<PAGE> 1
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended 9/30/96 Commission file number 1-5978
------- -------
SIFCO Industries, Inc., and Subsidiaries
- --------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Ohio 34-0553950
- --------------------------------- ---------------------
(STATE OR OTHER JURISDICTION OF I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) DENTIFICATION NO.)
970 East 64th Street, Cleveland Ohio 44103
- -------------------------------------------- -----------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code (216) 881-8600
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
- --------------------------------------------------------------------
Common Shares, $1 Par Value American Stock Exchange
- ------------------------------------- --------------------------
Securities registered pursuant to Section 12(g) of the Act:
- -------------------------------------------------------------------------------
(TITLE OF CLASS)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT
WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO
--- ---
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K.
---
STATE THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NONAFFILIATES OF
THE REGISTRANT. (THE AGGREGATE MARKET VALUE SHALL BE COMPUTED BY REFERENCE TO
THE PRICE AT WHICH THE STOCK WAS SOLD, OR THE AVERAGE BID AND ASKED PRICES OF
SUCH STOCK, AS OF A SPECIFIED DATE WITHIN 60 DAYS PRIOR TO THE DATE OF FILING.)
As of November 29, 1996 -- $32,948,632
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INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S CLASSES OF
COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE (APPLICABLE ONLY TO CORPORATE
REGISTRANTS.)
As of November 30, 1996 -- 5,135,401
- --------------------------------------------------------------------------------
DOCUMENTS INCORPORATED BY REFERENCE: LIST THE FOLLOWING DOCUMENTS IF
INCORPORATED BY REFERENCE AND THE PART OF THE FORM 10-K INTO WHICH THE DOCUMENT
IS INCORPORATED: (1) ANY ANNUAL REPORT TO SECURITY HOLDERS; (2) ANY PROXY OR
INFORMATION STATEMENT; AND (3) ANY PROSPECTUS FILED PURSUANT TO RULE 424(b) OR
(C) UNDER THE SECURITIES ACT OF 1933. (THE LISTED DOCUMENTS SHOULD BE CLEARLY
DESCRIBED FOR IDENTIFICATION PURPOSES.)
Portions of the 1996 Annual Report to Shareholders (Part I, III, IV)
Portions of the Proxy Statement for Annual Meeting of Shareholders on
January 28, 1997
(Part I,II,III)
<PAGE> 2
PART I
ITEM 1. BUSINESS
THE COMPANY
-----------
SIFCO Industries, Inc., an Ohio corporation (the "Company"), was
incorporated in 1916. The executive offices of the Company are located at 970
East 64th Street, Cleveland, Ohio 44103, and its telephone number is (216)
881-8600.
The Company is engaged in the production and sale of a variety of
metal-working processes, services and products produced primarily to the
specific design requirements of its customers. The processes include forging,
heat treating, welding, machining and electroplating; and the products include
forgings, machined forgings and other machined metal parts, remanufactured
component parts for turbine engines, and electroplating solutions and equipment.
The Company engages in international technology transfer and also has marketing
expertise to provide worldwide sourcing and distribution of overseas
manufacturers. The Company's operations are conducted in two segments: (1)
specialty products and (2) forgings.
SPECIALTY PRODUCTS
------------------
The Company's specialty products segment consists of the repair and
remanufacture of jet engine and industrial turbine components; precision
machining for aerospace applications, including subassemblies and finished
replacement parts; and equipment, solutions and contract services in selective
electroplating for aerospace, defense and industrial markets.
FORGINGS
--------
The Company's forging segment consists of the production and some
finishing of forgings in numerous alloys for application in the aerospace and
several sophisticated industrial markets, utilizing a variety of processes,
including conventional and near-net shape hot forging and cold forging
techniques. The Company's forged products include: OEM and aftermarket parts for
aircraft engines; structural airframe components; and land-based gas turbine
engine parts; construction, ordnance and nuclear power components; valves and
other parts for oil drilling and mining equipment; and low and high pressure
closures for boilers.
1
<PAGE> 3
COMPETITION; PRINCIPAL CUSTOMERS; BACKLOG
-----------------------------------------
There is active competition among many companies, large and small, in
every one of the services and products offered by the Company. The Company,
however, believes that it offers a wider variety of services than most of its
competitors and is more experienced than most in meeting the exact requirements
and technical specifications of its customers, particularly those in the
aerospace and turbine components repair markets. In addition, the Company has
the ability to use its management and marketing expertise to provide worldwide
sourcing and selling capabilities.
There is excess capacity in many segments of the forging industry which
the Company believes has the effect of increasing competition and limits the
ability to raise prices. The Company feels, however, that its focus on quality
and customer service help to give it an advantage in the markets it serves.
Defense orders can be quite volatile year to year. The decline in
defense spending had negatively impacted both sales and income of the Company
over the recent past. Defense orders received in 1996 were $17.8 million
compared to $4.4 million in 1995. Defense-related orders received in fiscal 1994
were approximately $11.5 million (including $7.0 million for a retrofit of the
CH-46 helicopter). This compares to $6.0 million in 1993, $8.3 million in 1992
and $15.3 million in 1991.
The performance of the domestic and international air transport
industries directly and significantly impact our performance. The restructuring
and down turn in the airline industry, over the past few years, has negatively
impacted the sales and income of the Company by increasing price competition for
the available business. Recently there has been a strong resurgence in the
performance of the worldwide airlines industry. The Air Transport Association
predicts a continuation of record profit levels for the industry.
A reduction in the number of airlines could result in fewer new
aircraft being ordered as the remaining airlines purchase the used aircraft from
the airlines no longer in business. On the other hand, older aircraft require
repairs more frequently than newer aircraft, and this could have a positive
effect on the Company. The airline industry's long term outlook is still for
continued growth in air travel which would suggest the need for newer aircraft
and growth in the requirement for repairs. The Company is not able to quantify
the interplay of these factors.
The Company believes it can partially compensate for these factors
mentioned above by its efforts to broaden its product lines and develop new
geographic markets, customers and technologies.
The identity and rankings of the Company's principal customers vary
from year to year, and the Company relies on its ability to adapt its services
and operations to changing requirements rather than on any high volume
production of a particular item or group of items for a particular customer or
customers. Sales to the Company's three largest customers were approximately
$5.0
2
<PAGE> 4
million, $3.9 million and $3.8 million, respectively. Sales to the Company's
next two largest customers were $2.6 million and $2.0 million. Four of the
aforementioned companies serve the airline transportation market and one ($2.0
million) the aerospace market. The Company believes that the total loss of sales
of its largest customer or two or more of the four remaining customers mentioned
above would result in a materially adverse impact on the business and income of
the Company. Although there is no assurance that this will continue,
historically as one or more major customers have reduced their purchases, one or
more other customers have increased purchases avoiding a materially adverse
impact on the business or financial results of the Company.
The Company's backlog of orders was as follows:
<TABLE>
<CAPTION>
9/30/96 9/30/95
------- -------
($000 omitted)
<S> <C> <C>
Specialty products and services $13,400 $ 9,000
Forgings 29,500 19,600
------ -------
$ 42,900 $28,600
======== ========
</TABLE>
Approximately 2% of 1996's backlogs are on hold, and 12% are scheduled
for delivery beyond fiscal year 1997.
No material part of the Company's business is seasonal.
Information concerning the Company's business and its reportable
business segments as set forth on pages 5, 6 and 16, respectively, of the 1996
Annual Report to Shareholders is incorporated herein by reference.
RESEARCH AND DEVELOPMENT; PATENTS; RAW MATERIALS
------------------------------------------------
The forging, machining, development of remanufacturing processes, or
other preparation of prototype parts to customers' specifications for use in
their research and development of new parts or designs has been an ordinary
portion of the Company's business. Apart from such work, the Company has spent
no material amount of time or money on research and development activities; and
the accounting records of the Company do not differentiate between work on
orders for customer research and development and work on other customer orders.
The Company uses in its business various trademarks, trade names,
patents, trade secrets and licenses. While a number of these are important to
it, the Company does not consider that a material part of its business is
dependent on any one or a group of them.
The Company has many sources for the raw materials, primarily high
quality steel, investment castings and chemicals essential to this business.
Suppliers of such materials are located in many areas throughout the country.
The Company does not depend on a single source for the supply of its materials
and believes that its sources are adequate for its business.
3
<PAGE> 5
ENVIRONMENTAL REGULATIONS
-------------------------
In common with other companies engaged in similar businesses, the
Company has been required to comply with various laws and regulations relating
to the protection of the environment. The costs of such compliance have not had,
and are not presently expected to have, a material effect on the capital
expenditures, earnings or competitive position of the Company and its
subsidiaries under existing regulations and interpretations.
EMPLOYEES
---------
The number of the Company's employees increased from 615 at the
beginning of the fiscal year to 684 at the end of the fiscal year.
ITEM 2. PROPERTIES
The Company's fixed assets include the plants described below and a
substantial quantity of machinery and equipment, most of which is general
purpose machinery and equipment using special jigs, tools and fixtures and in
many instances having automatic control features and special adaptions. The
Company's plants, machinery and equipment are in good operating condition, are
well-maintained and substantially all of its facilities are in regular use. The
Company considers the present level of fixed assets capitalized as of September
30, 1996 suitable and adequate given the current product offerings for the
respective business segments' operations in the current business environment.
The square footage numbers set forth in the following paragraphs are
approximations.
The Specialty Products segment has seven plants with a total of 259
thousand square feet. Four of these plants with a total of 201 thousand square
feet are for the repair and remanufacture jet engine and industrial turbine
components. Two of these plants are located in Cork, Ireland (100 thousand
square feet), one in Minneapolis, Minnesota (59 thousand square feet) and one
in Tampa, Florida (42 thousand square feet). A portion of the Minneapolis plant
is also the site of the Company's machining operations.
Selective Plating has three plants, one of which is located in
Independence, Ohio (34 thousand square feet); a leased facility in Brooklyn,
Ohio (14 thousand square feet); and a leased facility in Redditch, England (10
thousand square feet).
The Company also leases space for sales offices and/or its contract
plating services in Norfolk, Virginia; Hartford (East Windsor), Connecticut; Los
Angeles (San Dimas), California; and Tacoma, Washington. Selective Plating also
leases sales office space in Saint-Maur, France.
The Forging segment has one plant of 223 thousand square feet located
in Cleveland, Ohio. This facility is also the site of the Company's corporate
headquarters.
ITEM 3. LEGAL PROCEEDINGS
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
4
<PAGE> 6
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY
HOLDER MATTERS
The information required by Item 5 is incorporated herein by reference
to pages 1, 7 and 11 of the Annual Report to Shareholders for the year ended
September 30, 1996. As of November 1, 1996, the Company had 814 shareholders of
record.
ITEM 6. SELECTED FINANCIAL DATA
The information required by Item 6 is incorporated herein by reference
to page 7 of the Annual Report to Shareholders for the year ended September 30,
1996.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The information required by Item 7 is incorporated herein by reference
to pages 5 and 6 of the Annual Report to Shareholders for the year ended
September 30, 1996.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required by Item 8 are incorporated herein by
reference to pages 8 through 16, inclusive, of the Annual Report to Shareholders
for the year ended September 30, 1996.
ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
Not applicable.
5
<PAGE> 7
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES OF THE REGISTRANT
The information required by Item 10 as to Directors of the Registrant,
is incorporated herein by reference to the information set forth on pages 4
through 6 of the Proxy Statement for the Annual Meeting of Shareholders to be
held January 28, 1997.
EXECUTIVE OFFICERS AND KEY EMPLOYEES OF THE REGISTRANT
------------------------------------------------------
The Executive Officers of the Company are elected annually to serve
for one-year terms or until their successors are elected and qualified. The
officers listed below were elected January 30, 1996.
Name Age Title and Business Experience
- ---- --- -----------------------------
Charles H. Smith, Jr. (1) 76 Director since 1941; Chairman of the
Board; Mr. Smith previously served the
Company as its Chief Executive Officer
from January 1943 until February 1983.
Jeffrey P. Gotschall (1) 48 Director since October 1986; Chief
Executive Officer since July 1990;
President since October 1989 and Chief
Operating Officer from October 1986 to
July 1990; Mr. Gotschall previously
served the Company from October 1986
through September 1989 as Executive Vice
President and from May 1985 through
February 1989 as President of SIFCO
Turbine Component Services.
George D. Gotschall (1) 76 Director from 1950 to 1958 and
continuously since 1962; Mr. Gotschall is
Assistant Secretary of the Company and
previously served the Company until
February 1983 as Vice
President--International and Treasurer.
Richard A. Demetter 56 Vice President-Finance since January 1979;
Chief Financial Officer since January
1984, and previously Controller from
November 1976 to January 1984.
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<PAGE> 8
PART III (CONTINUED)
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES OF THE REGISTRANT
(continued)
EXECUTIVE OFFICERS AND KEY EMPLOYEES OF THE REGISTRANT (CONTINUED)
- ------------------------------------------------------------------
Name Age Title and Business Experience
- ---- --- -----------------------------
Hudson D. Smith (1) 45 Director since 1988. Treasurer of the
Company since 1983; Vice President and
General Manager of SIFCO Forge Group since
February 1995; General Manager of SIFCO
Forge Group's Cleveland Operations from
October 1989 through January 1995; Group
General Sales Manager of SIFCO Forge Group
from July 1985 through September 1989.
Timothy V. Crean 47 Managing Director of the SIFCO Turbine
Components Group since October 1995, and
Managing Director of SIFCO Turbine
Components, Ltd. since November 1986.
Mara L. Babin, Esq. 46 Secretary since July 1980, and General
Counsel since 1985, Ms. Babin is a partner
in the law firm of Squire, Sanders &
Dempsey and has been an attorney with the
firm since 1975.
(1) Charles H. Smith, Jr. and George D. Gotschall are brothers-in-law.
Hudson D. Smith is the son of Charles H. Smith, Jr. Jeffrey P. Gotschall is the
son of George D. Gotschall.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is incorporated herein by
reference to pages 10 through 15 of the Proxy Statement for the Annual Meeting
of Shareholders to be held January 28, 1997.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 is incorporated herein by
reference to the information set forth on pages 2 through 8 of the Proxy
Statement for the Annual Meeting of Shareholders to be held January 28, 1997.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
7
<PAGE> 9
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) Financial Statements:
---------------------
The following consolidated financial statements and related notes of
the Registrant and its subsidiaries contained on pages 8 through 16, inclusive,
of the Annual Report to Shareholders for the year ended September 30, 1996, are
incorporated herein by reference.
Consolidated Balance Sheets - September 30, 1996 and 1995.
Consolidated Statements of Income for the Years Ended September 30,
1996, 1995 and 1994.
Consolidated Statements of Shareholders' Equity for the Years Ended
September 30, 1996, 1995 and 1994.
Consolidated Statements of Cash Flows for the Years Ended September
30, 1996, 1995 and 1994.
Notes to Consolidated Financial Statements for the Years Ended
September 30, 1996, 1995 and 1994.
Report of Independent Public Accountants.
(a) (2) Financial Statement Schedules:
------------------------------
Report of Independent Public Accountants on the Financial Statement
Schedules.
Schedule II -- Allowance for Doubtful Accounts for the
Years Ended September 30, 1996, 1995 and
1994.
All schedules, other than Schedules II are omitted since the
information is not required or is otherwise furnished.
8
<PAGE> 10
PART IV (continued)
(a) (3) Exhibits:
-----------
** (3) Second Amended Articles of Incorporation, as amended, and
Amended Code of Regulations.
*** (4) Instruments defining the rights of security holders.
Reference is made to Exhibit (3) above and to Note 2,
page 10 of the 1986 Annual Report to Shareholders.
**** (9) Voting Trust Agreement, as amended.
(10) Material Contracts:
*****) (a) 1989 Stock Option Plan
# (b) Incentive Compensation Plan, as amended and restated
# (c) Deferred Compensation Program, as amended and restated
****) (d) Form of Indemnification Agreement between the Registrant
and each of its Directors and Executive Officers
*) (e) 1994 Phantom Stock Plan
(13) 1996 Annual Report to Shareholders
***** (21) Subsidiaries of the Registrant
(23) Consent of Arthur Andersen LLP
(24) Powers of Attorney
*) Incorporated herein by reference to Exhibit A to the Proxy
Statement for the
Annual Meeting of Shareholders held January 31, 1995.
**) Incorporated herein by reference to Form 10-K, September
30, 1986
***) Incorporated herein by reference to Form 10-K, September
30, 1987
****) Incorporated herein by reference to Form 10-K, September
30, 1988
*****) Incorporated herein by reference to Form 10-K, September
30, 1989
# Incorporated herein by reference to Form 10-K, September
30, 1995
(b) (1) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the last quarter of
the fiscal year ended September 30, 1996.
9
<PAGE> 11
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
SIFCO INDUSTRIES, INC.
By: /s/ Richard A. Demetter
------------------------------
Richard A. Demetter
Chief Accounting Officer
Date: December 18, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Annual Report has been signed below on December 18, 1996 by the following
persons on behalf of the Registrant in the capacities indicated.
/*/ Charles H. Smith, Jr. /*/ Richard S. Gray
- --------------------------- ---------------------------
Charles H. Smith, Jr. Richard S. Gray
Chairman of the Board; Director
Director
/*/ Jeffrey P. Gotschall /*/ William R. Higgins
- --------------------------- ---------------------------
Jeffrey P. Gotschall William R. Higgins
President; Chief Executive Officer; Director
Director
/*/ Richard A. Demetter /*/ David V. Ragone
- --------------------------- ---------------------------
Richard A. Demetter David V. Ragone
Vice President-Finance; Chief Financial Officer Director
/*/ George D. Gotschall /*/ Thomas J. Vild
- --------------------------- ---------------------------
George D. Gotschall Thomas J. Vild
Assistant Secretary; Director Director
/*/ Hudson D. Smith /*/ J. Douglas Whelan
- --------------------------- ---------------------------
Hudson D. Smith J. Douglas Whelan
Treasurer; Director Director
/s/ Richard A. Demetter
---------------------------
Richard A. Demetter
---------------------------
(Attorney in Fact)
10
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON THE FINANCIAL STATEMENT SCHEDULES
To the Board of Directors and Shareholders of
SIFCO Industries, Inc.
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements included in SIFCO Industries, Inc. and
Subsidiaries' annual report to shareholders incorporated by reference in this
Form 10-K, and have issued our report thereon dated October 24, 1996. Our audit
was made for the purpose of forming an opinion on those statements taken as a
whole. The schedule listed in the index of financial statement schedules is the
responsibility of the Company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic consolidated financial statements. This schedule has been subjected to
the auditing procedures applied in the audit of the basic consolidated financial
statements and, in our opinion, fairly states in all material respects the
financial data required to be set forth therein in relation to the basic
consolidated financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Cleveland, Ohio,
October 24, 1996.
11
<PAGE> 13
SCHEDULE II
<TABLE>
<CAPTION>
SIFCO INDUSTRIES, INC.
AND SUBSIDIARIES
ALLOWANCES FOR DOUBTFUL ACCOUNTS
FOR THE YEARS ENDED SEPTEMBER 30 1996, 1995, AND 1994
($000 omitted)
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
BALANCE
BEGINNING OF PERIOD $ 726 $ 538 $ 868
Additions
Charged to costs and expenses 43 86 54
Deductions - accounts
determined to be uncollectible (117) (19) (438)
Recoveries of fully reserved accounts 68 --- ---
Exchange rate changes and other (11) 121 54
----- ----- -----
BALANCE
END OF PERIOD $ 709 $ 726 $ 538
===== ===== =====
</TABLE>
12
<PAGE> 1
[SIFCO INDUSTRIES, INC. LOGO]
SIFCO
INDUSTRIES, INC.
ANNUAL REPORT 1996
<PAGE> 2
TABLE OF CONTENTS
FINANCIAL HIGHLIGHTS .........................1
SHAREHOLDERS' LETTER .........................2
MANAGEMENT'S DISCUSSION AND ANALYSIS..........3
SELECTED FINANCIAL DATA.......................7
CONSOLIDATED STATEMENTS OF INCOME.............8
BALANCE SHEETS................................9
CASH FLOW....................................10
CONSOLIDATED STATEMENTS OF
SHAREHOLDERS' EQUITY........................11
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS........................12
SUMMARIZED QUARTERLY RESULTS.................13
COMPANY DIRECTORS & OFFICERS.................17
[SIFCO INDUSTRIES, INC. LOGO]
SIFCO
INDUSTRIES, INC.
SIFCO INDUSTRIES, INC. IS COMMITTED TO THE ABSOLUTE SATISFACTION OF ITS
CUSTOMERS WORLDWIDE THROUGH COMPETITIVE PRICING, TOTAL SERVICE, COMPREHENSIVE
TECHNOLOGY AND SUPERIOR QUALITY. THE COMPANY IS DEDICATED TO MEETING THE
TECHNICAL NEEDS OF THE AEROSPACE INDUSTRY IN THE PRODUCTION, REPAIR, PLATING,
MACHINING AND MARKETING OF JET ENGINE AND OTHER AEROSPACE COMPONENTS. SIFCO
SERVES 90% OF THE WORLD'S AIRLINES AND MAINTAINS A GROWING NETWORK OF
MANUFACTURING, SERVICE AND DISTRIBUTION CENTERS IN THE UNITED STATES, EUROPE
AND THE FAR EAST. THE COMPANY'S OPERATIONS CONSIST OF TWO BUSINESS SEGMENTS:
SPECIALTY PRODUCTS
THE SPECIALTY PRODUCTS SEGMENT PROVIDES REPAIR AND REMANUFACTURE OF JET ENGINE
AND INDUSTRIAL TURBINE COMPONENTS; PRECISION MACHINING FOR AEROSPACE
APPLICATIONS, INCLUDING SUBASSEMBLIES AND FINISHED REPLACEMENT PARTS;
EQUIPMENT, SOLUTIONS AND CONTRACT SERVICES IN SELECTIVE ELECTROPLATING FOR
AEROSPACE, DEFENSE AND INDUSTRIAL MARKETS.
FORGINGS
THE FORGING SEGMENT PROVIDES SPECIALIZED FORGINGS IN NUMEROUS ALLOYS FOR
APPLICATIONS IN THE AEROSPACE AND SOPHISTICATED INDUSTRIAL MARKETS; MARKETING
TO PROVIDE WORLDWIDE SOURCING AND SELLING CAPABILITIES, AS WELL AS
INTERNATIONAL TECHNOLOGY TRANSFER.
<PAGE> 3
HIGHLIGHTS
1994 - 1995 - 1996
- --------------------------------------------------------------------------------
NET SALES
(millions)
1994 1995 1996
$61.4 $68.1 $85.4
NEW ORDERS
(millions)
1994 1995 1996
$66.6 $72.0 $99.7
OPERATING PROFIT BEFORE RESTRUCTURING
(millions)
1994 1995 1996
$.024 $1.6 $4.7
BACKLOG
(millions)
1994 1995 1996
$27.0 $28.6 $42.9
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS OF 1996
Dollars in thousands, except per share amounts
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
Years Ended September 30 1996 %Change 1995 %Change 1994
- ------------------------------------------------------------------------------------------------------------------------
Net Sales $85,420 25.4% $68,134 10.9% $61,429
Net Income (loss) 5,608 2,812* 55
Net income (loss) per share 1.09 .55 .01
Dividends per share .10 ---- ----
Shareholder's equity per share 7.01 15.9% 6.05 12.2% 5.39
Stock price range (high-low) 10 1/4 - 3 3/4 5 9/16 - 2 15/16 4 3/4 - 2 9/16
Shares outstanding 5,127 5,092 5,062
Number shareholders 815 835 860
Return on beginning shareholders'
equity 18.2% 10.3% 0.2%
Long-term debt/equity percent 29.4% 35.3% 25.6%
<FN>
*Includes reversal of restructuring charge to income of $1,512.
</TABLE>
1
<PAGE> 4
TO OUR SHAREHOLDERS
================================================================================
RECORD SALES The operating performance of our Company in 1996 was
very strong with record sales which produced a
substantial improvement in earnings. We were able to
build on last year's accomplishments and achieve our
best overall performance in five years, as detailed in
the "Management's Discussion" section of this report.
THERE HAVE BEEN SEVERAL FACTORS WHICH HAVE COME
TOGETHER TO AFFECT OUR OPERATING PERFORMANCE IN THE
PAST SEVERAL YEARS.
Among the most important is the strong resurgence and
continued solid performance of the worldwide
airline industry. The flight performance of the
domestic and international air transport industries
directly and significantly impact our performance. The
Air Transport Association predicts a continuation of
record profit levels for the industry, in line with our
expectations.
CUSTOMER PROGRAMS Equally important are our relationships with the
world's airlines. We estimate that we serve at
least 90% of the world's major airlines, either through
sales of original equipment or by providing repair
services. Regardless of whether you fly internationally
or domestically, it is very likely that a SIFCO new or
refurbished part it is on that aircraft. As all
airlines have struggled to cope with the heavy
increases in both air traffic and its related
maintenance requirements, we have identified and
instituted numerous ways to serve them. Our
just-in-time inventory management assistance designed
to provide parts exactly when they are needed has
become extremely popular with our customers. The
popularity of this and other customer focused programs,
including the Forge Group's mandate on customer
satisfaction, has resulted in a heightened emphasis on
customer relationships throughout our operations. We
have expanded our customer base worldwide through our
commitment not only to quality but also to providing a
level of customer service which we feel is unequaled
in our industry.
MARKET IMPROVEMENT Increased aircraft production is good news for our
forge business. Boeing Commercial Airplane
Company, one of our major customers and a solid
indicator of the health of the industry, has recalled
its personnel on layoff, and has been actively
recruiting skilled workers on a global basis in order
to meet the dramatic increase in their current and
future production schedules, Boeing is booking orders
at healthy rates, particularly for its 737, 747, 757,
767 and 777 model aircraft. Since SIFCO produces a
variety of forgings for those aircraft, Boeing's
success in sales is good news for us.
2
<PAGE> 5
================================================================================
PRODUCT DEVELOPMENT Increased flight activity provides strong demand for
component repairs and replacement parts. For example,
there has been a surge of scheduled maintenance
activity on the CFM-56 jet engines which are fitted on
Boeing 737s and Airbus A320s, A321s and A340s. Having
achieved record-breaking in-flight service times, these
engines are now being scheduled for repair and
overhaul. Our investment in the development of
our Turbine Group's repair programs for new
generation engines produced by the major manufacturers
is beginning to provide expected returns. The SNECMA
CFM-56 jet engine is a good example of a development
project that fits this description. But that is not
all. Additional repair programs are also being
developed for components on Pratt & Whitney's PW4000
engine, Rolls-Royce's Trent engine and International
Aero Engine's V2500 engine.
ASSET UTILIZATION Our continuing success and growth is dependent upon the
effective use of our resources. In the period
since 1993 we have made major strides in improving our
operating profitability while limiting the growth of
our assets. The dramatic increases in our labor and
capital productivity and the related increases in our
investment returns are the direct results of the
tremendous efforts of all employees at all levels in
the Company. The success of strategic plans is based on
our employees continuing to be as energetic, creative
and efficient in the future as they have been in recent
periods. Over the past several years we have upgraded
and expanded our capabilities even when adverse market
conditions might have caused us to question that
approach. Some of the investment programs we have
supported include:
- Restructuring of our Forge Group
- Reorganization of our Turbine Group
- Development of additional turbine component
repair services for new generation aircraft
power plants.
ISO 9002 In past letters we have reported a variety of quality
awards earned by our operations personnel. This
year has been no exception. Forge technical
capabilities were also affirmed when we earned
certification for our heat treat facilities form the
National Aerospace and Defense Contractors
Accreditation Program (NADCAP). In our Specialty
Products segment, our plating facility in the United
Kingdom and both Turbine Group operations in Ireland
have earned the ISO 9002 registration for
international quality performance and all major
facilities will be registered ISO 9002 by year-end
1997.
3
<PAGE> 6
================================================================================
OUTLOOK We are confident that markets for our products and
services will continue to grow for the next
several years. We are also confident that, despite
aggressive competition, our Company's strategy is to
serve the performance requirements of our customers,
satisfy the investment interests of our shareholders,
and fulfill the needs of our employees by providing
them with satisfying and rewarding employment
opportunities.
It gave us great pleasure to declare a year-end cash
dividend of $.10 per share. The declaration reflected
the strong performance of our business segments
throughout the fiscal year. It is our objective to
continue the practice of paying a year-end dividend;
however, any dividend action must be consistent with
meeting our capital needs for long-term growth, as well
as dependent upon the current year's financial
performance. We are grateful for the continued loyalty
of our shareholders.
Jeffrey P. Gotschall Charles H. Smith, Jr.
President & CEO Chairman of the Board
December 9, 1996
4
<PAGE> 7
MANAGEMENT'S DISCUSSION
AND ANALYSIS OF BUSINESS
OPERATIONS 1994-1996
1994 IN 1994, NET SALES increased from $51.9 million to
$61.4 million, or approximately 18%, with Specialty
Products increasing 25% and Forgings increasing 6%.
Income from operations before corporate and interest
expense was $2.3 million compared to a loss of $7.6
million in 1993. The Company recorded $6.5 million of
expense in the fourth quarter of fiscal 1993 relating
to the restructuring of its Forge Group. The amount
charged against the reserve in fiscal 1994 was $3.8
million, reducing the reserve to $2.7 at September
30, 1994. The Company had a gain of $.246 million
from the sale of investments in fiscal 1994. Defense
sales were basically flat at $7.0 compared with $7.3
million in 1993.
SPECIALTY PRODUCTS SALES increased $8.7 million to
$43.6 million from $34.9 million in 1993.
Defense-related sales were flat at $1.0 million for
both years. Specialty Products income from operations
before corporate and interest expenses increased to
$3.2 million from $1.1 million in 1993. Increased
activity from airline repair customers accounted for
the majority of the increase.
FORGING SALES increased to $18.5 million from $17.5
million in 1993. Defense-related sales were basically
flat at $6.0 million compared with $6.3 million
in 1993. Forging's loss from operations before
corporate, interest and restructuring charges
decreased to $.9 million from $2.2 million in 1993.
The restructuring of the Forge Group, which was
implemented at the end of the second quarter, was
planned to be completed by the end of fiscal 1995. A
balance of $2.7 million of the $6.5 million reserve
provided in fiscal 1993 remained for that purpose.
TOTAL NEW ORDERS FOR FISCAL 1994 increased to $66.6
million from $56.0 million in 1993. Defense orders
increased $5.5 million to $11.5 million from $6.0
million in 1993. A retrofit of the CH-46 helicopter
accounted for $7.0 of the defense orders.
1995 IN 1995, NET SALES increased to $68.1 million from
$61.4 million or approximately 11% with Specialty
Products increasing 9% and Forgings increasing
15%. Defense-related sales increased to $9.3 million
from $7.0 million in 1994. Income before income taxes
was $3.1 million compared with $.270 million in 1994.
The Company completed the restructuring of the Forge
Group in the second quarter of fiscal 1995 and income
before income taxes for fiscal 1995, as well as the
second quarter, includes the reversal to income of
$1.5 million of the restructuring reserve. Income
before income taxes in fiscal 1994 included a gain of
$.25 million from the sale of investments.
SPECIALTY PRODUCTS SALES increased $3.8 million
to $47.4 million from $43.6 million in 1994.
Defense-related sales were $.7 million.
5
<PAGE> 8
compared with $1.0 million last year. Specialty Products
income from operations before corporate and interest expense
increased to $3.6 million from $3.2 million in 1994.
Increased activity from airline repair customers was the
primary source of the increase.
FORGING SALES increased $2.8 million to $21.3 million from
$18.5 million in 1994. Defense-related sales were $8.6
million compared with $6.0 million in 1994. Forging's income
from operations before corporate and interest expense
increased to $2.1 million (including the reversal to income
of $1.5 million of the restructuring reserve mentioned
above) compared with a $.9 million loss in 1994.
TOTAL NEW ORDERS FOR FISCAL 1995 increased to $72.0 million
from $66.6 million in 1994. Defense orders declined to $4.4
million from $11.5 million last year. A retrofit of the
CH-46 helicopter accounted for $7.0 million of defense
orders in 1994.
1996 IN 1996, NET SALES increased to $85.4 million from $68.1
million, or approximately 25%, with Specialty Products
increasing 24% and Forgings increasing 27%. Defense-related
sales increased to $11.0 million from $9.3 million in 1995.
Income before income taxes was $4.7 million compared with
$3.1 million in 1995. The Company completed the
restructuring of the Forge Group in the second quarter of
fiscal 1995 and income before income taxes for fiscal 1995,
as well as the second quarter, includes the reversal to
income of $1.5 million of the restructuring reserve.
SPECIALTY PRODUCTS SALES increased $11.3 million to $58.7
million from $47.4 million in 1995. Defense-related sales
were $1.2 million, an increase from $.7 million in 1995.
Specialty Products income from operations before corporate
and interest expense increased to $5.9 million from $3.6
million in 1995. Increased activity from airline repair
customers was the primary source of the increase.
FORGING SALES increased $5.8 million to $27.1 million from
$21.3 million in 1995. Defense-related sales were $9.8
million compared with $8.6 million in 1995. Forging's income
from operations before corporate and interest expense
increased to $1.7 million from $.6 million in 1995,
excluding the reversal to income in 1995 of the $1.5 million
of the restructuring reserve mentioned above.
THE COMPANY'S TOTAL NEW ORDERS FOR FISCAL 1996 increased to
$99.7 million from $72.0 million in 1995. Defense orders
increased to $17.8 million from $11.5 million last year.
Backlog at September 30, 1996 and 1995 was $42.9 million and
$28.6 million, respectively.
THE COMPANY'S LONG-TERM DEBT as a percentage of equity at
the end of the year was 29.4% compared with 35.3% in 1995.
THE COMPANY'S LEAD BANK has agreed to increase the current
$10 million revolving line of credit and to convert a
portion of the revolving credit to a term loan. The amount
and terms of the agreement are not yet finalized. The
Company had $6.4 million outstanding against the credit
agreement at September 30, 1996. The Company feels it has
adequate funding for its requirements in the coming year.
6
<PAGE> 9
SELECTED FINANCIAL DATA
SIFCO INDUSTRIES, INC., AND SUBSIDIARIES
For the years ended September 30
($000 omitted except for per share data)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $ 85,420 $ 68,134 $ 61,429 $ 51,897 $ 57,605
Operating income (loss) 4,694 3,067** 24 (10,297)* (1,574)
Net gain on disposal of investments -- -- 246 -- 694
Income tax (provision) benefit 914 (255) (215) 1,196 440
Net income (loss) 5,608 2,812 55 (9,101) (440)
Net income (loss) per share 1.09 .55 .01 (1.80) (.0)
Cash dividends per share .10 -- -- -- .21
Shareholders' equity 35,957 30,805 27,270 25,814 37,716
Shareholders' equity per
share at year end 7.01 6.05 5.39 5.16 7.57
Return on beginning
shareholders' equity 18.2% 10.3% 0.2% (24.1%) (1.2%)
Long-term debt 10,575 10,875 6,975 7,875 9,815
Long-term debt to equity percent 29.4% 35.3% 25.6% 30.5% 26.0%
Working capital 20,860 16,671 9,675 5,234 14,923
Current ratio 2.2 2.2 1.6 1.3 2.2
Net property, plant and equipment 23,200 23,460 21,476 22,745 24,432
Total assets 67,970 60,682 55,784 54,924 62,172
Shares outstanding
at year end 5,127 5,092 5,062 5,003 4,980
<FN>
*Includes restructuring expense of $6,500.
**Includes reversal of restructuring charge to income of $1,512
</TABLE>
7
<PAGE> 10
CONSOLIDATED STATEMENTS OF INCOME
SIFCO INDUSTRIES, INC., AND SUBSIDIARIES
For the years ended September 30
($000 omitted except for per share data)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
1996 1995 1994
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $ 85,420 $ 68,134 $ 61,429
Costs and expenses:
Cost of goods sold (Note 1) 67,714 54,898 50,189
Selling, general and administrative expenses 12,335 11,106 10,830
Interest income (120) (154) (113)
Interest expense 1,141 1,091 739
Restructuring expense (reversal) (Note 1) -- (1,512) --
Other (income) expense, net (Note 1) (344) (362) (486)
-------- -------- --------
80,726 65,067 61,159
-------- -------- --------
Income before income taxes 4,694 3,067 270
Income tax (provision) benefit (Note 3) 914 (255) (215)
-------- -------- --------
Net income $ 5,608 $ 2,812 $ 55
======== ======== ========
Net income per share $ 1.09 $ .55 $ .01
======== ======== ========
</TABLE>
The accompnaying notes are an intefral part of these consilidated statements.
8
<PAGE> 11
CONSOLIDATED BALANCE SHEETS
SIFCO INDUSTRIES, INC., AND SUBSIDIARIES
September 30
($000 omitted except for per share data)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
1996 1995
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,130 $ 1,469
Receivables, less allowance for doubtful accounts
of $709 in 1996 and $726 in 1995 17,929 15,121
Inventories (Note 1) 17,789 13,285
Refundable income taxes (Note 3) 193 --
Prepaid expenses and other current assets 627 545
------ ------
Total current assets 38,668 30,420
------ ------
PROPERTY, PLANT AND EQUIPMENT AT COST (NOTES 1 AND 2):
Land 855 855
Buildings 14,422 14,424
Machinery and equipment 45,359 43,136
------ ------
60,636 58,415
Less accumulated depreciation and amortization 37,436 34,955
------ ------
23,200 23,460
------ ------
OTHER ASSETS:
Funds held by trustee for capital project -- 472
Cash surrender value of officers' life insurance -- 64
Goodwill, net of amortization (Note 1) 3,980 4,097
Deferred charges and other (Note 1) 2,122 2,169
------ ------
6,102 6,802
------ ------
$67,970 $60,682
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt (Note 2) $ 2,500 $ 2,300
Accounts payable 9,402 6,664
Accrued salaries and wages 974 658
Accrued workers' compensation 500 382
Other accrued expenses 4,432 3,718
Accrued income taxes (Note 3) -- 27
------ ------
Total current liabilities 17,808 13,749
------ ------
LONG-TERM DEBT, NET OF CURRENT MATURITIES (NOTE 2) 10,575 10,875
------ ------
OTHER LONG-TERM LIABILITIES (NOTE 1) 3,630 5,253
------ ------
SHAREHOLDERS' EQUITY (NOTE 2):
Serial preferred shares, no par value, authorized 1,000,000
shares in 1996 and 1995 -- --
Common shares, par value $1 per share, authorized 10,000,000 shares, issued
and outstanding 5,126,604 shares in 1996 and 5,092,444 shares in 1995 5,127 5,092
Capital in excess of par value 5,978 5,873
Earnings retained for use in the business 24,852 19,840
------ ------
Total shareholders' equity 35,957 30,805
------ ------
$67,970 $60,682
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
9
<PAGE> 12
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIFCO INDUSTRIES, INC., AND SUBSIDIARIES
For the years ended September 30
($000 omitted)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
1996 1995 1995
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET CASH PROVIDED BY (USED FOR)
OPERATING ACTIVITIES:
Net income $ 5,608 $ 2,812 $ 55
Adjustments to reconcile net
income to net cash provided
by (used for) operating activities:
Depreciation and amortization 3,566 3,416 2,988
Loss on disposal of property, plant and equipment 90 40 42
Deferred income taxes (1,177) 33 775
Non-cash restructuring expense (reversal) -- (1,512) --
------- ------- -------
8,087 4,789 3,860
NET CASH PROVIDED BY (USED FOR) CHANGES IN OPERATING ASSETS AND LIABILITIES:
Receivables (2,808) (2,238) (2,169)
Inventories (4,504) (2,945) (874)
Accrued or refundable income taxes (220) 1,066 498
Prepaid expenses and other current assets (82) (129) (35)
Accounts payable 2,738 458 521
Accrued salaries and wages 316 120 81
Other accrued expenses 319 571 (545)
Accrued restructuring expense -- (1,174) (1,351)
------- ------- -------
(4,241) (4,271) (3,874)
------- ------- -------
Net cash provided by (used for) operating activities 3,846 518 (14)
NET CASH PROVIDED BY (USED FOR)
INVESTING ACTIVITIES:
Purchase of property, plant and equipment (3,388) (4,890) (2,197)
Decrease in funds held by
trustee for capital project 472 261 549
Other (169) 277 752
------- ------- -------
Net cash used for investing activities (3,085) (4,352) (896)
------- ------- -------
NET CASH PROVIDED BY (USED FOR)
FINANCING ACTIVITIES:
Proceeds from additional borrowings 2,200 3,800 3,400
Repayment of borrowings (2,300) (1,900) (1,940)
Grants received from Irish government agency -- 1,147 519
------- ------- -------
Net cash provided by (used for) financing activities (100) 3,047 1,979
------- ------- -------
Increase (decrease) in cash and cash equivalents 661 (787) 1,069
Cash and cash equivalents, beginning of year 1,469 2,256 1,187
------- ------- -------
Cash and cash equivalents, end of year $ 2,130 $ 1,469 $ 2,256
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
10
<PAGE> 13
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
SIFCO INDUSTRIES, INC., AND SUBSIDIARIES
For the years ended September 30
($000 omitted except for per share data)
<TABLE>
<CAPTION>
Earnings
Retained
Common Capital in for Use
Shares Excess of in the
$1 Par Value Par Value Business
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BALANCE - September 30, 1993 $5,003 $5,676 $15,135
Net income -- -- 55
Shares issued to Employees' Thrift Plan 17 37 --
Stock options exercised, net of shares surrendered 42 136 --
Foreign currency translation adjustment -- -- 1,169
- --------------------------------------------------------------------------------------------------------------
BALANCE - September 30, 1994 $5,062 $5,849 $16,359
Net income -- -- 2,812
Shares issued to Employees' Thrift Plan 9 25 --
Stock options exercised, net of shares surrendered 21 (1) --
Foreign currency translation adjustment -- -- 669
- --------------------------------------------------------------------------------------------------------------
BALANCE - September 30, 1995 $5,092 $5,873 $19,840
Net income -- -- 5,608
Shares issued to Employees' Thrift Plan 7 30 --
Shares issued to vendors as payment for services 11 29 --
Stock options exercised, net of shares surrendered 17 46 --
Foreign currency translation adjustment -- -- (83)
Dividends declared ($.10 per share) -- -- (513)
- --------------------------------------------------------------------------------------------------------------
BALANCE - September 30, 1996 $5,127 $5,978 $24,852
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<TABLE>
<CAPTION>
STOCK PRICES BY QUARTERS
(AMEX)
1996 1995
- -----------------------------------------------------------
HIGH LOW High Low
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
First Quarter 5 3/8 3 3/4 4 1/8 3
Second Quarter 7 4 5/8 4 1/8 2 5/16
Third Quarter 9 6 7/16 4 3/4 3 3/16
Fourth Quarter 10 1/4 7 5/8 5 9/16 4 1/4
</TABLE>
11
<PAGE> 14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIFCO INDUSTRIES, INC., AND SUBSIDIARIES
September 30, 1996, 1995 AND 1994
($000 omitted except for per share data)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. PRINCIPLES OF CONSOLIDATION:
The accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated. Certain prior year's amounts
have been reclassified to conform with the 1996 classification.
B. RESTRUCTURING EXPENSE:
In the fourth quarter of 1993, the Company recorded a restructuring charge of
$6.5 million for which no tax benefit was provided. The charge represented the
estimated reduction of the carrying value of certain Forging segment assets and
costs associated with downsizing the Cleveland Forge operation. During 1994,
the Company began implementing its plan to restructure the Forge Group's
operations. The restructuring was completed in the second quarter of fiscal
1995 and $1.512 million of the restructuring reserve was reversed to income.
Activities charged to the restructuring reserve in fiscal 1995 and 1994 are as
follows:
<TABLE>
<CAPTION>
(000's omitted)
Cash 1995 1994
- ---- ---- ----
<S> <C> <C>
Severance and other $ 75 $ 642
Professional and other restructuring costs 78 709
----- -----
153 1,351
----- -----
Non-Cash
- --------
Write-off of property, plant,
equipment and investments 15 1,358
Disposal of unsaleable inventory 14 256
Write-off of accounts receivable 113 349
Health care benefits 227 --
Employee claim settlements 541 --
Other 111 500
----- -----
1,021 2,463
----- -----
TOTAL $1,174 $3,814
====== ======
</TABLE>
C. INVENTORY VALUATION:
Inventories are stated at the lower of cost or market and include the cost of
material, labor and factory overhead.
Inventories entering into the determination of cost of sales are summarized
as follows:
<TABLE>
<CAPTION>
($000 omitted)
1996 1995
---- ----
<S> <C> <C>
Last-in, first-out cost $ 7,514 $ 3,344
First-in, first-out or average cost 10,275 9,941
------ -----
$ 17,789 $ 13,285
======== ========
</TABLE>
Under the average cost method of accounting, LIFO inventories would have
been $3,570,000 and $3,463,000 higher than reported at September 30, 1996 and
1995, respectively. The inventories at September 30, 1996 and 1995,
respectively, consisted of raw materials and supplies of $5,067,000 and
$3,488,000, and finished goods and work-in-process of $12,722,000 and
$9,797,000.
D. DEPRECIATION POLICY:
For financial reporting purposes, the Company provides for depreciation of plant
and equipment, principally by the straight-line method, at annual rates
sufficient to amortize the cost over each asset's expected useful life. For tax
purposes, the Company uses various accelerated methods and provides for the
related deferred taxes. The principal rates of depreciation for financial
reporting purposes are: buildings 2% to 5% and machinery and equipment 5% to
33-1/3%.
E. GOODWILL:
Goodwill of $4,637,000, less accumulated amortization of $657,000 and $540,000
at September 30, 1996 and 1995, respectively, represents the excess of cost over
the net assets of acquired companies, and is being amortized over 40 years.
F. PENSIONS AND THRIFT PLANS:
The Company and its domestic subsidiaries sponsor five pension plans covering
substantially all United States employees. Two of the plans are multi-employer
defined contribution plans. Three of the plans are single employer
The defined contribution plans are funded monthly. Pension costs charged to
operations for these plans were $32,000 in 1996, $37,000 in 1995, and $25,000 in
1994.
Net pension expense for the defined benefit plans for 1996, 1995, and 1994
consisted of the following components:
<TABLE>
<CAPTION>
($000 omitted)
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Service cost - benefits earned
during the year $ 398 $ 397 $ 459
Interest cost on projected
benefit obligation 652 635 717
Actual return on plan assets (1,042) (1,557) (196)
Net amortization and deferral 318 955 (353)
------ ------ -------
Total Expense $ 326 $ 430 $ 627
====== ====== =======
<CAPTION>
Assumptions used in accounting for the defined benefit pension plans as of
September 30, 1996, 1995, and 1994 were:
<S> <C> <C> <C>
Weighted average discount rate
used for ending liabilities 7.75% 7.50% 8.25%
Weighted average discount rate
used for expense 7.50% 8.25% 8.00%
Rate of increase in compensation levels 4.00% 4.00% 5.00%
Expected long-term investment rate 8.50% 8.50% 8%-8.50%
</TABLE>
12
<PAGE> 15
NOTES CONTINUED
The following table sets forth the funded status of the defined benefit plans
and the amounts shown in the Consolidated Balance Sheets as of September 30,
1996 and 1995:
<TABLE>
<CAPTION>
Plans with Assets Plans with Accum-
in Excess of lated Benefit
Accumulated Obligations in
Benefit Obligations Excess of Assets
($000 omitted)
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Plan assets at fair value,
primarily listed stocks,
funds, and bonds $ 8,268 $ 7,561 $ 710 $ 578
Actuarial present value of
the benefit obligation
Vested (6,027) (5,496) (859) (664)
Non-vested (333) (684) (130) (186)
-------- -------- -------- --------
Accumulated benefit obligation (6,360) (6,180) (989) (850)
Projected effect of future
salary increases (1,411) (1,355) -- --
-------- -------- -------- --------
Total projected benefit obligation (7,771) (7,535) (989) (850)
-------- -------- -------- --------
Plan assets over (under)
projected benefit obligation 497 26 (279) (272)
Unrecognized prior service cost (179) (288) 98 --
Unrecognized net (gain) loss (1,535) (1,159) 103 154
Additional liability -- -- (291) (267)
Unrecognized transition
(asset) obligation (170) (206) 90 113
-------- -------- -------- --------
Pension liability at end of year $(1,387) $(1,627) $ (279) $ (272)
======== ======== ======== ========
</TABLE>
The employees in Ireland are covered by a pension plan, the cost of which
currently is accrued and fully funded.
All non-union employees of the Company and its domestic subsidiaries are
eligible to participate in the Company's thrift plan. The total costs for 1996,
1995 and 1994 were $60,000, $59,000 and $68,000, respectively.
G. NET INCOME PER SHARE:
Net income per share has been computed based upon the weighted average number of
common shares outstanding during the year and common share equivalents. The
weighted average number of common shares and common share equivalents was
5,124,075 in 1996, 5,082,788 in 1995, and 5,064,830 in 1994.
H. DEFERRED CHARGES AND OTHER:
The Company has classified in Deferred Charges and Other the net unamortized
cost of a 10-year non-competition agreement with the former owner of an acquired
company. This amounted to $2,000,000 less accumulated amortization of $850,000
and $650,000 as of September 30, 1996 and 1995, respectively.
I. CASH FLOW:
The Company considers all highly liquid short-term investments with original
maturities of three months or less to be cash equivalents.
Gross interest paid amounted to $1,194,000, $1,047,000 and $934,000 in
1996, 1995 and 1994, respectively. Income taxes paid (refunded) were $35,000,(
$1,021,000) and ($1,496,000) in 1996, 1995 and 1994, respectively.
J. OTHER INCOME:
Other income is comprised primarily of grant income from Irish government
agencies, foreign exchange gains and losses, and royalty and fee income.
K. OTHER LONG TERM LIABILITIES:
The Company receives grants and subsidies from the Republic of Ireland as an
incentive to invest in manufacturing facilities in that country. These grants
and subsidies require that the Company maintain operations in that country for
10 years in order to qualify for the full value of the benefits received.
The Company's liability for the unearned portion of these items amounted to
$2,807,000 and $3,149,000 at September 30, 1996 and 1995, respectively, and is
included in other long term liabilities.
L. MANAGEMENT ESTIMATES:
The Company prepares its financial statements in accordance with generally
accepted accounting principles, which requires management to make estimates and
assumptions that affect amounts reported in the financial statements for the
reporting period. Actual results could differ from those based upon such
estimates and assumptions. These estimates and assumptions are revised as
necessary.
13
<PAGE> 16
NOTES CONTINUED
2. DEBT
Long-term debt as of September 30, 1996 and 1995 consisted of:
<TABLE>
<CAPTION>
($000 omitted)
1996 1995
---- ----
<S> <C> <C>
Variable Rate Industrial Development
Revenue Improvement
and Refunding Bonds $ 2,300 $ 2,625
Notes payable to bank, due in
quarterly installments of $275,000,
plus interest, at the base rate 2,375 3,350
Note payable to bank, due
October 31, 1997, interest payable
quarterly, at rates based upon LIBOR
and DIBOR (adjusted quarterly) 1,000 1,000
Note payable to seller of
acquired business, at the base rate
plus 1/2% 1,000 2,000
Note payable under revolving credit
agreement, at the base rate 6,400 4,200
------- -------
13,075 13,175
Less - current maturities 2,500 2,300
------- -------
$10,575 $10,875
======= =======
</TABLE>
The Company has a $10 million revolving credit agreement subject to
eligible working capital as defined, which expires January 1, 1998. As of
September 30, 1996, the Company had $6.4 million outstanding under this
agreement. In addition, the Company has a $1.15 million credit facility which is
used for an irrevocable letter of credit which secures the $1 million loan from
an Irish bank due October 31, 1997. A commitment fee of 3/8% is incurred on the
remaining unused balance. Interest is at the base rate and is payable quarterly.
The average balance outstanding against the remaining capacity was $5.4 million,
$3.7 million, and $1.0 million, during 1996, 1995 and 1994, respectively. The
balances outstanding under this credit agreement have been classified as long
term debt.
The Industrial Development bond interest rate is reset weekly, based on
prevailing tax-exempt money market rates, and is payable quarterly. Principal is
payable in quarterly installments of $100,000, with the final balance due on May
1, 2002. The bonds are secured by the property and equipment of the facility,
and backed by an irrevocable bank letter of credit which expires on May 1, 1998.
The revolving credit agreement, term loan and Industrial Development bonds
are secured by the Company's domestic accounts receivable, inventory and
equipment.
Among other covenants, the Company is required to maintain a minimum
tangible net worth (as defined) of $19.8 million, increasing by 50% of net
income subsequent to September 30, 1993. At September 30, 1996, tangible net
worth exceeded the required minimum by $5.3 million.
As part of a previous acquisition, the seller provided financing in the
form of unsecured installment notes. These notes bear interest at the base rate
plus 1/2%, payable and adjustable quarterly. The final principal payment of
approximately $1 million is due July 1, 1997.
The $1 million note payable to the bank has a variable interest rate based
on a combination of both LIBOR and DIBOR (Dublin Interbank Rates) rates. The
average effective rates of 1996, 1995, and 1994 were 6.7% , 6.2%, and 5.2%,
respectively.
3. FEDERAL INCOME TAX AND OTHER
The provision for income taxes in the accompanying Consolidated Statements
of Income differs from the statutory rate as follows:
<TABLE>
<CAPTION>
($000 omitted)
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Income before taxes $ 4,694 $ 3,067 $ 270
Less - State and local income taxes -- -- --
------- ------- -------
$ 4,694 $ 3,067 $ 270
======= ======= =======
Tax provision at statutory rate $ 1,596 $ 1,043 $ 92
Tax effect of -
Foreign tax rate differential (777) (466) (192)
Valuation allowance (1,304) (410) 217
Deductible permanent book to
tax difference (511)
Other (1) 82 88 98
------- ------- -------
Provision (benefit) for federal and
foreign income taxes (914) 255 215
Add - State and local income taxes -- -- --
------- ------- -------
$ (914) $ 255 $ 215
======= ======= =======
<FN>
(1) Non-deductible expenses
</TABLE>
The provision (benefit) for income taxes differs from amounts currently payable
or refundable due to certain items reported for financial statement purposes in
periods which differ from those in which they are reported for tax purposes.
Income tax provision (benefit) is made up of the following components:
<TABLE>
<CAPTION>
($000 omitted)
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Current federal and foreign
income taxes $ 263 $ 255 $ (560)
Deferred federal income taxes (1,177) -- 775
State and local income taxes -- -- --
------- ------- -------
$ (914) $ 255 $ 215
======= ======= =======
</TABLE>
14
<PAGE> 17
NOTES CONTINUED
Deferred tax assets and liabilities are comprised of the following:
<TABLE>
<CAPTION>
($000 omitted)
1996 1995
---- ----
<S> <C> <C>
Deferred tax assets:
Employee benefits $ 1,242 $ 1,297
Doubtful accounts 140 129
Inventory and property reserves 224 222
Investment valuation reserve 511 695
Foreign taxes credits 161 161
Tax loss carryforward 28 28
Other 128 81
------- -------
2,434 2,613
Deferred tax liabilities:
Depreciation 910 909
Personal property taxes 89 102
Other 97 137
------- -------
1,096 1,148
------- -------
Deferred tax assets less liabilities 1,338 1,465
------- -------
Valuation allowance (161) (1,465)
------- -------
Net deferred tax assets $ 1,177 $ --
======= =======
</TABLE>
In the current year, $1,304,000 of the valuation allowance was reversed as
management has determined that it is more lik ely than not that the net deferred
tax assets, other than the foreign tax credits, will be realized.
Cumulative undistributed earnings of foreign subsidiaries for which no U.S.
federal deferred income tax liabilities have been recorded were approximately
$14,934,000 at September 30, 1996.
4. SUMMARIZED QUARTERLY RESULTS OF OPERATIONS (UNAUDITED):
<TABLE>
<CAPTION>
($000 omitted)
1996 Quarter Ended
Dec 31 March 31 June 30 Sept 30 Total
<S> <C> <C> <C> <C> <C>
Net Sales $18,271 $22,096 $23,142 $21,911 $85,420
Cost of Sales 14,986 17,621 18,126 16,981 67,714
Net Income 362 1,102 1,390 2,754 5,608
Net Income
Per Share $.07 $.22 $.27 $.53 $1.09
<CAPTION>
($000 omitted)
1995 Quarter Ended
Dec 31 March 31 June 30 Sept 30 Total
<S> <C> <C> <C> <C> <C>
Net Sales $15,997 $17,374 $17,721 $17,042 $68,134
Cost of Sales 12,627 13,750 14,633 13,888 54,898
Net Income 313 1,925* 90 484 2,812
Net Income
Per Share $ .06 $ .38 $ .02 $ .09 $ .55
<FN>
* Includes $1,512 reversal of restructuring expense to income
</TABLE>
5. STOCK OPTIONS
Under the 1995 Stock Option Plan, 200,000 shares are reserved for incentive
stock option grants to key employees of the Company. Recipients of the grants
may purchase common shares at not less than fair market value no later than ten
years from date of the grant. 110,000 options were granted in fiscal 1996 at a
price of $4.25 and remained outstanding at September 30, 1996.
75,500 options issued under previous stock option plans (for which
authority to issue additional grants has expired) at prices ranging from $3.75
to $8.08 remained outstanding at September 30, 1996. During 1996 and 1995,
23,875 and 32,625 options were exercised at an aggregate price of approximately
$112,000 and $72,000, respectively. None were exercised in 1994.
The Company also has a 1994 Phantom Stock Plan. Grantees under the Plan are
credited with dividend equivalent units. Upon discontinuance of participation in
the Plan, the grantee is normally paid in cash, although shares may be issued at
the Company's discretion. The benefit under the Plan is based upon the
difference between the market price at the date of discontinuance and the award
price for vested award units, plus the market value of dividend equivalent
units.
As of September 30, 1996 and 1995, award units outstanding under the
Phantom Stock Plan, which includes awards still outstanding under two previous
versions of the Plan (for which authority to make additional awards has
expired), were 185,938 and 172,213 at prices ranging from $2.72 to $9.25, plus
11,971 and 13,855 dividend equivalent units, respectively. Expense relating to
the Plan was $580,000 in 1996, and $-0- in 1995 and 1994.
15
<PAGE> 18
NOTES CONTINUED
6. BUSINESS SEGMENTS
The Specialty Products segment consists primarily of precision contract
machining, subassemblies, and finished parts; selective electroplating
equipment, solutions and services; and turbine component remanufacturing. The
Forging segment consists primarily of domestically produced and imported
forgings.
No one customer accounted for 10% or more of sales in any of the above
years. Intersegment sales are accounted for at cost.
Corporate expenses represent expenses which are not of an operating nature
and therefore not allocated to business segments. Corporate assets are
principally cash, cash equivalents and receivables.
The following table summarizes certain information regarding segments of
the Company's operations for the years ended September 30, 1996, 1995 and 1994:
<TABLE>
<CAPTION>
($000 omitted)
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Net sales, including
intersegment sales:
Specialty Products $58,692 $47,370 $43,634
Forgings 27,121 21,345 18,547
Intersegment sales (393) (581) (752)
------- ------- -------
$85,420 $68,134 $61,429
======= ======= =======
Income (loss) from
operations before
corporate expenses
and interest expense:
Specialty Products $ 5,933 $ 3,603 $ 3,206
Forgings 1,666 2,090 (927)
------- ------- -------
7,599 5,693 2,279
Corporate expenses (1,884) (1,689) (1,629)
Interest expense, net (1,021) (937) (626)
------- ------- -------
Income from operations 4,694 3,067 24
Gain on sale of
investments --- -- 246
------- ------- -------
Income before income
taxes $ 4,694 $ 3,067 $ 270
======== ======== =========
Depreciation and
amortization expense:
Specialty Products $ 2,947 $ 2,805 $ 2,314
Forgings 619 611 674
------- ------- -------
$ 3,566 $ 3,416 $ 2,988
======== ======== ========
Capital expenditures:
Specialty Products $ 2,733 $ 4,353 $ 1,917
Forgings 655 537 280
------- ------- -------
$ 3,388 $ 4,890 $ 2,197
======== ======== ========
Identifiable assets
Specialty Products $51,087 $47,355 $42,409
Forgings 14,309 11,315 9,663
Corporate 2,574 2,012 3,712
------- ------- -------
$67,970 $60,682 $55,784
======= ======= =======
Foreign operations
Net sales $27,522 $21,793 $20,068
Operating profit 2,584 2,402 2,504
Identifiable assets 24,116 23,723 17,438
</TABLE>
================================================================================
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
SIFCO INDUSTRIES, INC.
We have audited the accompanying consolidated balance sheets of SIFCO
INDUSTRIES, INC. (an Ohio corporation) AND SUBSIDIARIES as of September 30, 1996
and 1995, and the related consolidated statements of income, shareholders'
equity and cash flows for each of the three years in the period ended September
30, 1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of SIFCO Industries, Inc. and
Subsidiaries as of September 30, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
September 30, 1996, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Cleveland, Ohio
October 24, 1996
16
<PAGE> 19
<TABLE>
<CAPTION>
DIRECTORS
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
George D. Gotschall William R. Higgins Hudson D. Smith
Assistant Secretary President Treasurer, SIFCO Industries, Inc.
SIFCO Industries, Inc. Advanced Technology & Research, Inc. Vice President and General
Clearwater, Florida Manager, SIFCO Forge Group
Jeffrey P. Gotschall
President and David V. Ragone Thomas J. Vild
Chief Executive Officer Visiting Professor Vild & Associates
SIFCO Industries, Inc. Massachusetts Institute of Technology Chagrin Falls, Ohio
Department of Materials Science
Richard S. Gray and Engineering J. Douglas Whelan
President Cambridge, Massachusetts President
Enterprise Development, Inc. Wyman-Gordon Forgings
Cleveland, Ohio Charles H. Smith, Jr. Houston, Texas
Chairman
SIFCO Industries, Inc.
<CAPTION>
OFFICERS
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Charles H. Smith, Jr. Richard A. Demetter Hudson D. Smith
Chairman of the Board Vice President - Finance and Treasurer
Chief Financial Officer
Jeffrey P. Gotschall Mara L. Babin
President & Chief Executive Officer George D. Gotschall Secretary & General Counsel
Assistant Secretary Partner,
Squire, Sanders & Dempsey
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
AUDITORS DIVIDEND REINVESTMENT
Arthur Andersen LLP SIFCO Industries maintains a dividend reinvestment program
200 Public Square, Suite 1800 that enables shareholders to purchase additional shares of
Cleveland, Ohio 44114 SIFCO stock without fees or service charges. To participate
in this program, or for answers to any questions on your
LEGAL COUNSEL dividend investment account, contact the SIFCO corporate
Squire, Sanders & office.
Dempsey
Key Tower FORM 10-K REQUESTS
Cleveland, Ohio 44114 A copy of the Company's current form 10-K annual report as
filed with the Securities and Exchange Commission is
TRANSFER, AGENT & available without charge to shareholders upon written
REGISTRAR request to the corporate secretary.
National City Bank
Cleveland, Ohio 44114 ANNUAL MEETING
The annual meeting of shareholders of SIFCO Industries, Inc.
will be held at the National City Bank, East Ninth Street
and Euclid Avenue, Cleveland, Ohio, at 10:30 AM on January
28, 1997.
LISTING
SIFCO's common stock is listed on the American Stock
Exchange, symbol SIF.
</TABLE>
<PAGE> 20
[logo]
SIFCO INDUSTRIES, INC.
970 East 67th Street, Cleveland, Ohio 44103
Phone: (216) 881-8600 Fax: (216) 432-6281
or visit our home page: www.sifco.com
<PAGE> 1
Exhibit 23
----------
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation of our
reports dated October 24, 1996, included and incorporated by reference in this
Form 10-K, into the Company's previously filed Registration Statements, File
Nos. 2-82001 and 33-32826.
ARTHUR ANDERSEN LLP
Cleveland, Ohio,
December 18, 1996.
<PAGE> 1
Exhibit 24
SIFCO INDUSTRIES, INC.
ANNUAL REPORT ON FORM 10-K
Power of Attorney
-----------------
The undersigned, an officer or director or both an officer and director,
of SIFCO Industries, Inc. (the " Company"), an Ohio corporation, which
anticipates filing with the Securities and Exchange Commission, Washington,
D.C., under the Securities Exchange Act of 1934, as amended, an Annual Report on
Form 10-K (which together with any and all amendments thereto is hereinafter
called the " Form 1 0-K"), does hereby constitute and appoint Charles H. Smith,
Jr., Jeffrey P. Gotschall, Richard A. Demetter, and Mara L. Babin, and any one
of them, with full power of substitution and resubstitution, as attorneys or
attorney to execute and file on behalf of the undersigned in his capacity as an
officer and/or director of the Company, the Form 10-K, with full power and
authority to do and perform any and all acts and things whatsoever required or
necessary to be done in the premises, as fully as to all intents and purposes as
he could do if personally present, hereby ratifying and approving the acts of
said attorneys and any of them and any such substitution.
Executed at Cleveland, Ohio, this 16 day of December, 1996.
/s/ Jeff Gotschall
---------------------------
<PAGE> 2
SIFCO INDUSTRIES, INC.
ANNUAL REPORT ON FORM 10-K
Power of Attornev
-----------------
The undersigned, an officer or director or both an officer and director,
of SIFCO Industries, Inc. (the "Company"), an Ohio corporation, which
anticipates filing with the Securities and Exchange Commission, Washington,
D.C., under the Securities Exchange Act of 1934, as amended, an Annual Report on
Form 10-K (which together with any and all amendments thereto is hereinafter
called the "Form 1 0-K"), does hereby constitute and appoint Charles H. Smith,
Jr., Jeffrey P. Gotschall, Richard A. Demetter, and Mara L. Babin, and any one
of them, with full power of substitution and resubstitution, as attorneys or
attorney to execute and file on behalf of the undersigned in his capacity as an
officer and/or director of the Company, the Form 10-K, with full power and
authority to do and perform any and all acts and things whatsoever required or
necessary to be done in the premises, as fully as to all intents and purposes as
he could do if personally present, hereby ratifying and approving the acts of
said attorneys and any of them and any such substitution.
Executed at Cleveland, Ohio, this 18th day of December, 1996.
/s/ Hudson D. Smith
----------------------------
<PAGE> 3
SIFCO INDUSTRIES, INC.
ANNUAL REPORT ON FORM 10-K
Power of Attorney
-----------------
The undersigned, an officer or director or both an officer and director,
of SIFCO Industries, Inc. (the "Company"), an Ohio corporation, which
anticipates filing with the Securities and Exchange Commission, Washington,
D.C., under the Securities Exchange Act of 1934, as amended, an Annual Report on
Form 10-K (which together with any and all amendments thereto is hereinafter
called the "Form 10-K"), does hereby constitute and appoint Charles H. Smith,
Jr., Jeffrey P. Gotschall, Richard A. Demetter, and Mara L. Babin, and any one
of them, with lull power of substitution and resubstitution, as attorneys or
attorney to execute and file on behalf of the undersigned in his capacity as an
officer and/or director of the Company, the Form 10-K, with full power and
authority to do and perform any and all acts and things whatsoever required or
necessary to be done in the premises, as fully as to all intents and purposes as
he could do if personally present, hereby ratifying and approving the acts of
said attorneys and any of them and any such substitution.
Executed at Orange Village, Ohio Dec.17 this day of December, 1996.
/s/ C. H. Smith Jr.
-------------------------------
<PAGE> 4
SIFCO INDUSTRIES, INC.
ANNUAL REPORT ON FORM 10-K
Power of Attorney
-----------------
The undersigned, an officer or director or both an officer and director,
of SIFCO Industries, Inc. (the "Company"), an Ohio corporation, which
anticipates filing with the Securities and Exchange Commission, Washington,
D.C., under the Securities Exchange Act of 1934, as amended, an Annual Report on
Form 10-K (which together with any and all amendments thereto is hereinafter
called the "Form 10-K"), does hereby constitute and appoint Charles H. Smith,
Jr., Jeffrey P. Gotschall, Richard A. Demetter, and Mara L. Babin, and any one
of them, with full power of substitution and resubstitution, as attorneys or
attorney to execute and file on behalf of the undersigned in his capacity as an
officer and/or director of the Company, the Form 10-K, with full power and
authority to do and perform any and all acts and things whatsoever required or
necessary to be done in the premises, as fully as to all intents and purposes as
he could do if personally present, hereby ratifying and approving the acts of
said attorneys and any of them and any such substitution.
Executed at Chagrin Falls, Ohio this 16th day of December, 1996.
/s/ Thomas J. Vild
----------------------------
<PAGE> 5
SIFCO INDUSTRIES, INC.
ANNUAL REPORT ON FORM 10-K
Power of Attorney
-----------------
The undersigned, an officer or director or both an officer and director,
of SIFCO Industries, Inc. (the "Company"), an Ohio corporation, which
anticipates filing with the Securities and Exchange Commission, Washington,
D.C., under the Securities Exchange Act of 1934, as amended, an Annual Report on
Form 10-K (which together with any and all amendments thereto is hereinafter
called the "Form 10-K"), does hereby constitute and appoint Charles H. Smith,
Jr., Jeffrey P. Gotschall, Richard A. Demetter, and Mara L. Babin, and any one
of them, with full power of substitution and resubstitution, as attorneys or
attorney to execute and file on behalf of the undersigned in his capacity as an
officer and/or director of the Company, the Form 10-K, with full power and
authority to do and perform any and all acts and things whatsoever required or
necessary to be done in the premises, as fully as to all intents and purposes as
he could do if personally present, hereby ratifying and approving the acts of
said attorneys and any of them and any such substitution.
Executed at St. Petersburg, 14th this day of December, 1996.
/s/ W. Higgins
-------------------------------
<PAGE> 6
SIFCO INDUSTRIES, INC.
ANNUAL REPORT ON FORM 10-K
Power of Attorney
-----------------
The undersigned, an officer or director or both an officer and director,
of SIFCO Industries, Inc. (the "Company"), an Ohio corporation, which
anticipates filing with the Securities and Exchange Commission, Washington,
D.C., under the Securities Exchange Act of 1934, as amended, an Annual Report on
Form 10-K (which together with any and all amendments thereto is hereinafter
called the "Form 10-K"), does hereby constitute and appoint Charles H. Smith,
Jr., Jeffrey P. Gotschall, Richard A. Demetter, and Mara L. Babin, and any one
of them, with full power of substitution and resubstitution, as attorneys or
attorney to execute and file on behalf of the undersigned in his capacity as an
officer and/or director of the Company, the Form 10-K, with full power and
authority to do and perform any and all acts and things whatsoever required or
necessary to be done in the premises, as fully as to all intents and purposes as
he could do if personally present, hereby ratifying and approving the acts of
said attorneys and any of them and any such substitution.
Executed at Naples, Fl, the 14th day of December, 1996.
/s/ George D. Gotschall
----------------------------------
<PAGE> 7
SIFCO INDUSTRIES, INC.
ANNUAL REPORT ON FORM 10-K
Power of Attorney
-----------------
The undersigned, an officer or director or both an officer and director,
of SIFCO Industries, Inc. (the "Company"), an Ohio corporation, which
anticipates filing with the Securities and Exchange Commission, Washington,
D.C., under the Securities Exchange Act of 1934, as amended, an Annual Report on
Form 10-K (which together with any and all amendments thereto is hereinafter
called the "Form 10-K"), does hereby constitute and appoint Charles H. Smith,
Jr., Jeffrey P. Gotschall, Richard A. Demetter, and Mara L. Babin, and any one
of them, with full power of substitution and resubstitution, as attorneys or
attorney to execute and file on behalf of the undersigned in his capacity as an
officer and/or director of the Company, the Form 10-K, with full power and
authority to do and perform any and all acts and things whatsoever required or
necessary to be done in the premises, as fully as to all intents and purposes as
he could do if personally present, hereby ratifying and approving the acts of
said attorneys and any of them and any such substitution.
Executed at Cleveland, Ohio, this 14th day of December, 1996.
/s/ R. S. Gray
---------------------------------
<PAGE> 8
SIFCO INDUSTRIES, INC.
ANNUAL REPORT ON FORM 10-K
Power of Attorney
-----------------
The undersigned, an officer or director or both an officer and director,
of SIFCO Industries, Inc. (the "Company"), an Ohio corporation, which
anticipates filing with the Securities and Exchange Commission, Washington,
D.C., under the Securities Exchange Act of 1934, as amended, an Annual Report on
Form 10-K (which together with any and all amendments thereto is hereinafter
called the "Form 10-K"), does hereby constitute and appoint Charles H. Smith,
Jr., Jeffrey P. Gotschall, Richard A. Demetter, and Mara L. Babin, and any one
of them, with full power of substitution and resubstitution, as attorneys or
attorney to execute and file on behalf of the undersigned in his capacity as an
officer and/or director of the Company, the Form 10-K, with full power and
authority to do and perform any and all acts and things whatsoever required or
necessary to be done in the premises, as fully as to all intents and purposes as
he could do if personally present, hereby ratifying and approving the acts of
said attorneys and any of them and any such substitution.
Executed at Boston, Massachusetts, 15th this day of December, 1996.
/s/ David Ragone
----------------------------
<PAGE> 9
SIFCO INDUSTRIES, INC.
ANNUAL REPORT ON FORM 10-K
Power of Attorney
-----------------
The undersigned, an officer or director or both an officer and director,
of SIFCO Industries, Inc. (the "Company"), an Ohio corporation, which
anticipates filing with the Securities and Exchange Commission, Washington,
D.C., under the Securities Exchange Act of 1934, as amended, an Annual Report on
Form 10-K (which together with any and all amendments thereto is hereinafter
called the "Form 10-K"), does hereby constitute and appoint Charles H. Smith,
Jr., Jeffrey P. Gotschall, Richard A. Demetter, and Mara L. Babin, and any one
of them, with full power of substitution and resubstitution, as attorneys or
attorney to execute and file on behalf of the undersigned in his capacity as an
officer and/or director of the Company, the Form 10-K, with full power and
authority to do and perform any and all acts and things whatsoever required or
necessary to be done in the premises, as fully as to all intents and purposes as
he could do if personally present, hereby ratifying and approving the acts of
said attorneys and any of them and any such substitution.
Executed at Worcester, Mass, this 8th of December, 1996.
/s/ J. D. Whelan
--------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000090168
<NAME> SIFCO INDUSTRIES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> SEP-30-1996
<CASH> 2,130
<SECURITIES> 0
<RECEIVABLES> 17,929
<ALLOWANCES> 0
<INVENTORY> 17,789
<CURRENT-ASSETS> 38,668
<PP&E> 23,200
<DEPRECIATION> 0
<TOTAL-ASSETS> 67,970
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 5,127
0
0
<OTHER-SE> 30,830
<TOTAL-LIABILITY-AND-EQUITY> 67,970
<SALES> 0
<TOTAL-REVENUES> 85,420
<CGS> 67,714
<TOTAL-COSTS> 80,049
<OTHER-EXPENSES> (344)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,021
<INCOME-PRETAX> 4,694
<INCOME-TAX> (914)
<INCOME-CONTINUING> 5,608
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,608
<EPS-PRIMARY> 1.09
<EPS-DILUTED> 1.09
</TABLE>
