<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 9/30/98 Commission file number 1-5978
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SIFCO Industries, Inc., and Subsidiaries
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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Ohio 34-0553950
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(STATE OR OTHER JURISDICTION OF (I.R.S.
EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
970 East 64th Street, Cleveland Ohio 44103
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(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
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Common Shares, $1 Par Value American Stock Exchange
--------------------------- -----------------------
Securities registered pursuant to Section 12(g) of the Act:
(TITLE OF CLASS)
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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 December 2, 1998 -- $41,712,842
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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, 1998 -- 5,171,227
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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 1998 Annual Report to Shareholders (Part I, III, IV)
Portions of the Proxy Statement for Annual Meeting of Shareholders on
January 26, 1999 (Part I,II,III)
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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
metalworking processes, services and products produced primarily to the specific
design requirements of its customers. The processes include forging, heat
treating, coating, 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's operations are conducted in two segments: (1)
Turbine Component Services and Repair and (2) Aerospace Component Manufacturing.
TURBINE COMPONENT SERVICES AND REPAIR
-------------------------------------
The Company's Turbine Component Services and Repair 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, inventory management, solutions and
contract services in selective electroplating for aerospace, defense and
industrial markets.
AEROSPACE COMPONENT MANUFACTURING
---------------------------------
The Company's Aerospace Component Manufacturing 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. The Company's forged products include: OEM and aftermarket parts
for aircraft engines; structural airframe components; land-based gas turbine
engine parts; and miscellaneous commercial products.
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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,
customer service and offering a broader range of capabilities 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 that occurred in the early nineties negatively impacted both
sales and income of the Company. The growth in the commercial aerospace business
and the turbine component service and repair business since that time has
reduced the impact of defense spending on the Company.
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 in the early nineties 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. Although historically related,
there can be no assurance that record profits for the air transport industry
will translate directly into the particular performance of the Company.
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
$13.9 million, $6.6 million and $4.1 million, respectively. The first company
serves the aircraft engine market and the remaining two the airline
transportation market. The Company believes that the total loss of sales of its
largest customer or two of the 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.
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No material part of the Company's business is seasonal.
Information concerning the Company's business, backlog and its
reportable business segments as set forth on pages 6, 7 and 15, respectively, of
the 1998 Annual Report to Shareholders is incorporated herein by reference.
Information concerning the Company's Safe Harbor Statement set forth on
page 16 of the Annual Report to Shareholders for the year ended September 30,
1998 is hereby incorporated 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. A number of these licenses are important to
the Company and a loss of them could have a negative impact on the Company.
The Company has many sources for the raw materials, primarily high
quality metals, 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.
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.
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EMPLOYEES
---------
The number of the Company's employees increased from 770 at the
beginning of the fiscal year to 863 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, 1998 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 Turbine Component Services and Repair segment has seven plants with
a total of 296 thousand square feet. Five of these plants with a total of 252
thousand square feet are for the repair and remanufacture of jet engine and
industrial turbine components. Three of these plants are located in Cork,
Ireland (127 thousand square feet), one in Minneapolis, Minnesota (59 thousand
square feet) and one in Tampa, Florida (66 thousand square feet). A portion of
the Minneapolis plant is also the site of the Company's machining operations.
The remaining two plants, which are involved in selective plating, are located
in Independence, Ohio (34 thousand square feet) and Redditch, England (a leased
facility of 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; Tacoma,
Washington; and Saint-Maur, France.
The Aerospace Component Manufacturing 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.
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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 and 11 of the Annual Report to Shareholders for the year ended
September 30, 1998. As of December 2, 1998, the Company had 711 shareholders of
record.
ITEM 6. SELECTED FINANCIAL DATA
The information required by Item 6 is incorporated herein by reference
to page 1 of the Annual Report to Shareholders for the year ended September 30,
1998.
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 6 and 7 of the Annual Report to Shareholders for the year ended
September 30, 1998.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by Item 7A is incorporated herein by reference
to Note 7 on page 15 of the Annual Report to Shareholders for the year ended
September 30, 1998.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required by Item 8 are incorporated herein by
reference to pages 8 through 15, inclusive, of the Annual Report to Shareholders
for the year ended September 30, 1998.
ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
Not applicable.
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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 3
through 5 of the Proxy Statement for the Annual Meeting of Shareholders to be
held January 26, 1999.
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 28, 1997.
<TABLE>
<CAPTION>
Name Age Title and Business Experience
- ---- --- -----------------------------
<S> <C> <C>
Charles H. Smith, Jr. (1) 78 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) 50 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) 78 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 58 Vice President-Finance since January 1979; Chief Financial
Officer since January 1984, and previously Controller from
November 1976 to January 1984.
</TABLE>
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<TABLE>
<CAPTION>
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
- ---- --- -----------------------------
<S> <C> <C>
Hudson D. Smith (1) 47 Director since 1988. Treasurer of the Company since 1983; President
of SIFCO Forge Group since January 1998; Vice President and General
Manager of SIFCO Forge Group from January 1995 through January 1997;
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 50 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. 48 Secretary since July 1980, and General Counsel since 1985. Ms. Babin
is a partner in the law firm of Squire, Sanders & Dempsey L.L.P. and has
been an attorney with the firm since 1975.
<FN>
(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.
</TABLE>
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is incorporated herein by
reference to pages 5 through 11 of the Proxy Statement for the Annual Meeting
of Shareholders to be held January 26, 1999.
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 11 of the Proxy
Statement for the Annual Meeting of Shareholders to be held January 26, 1999.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
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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 15, inclusive,
of the Annual Report to Shareholders for the year ended September 30, 1998, are
incorporated herein by reference.
Consolidated Balance Sheets - September 30, 1998 and 1997.
Consolidated Statements of Income for the Years Ended September 30,
1998, 1997 and 1996.
Consolidated Statements of Shareholders' Equity for the Years Ended
September 30, 1998, 1997 and 1996.
Consolidated Statements of Cash Flows for the Years Ended September
30, 1998, 1997 and 1996.
Notes to Consolidated Financial Statements for the Years Ended
September 30, 1998, 1997 and 1996.
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, 1998,
1997 and 1996.
All schedules, other than Schedules II are omitted since the
information is not required or is otherwise furnished.
8
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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) 1998 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
(27) ab Financial Data Schedule
(99) ab Report of Independent Public Accountants on The
Financial Statement
Schedule II - Allowance for Doubtful Accounts for the
Years Ended September 30, 1998, 1997 and 1996.
(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, 1998.
9
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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.
/*/ Richard A. Demetter
-----------------------
Richard A. Demetter
Chief Accounting Officer
Date: December 21, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Annual Report has been signed below on December 21, 1998 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
/*/ Richard A. Demetter
-----------------------
Richard A. Demetter
(Attorney in Fact)
10
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EXHIBIT 13
FINANCIAL HIGHLIGHTS OF 1998
<TABLE>
<CAPTION>
Years Ended September 30 1998 1997 1996 1995 1994
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<S> <C> <C> <C> <C> <C>
Net sales $ 123,175 $ 108,790 $85,420 $ 68,134 $ 61,429
Operating income 11,609 9,123 4,694(*) 3,067 24
Net gain on disposal of investments -- -- -- -- 246
Income tax (provision) benefit (2,324) (2,047) 914 (255) (215)
Net income 9,285 7,076 5,608 2,812 55
Net income per share (basic) 1.80 1.38 1.10 .55 .01
Net income per share (diluted) 1.78 1.36 1.09 .55 .01
Cash dividends per share .20 .15 .10 -- --
Shareholders' equity 49,890 40,568 35,957 30,805 27,270
Shareholders' equity per
share at year end 9.65 7.86 7.01 6.05 5.39
Return on beginning
shareholders' equity 22.9% 19.7% 18.2% 10.3% 0.2%
Long-term debt 16,500 11,716 10,575 10,875 6,975
Long-term debt to equity percent 33.1% 28.9% 29.4% 35.3% 25.6%
Working capital 30,252 24,520 20,860 16,671 9,675
Current ratio 2.4 2.3 2.2 2.2 1.6
Net property, plant and equipment 32,582 24,714 23,200 23,460 21,476
Total assets 90,884 74,444 67,970 60,682 55,784
Shares outstanding
at year end 5,170 5,160 5,127 5,092 5,062
Stock price range (high-low) 27-1/8-11-5/8 21-1/4-9-5/8 10-1/4-3-3/4 5-9/16-2-15/16 4-3/4-2-9/16
</TABLE>
(*)Includes reversal of restructuring charge to income of $1,512
Dollars in thousands, except per share amounts
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF BUSINESS
================================================================================
OPERATIONS 1996-1998
1996 In 1996, net sales increased to $85.4 million from $68.1 million,
or approximately 25%, with Turbine Component Services and Repair
increasing 24% and Aerospace Component Manufacturing 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 Aerospace Component Manufacturing business 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.
Turbine Component Services and Repair 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. Turbine Component Services and Repair 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.
Aerospace Component Manufacturing 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. Aerospace
Component Manufacturing'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.
1997 In 1997 net sales rose to $108.8 million from $85.4 million in
1996, which is our first $100 million sales year. This
represents an increase of 27% from last year's sales. Income
before income taxes rose to $9.1 million from $4.7 million last
year or 94%. Net income per share was $1.36 compared to $1.09 last
year.
Net income for 1996 and the fourth quarter of 1996 were increased
by unusual circumstances involving non-recurring items which
include a valuation reserve established in 1994 for deferred taxes
that was reversed because of improved profitability. This reserve
reversal added $.25 per share to net income. In addition, a tax
benefit from the closing and consolidation of certain foreign
operations to improve the Company's effectiveness in selected
markets added $.10 per share to net income.
Turbine Component Services and Repair sales rose to $69.3 million
from $58.7 million last year or 18%. Income from operations before
corporate and interest expense rose to $9.0 million from $5.9
million or 53%. Increased activity from airline repair customers
and a better product mix were the primary source of the improved
operating performance.
Aerospace Component Manufacturing sales increased 46% to $39.6
million from $27.1 million last year. Income from operations
before corporate and interest expense was $3.5 million, an
increase of 106% from $1.7 million last year as a result of the
higher operating levels and improved efficiencies.
The Company's total new orders for fiscal 1997 increased to $112.4
million compared
6
<PAGE> 3
================================================================================
to $99.7 million in 1996. The following is a breakout by business
segment: Turbine Component Services and Repair, $69.0 million and
$64.0 million, respectively; and Aerospace Component
Manufacturing, $43.4 million and $35.7 million, respectively.
The Company's backlog as of September 30, 1997 and 1996 was $44.9
million and $42.9 million, respectively. The following is a
breakout of the backlog by business segment: Turbine Component
Services and Repair, $11.6 million and $13.4 million,
respectively; and Aerospace Component Manufacturing, $33.3 million
and $29.5 million, respectively. Approximately 3% of 1997's
backlog is on hold and 9% is scheduled for delivery beyond fiscal
1998.
1998 In 1998 net sales increased 13% to a record $123.2 million from
$108.8 million in 1997. Income before income taxes rose to $11.6
million from $9.1 million, an increase of 27% over last year. Net
income per diluted share was $1.78 versus $1.36 in 1997.
Turbine Component Services and Repair sales rose to $80.0 million
from $69.3 million last year, or 15%. Income from operations
before corporate and interest expense rose to $10.0 million from
$9.0 million, or 11%. Margins in 1998 were negatively impacted as
compared to 1997 by the mix of engine repairs performed.
Aerospace Component Manufacturing sales increased 9% to $43.3
million from $39.6 million in 1997. Income from operations before
corporate and interest expense rose to $5.0 million from $3.5
million, an increase of 43%. The segment benefited from a $.3
million LIFO reserve reversal in 1998 compared to a charge of $.4
million in 1997.
The Company's total new orders for fiscal 1998 increased to $120.7
million from $112.4 million in 1997. The following is a breakout
by business segment: Turbine Component Services and Repair, $77.8
million and $69.0 million, respectively; and Aerospace Component
Manufacturing, $42.9 million and $43.4 million, respectively.
The Company's backlog as of September 30, 1998 and 1997 was $41.3
million and $44.9 million, respectively. Approximately 4% of
1998's backlog is on hold and 8% is scheduled for delivery beyond
fiscal 1999. The following is a breakout by business segment:
Turbine Component Services and Repair, $7.7 million and $11.6
million, respectively; and Aerospace Component Manufacturing,
$33.6 million and $33.3 million, respectively.
YEAR Based on the assessment efforts to date, the Company does not
2000 believe that the Year 2000 issue will have a material adverse
ISSUE effect on its financial condition or results of operations. The
Company anticipates that it will remediate its Year 2000 risks and
be able to conduct normal operations without having to establish a
Year 2000 contingency plan. The Company estimates its cost to be
compliant at approximately $100,000, excluding the cost of Company
information technology employees.
However, the Year 2000 problem is unique and the Company's Year
2000 program is based on various assumptions and expectations that
cannot be assured. The cost estimate does not include costs
associated with addressing and resolving issues as a result of the
failure of third parties to become Year 2000 compliant. It would
be impractical for the Company to address all potential Year 2000
problems of Third Parties that, if uncorrected, could have a
material adverse impact on the Company's business.
FINANCIAL The Company's long-term debt as a percentage to equity at the end
POSITION of the year was 33.1% compared to 28.9% in 1997. As of September
30, 1998 the Company had $1.1 million outstanding against its $5
million revolving credit agreement which expires March 31, 2001.
The Company feels it has adequate credit availability to meet its
requirements in the coming year.
7
<PAGE> 4
CONSOLIDATED STATEMENTS OF INCOME
SIFCO INDUSTRIES, INC., AND SUBSIDIARIES
For the years ended September 30
($000 omitted except for per share data)
================================================================================
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
1998 1997 1996
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES $123,175 $108,790 $85,420
COSTS AND EXPENSES:
Cost of goods sold (Note 1) 97,587 85,049 67,714
Selling, general and administrative expenses 13,240 14,224 12,335
Interest income (220) (132) (120)
Interest expense 1,305 1,141 1,141
Other (income) expense, net (Note 1) (346) (615) (344)
-------- -------- -------
111,566 99,667 80,726
-------- -------- -------
INCOME BEFORE INCOME TAXES 11,609 9,123 4,694
INCOME TAX (PROVISION) BENEFIT (NOTE 3) (2,324) (2,047) 914
-------- -------- -------
NET INCOME 9,285 $ 7,076 $ 5,608
======== ======== =======
NET INCOME PER SHARE (BASIC) $ 1.80 $ 1.38 $ 1.10
NET INCOME PER SHARE (DILUTED) $ 1.78 $ 1.36 $ 1.09
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
8
<PAGE> 5
CONSOLIDATED BALANCE SHEETS
SIFCO INDUSTRIES, INC., AND SUBSIDIARIES
September 30
($000 omitted except for per share data)
================================================================================
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
1998 1997
- ------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 3,503 $ 2,998
Receivables, less allowance for doubtful accounts
of $774 in 1998 and $829 in 1997 20,073 20,516
Inventories (Note 1) 27,639 19,846
Prepaid expenses and other current assets 552 689
------- -------
Total current assets 51,767 44,049
------- -------
PROPERTY, PLANT AND EQUIPMENT AT COST (NOTES 1 AND 2):
Land 855 855
Buildings 18,627 15,251
Machinery and equipment 56,326 47,631
------- -------
75,808 63,737
Less accumulated depreciation and amortization 43,226 39,023
------- -------
32,582 24,714
------- -------
OTHER ASSETS:
Funds held by trustee for capital project 922 --
Goodwill, net of amortization (Note 1) 3,748 3,864
Deferred charges and other (Note 1) 1,865 1,817
------- -------
6,535 5,681
------- -------
$90,884 $74,444
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt (Note 2) $ 1,400 $ 1,256
Accounts payable 12,192 10,497
Accrued salaries and wages 1,456 1,279
Accrued workers' compensation 801 594
Other accrued expenses 5,098 5,675
Accrued income taxes (Note 3) 568 228
------- -------
Total current liabilities 21,515 19,529
------- -------
LONG-TERM DEBT, NET OF CURRENT MATURITIES (NOTE 2) 16,500 11,716
------- -------
OTHER LONG-TERM LIABILITIES (NOTE 1) 2,979 2,631
------- -------
SHAREHOLDERS' EQUITY (NOTE 2):
Serial preferred shares, no par value, authorized 1,000,000
shares in 1998 and 1997 -- --
Common shares, par value $1 per share, authorized 10,000,000 shares, issued
and outstanding 5,170,384 shares in 1998 and 5,159,708 shares in 1997 5,170 5,160
Capital in excess of par value 6,198 6,101
Earnings retained for use in the business 38,522 29,307
------- -------
Total shareholders' equity 49,890 40,568
------- -------
$90,884 $74,444
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
9
<PAGE> 6
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIFCO INDUSTRIES, INC., AND SUBSIDIARIES
For the years ended September 30
($000 omitted)
================================================================================
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET CASH PROVIDED BY (USED FOR)
OPERATING ACTIVITIES:
Net income $ 9,285 $ 7,076 $ 5,608
Adjustments to reconcile net
income to net cash provided
by (used for) operating activities:
Depreciation and amortization 4,055 3,681 3,566
Loss on disposal of property, plant and equipment 21 370 90
Deferred income taxes (152) (482) (1,177)
-------- -------- -------
13,209 10,645 8,087
NET CASH PROVIDED BY (USED FOR) CHANGES
IN OPERATING ASSETS AND LIABILITIES:
Receivables 443 (2,587) (2,808)
Inventories (7,793) (2,057) (4,504)
Accrued or refundable income taxes 340 421 (220)
Prepaid expenses and other current assets 137 (62) (82)
Accounts payable 1,695 1,095 2,738
Accrued salaries and wages 177 305 316
Other accrued expenses (370) 1,337 319
-------- -------- -------
(5,371) (1,548) (4,241)
-------- -------- -------
Net cash provided by (used for) operating activities 7,838 9,097 3,846
NET CASH PROVIDED BY (USED FOR)
INVESTING ACTIVITIES:
Purchase of property, plant and equipment (11,313) (6,613) (3,388)
Decrease (increase) in funds held by
trustee for capital project (922) -- 472
Other (462) (1,513) (169)
-------- -------- -------
Net cash provided by (used for) investing activities (12,697) (8,126) (3,085)
-------- -------- -------
NET CASH PROVIDED BY (USED FOR)
FINANCING ACTIVITIES:
Proceeds from additional borrowings 16,300 6,000 2,200
Repayment of borrowings (11,372) (6,103) (2,300)
Grants received from Irish government agency 436 -- --
-------- -------- -------
Net cash provided by (used for) financing activities 5,364 (103) (100)
-------- -------- -------
Increase (decrease) in cash and cash equivalents 505 868 661
Cash and cash equivalents, beginning of year 2,998 2,130 1,469
Cash and cash equivalents, end of year $ 3,503 $ 2,998 $ 2,130
======== ======== =======
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
10
<PAGE> 7
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, 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
Net income -- -- 7,076
Shares issued to Employees' Thrift Plan 4 51 --
Shares issued to vendors as payment for services 3 29 --
Stock options exercised, net of shares surrendered 26 43 --
Foreign currency translation adjustment -- -- (1,847)
Dividends declared ($.15 per share) -- -- (774)
- ---------------------------------------------------------------------------------------------------------------------
BALANCE - September 30, 1997 $5,160 $ 6,101 $ 29,307
Net income -- -- 9,285
Shares issued to Employees' Thrift Plan 3 49 --
Shares issued to vendors as payment for services 2 53 --
Stock options exercised, net of shares surrendered 5 (5) --
Foreign currency translation adjustment -- -- 963
Dividends declared ($.20 per share) -- -- (1,033)
BALANCE - September 30, 1998 $5,170 $ 6,198 $ 38,522
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
STOCK PRICES BY QUARTERS (AMEX)
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
---------------------------------------------------------
High Low High Low
---------------------------------------------------------
<S> <C> <C> <C> <C>
First Quarter 24 18-1/2 11-3/8 9-5/8
Second Quarter 25-5/8 18-1/2 12-1/2 10
Third Quarter 27-1/8 20-1/8 14-7/8 10-1/4
Fourth Quarter 22-7/8 11-5/8 21-1/4 14-1/8
</TABLE>
11
<PAGE> 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIFCO INDUSTRIES, INC., AND SUBSIDIARIES
September 30, 1998, 1997 and 1996
================================================================================
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.
B. 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)
1998 1997
---- ----
<S> <C> <C>
Last-in, first-out cost $11,376 $ 7,324
First-in, first-out or average cost 16,263 12,522
------- -------
$27,639 $19,846
======= =======
</TABLE>
Under the average cost method of accounting, LIFO inventories would have
been $4,060,000 and $4,372,000 higher than reported at September 30, 1998 and
1997, respectively. The inventories at September 30, 1998 and 1997,
respectively, consisted of raw materials and supplies of $8,008,000 and
$6,032,000, and finished goods and work-in-process of $19,631,000 and
$13,814,000.
C. 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%.
D. GOODWILL:
Goodwill of $4,637,000, less accumulated amortization of $889,000 and $773,000
at September 30, 1998 and 1997, respectively, represents the excess of cost over
the net assets of acquired companies, and is being amortized over 40 years. The
Company uses an undiscounted cash flow method to periodically review the value
of goodwill and other tangible assets and believes such assets are realizable.
E. 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 defined
benefit plans. The Company's funding policy for defined benefit plans is based
on an actuarially determined cost method allowable under Internal Revenue
Service regulations.
The defined contribution plans are funded monthly. Pension costs charged to
operations for these plans were $42,000 in 1998, $43,000 in 1997, and $32,000 in
1996.
Net pension expense for the defined benefit plans for 1998, 1997, and 1996
consisted of the following components:
<TABLE>
<CAPTION>
($000 omitted)
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Service cost - benefits earned
during the year $ 496 $ 416 $ 398
Interest cost on projected
benefit obligation 786 705 652
Actual return on plan assets (1,931) (1,504) (1,042)
Net amortization and deferral 1,112 763 318
------- ------- -------
Total Expense $ 463 $ 380 $ 326
======= ======= =======
</TABLE>
Assumptions used in accounting for the defined benefit pension plans as of
September 30, 1998, 1997, and 1996 were:
<TABLE>
<S> <C> <C> <C>
Weighted average discount rate
used for ending liabilities 7.00% 7.50% 7.75%
Weighted average discount rate
used for expense 7.50% 7.75% 7.50%
Rate of increase in compensation levels 4.00% 4.00% 4.00%
Expected long-term investment rate 8.50% 8.50% 8.50%
</TABLE>
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, 1998 and 1997:
<TABLE>
<CAPTION>
Plans with Assets Plans with Accum-
in Excess of ulated Benefit
Accumulated Obligations in
Benefit Obligations Excess of Assets
($000 omitted)
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Plan assets at fair value,
primarily listed stocks,
funds, and bonds $ 11,700 $ 9,798 $ 1,130 $ 961
Actuarial present value of
the benefit obligation
Vested (7,099) (6,829) (1,215) (1,003)
Non-vested (623) (411) (144) (144)
-------- ------- ------- -------
Accumulated benefit obligation (7,722) (7,240) (1,359) (1,147)
Projected effect of future
salary increases (1,957) (1,808) -- --
-------- ------- ------- -------
Total projected benefit obligation (9,679) (9,048) (1,359) (1,147)
-------- ------- ------- -------
Plan assets over (under)
projected benefit obligation 2,021 750 (229) (186)
Unrecognized prior service cost (156) (167) 84 81
Unrecognized net (gain) loss (3,307) (1,875) 137 63
Additional liability -- -- (266) (224)
Unrecognized transition
(asset) obligation (99) (135) 45 80
-------- ------- ------- -------
Pension liability at end of year (1,541) (1,427) (229) (186)
======== ======= ======= =======
</TABLE>
The employees in Ireland are covered by a pension plan, the cost of which
currently is accrued and fully funded.
12
<PAGE> 9
NOTES CONTINUED
================================================================================
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 1998,
1997 and 1996 were $82,000, $71,000, and $60,000, respectively.
F. NET INCOME PER SHARE:
Effective October 1, 1997, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 128, "Earnings Per Share." In accordance with SFAS No. 128,
the Company's basic net income per share amounts have been computed based on the
average number of common shares outstanding. Net income per share amounts
include the effect of the Company's outstanding stock options under the treasury
stock method. In accordance with SFAS No. 128, net income per share and
weighted-average shares outstanding have been restated to conform to this
statement for all periods presented. The weighted-average number of common
shares and common share equivalents were as follows:
<TABLE>
<CAPTION>
Basic Diluted
----- -------
<S> <C> <C>
1998 5,164,114 5,228,431
1997 5,141,497 5,183,935
1996 5,112,287 5,124,075
</TABLE>
G. 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 $1,250,000
and $1,050,000 as of September 30, 1998 and 1997, respectively.
H. 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 $1,200,000, $1,272,000, and $1,194,000, in
1998, 1997 and 1996, respectively. Income taxes paid were $2,105,000 $1,578,000,
and $35,000, in 1998, 1997 and 1996, respectively.
I. OTHER INCOME:
Other income is comprised primarily of grant income from Irish government
agencies, foreign exchange gains and losses, and royalty and fee income.
J. 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
$2,412,000 and $2,227,000 at September 30, 1998 and 1997, respectively, and is
included in other long-term liabilities.
K. 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 estimates and
assumptions. These estimates and assumptions are revised as necessary.
2. DEBT
Long-term debt as of September 30, 1998 and 1997 consisted of:
<TABLE>
<CAPTION>
($000 omitted)
1998 1997
---- ----
<S> <C> <C>
Variable Rate Industrial Development
Revenue Improvement
and Refunding Bonds $ 4,100 $ 1,900
Notes payable to bank, due in
quarterly installments of $300,000 11,700 5,572
Note payable to bank, due
October 31, 1999, interest
payable quarterly, at rates based
upon LIBOR and DIBOR 1,000 1,000
Note payable under revolving credit
agreement, at the base rate 1,100 4,500
------- -------
17,900 12,972
Less - current maturities 1,400 1,256
------- -------
$16,500 $11,716
======= =======
</TABLE>
In April 1998, the Company restructured its credit facilities. It reduced
the previously existing $9 million revolving credit agreement to $5 million,
which bears interest at the bank's base rate, and also replaced the $5.144
million term loan with a 10-year, $12 million term loan. The loan is repayable
in quarterly payments of $0.3 million. The term loan bears interest at a fixed
rate of 7.24%, subject to adjustment if certain loan covenants are not
maintained.
The average balance outstanding against the revolving credit agreement was
$4.3 million, $4.8 million and $5.4 million during 1998, 1997 and 1996,
respectively. The balances outstanding under the revolving credit agreement have
been classified as long-term debt. A commitment fee of 1/4% is incurred on the
remaining unused balance.
In addition, the Company has a $1.15 million credit facility, which is used
for an irrevocable letter of credit that secures the $1 million loan from an
Irish bank due October 31, 1999. The loan has a variable interest rate based on
a combination of LIBOR and DIBOR (Dublin Interbank Rates) rates.
The Company obtained a $4.1 million, 15-year, Industrial Development bond.
The proceeds of the bonds were used to refund the existing Industrial
Development bond of $1.6 million and the balance of the funds are being used to
expand the Turbine Component Services and Repair facility in Tampa, Florida. The
interest rate is reset weekly, based on prevailing tax-exempt money market
rates. The first principal payment is $200,000 and increases each year until the
final payment of $355,000 in 2013. The principal payment increases by $15,000
and $5,000 in the second and third year, respectively, and by $10,000 in the
following seven years. The bonds are secured by the property and equipment of
the facility, and backed by an irrevocable letter of credit.
Among other covenants, the Company is required to maintain a minimum
tangible net worth (as defined) of $30.0 million, increasing by 50% of net
income subsequent to September 30, 1997. Tangible net worth exceeded the
required minimum by $10.8 million at September 30, 1998.
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 1998, 1997, and 1996 were 7.0%, 6.7%, and 6.7%,
respectively.
13
<PAGE> 10
NOTES CONTINUED
================================================================================
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)
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Income before taxes $11,609 $ 9,123 $ 4,694
Less - State and local income taxes 57 20 --
------- ------- -------
$11,552 $ 9,103 $ 4,694
======= ======= =======
Tax provision at statutory rate $ 3,928 $ 3,095 $ 1,596
Tax effect of -
Foreign tax rate differential (1,569) (1,116) (777)
Valuation allowance -- -- (1,304)
Deductible permanent book to
tax difference -- -- (511)
Other (92) 48 82
------- ------- -------
Provision (benefit) for federal and
foreign income taxes 2,267 2,027 (914)
Add - State and local income taxes 57 20 --
------- ------- -------
$ 2,324 $ 2,047 $ (914)
======= ======= =======
</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)
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Current federal and foreign income taxes $ 4,078 $ 3,686 $ 263
Deferred federal income taxes (1,811) (1,659) (1,177)
State and local income taxes 57 20 --
------- ------- -------
$ 2,324 $ 2,047 $ (914)
======= ======= =======
</TABLE>
Deferred tax assets and liabilities are comprised of the following:
<TABLE>
<CAPTION>
($000 omitted)
1998 1997
---- ----
<S> <C> <C>
Deferred tax assets:
Employee benefits $1,545 $1,460
Doubtful accounts 106 153
Inventory and property reserves 392 355
Investment valuation reserve 511 511
Foreign taxes credits 161 161
Other 440 257
------ ------
3,155 2,897
Deferred tax liabilities:
Depreciation 1,044 950
Personal property taxes 139 127
------ ------
1,183 1,077
------ ------
Deferred tax assets less liabilities 1,972 1,820
Valuation allowance (161) (161)
------ ------
Net deferred tax assets $1,811 $1,659
====== ======
</TABLE>
Cumulative undistributed earnings of foreign subsidiaries for which no U.S.
federal deferred income tax liabilities have been recorded were approximately
$25,557,000 at September 30, 1998.
4. SUMMARIZED QUARTERLY RESULTS OF OPERATIONS (UNAUDITED):
<TABLE>
<CAPTION>
($000 omitted)
1998 Quarter Ended
Dec 31 March 31 June 30 Sept 30 Total
<S> <C> <C> <C> <C> <C>
Net Sales $29,898 $30,949 $31,957 $30,371 $123,175
Cost of Sales 23,212 24,681 25,434 24,260 97,587
Net Income 2,427 2,369 2,136 2,353 9,285
Net Income Per Share
Basic $ .47 $ .46 $ .41 $ .46 $ 1.80
Diluted $ .47 $ .45 $ .41 $ .45 $ 1.78
($000 omitted)
1997 Quarter Ended
Dec 31 March 31 June 30 Sept 30 Total
Net Sales $23,761 $27,122 $29,999 $27,908 $108,790
Cost of Sales 18,909 21,757 23,260 21,123 85,049
Net Income 1,098 1,426 2,009 2,543 7,076
Net Income Per Share
Basic $ .21 $ .28 $ .39 $ .50 $ 1.38
Diluted $ .21 $ .28 $ .38 $ .49 $ 1.36
</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 10,000 options were granted in fiscal 1998 at a price of
$20.38. All remained outstanding at September 30, 1998.
35,000 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, 1998. During 1998 and 1997, 6,750
and 40,500 options were exercised at an aggregate price of approximately $42,000
and $236,000, respectively.
In 1997, the Company adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation." The Black-Scholes option pricing model was used to determine that
the pro forma impact of compensation expense from incentive stock options
granted was immaterial.
14
<PAGE> 11
NOTES CONTINUED
================================================================================
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, 1998 and 1997, 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 124,063 and 124,563 at prices ranging from $3.55 to $20.31, plus
8,103 and 7,854 dividend equivalent units, respectively. Expense (income)
relating to the Plan was ($288,000) in 1998, $1,292,000 in 1997, and $580,000 in
1996.
6. BUSINESS SEGMENTS
The Turbine Component Services and Repair segment consists primarily of turbine
component remanufacturing, precision contract machining, subassemblies, and
finished parts; selective electroplating equipment, solutions and services. The
Aerospace Component Manufacturing segment consists primarily of domestically
produced and imported forgings principally for the aerospace industry.
One customer in 1998, an aircraft engine manufacturer, accounted for
approximately 11% of sales. No one customer accounted for 10% or more of sales
in 1997 and 1996. 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, 1998, 1997 and 1996:
<TABLE>
<CAPTION>
($000 omitted)
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Net sales, inc. intersegment sales:
Turbine Component
Services and Repair $ 80,000 $ 69,259 $58,692
Aerospace Component Manufacturing 43,250 39,628 27,121
Intersegment sales (75) (97) (393)
-------- -------- -------
$123,175 $108,790 $85,420
======== ======== =======
Income from operations
before corporate expenses
and interest expense:
Turbine Component
Services and Repair $ 9,991 $ 8,999 $ 5,933
Aerospace Component Manufacturing 4,954 3,539 1,666
-------- -------- -------
14,945 12,538 7,599
Corporate expenses (2,251) (2,406) (1,884)
Interest expense, net (1,085) (1,009) (1,021)
-------- -------- -------
Income before income taxes $ 11,609 $ 9,123 $ 4,694
======== ======== =======
($000 omitted)
1998 1997 1996
---- ---- ----
Depreciation and
amortization expense:
Turbine Component
Services and Repair $ 3,559 $ 3,225 $ 2,947
Aerospace Component Manufacturing 496 456 619
------- ------- -------
$ 4,055 $ 3,681 $ 3,566
======= ======= =======
Capital expenditures:
Turbine Component
Services and Repair $ 8,495 $ 5,944 $ 2,733
Aerospace Component Manufacturing 2,818 669 655
------- ------- -------
$11,313 $ 6,613 $ 3,388
======= ======= =======
Identifiable assets
Turbine Component
Services and Repair $64,682 $52,960 $51,087
Aerospace Component Manufacturing 22,328 18,246 14,309
Corporate 3,874 3,238 2,574
------- ------- -------
$90,884 $74,444 $67,970
======= ======= =======
Foreign operations
Net sales $47,866 $37,675 $27,522
Operating profit 7,330 5,826 2,584
Identifiable assets 36,455 29,111 24,116
</TABLE>
7. FOREIGN CURRENCY MANAGEMENT
The U.S. dollar is the functional currency for substantially all of the
Company's consolidated operations. For these operations, all gains and losses
from currency transactions are included in income currently. For certain foreign
equity investments, the functional currency is the local currency. The
cumulative translation effects for equity investments using functional
currencies other than the U.S. dollar are included in the earnings retained for
use in the business in stockholders' equity.
The Company uses currency forwards and options, which typically expire
within one year, to hedge payments and receipts of currencies related to the
purchase and sale of goods overseas. Realized gains and losses on these
contracts are recognized in the same period as the hedged transactions.
At September 30, 1998, the Company had forward contracts to sell
US$3,750,000. These contracts mature in October 1998 and are fully covered by
U.S. dollar receivables at September 30, 1998.
15
<PAGE> 12
================================================================================
SAFE HARBOR STATEMENT
This Annual Report contains various forward-looking statements and includes
assumptions concerning the Company's operations, future results and prospects.
These forward-looking statements are based on current expectations and are
subject to risk and uncertainties. In connection with the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995. The Company
provides the following cautionary statement identifying important economic,
political and technological factors, among others, the absence of which could
cause the actual results or events to differ materially from those set forth in
or implied by the forward-looking statements and related assumptions.
Such factors include the following: (1) continuation of the current and
projected future business environment, including interest rates and capital and
consumer spending; (2) competitive factors and competitor responses to the
Company's initiatives; (3) successful development and market introductions of
anticipated new products; (4) stability of government laws and regulations,
including taxes; (5) stable governments and business conditions in emerging
economies; (6) successful penetration of emerging economies; (7) continuation of
the favorable environment to make acquisitions, domestic and foreign, including
regulatory requirements and market values of candidates; (8) successful
identification and conversion of computer systems to address the year 2000 issue
by the Company, suppliers and vendors.
================================================================================
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, 1998
and 1997, and the related consolidated statements of income, shareholders'
equity and cash flows for each of the three years in the period ended September
30, 1998. 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, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
September 30, 1998, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Cleveland, Ohio,
October 27, 1998.
16
<PAGE> 1
ARTHUR ANDERSEN LLP
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation of our
reports dated October 27,1998, 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.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Cleveland, Ohio,
December 15,1998.
<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 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 17th day of December, 1998.
/s/ Charles H. Smith, Jr.
--------------------------
<PAGE> 2
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 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, Florida, this 18th day of December, 1998.
/s/ George D. Gotschall
--------------------------
<PAGE> 3
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 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 17th day of December, 1998.
/s/ Richard S. Gray
--------------------------
<PAGE> 4
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 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 Clearwater, Florida, this 18th day of December, 1998.
/s/ William R. Higgins
--------------------------
<PAGE> 5
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 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 Wellesley, MA, this 17th day of December, 1998.
/s/ David V. Ragone
--------------------------
<PAGE> 6
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 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 17th day of December, 1998.
/s/ Thomas J. Vild
--------------------------
<PAGE> 7
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 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 Grafton, MA, this 17th day of December, 1998.
/s/ J. Douglas Whelan
--------------------------
<PAGE> 8
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 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 21 day of December, 1998.
/s/ JEFFREY P. GOTSCHALL
--------------------
Jeffrey P. Gotschall
<PAGE> 9
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 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 21 day of December, 1998.
/s/ HUDSON D. SMITH
---------------
Hudson D. Smith
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000090168
<NAME> SIFCO INDUSTRIES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEP-30-1998
<CASH> 3,503
<SECURITIES> 0
<RECEIVABLES> 20,073
<ALLOWANCES> 0
<INVENTORY> 27,639
<CURRENT-ASSETS> 51,767
<PP&E> 32,582
<DEPRECIATION> 0
<TOTAL-ASSETS> 90,884
<CURRENT-LIABILITIES> 21,515
<BONDS> 0
0
0
<COMMON> 5,170
<OTHER-SE> 44,720
<TOTAL-LIABILITY-AND-EQUITY> 90,884
<SALES> 0
<TOTAL-REVENUES> 123,175
<CGS> 97,587
<TOTAL-COSTS> 110,827
<OTHER-EXPENSES> (346)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,085
<INCOME-PRETAX> 11,609
<INCOME-TAX> 2,324
<INCOME-CONTINUING> 9,285
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,285
<EPS-PRIMARY> 1.80
<EPS-DILUTED> 1.78
</TABLE>
<PAGE> 1
Exhibit 99
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 27, 1998. 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 22, 1998.
11
<PAGE> 2
SCHEDULE II
SIFCO INDUSTRIES, INC.
AND SUBSIDIARIES
ALLOWANCES FOR DOUBTFUL ACCOUNTS
FOR THE YEARS ENDED SEPTEMBER 30 1998, 1997, AND 1996
($000 omitted)
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
BALANCE
BEGINNING OF PERIOD $ 829 $ 709 $ 726
Additions
Charged to Costs and Expenses 83 184 43
Deductions - Accounts
determined to be uncollectible (152) (32) (117)
Recoveries of fully reserved accounts 8 -- 68
Exchange rate changes and other 6 (32) (11)
----- ----- -----
BALANCE
END OF PERIOD $ 774 $ 829 $ 709
===== ===== =====
</TABLE>
