Item 2. Properties - - ------- ----------
The table below lists the principal properties of Sparton, by segment. All are owned except as noted. There are manufacturing and/or office facilities at each
location. Sparton believes these facilities are suitable for its operations, except as noted.
Electronics: Jackson, Michigan DeLeon Springs, Florida (2 plants) Brooksville, Florida London, Ontario Albuquerque, New Mexico Rio Rancho, New Mexico Deming, New Mexico (lease/purchase, see below)
Automotive and industrial products: Flora, Illinois Grayville, Illinois (2 plants, one of which is leased) Lake Odessa, Michigan Kentwood, Michigan (leased) Gladwin, Michigan Grand Haven, Michigan (in part leased) White Cloud, Michigan (in part leased) Spring Lake, Michigan Brownstown, Indiana Hartford City, Indiana
The Company leases the Deming, New Mexico facility under terms of a capital lease and has exercised an option to purchase the facility at the end of the lease term which expires on July 1, 1997. Future minimum payments under this capital lease at June 30, 1994 are as follows: 1995 - $89,000, 1996 - $85,000, 1997 - $80,000, and $75,000 in 1998. Interest of $29,000, payable over the remaining lease term at 6 1/8% per annum, was deducted in arriving at the obligation at June 30, 1994. In July 1991, the Company leased an additional production facility in Albuquerque, New Mexico under a four-year agreement. This facility is presently vacant and available for sublease.
Both the White Cloud, Michigan and Grand Haven, Michigan facilities are occupied under lease agreements that allow termination by either party upon ninety (90) day notice. These facilities are owned by John J. Smith and Lawson K. Smith, Chief
Executive Officer, and Vice President-Secretary, respectively, of Sparton Corporation. The agreements, the result of arms-length type negotiations, grant the Company the option to acquire the properties during the lease term for $252,400 and $223,200, respectively.
The adminitrative facility in Kentwood, Michigan is presently leased under an agreement that expires in October, 1997. The Company officially closed the Gladwin plant of Sparton Engineered Products, Inc.-Lake Odessa Group in August 1990 with this property subsequently offered for sale. The Gladwin facility was placed back in service in October 1993 and is no longer actively offered for sale.
Item 3.
Item 3. Legal Proceedings - - ------ -----------------
Various litigation is pending against the Company, in many cases involving ordinary and routine claims incidental to the business of the Company and in others presenting allegations that are non-routine. The Company and its subsidiaries are also involved in certain compliance issues with the United States Environmental Protection Agency and various state agencies, including being named as a potentially responsible party at several sites. Potentially responsible parties can be held jointly and severally liable for the cleanup costs at any specific site. The Company's past experience, however, has indicated that when it has contributed only deminimus amounts of material or waste to a specific site, its ultimate share of any cleanup costs has been very small. Based upon available information, the Company believes it has contributed only deminimus amounts to those sites in which it is currently viewed a potentially responsible party.
One of the Company's facilities located in New Mexico has been the subject of ongoing investigations by the U. S. Environmental Protection Agency (EPA). To date, the work has involved remedial investigations, negotiation and execution of an administrative order on consent with the EPA, establishment of on-site and off-site monitoring systems, and the installation of some groundwater recovery and air stripping equipment. The remedial investigation has been completed and approved. The Company has prepared a corrective action plan based upon the results of its investigation. This action plan has not yet been approved. In addition, the Company is involved in related issues with State of New Mexico environmental agencies and a nearby landowner. The Company has charged to expense approximately $2,700,000, net of $3,000,000 of insurance recoveries received, since the contamination problem was first identified in the early 1980's. Efforts to resolve thses matters will likely continue for a number of years.
The ultimate legal and financial liability of the Company in respect to the above matters cannot be estimated with any certainty. Management of the Company believes, however, based on its examination of such matters, experience to date and discussions with counsel and other consultants, that such ultimate liability (including insurance recoveries, where applicable) should not be material in relation to the Company's consolidated financial statements.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders - - ------ ---------------------------------------------------
No matters were submitted to a vote of the security holders during the last quarter of the period covered by this report.
John J. Smith and Lawson K. Smith are brothers. There are no other family relationships between the persons named above. John J. Smith is employed as Chief Executive Officer under the terms of an employment agreement through June 30, 1994. All other officers are elected annually and serve at the discretion of the Board of Directors.
PART II - - ------- Item 5.
Item 5. Market for the Registrant's Common Stock - - ------ ---------------------------------------- and Related Security Holder Matters -----------------------------------
Information with respect to the market for the Company's stock, including stock prices, stock exchange and number of shareowners, and quarterly dividends for the two year period ended June 30, 1994, is included under "Financial Highlights" on page 1 and "Management's Discussion and Analysis of Financial Condition and Results of Operations" on page 20 of the Annual Report and is incorporated herein by reference.
Item 6.
Item 6. Selected Financial Data - - ------ -----------------------
The "Selected Financial Data" on page 19 of the Annual Report is incorporated herein by reference.
Item 7.
Item 7. Management's Discussion and Analysis of - - ------ --------------------------------------- Financial Condition and Results of Operations ---------------------------------------------
"Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 20-22 of the Annual Report is incorporated herein by reference.
Item 8.
Item 8. Financial Statements and Supplementary Data - - ------ -------------------------------------------
The consolidated financial statements and "Report of Independent Auditors" are included in the Annual Report on pages 8-18 and 12, respectively, and are incorporated herein by reference.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting - - ------ ----------------------------------------------------------- and Financial Disclosure ------------------------
None.
PART III - - -------- Item 10.
Item 10. Directors and Executive Officers - - ------- -------------------------------- of the Registrant -----------------
Information with respect to directors is included in the Proxy Statement under "Election of Directors" and is incorporated herein by reference. Information concerning the executive officers is included in Part I on pages 9-11.
Item 11.
Item 11. Executive Compensation - - ------- ----------------------
Information concerning executive compensation is included under "Compensation of Executive Officers and Directors" in the Proxy Statement and is incorporated herein by reference.
Item 12.
Item 12. Security Ownership of Certain - - ------- ----------------------------- Beneficial Owners and Management --------------------------------
Information on management and certain other beneficial ownership of the Company's common stock is included under "Outstanding Shares and Voting" in the Proxy Statement and is incorporated herein by reference.
Item 13.
Item 13. Certain Relationships and Related Transactions - - ------- ----------------------------------------------
Information as to certain relationships and related transactions is included under "Certain Relationships and Transactions" in the Proxy Statement and is incorporated herein by reference.
All other prescribed schedules have been omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements or the notes thereto.
Exhibit Index - - ------------- 3 and 4 Articles of Incorporation of the Registrant were filed with Form 10-K for the year ended June 30, 1981 and an amendment thereto was filed with Form 10-Q for the three-month period ended September 30, 1983, and are incorporated herein by reference.
By-laws of the Registrant were filed with Form 10-K for the year ended June 30, 1981, and are incorporated herein by reference.
Code of Regulations of the Registrant were filed with Form 10-K for the year ended June 30, 1981 and an amendment thereto was filed with Form 10-Q for the three-month period ended September 30, 1982, and are incorporated herein by reference.
10 The employment agreement with John J. Smith was filed with Form 10-K for the year ended June 30, 1981 and subsequent amendments thereto were filed with Form 10-K for the year ended June 30, 1985, with Form 10-Q for the three-month period ended September 30, 1988, and with Form 10-Q for the three month period ended September 30, 1991 and are incorporated herein by reference.
13 1994 Annual Report to Shareowners (filed herewith and attached). With the exception of the pages of the Annual Report specifically incorporated herein by reference, the Annual Report is not deemed to be filed as part of this report on Form 10-K.
22 Subsidiaries (filed herewith and attached).
23 Consent of independent auditors (filed herewith and attached).
27 Submitted to the Securities and Exchange Commission for its information
Reports on Form 8-K Filed in the Fourth Quarter of Fiscal 1994 - - --------------------------------------------------------------
No reports on Form 8-K were required to be filed by the Registrant during the last quarter of the period covered by this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SPARTON CORPORATION ---------------------------------
Date: September 26, 1994 By /s/ Richard L. Langley ------------------------------- Richard L. Langley, Vice President- Treasurer (Principal Accounting and Financial Officer)
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