Exhibit 99.1
| Analyst Contact: | Mark Schlei | |||
| Sparton Corporation | ||||
| Email:mschlei@sparton.com | ||||
| Office: (847) 762-5812 | ||||
| Media Contact: | Mike Osborne | |||
| Sparton Corporation | ||||
| Email:mosborne@sparton.com | ||||
| Office: (847) 762-5814 | ||||
| Investor Contact: | John Nesbett/Jennifer Belodeau | |||
| Institutional Marketing Services | ||||
| Email: jnesbett@institutionalms.com | ||||
| Office: (203) 972-9200 | ||||
FOR IMMEDIATE RELEASE
Sparton Corporation Reports $0.43 EPS for Fiscal 2013 Second Quarter
SCHAUMBURG, IL. — February 5, 2013 — Sparton Corporation (NYSE: SPA) today announced results for the second quarter of fiscal 2013 ended December 31, 2012. The Company reported second quarter sales of $66.0 million, or an increase of 19.2 %, from $55.4 million for the second quarter of fiscal 2012. Reported net income for the second quarter of fiscal 2013 was $4.4 million or $0.43 per share, compared to net income of $1.9 million, or $0.19 per share, in the same quarter a year ago.
Cary Wood, President & CEO, commented, “The first half $0.52 diluted earnings per share results outpaced the first half of the prior year by 57%. As expected, the second quarter was very strong, as delayed shipments from the first quarter were realized during the current quarter and a tax benefit resulting from a worthless stock deduction was recognized as a result of ceasing our Canadian operation a number of years ago. On an adjusted basis, the first half earnings per share of $0.36 is up from the same time period last year.”
Consolidated results for the quarters ended December 31, 2012 and 2011:
| For the Three Months Ended December 31, | For the Six Months Ended December 31, | |||||||||||||||
($ in 000’s, except per share) | 2012 | 2011 | 2012 | 2011 | ||||||||||||
Net sales | $ | 65,979 | $ | 55,370 | $ | 114,999 | $ | 107,203 | ||||||||
Net sales excluding Onyx | 59,864 | 55,370 | 108,884 | 107,203 | ||||||||||||
Gross profit | 11,408 | 8,736 | 18,621 | 17,080 | ||||||||||||
Gross profit excluding Onyx | 11,107 | 8,736 | 18,320 | 17,080 | ||||||||||||
Operating income | 3,513 | 2,919 | 4,857 | 5,308 | ||||||||||||
Operating income excluding Onyx | 4,080 | 2,919 | 5,424 | 5,308 | ||||||||||||
Provision for (benefit from) income taxes | (979 | ) | 1,069 | (531 | ) | 1,918 | ||||||||||
Net income | 4,401 | 1,942 | 5,354 | 3,451 | ||||||||||||
Adjusted net income | 2,712 | 1,823 | 3,665 | 3,332 | ||||||||||||
Income per share – basic | 0.43 | 0.19 | 0.53 | 0.34 | ||||||||||||
Adjusted income per share – basic | 0.27 | 0.18 | 0.36 | 0.32 | ||||||||||||
Income per share – diluted | 0.43 | 0.19 | 0.52 | 0.33 | ||||||||||||
Adjusted income per share – diluted | 0.26 | 0.18 | 0.36 | 0.32 | ||||||||||||
Adjusted EBITDA | 5,131 | 3,402 | 7,064 | 6,313 | ||||||||||||
Adjusted EBITDA excluding Onyx | 4,673 | 3,402 | 6,606 | 6,313 | ||||||||||||
Second Quarter Financial Highlights
| • | Awarded 13 new business programs during the second quarter of fiscal 2013 with estimated 2nd half fiscal 2013 revenue of $2.7 million. |
| • | Quarter end sales backlog of approximately $211.5 million, including approximately $30.5 million from the Company’s newly acquired business, representing a 35% increase over the previous quarter and a 67% increase over a year ago. Excluding the newly acquired business, backlog was approximately $181.0 million representing a 16% increase over the previous quarter and a 43% increase over a year ago. |
| • | Completed the acquisition of Onyx EMS, LLC. |
| • | Entered into a new five year banking agreement with BMO Harris Bank providing $65 million of committed credit facilities. The new facility also includes a $35 million accordion feature which could raise the total facility to $100 million. |
| • | Recognized a $2.1 million income tax benefit from claiming a worthless stock and bad debt deduction with respect to the Company’s investments in and advances to its 100% owned Canadian subsidiary. |
Onyx Acquisition
Mr. Wood continued, “We are extremely pleased to have closed the Onyx acquisition this past November. The first six weeks have resulted in a neutral impact to adjusted earnings and positive incremental EBITDA. We continue to expect that, as operational synergies and new business opportunities are realized, the acquisition will be accretive to earnings by the end of the year. The entry into the Minneapolis technological corridor laden with many large Medical OEM’s has already opened doors for Sparton’s legacy medical business for engineering programs as well as allowing the South Dakota team to explore larger and more complex device build opportunities with existing customers that were previously unattainable.”
On November 15, 2012, the Company completed the acquisition of Onyx EMS, LLC (“Onyx”) in a $43.25 million all-cash transaction, subject to certain post-closing adjustments and financed through the use of Company cash and borrowings under the Company’s new credit facility. At December 31, 2012, the Company has recorded additional consideration of $2.19 million in relation to a post-closing working capital adjustment, which will be settled in the Company’s third fiscal quarter. The transaction includes an approximate $4.3 million escrowed holdback which is available to fund potential seller indemnification obligations in relation to the acquisition agreement.
The acquired business, which is reported in the Company’s Medical segment, provides further expansion regionally into the Minneapolis medical device corridor, diversifying the Company’s customer base through both existing programs and a strong business development pipeline, and increases the number of complex sub-assembly and full device programs within Sparton. Additionally, Onyx brings solid, long-term customer relationships that will utilize Sparton’s expanded list of service offerings such as our low cost country footprint in Vietnam and full engineering design capabilities. Onyx primarily manufactures medical devices for OEM and emerging technology companies, including products for cardiovascular diagnostics, hearing assistance, patient temperature and warming, point-of-care diagnostics, and surgical equipment used in intraosseous medicine. Onyx also produces products such as precision measurement instruments for monitoring air quality and pollution, commercial fire and smoke alarm systems, sensing tools, test fixtures, and complex LED assemblies.
The following table summarizes the results of operations of Onyx for the periods ended December 31, 2012 and 2011 (in thousands):
| For the Three Months Ended December 31, | For the Six Months Ended December 31, | |||||||||||||||||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||||||||||||||||||
| Pre Acquisition | Post Acquisition | Total Onyx | Total Onyx | Pre Acquisition | Post Acquisition | Total Onyx | Total Onyx | |||||||||||||||||||||||||
Net sales | $ | 5,669 | $ | 6,115 | $ | 11,784 | $ | 12,668 | $ | 18,198 | $ | 6,115 | $ | 24,313 | $ | 24,458 | ||||||||||||||||
Adjusted gross profit | $ | 723 | $ | 867 | $ | 1,590 | $ | 2,134 | $ | 3,094 | $ | 867 | $ | 3,961 | $ | 4,173 | ||||||||||||||||
Adjusted operating income | $ | 237 | $ | (1 | ) | $ | 236 | $ | 1,023 | $ | 1,581 | $ | (1 | ) | $ | 1,580 | $ | 1,865 | ||||||||||||||
Adjusted EBITDA | $ | 522 | $ | 458 | $ | 980 | $ | 1,323 | $ | 2,264 | $ | 458 | $ | 2,722 | $ | 2,444 | ||||||||||||||||
Note: Reconciliations of the adjusted amounts shown above to the amounts reported by Onyx are provided at the end of this release.
Page 2 of 17
Segment Results
Medical Device (“Medical”)
Medical sales in the current year quarter include $6.1 million of additional sales from the acquisition of Onyx. Excluding these fiscal year 2013 incremental sales, legacy Medical sales increased approximately $0.7 million as compared with the prior year quarter. Reflected within the increase is $5.9 million of increased sales to this business unit’s largest customer due to expanded demand for its programs and additional refurbishment service revenue which began in the second half of fiscal 2012. Additionally reflected is $0.9 million of increased sales to another customer to meet increased demand for its product in both the U.S. and Japan. Partially offsetting these increases were decreased sales to three customers totaling $5.4 million. Decreased sales to one customer reflect the dual sourcing of certain of its programs with the Company during fiscal 2012. Decreased sales to the remaining two customers reflect these customers’ disengagements during fiscal 2012. Several other customers in the aggregate accounted for the remaining sales variance. Mr. Wood stated, “Medical won three new projects, two engineering projects with new customers and a prototype order from an existing customer.”
Excluding Onyx, the gross profit percentage on Medical sales increased to 14.1% from 13.9% for the three months ended December 31, 2012 and 2011, respectively. This improvement in margin on Medical sales reflects certain favorable product mix between the two periods, partially offset by decreased capacity utilization at the Strongsville, Ohio facility. Mr. Wood continued, “Medical’s gross margin improvement is, in part, indicative of the replacement of less profitable programs in the prior period with more profitable sales from newer programs.”
Excluding Onyx, selling and administrative expenses relating to the Medical segment were $1.6 million and $1.5 million for the three months ended December 31, 2012 and 2011, respectively. Excluding Onyx, Medical reported operating income of $2.4 million for the quarter ended December 31, 2012 compared to operating income of $2.3 million in the prior year quarter.
Complex Systems (“CS”)
Excluding an increase in intercompany sales of $0.6 million, CS sales to external customers for the three months ended December 31, 2012 increased $0.9 million as compared with the same quarter last year, due primarily to increased sales to two customers, partially offset by lower sales to three customers, reflecting relative demand for each of these customers’ products. Mr. Wood commented, “Complex Systems won seven new programs from new and existing customers during the second quarter, bringing the year-to-date new program total to 12.
The gross profit percentage on CS sales remained relatively consistent at 10.2% for the three months ended December 31, 2012 compared to 10.4% for the three months ended December 31, 2011.
Selling and administrative expenses relating to the CS segment were $0.7 million for each of the three months ended December 31, 2012 and 2011, respectively. CS reported operating income of $0.8 million for the quarter ended December 31, 2012 compared to operating income of $0.6 million in the prior year quarter.
Defense & Security Systems (“DSS”)
DSS sales increased approximately $2.9 million in the three months ended December 31, 2012 as compared with the same quarter last year, reflecting increased sonobuoy sales to foreign governments, partially offset by decreased U.S. Navy sonobuoy production and engineering sales in the current year quarter. The second quarter fiscal 2013 includes approximately $3.5 million of revenue from the U.S. Navy acceptance under waiver of the two sonobuoy lots that failed at the Navy test range in the final weeks of September 2012. The testing was conducted under suboptimal environmental conditions, which were outside of the product’s design specifications.
The gross profit percentage on DSS sales increased to 26.3% for the three months ended December 31, 2012 compared to 19.2% for the three months ended December 31, 2011. Gross profit percentage was favorably affected in the current year quarter by a significant increase in foreign sonobuoy sales and favorable product mix on U.S. Navy sales as compared to the prior year quarter.
Page 3 of 17
Selling and administrative expenses relating to the DSS segment were $1.2 million and $0.9 million for the three months ended December 31, 2012 and 2011, respectively, primarily reflecting increased business development efforts in the current fiscal quarter. The Company incurred $0.2 million of internally funded research and development expenses in each of the three months ended December 31, 2012 and 2011, respectively. DSS reported operating income of $4.1 million for the quarter ended December 31, 2012 compared to operating income of $2.4 million in the prior year quarter.
Liquidity and Capital Resources
As of December 31, 2012, the Company had $14.0 million borrowed and $51.0 million available under its new credit facility, available cash and cash equivalents of $6.1 million and performance based payments received under U.S. Navy contracts in excess of the funding of production to date under those contracts of $20.7 million. “We are pleased to have BMO Harris Bank as our new banking partner to support our operating needs and future growth ambitions. The $65 million in credit facilities, coupled with its flexible accordion feature of an additional $35 million, adds to our already strong liquidity position. With access to these funds in place, we plan to continue executing on complementary and compatible acquisitions as a key part of our strategic growth plan,” commented Mr. Wood.
Outlook
Cary Wood concluded, “We remain optimistic for fiscal 2013 and continue to expect year-over-year increases in both revenue and profitability and maintain that current organic growth will be up 3-5% for the year. As highlighted in recent news releases, the Medical industry appears to be in flux due to a number of macro-economic concerns and, as a result, we are seeing slight softening in our Medical segment in the third quarter. This softening is being partially offset by slight increases from Complex Systems in the third quarter and our Medical customers are describing this as a short term issue and anticipate that orders will return to normal levels by the fourth quarter. We are excited about the addition of Onyx to the Sparton family and I look forward to reporting on its successful integration and progress with our other growth initiatives in the future.”
Conference Call
Sparton will host a conference call with investors and analysts on February 6, 2013 at 10:00 a.m. CDT/11:00 a.m. EDT to discuss its fiscal year 2013 second quarter financial results, provide a general business update, and respond to investor questions. To participate, callers should dial (800) 734-4208. Participants should dial in at least 15 minutes prior to the start of the call. A Web presentation link is also available for the conference call: https://www.livemeeting.com/cc/gc_min_pro_usa/join?id=4RSNBJ&role=attend
Investors and financial analysts are invited to ask questions after the presentation is made. The presentation and a replay of the call will be available on Sparton’s Web site:http://www.sparton.com in the “Investor Relations” section for up to two years after the conference call.
Non-GAAP Financial Measures
In addition to reporting financial results in accordance with U.S. generally accepted accounting principles (“GAAP”), Sparton Corporation has provided non-GAAP financial measures as additional information for its operating results. These measures have not been prepared in accordance with GAAP and may be different from measures used by other companies. Whenever we use non-GAAP financial measures, we designate these measures, which exclude the effect of certain expenses and income, as “adjusted” and provide a reconciliation of non-GAAP financial measures to the most closely applicable GAAP financial measure. The non-GAAP financial measures eliminate or add certain items of expense and income from cost of goods sold, total operating expense, other income (expense) and provision for (benefit from) income taxes. Management believes that this presentation is helpful to investors in evaluating the current operational and financial performance of our business and facilitates comparisons to historical results of operations. Management discloses this information along with a reconciliation of the comparable GAAP amounts to provide access to the detail and nature of adjustments made to GAAP financial results. While some of these excluded items have been periodically reported in our statements of operations, including significant restructuring and impairment charges as well as certain gains on sales of assets, their occurrence in future periods depends on future business and economic factors, among other evaluation criteria, and the occurrence of such events and factors may frequently be beyond the control of management.
Page 4 of 17
We exclude restructuring/impairment charges, gross profit effect of capitalized profit in inventory from acquisition and gain on sale of investment as well as the related tax effect of these items because we believe that they are not related directly to the underlying performance of our fundamental business operations. We exclude these measures when reviewing financial results and for business planning. Although these events are reflected in our GAAP financials, these transactions may limit the comparability of our fundamental operations with prior and future periods.
Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization as adjusted for restructuring/impairment charges, gross profit effect of capitalized profit in inventory from acquisition and gain on sale of investment. The Company believes Adjusted EBITDA is commonly used by financial analysts and others in the industries in which the Company operates and, thus, provides useful information to investors. The Company does not intend, nor should the reader consider, Adjusted EBITDA an alternative to operating income, net income, net cash provided by operating activities or any other items calculated in accordance with GAAP. The Company’s definition of Adjusted EBITDA may not be comparable with Adjusted EBITDA as defined by other companies. Accordingly, the measurement has limitations depending on its use.
Related to Onyx, adjusted gross profit and adjusted operating income exclude the gross profit effect of capitalized profit in inventory from acquisition and unusual write-downs of inventory and accounts receivable related to an Onyx customer (“Augustine”) which was excluded from the acquisition. Adjusted EBITDA related to Onyx represents operating income before depreciation and amortization as adjusted for the gross profit effect of capitalized profit in inventory from acquisition and unusual write-downs of inventory and accounts receivable related to an Onyx customer (“Augustine”) which was excluded from the acquisition.
About Sparton Corporation
Sparton Corporation (NYSE:SPA), now in its 113th year, is a provider of complex and sophisticated electromechanical devices with capabilities that include concept development, industrial design, design and manufacturing engineering, production, distribution, and field service. The primary market classifications served are Navigation & Exploration, Defense & Security, Medical, and Complex Systems. Headquartered in Schaumburg, IL, Sparton currently has five manufacturing locations worldwide. Sparton’s Web site may be accessed athttp://www.sparton.com.
Safe Harbor and Fair Disclosure Statement
Certain statements described in this press release are forward-looking statements within the scope of the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements may be identified by the words “believe,” “expect,” “anticipate,” “project,” “plan,” “estimate,” “will” or “intend” and similar words or expressions. These forward-looking statements reflect Sparton’s current views with respect to future events and are based on currently available financial, economic and competitive data and its current business plans. Actual results could vary materially depending on risks and uncertainties that may affect Sparton’s operations, markets, prices and other factors. Important factors that could cause actual results to differ materially from those forward-looking statements include, but are not limited to, Sparton’s financial performance and the implementations and results of its ongoing strategic initiatives. For a more detailed discussion of these and other risk factors, see Part I, Item 1A, Risk Factors and Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in Sparton’s Form 10-K for the year ended June 30, 2012, and its other filings with the Securities and Exchange Commission. Sparton undertakes no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.
Page 5 of 17
SPARTON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands, except share and per share amounts)
| December 31, 2012 | June 30, 2012 (a) | |||||||
| Assets | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 6,066 | $ | 46,950 | ||||
Restricted cash | 535 | — | ||||||
Accounts receivable, net of allowance for doubtful accounts of $334 and $146, respectively | 40,821 | 29,618 | ||||||
Inventories and cost of contracts in progress, net | 45,367 | 35,102 | ||||||
Deferred income taxes | 2,020 | 2,020 | ||||||
Prepaid expenses and other current assets | 5,251 | 2,054 | ||||||
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| |||||
Total current assets | 100,060 | 115,744 | ||||||
Property, plant and equipment, net | 28,913 | 14,260 | ||||||
Goodwill | 14,903 | 7,472 | ||||||
Other intangible assets, net | 11,643 | 1,618 | ||||||
Deferred income taxes — non-current | 4,874 | 5,136 | ||||||
Other non-current assets | 701 | 325 | ||||||
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Total assets | $ | 161,094 | $ | 144,555 | ||||
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| Liabilities and Shareholders’ Equity | ||||||||
Current Liabilities: | ||||||||
Short-term bank borrowings | $ | 14,000 | $ | — | ||||
Current portion of long-term debt | 131 | 131 | ||||||
Accounts payable | 17,033 | 17,152 | ||||||
Accrued salaries and wages | 5,417 | 5,855 | ||||||
Accrued health benefits | 1,564 | 1,210 | ||||||
Current portion of pension liability | 115 | 323 | ||||||
Performance based payments on customer contracts | 20,718 | 25,836 | ||||||
Other accrued expenses | 8,273 | 5,890 | ||||||
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Total current liabilities | 67,251 | 56,397 | ||||||
Pension liability — non-current portion | 985 | 990 | ||||||
Long-term debt — non-current portion | 1,473 | 1,538 | ||||||
Environmental remediation — non-current portion | 2,978 | 3,142 | ||||||
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Total liabilities | 72,687 | 62,067 | ||||||
Commitments and contingencies | ||||||||
Shareholders’ Equity: | ||||||||
Preferred stock, no par value; 200,000 shares authorized, none issued | — | — | ||||||
Common stock, $1.25 par value; 15,000,000 shares authorized, 10,229,121 and 10,105,759 shares issued and outstanding, respectively | 12,786 | 12,632 | ||||||
Capital in excess of par value | 19,932 | 19,579 | ||||||
Retained earnings | 57,349 | 51,995 | ||||||
Accumulated other comprehensive loss | (1,660 | ) | (1,718 | ) | ||||
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Total shareholders’ equity | 88,407 | 82,488 | ||||||
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Total liabilities and shareholders’ equity | $ | 161,094 | $ | 144,555 | ||||
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| (a) | Derived from the Company’s audited financial statements as of June 30, 2012. |
Page 6 of 17
SPARTON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(Dollars in thousands, except share data)
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| December 31, 2012 | December 31, 2011 | December 31, 2012 | December 31, 2011 | |||||||||||||
Net sales | $ | 65,979 | $ | 55,370 | $ | 114,999 | $ | 107,203 | ||||||||
Cost of goods sold | 54,571 | 46,634 | 96,378 | 90,123 | ||||||||||||
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Gross profit | 11,408 | 8,736 | 18,621 | 17,080 | ||||||||||||
Operating Expense: | ||||||||||||||||
Selling and administrative expenses | 7,375 | 5,535 | 12,847 | 10,946 | ||||||||||||
Internal research and development expenses | 243 | 218 | 548 | 616 | ||||||||||||
Amortization of intangible assets | 273 | 110 | 375 | 221 | ||||||||||||
Restructuring/impairment charges | — | (59 | ) | — | (59 | ) | ||||||||||
Other operating expenses | 4 | 13 | (6 | ) | 48 | |||||||||||
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Total operating expense, net | 7,895 | 5,817 | 13,764 | 11,772 | ||||||||||||
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Operating income | 3,513 | 2,919 | 4,857 | 5,308 | ||||||||||||
Other income (expense) | ||||||||||||||||
Interest expense | (173 | ) | (175 | ) | (254 | ) | (347 | ) | ||||||||
Interest income | 23 | 24 | 51 | 48 | ||||||||||||
Gain on sale of investment | — | 127 | — | 127 | ||||||||||||
Other, net | 59 | 116 | 169 | 233 | ||||||||||||
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Total other income (expense), net | (91 | ) | 92 | (34 | ) | 61 | ||||||||||
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Income before provision for income taxes | 3,422 | 3,011 | 4,823 | 5,369 | ||||||||||||
Provision for (benefit from) income taxes | (979 | ) | 1,069 | (531 | ) | 1,918 | ||||||||||
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Net income | $ | 4,401 | $ | 1,942 | $ | 5,354 | $ | 3,451 | ||||||||
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Income per share of common stock: | ||||||||||||||||
Basic | $ | 0.43 | $ | 0.19 | $ | 0.53 | $ | 0.34 | ||||||||
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Diluted | $ | 0.43 | $ | 0.19 | $ | 0.52 | $ | 0.33 | ||||||||
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Weighted average shares of common stock outstanding: | ||||||||||||||||
Basic | 10,229,320 | 10,287,797 | 10,185,464 | 10,278,127 | ||||||||||||
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Diluted | 10,248,424 | 10,325,029 | 10,206,913 | 10,319,275 | ||||||||||||
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Page 7 of 17
SPARTON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(Dollars in thousands, except share data)
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| December 31, 2012 | December 31, 2011 | December 31, 2012 | December 31, 2011 | |||||||||||||
Net income | $ | 4,401 | $ | 1,942 | $ | 5,354 | $ | 3,451 | ||||||||
Other comprehensive income (loss) – Change in unrecognized pension costs, net of tax | 36 | (4 | ) | 58 | 81 | |||||||||||
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Comprehensive income | $ | 4,437 | $ | 1,938 | $ | 5,412 | $ | 3,532 | ||||||||
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Page 8 of 17
SPARTON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
| For the Six Months Ended | ||||||||
| December 31, 2012 | December 31, 2011 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income | $ | 5,354 | $ | 3,451 | ||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 1,472 | 831 | ||||||
Deferred income tax expense | 230 | 1,914 | ||||||
Pension expense | 6 | 14 | ||||||
Stock-based compensation expense | 597 | 532 | ||||||
Gross profit effect of capitalized profit in inventory from acquisition | 566 | — | ||||||
Gain on sale of investment | — | (127 | ) | |||||
Other | 41 | 174 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (4,306 | ) | (515 | ) | ||||
Inventories and cost of contracts in progress | (1,845 | ) | 207 | |||||
Prepaid expenses and other assets | (2,798 | ) | (1,191 | ) | ||||
Performance based payments on customer contracts | (5,118 | ) | 5,865 | |||||
Accounts payable and accrued expenses | (3,128 | ) | (3,436 | ) | ||||
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Net cash provided by (used in) operating activities | (8,929 | ) | 7,719 | |||||
Cash Flows from Investing Activities: | ||||||||
Purchase of Onyx | (43,250 | ) | — | |||||
Purchases of property, plant and equipment | (1,602 | ) | (1,917 | ) | ||||
Change in restricted cash | (535 | ) | ||||||
Proceeds from sale of investment | — | 1,750 | ||||||
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Net cash used in investing activities | (45,387 | ) | (167 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Short-term bank borrowings, net | 14,000 | — | ||||||
Repayment of long-term debt | (70 | ) | (66 | ) | ||||
Payment of debt financing costs | (408 | ) | — | |||||
Repurchase of stock | (234 | ) | (1,476 | ) | ||||
Proceeds from the exercise of stock options | 144 | 50 | ||||||
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Net cash provided by (used in) financing activities | 13,432 | (1,492 | ) | |||||
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Net increase (decrease) in cash and cash equivalents | (40,884 | ) | 6,060 | |||||
Cash and cash equivalents at beginning of period | 46,950 | 24,550 | ||||||
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Cash and cash equivalents at end of period | $ | 6,066 | $ | 30,610 | ||||
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Supplemental disclosure of cash flow information: | ||||||||
Cash paid for interest | $ | 258 | $ | 176 | ||||
Cash paid for income taxes | $ | 1,603 | $ | 464 | ||||
Supplemental disclosure of non-cash investing activities: | ||||||||
Accrued acquisition related working capital adjustment | $ | 2,188 | $ | — | ||||
Page 9 of 17
SPARTON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(UNAUDITED)
(Dollars in thousands, except share data)
| Six Months Ended December 31, 2012 | ||||||||||||||||||||||||
| Common Stock | Capital In Excess | Retained | Accumulated Other Comprehensive | |||||||||||||||||||||
| Shares | Amount | of Par Value | Earnings | Loss | Total | |||||||||||||||||||
Balance at June 30, 2012 | 10,105,759 | $ | 12,632 | $ | 19,579 | $ | 51,995 | $ | (1,718 | ) | $ | 82,488 | ||||||||||||
Issuance of stock | 159,433 | 199 | (199 | ) | — | — | — | |||||||||||||||||
Forfeiture of restricted stock | (39,811 | ) | (50 | ) | 50 | — | — | — | ||||||||||||||||
Repurchase of stock | (20,564 | ) | (25 | ) | (209 | ) | — | — | (234 | ) | ||||||||||||||
Exercise of stock options | 24,304 | 30 | 114 | — | — | 144 | ||||||||||||||||||
Stock-based compensation | — | — | 597 | — | — | 597 | ||||||||||||||||||
Comprehensive income, net of tax | — | — | — | 5,354 | 58 | 5,412 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Balance at December 31, 2012 | 10,229,121 | $ | 12,786 | $ | 19,932 | $ | 57,349 | $ | (1,660 | ) | $ | 88,407 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| Six Months Ended December 31, 2011 | ||||||||||||||||||||||||
| Common Stock | Capital In Excess | Retained | Accumulated Other Comprehensive | |||||||||||||||||||||
| Shares | Amount | of Par Value | Earnings | Loss | Total | |||||||||||||||||||
Balance at June 30, 2011 | 10,236,484 | $ | 12,796 | $ | 20,635 | $ | 42,487 | $ | (871 | ) | $ | 75,047 | ||||||||||||
Issuance of stock | 160,641 | 201 | (201 | ) | — | — | — | |||||||||||||||||
Forfeiture of restricted stock | (13,290 | ) | (17 | ) | 17 | — | — | — | ||||||||||||||||
Repurchase of stock | (188,055 | ) | (235 | ) | (1,241 | ) | — | — | (1,476 | ) | ||||||||||||||
Exercise of stock options | 10,000 | 12 | 38 | — | — | 50 | ||||||||||||||||||
Stock-based compensation | — | — | 532 | — | — | 532 | ||||||||||||||||||
Comprehensive income, net of tax | — | — | — | 3,451 | 81 | 3,532 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Balance at December 31, 2011 | 10,205,780 | $ | 12,757 | $ | 19,780 | $ | 45,938 | $ | (790 | ) | $ | 77,685 | ||||||||||||
|
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|
|
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|
|
| |||||||||||||
Page 10 of 17
SPARTON CORPORATION AND SUBSIDIARIES
SELECT SEGMENT INFORMATION
(UNAUDITED)
(Dollars in thousands)
Sales:
| For the Three Months Ended December 31, | For the Six Months Ended December 31, | |||||||||||||||||||||||
SEGMENT | 2012 | 2011 | % Chg | 2012 | 2010 | % Chg | ||||||||||||||||||
Medical | $ | 34,804 | $ | 28,027 | 24.2 | % | $ | 62,863 | $ | 55,487 | 13.3 | % | ||||||||||||
CS | 14,059 | 12,549 | 12.0 | 26,406 | 25,109 | 5.2 | ||||||||||||||||||
DSS | 21,402 | 18,476 | 15.8 | 34,608 | 33,763 | 2.5 | ||||||||||||||||||
Eliminations | (4,286 | ) | (3,682 | ) | 16.4 | (8,878 | ) | (7,156 | ) | 24.1 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Totals | $ | 65,979 | $ | 55,370 | 19.2 | $ | 114,999 | $ | 107,203 | 7.3 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Gross profit:
| For the Three Months Ended December 31, | For the Six Months Ended December 31, | |||||||||||||||||||||||||||||||
SEGMENT | 2012 | GP % | 2011 | GP % | 2012 | GP % | 2011 | GP % | ||||||||||||||||||||||||
Medical | $ | 4,344 | 12.5 | % | $ | 3,883 | 13.9 | % | $ | 8,538 | 13.6 | % | $ | 7,497 | 13.5 | % | ||||||||||||||||
CS | 1,428 | 10.2 | 1,306 | 10.4 | 2,524 | 9.6 | 2,394 | 9.5 | ||||||||||||||||||||||||
DSS | 5,636 | 26.3 | 3,547 | 19.2 | 7,559 | 21.8 | 7,189 | 21.3 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Totals | $ | 11,408 | 17.3 | $ | 8,736 | 15.8 | $ | 18,621 | 16.2 | $ | 17,080 | 15.9 | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Gross profit excluding Onyx:
| For the Three Months Ended December 31, | For the Six Months Ended December 31, | |||||||||||||||||||||||||||||||
SEGMENT | 2012 | GP % | 2011 | GP % | 2012 | GP % | 2011 | GP % | ||||||||||||||||||||||||
Medical | $ | 4,043 | 14.1 | % | $ | 3,883 | 13.9 | % | $ | 8,237 | 14.5 | % | $ | 7,497 | 13.5 | % | ||||||||||||||||
CS | 1,428 | 10.2 | 1,306 | 10.4 | 2,524 | 9.6 | 2,394 | 9.5 | ||||||||||||||||||||||||
DSS | 5,636 | 26.3 | 3,547 | 19.2 | 7,559 | 21.8 | 7,189 | 21.3 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Totals | $ | 11,107 | 18.6 | $ | 8,736 | 15.8 | $ | 18,320 | 16.8 | $ | 17,080 | 15.9 | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Operating income (loss):
| For the Three Months Ended December 31, | For the Six Months Ended December 31, | |||||||||||||||||||||||||||||||
SEGMENT | 2012 | % of Sales | 2011 | % of Sales | 2012 | % of Sales | 2011 | % of Sales | ||||||||||||||||||||||||
Medical | $ | 1,803 | 5.2 | % | $ | 2,332 | 8.3 | % | $ | 4,425 | 7.0 | % | $ | 4,219 | 7.6 | % | ||||||||||||||||
CS | 777 | 5.5 | 600 | 4.8 | % | 1,163 | 4.4 | % | 943 | 3.8 | % | |||||||||||||||||||||
DSS | 4,143 | 19.4 | 2,404 | 13.0 | % | 4,681 | 13.5 | % | 4,645 | 13.8 | % | |||||||||||||||||||||
Other Unallocated | (3,210 | ) | — | (2,417 | ) | — | (5,412 | ) | — | (4,499 | ) | — | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Totals | $ | 3,513 | 5.3 | $ | 2,919 | 5.3 | % | $ | 4,857 | 4.2 | % | $ | 5,308 | 5.0 | % | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Operating income (loss) excluding Onyx:
| For the Three Months Ended December 31, | For the Six Months Ended December 31, | |||||||||||||||||||||||||||||||
SEGMENT | 2012 | % of Sales | 2011 | % of Sales | 2012 | % of Sales | 2011 | % of Sales | ||||||||||||||||||||||||
Medical | $ | 2,370 | 8.3 | % | $ | 2,332 | 8.3 | % | $ | 4,992 | 8.8 | % | $ | 4,219 | 7.6 | % | ||||||||||||||||
CS | 777 | 5.5 | % | 600 | 4.8 | % | 1,163 | 4.4 | % | 943 | 3.8 | % | ||||||||||||||||||||
DSS | 4,143 | 19.4 | % | 2,404 | 13.0 | % | 4,681 | 13.5 | % | 4,645 | 13.8 | % | ||||||||||||||||||||
Other Unallocated | (3,210 | ) | — | (2,417 | ) | �� | — | (5,412 | ) | — | (4,499 | ) | — | |||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Totals | $ | 4,080 | 6.8 | % | $ | 2,919 | 5.3 | % | $ | 5,424 | 5.0 | % | $ | 5,308 | 5.0 | % | ||||||||||||||||
|
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|
|
|
|
|
| |||||||||||||||||||||||||
Page 11 of 17
SPARTON CORPORATION AND SUBSIDIARIES
RECONCILIATON OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
(Dollars in thousands, except share data)
| For the Three Months Ended December 31, 2012 | For the Three Months Ended December 31, 2011 | |||||||||||||||||||||||
| GAAP | Non-GAAP Adjustments | Adjusted | GAAP | Non-GAAP Adjustments | Adjusted | |||||||||||||||||||
Net sales | $ | 65,979 | $ | — | $ | 65,979 | $ | 55,370 | $ | — | $ | 55,370 | ||||||||||||
Cost of goods sold | 54,571 | (566 | ) | 54,005 | 46,634 | — | 46,634 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Gross profit | 11,408 | 566 | 11,974 | 8,736 | — | 8,736 | ||||||||||||||||||
Operating expense (income): | ||||||||||||||||||||||||
Selling and administrative expenses | 7,375 | — | 7,375 | 5,535 | — | 5,535 | ||||||||||||||||||
Internal research and development expenses | 243 | — | 243 | 218 | — | 218 | ||||||||||||||||||
Amortization of intangible assets | 273 | — | 273 | 110 | — | 110 | ||||||||||||||||||
Restructuring/impairment charges | — | — | — | (59 | ) | 59 | — | |||||||||||||||||
Other operating expenses | 4 | — | 4 | 13 | — | 13 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total operating expense, net | 7,895 | — | 7,895 | 5,817 | 59 | 5,876 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Operating income | 3,513 | 566 | 4,079 | 2,919 | (59 | ) | 2,860 | |||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||
Interest expense | (173 | ) | — | (173 | ) | (175 | ) | — | (175 | ) | ||||||||||||||
Interest income | 23 | — | 23 | 24 | — | 24 | ||||||||||||||||||
Gain on sale of investment | — | — | — | 127 | (127 | ) | — | |||||||||||||||||
Other, net | 59 | — | 59 | 116 | — | 116 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total other income (expense), net | (91 | ) | — | (91 | ) | 92 | (127 | ) | (35 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Income before provision for income taxes | 3,422 | 566 | 3,988 | 3,011 | (186 | ) | 2,825 | |||||||||||||||||
Provision for income taxes | (979 | ) | 2,255 | 1,276 | 1,069 | (67 | ) | 1,002 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net income | $ | 4,401 | $ | (1,689 | ) | $ | 2,712 | $ | 1,942 | $ | (119 | ) | $ | 1,823 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Income per share of common stock: | ||||||||||||||||||||||||
Basic | $ | 0.43 | $ | 0.27 | $ | 0.19 | $ | 0.18 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Diluted | $ | 0.43 | $ | 0.26 | $ | 0.19 | $ | 0.18 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Weighted average shares of common stock outstanding: | ||||||||||||||||||||||||
Basic | 10,229,320 | 10,229,320 | 10,287,797 | 10,287,797 | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Diluted | 10,248,424 | 10,248,424 | 10,325,029 | 10,325,029 | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Page 12 of 17
SPARTON CORPORATION AND SUBSIDIARIES
RECONCILIATON OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
(Dollars in thousands, except share data)
| For the Six Months Ended December 31, 2012 | For the Six Months Ended December 31, 2011 | |||||||||||||||||||||||
| GAAP | Non-GAAP Adjustments | Adjusted | GAAP | Non-GAAP Adjustments | Adjusted | |||||||||||||||||||
Net sales | $ | 114,999 | $ | — | $ | 114,999 | $ | 107,203 | $ | — | $ | 107,203 | ||||||||||||
Cost of goods sold | 96,378 | (566 | ) | 95,812 | 90,123 | — | 90,123 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Gross profit | 18,621 | 566 | 19,187 | 17,080 | — | 17,080 | ||||||||||||||||||
Operating expense (income): | ||||||||||||||||||||||||
Selling and administrative expenses | 12,847 | — | 12,847 | 10,946 | — | 10,946 | ||||||||||||||||||
Internal research and development expenses | 548 | — | 548 | 616 | — | 616 | ||||||||||||||||||
Amortization of intangible assets | 375 | — | 375 | 221 | — | 221 | ||||||||||||||||||
Restructuring/impairment charges | — | — | — | (59 | ) | 59 | — | |||||||||||||||||
Other operating expenses | (6 | ) | — | (6 | ) | 48 | — | 48 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total operating expense, net | 13,764 | — | 13,764 | 11,772 | 59 | 11,831 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Operating income | 4,857 | 566 | 5,423 | 5,308 | (59 | ) | 5,249 | |||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||
Interest expense | (254 | ) | — | (254 | ) | (347 | ) | — | (347 | ) | ||||||||||||||
Interest income | 51 | — | 51 | 48 | — | 48 | ||||||||||||||||||
Gain on sale of investment | — | — | — | 127 | (127 | ) | — | |||||||||||||||||
Other, net | 169 | — | 169 | 233 | — | 233 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total other income (expense), net | (34 | ) | — | (34 | ) | 61 | (127 | ) | (66 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Income before provision for income taxes | 4,823 | 566 | 5,389 | 5,369 | (186 | ) | 5,183 | |||||||||||||||||
Provision for income taxes | (531 | ) | 2,255 | 1,724 | 1,918 | (67 | ) | 1,851 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net income | $ | 5,354 | $ | (1,689 | ) | $ | 3,665 | $ | 3,451 | $ | (119 | ) | $ | 3,332 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Income per share of common stock: | ||||||||||||||||||||||||
Basic | $ | 0.53 | $ | 0.36 | $ | 0.34 | $ | 0.32 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Diluted | $ | 0.52 | $ | 0.36 | $ | 0.33 | $ | 0.32 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Weighted average shares of common stock outstanding: | ||||||||||||||||||||||||
Basic | 10,185,464 | 10,185,464 | 10,287,127 | 10,287,127 | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Diluted | 10,206,913 | 10,206,913 | 10,319,275 | 10,319,275 | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Page 13 of 17
SPARTON CORPORATION AND SUBSIDIARIES
RECONCILIATON OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
(Dollars in thousands)
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| December 31, 2012 | December 31, 2011 | December 31, 2012 | December 31, 2011 | |||||||||||||
Net income | $ | 4,401 | $ | 1,942 | $ | 5,354 | $ | 3,451 | ||||||||
Interest expense | 173 | 175 | 254 | 347 | ||||||||||||
Interest income | (23 | ) | (24 | ) | (51 | ) | (48 | ) | ||||||||
Provision for income taxes | (979 | ) | 1,069 | (531 | ) | 1,918 | ||||||||||
Depreciation and amortization | 993 | 426 | 1,472 | 831 | ||||||||||||
Restructuring/impairment charges | — | (59 | ) | — | (59 | ) | ||||||||||
Gross profit effect of capitalized profit in inventory from acquisition | 566 | — | 566 | — | ||||||||||||
Gain on sale of investment | — | (127 | ) | — | (127 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Adjusted EBITDA | 5,131 | 3,402 | 7,064 | 6,313 | ||||||||||||
Onyx adjusted EBITDA | 458 | — | 458 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Adjusted EBITDA without Onyx | $ | 4,673 | $ | 3,402 | $ | 6,606 | $ | 6,313 | ||||||||
|
|
|
|
|
|
|
| |||||||||
% of net sales | 7.8 | % | 6.1 | % | 6.1 | % | 5.9 | % | ||||||||
Page 14 of 17
SPARTON CORPORATION AND SUBSIDIARIES
RECONCILIATION OF SELECT SEGMENT INFORMATION
(UNAUDITED)
(Dollars in thousands)
| For the Three Months Ended December 31, 2012 | ||||||||||||||||||||
| Medical | CS | DSS | Eliminations | Total | ||||||||||||||||
Net Sales | $ | 34,804 | $ | 14,059 | $ | 21,402 | $ | (4,286 | ) | $ | 65,979 | |||||||||
Onyx net sales | 6,115 | — | — | — | 6,115 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net Sales excluding Onyx | $ | 28,689 | $ | 14,059 | $ | 21,402 | $ | (4,286 | ) | $ | 59,864 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| For the Six Months Ended December 31, 2012 | ||||||||||||||||||||
| Medical | CS | DSS | Eliminations | Total | ||||||||||||||||
Net Sales | $ | 62,863 | $ | 26,406 | $ | 34,608 | $ | (8,878 | ) | $ | 114,999 | |||||||||
Onyx net sales | 6,115 | — | — | — | 6,115 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net Sales excluding Onyx | $ | 56,748 | $ | 26,406 | $ | 34,608 | $ | (8,878 | ) | $ | 108,884 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| For the Three Months Ended December 31, 2012 | ||||||||||||||||||||
| Medical | CS | DSS | Corporate and Other Unallocated | Total | ||||||||||||||||
Gross profit | $ | 4,344 | $ | 1,428 | $ | 5,636 | $ | — | $ | 11,408 | ||||||||||
Onyx gross profit | 301 | — | — | — | 301 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Gross profit excluding Onyx | $ | 4,043 | $ | 1,428 | $ | 5,636 | $ | — | $ | 11,107 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
% of sales | 14.1 | % | 10.2 | % | 26.3 | % | — | % | 18.6 | % | ||||||||||
| For the Three Months Ended December 31, 2011 | ||||||||||||||||||||
| Medical | CS | DSS | Corporate and Other Unallocated | Total | ||||||||||||||||
Gross profit | $ | 3,883 | $ | 1,306 | $ | 3,547 | $ | — | $ | 8,736 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
% of sales | 13.9 | % | 10.4 | % | 19.2 | % | — | % | 15.8 | % | ||||||||||
| For the Six Months Ended December 31, 2012 | ||||||||||||||||||||
| Medical | CS | DSS | Corporate and Other Unallocated | Total | ||||||||||||||||
Gross profit | $ | 8,538 | $ | 2,524 | $ | 7,559 | $ | — | $ | 18,621 | ||||||||||
Onyx gross profit | 301 | — | — | — | 301 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Gross profit excluding Onyx | $ | 8,237 | $ | 2,524 | $ | 7,559 | $ | — | $ | 18,320 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
% of sales | 14.5 | % | 9.6 | % | 21.8 | % | — | % | 16.8 | % | ||||||||||
| For the Six Months Ended December 31, 2011 | ||||||||||||||||||||
| Medical | CS | DSS | Corporate and Other Unallocated | Total | ||||||||||||||||
Gross profit | $ | 7,497 | $ | 2,394 | $ | 7,189 | $ | — | $ | 17,080 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
% of sales | 13.5 | % | 9.5 | % | 21.3 | % | — | % | 15.9 | % | ||||||||||
Page 15 of 17
SPARTON CORPORATION AND SUBSIDIARIES
RECONCILIATION OF SELECT SEGMENT INFORMATION
(UNAUDITED)
(Dollars in thousands)
| For the Three Months Ended December 31, 2012 | ||||||||||||||||||||
| Medical | CS | DSS | Corporate and Other Unallocated | Total | ||||||||||||||||
Operating income | $ | 1,803 | $ | 777 | $ | 4,143 | $ | (3,210 | ) | $ | 3,513 | |||||||||
Onyx operating income | (567 | ) | — | — | — | (567 | ) | |||||||||||||
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Operating income excluding Onyx | $ | 2,370 | $ | 777 | $ | 4,143 | $ | (3,210 | ) | $ | 4,080 | |||||||||
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% of sales | 8.3 | % | 5.5 | % | 19.4 | % | — | % | 6.8 | % | ||||||||||
Depreciation and amortization excluding Onyx | $ | 175 | $ | 148 | $ | 153 | $ | 56 | $ | 534 | ||||||||||
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| For the Three Months Ended December 31, 2011 | ||||||||||||||||||||
| Medical | CS | DSS | Corporate and Other Unallocated | Total | ||||||||||||||||
Operating income | $ | 2,332 | $ | 600 | $ | 2,404 | $ | (2,417 | ) | $ | 2,919 | |||||||||
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% of sales | 8.3 | % | 4.8 | % | 13.0 | % | — | % | 5.3 | % | ||||||||||
Depreciation and amortization | $ | 178 | $ | 134 | $ | 101 | $ | 13 | $ | 426 | ||||||||||
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| For the Six Months Ended December 31, 2012 | ||||||||||||||||||||
| Medical | CS | DSS | Corporate and Other Unallocated | Total | ||||||||||||||||
Operating income | $ | 4,425 | $ | 1,163 | $ | 4,681 | $ | (5,412 | ) | $ | 4,857 | |||||||||
Onyx operating income | (567 | ) | — | — | — | (567 | ) | |||||||||||||
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Operating income excluding Onyx | $ | 4,992 | $ | 1,163 | $ | 4,681 | $ | (5,412 | ) | $ | 5,424 | |||||||||
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% of sales | 8.8 | % | 4.4 | % | 13.5 | % | — | % | 5.0 | % | ||||||||||
Depreciation and amortization excluding Onyx | $ | 348 | $ | 291 | $ | 297 | $ | 77 | $ | 1,013 | ||||||||||
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| For the Six Months Ended December 31, 2011 | ||||||||||||||||||||
| Medical | CS | DSS | Corporate and Other Unallocated | Total | ||||||||||||||||
Operating income | $ | 4,219 | $ | 943 | $ | 4,645 | $ | (4,499 | ) | $ | 5,308 | |||||||||
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% of sales | 7.6 | % | 3.8 | % | 13.8 | % | — | % | 5.0 | % | ||||||||||
Depreciation and amortization | $ | 347 | $ | 264 | $ | 195 | $ | 25 | $ | 831 | ||||||||||
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Page 16 of 17
SPARTON CORPORATION AND SUBSIDIARIES
RECONCILIATON OF PRO FORMA NON-GAAP FINANCIAL MEASURES
RELATED TO ONYX ACQUISITION
(UNAUDITED)
(Dollars in thousands)
| For the Three Months Ended December 31, | For the Six Months Ended December 31, | |||||||||||||||||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||||||||||||||||||
| Pre Acquisition | Post Acquisition | Total Onyx | Total Onyx | Pre Acquisition | Post Acquisition | Total Onyx | Total Onyx | |||||||||||||||||||||||||
Operating income | $ | 237 | $ | (567 | ) | $ | (330 | ) | $ | 278 | $ | 1,581 | $ | (567 | ) | $ | 1,014 | $ | 1,120 | |||||||||||||
Depreciation and amortization | 285 | 459 | 744 | 300 | 683 | 459 | 1,142 | 579 | ||||||||||||||||||||||||
Gross profit effect of capitalized profit in inventory from acquisition | — | 566 | 566 | — | — | 566 | 566 | — | ||||||||||||||||||||||||
Augustine | — | — | — | 745 | — | — | — | 745 | ||||||||||||||||||||||||
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Adjusted EBITDA | $ | 522 | $ | 458 | $ | 980 | $ | 1,323 | $ | 2,264 | $ | 458 | $ | 2,722 | $ | 2,444 | ||||||||||||||||
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% of net sales | 9.2 | % | 7.5 | % | 8.3 | % | 10.4 | % | 12.4 | % | 7.5 | % | 11.2 | % | 10.0 | % | ||||||||||||||||
| For the Three Months Ended December 31, | For the Six Months Ended December 31, | |||||||||||||||||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||||||||||||||||||
| Pre Acquisition | Post Acquisition | Total Onyx | Total Onyx | Pre Acquisition | Post Acquisition | Total Onyx | Total Onyx | |||||||||||||||||||||||||
Gross profit | $ | 723 | $ | 301 | $ | 1,024 | $ | 1,796 | $ | 3,094 | $ | 301 | $ | 3,395 | $ | 3,835 | ||||||||||||||||
Gross profit effect of capitalized profit in inventory from acquisition | — | 566 | 566 | — | — | 566 | 566 | — | ||||||||||||||||||||||||
Augustine | — | — | — | 338 | — | — | — | 338 | ||||||||||||||||||||||||
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Adjusted gross profit | $ | 723 | $ | 867 | $ | 1,590 | $ | 2,134 | $ | 3,094 | $ | 867 | $ | 3,961 | $ | 4,173 | ||||||||||||||||
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% of net sales | 12.8 | % | 14.2 | % | 13.5 | % | 16.8 | % | 17.0 | % | 14.2 | % | 16.3 | % | 17.1 | % | ||||||||||||||||
Depreciation | 285 | 287 | 572 | 300 | 683 | 287 | 970 | 579 | ||||||||||||||||||||||||
| For the Three Months Ended December 31, | For the Six Months Ended December 31, | |||||||||||||||||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||||||||||||||||||
| Pre Acquisition | Post Acquisition | Total Onyx | Total Onyx | Pre Acquisition | Post Acquisition | Total Onyx | Total Onyx | |||||||||||||||||||||||||
Net sales | $ | 5,669 | $ | 6,115 | $ | 11,784 | $ | 12,668 | $ | 18,198 | $ | 6,115 | $ | 24,313 | $ | 24,458 | ||||||||||||||||
Adjusted gross profit | 723 | 867 | 1,590 | 2,134 | 3,094 | 867 | 3,961 | 4,173 | ||||||||||||||||||||||||
Operating expense: | ||||||||||||||||||||||||||||||||
Selling and administrative expenses | 486 | 696 | 1,182 | 1,518 | 1,513 | 696 | 2,209 | 2,715 | ||||||||||||||||||||||||
Amortization of intangible assets | — | 172 | 172 | — | — | 172 | 172 | — | ||||||||||||||||||||||||
Augustine | — | — | — | (407 | ) | — | — | — | (407 | ) | ||||||||||||||||||||||
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Total operating expense | 486 | 868 | 1,354 | 1,111 | 1,513 | 868 | 2,381 | 2,308 | ||||||||||||||||||||||||
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Adjusted operating income | $ | 237 | $ | (1 | ) | $ | 236 | $ | 1,023 | $ | 1,581 | $ | (1 | ) | $ | 1,580 | $ | 1,865 | ||||||||||||||
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% of net sales | 4.2 | % | (0.0 | )% | 2.0 | % | 8.1 | % | 8.7 | % | (0.0 | )% | 6.5 | % | 7.6 | % | ||||||||||||||||
Depreciation and amortization | 285 | 459 | 744 | 300 | 683 | 459 | 1,142 | 579 | ||||||||||||||||||||||||
Page 17 of 17