<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<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 Rule 14a-11(c) or Rule 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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
[SIFCO INDUSTRIES, INC. LOGO]
970 EAST 64TH STREET, CLEVELAND, OHIO 44103
NOTICE OF 2000 ANNUAL MEETING OF SHAREHOLDERS
The 2000 Annual Meeting of Shareholders of SIFCO Industries, Inc. will be
held in the National City Bank auditorium (4th floor) of the National City
Center Annex Building, 1900 East 9th Street, Cleveland, Ohio, on January 25,
2000 at 10:30 a.m., for the following purposes:
1. To elect three directors for a three-year term expiring in 2003.
2. To ratify the designation of Arthur Andersen LLP as the independent
auditors of the Company.
3. To consider and take action upon such other matters as may properly come
before the meeting or any adjournment thereof.
The holders of record of Common Shares at the close of business on December
3, 1999, will be entitled to receive notice of and vote at the meeting.
The Company's Annual Report for the fiscal year ended September 30, 1999
has been previously mailed to Shareholders.
By order of the Board of Directors.
SIFCO Industries, Inc.
Mara L. Babin, Secretary
December 21, 1999
KINDLY FILL IN, DATE AND SIGN THE ENCLOSED PROXY AND PROMPTLY RETURN IT IN
THE ENCLOSED ADDRESSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. IF YOU ARE PRESENT AND VOTE IN PERSON AT THE MEETING, YOUR PROXY
WILL NOT BE USED.
<PAGE> 3
[SIFCO INDUSTRIES, INC. LOGO]
970 EAST 64TH STREET, CLEVELAND, OHIO 44103
December 21, 1999
PROXY STATEMENT
GENERAL INFORMATION
The proxy that accompanies this statement is solicited by the Board of
Directors of SIFCO Industries, Inc. (the "Company") for use at the 2000 Annual
Meeting of the Shareholders of the Company to be held January 25, 2000, or at
any adjournment thereof. This proxy statement was first mailed on December 21,
1999 to shareholders of record on December 3, 1999.
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 at the 2000 Annual Meeting. However, the mere presence at
the 2000 Annual 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 2000 Annual
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 2000 Annual 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 2000 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 determining shareholders entitled to vote at the 2000
Annual Meeting is December 3, 1999. As of November 30, 1999, the outstanding
voting securities of the Company were 5,194,308 Common Shares. Each Common
Share, exclusive of treasury shares, has one vote. The Company held no Common
Shares in its treasury on the record date. The holders of a majority of the
Common Shares of the Company issued and outstanding, present in person or by
proxy, shall constitute a quorum for the purposes of the 2000 Annual Meeting. As
of December 3, 1999, the Company had 783 shareholders of record.
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 if notice of the meeting has been given at least ten days
before the meeting, and, if the ten days' notice has not been
<PAGE> 4
given, not less than twenty-four hours before such meeting time, that the
shareholder desires that the voting at such election shall be cumulative,
provided that an announcement of the giving of such notice is made upon the
convening of the meeting by the Chairman of the Board or Secretary of the
Company or by or on behalf of the shareholder giving such notice. Cumulative
voting allows the shareholder to give one candidate a number of votes equal to
the number of directors to be elected multiplied by the number of shares held by
the shareholder, or distribute such number of votes among as many candidates and
in such manner as the shareholder deems advisable. In case of such notice, it is
intended that the persons named in the accompanying proxy will vote cumulatively
for all or such of the nominees hereinafter mentioned as they deem best.
As of November 30, 1999, Janice Carlson and Charles H. Smith, III, 970 East
64th Street, Cleveland, Ohio 44103, owned, as Trustees, 2,002,947 Common Shares
representing 38.56% 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 and extended to
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 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 as of
November 30, 1999, the number of such Common Shares beneficially owned by, or
held in trust for, each such person (including their spouses and children who
live with them, if any) and the percentage of the outstanding Common Shares
which that number of 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 692,972(1) 13.34%
7425 Pelican Bay Boulevard, Marbella #606
Naples, Florida 34108
Charles H. Smith, Jr. 586,936(1) 11.30%
4565 South Lake Drive
Boynton Beach, FL 33436
Dimensional Fund Advisors, Inc. 329,990(2) 6.35%
</TABLE>
- ---------------
(1) All shares owned by Mrs. G. D. Gotschall and C. H. Smith, Jr. are subject to
the Voting Trust Agreement described above.
(2) Dimensional Fund Advisors Inc. ("Dimensional"), an investment advisor
registered under Section 203 of the Investment Advisors Act of 1940,
furnishes investment advice to four investment companies registered under
the Investment Company Act of 1940, and serves as investment manager to
certain other investment vehicles, including commingled group trusts. These
investment companies and investment vehicles are the "Portfolios." In its
role as investment advisor and investment manager, Dimensional possesses
both voting and investment power over 329,990 Common Shares as of September
30, 1999. The Portfolios own all Common Shares reported in this proxy
statement, and Dimensional disclaims beneficial ownership of all such Common
Shares.
2
<PAGE> 5
ELECTION OF DIRECTORS
The size of the Board of Directors is currently fixed at ten and classified
into three classes. The term of office of one class of directors expires in each
year. The terms of office of Jeffrey P. Gotschall, Dr. David V. Ragone and
Charles H. Smith, Jr. will expire on the day of the 2000 Annual Meeting.
Proxies solicited hereunder granting authority to vote on the election of
directors will be voted for the election of Messrs. Jeffrey P. Gotschall,
Charles H. Smith, Jr. and Dr. David V. Ragone to serve for three-year terms
ending in 2003, 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 is occasioned by
death or other unexpected occurrence, it is currently intended that the
remaining directors will, by the vote of a majority of their number, designate a
different nominee for election to the Board at the 2000 Annual Meeting.
The following information was furnished to the Company by each
director/nominee and sets forth the name, age, principal occupation or
employment of each such person and the period during which he has served as a
director of the Company. Except as otherwise noted below, each director has held
his principal occupation or employment for at least five years.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
JEFFREY P. GOTSCHALL, 51, director of the Company since October 1986. Mr.
Gotschall has been Chief Executive Officer of the Company since July 1990 and
President of the Company since October 1989. Mr. Gotschall previously served the
Company from October 1986 to July 1990 as Chief Operating Officer, from October
1986 through September 1989 as Executive Vice President and from May 1985
through February 1989 as President of SIFCO Turbine Component Services.
DR. DAVID V. RAGONE, 69, director of the Company since 1983. Dr. Ragone has
been a partner of Ampersand Ventures, Wellesley, Massachusetts since April 1992.
He was a Senior Lecturer at Massachusetts Institute of Technology (Department of
Materials Science and Engineering) from July 1988 to June 1998 and prior to
that, 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 Cabot Corporation, Boston,
Massachusetts (carbon black and natural gas). He was a general partner of
Ampersand (venture capital fund) from 1988 to April 1992.
CHARLES H. SMITH, Jr., 79, director of the Company since 1941. Chairman of
the Board of the Company since 1970. 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.
3
<PAGE> 6
DIRECTORS WHOSE TERMS EXPIRE IN 2001
GEORGE D. GOTSCHALL, 79, director of the Company from 1950 to 1958 and
continuously since 1962 is retired. Mr. Gotschall is Assistant Secretary of the
Company and previously served the Company until February 1983 as Vice
President-International and Treasurer.
RICHARD S. GRAY, 68, director of the Company since January 1986 is retired.
Mr. Gray was President of Enterprise Development Inc., a cooperative venture
with the Weatherhead School of Management of Case Western Reserve University
from May 1987 to January 1999. Mr. Gray was 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.
He is a director of Shiloh Industries, Inc., Mansfield, Ohio (automotive parts
and steel processing) and Davey Tree Expert Company (tree care and line
clearing).
THOMAS J. VILD, 65, director of the Company since 1994. Mr. Vild has been a
Management Consultant since 1990. Mr. Vild was an aerospace industry analyst
with the investment firm of Roulston Research from 1987 through 1990 and former
Director of Market Analysis and Forecasting for the Aircraft Components Group of
TRW from 1978 to 1987. Prior to such time, Mr. Vild served in a variety of
management positions at TRW, Martin Marietta Corporation and Gould, Inc.
DIRECTORS WHOSE TERMS EXPIRE IN 2002
MAURICE FOLEY, 59, director of the Company since April 1999. Mr. Foley was
a director of the Company's Irish subsidiary, SIFCO Turbine Components Limited,
from 1996 to 1999. Mr. Foley is currently a director of AerFi Group plc
(Formerly GPA Group plc), an aircraft financing company, and a director of the
Irish subsidiary of Newcourt Credit Group, Inc. Mr. Foley also was a director of
the Irish subsidiary of ABN AMRO Bank NV from 1993 to 1999. Mr. Foley served in
a variety of senior executive and board positions with Aer Lingus plc, an Irish
airline, and its affiliates and with GPA Group from 1964 to 1994.
WILLIAM R. HIGGINS, 57, director of the Company since 1992. Mr. Higgins has
been the Chief Executive Officer of Applied Fiber Systems (a specialist in
carbon fiber impregnated raw material), Clearwater, Florida since August 1998.
Mr. Higgins served as President/General Manager of AAR Composites, Inc.,
Clearwater, Florida (design and manufacturing of advanced composite material
products) from October 1997 to July 1998, and President of Advanced Technology &
Research, Inc., Clearwater, Florida from 1980 to September 1997. Mr. Higgins
also previously served as a research consultant in composites technology for Jet
Executive International and Gulfstar, Inc. and as President of Force
Engineering, Sarasota, Florida from 1974 to 1978 (design and manufacture of
composites technology products for boat industry).
HUDSON D. SMITH, 48, director of the Company since 1988. Mr. Smith has been
Treasurer of the Company since 1983 and President of SIFCO Forge Group since
January 1998. Mr. Smith previously served as Vice President and General Manager
of SIFCO Forge Group from January 1995 through January 1998, 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, 60, director of the Company since October 1995. Mr.
Whelan has served as President and Chief Operating Officer of Wyman-Gordon
Company, North Grafton, Massachusetts, since
4
<PAGE> 7
October of 1997. He previously served from May 1994 through September 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, technical and management positions with Cameron Iron
Works. Mr. Whelan also serves on the board of Wyman-Gordon Company.
STOCK OWNERSHIP OF OFFICERS, DIRECTORS AND NOMINEES
The following table sets forth as of November 30, 1999, the number of
Common Shares of the Company beneficially owned by each director and 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 (1)............................ 38,381 *
Timothy V. Crean(1)................................ 132,743 2.55%
Maurice Foley...................................... 4,000 *
George D. Gotschall(2)(3)(4)....................... 692,972 13.34%
Jeffrey P. Gotschall(2)(4)(5)...................... 116,850 2.24%
Richard S. Gray.................................... 11,500 *
William R. Higgins................................. 1,000 *
David V. Ragone(6)................................. 11,125 *
Charles H. Smith, Jr.(2)(3)(4)..................... 586,936 11.30%
Hudson D. Smith(2)(4)(5)........................... 133,406 2.56%
Thomas J. Vild..................................... 1,000 *
J. Douglas Whelan.................................. 8,000 *
All Directors and Officers as a Group.............. 1,737,913 33.45%
</TABLE>
- ---------------
* Common Shares owned are less than one percent of class.
(1) Unless otherwise stated below, the shares owned are owned of record by that
person who has sole voting and investment power as to those shares. A
portion of the total number of shares for the following persons and group
represents shares which could be acquired within 60 days of the date of this
proxy statement by exercise of stock options: Mr. R. A. Demetter, 10,000
shares; Mr. T. V. Crean, 83,750 shares; and all directors and officers as a
group, 93,750 shares.
(2) Includes in the cases of Messrs. G. D. Gotschall, J. P. Gotschall, H. D.
Smith and C. H. Smith, Jr. shares owned by their spouses and any minor
children or in trust for them, their spouses and their lineal descendants.
(3) Mr. C. H. Smith, Jr. and Mr. G. D. Gotschall are brothers-in-law.
(4) Includes Voting Trust Certificates issued by the Voting Trust described
above representing an equivalent number of Common Shares held by such Trust
as follows: Mr. G. D. Gotschall -- 692,972; Mr. J. P. Gotschall -- 101,700;
Mr. C. H. Smith, Jr. -- 586,936; and Mr. H. D. Smith -- 72,344.
(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.
5
<PAGE> 8
ORGANIZATION AND COMPENSATION OF THE BOARD OF DIRECTORS
The Company's Board of Directors held four regularly scheduled meetings
during the last fiscal year. 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 Messrs. Foley,
Gray, Higgins and Vild and Dr. Ragone 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 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 last fiscal year.
The function of the Nominating Committee is to recommend candidates for the
Board of Directors. The Nominating Committee is currently composed of Messrs. G.
D. Gotschall and Gray and Dr. Ragone. 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 Nominating Committee did not hold any meetings
during the last fiscal year.
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 Messrs. Higgins, Vild and Whelan and Dr.
Ragone, did not hold any meetings during the last fiscal year.
In fiscal 1999, each director (other than directors who are employed by the
Company) received an annual retainer fee of $12,000 and an attendance fee of
$750 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.
COMPENSATION, PENSION AND STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
The members of the Compensation, Pension and Stock Option Committee are
Messrs. Gray (Chairman), Higgins and Whelan, none of whom is employed by the
Company. In fiscal 1999, there were no director relationships that require
disclosure under this section.
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 officers of
the Company whose salary and bonus exceed $100,000, together with the total
compensation paid to each such individual for the Company's three previous
fiscal years:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION
COMPENSATION ------------
---------------------- OPTION ALL OTHER
NAME & PRINCIPAL POSITION YEAR SALARY($) BONUS($) AWARDS COMPENSATION(1)
------------------------- ---- ---------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Jeffrey P. Gotschall.......... 1999 261,498 61,000 -0- 3,120
President & CEO 1998 250,007 125,000 -0- 2,250
1997 215,000 161,250 -0- 1,290
Richard A. Demetter........... 1999 118,000 25,000 -0- 1,416
Vice President & CFO 1998 115,002 57,500 -0- 1,380
1997 110,000 82,500 -0- 1,320
Timothy V. Crean.............. 1999 179,804 61,162 55,000 -0-
Executive Vice President 1998 156,193 126,633 -0- -0-
1997 135,911 96,565 -0- -0-
Hudson D. Smith............... 1999 110,000 2,109 -0- 1,320
Treasurer 1998 107,705 15,810 -0- 1,260
1997 93,457 16,200 -0- 1,092
</TABLE>
- ---------------
(1) Represents amounts contributed by the Company as matching contributions with
respect to U.S. employees pursuant to the Company's Employee Thrift Plan, a
defined contribution plan.
The value of non-cash compensation and personal benefits furnished by the
Company to its executive officers in 1999, valued at their incremental cost to
the Company, did not exceed ten percent of the reported cash compensation for
such person.
7
<PAGE> 10
OPTION GRANTS
Set forth below is information on grants of stock options pursuant to the
company's 1995 Stock Option Plan during the fiscal year ended September 30, 1999
to the executive officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------ VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF STOCK
OPTIONS/ OPTIONS/SARS EXERCISE PRICE APPRECIATION FOR
SARS GRANTED TO OR BASE OPTION TERM
GRANTED EMPLOYEES IN PRICE EXPIRATION -----------------------
NAME # FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
---- -------- ------------ --------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey P. Gotschall..... -0- -- -- -- -- --
R. A. Demetter........... -0- -- -- -- -- --
Timothy V. Crean......... 55,000 69% 12.875 11/2/2008 445,333 1,128,308
Hudson D. Smith.......... -0- -- -- -- -- --
</TABLE>
OPTION EXERCISES AND FISCAL YEAR-END VALUES
Set forth below, for each individual named in the Summary Compensation
Table, is information relating to such person's exercise of stock options during
the fiscal year ended September 30, 1999 and ownership of unexercised stock
options at September 30, 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN
SHARES UNDERLYING 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............. -0- -0- -0- -0- -0- -0-
R. A. Demetter........ 3,750 $11,408 10,000 -0- $ 10,683 -0-
Timothy V. Crean...... 4,500 -0- 55,000 70,000 $142,500 $41,250
Hudson D. Smith....... -0- -0- -0- -0- -0- -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. Gotschall, R. A. Demetter and H. D.
Smith 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"). Mr. T. V. Crean participates in the
SIFCO Turbine Components Limited Pension Plan (the "STCL Plan"), which is
described later in this section.
The Summary Compensation Table includes both the base salary, which is, in
the case of participating employees, utilized to determine benefits under the
Retirement Plan, and incentive compensation, which is not so utilized.
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
8
<PAGE> 11
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 12,980 17,307 21,633 24,758 27,883
75,000 21,020 28,027 35,033 39,721 44,408
100,000 29,060 38,747 48,433 54,683 60,933
150,000 45,140 60,187 75,233 84,608 93,983
200,000 61,220 81,627 102,033 114,533 127,033
250,000 77,300 103,067 128,833 144,458 160,083
300,000 93,380 124,507 155,633 174,383 193,133
</TABLE>
The payments by the Company to fund the benefits under the Retirement Plan
are actuarially determined. The estimated annual benefits payable upon
retirement and projected years of credited service to retirement are as follows:
Mr. J. P. Gotschall -- $182,293 (39.8 years); Mr. R. A. Demetter -- $63,686
(28.8 years); and Mr. H. D. Smith -- $77,856 (42.5 years). Under the Internal
Revenue Code of 1986, as amended, the maximum benefit payable under the
Retirement Plan to covered employees is limited to $135,000. 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 1999 was
$463,000.
Mr. T. V. Crean participates in the STCL Plan. This is a contributory plan
for employees of the Company's Irish subsidiary, SIFCO Turbine Components
Limited ("STCL"). Under the STCL Plan, the employee and STCL each pay 50% of
retirement benefits. Other costs such as life insurance are borne by STCL.
Under the terms of the STCL Plan, the amount of normal annual retirement
benefits payable to a participating employee is generally based upon years of
service with STCL prior to normal retirement date, "final pensionable salary"
(average basic salary during the period of 38 consecutive months within the 120
months preceding retirement during which the total of basic salary was the
highest) and average government pension. The benefit is 1/60th of final
pensionable salary for each year of service, subject to a maximum of 40 years,
minus 1 1/2 times the single person's annual rate of government retirement
pension. Years of service for senior managers who will have completed at least
ten years service may be augmented. The additional cost is paid by STCL.
9
<PAGE> 12
The payments by STCL and employees to fund the benefits under the STCL Plan
are actuarially determined. The current dollar value of estimated annual
benefits payable (in Irish pounds) upon retirement and projected years of
credited service to retirement for Mr. T. V. Crean is $110,208 (40 years). Total
pension expense for the STCL Plan for fiscal year 1999 was $259,000.
EMPLOYEES' THRIFT PLAN
The amounts stated in the Summary Compensation Table include amounts
contributed and expensed by the Company under the SIFCO Industries, Inc.
Employees' Thrift Plan. This Plan is a qualified 401(k) plan for U.S. employees
and was established in 1981 to encourage savings among employees. By the terms
of this Plan, all U.S. employees are permitted to contribute up to 16% of their
pay, including wages, overtime pay and any commissions received, up to a maximum
amount of $10,000 in calendar year 1999, 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, an international equity fund, a balanced fund and a government
money market fund. Company matching contributions are made in Company shares.
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. 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, September 30, 1992 as to the 1987 plan and September 30, 1999 as to
the 1994 plan. Units are 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 of the Company, the Company credits to participating
employees' dividend equivalent accounts the number of share equivalents which
could have been purchased had an equivalent dividend been paid on the phantom
stock units credited to the employee's unit accounts and applied to purchase the
Common Shares.
The earliest date (the "Valuation Date") upon which the Company terminates
the plan or 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, or (v) notifies the
Company of his election to voluntarily discontinue participation in the Plan,
fixes the amounts to which a participating employee is entitled under the Plan.
Under the 1981 plan and 1987 plan, a participating employee is entitled, with
respect to his unit account, to the excess of the average of the high and low
trading prices of the 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. Under the 1994 plan, a participating employee is entitled,
with respect to his unit account, to the excess of the average of the month end
closing prices of the Common Shares during the 36 months preceding the Valuation
Date over the base value of the units credited to his account and, with
10
<PAGE> 13
respect to his dividend equivalent account, the value of the divided equivalents
credited thereto. Dividend equivalents are valued in the same manner as unit
accounts.
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 1999 was $54,462. As of the date of this proxy
statement, there were an aggregate of 111,663 award units outstanding to an
aggregate of 21 employees under the three plans with base values ranging from
$3.55 to $20.31. 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); Mr. R. A. Demetter -- 750 units ($13.85); Mr. T. V. Crean -- 15,238
units ($6.33); and Mr. H. D. Smith -- 16,525 units ($6.32).
As of November 30, 1999, the Company's liability under the phantom stock
plans for officers was approximately $383,000, and for all participating
employees, was $910,000.
REPORT OF THE PENSION, COMPENSATION
AND STOCK OPTION COMMITTEE
The Company's compensation of its executive personnel has three components:
base salary, cash incentive compensation and non-cash incentives (stock options
and/or phantom stock).
Considering national research on CEO salaries in manufacturing companies of
comparable size and the Company's excellent performance in fiscal 1998, yet
cautious about the signs of a pending cyclical downturn, the Compensation
Committee set Mr. Gotschall's salary at $260,000 at the start of fiscal 1999.
The Company has incentive plans for each business unit and for the
corporate headquarters staff. The SIFCO Forge Group's incentive plan is a
gainsharing plan for all employees of the Group based on profits in excess of
quarterly performance goals.
Members of the other business units share in compensation pools equal to
10% of the unit's operating profits, less interest and parent expense. Each pool
is allocated by the applicable business unit manager among the participants in
the plan in the general proportion that each participant's salary bears to the
aggregate salaries of all participants, with individual awards subject to salary
caps.
Members of the corporate staff earned incentives from a pool equal to 3% of
profits before tax, subject to certain adjustments. Mr. Gotschall's cash
incentive for fiscal 1999 was $61,000.
During fiscal 1999, options on 80,000 shares were awarded to all
participants in the Company's 1995 Stock Option Plan, including an award of
55,000 shares to Mr. Crean.
Richard S. Gray
William R. Higgins
J. Douglas Whelan
11
<PAGE> 14
PERFORMANCE GRAPH
Set forth below is a graph comparing the price performance of the Company's
Common Shares to the price performance of the S&P Composite -- 500 Stock Index
and the S&P Aerospace/Defense Group. The graph assumes that the value of the
investment in the Common Shares, the S&P Composite -- 500 Stock Index and the
S&P Aerospace/Defense Group was $100 on September 30, 1994.
COMPARISON OF FIVE-YEAR PRICE PERFORMANCE OF
SIFCO INDUSTRIES, INC., S&P 500 INDEX
AND S&P AEROSPACE/DEFENSE GROUP
<TABLE>
<CAPTION>
SIFCO STOCK S&P 500 INDEX S&P AEROSPACE/DEFENSE
----------- ------------- ---------------------
<S> <C> <C> <C>
'09/94' 100 100 100
'12/94' 121.15 99.26 104.58
'03/95' 103.84 108.21 119.27
'06/95' 134.61 117.73 138.2
'09/95' 136.53 126.3 150.72
'12/95' 165.38 125.67 169.52
'03/96' 213.46 139.51 181.19
'06/96' 265.38 144.94 186.46
'09/96' 307.69 148.54 202.93
'12/96' 319.23 160.09 223.26
'03/97' 365.38 163.63 207.73
'06/97' 438.46 191.3 233.95
'09/97' 638.46 204.73 247.86
'12/97' 588.46 209.73 226.77
'03/98' 703.84 238.11 241.81
'06/98' 650 245.05 217.5
'09/98' 384.61 219.8 181.77
'12/98' 382.7 265.67 171.29
'03/99' 234.61 278.01 169.31
'06/99' 253.84 296.68 199.06
'09/99' 215.38 277.22 183.99
</TABLE>
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<PAGE> 15
APPROVAL OF DESIGNATION OF AUDITORS
The accounting firm of Arthur Andersen LLP has been the Company's
independent accountants and auditors and has audited the accounts of the Company
and its consolidated subsidiaries for a number of years. The Board of Directors
has chosen that firm to audit the accounts of the Company and its consolidated
subsidiaries for the fiscal year ending September 30, 2000, subject to the
approval of the shareholders for which the affirmative vote of a majority of the
Common Shares present and voting at the 2000 Annual Meeting (in person or by
proxy) is required. Arthur Andersen LLP has advised the Company that neither the
firm nor any of its members or associates has any direct or indirect financial
interest in the Company or any of its affiliates other than as auditors. The
Board of Directors recommends ratification of the selection of Arthur Andersen
LLP as independent auditors of the Company for the year ending September 30,
2000.
Representatives of Arthur Andersen LLP are expected to be present at the
2000 Annual Meeting with the opportunity to make a statement if they desire to
do so and to be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING
Any shareholder who is the record or beneficial owner of at least 1% or
$2,000 in market value of Common Shares of the Company entitled to be voted at
the 2000 Annual Meeting and who has held such Common Shares for at least one
year may present a proposal at the 2001 Annual Meeting of Shareholders. A
shareholder who intends to present a proposal at the 2001 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 no
later than August 8, 2000. Any shareholder proposal submitted other than for
inclusion in the Company's proxy materials for the 2001 Annual Meeting must be
delivered to the Company no later than November 3, 2000 or such proposal will be
considered untimely. If a shareholder proposal is received after November 3,
2000, the Company may vote in its discretion as to the proposal all of the
Common Shares for which it has received proxies for the 2001 Annual Meeting.
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 21, 1999
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<PAGE> 16
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 25, 2000, 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 2003.
Jeffrey P. Gotschall David V. Ragone Charles H Smith, Jr.
<TABLE>
<S> <C>
[ ] FOR all nominees listed [ ] WITHHOLD Authority to
above vote for all nominees
(except as noted below)
</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 auditors of the Company
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting or any
adjournment thereof.
[ ] GRANT AUTHORITY [ ] WITHHOLD AUTHORITY
(Continued on other side)
(Proxy -- continued from other side)
Proxy No. Shares
IF NO INSTRUCTION IS INDICATED, THIS PROXY WILL BE VOTED FOR THE ELECTION
OF THE NOMINEES FOR DIRECTORS, FOR THE PROPOSAL TO RATIFY THE DESIGNATION OF
INDEPENDENT AUDITORS AND IN THE DISCRETION OF THE PROXIES ON SUCH OTHER BUSINESS
AS MAY COME BEFORE THE MEETING OR ANY ADJOURNMENT.
Dated
---------------------------------
19
---------------------------------
---------------------------------
---------------------------------
NOTE: The signature of this proxy
should correspond with the name
(or names), as shown hereon, in
which your stock is registered.
Where stock is registered jointly
in the name of two or more
persons, all should sign.
