<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Sifco Industries, Inc.
----------------------------------------------
(Name of Registrant as Specified in its Charter)
Sifco Industries, Inc.
----------------------------------------------
(Name of Person(s) Filing Proxy Statement if Other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(1)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined)
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE> 2
[SIFCO INDUSTRIES, INC. LOGO]
SIFCO INDUSTRIES, INC.
970 EAST 64TH STREET, CLEVELAND, OHIO 44103
NOTICE OF 1997 ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of SIFCO Industries, Inc. will be
held in the National City Bank auditorium (4th floor) of the National City
Center Annex Building, 1900 East 9th Street, Cleveland, Ohio, on January 28,
1997 at 10:30 a.m., for the following purposes:
1. To elect three directors for a three-year term expiring in 2000.
2. To ratify the designation of Arthur Andersen LLP as the
independent auditors of the Company.
3. To consider and take action upon such other matters as may
properly come before the meeting or any adjournment thereof.
The holders of record of Common Shares at the close of business on
December 6, 1996, will be entitled to receive notice of and vote at the meeting.
The Company's Annual Report for the fiscal year ended September 30,
1996 has been previously mailed to Shareholders.
By order of the Board of Directors.
SIFCO Industries, Inc.
Mara L. Babin, Secretary
December 20, 1996
KINDLY FILL IN, DATE AND SIGN THE ENCLOSED PROXY AND PROMPTLY RETURN IT
IN THE ENCLOSED ADDRESSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. IF YOU ARE PRESENT AND VOTE IN PERSON AT THE MEETING, YOUR PROXY
WILL NOT BE USED.
<PAGE> 3
[SIFCO INDUSTRIES, INC. LOGO]
SIFCO INDUSTRIES, INC.
970 EAST 64TH STREET, CLEVELAND, OHIO 44103
December 20, 1996
PROXY STATEMENT
GENERAL INFORMATION
The proxy which accompanies this statement is solicited by the Board of
Directors of SIFCO Industries, Inc. (the "Company") for use at the 1997 Annual
Meeting of the Shareholders of the Company to be held January 28, 1997, or at
any adjournment thereof. This proxy statement was first mailed on December 20,
1996 to shareholders of record on December 6, 1996.
Any shareholder giving a proxy for the meeting may revoke it before it
is exercised by giving a later dated proxy or by giving notice of revocation to
the Company in writing or in the open meeting. However, the mere presence at the
meeting of the shareholder granting a proxy does not revoke the proxy. Unless
revoked by notice as above stated, the shares represented by valid proxies will
be voted on all matters to be acted upon at the meeting. On any matter or
matters with respect to which the proxy contains instructions for voting, such
shares will be voted in accordance with such instructions. Abstentions will be
deemed to be present for the purpose of determining a quorum for the meeting,
but will be deemed not voting on the issues or matters as to which abstention is
applicable. Brokers who have not received voting instructions from beneficial
owners generally may vote in their discretion with respect to the election of
directors and the ratification of the auditors. Broker non-votes will not affect
the outcome of any matter for which the 1997 annual meeting is called.
The cost of solicitation of proxies in the form accompanying this
statement will be borne by the Company. Proxies will be solicited by mail or by
telephone or personal interview with an officer or regular employee of the
Company or by requesting brokers and other custodians, nominees and fiduciaries
to forward proxy soliciting material to the beneficial owners of shares held of
record by such brokers, custodians, nominees or fiduciaries, who will be
reimbursed by the Company for their expenses in so doing.
<PAGE> 4
OUTSTANDING SHARES AND VOTING RIGHTS
The record date for determination of shareholders entitled to vote at
the 1997 Annual Meeting is December 6, 1996. As of November 30, 1996, the
outstanding voting securities of the Company were 5,135,401 Common Shares. Each
Common Share, exclusive of treasury shares, has one vote. The Company held no
Common Shares in its treasury on the record date. The holders of a majority of
the Common Shares of the Company issued and outstanding and entitled to be cast,
present in person or by proxy, shall constitute a quorum for the purposes of the
Annual Meeting.
Under the General Corporation Law of Ohio, if notice in writing is
given by any shareholder to the President or any Vice President or the Secretary
of the Company, not less than forty-eight hours before the time fixed for
holding the meeting, that the shareholder desires that the voting for election
of directors shall be cumulative, each shareholder will have cumulative voting
rights in the election of directors and can give one candidate a number of votes
equal to the number of directors to be elected multiplied by the number of
shares held by the shareholder, or distribute such number of votes among as many
candidates and in such manner as the shareholder deems advisable. In case of
such notice, it is intended that the persons named in the accompanying proxy
will vote cumulatively for all or such of the nominees hereinafter mentioned as
they deem best.
As of November 30, 1996, Jeffrey P. Gotschall, Marilyn Free Scott and
Charles H. Smith, III, 970 East 64th Street, Cleveland, Ohio 44103, owned, as
Trustees, 2,017,343 Common Shares representing 39.28% of the outstanding Common
Shares of the Company, such Common Shares having been deposited with them or
their predecessors, as Trustees, under a Voting Trust Agreement entered into as
of February 1, 1987 and extended to January 31, 1997 by an Extension Agreement
dated December 2, 1991. Voting Trust Certificates for the number of Common
Shares so deposited have been delivered by the Trustees (or their predecessors)
to the beneficial owners thereof, except for any numbers of shares less than one
hundred (100) as may exist from time to time, for which no Voting Trust
Certificates are delivered. The Trustees under the Voting Trust Agreement share
voting control with respect to all such Shares.
The table below names the persons who are known by the Company to be
the beneficial owners of more than 5% of its outstanding Common Shares and,
unless noted otherwise, as of November 30, 1996, the number of such Common
Shares beneficially owned by, or held in trust for, each such person (including
their spouses and children who live with them, if any) and the percentage of the
outstanding Common Shares entitled to vote which that number of shares
constitutes.
2
<PAGE> 5
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
<S> <C> <C>
Mrs. George D. Gotschall 742,514 (1) 14.46%
2400 Gulf Shore Blvd. N., Apt. 201
Naples, Florida 33940
Charles H. Smith, Jr. 600,636 (1) (2) 11.69%
4565 South Lake Drive
Boynton Beach, FL 33436
Dimensional Fund Advisors, Inc. 268,275 (3) (4) (5) (6) 5.22%
<FN>
(1) All shares owned by Mrs. G. D. Gotschall, and 598,136 shares owned by C. H. Smith, Jr. are subject to
the Voting Trust Agreement described above.
(2) Includes 1,000 shares owned by his wife which are not subject to the Voting Trust Agreement.
(3) As of September 30, 1996.
(4) Dimensional Fund Advisors, Inc. holds sole voting power to 177,200 Common Shares. Persons who are
officers of Dimensional Fund Advisors Inc. also serve as officers of DFA
Investment Dimensions Group Inc., (the "Fund") and The DFA Investment
Trust Company (the "Trust"), each an open-end management investment
company registered under the Investment Company Act of 1940. In their
capacity as officers of the Fund and the Trust, these persons vote 46,675
additional shares which are owned by the Fund and 44,400 Common Shares
which are owned by the Trust (both included in Sole Dispositive Power
below).
(5) Dimensional Fund Advisors, Inc. holds sole dispositive power to 268,275 shares.
(6) Dimensional Fund Advisors, Inc. disclaims beneficial ownership of all such Common Shares.
</TABLE>
3
<PAGE> 6
ELECTION OF DIRECTORS
The size of the Board of Directors is currently fixed at nine and
classified into three classes. The term of office of one class of directors
expires in each year. The terms of office of Jeffrey P. Gotschall, David V.
Ragone and C. H. Smith, Jr. will expire on the day of the 1997 Annual Meeting.
Proxies solicited hereunder granting authority to vote on the election
of directors will be voted for the election of Messrs. Jeffrey P. Gotschall,
David V. Ragone and C. H. Smith, Jr. to serve for three-year terms ending in
2000, and until their respective successors are elected. All nominees currently
serve as directors of the Company.
The nominees receiving the greatest number of votes shall be elected.
Although the Company does not contemplate that any of the nominees will be
unavailable for election, if a vacancy in the slate of nominees should be
occasioned by death or other unexpected occurrence, it is currently intended
that the proxies will be voted for reducing the size of the Board to eight or
for the election of such other person or persons, if any, as the Nominating
Committee of the Board may recommend.
The following information was furnished to the Company by each director
or nominee and sets forth the name, age, principal occupation or employment of
each director and the period during which he has served as a director of the
Company. Except as otherwise noted below, each director or nominee has held his
principal occupation or employment for at least five years.
DIRECTORS WHOSE TERMS EXPIRE IN 2000
JEFFREY P. GOTSCHALL, 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.
DR. DAVID V. RAGONE, 66, Director since 1983. Senior Lecturer --
Massachusetts Institute of Technology (Department of Materials Science
and Engineering) since July 1988, previously Visiting Professor at
M.I.T. from July 1987 through June 1988. Dr. Ragone was President of
Case Western Reserve University from July 1980 through June 1987 and
theretofore Dean of the College of Engineering at the University of
4
<PAGE> 7
Michigan. Dr. Ragone is also a director of Augat, Inc. (electronic
components and circuits) and Cabot Corporation (carbon black and
natural gas). He was a general partner of Ampersand (venture capital
fund) from 1988 to April 1992 and has now been a partner of Ampersand
Ventures since April 1992.
CHARLES H. SMITH, JR., 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. Mr. Smith is a former Chairman of the
Board of the Chamber of Commerce of the United States. He served as a
member of the governing body of the International Labor Organization
from 1975 to 1978 and served as the United States employer delegate to
the ILO from 1975 to 1992.
DIRECTORS WHOSE TERMS EXPIRE IN 1999
WILLIAM R. HIGGINS, 54, Director since 1992. President, Advanced Technology &
Research, Inc., Clearwater, Florida (design manufacturing of advanced
composite material products) since 1980. Mr. Higgins previously served
as a research consultant in composites technology for Jet Executive
International and Gulfstar, Inc. Mr. Higgins also served as President
of Force Engineering, Sarasota, Florida from 1974 to 1978 (design and
manufacture of composites technology for boat industry).
HUDSON D. SMITH, 45, Director since 1988. Treasurer of the Company since 1983;
Vice President and General Manager of SIFCO Forge Group since January
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.
J. DOUGLAS WHELAN, 57, Director since October 1995. President of Wyman-Gordon
Forgings since May of 1994. From 1989 through April 1994, Mr. Whelan
served as Vice President of Operations for the Cameron Forged Products
Division of Cooper Industries. From 1965 to 1989, Mr. Whelan served
in a variety of executive and management positions with Cameron Iron
Works.
5
<PAGE> 8
DIRECTORS WHOSE TERMS EXPIRE IN 1998
GEORGE D. GOTSCHALL, 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. Mr. Gotschall is also a director
of National City Trust Company, West Palm Beach, Florida (banking).
RICHARD S. GRAY, 65, Director since January 1986. President, Enterprise
Development Inc. since April 1987. Mr. Gray is a Director of Shiloh
Industries, Inc., (flatrolled steel processor). From November 1985 to
April 1987, Director of The Center for Venture Development; from July
1984 to June 1985, Senior Vice President of LTV Steel, Cleveland, Ohio
(primary steel manufacturer).
THOMAS J. VILD, 62, Director since 1994. Management Consultant since 1990. Mr.
Vild was an aerospace industry analyst with the investment firm of
Roulston Research from 1987 through 1990 and former Director of Market
Analysis and Forecasting for the Aircraft Components Group of TRW from
1978 to 1987. Prior to such time, Mr. Vild served in a variety of
management positions at TRW, Martin Marietta Corporation and Gould,
Inc.
6
<PAGE> 9
STOCK OWNERSHIP OF OFFICERS, DIRECTORS AND NOMINEES
The following table sets forth as of November 30, 1996, the number of
Common Shares of the Company beneficially owned by each director, nominee for
director, officer and all directors and officers as a group, according to
information furnished to the Company by such persons:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME OWNERSHIP (1) OF CLASS
<S> <C> <C>
Richard A. Demetter 41,694 *
George D. Gotschall (2)(3)(4) 742,514 14.51%
Jeffrey P. Gotschall (2)(4)(5)(8) 115,906 2.26%
Richard S. Gray 10,000 *
William R. Higgins 500 *
David V. Ragone (6) 11,125 *
Charles H. Smith, Jr. (2)(3)(4) 600,636 11.69%
Hudson D. Smith (2)(4)(5) 128,403 2.50%
Thomas J. Vild 1,000 *
J. Douglas Whelan 8,000
All Directors and Officers as a Group (7) 2,113,158 41.15%
<FN>
*Shares owned are less than one percent of class.
(1) Unless otherwise stated below, the shares owned by each director or nominee are owned
of record by that person who has sole voting and investment power as to those shares.
A portion of the total number of shares for the following persons and group represents
shares which could be acquired within 60 days of the date of this Proxy Statement by
exercise of stock options: Mr. J. P. Gotschall, 15,000 shares; Mr. H. D. Smith, 5,000
shares; Mr. R. A. Demetter, 17,500 shares; and all directors and officers as a group
42,500 shares.
</TABLE>
7
<PAGE> 10
(2) Includes in the cases of Messrs. G. D. Gotschall, J. P. Gotschall, H. D.
Smith and C. H. Smith, Jr. shares owned by their spouses and any minor
children or in trust for them, their spouses and their lineal
descendants.
(3) Mr. C. H. Smith, Jr. and Mr. G. D. Gotschall are brothers-in-law.
(4) Includes Voting Trust Certificates issued by the Voting Trust described
above representing an equivalent number of Common Shares held by such
Trust as follows: Mr. G. D. Gotschall -- 742,514; Mr. J. P. Gotschall --
99,080; Mr. C. H. Smith, Jr. -- 599,636; and Mr. H. D. Smith -- 121,733.
(5) Mr. J. P. Gotschall is the son of Mr. G. D. Gotschall and the nephew of
Mr. C. H. Smith, Jr. Mr. H. D. Smith is the son of Mr. C. H. Smith, Jr.
and the nephew of Mr. G. D. Gotschall.
(6) Includes shares owned jointly with his wife.
(7) Includes 2,017,343 shares held in the Voting Trust as to which Messrs.
J. P. Gotschall and C. H. Smith III, and Marilyn Free Scott, as
trustees, share voting control. Also includes shares reported as
beneficially owned by Dr. Ragone as described in Note (6).
(8) Does not include an additional 1,898,437 shares held in the Voting Trust
as to which J. P. Gotschall, Marilyn Free Scott and C. H. Smith III, as
trustees, share voting power.
ORGANIZATION AND COMPENSATION OF THE BOARD OF DIRECTORS
The Company's Board of Directors held four regularly scheduled meetings
and one special meeting during the last fiscal year. Among the Board of
Directors' standing committees are the Audit; Compensation, Pension and Stock
Option; Nominating; and Technology Committees.
The functions of the Audit Committee are to determine the scope of the
audit, to discuss any special problems that may arise during the course of the
audit and to review the audit and findings for the purpose of reporting to the
Board of Directors. The Audit Committee, currently composed of Mr. Gray, Dr.
Ragone, Mr. Vild and Mr. Higgins, held two meetings during the last fiscal year.
The function of the Compensation, Pension and Stock Option Committee is
to review the compensation of directors and officers of the Company and to
recommend to the Board of Directors the employees of the Company to whom stock
options should be granted and
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<PAGE> 11
the number of shares which should be subject to each option so granted. The
Compensation, Pension and Stock Option Committee, currently composed of Messrs.
Gray, Higgins and Whelan, held one meeting during the fiscal year.
The function of the Nominating Committee is to recommend candidates for
the Board of Directors. The Nominating Committee, currently composed of Dr.
Ragone, and Messrs. G. D. Gotschall and Gray, held one formal meeting separate
from Board meetings during the fiscal year and met in conjunction with Board
meetings and had informal discussions during the year. The Nominating Committee
will consider shareholder nominations for directors at any time. Any shareholder
desiring to have a nominee considered by the Nominating Committee should submit
such recommendation in writing to a member of the Nominating Committee or the
Secretary of the Company.
The function of the Technology Committee is to review developments in
technology that may impact the businesses and marketplace the Company serves.
The Technology Committee, comprised of Dr. Ragone and Messrs. Higgins, Vild and
Whelan, held no meetings in 1996.
In fiscal 1996, each director (other than directors who are employed by
the Company) received an annual retainer fee of $12,000 and an attendance fee of
$600 for each Board and committee meeting attended. Commencing in fiscal 1997,
the meeting attendance fee was changed to $700 for meetings on a day other than
the day of a board meeting and $400 for meetings held on the day of a board
meeting. Committee chairman will receive an additional $2,000 annual retainer
for such service. Under the Company's deferred compensation program, a director
may defer all or any portion of his compensation as a director. Compensation so
deferred is credited to an account or accounts on the Company's books and is
credited, at the participant's election, with interest at a money market rate,
or with units the value of which is tied to the market value of the Company's
Common Shares at the time the compensation is earned. The amounts so deferred
may be distributed, at the election of the director, upon termination of his
position with the Company, or at a future date, in a lump sum or in installments
over a period not to exceed ten years.
9
<PAGE> 12
EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term compensation
for the Company's Chief Executive Officer and the highest paid executive officer
of the Company whose salary and bonus exceed $100,000 together with the total
compensation paid to each such individual for the Company's three previous
fiscal years:
<TABLE>
===========================================================================================
SUMMARY COMPENSATION TABLE
- - -------------------------------------------------------------------------------------------
ANNUAL LONG TERM
COMPENSATION COMPENSATION
- - -------------------------------------------------------------------------------------------
<CAPTION>
NAME & PRINCIPAL OPTION ALL OTHER(1)
POSITION YEAR SALARY ($) BONUS ($) AWARDS # COMPENSATION
- - -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Jeffrey P. Gotschall 1996 200,000 74,000 -0- 1,206
President & CEO 1995 175,000 34,000 -0- 1,050
1994 175,000 -0- -0- 2,129
- - -------------------------------------------------------------------------------------------
Richard A. Demetter 1996 105,000 39,999 -0- 1,281
Vice President & CFO 1995 101,000 18,000 -0- 6,007
1994 101,000 -0- -0- 1,223
===========================================================================================
<FN>
(1) Represents amounts contributed by the Company as matching contributions
pursuant to the Company's Employee Thrift Plan, a defined contribution
plan, and compensation paid from the Phantom Stock Plan.
</TABLE>
The value of non-cash compensation and personal benefits furnished by
the Company to its executive officers in 1996, valued at their incremental cost
to the Company, did not exceed ten percent of the reported cash compensation for
such person.
STOCK OPTIONS
No stock options were granted during the fiscal year ended September
30, 1996.
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<PAGE> 13
OPTION EXERCISES AND FISCAL YEAR-END VALUES
Shown below is information with respect to the exercise of stock
options during the fiscal year ended September 30, 1996 to purchase the
Company's Common Shares by the executive officers named in the Summary
Compensation Table and information with respect to unexercised stock options at
September 30, 1996 for the Company executive officers named in the Summary
Compensation Table.
<TABLE>
<CAPTION>
===============================================================================================================
SHARES VALUE VALUE OF UNEXERCISED IN
ACQUIRED NUMBER OF UNEXERCISED THE MONEY OPTIONS AT
NAME ON REALIZED OPTIONS AT YEAR-END FISCAL YEAR-END
EXERCISE
Exercisable Unexercisable Exercisable Unexercisable
- - ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey P. 5,000 $ 9,875 11,250 3,750 $66,094 $22,031
Gotschall
- - ---------------------------------------------------------------------------------------------------------------
R. A. -0- -0- 16,250 1,250 $56,721 $8,281
Demetter
===============================================================================================================
</TABLE>
PENSION PLAN
The amounts stated in the foregoing Summary Compensation Table do not
include amounts paid by the Company for purposes of funding the Company's
non-contributory pension plan. Messrs. J. P. Gotschall and R. A. Demetter
participate on the same basis as other salaried employees in a non-contributory
pension plan known as SIFCO Industries, Inc. Salaried Retirement Plan (the
"Retirement Plan").
The foregoing Summary Compensation Table includes both the base salary,
which is compensation covered by the Retirement Plan, and incentive
compensation, which is not covered by the Retirement Plan.
The estimated annual retirement benefit under the Retirement Plan for
each participant is based upon the assumption that base salary will remain
unchanged until the normal retirement age of 65 is reached, and that likewise
the provisions of the Retirement Plan with respect to those retirement benefits
will remain unchanged. Under the terms of the Retirement Plan, the amount of
normal annual retirement benefit payable to a participating employee is
generally based upon years of service with the Company prior to normal
retirement date, "final average earnings" (average basic salary during the
period of
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<PAGE> 14
60 consecutive months within the 120 months preceding retirement during which
the total amount of basic salary was the highest) and average Social Security
covered compensation. For an employee retiring with 25 years of service or less,
the benefit is equal to 2.144% of final average earnings minus .625% of average
Social Security covered compensation multiplied by years of service up to 25
years. If an employee has more than 25 years of service at retirement, the
benefit is increased by 1.25% of final average earnings multiplied by his years
of service in excess of 25 years. The amount so determined is payable in the
form of a single life annuity or a lump sum payment.
<TABLE>
<CAPTION>
YEARS OF SERVICE
REMUNERATION 15 20 25 30 35
- - ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 50,000 13,496 17,994 22,493 25,618 28,743
75,000 21,536 28,714 35,893 40,580 45,268
100,000 29,576 39,434 49,293 55,543 61,793
125,000 37,616 50,154 62,693 70,505 78,318
150,000 45,656 60,874 76,093 85,468 94,843
175,000 53,696 71,594 89,493 100,430 111,368
200,000 61,736 82,314 102,893 115,393 127,893*
<FN>
*Amounts over $125,000 may only be paid from a supplemental retirement plan.
</TABLE>
The payments by the Company to fund the benefits under the Retirement
Plan are actuarially determined. The estimated annual benefits payable upon
retirement and projected years of credited service to retirement to the
above-named officers are as follows: Mr. J. P. Gotschall -- $139,975 (39.8
years); and Mr. R. A. Demetter -- $56,893 (28.8 years). Under the Internal
Revenue Code of 1986, as amended, the maximum benefit payable under the
Retirement Plan to covered employees is reduced to $125,000. Therefore,
effective as of March 1, 1984, the Company established a supplemental executive
retirement plan to provide covered employees with an amount equal to what they
would have been entitled to receive under the Retirement Plan if there had been
no reduction in the level of benefits payable as a result of changes in federal
tax laws. Total pension expense for the Retirement Plan for fiscal year 1996 was
$333,595.
12
<PAGE> 15
EMPLOYEES' THRIFT PLAN
The amounts stated in the Summary Compensation Table include amounts
contributed and expensed by the Company under the SIFCO Industries, Inc.
Employees' Thrift Plan. This Plan is a qualified 401(k) plan and was established
in 1981 to encourage savings among employees. By the terms of the Plan, all
employees are permitted to contribute up to 16% of their pay, up to a maximum
amount of $9,500 in calendar year 1996, including wages, overtime pay and any
commissions received, to a trust fund. Under the Plan, the Company matches 60%
of the first 2% of pay contributed.
Employee contributions may be invested in one or more of three funds:
an equity fund, a balanced fund and a government money market fund. For
employees with less than three full years of service, one-half of the amounts
contributed by the Company are automatically vested. The remaining 50% becomes
fully vested after three full years of service. Amounts contributed by the
Company for employees with three or more full years of service vest immediately.
Withdrawals of employee after-tax contributions may be made at six-month
intervals for any reason, but withdrawals of employee before-tax contributions
and all other vested earnings may be made only in cases of certain financial
emergencies at six-month intervals. All amounts in the fund credited to an
employee are payable in cash or stock on the employee's death, retirement or
permanent disability.
PHANTOM STOCK PLANS
The Company has outstanding units pursuant to three compensatory
phantom stock plans for key employees of the Company and its subsidiaries. Under
these plans, an aggregate of up to 600,000 units were authorized to be awarded.
The authority to grant units under the plans expired September 30, 1985 as to
the 1981 plan and September 30, 1992 as to the 1987 plan. Awards can be granted
under the phantom plan adopted in 1994 (the "1994 Phantom Plan") until September
30, 1999. Units were credited to participating employees' unit accounts at the
average of the high and low trading prices of the Company's Common Shares on the
10 business days preceding the date of award. At such times as dividends are
paid on the Common Shares of the Company, the Company credits to participating
employees' dividend equivalent accounts the number of share equivalents which
could have been purchased had an equivalent dividend been paid on the phantom
stock units credited to the employee's unit accounts and applied to purchase the
Company's Common Shares.
13
<PAGE> 16
The earliest date (the "Valuation Date") upon which a participating
employee (i) retires from the Company in conformity with its customary
retirement policies, (ii) retires early with the consent of the Company, (iii)
becomes disabled such that he is eligible to receive benefits under the
Company's long-term disability plan, (iv) dies, (v) notifies the Company of his
election to voluntarily discontinue participation in the Plan or the Company
terminates the Plan, fixes the amounts to which a participating employee is
entitled to receive under the Plan. A participating employee is entitled, with
respect to his unit account, to the excess of the average of the high and low
trading prices of the Company's Common Shares during the 10 days preceding the
Valuation Date over the base value of the units credited to his account and,
with respect to his dividend equivalent account, the value of the dividend
equivalents credited thereto. Dividend equivalents are valued at the average of
the high and the low trading prices of the Company's Common Shares over the 10
days preceding the Valuation Date.
Twenty-five percent (25%) of the units vest on each anniversary of the
date of the grant, and the employee is fully vested after four (4) years. The
dividend equivalent units vest immediately. The amount of compensation paid from
the Phantom Stock Plan in 1996 was $19,725. As of the date of this Proxy
Statement, there were an aggregate of 185,938 award units outstanding to an
aggregate of 42 employees under the three plans with base values ranging from
$2.72 to $9.25. Included in the foregoing amounts are the number of units and
average base value for each of the following: Mr. J. P. Gotschall -- 8,000 units
($5.88); and Mr. Demetter -0- units.
As of November 13, 1996, the Company's liability under the phantom
stock plans for officers was approximately $132,000, and for all participating
employees, was $708,000.
REPORT OF THE PENSION, COMPENSATION
AND STOCK OPTION COMMITTEE
The Company's compensation of its executive personnel has three
components: base salary, cash incentive compensation and non-cash incentives
(stock options and/or phantom stock).
Base salary is set at the beginning of each fiscal year with
consideration of roughly comparable positions in firms similar to the Company in
size and industry, the individual's relative degree of responsibility within the
Company, performance record and salary history. Mr. Gotschall's 1996 base salary
was set at $200,000 at the beginning of fiscal 1996. The
14
<PAGE> 17
Compensation Committee recognized the Company's improved performance in fiscal
1995 under Mr. Gotschall's leadership, the considerable management efforts
expended by him to deal with difficult operating problems and the absence of
raises in recent years.
The Company has incentive compensation plans for each business unit and
for the corporate headquarters staff. The Forge Group's incentive program is a
gainsharing plan that pays each employee of the Group an identical amount based
upon profits in excess of quarterly performance goals. For business units other
than the Forge Group, incentive compensation pools ranging from 3% of division
profit before tax (subject to certain adjustments) for the corporate
headquarters staff to 10% of division profit before tax less interest and parent
expense for the remaining business units. The formula for incentive compensation
pools is fixed at the beginning of each fiscal year. Incentive compensation is
allocated by the applicable business unit manager among the participants in the
plan in the general proportion that the participant's individual salary bears to
the aggregate salaries of all participants. Individual compensation cannot
exceed a specified monthly salary (seven months' salary for the Chief Executive
Officer and lesser multiples for other participants).
As a result of the Company's profit before tax in fiscal 1996, Mr.
Gotschall's incentive compensation as calculated pursuant to the incentive pool
for the corporate headquarters staff, was $74,000.
The Company also has a Phantom Stock Plan and Stock Option Plan. These
plans are utilized to reward performance and create incentives for future
performance to achieve the Company's strategic objectives. Grants under each
plan are recommended by management and approved or modified by the Compensation,
Stock Option and Pension Committee of the Board. With respect to fiscal 1996,
42,600 phantom stock units awarded.
Richard S. Gray
William R. Higgins
J. Douglas Whelan
15
<PAGE> 18
PERFORMANCE GRAPH
Set forth below is a line graph comparing the price performance of the
Company's Common Shares to the price performance of the S&P Composite -500 Stock
Index and the S&P Aerospace/Defense Group. The graph assumes that the value of
the investment in the Company's Common Shares, the S&P Composite - 500 Stock
Index and the S&P Aerospace/Defense Group was $100 on September 30, 1990.
COMPARISON OF FIVE-YEAR PRICE PERFORMANCE OF
SIFCO INDUSTRIES, INC., S&P 500 INDEX
AND S&P AEROSPACE/DEFENSE GROUP
<TABLE>
<CAPTION>
[GRAPHIC OMITTED]
COMPARISON OF FIVE-YEAR PRICE PERFORMANCE OF
SIFCO INDUSTRIES, INC., S&P 500 INDEX
AND S&P AEROSPACE/DEFENSE GROUP
SIFCO Stock Price Vs.
S&P 500 and S&P Aerospace/Defense
<S> <C> <C> <C> <C> <C> <C>
09/91 09/92 09/93 09/94 09/95 09/96
SIFCO Stock 1 0.734694 0.520408 0.530612 0.72449 1.632653
S&P 500 Index 1 0.734694 1.183236 1.19293 1.506755 1.772057
S&P Aerospace/Defense 1 0.948807 1.250696 1.364364 2.056387 2.768837
</TABLE>
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<PAGE> 19
APPROVAL OF DESIGNATION OF AUDITORS
The accounting firm of Arthur Andersen LLP has been the Company's
independent accountants and auditors and has audited the accounts of the Company
and its consolidated subsidiaries for a number of years. The Board of Directors
has chosen that firm to audit the accounts of the Company and its consolidated
subsidiaries for the fiscal year ending September 30, 1997, subject to the
approval of the shareholders for which the affirmative vote of a majority of the
Common Shares present and voting at the Annual Meeting (in person or by proxy)
is required. Arthur Andersen LLP has advised the Company that neither the firm
nor any of its members or associates has any direct or indirect financial
interest in the Company or any of its affiliates other than as auditors. The
Board of Directors recommends ratification of the selection of Arthur Andersen
LLP as independent auditors of the Company for the year ending September 30,
1997.
Representatives of Arthur Andersen LLP are expected to be present at
the Annual Meeting of Shareholders with the opportunity to make a statement if
they desire to do so and to be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
Any shareholder who is the record or beneficial owner of at least 1% or
$1,000 in market value of Common Shares of the Company entitled to be voted at
the 1998 Annual Meeting of Shareholders and who has held such Shares for at
least one year may present a proposal at the 1998 Annual Meeting. A shareholder
who intends to present a proposal at the 1998 Annual Meeting of Shareholders,
and who wishes to have the proposal included in the Company's proxy statement
and form of proxy for that meeting, must deliver the proposal to the Company not
later than August 11, 1997.
OTHER MATTERS
The management does not know of any other matters which will come
before the meeting. In case any other matter should properly come before the
meeting, it is the intention of the persons named in the enclosed proxy to vote
in accordance with their best judgment.
By order of the Board of Directors
Mara L. Babin, Secretary
December 20, 1996.
17
<PAGE> 20
SIFCO INDUSTRIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints CHARLES H. SMITH, JR. and GEORGE D.
GOTSCHALL, and each of them, the proxies of the undersigned to vote the shares
of the undersigned at the Annual Meeting of the Shareholders of SIFCO
Industries, INC., to be held on January 28, 1997, and at any and all
adjournments thereof, upon the following:
(1) ELECTION OF DIRECTORS. To elect the following persons for three-year
terms ending in 2000.
Jeffrey P. Gotschall David V. Ragone Charles H. Smith, Jr.
[ ] FOR all Nominees listed above [ ] WITHHOLD Authority to
(except as noted below) vote for all nominees
(INSTRUCTIONS: If you wish to withhold authority to vote for any individual
nominee, write that nominee's name in the space below.)
- - --------------------------------------------------------------------------------
(2) RATIFICATION OF THE DESIGNATION OF ARTHUR ANDERSEN LLP as independent
auditors of the Company
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting or any
adjournment thereof. [ ] GRANT AUTHORITY [ ] WITHHOLD AUTHORITY
(Continued on other side)
(Proxy - continued from other side)
Proxy No. Shares
IF NO INSTRUCTION IS INDICATED, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF THE NOMINEES FOR DIRECTORS, FOR THE PROPOSAL TO RATIFY THE
DESIGNATION OF INDEPENDENT AUDITORS AND IN THE DISCRETION OF THE PROXIES ON SUCH
OTHER BUSINESS AS MAY COME BEFORE THE MEETING OR ANY ADJOURNMENT.
Dated______________________ 19______
-------------------------------------------------------
-------------------------------------------------------
NOTE: The signature of this proxy should
correspond with the name (or names), as
shown hereon, in which your stock is
registered. Where stock is registered
jointly in the name of two or more
persons, all should sign.
