What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-12-10 compared with 2020-12-23 · 243 added, 363 removed, 914 unchanged (40% of the section changed)

5 unchanged sentences

We have audited the accompanying consolidated balance sheets of SIFCO Industries, Inc.

(an Ohio corporation) and subsidiaries (the “Company”) as of September 30, 2020 and 2019, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity, and cash flows for the two years then ended, and the related notes and financial statement schedule included under Item 15(a) (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2020 and 2019, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Change in accounting principle

As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for leases as of October 1, 2019 due to the adoption of ASU 2016-02, Leases (Topic 842).

(an Ohio corporation) and subsidiaries (the “Company”) as of September 30, 2021 and 2020, the related consolidated statements of operations, comprehensive income, shareholders’ equity, and cash flows for the for each of the two years ended, and the related notes and financial statement schedule included under Item 15(a) (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended September 30, 2021, in conformity with accounting principles generally accepted in the United States of America.

Basis for opinion

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Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Such procedures included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical audit matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involve our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

/s/ GRANT THORNTON LLP

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December 10, 2021

Table of C ontents

SIFCO Industries, Inc.

7 unchanged sentences

Selling, general and administrative expenses 13,484 14,022

Goodwill impairment — 8,294

Amortization of intangible assets 1,011 1,497

Loss (gain) on disposal or impairment of operating assets 174 ( 282 )

Loss on disposal or impairment of operating assets 209 174

Gain on insurance recoveries ( 2,397 ) ( 5,874 )

1 unchanged sentence

Interest expense, net 638 886

Foreign currency exchange loss (gain), net 51 ( 7 )

Foreign currency exchange loss, net 23 51

Other expense, net 202 226

8 unchanged sentences

See notes to consolidated financial statements.

Table of C ontents

SIFCO Industries, Inc.

and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Income

(Amounts in thousands)

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4,491 ( 569 )

Comprehensive income (loss) $ 9,032 $ ( 12,186 )

Comprehensive income $ 3,646 $ 9,032

See notes to consolidated financial statements.

Table of C ontents

SIFCO Industries, Inc.

42 unchanged sentences

See notes to consolidated financial statements.

Table of C ontents

SIFCO Industries, Inc.

8 unchanged sentences

Amortization of debt issuance costs 72 129

Loss (gain) on disposal of operating assets or impairment of operating assets 174 ( 282 )

Loss on disposal of operating assets or impairment of operating assets 209 174

Gain on insurance proceeds received for damaged property ( 2,397 ) ( 5,874 )

Gain on extinguishment of debt ( 287 ) —

LIFO effect 924 ( 10 )

1 unchanged sentence

Deferred income taxes ( 1,288 ) ( 422 )

Goodwill impairment — 8,294

Other long-term liabilities 375 27

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Insurance proceeds received for damaged property 4,101 7,828

Proceeds from disposal of property, plant and equipment — 317

Capital expenditures ( 4,979 ) ( 9,026 )

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Repayments of short-term debt borrowings ( 3,354 ) ( 4,722 )

Payments for debt financing — ( 132 )

Share retirement — ( 62 )

Payments for debt issuance costs ( 45 ) —

Net cash provided by (used for) financing activities ( 3,111 ) 822

4 unchanged sentences

See notes to consolidated financial statements.

Table of C ontents

SIFCO Industries, Inc.

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See notes to consolidated financial statements.

Table of C ontents

SIFCO Industries, Inc.

8 unchanged sentences

Balance - September 30, 2019 $ 5,777 $ 10,438 $ 33,148 $ ( 13,309 ) $ 36,054

Cumulative effect for the adoption of ASC 606 — — 3,598 — 3,598

Comprehensive loss — — ( 7,506 ) ( 4,680 ) ( 12,186 )

Comprehensive income (loss) — — 9,191 ( 159 ) 9,032

Shares retired — 47 — — 47

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Comprehensive income (loss) — — ( 743 ) 4,389 3,646

Other — 47 — — 47

Performance and restricted share expense — 469 — — 469

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See notes to consolidated financial statements.

Table of C ontents

SIFCO Industries, Inc.

8 unchanged sentences

Impact of COVID-19 Pandemic

In March 2020, a novel strain of coronavirus ("COVID-19") was recognized as a pandemic by the World Health Organization and the outbreak subsequently became increasingly widespread in the United States and other countries in which the Company operates.

The Company has taken proactive steps to ensure the safety of its employees and customers as well as to preserve the Company’s financial flexibility.

Immediate action was taken by the Company to minimize the spread of COVID-19 in its workplace and monitor the development of and responses to the COVID-19 pandemic and the impact it may have on the business.

We have been following the guidance from the U.S.

Centers for Disease Control to protect employees and prevent the spread at our plant locations.

The actions implemented include:

telework, alternate schedules, pre-shift temperature screenings, masks, social distancing, and enhanced cleaning protocols.

The impact of the COVID-19 outbreak on the Company continues to evolve and the full magnitude the pandemic will have on the Company's financial condition, liquidity and future results is uncertain.

Also uncertain is the timing, duration, shape and magnitude of recovery.

The resurgence of COVID-19 cases, and the continuation of restrictions, disruptions to travel, and businesses worldwide, may reduce customer demand and/or impair our ability to meet customer demands for products.

Reduced demand for products or impaired ability to meet customer demand (including as a result of disruptions at our facilities, in the transportation of products, and/or in the operations of our vendors) could have a material adverse effect on our business, operations and financial performance.

There continues to be significant uncertainty regarding the duration of the pandemic as well as the timing and scope of recovery in the commercial aerospace industry, with a return to pre-COVID-19 levels of activity not expected in commercial aerospace industry for several years.

The Company expects to continue to assess the potential implications of these conditions on its operations and take actions to preserve liquidity, including certain cost reduction measures taken subsequent to the end of fiscal year 2020, including a furlough of employees at one of its locations, starting in late November 2020 and continuing through the balance of the calendar year, in response to market conditions and its impact of the COVID-19 pandemic on customers’ ordering schedules.

Since being recognized by the World Health Organization as a pandemic, the novel coronavirus ("COVID-19") continues to impact the United States and other countries in which we operate.

As a result of the COVID-19 pandemic and related government mandated restrictions on the Company’s business as well as the businesses of its customers and suppliers, disruption to the Company’s business and the manufacture and sale of its products has occurred and is expected to continue into fiscal 2022.

During fiscal 2021, the COVID-19 pandemic impacted the Company’s results of operations.

Given the long lead times for certain of the Company's products, the Company saw a greater impact related to the effects of COVID-19 on orders and deliveries in fiscal 2021 than in fiscal 2020.

In response to the uncertain environment created by the COVID-19 pandemic, the Company has taken measures to reduce costs by furloughing and laying off certain of its employees from one of its plant locations that has experienced reduced sales of commercial aerospace products.

Such employees have since returned to work.

The Company continues to actively monitor and find ways to mitigate the impact of the pandemic on its operations and consider its ability to pivot its operations and the industries served.

PRINCIPLES OF CONSOLIDATION

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

A substantial majority of the Company’s cash and cash equivalent bank balances are within federally insured limits as of September 30, 2020 and 2019.

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

A substantial majority of the Company’s cash and cash equivalent bank balances exceed federally insured limits as of September 30, 2021.

CONCENTRATIONS OF CREDIT RISK

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The Company writes off accounts receivable when they become uncollectible.

During fiscal 2020 and 2019, $ 263 and $ 33 , respectively, of accounts receivable were written off against the allowance for doubtful accounts.

Bad debt expense totaled $ 80 and $ 39 in fiscal 2020 and fiscal 2019, respectively.

During fiscal 2021 $ 9 of accounts receivable were recovered against the allowance for doubtful accounts while in fiscal 2020 $ 263 of accounts receivable were written off against the allowance for doubtful accounts.

Bad debt benefit totaled $ 91 and $ 80 in fiscal 2021 and fiscal 2020, respectively.

Most of the Company’s receivables represent trade receivables due from manufacturers of turbine engines and aircraft components as well as turbine engine overhaul companies located throughout the world, including a significant concentration of U.S.

based companies.

In fiscal 2020, 47 % of the Company’s consolidated net sales were from three of its largest customers;

and 49 % of the Company's consolidated net sales were from the four largest customers and their direct subcontractors, which individually accounted for 16 %, 13 %, 10 % and 10 %, of consolidated net sales, respectively.

In fiscal 2019, 44 % of the Company’s consolidated net sales were from three of its largest customers;

In fiscal 2021, 20 % of the Company’s consolidated net sales were from two of its largest customers;

and 38 % of the Company's consolidated net sales were from the three largest customers and their direct subcontractors, which individually accounted for 17 %, 11 %, and 10 %, of consolidated net sales, respectively.

In fiscal 2020, 10 % of the Company’s consolidated net sales were from one of its largest customers;

and 49 % of the Company's consolidated net sales were from four of the largest customers and their direct subcontractors which individually accounted for 16 %, 13 %, 10 % and 10 %, of consolidated net sales, respectively.

Other than what has been disclosed, no other single customer or group represented greater than 10% of total net sales in fiscal 2021 and 2020.

At September 30, 2020, two of the Company’s largest customers had outstanding net accounts receivable which individually accounted for 30 % of the total net accounts receivable;

and three of the largest customers and their direct subcontractors had outstanding net accounts receivable which accounted for 13 %, 13 %, and 12 % of total net accounts receivable, respectively.

At September 30, 2019, two of the Company’s largest customers had outstanding net accounts receivable which individually accounted for 10 % of total net accounts receivable;

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and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

At September 30, 2021, none of the Company’s largest customers had outstanding net accounts receivable balances that were individually greater than 10% of the total net accounts receivable;

and one of the largest customers and their direct subcontractors collectively had outstanding net accounts receivable which accounted for 17 % of total net accounts receivable.

At September 30, 2020, one of the Company’s largest customers had outstanding net accounts receivable which individually accounted for 11 % of total net accounts receivable;

and three of the largest customers and their direct subcontractors had outstanding net accounts receivable which accounted for 13 %, 13 %, and 12 % of total net accounts receivable, respectively.

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(iii) software - 3 to 7 years (included in machinery and equipment);

and (iv) leasehold improvements - remaining life or length of the lease, whichever is less (included in buildings).

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

and (iv) leasehold improvements - 6 to 15 years range represent the remaining life or length of the lease, whichever is less (included in buildings).

The Company's property, plant and equipment assets by major asset class at September 30 consist of:

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Under the Accounting Standard Codification ("ASC") 360 ("Topic 360"), if the carrying value of a long-lived asset is greater than the estimated undiscounted future cash flows, then the long-lived asset is considered impaired and an impairment charge is recorded for the amount by which the carrying value of the long-lived asset exceeds its fair value.

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

The Company continuously monitors triggers to determine if further testing is necessary.

In fiscal 2020, the Company evaluated triggers for asset impairment three times.

During two of the three assessments, it was determined that there were no triggering events requiring further review of its assets groups.

The fourth quarter assessment resulted in further evaluation.

Certain qualitative factors, such as the reduction on future forecasted sales due to the reduction of committed orders by certain customers triggered a recoverability test on its Orange, California ("Orange") location.

The result of management's analysis on the asset group's recoverability at year-end indicated that the long-lived assets, right-of-use assets and definite lived intangible assets were recoverable and did not require further review for impairment.

The Company experienced three triggering events in fiscal 2019 requiring the review of two asset groups to determine if the carrying value of each asset group is recoverable.

Certain qualitative factors were triggered at its Orange location.

See Note 11, Commitments and Contingencies, of the consolidated financial statements, for further discussion on the evaluation of its long-lived assets as it relates to the Orange asset group.

The Maniago, Italy ("Maniago") location triggered certain qualitative factors, which led to an assessment of its long-lived assets as of May 31, 2019 and September 30, 2019, respectively, due to the continued challenges on operating income trends for the respective asset group.

The results of management's analysis on the asset group's recoverability at interim and at year-end, respectively, indicated that the long-lived assets and definite lived intangible assets were recoverable and did not require further review for impairment.

In the fourth quarter, further assessment was necessary as certain qualitative factors, such as, operating results triggered a recoverability test on its Orange, California ("Orange") location.

The results indicated that the long-lived assets, right-of-use assets and definite lived intangible assets were recoverable and did not require further review for impairment.

The Company continuously monitored and tested for recoverability at the Orange location.

The result of management's analysis on the asset group's recoverability at September 30, 2020 did not require further review for impairment.

GOODWILL AND INTANGIBLE ASSETS

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However, if the carrying amount exceeds the fair value, the Company should recognize an impairment charge for the amount by which the carrying amount exceeds the fair value, not to exceed the total amount of goodwill allocated to that reporting unit.

See Note 3, Goodwill and Intangibles , of the consolidated financial statements for further discussion of the July 31, 2020 and 2019 annual impairment test results and its interim goodwill test performed as of May 31, 2019 for one of its reporting units.

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

See Note 3, Goodwill and Intangibles Assets , of the consolidated financial statements for further discussion of the July 31, 2021 and 2020 annual impairment test results.

Intangible assets consist of identifiable intangibles acquired or recognized in the accounting for the acquisition of a business and include such items as a trade name, a non-compete agreement, below market lease, customer relationships and order backlog.

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NET INCOME (LOSS) PER SHARE

The Company’s net income and loss per basic share has been computed based on the weighted-average number of common shares outstanding.

Net income in the current period, per diluted share reflects the effect of the Company's outstanding restricted shares and performance shares under the treasury method.

In the prior period, due to the net loss for each reporting period, zero restricted shares are included in the calculation of diluted earnings per share because the effect would be anti-dilutive.

The Company’s net loss and income per basic share has been computed based on the weighted-average number of common shares outstanding.

Due to the net loss in the reporting period, zero restricted shares and performance shares are included in the calculation of diluted earnings per share because the effect would be anti-dilutive.

In the prior period, net income per diluted share reflects the effect of the Company's outstanding restricted shares and performance shares under the treasury method.

The dilutive effect is as follows:

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Anti-dilutive weighted-average common shares excluded from calculation of diluted earnings per share 412 207

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

REVENUE RECOGNITION

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Payment from customers are received based on the terms established in the contract with the customer.

The Company has implemented ASU 2016-02, "Leases (Topic 842)" and ASU 2018-11, "Leases (Topic 842) Targeted Improvements," (collectively with ASU 2016-02, "Topic 842"), which was adopted on October 1, 2019 using the cumulative-effect adjustment transition method.

Significant changes to the Company's accounting policies as a result of adopting Topic 842 are referenced in Note 1, Summary of Significant Accounting Policies - Impact of Recently Adopted Accounting Standards and in Note 10, Leases .

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

The leasing standard requires lessees to recognize a Right-of-Use ("ROU") asset and a lease liability on the consolidated balance sheet, with the exception of short-term leases.

The Company primarily leases its manufacturing buildings, specifically at its Orange location, as well as certain machinery and office equipment.

The Company determines if a contract contains a lease based on whether the contract conveys the right to control the use of identified assets for a period in exchange for consideration.

Upon identification and commencement of a lease, the Company establishes a ROU asset and a lease liability.

Operating leases are included in ROU assets, short-term operating lease liabilities, and long-term operating lease liabilities on the consolidated balance sheets.

Finance leases are included in property, plant, and equipment, current maturities of long-term debt and long-term debt on the consolidated balance sheets.

ROU assets and liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date.

As most of the leases do not provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at commencement date and duration of the lease term in determining the present value of the future payments.

Lease expense for operating leases is recognized on a straight-line basis over the lease term, while the expense for finance leases is recognized as depreciation expense and interest expense using the accelerated interest method of recognition.

IMPACT OF RECENTLY ADOPTED ACCOUNTING STANDARDS

The Company adopted Topic 842 as of October 1, 2019, using the cumulative effective method.

Under the transition method selected by the Company, leases that are not short-term in nature existing at, or entered on October 1, 2019 were required to be recognized and measured.

Prior period amounts were not adjusted and continue to be reflected with the Company's historical accounting.

The adoption of Topic 842 resulted in the Company recording right-of-use ("ROU") assets and operating lease liabilities of approximately $ 18,059 to the consolidated balance sheet as of October 1, 2019, with no related impact on the Company's consolidated statement of comprehensive income (loss) or consolidated statement of cash flows.

In August 2018, the FASB issued ASU 2018-14, " Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20) ," which adds the following disclosure requirements:

(1) the weighted-average interest crediting rates used in the Company's cash balance pension plans and other similar plans;

(2) a narrative description of the reasons for significant gains and losses affecting the benefit obligation for the period;

and (3) an explanation of any other significant changes in the benefit obligation or plan assets that are not otherwise apparent in the other disclosures required by Accounting Standards Codification ("ASC") Topic 715, "Compensation - Retirement Benefits." The ASU also clarifies the guidance included in ASC 715-20-50-3 on defined benefit plans disclosure requirements.

This ASU is effective for the Company and did not have a material impact to the pension disclosures.

See Note 8, Retirement Benefit Plans , of the consolidated financial statements for further information.

IMPACT OF NEWLY ISSUED ACCOUNTING STANDARDS

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ASU 2016-13 does not prescribe a specific method to make the estimate, so its application will require significant judgment.

ASU 2016-13 is effective for public companies in fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

However, in November 2019, the FASB issued ASU 2019-10, "Financial Instruments - Credit Loss (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)," which defers the effective date for public filers that are considered smaller reporting companies ("SRC"), as defined by the Securities and Exchange Commission, to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Because SIFCO is considered a SRC, the Company does not need to implement until October 1, 2023.

ASU 2016-13 is effective for public companies in fiscal years beginning after December 15, 2019, including interim periods within those fiscal

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

However, in November 2019, the FASB issued ASU 2019-10, "Financial Instruments - Credit Loss (Topic 326), Derivatives and Hedging (Topic 815) , and Leases (Topic 842) ," which defers the effective date for public filers that qualify as a smaller reporting company ("SRC"), as defined by the Securities and Exchange Commission, to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Because SIFCO is considered a SRC, the Company does not need to implement this standard until October 1, 2023.

The Company will continue to evaluate the effect of adopting ASU 2016-13 will have on the Company's results within the consolidated statements of operations and financial condition.

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This ASU is effective beginning October 1, 2021.

The Company continues to evaluate the effect adopting this ASU will have on the Company's results within the consolidated statements of operations and financial condition.

The adoption of this ASU is not expected to have a material impact to the Company's results within the consolidated statements of operations and financial condition.

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting," which is intended to provide temporary optional expedients and exceptions to the U.S.

GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burden related to the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates.

This ASU, along with recently issued ASU 2021-01, which further clarifies the scope of Topic 848, is available immediately and may be implemented in any period prior to the guidance expiration on December 31, 2022.

ASU 2020-04 was effective beginning on March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022.

The Company has not applied any optional expedients and exceptions to date, and will continue to evaluate the impact of the guidance and whether it will apply the optional expedients and exceptions.

USE OF ESTIMATES

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Amortization of debt issuance costs is included in interest expense in the consolidated statements of operations.

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

ACCUMULATED OTHER COMPREHENSIVE LOSS

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Total accumulated other comprehensive loss $ ( 9,079 ) $ ( 13,468 )

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

The following table provides additional details of the amounts recognized into net earnings from accumulated other comprehensive loss, net of tax:

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Balance at September 30, 2019 $ ( 5,667 ) $ ( 7,642 ) $ ( 13,309 )

Other comprehensive loss before reclassifications ( 712 ) ( 4,643 ) ( 5,355 )

Amounts reclassified from accumulated other comprehensive income — 675 675

Net current-period other comprehensive loss ( 712 ) ( 3,968 ) ( 4,680 )

Other comprehensive income (loss) before reclassifications 410 ( 1,560 ) ( 1,150 )

Amounts reclassified from accumulated other comprehensive loss — 991 991

Net current-period other comprehensive income (loss) 410 ( 569 ) ( 159 )

Balance at September 30, 2020 ( 5,257 ) ( 8,211 ) ( 13,468 )

Other comprehensive income (loss) before reclassifications ( 102 ) 3,371 3,269

Amounts reclassified from accumulated other comprehensive income — 991 991

Amounts reclassified from accumulated other comprehensive loss — 1,120 1,120

Net current-period other comprehensive income (loss) ( 102 ) 4,491 4,389

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See Note 8, Retirement Benefit Plans , of the consolidated financial statements for further information.

SIFCO Industries, Inc.

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Notes to Consolidated Financial Statements - (Continued)

The Company files a consolidated U.S.

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Taxable temporary differences result principally from tax depreciation in excess of book depreciation.

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

The Company evaluates for uncertain tax positions taken at each balance sheet date.

The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position.

For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest cumulative benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax

The Company's policy for interest and/or penalties related to underpayments of income taxes is to include interest and penalties in tax expenses.

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Goodwill and intangible assets are valued using Level 3 inputs.

SIFCO Industries, Inc.

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Notes to Consolidated Financial Statements - (Continued)

SHARE-BASED COMPENSATION

Share-based compensation is measured at the grant date, based on the calculated fair value of the award and the probability of meeting its performance condition, and is recognized as expense when it is probable that the performance conditions will be met over the requisite service period (generally the vesting period).

Share-based expense includes expense related to restricted shares and performance shares issued under the Company's 2007 Long-Term Incentive Plan ("2007 Plan") and the Company's 2007 Plan Long-Term Incentive Plan (Amended and Restated as of November 16, 2016) (as further amended, the "2016 Plan").

The Company recognizes share-based expense within selling, general, and administrative expense.

Share-based expense includes expense related to restricted shares and performance shares issued under the Company's 2007 Plan Long-Term Incentive Plan (Amended and Restated as of November 16, 2016) (as further amended, the "2016 Plan").

The Company recognizes share-based expense within selling, general, and administrative expense and adjusts for any forfeitures as they occur.

GOING CONCERN

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First, management must evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern.

Second, if management concludes that substantial doubt is raised, management is required to consider whether it has plans in place to alleviate that doubt.

Second, if management concludes that

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

substantial doubt is raised, management is required to consider whether it has plans in place to alleviate that doubt.

As required by ASC 205-40, this evaluation shall initially not take into consideration the potential mitigating effects of plans that have not been fully implemented as of the date the financial statements are issued.

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The consolidated financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets, or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

See Note 5, Debt, for further discussion regarding the Company's Credit Agreement, which matures in fewer than 12 months and management's plan related to going concern.

Inventories at September 30 consist of:

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If the FIFO method had been used for the entire Company, inventories would have been $ 9,210 and $ 8,286 higher than reported at September 30, 2021 and 2020, respectively.

LIFO benefit was $ 10 and $ 75 in fiscal 2020 and 2019, respectively.

There was no LIFO liquidation in fiscal 2020.

LIFO expense was $ 924 in fiscal 2021 and a LIFO benefit was $ 10 in fiscal 2020.

In fiscal 2021, results showed a reduction of inventory resulting in liquidations of LIFO inventory quantities.

1 unchanged sentence

These inventories were carried in prior periods at the then prevailing costs, which were accurate at the time, but differ from the current manufacturing cost and/or material costs.

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

There was no LIFO liquidation in fiscal 2020.

Goodwill and Intangible Assets

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Trade name 8 years $ 1,876 $ 1,850 $ — $ — $ 26

$ 1,876 $ 1,729 $ — $ ( 12 ) $ 135

Technology asset 5 years 1,869 1,869 — — —

1,869 1,843 — ( 24 ) 2

Customer relationships 10 years 13,589 12,736 — ( 5 ) 848

13,589 11,833 — ( 3 ) 1,753

Total intangible assets $ 17,334 $ 16,455 $ — $ ( 5 ) $ 874

8 unchanged sentences

The amortization expense on identifiable intangible assets for fiscal 2021 and 2020 was $ 1,011 and $ 1,497 , respectively.

SIFCO Industries, Inc.

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Notes to Consolidated Financial Statements - (Continued)

Amortization expense associated with the identified intangible assets is expected to be as follows:

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The methodology for determining fair values was consistent for the periods presented.

2020 Annual Goodwill Impairment Tests

SIFCO performed its annual impairment test as of July 31, 2020 for the Cleveland, Ohio ("Cleveland") reporting unit, it was determined that the fair value of the reporting unit exceeds the carrying value.

No impairment charge as of September 30, 2020.

SIFCO Industries, Inc.

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Notes to Consolidated Financial Statements - (Continued)

2019 Annual Goodwill Impairment Tests

During the third quarter of fiscal 2019, management reviewed qualitative factors under ASC 350 ("Topic 350"), which triggered an interim goodwill assessment as of May 31, 2019 for its Maniago reporting unit.

Certain qualitative factors, such as lower sales due to the soft energy market and continued under-performance relative to projected future operating results were factors that led the Company to perform an interim assessment of goodwill.

Upon completion of the interim impairment test performed in fiscal 2019 for the Maniago reporting unit, it was determined that the fair value of the reporting unit for Maniago did not exceed the carrying value, which resulted in a full write-down of the reporting unit's goodwill in the third quarter of fiscal 2019 in the amount of $ 8,294 (non-cash charge).

Upon completion of the annual impairment testing for the Cleveland reporting unit, it was determined that the fair value of the reporting unit exceeds the carrying value.

As such, no additional impairment of goodwill existed as of September 30, 2019.

2021 and 2020 Annual Goodwill Impairment Tests

SIFCO performed its annual impairment test as of July 31, 2021 and 2020, respectively, for the Cleveland, Ohio ("Cleveland") reporting unit.

Results determined that the fair value of the reporting unit exceeded the carrying value at each assessment date.

No impairment charge as of September 30, 2021 and 2020, respectively.

Goodwill is expected to be deductible for tax purposes.

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Total accrued liabilities $ 6,871 $ 8,290

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

Debt at September 30 consists of:

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Total long-term debt $ 2,669 $ 4,606

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

Credit Agreement and Security Agreement of 2018

On August 8, 2018, the Company entered into an asset-based Credit Agreement ("Credit Agreement") and a Security Agreement (“Security Agreement”) with its current lender.

The Credit Agreement matures on August 6, 2021 and is comprised of a senior secured revolving credit facility with a maximum borrowing of $ 30,000 .

The Credit Agreement also has an accordion feature, which allows the Company to increase maximum borrowings by up to $ 10,000 upon consent of the existing lender or upon additional lenders joining the Credit Agreement.

The terms of the Credit Agreement contain both a lock box arrangement and subjective acceleration clause.

As a result, the amount outstanding on the revolving credit facility is classified as a short-term liability.

The proceeds from the Credit Agreement were used to pay fees and expenses incurred in connection with entering into the Credit Agreement and continue to be used for working capital purposes and general corporate purposes.

The Credit Agreement contains affirmative and negative covenants and events of defaults.

As set forth in the Credit Agreement, the Company is required to maintain a fixed charge coverage ratio ("FCCR") of 1.1 to 1.0 any time the availability is equal to or less than 12.5 % of the revolving commitment.

In the event of a default, the Company may not be able to access the revolver, which could impact the ability to fund working capital needs, capital expenditures and invest in new business opportunities.

See discussion below regarding the Fourth Amendment (the "Fourth Amendment") to the Credit Agreement and Security Agreement discussion, which revises the provision related to FCCR.

On November 5, 2018, the Company entered into the First Amendment with its lender.

The First Amendment retroactively amended certain definitions and provisions effective as of the original closing date to clarify the parties' original understanding.

On December 17, 2018, the Company entered into an Export Credit Agreement (the “Export Credit Agreement”) with its Lender.

Pursuant to the terms of the Export Credit Agreement, the Lender will lend amounts to the Company on foreign receivables that are guaranteed by the Export-Import Bank of the United States of America.

The Export Credit Agreement provides for a revolving commitment of $ 5,000 , therefore increasing the maximum borrowing of the revolver to $ 35,000 .

The borrowings under the Export Credit Agreement will bear interest at (depending on the type of borrowing) the Prime or LIBOR Rate, plus the applicable margin as set forth in the Export Credit Agreement.

The maturity date under the Export Credit Agreement is August 6, 2021 (or such earlier date as the revolving commitments under the Export Credit Agreement are reduced to zero or otherwise terminated).

The Export Credit Agreement contains customary representations, warranties, covenants and events of default, including, without limitation, the affirmative covenants under the Company’s Credit Agreement dated August 8, 2018, as amended with the Lender.

In connection with entering into the Export Credit Agreement, the Company also entered into the Second Amendment (the “Second Amendment”) to its Credit Agreement.

The Second Amendment amends certain definitions and provisions to provide for the Company’s entrance into the Export Credit Agreement.

On March 29, 2019, the Company entered into a Third Amendment with its Lender.

This amendment extended the time frame for when certain post-closing requirements would be satisfied by March 31, 2019 to June 30, 2019.

These post-closing requirements were completed by June 30, 2019.

On September 20, 2019, the Company entered into a Fourth Amendment with its Lender.

As previously stated, the Company is subject to certain customary loan covenants if availability is less than or equal to 12.5 % of the revolving commitment for three or more business days in any consecutive 30 day period;

however, the Fourth Amendment to the Credit Agreement resulted in the reduction of its availability from 12.5 % of the revolving commitment to 10 % of the lesser of the collateral or total revolving commitment, with a $ 2,000 floor through June 30, 2020.

This previous requirement prior to the Fourth Amendment reset on July 1, 2020.

As of September 30, 2020 and 2019, the total collateral was $ 26,964 and $ 24,000 , respectively, and the revolving commitment was $ 35,000 for both periods.

Total availability at September 30, 2020 and 2019 was $ 13,284 and $ 7,709 , respectively, which exceed both the collateral and total commitment threshold.

If availability had fallen short, the Company would be required to meet the FCCR covenant, which must not be less than 1.1 to 1.0.

Because the availability was greater than the 12.5 % of the revolving commitment as of September 30, 2020, the FCCR calculation was not required.

Amounts borrowed under the Credit Agreement are secured by substantially all the assets of the Company and its U.S.

Credit Agreement and Security Agreement

The Company's asset-based Credit Agreement (as amended, the "Credit Agreement"), Security Agreement (“Security Agreement”) and Export Credit Agreement (as amended, the "Export Credit Agreement") are secured by substantially all the assets of the Company and its U.S.

subsidiaries and a pledge of 66.67 % of the stock of its first-tier non-U.S.

subsidiaries.

Borrowings will bear interest at the lender's established domestic rate or LIBOR, plus the applicable margin as set forth in the Credit Agreement.

The revolver has a rate based on LIBOR plus a 1.50 % spread, which was 1.7 % and 3.6 % at September 30, 2020 and 2019, respectively.

The Export Credit Agreement has a rate based on LIBOR plus a 1.00 % spread at September 30, 2020 and 1.25 % spread at September 30, 2019, which was 1.2 % and 3.4 % at September 30, 2020 and 2019, respectively.

The Company also has a commitment fee of 0.25 % under the Credit Agreement to be incurred on the unused balance of the revolver.

The Credit Agreement (as amended by Fifth Amendment (the "Fifth Amendment") described below), consists of a senior secured revolving credit facility with a maximum borrowing of $ 28,000 .

The revolving commitment through the Export Credit Agreement, as amended, which lends amounts to the Company on foreign receivables is $ 7,000 .

The Credit Agreement also has an accordion feature, which allows the Company to increase maximum borrowings by up to $ 10,000 upon consent of the Lender (as defined below) or upon additional lenders joining the Credit Agreement.

The Credit Agreement and the Export Agreement were amended on February 19, 2021, when the Company and certain of its subsidiaries (collectively, the "borrowers") entered into the Fifth Amendment to the Credit Agreement and the First Amendment (the "First Amendment") to the Export Credit Agreement, in each case, with JPMorgan Chase Bank, N.A., a national banking association, (the "Lender").

The combined maximum borrowings remain unchanged at $ 35,000 ;

however the maximum borrowing under the Credit Agreement was decreased to $ 28,000 (from $ 30,000 ) and the revolving commitment through the Export Agreement was increased to $ 7,000 (from $ 5,000 ).

The Fifth Amendment, among other things, extended the maturity date from August 6, 2021 to February 19, 2024.

The Credit Agreement contains affirmative and negative covenants and events of defaults.

Prior to the Fifth Amendment, the Credit Agreement required the Company to maintain a fixed charge coverage ratio ("FCCR") of 1.1 :1.0 any time the availability is equal to or less than 12.5 % of the revolving commitment.

However, the Fifth Amendment provides that the Company will not permit the fixed charge coverage ratio to be less than 1.1 to 1.0 as of the last day of any calendar month;

provided that the fixed charge coverage ratio will not be tested unless (i) a default has occurred and is continuing, (ii) when the combined availability was less than or equal to the greater of (x) 10 % of the lesser of the combined commitments or (y) 10 % of the combined borrowing base, and $ 2,000 , for three or more business days in any consecutive 30 day period.

The total collateral at September 30, 2021 and September 30, 2020 was $ 25,370 and $ 26,964 , respectively and the revolving commitment was $ 35,000 for both periods.

Total availability at September 30, 2021 and September 30, 2020 was $ 14,570 and $ 13,284 , respectively, which exceeds both the collateral and total commitment threshold.

Since the availability was greater than the 10.0 % of the revolving commitment as of September 30, 2021 and 12.5 % of the revolving commitment at September 30, 2020, the FCCR calculation was not required.

Borrowings will bear interest at the Lender's established domestic rate or LIBOR, plus the applicable margin as set forth in the Fifth Amendment.

The revolver has a rate based on LIBOR plus 1.75 % spread, which was 1.84 % at September 30, 2021 and a rate based on LIBOR plus 1.5 % spread, which was 1.7 % at September 30, 2020.

The Export Credit Agreement has a rate based on LIBOR plus 1.25 % spread, which was 1.3 % at September 30, 2021 and a rate based on LIBOR plus 1.0 % spread, which was 1.2 % at September 30, 2020, respectively.

The Company also has a commitment fee of 0.25 % under the Credit Agreement as amended to be incurred on the unused balance of the revolver.

SIFCO Industries, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements - (Continued)

The Company's Credit Agreement is set to mature within the next twelve months.

Absent being able to refinance, the reporting entity would not be able to meet its obligations within the next year.

Although there is no assurance that management will be successful in completing such refinancing or that such refinancing will be on terms similar to the current Credit Agreement or otherwise satisfactory to management, management intends to refinance its Credit Agreement with its Lender and is deemed probable of being implemented which would mitigate any adverse conditions.

Foreign subsidiary borrowings

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Interest rates are based on Euribor rates plus spread which range from 1.0 % to 4.2 %.

In December 2018, Maniago entered into a six month short-term debt arrangement with one of its lenders in the amount of $ 1,137 , to be used for working capital purposes, which has been repaid as of the end of the fiscal year 2019.

In September 2020, Maniago entered into a long-term term debt agreement in the amount of $ 1,465 , which was used to repay existing debt and for working capital purposes.

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The Company accounts for the pledge of receivables under this agreement as short-term debt and continues to carry the receivables on its consolidated balance sheets.

The Maniago, Italy ("Maniago") location obtained borrowings from two separate lenders in the third quarter of fiscal 2021.

The first loan was for $ 717 with repayment terms of approximately seven years , of which $ 287 was forgiven in the same period and was recorded in other income within the consolidated statements of operations and treated as a gain on debt extinguishment.

A second loan with a five year term was obtained in the amount of $ 303 .

The proceeds of these loans were used for working capital purposes.

Payments on long-term debt under the foreign term debt and other debt (excluding finance lease obligations, see Note 10, Leases , of the consolidated financial statements) over the next 5 years are as follows:

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Debt issuance costs

The Company incurred debt issuance costs as it pertains to the Credit Agreement in the amount of $ 212 , and incurred additional costs in fiscal 2019 of $ 75 related to the First and Second Amendments, which are included in the consolidated balance sheet as a deferred charge in other current assets, net of amortization of $ 205 and $ 106 at September 30, 2020 and 2019, respectively.

In response to the economic uncertainty created by the COVID-19 pandemic, as described above in Note 1, Summary of Significant Accounting Policies , and taking into consideration the Company’s market capitalization, status as a smaller reporting company, and uncertainties and volatility in, and disruptions to, the capital markets, as well as the terms of the Company’s Credit Agreement, the Company applied for and received funds under Paycheck Protection Program (or "PPP") of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act").

The Company incurred debt issuance costs as it pertains to the Fifth Amendment in the amount of $ 45 and combined the amount with the remaining unamortized debt issuance costs prior to the amendment for a total of $ 86 , which is included in the consolidated balance sheets as a deferred charge in other current assets, net of amortization of $ 17 and $ 205 at September 30, 2021 and 2020, respectively.

On April 10, 2020, the Company entered into an unsecured promissory note under the Paycheck Protection Program (the “PPP Loan”).

The PPP Loan to the Company was made through JPMorgan Chase Bank, N.A., a national banking association and the Company’s existing lender.

The note has an aggregate principal amount of approximately $ 5,025 and a two year term.

The note has an aggregate principal amount of approximately $ 5,025 , of which $ 261 was repaid in fiscal 2020 and has a two year term.

The interest rate on the PPP Loan is 0.98 %, which was deferred for the first six months of the term of the loan.

The promissory note evidencing the PPP Loan contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties, or provisions of the promissory note.

The occurrence of an event of default may result in the repayment of all amounts outstanding, collection of all amounts owing from the Company, and/or filing suit and obtaining judgment against the Company.

The loan proceeds were received on April 10, 2020 and were used for payroll, interest on mortgage obligations, rents on leases and utility payments.

The Company repaid $ 261 of proceeds back to its lender, leaving a remaining balance of $ 4,764 , of which $ 3,176 will be paid in the next twelve months and the remaining $ 1,588 in the following twelve months after, pending any forgiveness of such loan, as described below.

Under the terms of the CARES Act, PPP Loan recipients can apply for and potentially be granted forgiveness for all or a portion of loans granted under the PPP.

Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payroll costs and mortgage interest, rent or utility costs and the maintenance of employee and compensation levels.

Although the Company intends to file for forgiveness, no assurance is provided that the Company will obtain forgiveness of the PPP Loan in whole or in part.

As of September 30, 2020, the Company is waiting for further guidance regarding how to apply for the forgiveness for all or a portion of the PPP loan.

The promissory note evidencing the PPP Loan contains customary events of default.

The occurrence of an event of default may result in the repayment of all amounts outstanding, collection of all amounts owed from the Company, and/or filing suit and obtaining judgment against the Company.

The loan proceeds were received on April 10, 2020 and were used for payroll payments.

As of September 30, 2021 and 2020, the PPP loan balance was $ 4,764 .

PPP Loan recipients can apply for and potentially be granted forgiveness for all or a portion of loans granted under the Paycheck Protection Program.

Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payroll costs.

As of September 30, 2021, the Company has applied for forgiveness of all of its PPP Loan to the Small Business Administration.

While we expect to meet the standards for full forgiveness of the PPP Loan, there is no assurance that we will meet such standards.

The Company produces forged components for (i) turbine engines that power commercial, business and regional aircraft as well as military aircraft and armored military vehicles;

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Total $ 99,591 $ 113,573

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

The following table represents revenue by the various components:

7 unchanged sentences

Total $ 99,591 $ 113,573

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

The following table represents revenue by geographic region based on the Company's selling operation locations:

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The following table contains a roll forward of contract assets and contract liabilities for the period ended September 30, 2021 and 2020:

Contract assets - Beginning balance, October 1, 2018 $ 10,140

Contract assets - Ending balance, September 30, 2019 $ 10,349

Additional revenue recognized over-time 67,043

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Contract assets - Ending balance, September 30, 2021 $ 12,874

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

Contract liabilities (included within Accrued liabilities) - Beginning balance, October 1, 2018 $ —

Contract liabilities (included within Accrued liabilities) - Ending balance, September 30, 2019 $ ( 382 )

Payments received in advance of performance obligations ( 865 )

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As of September 30, 2021 and 2020, the Company has $ 77,198 and $ 91,135 , respectively, of remaining performance obligations, the majority of which are anticipated to be completed within the next twelve months.

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

The components of income (loss) before income tax benefit are as follows:

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state and local 8 19

Total current tax provision (benefit) 211 ( 136 )

Total current tax provision 66 211

Deferred income tax provision (benefit):

federal 10 10

state and local ( 2 ) 1

( 1,296 ) ( 433 )

Total deferred tax provision (benefit) ( 422 ) ( 565 )

Total deferred tax benefit ( 1,288 ) ( 422 )

Income tax benefit $ ( 1,222 ) $ ( 211 )

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

The income tax benefit in the accompanying consolidated statements of operations differs from amounts determined by using the statutory rate as follows:

8 unchanged sentences

Valuation allowance 601 ( 2,025 )

Prior year tax adjustments ( 1,115 ) —

Income tax benefit $ ( 1,222 ) $ ( 211 )

As described above, on March 27, 2020, the CARES Act was enacted and signed into law, which includes provisions relating to refundable payroll tax credits, deferral of certain payment requirements for the employer portion of Social Security taxes, net operating loss carryback periods and temporarily increasing the amount of net operating losses that corporations can use to offset income, alternative minimum tax ("AMT") credit refunds, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property.

The CARES Act did not materially affect the Company’s fiscal 2020 income tax provision, deferred tax assets and liabilities, or related taxes payable.

The Company continues to assess the future implications of these provisions within the CARES Act on its consolidated financial statements but does not expect the impact to be material.

On December 27, 2020, the Consolidated Appropriations Act, 2021 (the "Appropriations Act") was enacted in response to the COVID-19 pandemic.

The Appropriations Act, among other actions temporarily extends through December 31, 2025 certain expiring tax credits and other provisions.

Additionally, the Appropriations Act enacts new provisions and extends certain provisions originated within the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act"), enacted on March 27, 2020.

The CARES Act included provisions relating to refundable payroll tax credits, deferral of certain payment requirements for the employer portion of Social Security taxes, net operating loss carryback periods and temporarily increasing the amount of

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

net operating losses that corporations can use to offset income, alternative minimum tax ("AMT") credit refunds, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property.

The Appropriations Act and CARES Act did not materially affect the Company’s income tax provision, deferred tax assets and liabilities, or related taxes payable for fiscal 2021.

The Company will continue to assess the implications of these and any new relief provisions on its consolidated financial statements but does not expect the impact to be material.

Deferred tax assets and liabilities at September 30 consist of the following:

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Net deferred tax liabilities $ ( 158 ) $ ( 1,400 )

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

At September 30, 2021, the Company has a non-U.S.

1 unchanged sentence

The Company's non-operating subsidiary ceased operations in 2007 and therefore, a valuation allowance has been recorded against the deferred tax asset related to the Irish tax loss carryforward because it is unlikely that such operating loss can be utilized unless the Irish subsidiary resumes operations.

Additionally, a valuation allowance has been recorded in fiscal 2020 against a portion of the deferred tax asset related to the Italian tax loss carryforward that was not considered realizable.

Additionally, a valuation allowance has been recorded against the deferred tax asset related to the Italian tax loss carryforward as it is not more-likely-than-not that the deferred tax asset will be realizable.

The non-operating and Italian tax loss carryforwards do not expire.

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state and local tax loss carryforwards have been fully offset by a valuation allowance.

As of fiscal 2020, the valuation allowance on the Company’s U.S.

net deferred tax assets is $ 5,329 .

Each reporting period, the Company assesses available positive and negative evidence and estimate in determining the realizability of its deferred tax assets.

Through fiscal 2019, the Company’s history of U.S.

operating losses has resulted in significant negative evidence requiring a full valuation allowance to be recorded against the U.S.

net deferred tax assets.

Recent positive evidence includes profitable fiscal 2020 U.S.

results, however, there continues to be uncertainty as a result of the ongoing COVID-19 pandemic.

Accordingly, the Company has maintained a full valuation allowance on its U.S.

net deferred tax assets in fiscal 2020.

However, it is reasonably possible that sufficient positive evidence required to release all, or a portion, of the valuation allowance in the U.S.

will exist within the next 12 months.

The Company reported liabilities for uncertain tax positions, excluding any related interest and penalties, of $ 22 for both fiscal 2021 and 2020.

3 unchanged sentences

A summary of activity related to the Company’s uncertain tax position is as follows:

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

Balance at beginning of year $ 22 $ 22

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subsidiaries may be subject to nominal withholding taxes.

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

Retirement Benefit Plans

26 unchanged sentences

Net pension expense for defined benefit plans $ 529 $ 711

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

The status of all defined benefit pension plans at September 30 is as follows:

3 unchanged sentences

Interest cost 699 832

Actuarial loss 2,037 3,691

Actuarial (gain) loss ( 967 ) 2,037

Benefits paid ( 2,349 ) ( 1,965 )

6 unchanged sentences

Plan assets at end of year $ 23,211 $ 21,609

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

As shown within the above table, there was a decrease in the benefit obligation of $ 2,463 to $ 29,330 at September 30, 2021 compared with $ 31,793 at September 30, 2020.

The primary drivers that attributed to the change pertained to updates in the mortality scale and the discount rate used along with asset returns being better than expected.

Plans in which

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Net amount recognized in the consolidated balance sheets $ 1,363 $ 1,762

The amounts in accumulated other comprehensive loss that are expected to be recognized as components of net periodic benefit costs during fiscal 2021 are as follows:

Plans in which

Assets Exceed

Obligations Plans in which

Exceed Assets

Net loss $ — $ 844

Where applicable, the following weighted-average assumptions were used in developing the benefit obligation and the net pension expense for defined benefit pension plans:

3 unchanged sentences

Expected return on assets 7.0 % 7.2 %

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

The Company holds investments in pooled separate accounts and common/collective trusts, in which the fair value of assets of the underlying funds are determined in the following ways:

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bond funds, are private placement funds, for which fair market value is not always commercially available, the fair value of these investments is primarily determined using a discounted cash flow model, which utilizes a discount rate based upon the average of spread surveys collected from private-market intermediaries who are active in both primary and secondary transactions, and takes into account, among other factors, the credit quality and industry sector of the issuer and the reduced liquidity associated with private placements.

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

bond funds are comprised of international fixed income securities.

4 unchanged sentences

However, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement result.

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

The following tables set forth the asset allocation of the Company’s defined benefit pension plan assets and summarize the fair values and levels within the fair value hierarchy for such plan assets as of September 30, 2021 and 2020:

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Total plan assets at fair value $ 23,211 $ 21,103 $ 2,108

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

September 30, 2020 Asset

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Total plan assets at fair value $ 21,609 $ 19,511 $ 2,098

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

Changes in the fair value of the Company’s Level 3 investments during the years ending September 30, 2021 and 2020 were as follows:

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The “Asset Allocation Range” listed below anticipates these potential scenarios and provides flexibility for the Plan’s investments to vary around the objective without triggering a reallocation of the assets, as noted by the following:

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

Percent of Plan Assets at

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The Company’s ability to elect to use such carryover balances will be determined based on the actual funded status of each defined benefit pension plan relative to the plan’s minimum regulatory funding requirements.

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

The following defined benefit payment amounts are expected to be made in the future:

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Multi-Employer Plan

The Company contributes to one ( 1 ) U.S.

multi-employer retirement plan for certain union employees, as follow:

Fund Pension Protection Act Zone Status FIP/RP Status

Implemented Contributions by the Company Surcharge

Imposed Expiration of

2020 2019 2020 2019

Fund ¹ N/A Red Implemented $ — $ 55 Yes 5/31/2020

¹ The fund is the IAM National Pension Fund – EIN 51-6031295 / Plan number 2.

The IAM National Pension Fund ("IAM plan") utilized the special 30-year amortization provided by Public law 111-192, section 211 to amortize its losses from 2008.

The plan's year-end to which the zone status relates is December 31, 2018.

Under the Pension Protection Act of 2006 and extended by the Multi-employer Pension Reform Act of 2014, certain safeguards were implemented to inform participants about the financial health of pension plan.

The Company received the zone status notice from the IAM plan.

The notice states the plan is well funded at 89 %;

however, the IAM Plan's Board of Trustees voluntarily elected to place the plan in the Red Zone, which deems it to be in critical status for 2019 due to decline of the IAM Plan's credit balance and challenging investment environment.

As such, all participating employers were required by regulation to begin contributing 5% Pension Protection Act ("PPA") contribution surcharges effective June 1, 2019.

The Company began contributing the surcharges during fiscal 2019.

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

As noted within Note 12, Business Information, the bargaining unit that participated in this multi-employer plan ratified a new collective bargaining agreement in December 2019.

Included within this agreement was a provision to withdraw from the existing multi-employer plan effective December 31, 2019.

The withdrawal resulted in a withdrawal liability of $ 739 , which was recorded within the costs of goods sold line of the consolidated statements of operations and is included in other long-term liabilities.

As noted within Note 12, Business Information, one of the bargaining units previously participated in a multi-employer plan;

however, as part of the ratification of a new collective bargaining agreement in December 2019, there was a provision to withdraw from the existing multi-employer plan effective December 31, 2019.

The withdrawal resulted in a liability of $ 739 , which was recorded within the costs of goods sold line in fiscal 2020 of the consolidated statements of operations and is included in other long-term liabilities.

The liability is payable in quarterly installments over the next 20 years.

The next four quarterly installments are recorded in accrued liabilities of the consolidated balance sheet.

The Company withdrew from the multi-employer plan to mitigate the risks associated with these plans.

The Company's withdrawal from the multi-employer plan was to mitigate the risks associated with such type of plan.

Subsequent to the withdrawal, the remaining risk to the Company is the potential occurrence of a "mass withdrawal" of all participating employers within three years of the Company's withdrawal date, in which case the Company could be assessed additional withdrawal liability.

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Effective January 1, 2020, the Company sponsors a defined contribution plan for the Cleveland bargaining unit that withdrew from the multi-employer plan, as described above.

The Company's makes a non-elective contribution equal to $ 1.50 per work, vacation, or holiday hour, up to a maximum of 40 hours per week.

The Company non-elective contribution expense was $ 56 in fiscal 2020.

The Company makes a non-elective contribution equal to $ 1.50 per work, vacation, or holiday hour, up to a maximum of 40 hours per week.

The Company's non-elective contribution expense was $ 112 in fiscal 2021 and $ 56 in fiscal 2020.

The Company sponsors a defined contribution plan for certain of its Maniago union employees.

1 unchanged sentence

Stock-Based Compensation

The Company has awarded performance and restricted shares under its shareholder-approved amended and restated 2007 Plan, which was further amended and restated under the 2016 Plan.

At the Annual Meeting of Shareholders held on January 30, 2020, the shareholders of the Company approved the first amendment (the "Amendment") to the 2016 Plan.

The Amendment increased the number of shares available for award under the 2016 Plan by 550 shares.

The aggregate number of shares that may be awarded by the Company was increased to 1,196 shares, less any shares previously awarded and subject to an adjustment for the forfeiture of any unvested shares, pursuant to the 2016 Plan.

The Company has awarded performance and restricted shares under the Company's 2007 Long-Term Incentive Plan ("2007 Plan") and the Company's 2007 Long-Term Incentive Plan (Amended and Restated as of November 16, 2016) (as further amended, the "2016 Plan").

The aggregate number of shares that may be awarded by the Company under the 2016 Plan is 1,196 shares, less any shares previously awarded and subject to an adjustment for the forfeiture of any unvested shares.

In addition, shares that may be awarded are subject to individual recipient award limitations.

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Any such awards are exercisable no later than ten years from the date of grant.

The performance shares that have been awarded under both plans generally provide for the vesting of the Company’s common shares upon the Company achieving certain defined financial performance objectives during a period up to three years following the granting of such award.

The ultimate number of common shares of the Company that may be earned pursuant to an award ranges from a minimum of no shares to a maximum of 200 % of the initial target number of performance shares awarded, depending on the level of the Company’s achievement of its financial performance objectives.

Beginning in fiscal 2020, the maximum shares that may be achieved was reduced to 150 % of target.

With respect to such performance shares, compensation expense is accrued based on the probability of meeting the performance target.

The Company is currently recognizing compensation expense for one of its tranches of awards as it has concluded it is probable that the performance criteria for that award will be met.

The Company is not currently recognizing compensation expense for two tranches of awards as it has concluded it is not probable it will meet the performance criteria for those awards.

During each future reporting period, such expense may be subject to adjustment based upon the Company's financial

SIFCO Industries, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements - (Continued)

performance, which impacts the number of shares that it expects to vest up on the completion of a performance period.

following the granting of such award.

Beginning in fiscal 2020, the maximum shares that may be achieved was reduced to 150 % of target.

With respect to such performance shares, compensation expense is being accrued based on the probability of meeting the performance target.

The Company is currently recognizing compensation expense for one of its tranches of awards at 50 % of target where it has concluded it is probable that the performance criteria for this award will be met, while the Company is not recognizing compensation expense for two tranches of awards as it has concluded it is not probable that the performance criteria for those awards will be met.

During each future reporting period, such expense may be subject to adjustment based upon the Company's financial performance, which impacts the number of shares that it expects to vest upon the completion of a performance period.

The performance shares were valued at the closing market price of the Company’s common shares on the date of grant.

3 unchanged sentences

The unearned compensation is being amortized ratably over the restricted stock vesting period of one (1) year or three (3) years.

If all outstanding share awards are ultimately earned and issued at the target number of shares, then at September 30, 2020 there are approximately 589 shares that remain available for award under the 2016 Plan.

If any of the outstanding share awards are ultimately earned and issued at greater than the target number of shares, up to the maximum of 200 % or 150 % of such target, then a fewer number of shares would be available for award.

If all outstanding share awards are ultimately earned and vest at the target number of shares, there are approximately 447 shares that remain available for award at September 30, 2021.

If any of the outstanding share awards are ultimately earned and vest at greater than the target number of shares, up to the maximum of 200 % or 150 % of such target, then a fewer number of shares would be available for award.

Stock-based compensation under the 2016 Plan was expense of $ 469 and $ 398 for fiscal 2021 and 2020, respectively.

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Outstanding at end of year 406 $ 4.05 371 $ 4.14

The adoption of Topic 842 requires lessees to recognize a ROU asset and a lease liability on the consolidated balance sheet, with the exception of short-term leases.

The Company primarily leases its manufacturing buildings, specifically at its Orange location, machinery and office equipment.

The Company determines if a contract contains a lease based on whether the contract conveys the right to control the use of identified assets for a period in exchange for consideration.

Upon identification and commencement of a lease, the Company establishes a ROU asset and a lease liability.

Operating leases are included in ROU assets, short-term operating lease liabilities, and long-term operating lease liabilities on the consolidated balance sheets.

Finance leases are included in property, plant, and equipment, current maturities of long-term debt and long-term debt on the consolidated balance sheets.

The Company has remaining lease terms ranging from one to 16 years, some of which include options to renew the lease.

The total lease term is determined by considering the initial lease term per the lease agreement, which is adjusted to include any renewal options that the Company is reasonably certain to exercise as well as any period that the Company has control before the stated initial term of the agreement.

If the Company determines there exists a reasonable certainty of exercising termination or early buyout options, then the lease terms are adjusted to account for these facts.

A portion of our real estate leases include rents that are generally subject to annual changes in the Consumer Price Index ("CPI").

Such changes to the CPI are treated as variable lease payments.

The Company elected the package of practical expedients permitted under the transition guidance within the new standard which, among other things, allowed the Company to carry forward the historical lease classification.

SIFCO Industries, Inc.

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Notes to Consolidated Financial Statements - (Continued)

The Company has made an accounting policy election to not separate non-lease components from lease components when allocating consideration for the buildings and machinery and equipment ROU asset classes.

The election was made to reduce the administrative burden that would be imposed on the Company.

ROU assets and liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date.

A lease asset and lease liability are not recorded for leases with an initial term of 12 months or less and the lease expense related to these leases is recognized as incurred over the lease term.

The components of lease expense were as follows:

September 30, 2021 Year Ended

September 30, 2020

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Total lease liabilities $ 16,249 $ 17,259

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

Supplemental cash flow and other information related to leases were as follows:

September 30, 2020

September 30, 2021 September 30, 2020

Other Information

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Operating leases $ 43 $ 278

September 30, 2020

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

September 30, 2021 September 30, 2020

Weighted-average remaining lease term (years):

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2022 $ 17 $ 1,694

2022 21 1,687

Thereafter — 15,906

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Present value of lease liabilities $ 22 $ 16,227

As previously disclosed in the Company's 2019 Annual Report on Form 10-K, the Company recorded rent expense of $ 2,391 in fiscal 2019 and under the previous lease accounting standard, future minimum lease payments under initial or remaining non-cancellable lease terms in excess of one year would have been as follows:

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

Year ending September 30, Finance Leases Operating

2020 $ 61 $ 2,172

2021 61 1,865

2022 21 1,583

Thereafter — 16,711

Total lease payments $ 149 $ 25,331

Interest ( 11 )

Present value of lease liabilities $ 138

Commitments and Contingencies

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however, it is possible that the Company’s future operating results could be affected by future costs of litigation.

A subsidiary of the Company, Quality Aluminum Forge, LLC ("Orange"), is currently a defendant in a lawsuit filed by Avco Corporation (“Avco”) in the Pennsylvania State Court, which was filed in August 2019, alleging that certain forged pistons delivered by the Orange plant failed to meet material specifications required by Avco.

A subsidiary of the Company, Quality Aluminum Forge, LLC ("Orange"), was a defendant in a lawsuit filed by Avco Corporation (“Avco”) in the Pennsylvania State Court, which was filed in August 2019, alleging that certain forged pistons delivered by the Orange plant failed to meet material specifications required by Avco.

Avco also sued Arconic, Inc.

(“Arconic”), which was the raw material supplier.

No specific amount of damages was claimed by Avco and discovery has only recently begun.

Orange disagrees with the allegations made by Avco and has made cross claims against Arconic.

Previously, Orange was a defendant with respect to the same action in the United States District Court for the District of Rhode Island, which action was dismissed in connection with the movement of the matter to Pennsylvania State Court.

Although the Company records reserves for legal disputes and other matters in accordance with GAAP, the ultimate outcomes of these types of matters are inherently uncertain.

Actual results may differ significantly from current estimates.

Given the current status of this matter, the Company has not recorded a charge, as the Company does not have a reasonable basis on which to establish an estimate.

The Company is a defendant in a purported class action lawsuit filed in the Superior Court of California, County of Orange, which was filed in August 2017, arising from employee wage-and-hour claims under California law for alleged meal period, rest break, hourly and overtime wage calculation, timely wage payment and necessary expenditure indemnification violations;

The lawsuit has been resolved in a manner satisfactory to all parties pursuant to a confidential settlement agreement for an immaterial amount, and the case was dismissed on October 14, 2021.

The Company was a defendant in a purported class action lawsuit filed in the Superior Court of California, County of Orange, which was filed in August 2017, arising from employee wage-and-hour claims under California law for alleged meal period, rest break, hourly and overtime wage calculation, timely wage payment and necessary expenditure indemnification violations;

failure to maintain required wage records and furnish accurate wage statements;

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A settlement has been reached and the Company received preliminary court approval on July 13, 2020, following a brief delay caused by COVID-19 closures and restrictions.

Class action notices were sent at the end of September.

The Company recorded an additional $ 65 in fiscal 2020 as part of the estimated loss and had previously recorded an estimated loss of $ 250 as of September 30, 2019.

Class action notices were sent at the end of September and there were no objections to the settlement.

On February 4, 2021, the court issued a tentative ruling to grant final approval.

The final approval was granted and the previously recorded liability of $ 315 was paid on March 29, 2021.

During fiscal 2020, the Company received notice from the International Association of Machinists and Aerospace Workers Union that they were disclaiming all interest in representing certain hourly employees at the Company’s Cleveland facility.

Subsequently, the International Brotherhood of Boilermakers Union filed a petition to represent this same group of hourly employees.

A mail ballot election took place in June and the National Labor Relations Board certified the International Brotherhood of Boilermakers as the elected representative of the Company’s hourly production employees.

The Company’s obligations will be more fully understood following the ratification of a collective bargaining agreement.

In fiscal 2020, the Company continued to make significant progress in its restoration of its operations at the manufacturing facility at the Company's Orange location, which was damaged by a fire that occurred in fiscal 2019.

As part of these efforts, the Company continued to actively work with its insurance carrier to obtain insurance proceeds in order to restore its Orange location to full service as safely and quickly as possible, following the fire.

The Company relocated a press to Orange from a temporary Michigan location in November 2019, which was placed into service in March 2020, and two other presses were brought into service at the Orange location, one in December 2019 and the second at the end of July 2020.

Restoration of the building structure is nearly complete.

As of the September 30, 2020, Orange had six out of eight presses in production.

A mail ballot election took place in June 2020 and the National Labor Relations Board certified the International

SIFCO Industries, Inc.

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Notes to Consolidated Financial Statements - (Continued)

the six presses damaged in the fire are still in the restoration process.

The Company anticipates to have those restored within the first half of fiscal 2021;

however, no assurances can be made that the restoration will be completed within such timeframe.

As of September 30, 2020, the Company recognized insurance proceeds of $ 8,974 , of which $ 7,427 out of the $ 10,927 received pertains to fiscal 2020.

As of September 30, 2019, the Company recognized insurance proceeds of $ 11,986 , of which $ 8,486 had been received.

As the fire damaged a building leased by the Company, pursuant to the terms of the lease agreement, the Company was responsible to restore the property to full replacement value.

With the Company being fully insured, the restoration of the property was covered by insurance and the insurance carrier has separately funded payments of insurance proceeds as of September 30, 2020 and 2019, respectively, directly to the landlord for the restoration of the building as prescribed under the lease arrangement in the amount of $ 713 and $ 2,878 , respectively.

The table below reflects the receipt of proceeds and how they were disbursed as of September 30, 2020 and 2019, respectively.

Any additional recoveries in excess of recognized losses are treated as gain contingencies and will be recognized when the gain is realized or realizable.

The Company maintains business interruption insurance coverage and continues to work with the insurance company to reach an agreement on the recoverable amounts of business interruption expenses.

As noted within the tables below, payments totaling $ 1,219 and $ 1,168 were made towards this coverage as of September 30, 2020 and 2019 and are reflected within the cost of goods sold line within the consolidated financial statements.

Brotherhood of Boilermakers as the elected representative of the Company’s hourly production employees.

The Company’s obligations will be more fully understood following the ratification of a collective bargaining agreement.

In fiscal 2021, the insurance claim related to the fire on December 26, 2018 at the Orange location was finalized with the Company's insurance carrier.

The Company completed the restoration of the final two of the six presses damaged in the fire at the end of the third quarter of fiscal 2021.

The restoration of the building structure was completed as of September 30, 2021.

Having finalized the claim with its insurance carrier, cash proceeds of $ 4,548 were received in fiscal 2021.

As noted in the table below, $ 3,001 was recognized within the consolidated statements of operations.

The Company has business interruption insurance coverage, of which $ 546 of the amount received was reflected within the cost of goods line within the consolidated statement of operations.

Balance sheet (Other receivables):

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Gain on insurance recoveries $ — $ ( 2,397 ) $ ( 2,397 )

(Loss) before income tax benefit $ ( 4,966 ) $ ( 3,001 ) $ ( 1,965 )

September 30, 2020

Balance without insurance proceeds Insurance recoveries Balance with insurance proceeds

Cost of goods sold $ 96,711 $ ( 3,100 ) $ 93,611

Gain on insurance recoveries $ — $ ( 5,874 ) $ ( 5,874 )

Income before income tax benefit $ 6 $ ( 8,974 ) $ 8,980

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Notes to Consolidated Financial Statements - (Continued)

September 30, 2019

Balance without insurance proceeds Insurance recoveries Balance with insurance proceeds

Cost of goods sold $ 105,448 $ ( 3,631 ) $ 101,817

Loss (gain) on insurance recoveries $ 1,102 ( 8,355 ) $ ( 7,253 )

Loss before income tax benefit $ ( 20,193 ) ( 11,986 ) $ ( 8,207 )

Included in the September 30, 2019 loss (gain) on insurance proceeds in the consolidated statements of operations is approximately $ 1,107 in impairment charges for the equipment damaged by the fire offset by insurance proceeds received.

In fiscal 2019, the Company performed a separate evaluation of the long-lived assets that were not damaged in the fire.

In accordance with Topic 360, the fire resulted in a triggering event as of December 31, 2018, requiring an interim assessment to determine if the carrying amount of long-lived assets are recoverable.

As noted within Topic 360, an impairment loss shall be recognized only if the carrying amount of a long-lived asset is not recoverable and exceeds its fair value.

The results of management's analysis indicated that the remaining long-lived assets as of December 31, 2018 were recoverable and continued to be as of September 30, 2019.

The following table demonstrates the total settlement amount since December 26, 2018:

Property & damage ** $ 20,364

Extra expense & mitigation expense 4,404

Business interruption 2,932

**$ 3,640 of total was directed to the landlord of the property for the restoration of the building in response to the fire damage that occurred in 2018 as prescribed by the lease arrangement.

Business Information

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Geographic net sales are based on location of customer.

The United States of America is the single largest country for unaffiliated customer sales, accounting for 72 % of consolidated net sales in fiscal 2020 and 2019.

No other single country represents greater than 10% of consolidated net sales in fiscal 2020 and 2019.

Net sales to unaffiliated customers located in various European countries accounted for 14 % and 15 % of consolidated net sales in fiscal 2020 and 2019, respectively.

Net sales to unaffiliated customers located in various Asian countries accounted for 8 % and 6 % of consolidated net sales in fiscal 2020 and 2019, respectively.

The United States of America is the single largest country for unaffiliated customer sales, accounting for 66 % and 72 % of consolidated net sales in fiscal 2021 and 2020, respectively.

No other single country represents greater than 10% of consolidated net sales in fiscal 2021 and 2020 Net sales to unaffiliated customers located in various European countries accounted for 18 % and 14 % of consolidated net sales in fiscal 2021 and 2020, respectively.

Net sales to unaffiliated customers located in various Asian countries accounted for 8 % of consolidated net sales in fiscal 2021 and 2020, respectively.

Substantially all of the Company's operations and identifiable assets are located within the United States with the exception of its non-U.S.

subsidiary located in Maniago, Italy.

The identifiable assets for the Company's foreign subsidiaries as of September 30, 2020 was $ 21,989 compared with $ 20,986 as of September 30, 2019.

The identifiable assets for the Company's foreign subsidiaries as of September 30, 2021 were $ 19,586 compared with $ 21,989 as of September 30, 2020.

Long-Lived Assets

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Cleveland, Ohio (unit 2) May 31, 2020

Maniago, Italy December 31, 2019

Maniago, Italy June 30, 2024

The Company is a party to collective bargaining agreements ("CBA") with certain employees located in Cleveland, which has two bargaining units.

The Company entered into early negotiations and ratified its CBA with one such unit in December 2019.

The second bargaining unit received notice in the second quarter of fiscal 2020 from the International Association of Machinists and Aerospace Workers Union that they were disclaiming all interest in representing the unit.

In the same quarter, the International Brotherhood of Boilermakers Union filed a petition to represent the unit.

In June 2020, the National Labor Relations Board certified the International Brotherhood of Boilermakers as the elected representative of the Company’s second bargaining group.

Negotiations with this bargaining group are ongoing and the workforce continues to work under existing

SIFCO Industries, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements - (Continued)

terms and conditions.

The Maniago location is party to the National Collective Agreement in Metalworking, which expired in December 2019.

Negotiations have been ongoing regarding such agreement and Maniago continues to apply existing terms and condition until a new agreement is reached.

The Company's Cleveland bargaining unit 1 ratified its CBA in fiscal 2020.

The second bargaining unit, under its new representative the International Brotherhood of Boilermakers, is in ongoing negotiations with the Company and there continues to be no work disruptions as the Company operates per the terms of the previous contract.

The Maniago location is party to the National Collective Agreement in Metalworking, which was renewed in February 2021.

Subsequent events

The Company has evaluated subsequent events through the date the consolidated financial statements are issued.

On December 3, 2020, the Company received its final installment from its insurance claims relating to the fire at the Orange location that occurred during fiscal 2019.

The amount received was $ 3,148 that will be realized in the first quarter of fiscal 2021.

In October 2021, the Company's Maniago location obtained a new loan agreement with a lender in the amount of $ 1,200 (equivalent to 1,000 Euros) with repayment term of 6 years.

The Company is not aware of any other subsequent events which would require recognition or disclosure in the consolidated financial statements .

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data