   |
| Net      sales                                                              |   | $                           | 7,373  |   |   | $ | 20,093 |   |   | $ | 111,011 |   |
|                                                                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| (Loss)      income from discontinued operations, before income taxes        |   | $                           | (1,799 | ) |   | $ | (3,127 | ) |   | $ | 7,617 |   |
| Goodwill      impariment charge                                             |   |                        | -      |   |   |   | - |   |   |   | (4,465 | ) |
| (Loss)      gain on sale of discontinued operations, before income    taxes |   |                        | (1,896 | ) |   |   | 15,023 |   |   |   | - |   |
| Income      tax (benefit) expense                                           |   |                        | (1,957 | ) |   |   | 2,414 |   |   |   | 1,776 |   |
| (Loss)      income from discontinued operations, after income taxes         |   | $                           | (1,738 | ) |   | $ | 9,482 |   |   | $ | 1,376 |   |

|                                                                                         |   | Year      Ended December 31 |   |
|----------------------------------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                                                         |   | 2008                        |   |   | 2007 |   |   | 2006 |   |
| Basic      (loss) earnings per share from discontinued operations, after income      taxes   |   |                        |   |   |   |   |   |   |   |
| (Loss)      income from discontinued operations, after income taxes                          |   |                        | (0.05  | ) |   | $ | (0.27 | ) |   | $ | 0.15 |   |
| (Loss)      gain on sale of discontinued operations, after incometaxes                       |   |                        | (0.14  | ) |   |   | 1.33 |   |   |   | - |   |
| Basic      (loss) earnings per share from discontinued operations, after income      taxes   |   | $                           | (0.19  | ) |   | $ | 1.06 |   |   | $ | 0.15 |   |
| Diluted      (loss) earnings per share from discontinued operations, after income      taxes |   |                        |   |   |   |   |   |   |   |   |   |   |
| (Loss)      income from discontinued operations, after income taxes                          |   | $                           | (0.05  | ) |   | $ | (0.27 | ) |   | $ | 0.15 |   |
| (Loss)      gain on sale of discontinued operations, after incometaxes                       |   |                        | (0.14  | ) |   |   | 1.28 |   |   |   | - |   |
| Diluted      (loss) earnings per share from discontinued operations, after income      taxes |   | $                           | (0.19  | ) |   | $ | 1.01 |   |   | $ | 0.15 |   |

|                                                 |   | December      31 |   |
|------------------------------------------------------|--------|------------------|--------|
|                                                 |   | 2007             |   |
| Cash                                                 |   | $                | 23     |   |
| Accounts      receivable                             |   |             | 1,105  |   |
| Inventory                                            |   |             | 4,331  |   |
| Other      current assets                            |   |             | 50     |   |
| Total      current assets of discontinued operations |   | $                | 5,509  |   |
| Property,      plant and equipment                   |   |             | 1,170  |   |
| Total      assets of discontinued operations         |   | $                | 6,679  |   |
|                                                 |   |             |   |   |
| Accounts      payable                                |   | $                | 1,124  |   |
| Other      accrued expenses                          |   |             | 616    |   |
| Total      liabilities of discontinued operations    |   | $                | 1,740  |   |

|                     |   | Total  |   |   | Level      1 |   |   | Level      2 |   |   | Level      3 |   |
|--------------------------|--------|--------|--------|--------|--------------|--------|--------|--------------|--------|--------|--------------|--------|
| Money      market funds  |   | $      | 22,031 |   |         | $      | 22,031 |         |   | $      | -            |   |   | $ | - |   |
| Mutual      funds        |   |   | 25,028 |   |         |   | 25,028 |         |   |   | -            |   |   |   | - |   |
| Commercial      paper    |   |   | 19,956 |   |         |   | -      |         |   |   | 19,956       |   |   |   | - |   |
| U.S.      govt. agencies |   |   | 10,000 |   |         |   | -      |         |   |   | 10,000       |   |   |   | - |   |
| Other      trading(1)    |   |   | 1,062  |   |         |   | 1,062  |         |   |   | -            |   |   |   | - |   |
| Total                    |   | $      | 78,077 |   |         | $      | 48,121 |         |   | $      | 29,956       |   |   | $ | - |   |

| (1)   | Included      as a component of Other long-term assets in the Consolidated Balance Sheet      as of December 31, 2008. |
|-----------------|------------------------------------------------------------------------------------------------------------------------|

|                                                           |   | 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 |   | $                                  | 30,791 |   |   | $ | 60 |   |   | $ | (26 | ) |   | $ | 30,774 |   |

|                         |   | December      31, 2008 |   |   | December      31, 2007        |   |
|------------------------------|--------|------------------------|--------|--------|-------------------------------|--------|
|                         |   | Gross                  |   |   | Accumulated      Amortization |   |   | Net |   |   | Gross |   |   | Accumulated      Amortization |   |   | Net |   |
| Product      certifications  |   | $                      | 20,820 |   |                          | $      | 14,252 |   |   | $ | 6,568 |   |   | $ | 20,820 |   |   | $ | 13,663 |   |   | $ | 7,157 |   |
| Other      intangible assets |   |                   | 2,575  |   |                          |   | 2,575 |   |   |   | - |   |   |   | 2,575 |   |   |   | 2,575 |   |   |   | - |   |
|                         |   | $                      | 23,395 |   |                          | $      | 16,827 |   |   | $ | 6,568 |   |   | $ | 23,395 |   |   | $ | 16,238 |   |   | $ | 7,157 |   |

|                                          |   | December      31 |   |
|-----------------------------------------------|--------|------------------|--------|
|                                          |   | 2008             |   |   | 2007 |   |
| Senior      Notes                             |   | $                | 87,090 |   |   | $ | 87,090 |   |
| Bank      Facility                            |   |             | -      |   |   |   | - |   |
| Other                                         |   |             | -      |   |   |   | 59 |   |
|                                          |   |             | 87,090 |   |   |   | 87,149 |   |
| Less      current portion and short-term debt |   |             | -      |   |   |   | 59 |   |
|                                          |   | $                | 87,090 |   |   | $ | 87,090 |   |

| 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 all of our  assets.                         |

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

| 10.  Stock      Compensation Plan |
|---------------------------------------------|

|                                           |   | 2008   |   |   | 2007   |   |   | 2006   |   |
|------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Expected      volatility                       |   |   | 86.2   | %      |   |   | 87.2   | %      |   |   | 89.5 | % |
| Expected      option life in years             |   |   | 5.5    |   |   |   | 5.5    |   |   |   | 5.7 |   |
| Expected      dividend yield                   |   |   | 0.0    | %      |   |   | 0.0    | %      |   |   | 0.0 | % |
| Risk-free      interest rate                   |   |   | 3.2    | %      |   |   | 5.0    | %      |   |   | 5.0 | % |
| Weighted      average fair value at grant date |   | $      | 5.19   |   |   | $      | 8.68   |   |   | $ | 9.72 |   |

|                                          |   | Options |    |   | Weighted      Average Exercise Price |   | Weighted      Average Remaining Contract Term |   | Aggregate      Intrinsic Value(in      thousands) |   |
|-----------------------------------------------|--------|---------|---------|--------|--------------------------------------|--------|-----------------------------------------------|--------|---------------------------------------------------|--------|
| Options      outstanding at January 1, 2008   |   |    | 657,181 |   |                                 | $      | 6.26                                          |   |                                              |   |   |   |
| Granted                                       |   |    | 179,000 |   |                                 |   | 17.12                                         |   |                                              |   |   |   |
| Exercised                                     |   |    | (27,353 | )      |                                 |   | 8.07                                          |   |                                              |   |   |   |
| Forfeited      or expired                     |   |    | (10,000 | )      |                                 |   | 17.00                                         |   |                                              |   |   |   |
| Options      outstanding at December 31, 2008 |   |    | 798,828 |   |                                 | $      | 8.50                                          |   | 5.3      yrs.                                     |   | $ | 6,643 |   |
|                                          |   |    |    |   |                                 |   |                                          |   |                                              |   |   |   |   |
| Exercisable      at December 31, 2008         |   |    | 515,628 |   |                                 | $      | 5.04                                          |   |  3.5      yrs.                               |   | $ | 5,959 |   |

|                         |                |   | Outstanding |    |    | Exercisable |   |
|------------------------------|---------------------|--------|-------------|---------|---------|-------------|--------|
| Range      of Exercise Price |                |   | Vested      |    |    | Unvested    |   |   | Weighted      Average Exercise Price |   |   | Weighted      Average Remaining Contractual Life (years) |   |   | Options |   |   | Weighted      Average Exercise Price |   |
| $                            | 3.40      to $ 3.50 |   |        |    | 58,814  |        |   |   | - |   |   | $ | 3.40 |   |   |   | 2.8 |   |   |   | 58,814 |   |   | $ | 3.40 |   |
| $                            | 3.51      to $ 5.00 |   |        |    | 243,759 |        |   |   | 600 |   |   | $ | 3.75 |   |   |   | 2.8 |   |   |   | 243,759 |   |   | $ | 3.74 |   |
| $                            | 5.01      to $ 6.00 |   |        |    | 89,455  |        |   |   | 12,000 |   |   | $ | 5.06 |   |   |   | 4.9 |   |   |   | 89,455 |   |   | $ | 5.06 |   |
| $                            | 6.01      to $18.29 |   |        |    | 123,600 |        |   |   | 270,600 |   |   | $ | 13.11 |   |   |   | 7.4 |   |   |   | 123,600 |   |   | $ | 8.37 |   |
| Total                        |                |   |        | 515,628 |    |        |   | 283,200 |   |   | $ | 8.51 |   |   |   | 5.3 |   |   |   | 515,628 |   |   | $ | 5.04 |   |

|                                                                   |   | Year      Ended December 31 |    |
|------------------------------------------------------------------------|--------|-----------------------------|---------|
|                                                                   |   | 2008                        |    |   | 2007 |   |
| Accumulated      benefit obligation                                    |   | $                           | 30,845  |   |   | $ | 28,134 |   |
|                                                                   |   |                        |    |   |   |   |   |   |
| Change      in benefit obligation:                                     |   |                        |    |   |   |   |   |   |
| Benefit      obligation at beginning of year                           |   | $                           | 28,405  |   |   | $ | 30,091 |   |
| Service      cost                                                      |   |                        | 190     |   |   |   | 186 |   |
| Interest      cost                                                     |   |                        | 1,746   |   |   |   | 1,703 |   |
| Actuarial      (gains) losses                                          |   |                        | 2,651   |   |   |   | (2,057 | ) |
| Foreign      currency exchange rate impact (1)                         |   |                        | (207    | ) |   |   | 184 |   |
| Benefits      paid                                                     |   |                        | (1,772  | ) |   |   | (1,702 | ) |
| Benefit      obligation at end of year                                 |   | $                           | 31,013  |   |   | $ | 28,405 |   |
|                                                                   |   |                        |    |   |   |   |   |   |
| Change      in plan assets:                                            |   |                        |    |   |   |   |   |   |
| Fair      value of plan assets at beginning of year                    |   | $                           | 27,923  |   |   | $ | 25,364 |   |
| Actual      return on plan assets                                      |   |                        | (7,530  | ) |   |   | 2,494 |   |
| Foreign      currency exchange rate impact (1)                         |   |                        | (166    | ) |   |   | 165 |   |
| Company      contributions                                             |   |                        | 1,258   |   |   |   | 1,602 |   |
| Benefits      paid                                                     |   |                        | (1,772  | ) |   |   | (1,702 | ) |
| Fair      value of plan assets at end of year                          |   | $                           | 19,713  |   |   | $ | 27,923 |   |
|                                                                   |   |                        |    |   |   |   |   |   |
| Funded      status of the plans                                        |   | $                           | (11,300 | ) |   | $ | (482 | ) |
|                                                                   |   |                        |    |   |   |   |   |   |
| Amounts      recognized in the balance sheet consist of the following: |   |                        |    |   |   |
| Prepaid      benefit liability - non current                           |   | $                           | -       |   |   | $ | 197 |   |
| Accrued      benefit liability - non current                           |   | $                           | (11,300 | ) |   | $ | (679 | ) |

|                                                   |   | Year      Ended December 31 |   |
|--------------------------------------------------------|--------|-----------------------------|--------|
|                                                   |   | 2008                        |   |   | 2007 |   |
| Projected      benefit obligation                      |   | $                           | 31,013 |   |   | $ | 9,949 |   |
| Accumulated      benefit obligation                    |   | $                           | 30,845 |   |   | $ | 9,678 |   |
| Fair      value of plan assets                         |   | $                           | 19,713 |   |   | $ | 9,270 |   |
| Amounts      recognized as accrued benefit liabilities |   | $                           | 11,300 |   |   | $ | 679 |   |
| Amounts      recognized as prepaid benefit liabilities |   | $                           | -      |   |   | $ | 197 |   |

|                                                    |   | Year      Ended December 31 |   |
|---------------------------------------------------------|--------|-----------------------------|--------|
|                                                    |   | 2008                        |   |   | 2007 |   |   | 2006 |   |
| Components      of net periodic pension cost:           |   |                        |   |   |   |   |   |   |   |
| Service      cost                                       |   | $                           | 223    |   |   | $ | 186 |   |   | $ | 731 |   |
| Interest      cost                                      |   |                        | 1,746  |   |   |   | 1,703 |   |   |   | 1,751 |   |
| Expected      return on plan assets                     |   |                        | (2,274 | ) |   |   | (2,091 | ) |   |   | (1,921 | ) |
| Amortization      of prior service cost                 |   |                        | 240    |   |   |   | 240 |   |   |   | 139 |   |
| Pension      curtailment                                |   |                        | -      |   |   |   | - |   |   |   | 42 |   |
| Recognized      net actuarial loss                      |   |                        | 251    |   |   |   | 400 |   |   |   | 464 |   |
| Net      periodic pension cost of defined benefit plans |   | $                           | 186    |   |   | $ | 438 |   |   | $ | 1,206 |   |

|                               |   | Year      Ended December 31 |   |
|------------------------------------|--------|-----------------------------|--------|
|                               |   | 2008                        |   |   | 2007 |   |
| Asset      Category                |   |                        |   |   |   |   |
| Equity      securities             |   |                        | 62     | % |   |   | 66 | % |
| Debt      securities               |   |                        | 30     | % |   |   | 25 | % |
| Hawk      Corporation common stock |   |                        | 5      | % |   |   | 4 | % |
| Cash      and other                |   |                        | 3      | % |   |   | 5 | % |
| Total                              |   |                        | 100    | % |   |   | 100 | % |

|                                                                                                              |   | Year      Ended December 31 |   |
|-------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                                                                              |   | 2008                        |   |   | 2007 |   |   | 2006 |   |
| Weighted      average rates used to compute the projected benefit obligation as of      December 31:              |   |
| Discount      rate                                                                                                |   |                        | 6.0    | % |   |   | 6.0 | % |   |   | 5.7 | % |
| Rate      of compensation increase (1)                                                                            |   |                        | 3.5    | % |   |   | 3.5 | % |   |   | 3.0 | % |
|                                                                                                              |   |                        |   |   |   |   |   |   |   |   |   |   |
| Weighted      average rates used to determine the net periodic benefit cost for the      years ended December 31: |   |
| Discount      rate                                                                                                |   |                        | 6.0    | % |   |   | 5.6 | % |   |   | 5.5 | % |
| Rate      of compensation increase (1)                                                                            |   |                        | 3.5    | % |   |   | 3.5 | % |   |   | 3.0 | % |
| Expected      long-term rate of return on plan assets                                                             |   |                        | 8.2    | % |   |   | 8.2 | % |   |   | 8.2 | % |

|  Year       |   | BenefitPayments |   |
|------------------|--------|-----------------|--------|
| 2009             |   | $               | 1,659  |   |
| 2010             |   | $               | 1,666  |   |
| 2011             |   | $               | 1,777  |   |
| 2012             |   | $               | 1,827  |   |
| 2013             |   | $               | 1,855  |   |
| 2014      - 2018 |   | $               | 9,803  |   |

|                                |   | Year      Ended December 31 |   |
|-------------------------------------|--------|-----------------------------|--------|
|                                |   | 2008                        |   |   | 2007 |   |
| Machinery      and equipment        |   | $                           | -      |   |   | $ | 714 |   |
| Accumulated      amortization       |   |                        | -      |   |   |   | 533 |   |
| Net      assets under capital lease |   | $                           | -      |   |   | $ | 181 |   |

|                                                              |   | For      the Year Ended December 31 |   |
|-------------------------------------------------------------------|--------|-------------------------------------|--------|
|                                                              |   | 2008                                |   |   | 2007 |   |
| Balance      at January 1                                         |   | $                                   | 1,113  |   |   | $ | 1,097 |   |
| Additions      based on tax positions related to the current year |   |                                | 110    |   |   |   | 133 |   |
| Additions      for tax positions of prior years                   |   |                                | -      |   |   |   | 581 |   |
| Reduction      for tax positions of prior years                   |   |                                | -      |   |   |   | (118 | ) |
| Settlement                                                        |   |                                | (517   | ) |   |   | (536 | ) |
| Lapses      in applicable statutes                                |   |                                | (120   | ) |   |   | (44 | ) |
| Balance      at December 31                                       |   | $                                   | 586    |   |   | $ | 1,113 |   |

|                            |   | Year      ended December 31 |   |
|---------------------------------|--------|-----------------------------|--------|
|                            |   | 2008                        |   |   | 2007 |   |   | 2006 |   |
| Current:                        |   |                        |   |   |   |   |   |   |   |
| Federal                         |   | $                           | 3,138  |   |   | $ | 8 |   |   | $ | - |   |
| State      and local            |   |                        | 307    |   |   |   | (97 | )  |   |   | 486 |   |
| Foreign                         |   |                        | 7,063  |   |   |   | 3,919 |   |   |   | 3,876 |   |
|                            |   |                        | 10,508 |   |   |   | 3,830 |   |   |   | 4,362 |   |
| Deferred:                       |   |                        |   |   |   |   |   |   |   |   |   |   |
| Federal                         |   |                        | 2,708  |   |   |   | 1,318 |   |   |   | (1,395 | ) |
| State      and local            |   |                        | 21     |   |   |   | 38 |   |   |   | (157 | )  |
| Foreign                         |   |                        | (1,098 | ) |   |   | 643 |   |   |   | 9 |   |
|                            |   |                        | 1,631  |   |   |   | 1,999 |   |   |   | (1,543 | ) |
| Total      income tax provision |   | $                           | 12,139 |   |   | $ | 5,829 |   |   | $ | 2,819 |   |

|                                |   | Year      ended December 31 |   |
|-------------------------------------|--------|-----------------------------|--------|
|                                |   | 2008                        |   |   | 2007 |   |   | 2006 |   |
| Deferred      tax assets:           |   |                        |   |   |   |   |   |   |   |
| NOL      carryforward               |   | $                           | -      |   |   | $ | 505 |   |   | $ | 10,672 |   |
| AMT      carryforward               |   |                        | 490    |   |   |   | 1,506 |   |   | $ | 10,672 |   |
| Accrued      vacation               |   |                        | 494    |   |   |   | 491 |   |   |   | 664 |   |
| Employee      benefits              |   |                        | 3,599  |   |   |   | 744 |   |   |   | 3,205 |   |
| Other      accruals                 |   |                        | 2,734  |   |   |   | 1,994 |   |   |   | 1,821 |   |
| Book      over tax amortization     |   |                        | -      |   |   |   | 525 |   |   |   |   |   |
| Inventory                           |   |                        | 1,134  |   |   |   | 1,295 |   |   |   | 1,949 |   |
| Subtotal      deferred tax assets   |   |                        | 8,451  |   |   |   | 7,060 |   |   |   | 18,311 |   |
| Valuation      allowances           |   |                        | (54    | ) |   |   | (324 | ) |   |   |   |   |
| Total      deferred tax assets      |   |                        | 8,397  |   |   |   | 6,736 |   |   |   | 18,311 |   |
|                                |   |                        |   |   |   |   |   |   |   |   |   |   |
| Deferred      tax liabilities:      |   |                        |   |   |   |   |   |   |   |   |   |   |
| Tax      over book depreciation     |   |                        | 4,158  |   |   |   | 5,258 |   |   |   | 9,908 |   |
| Tax      over book amortization     |   |                        | 1,436  |   |   |   | - |   |   |   | 2,930 |   |
| Foreign      leased property        |   |                        | 334    |   |   |   | 384 |   |   |   | 319 |   |
| Other                               |   |                        | 12     |   |   |   | 3 |   |   |   | 350 |   |
| Total      deferred tax liabilities |   |                        | 5,940  |   |   |   | 5,645 |   |   |   | 13,507 |   |
| Net      deferred tax assets        |   | $                           | 2,457  |   |   | $ | 1,091 |   |   | $ | 4,804 |   |

|                                                                                  |   | Year      Ended December 31 |   |
|---------------------------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                                                  |   | 2008                        |   |   | 2007 |   |   | 2006 |   |
| Income      tax expense at federal statutory rate                                |   | $                           | 12,152 |   |   | $ | 4,764 |   |   | $ | 1,545 |   |
| State      and local tax, net of federal tax benefit                                  |   |                        | 213    |   |   |   | (38 | ) |   |   | 213 |   |
| Taxes      on foreign income which differ from United States statutory      rate |   |                        | (909   | ) |   |   | 668 |   |   |   | 759 |   |
| Foreign      tax withholding                                                          |   |                        | 329    |   |   |   | 232 |   |   |   | 201 |   |
| Other                                                                                 |   |                        | 354    |   |   |   | 203 |   |   |   | 101 |   |
| Provision      for income taxes                                                  |   | $                           | 12,139 |   |   | $ | 5,829 |   |   | $ | 2,819 |   |

|                                                               |   | Year      ended December 31 |   |
|--------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                               |   | 2008                        |   |   | 2007 |   |   | 2006 |   |
| Income      (loss) from continuing operations before income taxes: |   |                        |   |   |   |   |   |   |   |
| Domestic                                                           |   | $                           | 14,473 |   |   | $ | 2,953 |   |   | $ | (3,943 | ) |
| Foreign                                                            |   |                        | 20,246 |   |   |   | 10,662 |   |   |   | 8,355 |   |
| As      reported                                                   |   | $                           | 34,719 |   |   | $ | 13,615 |   |   | $ | 4,412 |   |

|                                                                                                  |   | Year      Ended December 31 |   |
|-------------------------------------------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                                                                  |   | 2008                        |   |   | 2007 |   |   | 2006 |   |
| Income      from continuing operations, after income taxes                                            |   | $                           | 22,580 |   |   | $ | 7,786 |   |   | $ | 1,593 |   |
| Less:      Preferred stock dividends                                                                  |   |                        | 150    |   |   |   | 150 |   |   |   | 150 |   |
| Income      from continuing operations, after income taxes available      to common shareholders |   | $                           | 22,430 |   |   | $ | 7,636 |   |   | $ | 1,443 |   |
|                                                                                                  |   |                        |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                       |   | $                           | 20,842 |   |   | $ | 17,268 |   |   | $ | 2,969 |   |
| Less:      Preferred stock dividends                                                                  |   |                        | 150    |   |   |   | 150 |   |   |   | 150 |   |
| Net      income available to common shareholders                                                      |   | $                           | 20,692 |   |   | $ | 17,118 |   |   | $ | 2,819 |   |
|                                                                                                  |   |                        |   |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding (in      thousands):                                         |   |                        |   |   |   |   |   |   |   |   |   |   |
| Basic      weighted average shares outstanding                                                        |   |                        | 8,964  |   |   |   | 8,967 |   |   |   | 8,993 |   |
| Diluted:                                                                                              |   |                        |   |   |   |   |   |   |   |   |   |   |
| Basic      weighted average shares outstanding                                                        |   |                        | 8,964  |   |   |   | 8,967 |   |   |   | 8,993 |   |
| Dilutive      effect of stock options                                                                 |   |                        | 392    |   |   |   | 393 |   |   |   | 521 |   |
| Diluted      weighted average shares outstanding                                                      |   |                        | 9,356  |   |   |   | 9,360 |   |   |   | 9,514 |   |
|                                                                                                  |   |                        |   |   |   |   |   |   |   |   |   |   |
| Earnings      per share:                                                                              |   |                        |   |   |   |   |   |   |   |   |   |   |
| Basic      earnings from continuing operations, after income      taxes                          |   | $                           | 2.50   |   |   | $ | 0.85 |   |   | $ | 0.16 |   |
| Discontinued      operations                                                                          |   |                        | (0.19  | ) |   |   | 1.06 |   |   |   | 0.15 |   |
| Net      earnings per basic share                                                                     |   | $                           | 2.31   |   |   | $ | 1.91 |   |   | $ | 0.31 |   |
|                                                                                                  |   |                        |   |   |   |   |   |   |   |   |   |   |
| Diluted      earnings from continuing operations, after income      taxes                        |   | $                           | 2.40   |   |   | $ | 0.82 |   |   | $ | 0.15 |   |
| Discontinued      operations                                                                          |   |                        | (0.19  | ) |   |   | 1.01 |   |   |   | 0.15 |   |
| Net      earning per diluted share                                                                    |   | $                           | 2.21   |   |   | $ | 1.83 |   |   | $ | 0.30 |   |

|                                |  Year      Ended December 31 |                        |
|-------------------------------------|-----------------------------------|-----------------------------|
|                                |                              | 2008                        |   |   | 2007 |   |   | 2006 |   |
|                                |                              | (dollars      in thousands) |   |
| Net      Sales:                     |                              |                        |   |   |   |   |   |   |   |
| United      States                  |                              | $                           | 157,437 |   |   | $ | 131,644 |   |   | $ | 135,390 |   |
| Italy                               |                              |                        | 98,023 |   |   |   | 73,457 |   |   |   | 56,221 |   |
| All      Other Foreign              |                              |                        | 14,188 |   |   |   | 10,778 |   |   |   | 8,304 |   |
| Total                               |                              | $                           | 269,648 |   |   | $ | 215,879 |   |   | $ | 199,915 |   |
|                                |                              |                        |   |   |   |   |   |   |   |   |   |   |
| Property,      Plant and Equipment: |                              |                        |   |   |   |   |   |   |   |   |   |   |
| United      States                  |                              | $                           | 33,610 |   |   | $ | 27,272 |   |   | $ | 28,194 |   |
| Italy                               |                              |                        | 11,198 |   |   |   | 9,729 |   |   |   | 7,475 |   |
| All      Other Foreign              |                              |                        | 2,690 |   |   |   | 2,574 |   |   |   | 2,579 |   |
| Total                               |                              | $                           | 47,498 |   |   | $ | 39,575 |   |   | $ | 38,248 |   |

| ·   | Consolidating      condensed balance sheets as of December 31, 2008 and December 31, 2007,      consolidating condensed Statements of Operations for the years ended      December 31, 2008, 2007 and 2006 and consolidating condensed statements of      cash flows for the years ended December 31, 2008, 2007 and      2006. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 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. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------|

|                                                  |   | Year      Ended December 31, 2008 |    |
|-------------------------------------------------------|--------|-----------------------------------|---------|
|                                                  |   | Parent                            |    |   | Combined      Guarantor Subsidiaries |   |   | CombinedNon-Guarantor      Subsidiaries |   |   | Eliminations |   |   | Consolidated |   |
| Assets                                                |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Current      assets:                                  |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents                        |   | $                                 | 45,241  |   |   | $ | 32 |   |   | $ | 17,247 |   |   | $ | - |   |   | $ | 62,520 |   |
| Short-term      investments                           |   |                              | 29,956  |   |   |   | - |   |   |   | 818 |   |   |   | - |   |   |   | 30,774 |   |
| Accounts      receivable, net                         |   |                              | -       |   |   |   | 13,900 |   |   |   | 24,669 |   |   |   | - |   |   |   | 38,569 |   |
| Inventories,      net                                 |   |                              | -       |   |   |   | 23,779 |   |   |   | 17,858 |   |   |   | (260 | ) |   |   | 41,377 |   |
| Deferred      income taxes                            |   |                              | 116     |   |   |   | - |   |   |   | 298 |   |   |   | - |   |   |   | 414 |   |
| Other      current assets                             |   |                              | 1,545   |   |   |   | 1,650 |   |   |   | 2,326 |   |   |   | - |   |   |   | 5,521 |   |
| Assets      of discontinued operations                |   |                              | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total      current assets                             |   |                              | 76,858  |   |   |   | 39,361 |   |   |   | 63,216 |   |   |   | (260 | ) |   |   | 179,175 |   |
| Investment      in subsidiaries                       |   |                              | 38,498  |   |   |   | - |   |   |   | - |   |   |   | (38,498 | ) |   |   | - |   |
| Inter-company      advances, net                      |   |                              | -       |   |   |   | 14,122 |   |   |   | (14,115 | ) |   |   | (7 | ) |   |   | - |   |
| Property,      plant and equipment, net               |   |                              | -       |   |   |   | 33,610 |   |   |   | 13,888 |   |   |   | - |   |   |   | 47,498 |   |
| Other      assets:                                    |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Finite-lived      intangible assets                   |   |                              | -       |   |   |   | 6,568 |   |   |   | - |   |   |   | - |   |   |   | 6,568 |   |
| Other                                                 |   |                              | 5,956   |   |   |   | 606 |   |   |   | 189 |   |   |   | - |   |   |   | 6,751 |   |
| Total      other assets                               |   |                              | 5,956   |   |   |   | 7,174 |   |   |   | 189 |   |   |   | - |   |   |   | 13,319 |   |
| Total      assets                                     |   | $                                 | 121,312 |   |   | $ | 94,267 |   |   | $ | 63,178 |   |   | $ | (38,765 | ) |   | $ | 239,992 |   |
| Liabilities      and shareholders’ equity       |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current      liabilities:                             |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts      payable                                 |   | $                                 | 114     |   |   | $ | 14,865 |   |   | $ | 15,228 |   |   | $ | - |   |   | $ | 30,207 |   |
| Accrued      compensation                             |   |                              | 3,013   |   |   |   | 4,393 |   |   |   | 2,504 |   |   |   | - |   |   |   | 9,910 |   |
| Accrued      interest                                 |   |                              | 3,816   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,816 |   |
| Accrued      taxes                                    |   |                              | 195     |   |   |   | 45 |   |   |   | 2,058 |   |   |   | (45 | ) |   |   | 2,253 |   |
| Other      accrued expenses                           |   |                              | 1,796   |   |   |   | 2,956 |   |   |   | 2,273 |   |   |   | 6 |   |   |   | 7,031 |   |
| Current      portion of long-term debt                |   |                              | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Liabilities      of discontinued operations      |   |                              | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total      current liabilities                        |   |                              | 8,934   |   |   |   | 22,259 |   |   |   | 22,063 |   |   |   | (39 | ) |   |   | 53,217 |   |
| Long-term      liabilities:                           |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term      debt                                   |   |                              | 87,090  |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 87,090 |   |
| Deferred      income taxes                            |   |                              | -       |   |   |   | - |   |   |   | 338 |   |   |   | - |   |   |   | 338 |   |
| Other                                                 |   |                              | 2,327   |   |   |   | 15,785 |   |   |   | 3,844 |   |   |   | - |   |   |   | 21,956 |   |
| Inter-company      advances, net                      |   |                              | (54,430 | ) |   |   | 46,591 |   |   |   | 7,696 |   |   |   | 143 |   |   |   | - |   |
| Total      long-term liabilities                      |   |                              | 34,987  |   |   |   | 62,376 |   |   |   | 11,878 |   |   |   | 143 |   |   |   | 109,384 |   |
| Shareholders’      equity                       |   |                              | 77,391  |   |   |   | 9,632 |   |   |   | 29,237 |   |   |   | (38,869 | ) |   |   | 77,391 |   |
| Total      liabilities and shareholders’ equity |   | $                                 | 121,312 |   |   | $ | 94,267 |   |   | $ | 63,178 |   |   | $ | (38,765 | ) |   | $ | 239,992 |   |

|                                                  |   | December      31, 2007 |    |
|-------------------------------------------------------|--------|------------------------|---------|
|                                                  |   | Parent                 |    |   | Combined      Guarantor Subsidiaries |   |   | CombinedNon-Guarantor      Subsidiaries |   |   | Eliminations |   |   | Consolidated |   |
| Assets                                                |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Current      assets:                                  |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents                        |   | $                      | 69,944  |   |   | $ | 42 |   |   | $ | 9,986 |   |   | $ | - |   |   | $ | 79,972 |   |
| Marketable      securities                            |   |                   | -       |   |   |   | - |   |   |   | 1,019 |   |   |   | - |   |   |   | 1,019 |   |
| Accounts      receivable, net                         |   |                   | -       |   |   |   | 11,867 |   |   |   | 25,619 |   |   |   | - |   |   |   | 37,486 |   |
| Inventories,      net                                 |   |                   | -       |   |   |   | 20,382 |   |   |   | 16,744 |   |   |   | (407 | ) |   |   | 36,719 |   |
| Deferred      income taxes                            |   |                   | 983     |   |   |   | 372 |   |   |   | - |   |   |   | - |   |   |   | 1,355 |   |
| Other      current assets                             |   |                   | 1,828   |   |   |   | 1,180 |   |   |   | 1,758 |   |   |   | - |   |   |   | 4,766 |   |
| Current      assets of discontinued operations        |   |                   | -       |   |   |   | 5,509 |   |   |   | - |   |   |   | - |   |   |   | 5,509 |   |
| Total      current assets                             |   |                   | 72,755  |   |   |   | 39,352 |   |   |   | 55,126 |   |   |   | (407 | ) |   |   | 166,826 |   |
| Investment      in subsidiaries                       |   |                   | 11,606  |   |   |   | - |   |   |   | - |   |   |   | (11,606 | ) |   |   | - |   |
| Inter-company      advances, net                      |   |                   | -       |   |   |   | 16,007 |   |   |   | (16,007 | ) |   |   | - |   |   |   | - |   |
| Property,      plant and equipment, net               |   |                   | -       |   |   |   | 27,272 |   |   |   | 12,303 |   |   |   | - |   |   |   | 39,575 |   |
| Other      assets:                                    |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Finite-lived      intangible assets                   |   |                   | -       |   |   |   | 7,157 |   |   |   | - |   |   |   | - |   |   |   | 7,157 |   |
| Other                                                 |   |                   | 4,184   |   |   |   | 992 |   |   |   | - |   |   |   | - |   |   |   | 5,176 |   |
| Long-term      assets of discontinued operations      |   |                   | -       |   |   |   | 1,170 |   |   |   | - |   |   |   | - |   |   |   | 1,170 |   |
| Total      other assets                               |   |                   | 4,184   |   |   |   | 9,319 |   |   |   | - |   |   |   | - |   |   |   | 13,503 |   |
| Total      assets                                     |   | $                      | 88,545  |   |   | $ | 91,950 |   |   | $ | 51,422 |   |   | $ | (12,013 | ) |   | $ | 219,904 |   |
|                                                  |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities      and shareholders’ equity       |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current      liabilities:                             |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts      payable                                 |   | $                      | (141    | ) |   | $ | 13,425 |   |   | $ | 17,041 |   |   | $ | - |   |   | $ | 30,325 |   |
| Accrued      compensation                             |   |                   | 2,532   |   |   |   | 3,430 |   |   |   | 2,713 |   |   |   | - |   |   |   | 8,675 |   |
| Accrued      interest                                 |   |                   | 3,816   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,816 |   |
| Accrued      taxes                                    |   |                   | 948     |   |   |   | 93 |   |   |   | 794 |   |   |   | (73 | ) |   |   | 1,762 |   |
| Other      accrued expenses                           |   |                   | 1,647   |   |   |   | 3,107 |   |   |   | 2,415 |   |   |   | 12 |   |   |   | 7,181 |   |
| Current      portion of long-term debt                |   |                   | -       |   |   |   | - |   |   |   | 59 |   |   |   | - |   |   |   | 59 |   |
| Liabilities      of discontinued operations           |   |                   | -       |   |   |   | 1,740 |   |   |   | - |   |   |   | - |   |   |   | 1,740 |   |
| Total      current liabilities                        |   |                   | 8,802   |   |   |   | 21,795 |   |   |   | 23,022 |   |   |   | (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                      |   |                   | (75,751 | ) |   |   | 69,951 |   |   |   | 6,146 |   |   |   | (346 | ) |   |   | - |   |
| Total      long-term liabilities                      |   |                   | 12,419  |   |   |   | 75,899 |   |   |   | 11,050 |   |   |   | (346 | ) |   |   | 99,022 |   |
| Shareholders’      equity                       |   |                   | 67,324  |   |   |   | (5,744 | ) |   |   | 17,350 |   |   |   | (11,606 | ) |   |   | 67,324 |   |
| Total      liabilities and shareholders’ equity |   | $                      | 88,545  |   |   | $ | 91,950 |   |   | $ | 51,422 |   |   | $ | (12,013 | ) |   | $ | 219,904 |   |

|                                                                  |   | Year      Ended December 31, 2008 |   |
|-----------------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                                  |   | Parent                            |   |   | Combined      Guarantor Subsidiaries |   |   | CombinedNon-Guarantor      Subsidiaries |   |   | Eliminations |   |   | Consolidated |   |
| Net      sales                                                        |   | $                                 | -      |   |   | $ | 155,745 |   |   | $ | 123,925 |   |   | $ | (10,022 | ) |   | $ | 269,648 |   |
| Cost      of sales                                                    |   |                              | -      |   |   |   | 106,725 |   |   |   | 95,849 |   |   |   | (10,022 | ) |   |   | 192,552 |   |
| Gross      profit                                                     |   |                              | -      |   |   |   | 49,020 |   |   |   | 28,076 |   |   |   | - |   |   |   | 77,096 |   |
| Operating      expenses:                                              |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling,      technical and administrative expenses                   |   |                              | 70     |   |   |   | 29,331 |   |   |   | 7,924 |   |   |   | - |   |   |   | 37,325 |   |
| Amortization      of finite-lived intangible assets                   |   |                              | -      |   |   |   | 589 |   |   |   | - |   |   |   | - |   |   |   | 589 |   |
| Total      operating expenses                                         |   |                              | 70     |   |   |   | 29,920 |   |   |   | 7,924 |   |   |   | - |   |   |   | 37,914 |   |
| Income      from operations                                           |   |                              | (70    | ) |   |   | 19,100 |   |   |   | 20,152 |   |   |   | - |   |   |   | 39,182 |   |
| Interest      (expense) income, net                                   |   |                              | (220   | ) |   |   | (6,278 | ) |   |   | 532 |   |   |   | - |   |   |   | (5,966 | ) |
| Income      from equity investee                                      |   |                              | 23,521 |   |   |   | 14,817 |   |   |   | - |   |   |   | (38,338 | ) |   |   | - |   |
| Other      (expense) income , net                                     |   |                              | (303   | ) |   |   | 2,073 |   |   |   | (267 | ) |   |   | - |   |   |   | 1,503 |   |
| Income      from continuing operations, before income      taxes |   |                              | 22,928 |   |   |   | 29,712 |   |   |   | 20,417 |   |   |   | (38,338 | ) |   |   | 34,719 |   |
| Income      tax provision                                             |   |                              | 50     |   |   |   | 6,445 |   |   |   | 5,644 |   |   |   | - |   |   |   | 12,139 |   |
| Income      from continuing operations, after income taxes            |   |                              | 22,878 |   |   |   | 23,267 |   |   |   | 14,773 |   |   |   | (38,338 | ) |   |   | 22,580 |   |
| Discontinued      operations, net of tax                              |   |                              | (2,036 | ) |   |   | 254 |   |   |   | 44 |   |   |   | - |   |   |   | (1,738 | ) |
| Net      income                                                       |   | $                                 | 20,842 |   |   | $ | 23,521 |   |   | $ | 14,817 |   |   | $ | (38,338 | ) |   | $ | 20,842 |   |

|                                                                             |   | Year      Ended December 31, 2007 |   |
|----------------------------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                                             |   | Parent                            |   |   | Combined      Guarantor Subsidiaries |   |   | CombinedNon-Guarantor      Subsidiaries |   |   | Eliminations |   |   | Consolidated |   |
| Net      sales                                                                   |   | $                                 | -      |   |   | $ | 133,535 |   |   | $ | 93,013 |   |   | $ | (10,669 | ) |   | $ | 215,879 |   |
| Cost      of sales                                                               |   |                              | -      |   |   |   | 99,870 |   |   |   | 75,308 |   |   |   | (10,669 | ) |   |   | 164,509 |   |
| Gross      profit                                                                |   |                              | -      |   |   |   | 33,665 |   |   |   | 17,705 |   |   |   | - |   |   |   | 51,370 |   |
| Operating      expenses:                                                         |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling,      technical and administrative expenses                              |   |                              | 327    |   |   |   | 24,083 |   |   |   | 6,762 |   |   |   | - |   |   |   | 31,172 |   |
| Amortization      of finite-lived intangible assets                              |   |                              | -      |   |   |   | 727 |   |   |   | - |   |   |   | - |   |   |   | 727 |   |
| Total      operating expenses                                                    |   |                              | 327    |   |   |   | 24,810 |   |   |   | 6,762 |   |   |   | - |   |   |   | 31,899 |   |
| Income      from operations                                                      |   |                              | (327   | ) |   |   | 8,855 |   |   |   | 10,943 |   |   |   | - |   |   |   | 19,471 |   |
| 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   | ) |   |   | 694 |   |   |   | (461 | ) |   |   | - |   |   |   | (297 | ) |
| Income      from continuing operations, before income      taxes            |   |                              | 6,447  |   |   |   | 9,056 |   |   |   | 10,803 |   |   |   | (12,691 | ) |   |   | 13,615 |   |
| Income      tax (benefit) provision                                              |   |                              | 16     |   |   |   | 1,482 |   |   |   | 4,331 |   |   |   | - |   |   |   | 5,829 |   |
| Income      from continuing operations, after   income      taxes |   |                              | 6,431  |   |   |   | 7,574 |   |   |   | 6,472 |   |   |   | (12,691 | ) |   |   | 7,786 |   |
| Discontinued      operations, net of tax                                         |   |                              | 10,837 |   |   |   | (36 | ) |   |   | (1,319 | ) |   |   | - |   |   |   | 9,482 |   |
| 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                                                                   |   | $                                 | -      |   |   | $ | 138,442 |   |   | $ | 73,419 |   |   | $ | (11,946 | ) |   | $ | 199,915 |   |
| Cost      of sales                                                               |   |                              | 26     |   |   |   | 107,679 |   |   |   | 59,287 |   |   |   | (11,946 | ) |   |   | 155,046 |   |
| Gross      profit                                                                |   |                              | (26    | ) |   |   | 30,763 |   |   |   | 14,132 |   |   |   | - |   |   |   | 44,869 |   |
| Operating      Expenses:                                                         |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling,      technical and administrative expenses                              |   |                              | 713    |   |   |   | 22,569 |   |   |   | 5,702 |   |   |   | - |   |   |   | 28,984 |   |
| Amortization      of finite-lived  intangibles                         |   |                              | -      |   |   |   | 495 |   |   |   | - |   |   |   | - |   |   |   | 495 |   |
| Total      operating expenses                                                    |   |                              | 713    |   |   |   | 23,064 |   |   |   | 5,702 |   |   |   | - |   |   |   | 29,479 |   |
| (Loss)      income from operations                                               |   |                              | (739   | ) |   |   | 7,699 |   |   |   | 8,430 |   |   |   | - |   |   |   | 15,390 |   |
| 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  |   |   |   | (1,873 | ) |   |   | 8,159 |   |   |   | (7,297 | ) |   |   | 4,412 |   |
| Income      tax provision (benefit)                                              |   |                              | 2,454  |   |   |   | (3,318 | ) |   |   | 3,683 |   |   |   | - |   |   |   | 2,819 |   |
| Income      from continuing operations, after   income      taxes |   |                              | 2,969  |   |   |   | 1,445 |   |   |   | 4,476 |   |   |   | (7,297 | ) |   |   | 1,593 |   |
| Discontinued      operations, net of tax                                         |   |                              | -      |   |   |   | 1,177 |   |   |   | 199 |   |   |   | - |   |   |   | 1,376 |   |
| Net      income                                                                  |   | $                                 | 2,969  |   |   | $ | 2,622 |   |   | $ | 4,675 |   |   | $ | (7,297 | ) |   | $ | 2,969 |   |

|                                                                                        |   | Year      Ended December 31, 2008 |     |
|---------------------------------------------------------------------------------------------|--------|-----------------------------------|----------|
|                                                                                        |   | Parent                            |     |   | Combined      Guarantor Subsidiaries |   |   | CombinedNon-Guarantor      Subsidiaries |   |   | Eliminations |   |   | Consolidated |   |
| Net      cash provided by operating activities      of continuing operations           |   | $                                 | 2,767    |   |   | $ | 8,348 |   |   | $ | 12,453 |   |   | $ | - |   |   | $ | 23,568 |   |
| Net      cash provided by operating activities      of discontinued operations         |   |                              | -        |   |   |   | 1,895 |   |   |   | 44 |   |   |   | - |   |   |   | 1,939 |   |
| Cash      flows from investing activities:                                                  |   |                              |     |   |   |   |   |   |   |
| Proceeds      from sale of discontinued operations                                          |   |                              | 2,650    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,650 |   |
| Purchases      of available for sale securities                                             |   |                              | (310,359 | ) |   |   | - |   |   |   | (996 | ) |   |   | - |   |   |   | (311,355 | ) |
| Proceeds      from available for sale securities                                            |   |                              | 339,575  |   |   |   | - |   |   |   | 996 |   |   |   | - |   |   |   | 340,571 |   |
| Purchases      of property, plant and equipment                                             |   |                              | -        |   |   |   | (10,884 | ) |   |   | (4,320 | ) |   |   | - |   |   |   | (15,204 | ) |
| Proceeds      from sale of property, plant and equipment                               |   |                              | -        |   |   |   | 7 |   |   |   | 11 |   |   |   | - |   |   |   | 18 |   |
| Net      cash provided by (used in) investing activities      of continuing operations |   |                              | 31,866   |   |   |   | (10,877 | ) |   |   | (4,309 | ) |   |   | - |   |   |   | 16,680 |   |
| Net      cash used in investing activities of discontinued      operations             |   |                              | -        |   |   |   | (51 | ) |   |   | - |   |   |   | - |   |   |   | (51 | ) |
| Cash      flows from financing activities:                                                  |   |                              |     |   |   |   |   |   |   |
| Payments      on long-term debt                                                             |   |                              | -        |   |   |   | - |   |   |   | (59 | ) |   |   | - |   |   |   | (59 | ) |
| Receipts      from government grants                                                        |   |                              |     | 675 |   |   |   |   |   |   |   |   |   |   |   | 675 |   |
| Proceeds      from stock options                                                            |   |                              | 221      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 221 |   |
| Stock      repurchase                                                                       |   |                              | (2,335   | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (2,335 | ) |
| Tax      benefit from exercise of incentive stock options                                   |   |                              | 908      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 908 |   |
| Payments      of preferred stock dividend                                                   |   |                              | (150     | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (150 | ) |
| Net      cash (used in) provided by financing activities      of continuing operations |   |                              | (1,356   | ) |   |   | 675 |   |   |   | (59 | ) |   |   | - |   |   |   | (740 | ) |
| Effect      of exchange rate changes on cash                                                |   |                              | -        |   |   |   | - |   |   |   | (868 | ) |   |   | - |   |   |   | (868 | ) |
| Net      cash provided by (used in) continuing operations                              |   |                              | 33,277   |   |   |   | (1,854 | ) |   |   | 7,217 |   |   |   | - |   |   |   | 38,640 |   |
| Net      cash provided by discontinued operations                                      |   |                              | -        |   |   |   | 1,844 |   |   |   | 44 |   |   |   | - |   |   |   | 1,888 |   |
| Net      increase (decrease) in cash and cash equivalents                              |   |                              | 33,277   |   |   |   | (10 | ) |   |   | 7,261 |   |   |   | - |   |   |   | 40,528 |   |
| Cash      and cash equivalents at beginning of period                                  |   |                              | 11,964   |   |   |   | 42 |   |   |   | 9,986 |   |   |   | - |   |   |   | 21,992 |   |
| Cash      and cash equivalents at end of period                                             |   | $                                 | 45,241   |   |   | $ | 32 |   |   | $ | 17,247 |   |   | $ | - |   |   | $ | 62,520 |   |

|                                                                                        |   | Year      Ended December 31, 2007 |     |
|---------------------------------------------------------------------------------------------|--------|-----------------------------------|----------|
|                                                                                        |   | Parent                            |     |   | Combined      Guarantor Subsidiaries |   |   | CombinedNon-Guarantor      Subsidiaries |   |   | Eliminations |   |   | Consolidated |   |
| Net      cash (used in) provided by operating activities      of continuing operations |   | $                                 | (1,244   | ) |   | $ | 10,936 |   |   | $ | 10,723 |   |   | $ | - |   |   | $ | 20,415 |   |
| Net      cash used in operating activities      of discontinued operations             |   |                              | -        |   |   |   | (5,481 | ) |   |   | (1,473 | ) |   |   | - |   |   |   | (6,954 | ) |
| Cash      flows from investing activities:                                                  |   |                              |     |   |   |   |   |   |   |   |   |   |   |
| Proceeds      from sale of discontinued operations                                     |   |                              | 93,354   |   |   |   | 1 |   |   |   | - |   |   |   | - |   |   |   | 93,355 |   |
| Purchases      of held to maturity securities                                               |   |                              | (78,969  | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (78,969 | ) |
| Proceeds      from held to maturity securities                                              |   |                              | 80,475   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 80,475 |   |
| Purchases      of available for sale securities                                             |   |                              | (262,937 | ) |   |   |   |   |   |   | (932 | ) |   |   |   |   |   |   | (263,869 | ) |
| Proceeds      from available for sale securities                                            |   |                              | 206,306  |   |   |   | - |   |   |   |   |   |   |   | - |   |   |   | 206,306 |   |
| Purchases      of property, plant and equipment                                             |   |                              | -        |   |   |   | (4,033 | ) |   |   | (3,615 | ) |   |   | - |   |   |   | (7,648 | ) |
| Proceeds      from sale of property, plant and equipment                               |   |                              | -        |   |   |   | 15 |   |   |   | 2 |   |   |   | - |   |   |   | 17 |   |
| Net      cash provided by (used in) investing activities      of continuing operations |   |                              | 38,229   |   |   |   | (4,017 | ) |   |   | (4,545 | ) |   |   | - |   |   |   | 29,667 |   |
| Net      cash used in investing activities of discontinued      operations             |   |                              | -        |   |   |   | (1,423 | ) |   |   | - |   |   |   | - |   |   |   | (1,423 | ) |
| Cash      flows from financing activities:                                                  |   |                              |     |   |   |   |   |   |   |
| Payments      on short-term debt                                                            |   |                              | -        |   |   |   | - |   |   |   | (980 | ) |   |   | - |   |   |   | (980 | ) |
| Proceeds      from long-term debt                                                           |   |                              | 10,964   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 10,964 |   |
| Payments      on long-term debt                                                             |   |                              | (33,874  | ) |   |   | - |   |   |   | (132 | ) |   |   | - |   |   |   | (34,006 | ) |
| Proceeds      from stock options                                                            |   |                              | 1,233    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,233 |   |
| Stock      repurchase                                                                       |   |                              | (3,694   | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (3,694 | ) |
| Payments      of preferred stock dividend                                                   |   |                              | (150     | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (150 | ) |
| Net      cash used in financing activities      of continuing operations               |   |                              | (25,521  | ) |   |   | - |   |   |   | (1,112 | ) |   |   | - |   |   |   | (26,633 | ) |
| Net      cash used in financing activities      of discontinued operations             |   |                              | -        |   |   |   | (14 | ) |   |   | - |   |   |   | - |   |   |   | (14 | ) |
| Effect      of exchange rate changes on cash                                                |   |                              | -        |   |   |   | - |   |   |   | 771 |   |   |   | - |   |   |   | 771 |   |
| Net      cash provided by continuing operations                                        |   |                              | 11,464   |   |   |   | 6,919 |   |   |   | 5,837 |   |   |   | - |   |   |   | 24,220 |   |
| Net      cash used in discontinued operations                                          |   |                              | -        |   |   |   | (6,918 | ) |   |   | (1,473 | ) |   |   | - |   |   |   | (8,391 | ) |
| Net      increase in cash and cash equivalents                                         |   |                              | 11,464   |   |   |   | 1 |   |   |   | 4,364 |   |   |   | - |   |   |   | 15,829 |   |
| Cash      and cash equivalents at beginning of period                                  |   |                              | 500      |   |   |   | 41 |   |   |   | 5,622 |   |   |   | - |   |   |   | 6,163 |   |
| Cash      and cash equivalents at end of period                                             |   | $                                 | 11,964   |   |   | $ | 42 |   |   | $ | 9,986 |   |   | $ | - |   |   | $ | 21,992 |   |

|                                                                                        |   | 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 |   | $                                 | 5,319   |   |   | $ | (7,692 | ) |   | $ | 1,395 |   |   | $ | - |   |   | $ | (978 | ) |
| Net      cash provided by operating activities of discontinued      operations              |   |                              | -       |   |   |   | 15,807 |   |   |   | 1,182 |   |   |   | - |   |   |   | 16,989 |   |
| Cash      flows from investing activities:                                                  |   |                              |    |   |   |   |   |   |   |   |   |   |   |
| Purchases      of property, plant and equipment                                             |   |                              | -       |   |   |   | (4,841 | ) |   |   | (3,053 | ) |   |   | - |   |   |   | (7,894 | ) |
| Proceeds      from sale or property, plant and equipment                               |   |                              | -       |   |   |   | 1,624 |   |   |   | - |   |   |   | - |   |   |   | 1,624 |   |
| Net      cash used in investing activities of continuing operations                         |   |                              | -       |   |   |   | (3,217 | ) |   |   | (3,053 | ) |   |   | - |   |   |   | (6,270 | ) |
| Net      cash used in investing activities of discontinued      operations             |   |                              | -       |   |   |   | (4,717 | ) |   |   | (635 | ) |   |   | - |   |   |   | (5,352 | ) |
| Cash      flows from financing activities:                                                  |   |                              |    |   |   |   |   |   |   |   |   |   |   |
| Proceeds      on short-term debt                                                            |   |                              | -       |   |   |   | - |   |   |   | 444 |   |   |   | - |   |   |   | 444 |   |
| Payment      on short-term debt                                                             |   |                              | -       |   |   |   | - |   |   |   | (804 | ) |   |   | - |   |   |   | (804 | ) |
| Proceeds      from long-term debt                                                           |   |                              | 82,450  |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 82,450 |   |
| Payments      on long-term debt                                                             |   |                              | (87,490 | ) |   |   | - |   |   |   | (150 | ) |   |   | - |   |   |   | (87,640 | ) |
| Proceeds      from stock options                                                            |   |                              | 371     |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 371 |   |
| Payments      of preferred stock dividends                                                  |   |                              | (150    | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (150 | ) |
| Net      cash used in financing activities      of continuing operations               |   |                              | (4,819  | ) |   |   | - |   |   |   | (510 | ) |   |   | - |   |   |   | (5,329 | ) |
| 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     |   |   |   | (10,909 | ) |   |   | (1,637 | ) |   |   | - |   |   |   | (12,046 | ) |
| Net      cash provided by discontinued operations                                           |   |                              | -       |   |   |   | 10,919 |   |   |   | 537 |   |   |   | - |   |   |   | 11,456 |   |
| Net      increase (decrease) in cash and cash equivalents                              |   |                              | 500     |   |   |   | 10 |   |   |   | (1,100 | ) |   |   | - |   |   |   | (590 | ) |
| Cash      and cash equivalents, at beginning of period                                      |   |                              | -       |   |   |   | 31 |   |   |   | 6,722 |   |   |   | - |   |   |   | 6,753 |   |
| Cash      and cash equivalents, at end of period                                            |   | $                                 | 500     |   |   | $ | 41 |   |   | $ | 5,622 |   |   | $ | - |   |   | $ | 6,163 |   |

|                                                       |   | 2008          |   |
|------------------------------------------------------------|--------|---------------|--------|
|                                                       |   | March      31 |   |   | June      30 |   |   | September      30 |   |   | December      31 |   |
| Net      sales                                             |   | $             | 65,779 |   |   | $ | 71,801 |   |   | $ | 74,181 |   |   | $ | 57,887 |   |
| Gross      profit                                          |   |          | 17,411 |   |   |   | 21,099 |   |   |   | 25,111 |   |   |   | 13,475 |   |
| Income      from continuing operations, after income taxes |   |          | 3,826  |   |   |   | 6,180 |   |   |   | 10,297 |   |   |   | 2,277 |   |
| Discontinued      operations, net of tax                   |   |          | (675   | ) |   |   | (1,168 | ) |   |   | (41 | ) |   |   | 146 |   |
| Net      income                                            |   | $             | 3,151  |   |   | $ | 5,012 |   |   | $ | 10,256 |   |   | $ | 2,423 |   |
| Basic      earnings per share: (1)                         |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      per share from continuing operations         |   | $             | 0.42   |   |   | $ | 0.69 |   |   | $ | 1.14 |   |   | $ | 0.25 |   |
| Discontinued      operations                               |   |          | (0.07  | ) |   |   | (0.13 | ) |   |   | - |   |   |   | 0.02 |   |
| Net      earnings per basic share                          |   | $             | 0.35   |   |   | $ | 0.56 |   |   | $ | 1.14 |   |   | $ | 0.27 |   |
| Diluted      earnings per share: (1)                       |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      per share from continuing operations         |   | $             | 0.40   |   |   | $ | 0.66 |   |   | $ | 1.09 |   |   | $ | 0.24 |   |
| Discontinued      operations                               |   |          | (0.07  | ) |   |   | (0.13 | ) |   |   | - |   |   |   | 0.02 |   |
| Net      earnings per diluted share                        |   | $             | 0.33   |   |   | $ | 0.53 |   |   | $ | 1.09 |   |   | $ | 0.26 |   |

|                                                       |   | 2007          |   |
|------------------------------------------------------------|--------|---------------|--------|
|                                                       |   | March      31 |   |   | June      30 |   |   | September      30 |   |   | December      31 |   |
| Net      sales                                             |   | $             | 54,175 |   |   | $ | 55,342 |   |   | $ | 51,490 |   |   | $ | 54,872 |   |
| Gross      profit                                          |   |          | 13,997 |   |   |   | 13,473 |   |   |   | 11,715 |   |   |   | 12,185 |   |
| Income      from continuing operations, after income taxes |   |          | 1,945  |   |   |   | 1,898 |   |   |   | 1,927 |   |   |   | 2,016 |   |
| Discontinued      operations, net of tax                   |   |          | 10,841 |   |   |   | 219 |   |   |   | (266 | ) |   |   | (1,312 | ) |
| Net      income                                            |   | $             | 12,786 |   |   | $ | 2,117 |   |   | $ | 1,661 |   |   | $ | 704 |   |
| Basic      earnings per share: (1)                         |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      per share from continuing operations         |   | $             | 0.21   |   |   | $ | 0.21 |   |   | $ | 0.21 |   |   | $ | 0.22 |   |
| Discontinued      operations                               |   |          | 1.20   |   |   |   | 0.02 |   |   |   | (0.03 | ) |   |   | (0.15 | ) |
| Net      earnings per basic share                          |   | $             | 1.41   |   |   | $ | 0.23 |   |   | $ | 0.18 |   |   | $ | 0.07 |   |
| Diluted      earnings per share: (1)                       |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      per share from continuing operations         |   | $             | 0.20   |   |   | $ | 0.20 |   |   | $ | 0.20 |   |   | $ | 0.21 |   |
| Discontinued      operations                               |   |          | 1.16   |   |   |   | 0.02 |   |   |   | (0.02 | ) |   |   | (0.14 | ) |
| Net      earnings per diluted share                        |   | $             | 1.36   |   |   | $ | 0.22 |   |   | $ | 0.18 |   |   | $ | 0.07 |   |

|                                            |   | Balance      at Beginning of Year |   |   | Additions      Charged to Costs and Expenses |   |   | Deductions |   |   |   | Balance      at End of Year |   |
|-------------------------------------------------|--------|-----------------------------------|--------|--------|----------------------------------------------|--------|--------|------------|--------|--------|--------|-----------------------------|--------|
| Year      ended December 31, 2008:              |   |                              |   |   |                                         |   |   |       |   |   |   |                        |   |
| Allowance      for uncollectible accounts       |   | $                                 | 847    |   |                                         | $      | 726    |       |   | $      | 245    | (1)                         | (3)    |   | $ | 1,328 |   |
| Slow      moving and obsolete inventory reserve |   |                              | 3,477  |   |                                         |   | 860    |       |   |   | 544    | (2)                         | (3)    |   |   | 3,793 |   |
|                                            |   |                              |   |   |                                         |   |   |       |   |   |   |                        |   |   |   |   |   |
| Year      ended December 31, 2007:              |   |                              |   |   |                                         |   |   |       |   |   |   |                        |   |   |   |   |   |
| Allowance      for uncollectible accounts       |   | $                                 | 827    |   |                                         | $      | 120    |       |   | $      | 100    | (1)                         | (3)    |   | $ | 847 |   |
| Slow      moving and obsolete inventory reserve |   |                              | 2,970  |   |                                         |   | 901    |       |   |   | 394    | (2)                         | (3)    |   |   | 3,477 |   |
|                                            |   |                              |   |   |                                         |   |   |       |   |   |   |                        |   |   |   |   |   |
| Year      ended December 31, 2006:              |   |                              |   |   |                                         |   |   |       |   |   |   |                        |   |   |   |   |   |
| Allowance      for uncollectible accounts       |   | $                                 | 498    |   |                                         | $      | 603    |       |   | $      | 274    | (1)                         | (3)    |   | $ | 827 |   |
| Slow      moving and obsolete inventory reserve |   |                              | 1,884  |   |                                         |   | 1,156  |       |   |   | 70     | (2)                         | (3)    |   |   | 2,970 |   |

| (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, 2008 and2007 |
|--------|-----|---------------------------------------------------------------|

|   | (ii) | Consolidated      Statements of Operations for the years ended December 31, 2008, 2007 and      2006 |
|--------|------|------------------------------------------------------------------------------------------------------|

|   | (iii) | Consolidated      Statements of Shareholders’ Equity for the years ended December 31, 2008,      2007 and 2006 |
|--------|-------|----------------------------------------------------------------------------------------------------------------------|

|   | (iv) | Consolidated      Statements of Cash Flows for the years ended December 31, 2008, 2007 and      2006 |
|--------|------|------------------------------------------------------------------------------------------------------|

|   | (v) | Notes      to Consolidated Financial Statements for the years ended December 31,      2008, 2007 and 2006 |
|--------|-----|-----------------------------------------------------------------------------------------------------------|

| 2.   | Schedule      II – Valuation and Qualifying Accounts for the years ended December 31,      2008, 2007 and 2006 |
|----------------|----------------------------------------------------------------------------------------------------------------------|

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

| 3.1 | Form      of Hawk Corporation’s Second Amended and Restated Certificate of      Incorporation (Incorporated by reference to the Company’s Registration      Statement on Form S-1 as filed on November 19, 1997 with the Securities      and Exchange Commission (Reg. No.333-40535)) |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.2 | Hawk      Corporation’s Amended and Restated By-laws (Incorporated by reference to      the Company’s Current Report on Form 8-K as filed on March 2, 2000 with      the Securities and ExchangeCommission) |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.3 | Hawk      Corporation’s Amendment No. 1 to Amended and Restated By-laws, dated      August 19, 2008 (Incorporated by reference to the Company’s Current Report      on Form 8-K as filed on August 22, 2008 with the Securities and Exchange      Commission) |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.1 | Stockholders’      Voting Agreement, effective as of November 27, 1996, by and among Hawk      Corporation, 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)) |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.2 | Letter      agreement, dated January 5, 1998, amending the Stockholders’ Voting      Agreement, effective as of November 27, 1996, by and among Hawk      Corporation, 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 Amendment No. 4 to Registration Statement on      Form S-1/A as filed on January 23, 1998 with the Securities and Exchange      Commission (Reg. No. 333-40535)) |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.3 | 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 as filed on November 1, 2004 with      the Securities and ExchangeCommission) |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.4 | 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 as filed on November      1, 2004 with the Securities and Exchange  Commission) |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.5 | 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 as filed on January 4, 2008 with the      Securities and Exchange Commission) |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.6 | 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 on December 3, 2004      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 Hawk Corporation (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 Hawk Corporation (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 on November 19, 1997      with the Securities and Exchange Commission (Reg. No.      333-40535)) |
|-------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.4*† | First      Amendment to Hawk Corporation 1997 Stock Option Plan dated December 31,      2008 |
|--------------|----------------------------------------------------------------------------------------------|

| 10.5† | 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 on      March 23, 2001 with the Securities and Exchange  Commission) |
|-------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.6      *† |        First Amendment to Hawk Corporation 2000 Long Term Incentive Plan dated      December 31, 2008 |
|--------------------|------------------------------------------------------------------------------------------------------------|

| 10.7† | 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      on March 23, 2001 with the Securities and Exchange    Commission) |
|-------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.8† | Hawk      Corporation Deferred Compensation Plan (Incorporated by reference to the      Company’s Registration Statement on Form S-8 as filed on December 5, 2007      with the Securities and Exchange Commission (Reg. No.      333-147832)) |
|-------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.9 | Form      of Intellectual Property Security Agreement, dated as of August 10, 2001,      by and between Hawk Corporation and each of the following subsidiaries of      Hawk Corporation: 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 on August 14, 2001 with the Securities and Exchange      Commission) |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.10 | 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 as filed on November 1, 2004 with the Securities and      Exchange Commission) |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.11 | 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) |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.12 | 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, 2006 with the Securities and      Exchange Commission) |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.13 | Amendment      No. 4 and Consent to Credit and Security Agreement and Omnibus Amendment      to Certain Other Loan Documents, made as of May 30, 2008, among Hawk      Corporation, Friction Products Co., Hawk Motors, Inc., Logan Metal      Stampings, Inc., Quarter Master Industries, Inc., 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 of the Agreement, KeyBank National Association, as      Administrative Agent, and KeyBank National Association, as LC Issuer      (Incorporated by reference to the Company’s Form 8-K as filed on June 3,      2008 with the Securities and Exchange  Commission) |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.14 | 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 on November 15, 2004      with the Securities and ExchangeCommission) |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.15 | 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 on November 15, 2004 with the Securities and      Exchange Commission) |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.16 | 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 on November 15, 2004 with the      Securities and Exchange Commission) |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.17 | 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 on November 15, 2004 with the Securities and Exchange      Commission) |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.18 | 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 on November 15, 2004      with the Securities and ExchangeCommission) |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.19 | 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 on December 20, 2004 with the      Securities and Exchange Commission (Reg. No.  333-120991)) |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.20† | Amended      and Restated Employment Agreement, dated as of December 31, 2001, by and      among Hawk Corporation, 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 on April 1, 2002 with the Securities and      Exchange Commission) |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.21† | Amendment      No. 1 to Amended and Restated Employment Agreement, dated as of March 3,      2004, by and among Hawk Corporation, 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 on March 26, 2004 with the      Securities and Exchange Commission) |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.22*† | Amendment      No. 2 to Amended and Restated Employment Agreement, dated as of December      31, 2008, by and among Hawk Corporation, Friction Products Co. and Ronald      E. Weinberg |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.23† | Amended      and Restated Wage Continuation Agreement, dated as of December 31, 2001,      by and among Hawk Corporation, Friction Products Co. and Norman C. Harbert      (Incorporated by reference to the Company’s Form 10-K for the period ended      December 31, 2001 as filed on April 1, 2002 with the Securities and      Exchange Commission) |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  10.24*† | Second      Amendment to Restated Wage Continuation Agreement dated as of December 31,      2008 by and between Norman C. Harbert and Hawk  Corporation |
|---------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.25*† | Amended      and Restated Senior Advisor Agreement dated as of December 31, 2008 by and      between Hawk Corporation and Norman C.Harbert |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------|

| 10.26† | 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 on August 14, 2006      with the Securities and ExchangeCommission) |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.27† | 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 on November 13, 2006 with the Securities and Exchange      Commission) |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.28*† | Second      Amendment to Employment Agreement dated as of December 30, 2008, by and      between Hawk Corporation and Joseph J.  Levanduski |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------|

| 10.29† | 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      on August 14, 2006 with the Securities and Exchange      Commission) |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.30† | Amendment      to Agreements, dated November 10, 2006, by and 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 on November 14, 2006 with the Securities and      Exchange Commission) |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.31*† | Second      Amendment to Employment Agreement dated as of December 31, 2008, by and      between Wellman Products Group, Inc. and B. Christopher      Disantis |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.32† | Form      of Change in Control Agreement by and among Hawk Corporation and certain      executive officers (Incorporated by reference to the Company’s Form 10-Q      for the quarterly period ended June 30, 2006 as filed on August 14, 2006      with the Securities and ExchangeCommission) |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.33*† | Form      of Amendment No. 1 to Change in Control Agreement by and among Hawk      Corporation and certain executiveofficers |
|---------------|------------------------------------------------------------------------------------------------------------------------------|

| 14 | Code      of Business Conduct and Ethics (Incorporated by reference to the Company’s      Form 8-K as filed on May 30, 2006 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      10, 2009                                                                                              |
| Ronald      E. Weinberg                                                                                                                                                                                                                 | Officer,      and Director                                                                                                                                                                            |                                                                                                             |
|                                                                                                                                                                                                                                    | (principal      executive officer)                                                                                                                                                                    |                                                                                                             |
|                                                                                                                                                                                                                               |                                                                                                                                                                                                  |                                                                                                             |
| /s/   Norman      C. Harbert                                                                                                                                                                                             | Chairman      Emeritus,                                                                                                                                                                               | March      10, 2009                                                                                              |
| Norman      C. Harbert                                                                                                                                                                                                                  | Founder      and Director                                                                                                                                                                             |                                                                                                             |
|                                                                                                                                                                                                                               |                                                                                                                                                                                                  |                                                                                                             |
| /s/   Joseph      J. Levanduski                                                                                                                                                                                          | Chief      Financial Officer                                                                                                                                                                          | March      10, 2009                                                                                              |
| Joseph      J. Levanduski                                                                                                                                                                                                               | (principal      financial and accounting officer)                                                                                                                                                     |                                                                                                             |
|                                                                                                                                                                                                                          |                                                                                                                                                                                                  |                                                                                                             |
| /s/   Byron      S. Krantz                                                                                                                                                                                               | Secretary      and Director                                                                                                                                                                           | March      10, 2009                                                                                              |
| Byron      S. Krantz                                                                                                                                                                                                                    |                                                                                                                                                                                                  |                                                                                                             |
|                                                                                                                                                                                                                          |                                                                                                                                                                                                  |                                                                                                             |
| /s/   Paul      R. Bishop                                                                                                                                                                                                | Director                                                                                                                                                                                              | March      10, 2009                                                                                              |
| Paul      R. Bishop                                                                                                                                                                                                                     |                                                                                                                                                                                                  |                                                                                                             |
|                                                                                                                                                                                                                          |                                                                                                                                                                                                  |                                                                                                             |
| /s/   Jack      F. Kemp                                                                                                                                                                                                  | Director                                                                                                                                                                                              | March      10, 2009                                                                                              |
| Jack      F. Kemp                                                                                                                                                                                                                       |                                                                                                                                                                                                  |                                                                                                             |
|                                                                                                                                                                                                                          |                                                                                                                                                                                                  |                                                                                                             |
| /s/   Dan      T. Moore, III                                                                                                                                                                                             | Director                                                                                                                                                                                              | March      10, 2009                                                                                              |
| Dan      T. Moore, III                                                                                                                                                                                                                  |                                                                                                                                                                                                  |                                                                                                             |
|                                                                                                                                                                                                                          |                                                                                                                                                                                                  |                                                                                                             |
| /s/   Andrew      T. Berlin                                                                                                                                                                                              | Director                                                                                                                                                                                              | March      10, 2009                                                                                              |
| Andrew      T. Berlin                                                                                                                                                                                                                   |                                                                                                                                                                                                  |                                                                                                             |
|                                                                                                                                                                                                                          |                                                                                                                                                                                                  |                                                                                                             |
| /s/   Richard      T. Marabito                                                                                                                                                                                           | Director                                                                                                                                                                                              | March      10, 2009                                                                                              |
| Richard      T. Marabito                                                                                                                                                                                                                |                                                                                                                                                                                                  |                                                                                                             |