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<SEC-DOCUMENT>0000950152-00-008658.txt : 20001225
<SEC-HEADER>0000950152-00-008658.hdr.sgml : 20001225
ACCESSION NUMBER:		0000950152-00-008658
CONFORMED SUBMISSION TYPE:	10-K405
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20000930
FILED AS OF DATE:		20001222

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			SIFCO INDUSTRIES INC
		CENTRAL INDEX KEY:			0000090168
		STANDARD INDUSTRIAL CLASSIFICATION:	AIRCRAFT ENGINES & ENGINE PARTS [3724]
		IRS NUMBER:				340553950
		STATE OF INCORPORATION:			OH
		FISCAL YEAR END:			0930

	FILING VALUES:
		FORM TYPE:		10-K405
		SEC ACT:		
		SEC FILE NUMBER:	001-05978
		FILM NUMBER:		793788

	BUSINESS ADDRESS:	
		STREET 1:		970 E 64TH ST
		CITY:			CLEVELAND
		STATE:			OH
		ZIP:			44103
		BUSINESS PHONE:		2168818600

	MAIL ADDRESS:	
		STREET 1:		970 EAST 64TH STREET
		CITY:			CLEVELAND
		STATE:			OH
		ZIP:			44103

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	STEEL IMPROVEMENT & FORGE CO
		DATE OF NAME CHANGE:	19690520
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K405
<SEQUENCE>1
<FILENAME>l85335ae10-k405.txt
<DESCRIPTION>SIFCO INDUSTRIES, INC.   FORM 10-K405
<TEXT>

<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     9/30/00        Commission file number     1-5978
                              -------                                   ------

                    SIFCO Industries, Inc., and Subsidiaries
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

               OHIO                                              34-0553950
- --------------------------------------------------------------------------------
 (STATE OR OTHER JURISDICTION OF                              (I.R.S. EMPLOYER
   INCORPORATION OR ORGANIZATION)                            IDENTIFICATION NO.)

        970 EAST 64TH STREET, CLEVELAND OHIO                        44103
- --------------------------------------------------------------------------------
  (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                        (ZIP CODE)

Registrant's telephone number, including area code (216) 881-8600

Securities registered pursuant to Section 12(b) of the Act:

                                                    NAME OF EACH EXCHANGE ON
        TITLE OF EACH CLASS                             WHICH REGISTERED
- --------------------------------------------------------------------------------

     COMMON SHARES, $1 PAR VALUE                     AMERICAN STOCK EXCHANGE
- --------------------------------------------------------------------------------


Securities registered pursuant to Section 12(g) of the Act:

                                      NONE


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.   X
           -----

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 8, 2000 -- $17,956,926
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 December 8, 2000 -- 5,135,063

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 Annual Report to Shareholders for the year ended September 30,
2000 (Part I, II, IV) Portions of the Proxy Statement for Annual Meeting of
Shareholders on January 30, 2001 (Part III)




                                       1
<PAGE>   2


                                     PART I

ITEM 1. BUSINESS

A. THE COMPANY

         SIFCO Industries, Inc., an Ohio corporation ("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 business segments:
(1) Turbine Component Services and Repair and (2) Aerospace Component
Manufacturing.

B. PRINCIPAL PRODUCTS AND SERVICES

1. TURBINE COMPONENT SERVICES AND REPAIR BUSINESS SEGMENT

         The Company's Turbine Component Services and Repair ("TCSR") business
is headquartered in Cork, Ireland. This business consists principally of the
repair and remanufacture of jet engine (aerospace) turbine components. The TCSR
business is also involved in the repair of industrial land-based gas turbine
components, precision machining for aerospace applications and inventory
management. Further, the TCSR business provides equipment, solutions and
contract services for selective electroplating applications in the aerospace,
defense and industrial markets.

Operations

         The TCSR business maintains its principal operations in Cork, Ireland
(three repair facilities); Tampa, Florida; Minneapolis, Minnesota; and
Independence, Ohio. The aerospace portion of the business requires the
procurement of licenses which certify that it has obtained approval to perform
certain proprietary repair processes. Such approvals are generally specific to
an engine and its components, a process and a repair facility/location. Without
possession of such approvals, a company would be precluded from competing in the
aerospace turbine component repair business. Approvals are issued by either the
original equipment manufacturers ("OEM") of jet engines or the Federal Aviation
Administration ("FAA"). Historically the TCSR business has elected to procure
approvals primarily from the OEM and currently maintains a variety of OEM
proprietary repair process approvals issued by each of the primary OEM (i.e. GE,
Snecma, Pratt and Whitney, Rolls-Royce, etc.). In exchange for being granted an
OEM approval, the TCSR business is obligated to pay a royalty to the OEM for
each component repair that it performs utilizing the OEM approved proprietary
repair process. Recently the TCSR business has been successful in procuring FAA
repair process approvals. There is no royalty payment obligation associated with
the use of a repair process approved by the FAA. To procure an OEM or FAA
approval the TCSR business is required to demonstrate its technical competence
in the process of repairing such turbine components.

         The development of remanufacturing and repair processes is an ordinary
part of the TCSR business. The TCSR business continues to invest time and money
on research and



                                       2
<PAGE>   3


development activities. Operating costs related to such activities are expensed
during the period in which they are incurred.

         The TCSR business uses various trademarks, trade names, patents, trade
secrets and licenses. A number of these licenses are important to the TCSR
business and a loss of them could have a negative impact on the TCSR business.

         The TCSR business has many sources for its raw materials, consisting
primarily of investment castings and chemicals essential to this business.
Suppliers of such materials are located in many areas throughout North America
and Europe. The TCSR business does not depend on a single source for the supply
of its materials and management believes that its sources are adequate for its
business.

Industry

         The performance of the domestic and international air transport
industries directly and significantly impact the performance of the TCSR
business. The air transport industry's long-term outlook is for continued growth
which suggests the need for additional aircraft and growth in the requirement
for aircraft and engine repairs.

         While the world's fleet of aircraft has been growing, it has also been
in transition. Several older models of certain aircraft (727, 737-100/200,
747-100/200 and DC-9) and the engines (JT8D and JT9D) that power such aircraft
are either being retired from their respective fleets or in-flight service times
are being reduced. As a result, the overall demand for repairs to such older
model engines is not growing and in some cases is decreasing. At the same time,
newer generation aircraft (newer generation 737 and 747; 767, A320, A330, A340,
etc.) and engines (CFM56, PW4000, Trent, etc.) are being introduced with newer
technology required to both operate and maintain such engines. The introduction
of such newer generation engines has had an impact on the cycle times relative
to when engines and related component repairs may be required. Such impact has
generally resulted in a longer period before initial repairs are required and
longer cycle times between subsequent repairs. The longer cycle times between
repairs has been attributed to improved technology, including the improved
ability to monitor an engine's condition while still in operation.

         The TCSR business is not able to quantify the interplay of these
factors.

Competition

         In recent years, while the absolute number of competitors has decreased
as a result of industry consolidation, competition in the component repair
business has nevertheless increased, principally due to the encroachment of the
OEM into the engine overhaul and component repair businesses. With the entry of
the OEM into the market, there has been a general reluctance on the part of the
OEM to issue, to the independent component repair companies, its approvals for
the repair of its newer model engines and related components. As a result, if an
OEM repair process approval is not available, the TCSR business has been
successful in procuring, and subsequently marketing to its customers, FAA
approvals and related repair processes. It appears that the TCSR business will,
more likely than not, become more dependent on its ability to successfully
procure and market FAA approved licenses and related repair processes in the
future. Further, the TCSR business believes it can partially compensate for
these factors by its efforts to broaden its product lines and develop new
geographic markets and customers.

Customers

         The identity and ranking of the TCSR business segment's principal
customers can vary from year to year. The TCSR business attempts to rely on its
ability to adapt its services and



                                       3
<PAGE>   4


operations to changing requirements of the market in general and its customers
in particular, rather than relying on high volume production of a particular
item or group of items for a particular customer or customers. During fiscal
2000, the TCSR business segment had two customers that accounted for 17% and 11%
of the segment's net sales. Although there is no assurance that this will
continue, historically as one or more major customers have reduced their
purchases, the business has generally been successful in replacing such reduced
purchases, thereby avoiding a material adverse impact on the business. No
material part of the Company's TCSR business is seasonal.


2. AEROSPACE COMPONENT MANUFACTURING BUSINESS SEGMENT

Operations

         The Company's Aerospace Component Manufacturing ("ACM") segment is
headquartered and maintains its sole manufacturing operation in Cleveland, Ohio.
The ACM business consists of the production, heat treatment and some machining
of forgings in various alloys utilizing a variety of processes for application
in the aerospace industry as well as several other industrial markets. The
Company's forged products include: OEM and aftermarket parts for aircraft
engines; structural airframe components; aircraft landing gear, wheels and
brakes; land-based gas turbine engine parts; components for underwater
communications; and miscellaneous commercial products.

         The forging, machining, or other preparation of prototype parts to
customers' specifications, which may require research and development of new
parts or designs, is an ordinary part of the ACM business. Apart from such work,
the ACM business has not invested a material amount of time or money on research
and development activities.

         The ACM business has many sources for its raw materials, consisting
primarily of high quality metals essential to this business. Suppliers of such
materials are located in many areas throughout North America and Europe. The ACM
business does not depend on a single source for the supply of its materials and
believes that its sources are adequate for its business.

Industry

         The performance of the domestic and international air transport
industries directly and significantly impact the performance of the ACM
business. A reduction in the number of air transport entities could result in
fewer new aircraft being ordered as the remaining air transport entities
purchase the used aircraft from the air transport entities no longer in
business. However, the air transport industry's long-term outlook is for
continued growth which suggests the need for additional aircraft and growth in
the world aircraft fleet. The ACM business is not able to quantify the interplay
of these factors.

Competition

         There is excess capacity in many segments of the forging industry. The
ACM business believes this has the effect of increasing competition and limits
the ability to raise prices. The ACM business 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. The Company believes it can
partially compensate for these factors by its efforts to broaden its product
lines and develop new customers.




                                       4
<PAGE>   5


Customers

         The identity and ranking of the ACM business segment's principal
customers can vary from year to year. The ACM business attempts to rely on its
ability to adapt its services and operations to changing requirements of the
market in general and its customers in particular, rather than relying on high
volume production of a particular item or group of items for a particular
customer or customers. During fiscal 2000, the ACM business segment had one
customer that accounted for 38% of the segment's net sales. The ACM business
believes that the total loss of sales to such customer would result in a
materially adverse impact on the business and income of the ACM business.
However, the ACM business has maintained a business relationship with this
customer for over ten years and is currently conducting business with such
customer under a multi-year arrangement. Although there is no assurance that
this will continue, historically as one or more major customers have reduced
their purchases, the business has generally been successful in replacing such
reduced purchases, thereby avoiding a material adverse impact on the business.
No material part of the Company's ACM business is seasonal.

3. GENERAL

         Information concerning the Company's reportable business segments as
contained in the Company's Annual Report to Shareholders for the year ended
September 30, 2000 is incorporated herein by reference.

         Information concerning the Company's Safe Harbor Statement as contained
in the Company's Annual Report to Shareholders for the year ended September 30,
2000 is incorporated herein by reference.

C. 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.


D. EMPLOYEES

         The number of the Company's employees decreased from 848 at the
beginning of the fiscal year to 792 at the end of the fiscal year.


ITEM 2. PROPERTIES

         The Company's property, plant and equipment 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. In general, the Company's property, plant and equipment are in good
operating condition, are well maintained and substantially all of its facilities
are in regular use. The Company considers its investment in property, plant and
equipment as of September 30, 2000 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:



                                       5
<PAGE>   6


         -        The Turbine Component Services and Repair segment has:

                  -        Seven (7) plants with a total of 296 thousand square
                           feet.

                  -        Five (5) of these plants with a total of 252 thousand
                           square feet are involved in the repair and
                           remanufacture 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
                           some of the Company's machining operations.

                  -        The remaining two (2) 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
                           Paris (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

         In the normal course of business, the Company may, from time to time,
be involved in pending legal actions. To the knowledge of the Company, the only
pending legal action existing as of September 30, 2000, in which the Company was
a defendant, was a proceeding that involves a former employee ("Plaintiff") of
the Company. On September 13, 2000, Plaintiff filed a complaint in the Cuyahoga
County Court of Common Pleas alleging certain wrongdoing on the part of the
Company, including wrongful termination of the Plaintiff. The Plaintiff seeks
unspecified compensatory and punitive damages. The Company believes that the
allegations are without merit and intends to vigorously defend its position.

         The Company cannot reasonably estimate future costs related to this and
other matters that may arise. Although it is possible that the Company's future
operating results could be affected by future cost of litigation, it is
management's belief at this time that such costs will not have a material
adverse affect on the Company's consolidated financial position or results of
operations.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         Not applicable.





                                       6
<PAGE>   7


                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS

         The information required by Part II, Item 5 is incorporated herein by
reference to the information contained in the Company's Annual Report to
Shareholders for the year ended September 30, 2000. The Company's common stock
is traded on the American Stock Exchange (under the symbol: SIF). As of December
8, 2000, the Company had 764 shareholders of record.


ITEM 6. SELECTED FINANCIAL DATA

         The information required by Part II, Item 6 is incorporated herein by
reference to the information contained in the Company's Annual Report to
Shareholders for the year ended September 30, 2000.


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

         Management's Discussion and Analysis of Financial Condition and Results
of Operations may contain 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) future business environment, including
capital and consumer spending; (2) competitive factors, including the ability to
replace business which may be lost due to OEM encroachment into turbine
component services and repair markets; (3) successful procurement of new repair
process licenses; (4) the impact of fluctuations in foreign currency (euro)
exchange rates on the results of operations; (5) successful development and
market introductions of new products; (6) stability of government laws and
regulations, including taxes; and (7) stable governments and business conditions
in economies where business is conducted.

A. RESULTS OF OPERATIONS

FISCAL YEAR 1999 COMPARED WITH FISCAL YEAR 1998

         In 1999 net sales decreased 6.2% to $115.5 million from $123.2 million
in 1998 but were still the second highest in the Company's 86-year history.
Income before income taxes declined to $4.1 million or 65% from $11.6 million in
1998. Net income per diluted share was $.72 compared to $1.78 in 1998.

         Turbine Component Services and Repair sales rose slightly to a record
$81.1 million from $80.0 million in 1998. Operating income declined to $5.7
million from $9.6 million in 1998. While sales rose overall, there was a higher
mix of lower margin business and a shift of business between some facilities
resulting in unabsorbed overheads that were not offset by the



                                       7
<PAGE>   8


increase in volume at other facilities. Repair volume for the older engine types
fell off as many of the older planes powered by these engines were retired from
the fleet.

         Aerospace Component Manufacturing sales decreased approximately 21% to
$34.3 million from $43.3 million in 1998. Operating income decreased to $1.1
million from $5.0 million in 1998. The segment benefited from a $0.3 million
LIFO reversal in both 1999 and 1998. Whereas 1998 was a cyclical peak in the
aircraft industry, 1999 began the cyclical decline. Boeing slowed its build rate
and already procured the forgings for the aircraft it was building. Almost all
customers instituted inventory reduction plans under which they order fewer
parts at a time, due to reduced manufacturing cycle times. Many industry
analysts feel that the decline will be much shorter than in the past with
recovery expected in the second half of 2000 and rising through 2001 for large
commercial aircraft.

         The Company's total new orders for fiscal 1999 declined to $115.4
million from $120.7 million in 1998. The following is a breakout by business
segment: Turbine Component Services and Repair $82.0 million and $77.8 million,
respectively; and Aerospace Component Manufacturing $33.4 million and $42.9
million, respectively.

         The Company's backlog as of September 30, 1999 and 1998 was $39.5
million and $41.3 million, respectively. Approximately 3% of 1999's backlog is
on hold and 13.2% is scheduled for delivery beyond fiscal 2000. The following is
a breakout by business segment: Turbine Component Services and Repair $7.4
million and $7.7 million, respectively; and Aerospace Component Manufacturing
$32.1 million and $33.6 million, respectively.

FISCAL YEAR 2000 COMPARED WITH FISCAL YEAR 1999

         In 2000, net sales decreased 8.1% to $106.1 million from $115.5 million
in 1999. Net income per diluted share was $.47 compared to $.72 in 1999.

TURBINE COMPONENT SERVICES AND REPAIR GROUP ("REPAIR GROUP")

         The Repair Group, which accounted for 67% of the Company's business in
2000, had net sales of $71.2 million, down 12.3% from the $81.1 million level in
1999. The net sales growth that was anticipated when we expanded our repair
facilities in 1998 has not materialized. The primary contributor to the decline
in repair sales volume has been the reduced demand for the overhaul of older
model JT8D and JT9D engines as many of the older model 737-100/200, 727,
747-100/200 and DC-9 aircraft, powered by these engines, have experienced
reduced utilization or were retired from their respective fleets. Also
contributing to the reduction in repair sales was the reduced volume of repairs
to the CFM56 (GE/Snecma) and RB211 (Rolls-Royce) engines as a result of the
further encroachment of the jet engine manufacturers into the repair
marketplace. Revenues associated with the demand for replacement parts that
complement the repair services provided to customers was also down in 2000
because of the reduced repair volumes in general.

         Operating income in fiscal 2000 declined to $3.4 million, or 4.8% of
net sales, from $5.7 million, or 7.0% of net sales, in 1999. While repair sales
were down in 2000 compared to 1999, margins on such sales were up slightly as a
direct result of the further weakening of the euro in relation to the U.S.
dollar. The vast majority of the Repair Group's U.S. and non-U.S. sales are
denominated in U.S. dollars. At the same time, over 50% of the Group's
operations are located in Ireland and related costs are denominated in local
currency that is tied directly to the euro. Consequently, as the euro declines,
costs are favorably impacted when measured and reported in equivalent U.S.
currency. A decline in the availability of used replacement parts that can be
refurbished required the Repair Group to procure higher cost new OEM replacement
parts. As a result, not only did the Repair Group experience a general reduction
in sales volume, the Repair



                                       8
<PAGE>   9


Group also was impacted by lower margins on replacement parts sales due to
higher replacement part costs in fiscal 2000.

         During 2000, selling, general and administrative and other
income/expenses for the Repair Group were generally comparable to 1999.

AEROSPACE COMPONENT MANUFACTURING GROUP ("ACM GROUP")

         Net sales for fiscal 2000 increased 1.8% to $35.0 million, compared
with $34.3 million for fiscal 1999. The sales increase is net of a reduction in
selling price of $1.1 million caused by a decline in the market price of
titanium during fiscal 2000 that was passed on to customers. The increase in
sales is attributable to a rise in the build rates for business and regional jet
aircraft during the latter part of fiscal 2000, offset in part by a reduction in
the large aircraft build cycle from its peak in 1999.

         The ACM Group's operating income in fiscal 2000 was $1.5 million, or
4.3% of net sales, compared with $1.1 million, or approximately 3.2% of net
sales in fiscal 1999. The operating income percentage benefited in fiscal 2000
from the decline in the market price of titanium. In addition, the Group
benefited from a $0.8 million and $0.3 million LIFO reversal in fiscal 2000 and
1999, respectively. During fiscal 2000 this benefit was partially offset by an
increase in tooling expenditures of $0.7 million. The increase is attributable
to construction of new tooling to support new programs, as well as increases in
die maintenance costs as a result of the full year impact of the Group's
implementation of its Synchronous Manufacturing project in fiscal 1999. The
objectives of the Synchronous Manufacturing project include shorter lead times,
shorter cycle times, lower inventories and increased capacity for new orders and
new products.

         Selling, general and administrative expenses for fiscal 2000 declined
$0.2 million to $2.0 million, compared to $2.2 million in fiscal 1999. The
decline in selling, general and administrative expenses is primarily
attributable to lower benefit costs.

OTHER/GENERAL

         Corporate unallocated expenses of $1.9 million in both 2000 and 1999,
consist of corporate salaries and benefits, legal and professional and other
corporate expenses.

         Net interest expense for 2000 is down 17.6% to $0.8 million from $1.0
million in 1999, primarily due to the Company's reduction of its outstanding
debt obligations through the use of its operating cash flows.

         The Company's backlog as of September 30, 2000 and 1999 was $42.6
million and $39.5 million, respectively. Approximately 2.8% of 2000's backlog is
on hold and 6.2% is scheduled for delivery beyond fiscal 2001. The following is
a breakout by business segment: Repair Group: $9.1 million and $7.4 million,
respectively; and ACM Group: $33.5 million and $32.1 million, respectively.




                                       9
<PAGE>   10


B. FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

         Cash and Cash equivalents increased to $4.7 million from $2.0 million
in 1999. A significant portion of the Company's cash is in the possession of its
non-U.S. subsidiaries. With respect to such cash, the Company has not paid any
U.S. Federal income taxes on the non-U.S. earnings that generated such cash.
Accordingly, if the Company elects to utilize the cash of its non-U.S.
subsidiaries it will have to pay taxes on such cash at the time it is received
in the U.S. Grant proceeds received from the Irish Government amounted to $1.2
million and $1.4 million in 2000 and 1999, respectively. Working capital was
$28.7 million at September 30, 2000 compared to $31.9 million at September 30,
1999 and the current ratio remained at 2.6 as of both dates. Receivables,
inventories and accounts payable all decreased in fiscal 2000 when compared to
1999, due principally to reduced sales levels during the same periods.

         Capital expenditures were $4.6 million in fiscal 2000 compared to $4.9
million in fiscal 1999. The Company has no material outstanding commitments for
capital expenditures and anticipates that its capital expenditures for the
foreseeable future will approximate the spending levels incurred during fiscal
2000.

         The Company's long-term debt as a percentage to equity at the end of
fiscal 2000 was 26.3% compared to 25.9% in 1999. As of September 30, 2000 the
Company had a $0.4 million outstanding balance against its $6.0 million
revolving credit agreement which expires March 31, 2002.

         During fiscal 2000, the Company repurchased 70,700 of its outstanding
common shares at a cost of $0.4 million under a share-repurchase program.
Dividends of $1.0 million were paid during both fiscal 2000 and 1999.

         The Company is not aware of any trend, event or uncertainty that will
have a material effect on its liquidity. Further, the Company believes that the
funds available under its loan agreements and anticipated funds generated from
its operations will be adequate to meet its liquidity needs through the
foreseeable future.

C. RECENTLY ISSUED ACCOUNTING STANDARDS

         In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This Statement, as amended by SFAS No. 138,
is effective for fiscal years beginning after June 15, 2000. The standard
establishes accounting and reporting standards for derivative instruments and
for hedging activities. SFAS No. 133 requires that all derivative instruments be
recorded on the balance sheet at fair value. Changes in the fair value of
derivatives are recorded in earnings or other comprehensive income, based on
whether the instrument is designated as part of a hedge transaction and, if so,
the type of hedge transaction. The Company is required to adopt this statement
in the first quarter of fiscal 2001. The Company believes that the adoption of
SFAS No. 133 will not have a material impact on its financial position or
results of operations.

D. EFFECTS OF FOREIGN CURRENCY AND INFLATION

         The Company operates internationally and enters into transactions
denominated in foreign currencies. As a result, the Company is subject to the
variability that arises from exchange rate movements. The effects of foreign
currency on operating results of the company were discussed previously. The
Company's use of foreign currency derivative contracts is discussed under the
heading, "Quantitative and Qualitative Disclosures about Market Risk."

         The Company believes that inflation has not materially affected its
results of operations in 2000 and 1999 and does not expect inflation to be a
significant factor in 2001.



                                       10
<PAGE>   11


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         In the ordinary course of business, the Company is subject to foreign
currency and interest rate risk. The risks primarily relate to the sale of the
Company's products to non-U.S. customers, the payment of wages and other costs
related to the Company's non-U.S. operations, and changes in interest rates on
the Company's long-term debt obligations.

A. INTEREST RATE RISK

         The Company is exposed to certain risks, primarily resulting from the
effects of changes in interest rates. To reduce exposures to such risks
resulting from fluctuations in interest rates, the Company uses derivative
financial instruments. Specifically, the Company uses an interest rate swap
agreement to mitigate the effects of interest rate fluctuations on net income by
changing the floating interest rates on certain portions of the Company's debt
to fixed interest rates. The effect of changes in interest rates on the
Company's results of operations generally has been small relative to other
factors that also affect net income, such as sales and operating margins.
Management believes that its use of these financial instruments to reduce risk
is in the Company's best interest. The Company does not enter into financial
instruments for trading purposes.

B. FOREIGN CURRENCY RISK

         The financial results of the Company's non-U.S. subsidiaries are
measured in their local currencies. Assets and liabilities are translated into
U.S. dollars at the rates of exchange at the end of each year and revenues and
expenses are reported at average rates of exchange. Resulting translation
adjustments are reported as a component of comprehensive income.

         Historically, the Company has been able to mitigate the impact, if any,
of foreign currency risk by means of hedging such risk through the use of
foreign currency exchange contracts. As discussed in Note 10 - Foreign Currency
Management on page 14 of the Company's Annual Report to Shareholders at
September 30, 2000, the Company had several forward foreign currency exchange
contracts to purchase foreign currencies aggregating U.S. $3.5 million. The
Company will continue to evaluate its foreign currency risk, if any, and the
effectiveness of using similar hedges in the future to mitigate such risk.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The financial statements required by Part II, Item 8 are incorporated
herein by reference to information contained in the Company's Annual Report to
Shareholders for the year ended September 30, 2000.


ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

         Not applicable.






                                       11
<PAGE>   12


                                    PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES OF THE REGISTRANT

          Information regarding Directors of the Company, as required by Part
III, Item 10, is incorporated herein by reference to the information contained
in the Company's Proxy Statement dated December 21, 2000, filed in connection
with the Company's Annual Meeting of Shareholders to be held January 30, 2001.

          The Executive Officers of the Company are elected annually to serve
for one-year terms or until their successors are elected and qualified. The
Executive Officers as of December 21, 2000 were as follows:

<TABLE>
<CAPTION>
NAME                                AGE               TITLE AND BUSINESS EXPERIENCE
- ----                                ---               -----------------------------
<S>                                 <C>     <C>
Charles H. Smith, Jr. (1)           80      Director of the Company since 1941; Chairman of the Board since 1970; Mr.
                                            Smith previously served the Company as its Chief Executive Officer
                                            from 1943 until 1983.

Jeffrey P. Gotschall (1)            52      Director of the Company since 1986; Chief Executive Officer since 1990 and
                                            President since 1989; Chief Operating Officer from 1986 to 1990; Mr.
                                            Gotschall previously served the Company from 1986 through 1989 as
                                            Executive Vice President and from 1985 through 1989 as President of
                                            SIFCO Turbine Component Services.

George D. Gotschall (1)             80      Director of the Company from 1950 to 1958 and continuously since 1962; Mr.
                                            Gotschall is Assistant Secretary of the Company and previously served
                                            the Company until 1983 as Vice President--International and Treasurer.

Frank A. Cappello                   42      Vice President-Finance and Chief Financial Officer since February 21, 2000,
                                            the date on which he initially joined the Company.
</TABLE>









                                       12
<PAGE>   13


                              PART III (CONTINUED)

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES OF THE REGISTRANT
(CONTINUED)

<TABLE>
<CAPTION>
NAME                                AGE               TITLE AND BUSINESS EXPERIENCE
- ----                                ---               -----------------------------
<S>                                 <C>     <C>
Hudson D. Smith (1)                 49      Director of the Company since 1988. Mr. Smith has been Treasurer
                                            of the Company since 1983 and President of the SIFCO Forge Group
                                            since 1998. Mr. Smith previously served as Vice President and
                                            General Manager of SIFCO Forge Group from 1995 to 1997, General
                                            Manager of SIFCO Forge Group's Cleveland Operations from 1989 through
                                            1995 and Group General Sales Manager of SIFCO Forge Group from 1985
                                            through 1989.

Timothy V. Crean                    52      Managing Director of the SIFCO Turbine Components Group since 1995,
                                            and Managing Director of SIFCO Turbine Components, Ltd. since 1986.

Carolyn J. Buller, Esq.             45      Secretary and General Counsel since November 8, 2000; Ms. Buller is a
                                            partner in the law firm of Squire, Sanders & Dempsey and has been an
                                            attorney with the firm since 1981.
</TABLE>


         (1) Charles H. Smith, Jr. and George D. Gotschall are brothers-in-law.
Hudson D. Smith is the son of Charles H. Smith, Jr. Jeffrey P. Gotschall is the
son of George D. Gotschall.

ITEM 11. EXECUTIVE COMPENSATION

          The information required by Part III, Item 11 is incorporated herein
by reference to the information contained in the Company's Proxy Statement dated
December 21, 2000, filed in connection with the Company's Annual Meeting of
Shareholders to be held January 30, 2001.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

          The information required by Part III, Item 12 is incorporated herein
by reference to the information contained in the Company's Proxy Statement dated
December 21, 2000, filed in connection with the Company's Annual Meeting of
Shareholders to be held January 30, 2001.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

          Not applicable.





                                       13
<PAGE>   14


                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

         (a) (1) FINANCIAL STATEMENTS:

         The following consolidated financial statements contained in the
         Company's Annual Report to Shareholders for the year ended September
         30, 2000, are incorporated herein by reference.

         Consolidated Statements of Income for the Years Ended September 30,
         2000, 1999 and 1998.

         Consolidated Balance Sheets - September 30, 2000 and 1999.

         Consolidated Statements of Cash Flows for the Years Ended September 30,
         2000, 1999 and 1998.

         Consolidated Statements of Shareholders' Equity for the Years Ended
         September 30, 2000, 1999 and 1998.

         Notes to Consolidated Financial Statements - September 30, 2000, 1999
         and 1998.

         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, 2000, 1999 and 1998.

         Financial statement schedules, other than Schedule II are not presented
         because the information is not required or it is furnished elsewhere.





                                       14
<PAGE>   15


                               PART IV (continued)

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(CONTINUED)

         (a)(3) EXHIBITS:

<TABLE>
<CAPTION>
        EXHIBIT NO.                            DESCRIPTION                                       LOCATION
        -----------                            -----------                                       --------
        <S>                <C>                                                                   <C>
          (3)              Second Amended Articles of Incorporation, as amended,
                           and Amended Code of Regulations                                              (B)

          (4)              Instruments defining the rights of security holders--
                           Reference is made to Exhibit (3) above and to Note 3,
                           page 11 of the Annual Report to Shareholders for the
                           year ended September 30, 2000                                                (C)

          (9)              Voting Trust Agreement, as amended                                           (D)

          (10)             Material Contracts:

                  (a)      1989 Stock Option Plan                                                       (E)

                  (b)      Incentive Compensation Plan, as amended and restated                         (F)

                  (c)      Deferred Compensation Program, as amended and restated                       (F)

                  (d)      Form of Indemnification Agreement between the
                           Registrant and each of its Directors and Executive
                           Officers                                                                     (D)

                  (e)      1994 Phantom Stock Plan                                                      (A)

                  (f)      1998 Long-Term Incentive Plan                                                (G)

          (13)             Annual Report to Shareholders for the year ended
                           September 30, 2000

          (21)             Subsidiaries of the Registrant                                               (E)

          (23)             Consent of Arthur Andersen LLP

          (27)             Financial Data Schedule

          (99)             Report of Independent Public Accountants on The
                           Financial Statement Schedule II - Allowance for
                           Doubtful Accounts for the Years Ended September 30,
                           2000, 1999 and 1998.
</TABLE>

   LOCATION REFERENCE
   ------------------
          (A)              Incorporated herein by reference to Exhibit A to the
                           Proxy Statement for the Annual Meeting of
                           Shareholders held January 31, 1995.
          (B)              Incorporated herein by reference to Form 10-K,
                           September 30, 1986
          (C)              Incorporated herein by reference to Form 10-K,
                           September 30, 1987
          (D)              Incorporated herein by reference to Form 10-K,
                           September 30, 1988
          (E)              Incorporated herein by reference to Form 10-K,
                           September 30, 1989
          (F)              Incorporated herein by reference to Form 10-K,
                           September 30, 1995
          (G)              Incorporated herein by reference to Appendix A to the
                           Proxy Statement for the Annual Meeting of
                           Shareholders held January 26, 1999



                                       15
<PAGE>   16


          (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, 2000.


                                   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. and Subsidiaries

                                         BY: /S/ FRANK A. CAPPELLO
                                         -------------------------
                                         Chief Accounting Officer
                                         Date: December 22, 2000

           Pursuant to the requirements of the Securities Exchange Act of 1934,
this Annual Report has been signed below on December 22, 2000 by the following
persons on behalf of the Registrant in the capacities indicated.

/S/ CHARLES H. SMITH, JR.                              /S/ RICHARD S. GRAY
- -------------------------                              -------------------
Charles H. Smith, Jr.                                  Richard S. Gray
Chairman of the Board of Directors                     Director

/S/ JEFFREY P. GOTSCHALL                               /S/ WILLIAM R. HIGGINS
- ------------------------                               ----------------------
Jeffrey P. Gotschall                                   William R. Higgins
President; Chief Executive Officer;                    Director
Director

/S/ FRANK A. CAPPELLO                                  /S/ DAVID V. RAGONE
- -----------------------                                -------------------
Frank A. Cappello                                      David V. Ragone
Vice President-Finance; Chief Financial Officer        Director

/S/ GEORGE D. GOTSCHALL                                /S/ THOMAS J. VILD
- -----------------------                                ------------------
George D. Gotschall                                    Thomas J. Vild
Assistant Secretary; Director                          Director

/S/ HUDSON D. SMITH                                    /S/ J. DOUGLAS WHELAN
- -------------------                                    ---------------------
Hudson D. Smith                                        J. Douglas Whelan
Treasurer; Director                                    Director

/S/ MAURICE FOLEY
- -----------------------
Maurice Foley
Director





                                       16
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>2
<FILENAME>l85335aex13.txt
<DESCRIPTION>EXHIBIT 13
<TEXT>

<PAGE>   1
["S" GRAPHIC/LOGO]

Backed by over 88 years of industrial experience, the diamond "S" trademark can
be found on critical aircraft components manufactured throughout this century.
It can still be found on parts such as landing gears of the classic Vought F4U
Corsair and the latest generation 737-800 manufactured by Boeing.

[SIFCO GRAPHIC/LOGO]

In 1993, a new corporate logo was designed by SIFCO employees to promote greater
unity in our marketing identity and to illustrate the significant growth in
SIFCO's business from manufacturing to turbine component services and repair.
SIFCO engineers describe it as depicting an airfoil cross-section, while the
more poetic among us claim it symbolizes man's flight from earthly bounds. While
we admit that the interpretation of any abstraction can be open to debate, our
graphic was selected to represent the technical as well as the personal points
of view, and embodies our pride in a company firmly rooted in tradition and
poised for future growth. It serves as the hallmark of SIFCO's commitment to
customers -- a commitment that promises the best-engineered manufactured
products and the most personal and timely service available anywhere worldwide.


TABLE OF CONTENTS

<TABLE>
<S>                                                    <C>
Financial Highlights ..........................         1

Letter to Our Shareholders ....................         2

Management's Discussion and Analysis
of Business ...................................         4

Consolidated Statements of Income .............         6

Consolidated Balance Sheets ...................         7

Consolidated Statements of Cash Flows .........         8

Consolidated Statements of
Shareholders' Equity ..........................         9

Notes to Consolidated
Financial Statements ..........................        10

Safe Harbor Statement .........................        15

Report of Independent Public Accountants.......        15

Shareholder Information .......................        16
</TABLE>


                        STOCK PRICES BY QUARTERS (AMEX)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                   2000                         1999
- --------------------------------------------------------------------------------
                           HIGH           LOW           High            Low
<S>                     <C>            <C>             <C>             <C>
First Quarter           $ 7 11/16      $ 6 9/16        $ 15            $ 11 3/8
Second Quarter            7 1/4          5 5/8           14 7/8           7 5/8
Third Quarter             7 1/4          5 5/8            9 1/4           7 3/16
Fourth Quarter            7 5/8          5 1/8            9 1/8           7
</TABLE>

<PAGE>   2
[SIFCO GRAPHIC/LOGO]
- -------------------------------------------------------------------------------

   SIFCO Industries, Inc., is dedicated to meeting the technical needs of the
 aerospace industry in the production, repair, coating, machining and marketing
of jet engine and other aerospace components. SIFCO serves the world's airlines
through a network of manufacturing and service centers in the United States and
abroad. The Company is committed to the satisfaction of its customers worldwide
            through competitive pricing, total service, comprehensive
                        technology and superior quality.

           The Company's operations consist of two business segments:

<TABLE>
<S>                                                     <C>
       TURBINE COMPONENT                                              AEROSPACE
      SERVICES AND REPAIR                                             COMPONENT
                                                                    MANUFACTURING
 "WE FIX PARTS FROM THE TURBINE
SECTION OF AEROSPACE AND LAND-BASED                     "WE MAKE PARTS FOR A WIDE VARIETY OF
      GAS TURBINE ENGINES."                               COMMERCIAL AND MILITARY AIRCRAFT,
       67% OF 2000 SALES                                        INCLUDING HELICOPTERS."
                                                                   33% OF 2000 SALES
</TABLE>

                              FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
Years Ended September 30                           2000           1999            1998            1997               1996
(Amounts in thousands, except per share data)
- ----------------------------------------------------------------------------------------------------------------------------
<S>                                            <C>             <C>             <C>             <C>             <C>
STATEMENT OF INCOME DATA
Net sales                                      $ 106,138       $ 115,490       $ 123,175       $ 108,790       $  85,420
Income before income tax provision                 2,479           4,105          11,609           9,123           4,694*
Income tax (provision) benefit                       (57)           (332)         (2,324)         (2,047)            914
Net income                                         2,422           3,773           9,285           7,076           5,608
Net income per share (basic)                         .47             .73            1.80            1.38            1.10
Net income per share (diluted)                       .47             .72            1.78            1.36            1.09
Cash dividends per share                             .20             .20             .20             .15             .10

SHARES OUTSTANDING AT YEAR END                     5,134           5,193           5,170           5,160           5,127

BALANCE SHEET DATA
Working capital                                $  28,676       $  31,924       $  32,102       $  26,235       $  22,048
Property, plant and equipment, net                29,009          31,392          32,582          24,714          23,200
Total assets                                      80,500          88,662          93,011          76,159          70,043
Long-term debt, net of current maturities         11,962          12,985          16,500          11,716          10,575
Total shareholders' equity                        45,500          50,046          49,890          40,568          35,957
Shareholders' equity per share at year end          8.86            9.64            9.65            7.86            7.01

FINANCIAL RATIOS
Return on beginning shareholders' equity             4.8%            7.6%           22.9%           19.7%           18.2%
Long-term debt to equity percent                    26.3%           25.9%           33.1%           28.9%           29.4%
Current ratio                                        2.6             2.6             2.5             2.3             2.2

STOCK PRICE RANGE (HIGH-LOW)                   $7 11/16-5 1/8      $15-7       $27 1/8-11 5/8  $21 1/4-9 5/8   $10 1/4-3 3/4
</TABLE>

*  Includes reversal of restructuring charge to income of $1,512

                                       1
<PAGE>   3
[SIFCO GRAPHIC/LOGO]
TO OUR SHAREHOLDERS
- -------------------------------------------------------------------------------

         Fiscal 2000 brought both disappointment and encouragement. Although the
investments we have made over the past few years have not yet realized their
full potential, we are pleased that our fourth quarter results show positive
strides toward our objectives. While our net sales fell by 8.1% in the fiscal
year, our fourth quarter sales showed an increase of 5.4%. Similar results are
reflected in pre-tax income (which decreased 39.6% for the year, but increased
14.6% for the fourth quarter), net income (which decreased 35.8% for the year,
but increased 8% for the fourth quarter), and earnings per diluted share (which
decreased from $.72 to $.47 for the year, but increased from $.17 to $.19 for
the fourth quarter). Most promising is our 7.8% growth in backlog for the year,
which suggests a much more favorable market environment for SIFCO's products and
services.

         The annual revenue from our largest business segment, SIFCO's Turbine
Component Services and Repair Group, was down 12.3% from 1999. The sales growth
that we anticipated in 1998 when we expanded our facilities in Ireland and Tampa
did not yet materialize. Repair volume for the older engine types fell off as
many of the older planes powered by these engines were retired from the fleet.
The reduction in Repair Group revenue for the year can be related principally to
the decline in the demand for JT8D and JT9D engine overhaul, which is
attributable to the retirement or reduced utilization of older model aircraft,
such as the 737-100/200, the 747-100/200, the 727, and the DC-9. This trend is
expected to continue.

         We recognize that the JT8D and JT9D market is mature; however, newer
models of these engines will continue to require repairs in the future. The
balance of the shortfall in revenue can be linked to reduced volume of CFM56 and
RB211 engine overhaul repairs, a reduction in the sales volume of replacement
parts, and the continued encroachment of the engine manufacturers into the
repair marketplace. For fiscal 2000, reduced sales volumes of both repair
services and replacement parts correspondingly reduced the Repair Group's
operating income. The margin on replacement-part sales decreased in fiscal 2000
while the further weakening of the euro improved the Repair Group's margin on
its sales of repair services. The Repair Group is responding to these changes by
tailoring resources to throughput and accelerating its introduction of products
and services for the newer engine types, such as PW4000, Trent, AE3007 and
BR700. The Repair Group continues to access new markets for its technology
applications. Further, the Repair Group continues to explore opportunities in
the field of repairing land-based, industrial gas turbines utilized in the
generation of electric power.

         The Aerospace Component Manufacturing Group's net sales increased 1.8%
in fiscal 2000, but the rise in build rates for regional and business jets drove
fourth-quarter revenues up 30.5% from their prior-year level. The ACM Group is a
major supplier of components for the Rolls-Royce AE3007 engines used on the
popular Embraer 135 and 145 regional jets. If not for the decline in raw
material costs, which were

                                       2
<PAGE>   4
- -------------------------------------------------------------------------------

passed on to customers through reduced selling prices, fiscal 2000 sales would
have increased 4.9% on the same number of units. Through its e-commerce
activity, the ACM Group was able to add another major aerospace customer to its
list of world-class customers, and it received new orders for over 100
components that it had not previously manufactured. While the cost for the
construction of tooling and related expenditures for these new components
impacted fiscal 2000, the expected revenues from the sales of these components
should benefit future years.

         Despite lower net sales and net income for the year, we continued to
strengthen our balance sheet. Total debt decreased to $13.4 million from $14.4
million, while cash and cash equivalents increased to $4.7 million from $2.0
million. Total shareholders' equity declined $4.5 million, net of $2.4 million
of net income. This decline is primarily due to a $5.6 million foreign currency
translation adjustment as we reduced the reported carrying value of our assets
in Ireland to reflect the declining value of the euro relative to the U.S.
dollar and $1.0 million of dividends. Our current ratio remained strong at 2.6,
and we feel we have the necessary resources to meet marketplace challenges.

         On a personal note, an expression of gratitude must be extended to
Richard Demetter, who retired this past year after 23 years of service with the
Company. His thoroughness guided us through many business cycles during his
tenure. Our new Vice President and Chief Financial Officer is Frank Cappello,
who assumed that role in February 2000. We are very pleased to have Frank on our
team as we face the business challenges of the aerospace industry.

         As we focus on fiscal 2001, we are encouraged by the stronger outlook
for the aerospace industry. We are confident that our investments will improve
our financial results as the markets we serve continue to evolve and that our
strong balance sheet and commitment to growth will provide positive returns for
our shareholders.

         We thank you for your continued loyalty and support.

         Sincerely,

         /s/ Charles H. Smith, Jr.        /s/ Jeffery P. Gotschall

         Chairman of the Board            President and Chief Executive Officer

                                       3
<PAGE>   5
MANAGEMENTS DISCUSSION AND ANALYSIS OF BUSINESS
- -------------------------------------------------------------------------------
RESULTS OF OPERATIONS

FISCAL YEAR 1999 COMPARED WITH FISCAL YEAR 1998

In 1999 net sales decreased 6.2% to $115.5 million from $123.2 million in 1998
but were still the second highest in the Company's 86-year history. Income
before income taxes declined to $4.1 million or 65% from $11.6 million in 1998.
Net income per diluted share was $.72 compared to $1.78 in 1998.

Turbine Component Services and Repair sales rose slightly to a record $81.1
million from $80.0 million in 1998. Operating income declined to $5.7 million
from $9.6 million in 1998. While sales rose overall, there was a higher mix of
lower margin business and a shift of business between some facilities resulting
in unabsorbed overheads that were not offset by the increase in volume at other
facilities. Repair volume for the older engine types fell off as many of the
older planes powered by these engines were retired from the fleet.

Aerospace Component Manufacturing sales decreased approximately 21% to $34.3
million from $43.3 million in 1998. Operating income decreased to $1.1 million
from $5.0 million in 1998. The segment benefited from a $0.3 million LIFO
reversal in both 1999 and 1998. Whereas 1998 was a cyclical peak in the aircraft
industry, 1999 began the cyclical decline. Boeing slowed its build rate and
already procured the forgings for the aircraft it was building. Almost all
customers instituted inventory reduction plans under which they order fewer
parts at a time, due to reduced manufacturing cycle times. Many industry
analysts feel that the decline will be much shorter than in the past with
recovery expected in the second half of 2000 and rising through 2001 for large
commercial aircraft.

The Company's total new orders for fiscal 1999 declined to $115.4 million from
$120.7 million in 1998. The following is a breakout by business segment: Turbine
Component Services and Repair $82.0 million and $77.8 million, respectively; and
Aerospace Component Manufacturing $33.4 million and $42.9 million, respectively.

The Company's backlog as of September 30, 1999 and 1998 was $39.5 million and
$41.3 million, respectively. Approximately 3% of 1999's backlog is on hold and
13.2% is scheduled for delivery beyond fiscal 2000. The following is a breakout
by business segment: Turbine Component Services and Repair $7.4 million and $7.7
million, respectively; and Aerospace Component Manufacturing $32.1 million and
$33.6 million, respectively.

FISCAL YEAR 2000 COMPARED WITH FISCAL YEAR 1999

In 2000, net sales decreased 8.1% to $106.1 million from $115.5 million in 1999.
Net income per diluted share was $.47 compared to $.72 in 1999.

TURBINE COMPONENT SERVICES AND REPAIR GROUP ("REPAIR GROUP")

The Repair Group, which accounted for 67% of the Company's business in 2000, had
net sales of $71.2 million, down 12.3% from the $81.1 million level in 1999. The
net sales growth that was anticipated when we expanded our repair facilities in
1998 has not materialized. The primary contributor to the decline in repair
sales volume has been the reduced demand for the overhaul of older model JT8D
and JT9D engines as many of the older model 737-100/200, 727, 747-100/200 and
DC-9 aircraft, powered by these engines, have experienced reduced utilization or
were retired from their respective fleets. Also contributing to the reduction in
repair sales was the reduced volume of repairs to the CFM56 (GE/Snecma) and
RB211 (Rolls-Royce) engines as a result of the further encroachment of the jet
engine manufacturers into the repair marketplace. Revenues associated with the
demand for replacement parts that complement the repair services provided to
customers was also down in 2000 because of the reduced repair volumes in
general.

Operating income in fiscal 2000 declined to $3.4 million, or 4.8% of net sales,
from $5.7 million, or 7.0% of net sales, in 1999. While repair sales were down
in 2000 compared to 1999, margins on such sales were up slightly as a direct
result of the further weakening of the euro in relation to the U.S. dollar. The
vast majority of the Repair Group's U.S. and non-U.S. sales are denominated in
U.S. dollars. At the same time, over 50% of the Group's operations are located
in Ireland and related costs are denominated in local currency that is tied
directly to the euro. Consequently, as the euro declines, costs are favorably
impacted when measured and reported in equivalent U.S. currency. A decline in
the availability of used replacement parts that can be refurbished required the
Repair Group to procure higher cost new OEM replacement parts. As a result, not
only did the Repair Group experience a general reduction in sales volume, the
Repair Group also was impacted by lower margins on replacement parts sales due
to higher replacement part costs in fiscal 2000.

During 2000, selling, general and administrative and other income/expenses for
the Repair Group were generally comparable to 1999.

                                       4
<PAGE>   6
MANAGEMENTS DISCUSSION AND ANALYSIS OF BUSINESS (CONTINUED)
- -------------------------------------------------------------------------------

AEROSPACE COMPONENT MANUFACTURING GROUP ("ACM GROUP")

Net sales for fiscal 2000 increased 1.8% to $35.0 million, compared with $34.3
million for fiscal 1999. The sales increase is net of a reduction in selling
price of $1.1 million caused by a decline in the market price of titanium during
fiscal 2000 that was passed on to customers. The increase in sales is
attributable to a rise in the build rates for business and regional jet aircraft
during the latter part of fiscal 2000, offset in part by a reduction in the
large aircraft build cycle from its peak in 1999.

The ACM Group's operating income in fiscal 2000 was $1.5 million, or 4.3% of net
sales, compared with $1.1 million, or approximately 3.2% of net sales in fiscal
1999. The operating income benefited in fiscal 2000 from the decline in the
market price of titanium. In addition, the Group benefited from a $0.8 million
and $0.3 million LIFO reversal in fiscal 2000 and 1999, respectively. During
fiscal 2000 this benefit was partially offset by an increase in tooling
expenditures of $0.7 million. The increase is attributable to construction of
new tooling to support new programs, as well as increases in die maintenance
costs as a result of the full year impact of the Group's implementation of its
Synchronous Manufacturing project in fiscal 1999. The objectives of the
Synchronous Manufacturing project include shorter lead times, shorter cycle
times, lower inventories and increased capacity for new orders and new products.

Selling, general and administrative expenses for fiscal 2000 declined $0.2
million to $2.0 million, compared to $2.2 million in fiscal 1999. The decline in
selling, general and administrative expenses is primarily attributable to lower
benefit costs.

OTHER/GENERAL

Corporate unallocated expenses of $1.9 million in both 2000 and 1999, consist of
corporate salaries and benefits, legal and professional and other corporate
expenses.

Net interest expense for 2000 is down 17.6% to $0.8 million from $1.0 million in
1999, primarily due to the Company's reduction of its outstanding debt
obligations through the use of its operating cash flows.

The Company's backlog as of September 30, 2000 and 1999 was $42.6 million and
$39.5 million, respectively. Approximately 2.8% of 2000's backlog is on hold and
6.2% is scheduled for delivery beyond fiscal 2001. The following is a breakout
by business segment: Repair Group: $9.1 million and $7.4 million, respectively;
and ACM Group: $33.5 million and $32.1 million, respectively.


FINANCIAL POSITION

The Company's long-term debt as a percentage to equity at the end of the year
was 26.3% compared to 25.9% in 1999. As of September 30, 2000 the Company had a
$0.4 million outstanding balance against its $6.0 million revolving credit
agreement which expires March 31, 2002. The Company feels it has adequate
financing available to meet its liquidity needs through the foreseeable future.

                                       5
<PAGE>   7
                                   SIFCO INDUSTRIES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME  Years ended September 30
                                   (Amounts in thousands, except per share data)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                          2000           1999           1998

==============================================================================================
<S>                                                    <C>            <C>            <C>
NET SALES                                              $ 106,138      $ 115,490      $ 123,175
OPERATING EXPENSES:
  Cost of goods sold                                      90,732         97,772         97,587
  Selling, general and administrative expenses            12,357         12,827         13,240
- ----------------------------------------------------------------------------------------------

    Total operating expenses                             103,089        110,599        110,827
- ----------------------------------------------------------------------------------------------

    Operating Income                                       3,049          4,891         12,348

INTEREST INCOME                                             (196)          (277)          (220)
INTEREST EXPENSE                                           1,019          1,276          1,305
OTHER INCOME, NET                                           (253)          (213)          (346)
- ----------------------------------------------------------------------------------------------

    Income before income tax provision                     2,479          4,105         11,609
INCOME TAX PROVISION                                          57            332          2,324
- ----------------------------------------------------------------------------------------------

    Net income                                         $   2,422      $   3,773      $   9,285
==============================================================================================


NET INCOME PER SHARE (BASIC)                           $     .47      $     .73      $    1.80
NET INCOME PER SHARE (DILUTED)                         $     .47      $     .72      $    1.78

WEIGHTED-AVERAGE NUMBER OF COMMON SHARES (BASIC)           5,169          5,181          5,164
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES (DILUTED)         5,203          5,228          5,228
</TABLE>


See accompanying notes to consolidated financial statements.


                                       6
<PAGE>   8
                                   SIFCO INDUSTRIES, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS        September 30
                                   (Amounts in thousands, except per share data)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                          2000          1999
==============================================================================================
<S>                                                                     <C>           <C>

                         ASSETS
CURRENT ASSETS:
   Cash and cash equivalents                                            $  4,687      $  2,022
   Receivables, less allowance for doubtful accounts
    of $765 in 2000 and $722 in 1999                                      19,743        22,192
   Inventories                                                            19,878        23,935
   Refundable income taxes                                                    --           354
   Deferred income taxes                                                   1,486         1,666
   Prepaid expenses and other current assets                                 656         1,365
- ----------------------------------------------------------------------------------------------

     Total current assets                                                 46,450        51,534

PROPERTY, PLANT AND EQUIPMENT AT COST:
   Land                                                                      859           867
   Buildings                                                              18,493        18,935
   Machinery and equipment                                                55,724        57,292
- ----------------------------------------------------------------------------------------------

                                                                          75,076        77,094
   Less - accumulated depreciation and amortization                       46,067        45,702
- ----------------------------------------------------------------------------------------------

     Property, plant and equipment, net                                   29,009        31,392

OTHER ASSETS:
   Funds held by trustee for capital project                                 530           677
   Goodwill and other intangible assets, net                               3,866         4,182
   Other assets                                                              645           877
- ----------------------------------------------------------------------------------------------

     Total other assets                                                    5,041         5,736
- ----------------------------------------------------------------------------------------------

       Total assets                                                     $ 80,500      $ 88,662
==============================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
   Current maturities of long-term debt                                 $  1,420      $  1,415
   Accounts payable                                                       10,263        11,629
   Accrued salaries and wages                                              1,251         1,074
   Accrued workers' compensation                                             731           696
   Accrued income taxes                                                       81            --
   Other accrued liabilities                                               4,028         4,796
- ----------------------------------------------------------------------------------------------

     Total current liabilities                                            17,774        19,610

LONG-TERM DEBT, NET OF CURRENT MATURITIES                                 11,962        12,985

OTHER LONG-TERM LIABILITIES                                                5,264         6,021

SHAREHOLDERS' EQUITY:
   Serial preferred shares, no par value, authorized 1,000 shares             --            --
   Common shares, par value $1 per share, authorized 10,000 shares;
     issued 5,205 shares in 2000 and 5,193 shares in 1999;
     outstanding 5,134 shares in 2000 and 5,193 shares in 1999             5,205         5,193
   Additional paid-in-capital                                              6,413         6,352
   Accumulated other comprehensive loss                                   (8,310)       (2,749)
   Retained earnings                                                      42,641        41,250
   Common shares held in treasury at cost, 71 shares in 2000                (449)           --
- ----------------------------------------------------------------------------------------------

     Total shareholders' equity                                           45,500        50,046
- ----------------------------------------------------------------------------------------------

       Total liabilities and shareholders' equity                       $ 80,500      $ 88,662
==============================================================================================
</TABLE>


See accompanying notes to consolidated financial statements.

                                        7
<PAGE>   9
                                        SIFCO INDUSTRIES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS   Years ended September 30
                                        (Amounts in thousands)
- --------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                          2000          1999          1998
============================================================================================================
<S>                                                                     <C>           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                                          $  2,422      $  3,773      $  9,285
    Adjustments to reconcile net
      income to net cash provided
      by (used for) operating activities:
        Depreciation and amortization                                      4,587         4,589         4,055
        Loss on disposal of property, plant and                               --            71            21
        Deferred income taxes                                                176           335          (152)

    CHANGES IN OPERATING ASSETS AND LIABILITIES:
        Receivables                                                        2,449        (2,119)          443
        Inventories                                                        4,057         3,704        (7,793)
        Accrued or refundable income taxes                                   435          (922)          340
        Prepaid expenses and other current assets                            709          (813)          137
        Other assets                                                         232           238           248
        Accounts payable                                                  (1,366)         (840)        1,972
        Accrued salaries and wages                                           177          (382)          177
        Accrued workers' compensation and other accrued liabilities         (733)         (407)         (370)
        Other long-term liabilities                                         (753)       (1,711)         (196)
- ------------------------------------------------------------------------------------------------------------

          Net cash provided by operating activities                       12,392         5,516         8,602

CASH FLOWS FROM INVESTING ACTIVITIES:
        Capital expenditures                                              (4,633)       (4,902)      (11,313)
        Decrease (increase) in funds held by
         trustee for capital project                                         147           245          (922)
        Other                                                             (2,743)        1,920           955
- ------------------------------------------------------------------------------------------------------------

          Net cash used for investing activities                          (7,229)       (2,737)      (11,280)


CASH FLOWS FROM FINANCING ACTIVITIES:
        Proceeds from additional borrowings                                  397            --        16,300
        Repayment of borrowings                                           (1,415)       (3,500)      (11,372)
        Repurchase of common shares                                         (449)           --            --
        Dividends                                                         (1,031)       (1,037)       (1,033)
- ------------------------------------------------------------------------------------------------------------

          Net cash provided by (used for) financing activities            (2,498)       (4,537)        3,895

- ------------------------------------------------------------------------------------------------------------

Increase (decrease) in cash and cash equivalents                           2,665        (1,758)          782
Cash and cash equivalents, beginning of year                               2,022         3,780         2,998
- ------------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of year                                  $  4,687      $  2,022      $  3,780
============================================================================================================

Supplemental disclosure of cash flow information:
        Cash paid for interest                                          $  1,021      $  1,295      $  1,200
        Cash paid for income taxes, net                                       62         1,246         2,105
</TABLE>


See accompanying notes to consolidated financial statements.

                                        8
<PAGE>   10
CONSOLIDATED STATEMENTS OF         SIFCO Industries, Inc., and Subsidiaries
SHAREHOLDERS' EQUITY               Years ended September 30
                                   (Amounts in thousands, except per share data)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                ACCUMULATED                COMMON
                                                                  ADDITIONAL       OTHER                    SHARES       TOTAL
                                                         COMMON    PAID-IN     COMPREHENSIVE   RETAINED    HELD IN    SHAREHOLDERS'
                                                         SHARES    CAPITAL      INCOME(LOSS)   EARNINGS    TREASURY      EQUITY
===================================================================================================================================
<S>                                                      <C>      <C>          <C>             <C>         <C>        <C>

BALANCE - September 30, 1997                             $5,160     $6,101        $  (955)     $30,262      $  --       $40,568
    Comprehensive income:
        Net income                                           --         --             --        9,285         --         9,285
        Foreign currency translation adjustment              --         --            963           --         --           963
                                                                                                                         ------
            Total comprehensive income                                                                                   10,248

    Shares issued to Defined Contribution Plan                3         49             --           --         --            52
    Shares issued to vendor as payment for services           2         53             --           --         --            55
    Stock options exercised, net of shares surrendered        5         (5)            --           --         --            --
    Dividends declared ($.20 per share)                      --         --             --       (1,033)        --        (1,033)
- -----------------------------------------------------------------------------------------------------------------------------------

BALANCE - September 30, 1998                             $5,170     $6,198        $     8      $38,514      $  --       $49,890
    Comprehensive income:
        Net income                                           --         --             --        3,773         --         3,773
        Foreign currency translation adjustment              --         --         (2,757)          --         --        (2,757)
                                                                                                                         ------
            Total comprehensive income                                                                                    1,016

    Shares issued to Defined Contribution Plan                6         51             --           --         --            57
    Shares issued to vendor as payment for services           4         48             --           --         --            52
    Stock options exercised, net of shares surrendered       13         55             --           --         --            68
    Dividends declared ($.20 per share)                      --         --             --       (1,037)        --        (1,037)
- -----------------------------------------------------------------------------------------------------------------------------------

BALANCE - September 30, 1999                             $5,193     $6,352        $(2,749)     $41,250      $  --       $50,046
    Comprehensive loss:
        Net income                                           --         --             --        2,422         --         2,422
        Foreign currency translation adjustment              --         --         (5,561)          --         --        (5,561)
                                                                                                                         ------
            Total comprehensive loss                                                                                     (3,139)

    Shares issued to Defined Contribution Plan                1          5             --           --         --             6
    Shares issued to vendor as payment for services           6         42             --           --         --            48
    Stock options exercised                                   5         14             --           --         --            19
    Shares repurchased and held in treasury                  --         --             --           --       (449)         (449)
    Dividends declared ($.20 per share)                      --         --             --       (1,031)        --        (1,031)
- -----------------------------------------------------------------------------------------------------------------------------------

BALANCE - September 30, 2000                             $5,205     $6,413        $(8,310)     $42,641      $(449)      $45,500
===================================================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                       9
<PAGE>   11
                         SIFCO INDUSTRIES, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED    September 30, 2000, 1999, and 1998
FINANCIAL STATEMENTS     (Amounts in thousands, except share and per share data)
- --------------------------------------------------------------------------------

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. DESCRIPTION OF BUSINESS:
SIFCO Industries, Inc., an Ohio Corporation, and its subsidiaries (the
"Company") engage 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 forged parts and other machined metal parts, remanufactured
component parts for turbine engines, and electroplating solutions and equipment.

B. 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.

C. CASH EQUIVALENTS:
The Company considers all highly liquid short-term investments with original
maturities of three months or less to be cash equivalents.

D. INVENTORY VALUATION:
Inventories are stated at the lower of cost or market. Inventory costs include
material, direct labor and factory overhead. Cost is determined by the last-in,
first-out (LIFO) method for approximately 31% and 30% of inventories at
September 30, 2000 and 1999, respectively. The first-in, first-out (FIFO) method
is used for the remainder of inventories.

E. DEPRECIATION:
The Company provides for depreciation of property, plant and equipment,
principally by the straight-line method, at annual rates sufficient to amortize
the cost over each asset's expected useful life. The principal rates of
depreciation for financial reporting purposes are: buildings 2% to 5% and
machinery and equipment 5% to 33-1/3%.

F. GOODWILL AND OTHER INTANGIBLE ASSETS:
Goodwill and other intangible assets primarily represent the excess of cost over
the net assets of acquired companies. Goodwill is amortized using the
straight-line method over 40 years. Also included is a 10-year, non-competition
agreement with the former owner of an acquired company. This asset is being
amortized using the straight-line method over 10 years. At September 30, 2000
and 1999, accumulated amortization of goodwill and other intangible assets was
$2,770 and $2,455, respectively. The Company uses an undiscounted cash flow
method to periodically review the value of goodwill and other intangible assets
and believes such assets are realizable.

G. NET INCOME PER SHARE:
The Company's net income per basic share amounts have been computed based on the
average number of common shares outstanding. Net income per diluted share
amounts reflect the effect of the Company's outstanding stock options under the
treasury stock method.

H. OTHER INCOME:
Other income is comprised primarily of grant income from Irish government
agencies, foreign exchange gains and losses, and royalty and fee income.

I. USE OF ESTIMATES:
Accounting principles generally accepted in the United States require management
to make a number of estimates and assumptions relating to the reported amounts
of assets and liabilities and the disclosure of contingent liabilities, at the
date of the consolidated financial statements, and the reported amounts of
revenues and expenses during the period in preparing these consolidated
financial statements. Actual results could differ from these estimates.

J. REVENUE RECOGNITION:
Sales are generally recognized when products are shipped or services are
provided to customers.

K. NEW ACCOUNTING STANDARD:
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This Statement, as amended by SFAS No. 138,
is effective for fiscal years beginning after June 15, 2000. The standard
establishes accounting and reporting standards for derivative instruments and
for hedging activities. SFAS No. 133 requires that all derivative instruments be
recorded on the balance sheet at fair value. Changes in the fair value of
derivatives are recorded in earnings or other comprehensive income, based on
whether the instrument is designated as part of a hedge transaction and, if so,
the type of hedge transaction. The Company is required to adopt this statement
in the first quarter of fiscal 2001. The Company believes that the adoption of
SFAS No. 133 will not have a material impact on its financial position or
results of operations.

L. RECLASSIFICATIONS:
Certain amounts in prior years have been reclassified to conform to the 2000
consolidated financial statement presentation.


2. INVENTORIES

INVENTORIES CONSIST OF:

<TABLE>
<CAPTION>
                                          2000        1999

==========================================================
<S>                                     <C>         <C>

Raw materials and supplies              $ 4,380     $ 6,780
Finished goods and work-in-progress      15,498      17,155
- -----------------------------------------------------------

Total inventories                       $19,878     $23,935
===========================================================
</TABLE>

If the FIFO method had been used for the entire Company, inventories would have
been $2,979 and $3,789 higher than reported at September 30, 2000 and 1999,
respectively.


                                       10
<PAGE>   12
NOTES CONTINUED          (Amounts in thousands, except share and per share data)
- --------------------------------------------------------------------------------

3. LONG-TERM DEBT

Long-term debt consists of:

<TABLE>
<CAPTION>
                                           2000        1999
============================================================
<S>                                      <C>         <C>

Term note payable to bank                $ 9,300     $10,500
Revolving credit agreement                   397          --
Industrial development variable rate
 demand revenue bonds                      3,685       3,900
- ------------------------------------------------------------

Total debt                                13,382      14,400
Less - current maturities                  1,420       1,415

- ------------------------------------------------------------

Total long-term debt                     $11,962     $12,985
============================================================
</TABLE>

   The term note is unsecured and payable in quarterly installments of $300
through February 1, 2005 with the remaining balance of $3,900 due May 1, 2005.
The term note has a variable interest rate which, after giving effect to an
interest rate swap agreement with the same bank, becomes an effective fixed rate
of 7.74% and is subject to adjustment if certain loan covenants are not
maintained. The interest rate swap agreement has a notional amount equal to the
amount owed under the term note and bears interest at a fixed rate of 5.99%.

   The Company has an unsecured $6,000 revolving credit agreement which expires
on March 31, 2002 and bears interest at the bank's base rate. The interest rate
was 9.5% at September 30, 2000. The average balance outstanding against the
revolving credit agreement was $212, $2,205, and $4,300 during 2000, 1999 and
1998, respectively. A commitment fee of 1/4% is incurred on the remaining unused
balance.

   The Company has a $4,100, 15-year, Industrial Development bond outstanding,
the net proceeds of which are being used at the Turbine Component Services and
Repair facility in Tampa, Florida. The interest rate is reset weekly, based on
prevailing tax-exempt money market rates (5.6% at September 30, 2000). The bond
requires annual principal payments ranging from $220 in 2001 to $355 in 2013.
The bonds are guaranteed by a letter of credit, which is secured by the property
and equipment of the facility.

   Under its various credit agreements, the Company is subject to certain
customary covenants. These include, without limitation, a minimum tangible net
worth level (as defined). At September 30, 2000 the Company was in compliance
with such covenants.

4. INCOME TAXES

Income tax provision consists of the following:

<TABLE>
<CAPTION>
                                         2000         1999         1998
========================================================================
<S>                                    <C>          <C>          <C>

Current U.S. federal and non-U.S.
    income tax provision (benefit)     $  (108)     $    (9)     $ 2,419
Deferred U.S. federal
    income tax provision (benefit)         176          335         (152)
State and local income tax
    provision (benefit)                    (11)           6           57
- ------------------------------------------------------------------------
Income tax provision                   $    57      $   332      $ 2,324
================================================================================
</TABLE>

   The income tax provision 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. The income tax
provision in the accompanying Consolidated Statements of Income differs from the
statutory rate as follows:

<TABLE>
<CAPTION>
                                            2000          1999          1998

================================================================================
<S>                                       <C>           <C>           <C>

Income before income tax provision        $  2,479      $  4,105      $ 11,609
Less-U.S., state and local income tax
  provision (benefit)                          (11)            6            57
- --------------------------------------------------------------------------------

Income before federal
  income tax provision                    $  2,490      $  4,099      $ 11,552
================================================================================

Income tax provision at U.S. federal
  statutory rate                          $    847      $  1,393      $  3,928
Tax effect of:
  Non-U.S. tax rate differential              (792)         (975)       (1,569)
  Other                                         13           (92)          (92)
- --------------------------------------------------------------------------------

U.S. federal and non-U.S.
  income tax provision                          68           326         2,267
Add-U.S., state and local income tax
  provision (benefit)                          (11)            6            57
- --------------------------------------------------------------------------------
Income tax provision                      $     57      $    332      $  2,324
================================================================================
</TABLE>

Deferred tax assets and liabilities consist of the following:

<TABLE>
<CAPTION>
                                           2000         1999
=============================================================
<S>                                      <C>          <C>

Deferred tax assets:
    Employee benefits                    $ 1,308      $ 1,531
    Doubtful accounts                        151          180
    Inventory and property reserves          355          324
    Investment valuation reserve             511          511
    Foreign taxes credits                    161          161
    Other                                    370          398
- -------------------------------------------------------------
Total deferred tax assets                  2,856        3,105

Deferred tax liabilities:
    Depreciation                           1,220        1,243
    Personal property taxes                  175          225
- -------------------------------------------------------------
Total deferred tax liabilities             1,395        1,468
- -------------------------------------------------------------
Deferred tax assets less liabilities       1,461        1,637
Valuation allowance                         (161)        (161)
- -------------------------------------------------------------
Net deferred tax assets                  $ 1,300      $ 1,476
=============================================================
</TABLE>

   The realization of the Company's net deferred tax assets is dependent upon
the generation of future U.S. taxable income. Management believes it is more
likely than not that the Company will generate sufficient future U.S. taxable
income to fully utilize the established net deferred tax assets.

   Cumulative undistributed earnings of non-U.S. subsidiaries for which no U.S.
federal deferred income tax liabilities have been recorded were approximately
$25,000 at September 30, 2000.


                                       11
<PAGE>   13
NOTES CONTINUED          (Amounts in thousands, except share and per share data)
- --------------------------------------------------------------------------------

5. RETIREMENT BENEFIT PLANS:

   The Company and certain of its U.S. subsidiaries sponsor defined benefit
pension plans covering most of its employees. The Company's funding policy for
U.S. defined benefit plans is based on an actuarially determined cost method
allowable under Internal Revenue Service regulations. Non-U.S. plans are funded
in accordance with the requirements of regulatory bodies governing the plan.

   At September 30, 1999, the Company adopted SFAS No. 132, "Employers'
Disclosure about Pensions and Other Postretirement Benefits, "which standardizes
the disclosure requirements for pensions and other postretirement benefits.

   Net pension expense for the Company-sponsored defined benefit plans for 2000,
1999, and 1998 consists of the following:

<TABLE>
<CAPTION>
                                         2000         1999         1998
========================================================================
<S>                                    <C>          <C>          <C>

Service cost                           $   886      $   906      $   779
Interest cost                            1,153          967          951
Expected return on plan assets          (1,317)      (1,122)      (1,010)
Amortization of transition
  (asset) obligation                        12          (13)         (13)
Amortization of prior service cost          42           (2)          (2)
Amortization of net gain                  (132)         (79)         (39)
- ------------------------------------------------------------------------

Net pension expense for defined
  benefit plans                        $   644      $   657      $   666
========================================================================
</TABLE>

The status of all significant U.S. and non-U.S. defined benefit plans
is as follows:

<TABLE>
<CAPTION>
Benefit Obligations:                    2000          1999
=============================================================
<S>                                   <C>           <C>

Benefit obligation at
   beginning of year                  $ 15,446      $ 14,002
Service cost                               886           906
Interest cost                            1,153           967
Participant contributions                  187           183
Amendments for union contracts             ---           540
Actuarial gain                          (1,061)         (339)
Benefits paid                           (1,395)         (524)
Currency translation adjustment           (620)         (289)
- -------------------------------------------------------------

Benefit obligation at end of year     $ 14,596      $ 15,446
=============================================================
</TABLE>


<TABLE>
<CAPTION>
Plan Assets:                           2000          1999
============================================================
<S>                                  <C>           <C>

Plan assets at beginning of year     $ 17,734      $ 16,515
Actual return on plan assets            1,941         1,569
Employer contributions                    466           333
Participant contributions                 187           183
Benefits paid                          (1,395)         (513)
Currency translation adjustment          (789)         (353)
- ------------------------------------------------------------

Plan assets at end of year           $ 18,144      $ 17,734
============================================================
</TABLE>


<TABLE>
<CAPTION>
                                Plans in which           Plans in which
                                Assets Exceed              Accumulated
                                 Accumulated                Benefits
                                   Benefits               Exceed Assets
                                   --------               -------------

Reconciliation of
Funded Status:                2000         1999         2000         1999
===========================================================================
<S>                         <C>          <C>          <C>          <C>

Plan assets in excess
  of projected
  benefit obligations       $ 3,941      $ 3,256      $  (393)     $  (968)
Unrecognized net gain        (3,917)      (3,226)      (1,999)      (1,217)
Unrecognized prior
  service cost                  640          391         (211)          80
Unrecognized transition
  asset                          (7)          (8)         (53)         (41)
Currency translation
  adjustment                     94           14          ---          ---
- ---------------------------------------------------------------------------

Net amount recognized
  in the balance sheet      $   751      $   427      $(2,656)     $(2,146)
===========================================================================
</TABLE>


The net amounts are recorded in other long-term liabilities.


Assumptions used for defined benefit plans consist of:

<TABLE>
<CAPTION>
                                       2000        1999        1998

===================================================================
<S>                                    <C>         <C>         <C>

Discount rate for liabilities          7.8%        7.4%        6.7%
Expected return on assets              8.6%        8.1%        8.1%
Rate of compensation increase          4.0%        4.0%        3.8%
</TABLE>

   The Company also contributes to two U.S. multi-employer defined contribution
plans for certain union employees. The Company's contributions to these plans in
2000, 1999 and 1998 were $46, $43 and $42, respectively.

   All nonunion employees of the Company and its U.S. subsidiaries are eligible
to participate in the Company's defined contribution plan. The total cost for
2000, 1999 and 1998 was $85, $80, and $82, respectively.

   The Company's Irish subsidiary sponsors, for all of its employees, a
tax-advantaged profit sharing program which was adopted in 1999. Company
discretionary contributions and employee elective contributions are invested in
common stock of the Company without being subject to personal income taxes if
held for at least three years. Employees have the option of taking a cash
taxable distribution. The total cost of the plan for 2000 and 1999 was $-0-and
$156, respectively.



                                       12

<PAGE>   14
NOTES CONTINUED          (Amounts in thousands, except share and per share data)
================================================================================

6. GOVERNMENT GRANTS

The Company receives grants and subsidies from the Republic of Ireland as an
incentive to invest in facilities and training in that country. These grants and
subsidies generally require that the Company maintain operations for ten years
in order to qualify for the full value of benefits received. These grants are
recorded as deferred credits when awarded and are subsequently amortized into
income over the period in which such grants are required to be earned. The
unamortized portion of these grants amounted to $2,656 and $3,241 at September
30, 2000 and 1999, and is included in other long-term liabilities. Grant revenue
of $513, $620 and $662 for 2000, 1999 and 1998, respectively, is included in
other income, net.

   These grants may be repayable in certain circumstances, principally the sale
of related assets or discontinuance of operations. The contingent liability for
such possible repayments was $4,545 and $3,330 at September 30, 2000 and 1999,
respectively.

7. STOCK OPTIONS

During 1999, the Company adopted the 1998 Long-Term Incentive Plan. The
aggregate number of stock options which may be granted under the Plan in each
fiscal year is limited to 1.5% of the total outstanding shares at September 30,
1998 up to a maximum of 5% of such total outstanding shares. Options also remain
outstanding under two previous stock option plans for which authority to issue
additional grants has expired. 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. Options issued under all plans generally vest at a rate of 25% per
year.

   Option activity relating to these plans during the last three years was as
follows:


<TABLE>
<CAPTION>
                                             2000               1999                1998
===========================================================================================
<S>                                      <C>                <C>                <C>
Options at beginning of year                 205,000            148,250            145,000
  Weighted average exercise price        $      8.28        $      5.67        $      4.68
Options granted during the year               76,000             80,000             10,000
  Weighted average exercise price        $      7.08        $     12.88        $     20.38
Options exercised during the year             (5,000)           (15,750)            (6,750)
  Weighted average exercise price        $      3.75        $      6.26        $      6.16
Options canceled during the year                  --             (7,500)                --
  Weighted average exercise price        $        --        $     10.00        $        --
Options at end of year                       276,000            205,000            148,250
  Weighted average exercise price        $      8.03        $      8.28        $      5.67
Options exercisable at end of year           138,750             97,500             83,250
  Weighted average exercise price        $      6.14        $      4.84        $      4.84
</TABLE>

The following table provides additional information regarding options
outstanding as of September 30, 2000:

<TABLE>
<CAPTION>
   OPTION              OPTIONS         OPTIONS       REMAINING LIFE
EXERCISE PRICE      OUTSTANDING      EXERCISABLE     OF OPTIONS (YRS)
======================================================================
<S>                 <C>              <C>             <C>
     3.75              5,000            5,000              2.1
     4.25            100,000          100,000              5.1
     6.50             10,000           10,000              1.1
     6.81              5,000               --              9.4
     6.94             55,000               --              9.1
     7.63             16,000               --              9.1
    12.88             75,000           18,750              8.1
    20.38             10,000            5,000              7.3
- ----------------------------------------------------------------------
    Total            276,000          138,750
======================================================================
</TABLE>

   The Company employs the disclosure-only provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation." The
pro forma impact of compensation expense from incentive stock options granted
was immaterial for all years presented.

   The Company had three Phantom Stock Plans as of September 30, 1999. During
2000, all remaining participants in the Company's three Phantom Stock Plans
elected to discontinue participation in the Plans and, therefore, all such
participants received full and final distributions from the Plans. Consequently,
as of September 30, 2000, there were no award units outstanding under any of
these Phantom Stock Plans, and the Company has no further obligation under such
Plans. As of September 30, 1999 and 1998, award units outstanding under the
Phantom Stock Plans were 111,663 and 124,063 at prices ranging from $3.55 to
$20.31, plus 10,122 and 8,103 dividend equivalent units, respectively. Expense
(income) relating to the Plans was, -0- in 2000 and 1999, and $(288) in 1998.

8. SUMMARIZED QUARTERLY RESULTS OF OPERATIONS(UNAUDITED AND RESTATED)

<TABLE>
<CAPTION>
                                                2000  QUARTER ENDED
                                ------------------------------------------------------
                                  Dec 31       March 31       June 30          Sept 30
                                  ------       --------       -------          -------
<S>                             <C>            <C>            <C>             <C>
Net sales                       $ 25,345       $ 28,182       $ 26,097        $ 26,514
Cost of goods sold:
   Previously reported            21,447         23,160         22,989          23,136
   Restated                       21,447         23,493         22,656          23,136
Net income:
   Previously reported               484          1,088           (109)            959
   Restated                          484            934             45             959
Net income per share
   Basic:
      Previously reported       $    .09       $    .21       $   (.02)       $    .19
      Restated                  $    .09       $    .18       $    .01        $    .19
   Diluted:
      Previously reported       $    .09       $    .21       $   (.02)       $    .19
      Restated                  $    .09       $    .18       $    .01        $    .19
</TABLE>


<TABLE>
<CAPTION>
                                          1999 Quarter Ended
                           --------------------------------------------------
                            Dec 31       March 31      June 30       Sept 30
                            ------       --------      -------       -------
<S>                        <C>           <C>           <C>           <C>
Net sales                  $29,525       $30,281       $30,535       $25,149
Cost of goods sold          25,080        25,343        25,958        21,391
Net income                     879         1,098           908           888
Net income per share
   Basic                   $   .17       $   .21       $   .18       $   .17
   Diluted                 $   .17       $   .21       $   .17       $   .17
</TABLE>

The Company restated its results for the second and third quarters of fiscal
2000 for an inventory valuation adjustment at its Aerospace Component
Manufacturing Group that reduced net income for the second quarter by $154 and
increased net income for the third quarter by $154. Such restatement had no
effect on net income for the entire fiscal year.


                                       13
<PAGE>   15
NOTES CONTINUED          (Amounts in thousands, except share and per share data)
================================================================================

9. CONTINGENCIES

In the normal course of business, the Company is involved in pending legal
actions. The Company cannot reasonably estimate future costs, if any, related to
these matters. Although it is possible that the Company's future operating
results could be affected by future cost of litigation, it is management's
belief at this time that such costs will not have a material adverse effect on
the Company's consolidated financial position or results of operations.

10. 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 accumulated other
comprehensive loss in shareholders' 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, 2000, the Company had forward contracts to sell U.S. $3,500.
These contracts mature in October and November of 2000 and are fully covered by
U.S. dollar receivables at September 30, 2000.

11. BUSINESS SEGMENTS

Reportable segments are identified by the Company based upon distinct products
manufactured and services provided. The Turbine Component Services and Repair
("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 ("ACM") segment consists primarily of domestically produced
forgings and semi-finished components principally for the aerospace industry.
The Company's reportable segments are separately managed.

   Two customers accounted for 17% and 12%, respectively, of the Company's
consolidated net sales in 2000. The customer that accounted for 17% of such
sales was supplied by both of the Company's business segments, while the
customer that accounted for 12% of such sales was supplied by the Company's
Repair segment. One customer of the Company's Repair segment accounted for 13%
of consolidated net sales in 1999. One customer supplied by both of the
Company's business segments accounted for 15% of the Company's consolidated net
sales in 1998.

   Unallocated amounts 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, 2000, 1999, and 1998:

<TABLE>
<CAPTION>
                                                  2000             1999             1998
============================================================================================
<S>                                            <C>              <C>              <C>
Net sales, inc. intersegment sales:
   Turbine Component Services and Repair       $  71,180        $  81,145        $  80,000
   Aerospace Component Manufacturing              34,958           34,345           43,250
   Intersegment sales                                 --               --              (75)
- --------------------------------------------------------------------------------------------
      Consolidated net sales                   $ 106,138        $ 115,490        $ 123,175
============================================================================================

Operating income:
   Turbine Component Services and Repair       $   3,425        $   5,689        $   9,630
   Aerospace Component Manufacturing               1,491            1,097            4,969
   Corporate unallocated expenses                 (1,867)          (1,895)          (2,251)
- --------------------------------------------------------------------------------------------
    Consolidated operating income                  3,049            4,891           12,348
Interest expense, net                                823              999            1,085
Other income, net                                   (253)            (213)            (346)
- --------------------------------------------------------------------------------------------
   Consolidated income before
    income tax provision                       $   2,479        $   4,105        $  11,609
============================================================================================

Depreciation and amortization expense:
   Turbine Component Services and Repair       $   3,908        $   3,971        $   3,559
   Aerospace Component Manufacturing                 679              618              496
- --------------------------------------------------------------------------------------------
      Consolidated depreciation and
       amortization expense                    $   4,587        $   4,589        $   4,055
============================================================================================

Capital expenditures:
   Turbine Component Services and Repair       $   4,118        $   3,338        $   8,495
   Aerospace Component Manufacturing                 515            1,564            2,818
- --------------------------------------------------------------------------------------------
      Consolidated capital expenditures        $   4,633        $   4,902        $  11,313
============================================================================================

Identifiable assets:
   Turbine Component Services and Repair       $  55,614        $  65,011        $  64,682
   Aerospace Component Manufacturing              18,408           19,260           22,328
   Corporate                                       6,478            4,391            5,795
- --------------------------------------------------------------------------------------------
      Consolidated total assets                $  80,500        $  88,662        $  92,805
============================================================================================

Foreign operations:
   Net sales                                   $  46,402        $  53,982        $  47,866
   Operating income                                2,824            4,687            7,330
   Identifiable assets                            29,768           38,444           36,455
</TABLE>


                                       14
<PAGE>   16
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) future business environment,
including capital and consumer spending; (2) competitive factors, including the
ability to replace business which may be lost due to OEM encroachment into
turbine component services and repair markets; (3) successful procurement of new
repair process licenses; (4) the impact of fluctuations in foreign currency
(euro) exchange rates on the results of operations; (5) successful development
and market introductions of new products; (6) stability of government laws and
regulations, including taxes; and (7) stable governments and business conditions
in economies where business is conducted.


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, 2000
and 1999, and the related consolidated statements of income, shareholders'
equity and cash flows for each of the three years in the period ended September
30, 2000. 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 auditing standards generally
accepted in the United States. 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, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
September 30, 2000, in conformity with accounting principles generally accepted
in the United States.

                                              ARTHUR ANDERSEN LLP




                                              Cleveland, Ohio,
                                              October 27, 2000.


                                       15
<PAGE>   17
SHAREHOLDER INFORMATION
================================================================================

<TABLE>
<CAPTION>
DIRECTORS
<S>                                         <C>                                     <C>
Maurice Foley                               William R. Higgins                      Hudson D. Smith
Director, AerFi Group plc                   Chief Executive Officer                 Treasurer, SIFCO Industries, Inc.
Shannon, Ireland                            Applied Fiber Systems                   President, SIFCO Forge Group
                                            Clearwater, Florida
George D. Gotschall                                                                 Thomas J. Vild
Assistant Secretary                         David V. Ragone                         Vild & Associates
SIFCO Industries, Inc.                      Partner                                 Chagrin Falls, Ohio
                                            Ampersand Ventures
Jeffrey P. Gotschall                        Wellesley, Massachusetts                J. Douglas Whelan
President and Chief Executive Officer                                               Retired President and
SIFCO Industries, Inc.                      Charles H. Smith, Jr.                     Chief Operating Officer
                                            Chairman of the Board                   Wyman-Gordon Company
Richard S. Gray                             SIFCO Industries, Inc.                  North Grafton, Massachusetts
Retired President
Enterprise Development, Inc.
Cleveland, Ohio
</TABLE>


================================================================================

<TABLE>
<CAPTION>
OFFICERS
<S>                                         <C>                                     <C>
Charles H. Smith, Jr.                       Timothy V. Crean                        Mara L. Babin
Chairman of the Board                       Executive Vice President                Secretary and General Counsel
                                                                                    Partner
Jeffrey P. Gotschall                                                                Squire, Sanders & Dempsey
President and Chief Executive Officer       George D. Gotschall
                                            Assistant Secretary
Frank A. Cappello
Vice President-Finance                      Hudson D. Smith
  and Chief Financial Officer               Treasurer
</TABLE>

================================================================================

AUDITORS

Arthur Andersen LLP
200 Public Square, Suite 1800
Cleveland, Ohio 44114-2803



GENERAL COUNSEL

Squire, Sanders & Dempsey
4900 Key Tower
127 Public Square
Cleveland, Ohio 44114-1304



TRANSFER AGENT AND REGISTRAR
National City Bank
Corporate Trust Operations
P. O. Box 92301
Cleveland, Ohio 44193-0900
Phone: 1-800-622-6757


DIVIDEND REINVESTMENT

SIFCO Industries maintains a dividend reinvestment program that enables
shareholders to purchase additional shares of SIFCO stock without fees or
service charges. To participate in this program, or for answers to any questions
on your dividend investment account, contact the SIFCO corporate office.

FORM 10-K REQUESTS

A copy of the Company's current form 10-K annual report as filed with the
Securities and Exchange Commission is available without charge to shareholders
upon request to Investor Relations, SIFCO Industries, Inc.

ANNUAL MEETING

The annual meeting of shareholders of SIFCO Industries, Inc. will be held at
National City Bank, East Ninth Street and Euclid Avenue, Cleveland, Ohio, at
10:30 AM on January 30, 2001.

LISTING

The common stock of SIFCO Industries, Inc. is listed on the American Stock
Exchange under the symbol SIF.


                                       16
<PAGE>   18
[SIFCO INDUSTRIES, INC. LOGO]

970 EAST 64TH STREET, CLEVELAND, OHIO  44103-1694
PHONE: (216) 881-8600 FAX:  (216) 432-6281
WWW.SIFCO.COM

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>3
<FILENAME>l85335aex23.txt
<DESCRIPTION>EXHIBIT 23
<TEXT>

<PAGE>   1


                                                                      EXHIBIT 23


                    CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS


As independent public accountants, we hereby consent to the incorporation of our
reports dated October 27, 2000, included and incorporated by reference in this
Form 10-K, into the Company's previously filed Registration Statements, File
Nos. 2-82001 and 33-32826.



                                                    ARTHUR ANDERSEN LLP


Cleveland, Ohio,
December 22, 2000.



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27
<SEQUENCE>4
<FILENAME>l85335aex27.txt
<DESCRIPTION>EXHIBIT 27
<TEXT>

<TABLE> <S> <C>

<ARTICLE> 5
<CIK> 0000090168
<NAME> SIFCO INDUSTRIES, INC.
<MULTIPLIER> 1,000

<S>                             <C>
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          SEP-30-2000
<PERIOD-START>                             OCT-01-1999
<PERIOD-END>                               SEP-30-2000
<CASH>                                           4,687
<SECURITIES>                                         0
<RECEIVABLES>                                   19,743
<ALLOWANCES>                                       765
<INVENTORY>                                     19,878
<CURRENT-ASSETS>                                46,450
<PP&E>                                          75,076
<DEPRECIATION>                                  46,067
<TOTAL-ASSETS>                                  80,500
<CURRENT-LIABILITIES>                           17,774
<BONDS>                                              0
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                         5,205
<OTHER-SE>                                      40,295
<TOTAL-LIABILITY-AND-EQUITY>                    80,500
<SALES>                                              0
<TOTAL-REVENUES>                               106,138
<CGS>                                           90,732
<TOTAL-COSTS>                                  103,089
<OTHER-EXPENSES>                                 (253)
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                               1,019
<INCOME-PRETAX>                                  2,479
<INCOME-TAX>                                        57
<INCOME-CONTINUING>                                  0
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     2,422
<EPS-BASIC>                                        .47
<EPS-DILUTED>                                      .47


</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>5
<FILENAME>l85335aex99.txt
<DESCRIPTION>EXHIBIT 99
<TEXT>

<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 auditing standards generally
accepted in the United States, 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, 2000. 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 27, 2000.


<PAGE>   2


                                                                     SCHEDULE II



                             SIFCO INDUSTRIES, INC.
                                AND SUBSIDIARIES
                        ALLOWANCE FOR DOUBTFUL ACCOUNTS
              FOR THE YEARS ENDED SEPTEMBER 30 2000, 1999 AND 1998
                             (Amounts in thousands)

<TABLE>
<CAPTION>
                                                   2000        1999        1998
                                                   ----        ----        ----
<S>                                                <C>         <C>         <C>
Balance beginning of period                        $ 722       $ 774       $829

Additions - charged to costs and expenses            220          84         83

Deductions - accounts
  determined to be uncollectible                    (140)       (169)      (152)

Recoveries of fully reserved accounts                 23          94          8

Exchange rate changes and other                      (60)        (61)         6
                                                   -----       -----       ----

Balance end of period                              $ 765       $ 722       $774
                                                   =====       =====       ====
</TABLE>


</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
