The components of accumulated other comprehensive loss are as follows:

The Company is subject to U.S. federal income taxtaxes and to income taxes in various states and foreign jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for fiscal years that ended prior to September 30, 2001.2002.

It is the Company’s continuing policy to recognize any interest related to uncertain tax positions in interest expense and any penalties related to uncertain tax positions in selling, general and administrative expense. The Company has not recorded any significant interest or penalties related to uncertain tax positions as of June 30,December 31, 2008.

The Company and certain of its subsidiaries sponsor defined benefit pension plans covering most of its employees. The components of net periodic benefit cost (income) of the Company’s defined benefit plans are as follows:

Management’s Discussion and Analysis of Financial Condition and Results of Operations may contain various forward-looking statements and includes assumptions concerning the Company’s operations, future results and prospects. These forward-looking statements are based on current expectations and are subject to risk and uncertainties. In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, the Company provides this cautionary statement identifying important economic, political and technological factors, among others, the absence or effect of which could cause the actual results or events to differ materially from those set forth in or implied by the forward-looking statements and related assumptions. Such factors include the following: (1) the impact on business conditions, and on the demand for product in the aerospace industry in particular, of the global economic crisis, including the reduction in available capital and liquidity from banks and other providers of credit; (2) future business environment, including capital and consumer spending; (2)(3) competitive factors, including the ability to replace business which may be lost; (3)(4) successful development of turbine component repair processes and/or the procurement of new repair process licenses from turbine engine manufacturers and/or the Federal Aviation Administration; (4)(5) metals and commodities price increases and the Company’s ability to recover such price increases; (5)(6) successful development and market introductionsintroduction of new products and services; (6)services (7) regressive pricing pressures on the Company’s products and services, with productivity improvements as the primary means to maintain margins; (7) the impact on business conditions, and on the aerospace industry in particular, of the global terrorism threat; (8) continued reliance on consumer acceptance of regional and business aircraft powered by more fuel efficient turboprop engines vs. regional and business aircraft powered by turbofan engines; (9) continued reliance on several major customers for revenues; (10) the Company’s ability to continue to have access to its revolving credit facility and to comply with the terms of its credit agreements, including financial covenants;facility; (11) the impact of changes inon future contributions to the Company’s defined benefit pension planplans due to changes in actuarial assumptions on future contributions;and the market value of plan assets; and (12) stable governments, business conditions, laws, regulations and taxes in economies where business is conducted.

SIFCO Industries, Inc.The Company and its subsidiaries engage in the production and sale of a variety of metalworking processes, services and products produced primarily to the specific design requirements of its customers. The processes and services include forging, heat-treating, coating, welding, precision component machining and selective electrochemical metal finishing. The products include forged components, machined forged components, other machined metal components, remanufactured component parts for turbine engines, and selective electrochemical finishing solutions and equipment. The Company endeavors to plan and evaluate the operation of its businesses’ operationsbusinesses while taking into consideration certain factors including the following — (i) the projected build rate for commercial, business and military aircraft as well as the engines that power such aircraft, (ii) the projected maintenance, repair and overhaul schedules for commercial, business and military aircraft as well as the engines that power such aircraft, and (iii) anticipated exploration and production activities relative to oil and gas products, etc.

Net sales from continuing operations in the first nine monthsquarter of fiscal 20082009 increased 18.3%2.1% to $76.5$23.5 million, compared with $64.7$23.1 million in the comparable period in fiscal 2007.2008. Income from continuing operations before income taxes in the first nine monthsquarter of fiscal 20082009 was $8.4$1.5 million, compared with $7.2$1.1 million in the comparable period in fiscal 2007.2008. Included in the $8.4$1.1 million of income from continuing operations before income taxes in the first nine monthsquarter of fiscal 2008 was expense of $0.5 million related to the business settlement of a product dispute that originated in fiscal 2007. Income (loss) from discontinued operations, net of tax, which includes both the industrial turbine repair business that was sold in the third quarter$0.1 million of fiscal 2007 and the large aerospace turbine repair business that was sold in fiscal 2006, was a loss of $0.2 million in the first nine months of fiscal 2008, compared with a $1.9 million loss in the comparable period in fiscal 2007. Included in the $0.2 million loss from discontinued operations in the first nine months of fiscal 2008 was a foreign currency loss of $0.5 million. Included in the $1.9 million loss from discontinued operations in the first nine months of fiscal 2007 was (i) grant income of $2.1 million and (ii) a loss of approximately $0.8 million from the divestiture in fiscal 2007 of a business and certain related assets, as explained more fully in Notes 5 and 9, respectively, to the Unaudited Condensed Consolidated Financial Statements.

The ACM Group’s airframe and turbine engine component products have both military and commercial applications. Net sales of airframe and turbine engine components that solely have military applications were $24.9$8.2 million in the first nine monthsquarter of fiscal 2008,2009, compared with $19.7$7.1 million in the comparable period in fiscal 2007.2008. This increase is attributable in part to increased military spending due to ongoing wartime demand such as for additional military helicopters and related replacement components.

The ACM Group’s selling, general and administrative expenses increaseddecreased $0.5 million to $1.0 million, to $3.8 million, or 7.0%6.2% of net sales, in the first nine monthsquarter of fiscal 2008,2009, compared with $2.8$1.5 million, or 6.4%9.6% of net sales, in the comparable period in fiscal 2007. The $1.02008. Included in the $1.5 million increase inof selling, general and administrative expenses in the first nine monthsquarter of fiscal 2008 was principally due tois a $0.6$0.5 million payment to a customer that (i) was made to achieve an amicable settlement related to a product dispute that originated in fiscal 2007, of which $0.1 million was expensed in fiscal 2007, and (ii) the Company agreed to make as a business gesture of good faith and cooperation without admission of liability. The remaining selling, general and administrative expenses in the first nine monthsquarters of fiscal 2009 and 2008 and 2007 were $3.3$1.0 million, or 6.1% of net sales,6.2% and $2.8 million, or 6.4% of net sales, respectively. In addition, variable selling expenses increased by $0.3 million in the first nine months of fiscal 2008, compared to the same period in fiscal 2007, principally due to the increase in net sales.

The ACM Group’s operating income in the first nine monthsquarter of fiscal 20082009 was $9.0$2.4 million, compared with $7.1$2.3 million in the comparable period in fiscal 2007.2008. Operating results improved principally due to (i) the positive impact on margins resulting from significantly higher production and sales volumesaforementioned $0.5 million settlement expense, (ii) an approximately three percentage point decrease in the first nine monthsACM Group’s total material cost of fiscal 2008, which allowed the ACM Group to leverage its fixed operating cost structure over more unitsgoods sold as a percentage of productionnet product sales, and sales. In addition, there was(iii) a $0.7$0.1 million reduction in the LIFO provision in the first nine monthsquarter of fiscal 2008,2009, compared to the same period in fiscal 2007.2008. These margin improvements were partially offset by the negative impact of (i) the aforementioned $0.5 million settlementhigher manufacturing labor and benefits expenses due to higher levels of employment, (ii) an increase in utilities expense, primarily natural gas, and (ii) higher variable labor costs recognized(iii) an increase in repairs and maintenance and manufacturing supply expenses in the first nine monthsquarter of fiscal 2008,2009, compared to the same period in fiscal 2007.2008.

The ACM Group’s backlog as of June 30,December 31, 2008 was $83.9$82.9 million, compared with $82.8$76.6 million as of September 30, 2007.2008. At June 30,December 31, 2008, $65.8$62.4 million of the total backlog was scheduled for delivery over the next twelve months and $18.1 million was scheduled for delivery beyond the next twelve months. All orders are subject to modification or cancellation by the customer with limited charges. It is important to note that the delivery lead times for certain raw materialmaterials (e.g. aerospace gradegrades of steel and titanium alloys) delivery lead timesalloy) have shortened,continued to shorten and the ACM Group believes that such lead time improvement may resultreduction has resulted in a fundamental shift in the ordering pattern of the ACM Group’sits customers. A potentiallikely consequence of such an ordering patterna shift may beis that customers willare not placeplacing orders as far in advance as they previously did, resultingwhich results in a potential reduction, relative to comparable prior year periods, in the ACM Group’s backlog. Accordingly, due to this and other factors, thesuch backlog mayreduction is not benecessarily completely indicative of actual sales demand expected for any succeeding period.

DuringNet sales in the first nine monthsquarter of fiscal 2008, net sales from continuing operations,2009, which consists principally of component repair services (including precision component machining and industrial coating) for small aerospace turbine engines, increased 19.5%decreased 7.4% to $11.2$3.5 million, compared with $9.4$3.8 million in the comparable fiscal 20072008 period.

During the first nine monthsquarter of fiscal 2008,2009, the Repair Group’s selling, general and administrative expenses from continuing operations were $1.0$0.3 million, or 8.5%9.9% of net sales, compared with $1.0$0.4 million, or 10.6%10.7% of net sales, in the comparable fiscal 20072008 period. IncludedThis $0.1 million decrease in selling, general and administrative expenses during the first nine monthsquarter of bothfiscal 2009, compared with the same period in fiscal 2008, and 2007 was $0.1 million of bad debt recoveries and, therefore, the remaining selling,due to a general and administrative expenses were $1.1 million, or 9.7% of net sales, and $1.1 million, or 11.5% of net sales, during such periods.reduction in spending in multiple areas.

The Repair Group’s operating results from continuing operations were essentially breakeven in the first nine monthsquarter of fiscal 20082009 was income of $0.2 million, compared with incomea loss of $0.4$0.1 million in the comparable fiscal 20072008 period. IncludedThe modest improvement in operating results is principally attributable to the non-recurrence of the startup costs that occurred in the breakeven operating results during the first nine monthsquarter of fiscal 2008 were (i) the aforementioned $0.1 million of bad debt recovery, (ii) $0.1 million of income from the sale of previously reserved inventory, and (iii) $0.1 million of income related to the renegotiation of a vendor obligation. Despite these favorable items, the reason that operating results did not improve with the higher volumes during the first nine months of fiscal 2008 is due principally to startup costs related to the production launch of a new component repair program and a change in product sales mix to less favorable margin products.program.

Cash and cash equivalents increaseddecreased to $7.1$7.3 million at June 30,December 31, 2008 compared with $5.5from $10.4 million at September 30, 2007.2008. At present, $5.5December 31, 2008, $5.4 million of the Company’s cash and cash equivalents are in the possession of its non-U.S. subsidiaries. Distributions from the Company’s non-U.S. subsidiaries to the Company may be subject to statutory restriction, adverse tax consequences or other limitations.

The Company’s operating activities provided $5.5consumed $1.9 million of cash (of which $6.2$1.7 million was consumed by continuing operations) in the first quarter of fiscal 2009 compared with $0.9 million of cash provided by operating activities (of which $1.3 million was provided by continuing operations) in the first nine monthsquarter of fiscal 2008 compared with $4.52008.

Capital expenditures, all of which were from continuing operations, were $1.8$1.0 million in the first nine monthsquarter of fiscal 20082009 compared with $1.2to $0.5 million (of which $1.1 million were from continuing operations) in the comparable fiscal 20072008 period. CapitalFiscal 2009 capital expenditures during the first nine months of fiscal 2008 consist of $1.0$0.8 million by the ACM Group $0.4 million by the ASC Group and $0.4$0.2 million by the Repair Group. The Company anticipates that total fiscal 20082009 capital expenditures willto be within the range of $2.0$3.0 to $3.0$4.0 million, of which $0.6$0.7 million has been committed as of June 30,December 31, 2008.

At June 30,December 31, 2008, the Company has an $8.0 million revolving credit agreement with a bank, subject to sufficiency of collateral, which expires on JulyOctober 1, 20092010 and bears interest at the bank’s base rate.rate plus 0.50%. The interest rate was 5.00%3.25% at June 30,December 31, 2008. A 0.35% commitment fee is incurred on the unused balance of the revolving credit agreement. At June 30,December 31, 2008, no amount was outstanding and the Company had $7.9 million available under its $8.0 million revolving credit agreement. The Company’s revolving credit agreement is secured by substantially all of the Company’s assets located in the U.S. and a guarantee by its U.S. subsidiaries.

Under its revolving credit agreement with the bank, the Company is subject to certain customary covenants. These include, without limitation, covenants (as defined) that require maintenance of certain specified financial ratios, including a minimum tangible net worth level and a minimum EBITDA level. The Company was in compliance with all applicableof the covenants at June 30, 2008.

The Company believes that cash flows from its operations together with existing cash reserves and the funds available under its revolving credit agreement will be sufficient to meet its working capital requirements through the end of fiscal year 2008.

In the ordinary course of business, the Company is subject to foreign currency and interest rate risk. The risks primarily relate to the sale of the Company’s products and services in transactions denominated in non-U.S. dollar currencies;currencies (the euro, pound sterling and Swedish krona); the payment in local currency of wages and other costs related to the Company’s non-U.S. operations; and changes in interest rates on the Company’s long-term debt obligations. The Company does not hold or issue financial instruments for trading purposes.

The U.S. dollar is the functional currency for all of the Company’s U.S. operations. For these operations, all gains and losses from completed currency transactions are included in income currently. For the Company’s non-U.S. subsidiaries, the functional currency is the local currency. Assets and liabilities are translated into U.S. dollars at the rate of exchange at the end of the period, and revenues and expenses are translated using average rates of exchange for the reporting period.exchange. Foreign currency translation adjustments are reported as a component of accumulated other comprehensive loss in the consolidated condensed financial statements.loss.

Historically, the Company has been able to mitigate the impact of foreign currency risk by means of hedging such risk through the use of foreign currency exchange contracts, which typically expireexpired within one year. However, such risk is mitigated only for the periods for which the Company has foreign currency exchange contracts in effect, and only to the extent of the U.S. dollar amounts of such contracts. At June 30,December 31, 2008, the Company had no forward exchange contracts outstanding. The Company will continue to evaluate its foreign currency risk, if any, and the effectiveness of using similar hedges in the future to mitigate such risk.

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosedAs defined in its reports filed or submittedRule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), disclosure controls and procedures are controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and forms,on a timely basis, and that such information is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow for timely decisions regarding required disclosure. The Company’s disclosure controls and procedures include components of the Company’s internal control over financial reporting. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The

Management of the Company, carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Chairman and Chief Executive Officer of the Company and Chief Financial Officer, of the Company,carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e) as of June 30,December 31, 2008 (the “Evaluation Date”). Based upon that evaluation, the Chairman and Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e)) were not effective in timely alerting them to material information relatingdue solely to the Company (including its consolidated subsidiaries) required to be includedmaterial weakness in the Company’s periodic SEC filings. Managementinternal control over financial reporting as a result of the following:

The noted material weakness in the effectiveness of the Company’s internal controls with respect to its existing management information system were not all remediated as of December 31, 2008 because Company management believes that (i) the relevant risk associated with not remediating such controls at this time is not deemed to be “high” and (ii) the cost/benefit analysis does not justify remediating such controls at this time given the fact that the Company is in the process of selecting a new management information system (to be implemented during the next 18-24 months) and plans to incorporate the remediation of a majority of the deficiencies noted above as part of the new management information system. In light of this material weakness, the Company performed additional analysis as deemed necessary to ensure that the consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles. Accordingly, notwithstanding the existence of the material weakness described above, management has concluded that the unaudited consolidated condensed financial statements included in this Form 10-Q fairly present, in all material respects, the Company’s financial position, results of operations and cash flows for the periods presented.