-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PJj5fTSL6dwQ6H48MNMLwanDJ2Vj38QEMoDnQ8QRCGjA33Rk9zurX/uGgAts08eJ jpqK/G7SBirk3uKNXvYT9g== 0000950152-05-000146.txt : 20060315 0000950152-05-000146.hdr.sgml : 20060315 20050111131248 ACCESSION NUMBER: 0000950152-05-000146 CONFORMED SUBMISSION TYPE: CORRESP PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20050111 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: CORRESP 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 CORRESP 1 filename1.txt January 10, 2005 Mr. Michael Fay Branch Chief U.S. Securities and Exchange Commission Division of Corporate Finance 450 Fifth Street, N.W. Washington, D.C. 20549 RE: SIFCO INDUSTRIES, INC. FILE NO. 1-5978 SEPTEMBER 30, 2004 FORM 10-K Dear Mr. Fay: This letter is written in response to the SEC's letter to SIFCO Industries, Inc. dated January 4, 2005. In response to the SEC's comments, SIFCO responds as follows: - RESPONSE TO COMMENT 1 - SIFCO's September 30, 2004 Form 10-K notes in "Item 1. Business; B. Principal Products and Services; 1. Turbine Component Services and Repair Group - - In the Operations discussion (Page 2), SIFCO notes that it is required to obtain licenses that certify its ability to repair specific turbine engine components. The discussion states that SIFCO has elected to obtain licenses primarily from the OEM. This is because, although FAA licenses are more easily obtained than OEM approvals, FAA approvals may have a marketability issue associated with them. - In the Competition discussion (Page 4), SIFCO notes that with the entry of the OEM into the (turbine engine repair and overhaul) market, there has been reluctance on the part of the OEM to issue, to independent component repair companies (like SIFCO), additional licenses authorizing repairs to newer model aerospace turbine engine components. In that same section SIFCO describes that it has been able to partially overcome this trend through close collaboration between itself and the OEM. Such collaboration, in certain circumstances, also involves the commercial airline(s) that purchase and operate the engines produced by the OEM because commercial airlines are motivated to ensure that alternative sources for turbine engine component repairs exist to provide them with a competitive source for such component repair services. To clarify this further, SIFCO will expand its discussion in future filings to include the involvement of commercial airlines in such collaboration. Based on the above noted items, SIFCO believes that its disclosure in Operations (Pg. 2) and Competition (Pg. 4)" provides the appropriate level of discussion to enable the reader to understand the state of the repair approval environment in which SIFCO currently operates. To the extent that the environment may change in the future, SIFCO will revise this discussion accordingly. - RESPONSE TO COMMENT 2: - SIFCO will include a discussion of its policy for receivables and inventory allowances in its "Summary of Significant Accounting Policies" financial statement footnote in its future filings. At the SEC's request, SIFCO provides the attached supplemental Schedule II that has been expanded to reflect all of SIFCO's reserve accounts that are deemed to be material. - SIFCO provides manufacturing and repair products and services that are generally required to meet product specifications that have been established by parties other than SIFCO and, therefore, SIFCO only warranties that its manufacturing and repair products and services will meet such established (third party) specifications. SIFCO evaluates its warranty obligation based on historical claim activity and the existence of any known outstanding warranty claims. SIFCO has historically not had any significant warranty claims and therefore at September 30, 2004 (and in recent prior periods) its warranty claim reserve level was immaterial. - RESPONSE TO COMMENT 3 - SIFCO's revolving credit agreement has not become due as a result of a material adverse change. SIFCO will make a similar disclosure in future filings. At the SEC's request, SIFCO makes the following statements acknowledging its understanding that: - The Company is responsible for the adequacy and accuracy of the disclosure in the (September 30, 2004) filing; - Staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any actions with respect to the filing; and - The Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. SIFCO will be pleased to discuss these matters further with you, and to provide additional information in response to specific questions that may arise upon the SEC's review of this response. If you have any questions regarding this response, please feel free to contact me directly at (216) 432-6278 at your earliest convenience. Sincerely, /s/ Frank A. Cappello - --------------------- Frank A. Cappello Vice President - Finance and Chief Financial Officer Cc: J. Robinson (Grant Thornton) M. Lipscomb (SIFCO Audit Committee) SIFCO INDUSTRIES, INC. AND SUBSIDIARIES Schedule II - Valuation and Qualifying Accounts For the Years Ended September 30, 2004, 2003 and 2002 (amounts in thousands)
ADDITIONS (REDUCTIONS) BALANCE AT CHARGED TO CHARGED TO BALANCE BEGINNING OF COSTS AND OTHER AT END OF DESCRIPTION PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD ----------- ------ -------- -------- ---------- ------ YEAR ENDED SEPTEMBER 30, 2004 Deducted from asset accounts: Allowance for doubtful accounts 1,045 (104) 0 (311)(a) 630 Return and allowance reserve 334 (193) 0 (5)(b) 136 Inventory obsolescence reserve 1,479 173 0 (366)(c) 1,286 Inventory LIFO reserve 3,230 288 0 0 3,518 Asset impairment reserve 1,772 0 0 (219)(d) 1,553 Valuation allowance for deferred taxes 3,430 699 0 0 4,129 Accrual for estimated liability Workers' compensation reserve 1,099 344 0 (326)(e) 1,117 YEAR ENDED SEPTEMBER 30, 2003 Deducted from asset accounts: Allowance for doubtful accounts 1,250 115 0 (320)(a) 1,045 Return and allowance reserve 428 321 0 (415)(b) 334 Inventory obsolescence reserve 2,655 279 0 (1,455)(c) 1,479 Inventory LIFO reserve 3,114 116 0 0 3,230 Asset impairment reserve 756 1,309 0 (293)(d) 1,772 Valuation allowance for deferred taxes 1,723 1,707 0 0 3,430 Accrual for estimated liability Workers' compensation reserve 1,029 311 0 (241)(e) 1,099 YEAR ENDED SEPTEMBER 30, 2002 Deducted from asset accounts: Allowance for doubtful accounts 1,422 481 (1)(f) (652)(a) 1,250 Return and allowance reserve 272 175 0 (17)(b) 428 Inventory obsolescence reserve 1,888 3,936 0 (3,169)(c) 2,655 Inventory LIFO reserve 2,884 230 0 0 3,114 Asset impairment reserve 0 1,168 0 (412)(d) 756 Valuation allowance for deferred taxes 161 1,562 0 0 1,723 Accrual for estimated liability Workers' compensation reserve 1,497 182 (55) (595)(e) 1,029
(a) Accounts determined to be uncollectible, net of recoveries (b) Actual returns received (c) Inventory sold or otherwise disposed (d) Equipment sold or otherwise disposed (e) Payment of workers' compensation claims (f) Exchange rate changes -----END PRIVACY-ENHANCED MESSAGE-----