Sparton Corporation Reaches A Settlement with U.S. Department of Energy

(JACKSON, MICHIGAN)--September 5, 2002--Electronic Contract Manufacturing Services (EMS) provider Sparton Corporation (NYSE:SPA) announced today that it has reached a settlement with the United States Department of Energy (DOE) and others to recover past EPA remediation costs.

Under the terms of the settlement, Sparton will be reimbursed for a portion of the costs the Company has incurred in its investigation and site remediation efforts at the Sparton Technology Inc. Coors Road site, located in Albuquerque, New Mexico. The remediation efforts began in 1983. The settlement concludes a very lengthy negotiation process and two court actions, one in the Federal Court of Claims and one in the Federal District Court in Albuquerque.

Under the settlement terms, Sparton will receive $4,850,000 from the DOE and others in its fiscal 2003, plus an additional $1,000,000 in fiscal 2004. In addition, the DOE has agreed to reimburse Sparton 37.5% of future environmental remediation expenses in excess of $8,400,000 incurred at the site.

With the settlement, Sparton was able to receive cash and gain some degree of risk protection, with the DOE sharing in costs incurred above an established level. The financial impact of the settlement will be recorded in the first quarter of fiscal 2003, that ends September 30, 2002. Most of the settlement proceeds received (approximately $5,500,000) will be recorded as income.

The Company continues to pursue other claims for recovery. It is presently not possible to evaluate the ultimate success in these other claims.