Sparton Corporation Releases Fiscal 2002 First Quarter Results at Annual Shareowners Meeting

(JACKSON, MICHIGAN)-October 24, 2001-At the Annual Shareowners meeting today, electronics manufacturing service (EMS) provider Sparton Corporation (NYSE:SPA) reelected three directors, approved amendments to the Company’s stock incentive plan and released fiscal 2002 First Quarter results.

Directors David P. Molfenter, W. Peter Slusser and Bradley O.Smith were reelected to three-year terms expiring in 2004.

The Shareowners approved amendments to the Company’s stock incentive plan. One amendment increases the number of shares available for issuance under the plan to 760,000 and another allows eligibility in the plan for non-employee Directors.

President David W. Hockenbrocht also announced fiscal 2002 First Quarter results. Sales for the three months ended September 30, 2001, were $40,810,000 with a net income of $858,000 ($.11 per share). This compares to the previous year’s First Quarter sales of $42,682,000 and a loss of $1,109,000 ($.14 per share). The backlog of government EMS orders at September 30, 2001, totaled $71,000,000.

We have noted a drop in commercial customer demand but a slight increase in demand for government products, principally sonobuoys. In response to this softness in commercial EMS demand, which we believe will span at least six months, we have laid off 170 Sparton associates in selected plants to keep our costs in line. While we are reporting a profit for the quarter in line with our expectations, the near future is obscure at best.

We plan to issue news releases covering any material changes to our business plans. In the long term, we remain bullish on our future in the Electronic Manufacturing Services (EMS) marketplace, given the increasing number of OEM companies who are mounting an outsourcing strategy. It is significant to note that EMS is now the largest manufacturing business in the world at $106 billion and continuing to portray strong growth in a market which it is only approximately 13% penetrated. Our focus continues on regulated businesses in government, aerospace, medical, and telecommunications, particularly with clients who have high mix coupled with low to medium volume requirements.

Several internal management committees are performing a thorough review and restructuring of our entire business processes around new technologies available through our IT network. We anticipate a continuing reduction in our costs of doing business even as our sales continue to grow, long-term.

The Board of Directors of Sparton Corporation also approved the initiation of a stock repurchase program effective October 24, 2001.

“We believe that our current stock price does not reflect our true long-term value," said CEO and President, David W. Hockenbrocht. “As our earnings continue to show improvement and consistency, we believe that the purchase of our own stock is a good use of our capital and demonstrates our commitment to the future of the company and its potential value to our shareowners."

The repurchase of up to 350,000 shares of its outstanding common stock was authorized by the Board. Sparton has selected A.G. Edwards & Sons as the broker/dealer to assist the Company in any repurchases made by the Company in connection with the stock repurchase program. Purchases will be made on the open market over the next 24 months and will be subject to market conditions and all applicable laws and regulations. The timing of purchases and the exact number of shares to be purchased will depend on market conditions at the time. The share repurchase program does not include specific price targets or timetables and may be suspended, at any time. The Company intends to finance the purchases using its available cash and if necessary, its lines of credit. Repurchased shares will be used principally for ongoing stock issuances under the employee stock incentive plan and other general corporate purposes.

This news release 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," “anticipate," 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-K for the year ended June 30, 2001 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.