EXHIBIT 99.1
[LOGO OF SPARTON CORPORATION] NEWS RELEASE
FOR IMMEDIATE RELEASE
SPARTON CORPORATION
Sparton Corporation Releases Second Quarter Fiscal 2003 Results
JACKSON, Mich.-- February 11, 2003--Electronic Design and Manufacturing
Service (EMS) provider, Sparton Corporation (NYSE:SPA) announces the financial
results for the second quarter and six months ended December 31, 2002.
Sales for the three months ended December 31, 2002 were $43,279,000, an
increase of $2,213,000 (5%) over the same period a year ago. This increase
reflects strong sales in homeland security related products, avionics, and
medical markets. Sales in our other key markets, including government,
declined. The majority of the sales increase came from new customers or
programs, as opposed to increasing demand from existing programs. Sales for
the six months ended December 31, 2002, were $80,047,000, a slight decrease
from the prior year. Sparton continues to exercise ongoing initiatives to
reduce costs and expenses while building sales.
Operating income of $2,438,000 and $8,025,000 was reported for the three
months and six months ended December 31, 2002, respectively, compared to
$604,000 and $1,879,000 for the same periods last year. Included in operating
income for the six-month period was $5,500,000 of income recognized in the
first quarter reflecting Sparton's settlement with the United States (U.S.)
Department of Energy and others. This settlement reflected reimbursement for
costs incurred at the Company's Sparton Technology, Inc. Coors Road
remediation site, located in Albuquerque, New Mexico.
In general, the higher gross margins reflect a favorable product mix. Also,
continued cost reduction measures have resulted in higher individual contract
margins. During the three months ended December 31, 2002, the Company reduced
its annual effective tax rate, based on anticipated usage of the Canadian loss
and contribution carry-forwards. This reduced taxes previously accrued through
September 30, 2002 by $398,000. Net income per share for the three months and
six months ended December 31, 2002 was $.27 per share and $.72 per share,
respectively. Government sales backlog at December 31, 2002, totaled $45
million. U.S. Government awards of the 2003 sonobuoy contracts are expected to
be announced in February or March. Sparton's share of those anticipated awards
will be included in the backlog at that time. We remain financially strong
with no bank debt.
On January 10, 2003, the Board of Directors approved a 5% stock dividend.
Eligible shareowners of record on January 21, 2003, will receive the stock
dividend. The dividend distribution or payment date was established as
February 18, 2003. Cash will be paid in lieu of any fractional shares of
stock. The Board believes stock dividends are an excellent way to reward
shareowners, demonstrating a strong commitment to enhancing shareowner value
and increasing the liquidity of Sparton stock over time.
For more information, please contact Rhonda Aldrich, Sparton Corporation at
(517) 787-8600 or visit the Sparton website at http://www.sparton.com/.
SPARTON CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)
For the Three-Month and Six-Month Periods ended December 31, 2002 and 2001
THREE-MONTH PERIODS
2002 2001
---- ----
Net sales $43,279,295 $41,065,819
Costs of goods sold 37,514,228 37,248,947
----------- -----------
5,765,067 3,816,872
Selling and administrative income (expense):
Selling and administrative expenses (3,209,415) (3,086,312)
EPA related - net (117,438) (127,047)
----------- ----------
(3,326,853) (3,213,359)
----------- ----------
Operating income 2,438,214 603,513
Other income (expense):
Interest and investment income 184,360 114,344
Equity loss in investment (18,000) (71,250)
Other - net (61,141) 268,207
----------- ----------
105,219 311,301
----------- ----------
Income before income taxes 2,543,433 914,814
Provision for income taxes 365,000 365,000
----------- ----------
Net income $ 2,178,433 $ 549,814
=========== ==========
Basic and diluted earnings per share $0.27 $0.07
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SIX-MONTH PERIODS
2002 2001
---- ----
Net sales $80,047,202 $81,875,899
Costs of goods sold 70,517,873 73,331,112
----------- -----------
9,529,329 8,544,787
Selling and administrative income (expense):
Selling and administrative expenses (6,733,629) (6,365,418)
EPA related - net 5,229,562 (300,473)
----------- -----------
(1,504,067) (6,665,891)
----------- -----------
Operating income 8,025,262 1,878,896
Other income (expense):
Interest and investment income 301,657 242,968
Equity loss in investment (57,000) (142,500)
Other - net (46,651) 226,260
---------- ----------
198,006 326,728
---------- ----------
Income before income taxes 8,223,268 2,205,624
Provision for income taxes 2,467,000 869,000
---------- ----------
Net income $5,756,268 $1,336,624
========== ==========
Basic and diluted earnings per share $0.72 $0.17
===== =====
SPARTON CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheet as of December 31, 2002
(Unaudited)
Assets Liabilities and Shareowners' Equity
- ------ ----------------------------
Current assets $ 91,715,599 Current liabilities $ 14,673,306
Miscellaneous Other Assets 8,932,595 Environmental remediation 7,192,841
Property, plant and equipment 8,908,176 Shareowners' equity 87,690,223
------------ ------------
Total Liabilities and
Total Assets $109,556,370 Shareowners' Equity $109,556,370
============ ============
See accompanying notes.
Notes:
1. Financial information was taken from the Company's internal records and is
unaudited.
2. For the three-month and six-month periods, average shares outstanding were
7,941,717 and 7,941,500 in 2002, and 7,944,550 and 7,946,315 in 2001. Average
shares outstanding include estimated additional shares to be issued with
respect to the 5% common stock dividend declared by the Board of Directors on
January 10, 2003. Differences in the weighted average number of shares
outstanding for purposes of computing diluted earnings per share were due to
the inclusion of employee incentive stock options. These differences in the
calculation of basic and diluted earnings per share were not material and
resulted in no differences in per share amounts.
3. The financial results for the six-month period ended December 31, 2002
include the impact ($5,500,000) of the previously announced settlement with
various governmental agencies, to recover costs associated with its Coors Road
remediation efforts in Albuquerque, New Mexico.
This release of earnings contains certain forward-looking statements within
the scope of the Securities Act of 1933 and the Securities Exchange Act of
1934. The words "expect", "believe", and similar expressions, and the
negatives of such expressions, are intended to identify forward-looking
statements. Although the Company believes that these statements are based upon
reasonable assumptions, such statements involve risks, uncertainties, and
assumptions, including but not limited to industry and economic conditions,
customer actions, and the other factors discussed in the Company's Form 10-Q
for the quarter ended December 31, 2002, and its other filings with the
Securities and Exchange Commission. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual outcomes may vary materially from those indicated.