<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
Sifco Industries, Inc.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(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(i)(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 Logo]
970 EAST 64TH STREET, CLEVELAND, OHIO 44103
NOTICE OF 1998 ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of SIFCO Industries, Inc. (the
"Company") 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 27, 1998 at 10:30 a.m., for the following purposes:
1. To elect three directors for a three-year term expiring in 2001.
2. To ratify the designation of Arthur Andersen LLP as the independent
auditor 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 of the Company at the close of
business on December 5, 1997, will be entitled to receive notice of and vote at
the meeting.
The Company's Annual Report for the fiscal year ended September 30, 1997
has been previously mailed to shareholders.
By order of the Board of Directors.
SIFCO Industries, Inc.
Mara L. Babin, Secretary
December 12, 1997
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 NOTIFY THE COMPANY AT OR PRIOR TO THE MEETING THAT YOU
INTEND TO VOTE YOUR SHARES IN PERSON AT THE MEETING, YOUR PROXY WILL NOT BE
USED.
<PAGE> 3
[SIFCO LOGO]
970 EAST 64TH STREET, CLEVELAND, OHIO 44103
December 12, 1997
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 Annual
Meeting of Shareholders of the Company to be held January 27, 1998, or at any
adjournment thereof (the "1998 Annual Meeting"). This proxy statement was first
mailed on December 12, 1997 to holders of record of common shares of the Company
("Common Shares") at the close of business on December 5, 1997.
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 1998 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.
OUTSTANDING SHARES AND VOTING RIGHTS
The record date for determination of shareholders entitled to vote at the
1998 Annual Meeting is December 5, 1997. As of November 30, 1997, the
outstanding voting securities of the Company were 5,160,249 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 issued and outstanding and entitled to be cast, present in
person or by proxy, shall constitute a quorum for the purposes of the 1998
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
<PAGE> 4
Common 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, 1997, Janice Carlson and Charles H. Smith, III, 970 East
64th Street, Cleveland, Ohio 44103, owned, as Trustees, 2,002,647 Common Shares
representing 38.81% 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, 1997, effective until
January 31, 2002. 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 Common 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 Common 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, 1997, the number of 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 Common Shares
constitutes.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- ----------------------------------- -------------------- --------
<S> <C> <C>
Mrs. George D. Gotschall 729,714(1) 14.14%
2400 Gulf Shore Blvd. N., Apt. 201
Naples, Florida 33940
Charles H. Smith, Jr. 600,636(1) 11.64%
4565 South Lake Drive
Boynton Beach, FL 33436
Dimensional Fund Advisors, Inc. 274,975(2) 5.33%
</TABLE>
- ---------------
(1) All Common Shares owned by Mrs. G. D. Gotschall, and 586,136 Common Shares
owned by C. H. Smith, Jr. are subject to the Voting Trust Agreement
described above.
(2) As of September 30, 1997, Dimensional Fund Advisors, Inc. ("Dimensional"), a
registered investment advisor, was deemed to have beneficial ownership of
274,975 Common Shares held by DFA Investment Dimensions Group, Inc. (the
"Fund"), a registered open-end investment company, or by The DFA Investment
Trust Company (the "Trust"), a Delaware business trust, or by the DFA Group
Trust and the DFA Participating Group Trust, investment vehicles for
qualified employee benefit plans, all of which Dimensional serves as
investment manager. Dimensional disclaims beneficial ownership of all such
Common Shares.
2
<PAGE> 5
<TABLE>
<S> <C> <C> <C>
Sole Voting Power = 179,700 Common Shares*
Shared Voting Power = 0
Sole Dispositive Power = 274,975
Shared Dispositive Power = 0
</TABLE>
*Persons who are officers of Dimensional also serve as officers of the Fund and
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 Common Shares which are owned by
the Fund and 48,600 Common Shares which are owned by the Trust (both included in
Sole Dispositive Power above).
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 George D. Gotschall, Richard S.
Gray and Thomas J. Vild will expire on the day of the 1998 Annual Meeting.
Proxies solicited hereunder granting authority to vote on the election of
directors will be voted for the election of Messrs. George D. Gotschall, Richard
S. Gray and Thomas J. Vild to serve for three-year terms ending in 2001, 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 2001
GEORGE D. GOTSCHALL, 77, Director of the Company 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, 66, Director of the Company since January 1986. Mr. Gray
is President of Enterprise Development Inc., a cooperative venture with the
Weatherhead School of Management of Case Western Reserve University, and a
Director of Shiloh Industries, Inc., Mansfield, Ohio, (flatrolled steel
processor). In addition, Mr. Gray was a Director of The Center for Venture
Development from November 1985 to April 1987 and Senior Vice President of LTV
Steel, Cleveland, Ohio (primary steel manufacturer) from July 1984 to June 1985.
3
<PAGE> 6
THOMAS J. VILD, 63, Director of the Company since 1994; management
consultant since 1990. Mr. Vild was an aerospace industry analyst with the
investment firm of Roulston Research, Cleveland, Ohio, from 1987 through 1990
and 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.
DIRECTORS WHOSE TERMS EXPIRE IN 2000
JEFFREY P. GOTSCHALL, 49, Director of the Company since October 1986; Chief
Executive Officer of the Company since July 1990; and President of the Company
since October 1989. In addition, Mr. Gotschall served as Chief Operating Officer
of the Company from October 1986 to July 1990, as Executive Vice President of
the Company from October 1986 through September 1989, and as President of SIFCO
Turbine Component Services from May 1985 through February 1989.
DR. DAVID V. RAGONE, 67, Director of the Company since 1983. Dr. Ragone has
been a Senior Lecturer at Massachusetts Institute of Technology (Department of
Materials Science and Engineering) since July 1988 and was a 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 Michigan. Dr. Ragone is also
a Director of Cabot Corporation, Boston, Massachusetts, (carbon black and
natural gas). He was a general partner of Ampersand (venture capital fund) from
1988 to April 1992 and has been a partner of Ampersand Ventures, Wellesley,
Massachusetts, since April 1992.
CHARLES H. SMITH, Jr., 77, Director of the Company 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, 55, Director of the Company since 1992. Mr. Higgins has
served as President/General Manager of AAR Composites,Inc., Clearwater, Florida
(design and 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, 46, Director of the Company 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; and Group General Sales Manager of SIFCO
Forge Group from July 1985 through September 1989.
J. DOUGLAS WHELAN, 58, Director of the Company since October 1995. Mr.
Whelan has served as President of Wyman-Gordon Company, Grafton, Massachusetts,
since October of 1997. Mr. Whelan previously served from May of 1994 through
September of 1997 as President of Wyman-Gordon Forgings, Houston, Texas and from
1989 through April 1994, as Vice President of Operations for the Cameron Forged
Products Division of Cooper Industries, Houston, Texas. From 1965 to 1989, Mr.
Whelan served in a variety of executive and management positions with Cameron
Iron Works.
4
<PAGE> 7
STOCK OWNERSHIP OF OFFICERS, DIRECTORS AND NOMINEES
The following table sets forth as of November 30, 1997, the number of
Common Shares 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)....................... 729,714 14.14%
Jeffrey P. Gotschall(2)(4)(5)...................... 114,325 2.22%
Richard S. Gray.................................... 9,400 *
William R. Higgins................................. 500 *
David V. Ragone(6)................................. 11,125 *
Charles H. Smith, Jr.(2)(3)(4)..................... 600,636 11.64%
Hudson D. Smith(2)(4)(5)........................... 132,399 2.57%
Thomas J. Vild..................................... 1,000 *
J. Douglas Whelan.................................. 8,000 *
All Directors and Officers as a Group(7)........... 2,113,158 40.96%
</TABLE>
- ---------------
* Common Shares owned are less than one percent of class.
(1) Unless otherwise stated below, the Common Shares owned by each director or
nominee are owned of record by that person who has sole voting and
investment power as to those Common Shares. A portion of the total number of
Common Shares for the following persons and group represents Common Shares
which could be acquired within 60 days of the date of this Proxy Statement
by exercise of stock options: Mr. R. A. Demetter, 17,500 Common Shares; and
all directors and officers as a group 17,500 Common Shares.
(2) Includes in the cases of Messrs. G. D. Gotschall, J. P. Gotschall, H. D.
Smith and C. H. Smith, Jr. Common 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 -- 729,714; Mr. J. P. Gotschall -- 98,000;
Mr. C. H. Smith, Jr. -- 586,136; and Mr. H. D. Smith -- 130,727.
(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 Common Shares owned jointly with his wife.
(7) Includes 2,002,647 Common Shares held in the Voting Trust as to which Janice
Carlson and C. H. Smith III, as trustees, share voting control. Also
includes Common Shares reported as beneficially owned by Dr. Ragone as
described in Note (6).
5
<PAGE> 8
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. Higgins, Mr.
Gray, Dr. Ragone and Mr. Vild 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 the number of Common 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 Messrs. G.
D. Gotschall and Gray and Dr. Ragone, 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 one meeting in 1997.
In fiscal 1997, each director (other than directors who are employed by the
Company) received an annual retainer fee of $12,000 and an attendance fee of
$700 per meeting for meetings on a day other than the day of a Board meeting and
$400 per meeting for meetings held on the day of a Board meeting. Committee
chairmen received 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 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.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING AND COMPLIANCE
On one occasion, Mr. Gray was several days late in filing a Form 4 with
respect to a single transaction involving a charitable gift.
6
<PAGE> 9
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 $100,000 together with the total
compensation paid to each such individual for the Company's three previous
fiscal years:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION
COMPENSATION ------------
---------------------- OPTION ALL OTHER(1)
NAME & PRINCIPAL POSITION YEAR SALARY($) BONUS($) AWARDS# COMPENSATION
- -------------------------------- ---- --------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Jeffrey P. Gotschall............ 1997 215,000 161,250 -0- 1,290
President & CEO................. 1996 200,000 74,000 -0- 1,206
1995 175,000 34,000 -0- 1,050
Richard A. Demetter............. 1997 110,000 82,500 -0- 1,320
Vice President & CFO............ 1996 105,000 39,999 -0- 1,281
1995 101,000 18,000 -0- 6,007
</TABLE>
- ---------------
(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.
The value of non-cash compensation and personal benefits furnished by the
Company to its executive officers in 1997, 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 for the purchase of Common shares ("Stock Options") were
granted during the fiscal year ended September 30, 1997.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
Set forth below, for each executive officer of the Company named in the
Summary Compensation Table, is information relating to such officer's exercise
of Stock Options during the fiscal year ended September 30, 1997 and ownership
of unexercised Stock Options at September 30, 1997.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED IN
SHARES NUMBER OF UNEXERCISED THE MONEY OPTIONS AT
ACQUIRED OPTIONS AT YEAR-END FISCAL YEAR-END
ON VALUE ----------------------------- -----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey P.
Gotschall...... 9,245 $ 99,375 -0- -0- -0- -0-
R. A. Demetter... -0- -0- 17,500 -0- $ 251,300 -0-
</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.
7
<PAGE> 10
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 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 13,333 17,777 22,221 25,346 28,471
75,000 21,373 28,497 35,621 40,309 44,996
100,000 29,413 39,217 49,021 55,271 61,521
150,000 45,493 60,657 75,821 85,196 94,571
200,000 61,573 82,097 102,621 115,121 127,621
250,000 77,653 103,537 129,421 145,046 160,671
300,000 93,733 124,977 156,221 174,971 193,721(1)
</TABLE>
- ---------------
(1) Amounts over $130,000 may only be paid from a supplemental retirement plan.
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 -- $175,671 (39.8
years); and Mr. R. A. Demetter -- $62,093 (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 $130,000. 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 1997 was
$422,749.
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)
8
<PAGE> 11
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 1997, 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 four funds: an
equity fund, a balanced fund, a government money market fund and an
international 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 Common Shares on the 10
business days preceding the date of award. At such times as dividends are paid
on the Common Shares, 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 Common Shares.
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 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 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 1997 was $422,749. As of the date of this Proxy
Statement, there were an aggregate of 124,563 award units outstanding to an
aggregate of 24 employees under the three plans with base values ranging from
$2.72 to $10.625. 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 1,000 units ($10.625).
9
<PAGE> 12
As of November 13, 1997, the Company's liability under the phantom stock
plans for officers was approximately $449,643, and for all participating
employees, was $1,707,316.
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 1997 base salary was set
at $215,000 at the beginning of fiscal 1997. The Compensation Committee
recognized the greatly improved Company earnings, the dramatic improvement in
the price of the Common Shares and the major organizational effort and
leadership exhibited by Mr. Gotschall in fiscal 1996.
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, subject to a cap on individual
incentive compensation equal to a specified percentage of the participant's base
salary (75% of base salary for the Chief Executive Officer and an equal or
lesser percentage of base salary for other participants in fiscal 1997).
As a result of the Company's profit before tax in fiscal 1997, Mr.
Gotschall's incentive compensation as calculated pursuant to the incentive pool
for the corporate headquarters staff, was $161,250.
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 1997,
25,000 phantom stock units were awarded.
Richard S. Gray
William R. Higgins
J. Douglas Whelan
10
<PAGE> 13
PERFORMANCE GRAPH
Set forth below is a line graph comparing the price performance of 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 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>
MEASUREMENT PERIOD S&P
(FISCAL YEAR COVERED) SIFCO STOCK AEROSPACE/DEFENSE S&P 500 INDEX
<S> <C> <C> <C>
09/92 100 100 100
12/92 97 112 104
03/93 86 115 108
06/93 75 126 108
09/93 71 132 110
12/93 78 143 112
03/94 83 146 107
06/94 60 147 106
09/94 72 144 111
12/94 87 150 110
03/95 75 172 120
6/95 97 199 130
9/25 99 217 140
12/95 119 244 139
03/96 154 261 154
06/96 192 268 161
09/96 222 292 165
12/96 231 321 177
03/97 264 299 181
06/97 317 336 212
09/97 461 356 227
</TABLE>
11
<PAGE> 14
APPROVAL OF DESIGNATION OF AUDITOR
The accounting firm of Arthur Andersen LLP has been the Company's
independent accountant and auditor 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 1998 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 auditor of the Company for the year ending September 30,
1998.
Representatives of Arthur Andersen LLP are expected to be present at the
1998 Annual Meeting and will have the opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING
Any shareholder who is the record or beneficial owner of at least 1% or
$1,000 in market value of Common Shares entitled to be voted at the 1999 Annual
Meeting of Shareholders (the "1999 Annual Meeting") and who has held such Common
Shares for at least one year may present a proposal at the 1999 Annual Meeting.
A shareholder who intends to present a proposal at the 1999 Annual Meeting, 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 10, 1998.
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 12, 1997.
12
<PAGE> 15
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 27, 1998, 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 2001.
George D. Gotschall Richard S. Gray Thomas J. Vild
<TABLE>
<S> <C>
[ ] FOR all nominees listed above [ ] WITHHOLD Authority to
(except as noted below) vote for all nominees
</TABLE>
(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 auditor 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
The Board of Directors recommends that the Shareholders vote FOR the nominees
and proposals listed above.
(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.
