<PAGE> 1
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SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
SPARTON CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
SPARTON CORPORATION
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
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<PAGE> 2
SPARTON CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Our Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders of Sparton
Corporation will be held at the offices of the Corporation, 2400 East Ganson
Street, Jackson, Michigan 49202, on Wednesday, October 25, 2000, at 10:00 a.m.,
local time, for the following purposes:
1. To elect three directors each for a term of three years as set
forth in the Proxy Statement.
2. To transact such other business as may properly come before the
meeting.
Only holders of Common Stock of record at the close of business on
September 15, 2000 are entitled to notice of and to vote at the meeting.
By Order of the Board of Directors
R. JAN APPEL
Secretary
September 27, 2000
IMPORTANT
All shareholders are cordially invited to attend the meeting. Whether or
not you plan to attend in person, you are urged to sign and date the Proxy
enclosed and return it promptly in the envelope provided. This will assure your
representation and a quorum for the transaction of business at the meeting. If
you do attend the meeting in person, the Proxy will not be used if you so
request by revoking it as described on page 3 of the Proxy Statement.
<PAGE> 3
SPARTON CORPORATION
2400 East Ganson Street
Jackson, Michigan 49202
------------------
PROXY STATEMENT
------------------
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON OCTOBER 25, 2000
SOLICITATION
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of SPARTON CORPORATION, an Ohio corporation (the
"Company"), of proxies for use at the 2000 Annual Meeting of Shareholders of the
Company (the "Annual Meeting") to be held at the offices of the Company, 2400
East Ganson Street, Jackson, Michigan 49202, on October 25, 2000 at 10 a.m.,
local time, and at any and all adjournments thereof. The cost of solicitation
will be paid by the Company. In addition, officers and employees of the Company
and its subsidiaries may solicit proxies personally, by telephone, facsimile or
other means, without additional compensation. This Proxy Statement and the form
of Proxy are being mailed to shareholders on or about September 27, 2000.
At the meeting, the Company's shareholders will act upon the election of
three (3) directors each to serve for a three (3) year term until the annual
meeting held in the year 2003 or until their successors are elected and
qualified, as described in more detail in this Proxy Statement.
OUTSTANDING STOCK AND VOTING RIGHTS
In accordance with the Code of Regulations of the Company, the Board of
Directors has fixed the close of business on September 15, 2000, as the record
date for determination of shareholders entitled to notice of, and to vote at,
the Annual Meeting. Only shareholders of record on that date will be entitled to
vote.
As of September 15, 2000, the record date for the Annual Meeting, the
Company had outstanding 7,828,090 shares of Common Stock, each entitled to one
vote at the Annual Meeting. Votes cast at the meeting and submitted by proxy are
counted by the inspectors of the meeting, who are appointed by the Company. As
of September 1, 2000, the persons named in the following table were known by the
management to be the beneficial owners of more than 5% of the Company's
outstanding Common Stock:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
------------------- ------------- --------
<S> <C> <C>
John J. Smith(l)
1839 S. Walmont
Jackson, Michigan 49203 2,424,200(2) 30.97%(2)
Lawson K. Smith(l)
2900 Thornhills, S.E.,
Apt. #309
Grand Rapids, Michigan 49546 672,046(3) 8.59(3)
</TABLE>
1
<PAGE> 4
<TABLE>
<CAPTION>
AMOUNT AND
NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
------------------- ------------- --------
<S> <C> <C>
Bradley O. Smith(1)
6043 N. Gatehouse, S.E
Grand Rapids, Michigan 49546 407,054(4) 5.20
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue, llth Fl
Santa Monica, California 90401 539,000(5) 6.89(5)
</TABLE>
---------------
(1) Mr. John J. Smith and Mr. Lawson K. Smith are brothers. Mr. Bradley O. Smith
is the son of Mr. Lawson K. Smith and the nephew of Mr. John J. Smith.
(2) Includes 1,825,100 shares owned by Mr. John J. Smith. An additional 280,000
shares are held by trusts over which Mr. Smith has voting control. The
amount also includes 319,100 shares held by the Company's retirement pension
plan as to which Mr. Smith holds voting and investment power in his capacity
as chief executive officer of the Company. Mr. Smith has no financial
interest and disclaims any beneficial interest in these 319,100 shares.
(3) Includes 361,506 shares and 310,540 shares held by the Lawson K. Smith Trust
and Margaret E. Smith Trust, respectively. Mr. Lawson K. Smith and his wife,
Margaret E. Smith, have voting and investment control over the shares held
in the trusts bearing their names.
(4) Includes 146,715 shares owned individually by Mr. Bradley O. Smith, 197,549
shares owned by Mr. Smith jointly with his wife, 11,090 shares owned by his
wife, Sharon A. Smith and 51,700 shares over which Mr. Smith holds voting
and investment power.
(5) According to information included in the Form 13G Report filed as of
December 31, 1999, by Dimensional Fund Advisors Inc. ("Dimensional"), a
registered investment advisor, Dimensional is deemed to have beneficial
ownership of 539,000 shares of Common Stock, all of which shares are held in
portfolios of DFA Investment Dimensions Group Inc., a registered open-end
investment company, or in series of the DFA Investment Trust Company, a
Delaware business trust, or the DFA Group Trust and DFA Participation Group
Trust, investment vehicles for qualified employee benefit plans, to all of
which Dimensional Fund Advisors Inc. serves as investment manager.
Dimensional disclaims beneficial ownership of all such shares.
As of September 1, 2000, the following table shows the shares of the
Company's Common Stock beneficially owned by the Named Executives identified in
the Compensation Table shown later in this Proxy Statement and all officers and
directors of the Company as a group (16 persons):
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME BENEFICIAL OWNERSHIP CLASS(7)
---- --------------------- ----------
<S> <C> <C>
John J. Smith 2,424,200(1) 30.97%
David W. Hockenbrocht 88,202(2) 1.12
Richard D. Mico 24,500(3) .31
Douglas E. Johnson 20,000(4) .26
Richard L. Langley 22,200(5) .28
All Officers and Directors 3,011,086(6) 38.11
</TABLE>
---------------
(1) Reference is made to note (2) on page 2.
(2) Includes 32,000 shares which Mr. Hockenbrocht has the right to acquire
pursuant to options exercisable within 60 days.
2
<PAGE> 5
(3) Includes 7,500 shares which Mr. Mico has the right to acquire pursuant to
options exercisable within 60 days.
(4) Includes 15,000 shares which Mr. Johnson has the right to acquire pursuant
to options exercisable within 60 days.
(5) Includes 7,500 shares which Mr. Langley has the right to acquire pursuant to
options exercisable within 60 days.
(6) Includes shares under options held by all officers and directors exercisable
within 60 days.
(7) Calculation is based on total shares outstanding plus the shares subject to
options exercisable within 60 days as described in this Proxy Statement.
Any Proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing a
written notice of revocation with the Chairman or Secretary of the Company, at
or before the Annual Meeting, (ii) duly executing a subsequent proxy relating to
the same shares and delivering it to the Chairman or Secretary of the Company at
or before the Annual Meeting or (iii) attending the Annual Meeting and voting in
person (although attendance at the Annual Meeting will not in and of itself
constitute a revocation of a proxy). Unless revoked, the shares represented by
the enclosed Proxy will be voted at the meeting in accordance with any
specification made thereon, if the Proxy is returned properly executed and
delivered in time for voting. Unless otherwise specified, the Proxy will be
voted "FOR" the election of the three (3) director nominees.
Management does not intend to present, and does not know of anyone who
intends to present, any matters at the meeting to be acted upon by the
shareholders not referred to in the Notice and this Proxy Statement. If any
other matters should properly come before the meeting, it is the intention of
the persons named in the Proxy to vote in accordance with their judgment on such
matters.
The shareholders of the Company have cumulative voting rights in the
election of directors at the Annual Meeting if notice in writing is given by any
shareholder to the Chairman, President, a Vice President or the Secretary of the
Company not less than 48 hours before the time fixed for holding the Annual
Meeting that the shareholder desires that the voting at such election shall be
cumulative. An announcement of the giving of such notice shall be made upon the
convening of the Annual Meeting by the Chairman or Secretary.
If voting at the Annual Meeting is cumulative, each shareholder will have
the right to cast that number of votes which equals the number of shares owned
by the shareholder multiplied by the number of directors to be elected, and the
shareholder may cast all such votes for one candidate or distribute such votes
among any number of candidates as the shareholder elects. The actual number of
shares required for election of a candidate will vary depending upon the total
number of shares voted. However, shareholders owning 1,957,023 shares, or
approximately 25% of the Company's outstanding shares, could elect at least one
director to the class of three directors to be elected at the 2000 Annual
Meeting if there are four nominees.
ELECTION OF DIRECTORS
The following directors whose terms of office expire at the Annual Meeting,
Messrs. James N. DeBoer, David W. Hockenbrocht and Rory B. Riggs, are nominees
each for election to a three (3) year term expiring in 2003. The following
portion of this Proxy Statement contains additional information about these
nominees.
A plurality of the votes cast at the meeting is required to elect the
nominees as directors of the Company. As such, the three (3) individuals who
receive the greatest number of votes cast by the holders of Common Stock will be
elected as directors. Shares not voted at the Annual
3
<PAGE> 6
Meeting, whether by abstention, broker non-vote, or otherwise, will not be
treated as votes cast at the meeting.
It is believed that all three (3) nominees are, and will be at the time of
the Annual Meeting, available for election; and, if elected, will serve.
However, in the event one or more of them is or should become unavailable, or
should decline to serve, it is intended that the proxies will be voted for such
substitute nominee or nominees as the persons named in the proxy may in their
discretion select.
In the following table, the column "Amount and Nature of Beneficial
Ownership" relates to common shares of the Company beneficially owned by the
directors and nominees as of September 1, 2000, and is based upon information
furnished by them.
<TABLE>
<CAPTION>
HAS
SERVED AMOUNT AND
AS A NATURE
DIRECTOR OF BENEFICIAL PERCENT OF
NAME AGE PRINCIPAL OCCUPATION SINCE OWNERSHIP (1) CLASS (1)
---- --- ------------------------------------- -------- ------------- ----------
<S> <C> <C> <C> <C> <C>
NOMINEES FOR ELECTION AS DIRECTORS FOR TERMS EXPIRING IN 2003
James N. DeBoer........ 75 Partner, law firm of Varnum, 1971 4,370 .06%
Riddering, Schmidt & Howlett, LLP,
Grand Rapids, Michigan.
David W. 65 President and Chief Operating Officer 1978 88,202(2) 1.12
Hockenbrocht......... of Sparton Corporation, Jackson,
Michigan.
Rory B. Riggs.......... 47 President and a Director of 1994 -0- -0-
Biomatrix, Inc., Richfield, New
Jersey, a medical biotechnology
company since 1997, and President,
ITIM Corporation, New York, New York,
an investment advisory and venture
capital firm since 1991.
DIRECTORS WHOSE TERMS EXPIRE IN 2001
John J. Smith.......... 88 Chairman of the Board and Chief 1950 2,424,200(3) 30.97
Executive Officer of Sparton
Corporation, Jackson, Michigan.
W. Peter Slusser....... 71 President, Slusser Associates, Inc., 1997 1,000 .01
Investment Banking, New York, New
York.
Bradley O. Smith....... 55 Private Investor since May 1998. For 1998 407,054(4) 5.20
the preceding 24 years, owner and
President of Tracy Products, Inc., an
automotive metal stamping company,
Ionia, Michigan.
DIRECTORS WHOSE TERMS EXPIRE IN 2002
Robert J. Kirk......... 87 Financial Consultant, Toledo, Ohio 1978 6,000 .08
William I. Noecker..... 51 Director of Program Management, 1998 40 -0-
Fisher Dynamics Corp., St. Clair
Shores, Michigan since 1996. Chairman
of Brasco International Inc.,
Detroit, Michigan since 1993.
</TABLE>
---------------
(1) Unless otherwise indicated by footnote, each director or nominee has sole
voting power and owns the shares directly, or shares voting and investment
power with his spouse or other family members under joint ownership.
(2) Reference is made to note (2) on the bottom of page 2.
4
<PAGE> 7
(3) Reference is made to note (2) on page 2.
(4) Reference is made to note (4) on page 2.
Mr. Bradley O. Smith is the son of Mr. Lawson K. Smith, former Secretary
and Director, and the nephew of Mr. John J. Smith. There are no other family
relationships between the nominees and the directors. Except as noted, the
principal occupations referred to have been held by the foregoing nominees and
directors for at least five years.
Mr. W. Peter Slusser is a director of Ampex Corporation and Tyco
International Ltd.
The Board of Directors, which had four (4) meetings during the past year,
has standing Audit, Compensation and Executive Committees. There is no
Nominating Committee.
The Audit Committee met two (2) times last year and consisted of Messrs.
Robert J. Kirk, Bradley O. Smith and William I. Noecker. This committee oversees
accounting and internal control matters. The Committee consults with the
independent accountants and reviews their audit and other work. The Committee
also consults with the Chairman of the Board, President and Treasurer and
reviews Sparton's internal controls and compliance with policies.
The Compensation Committee, which met once last year and consisted of
Messrs. John J. Smith, David W. Hockenbrocht, Rory B. Riggs, W. Peter Slusser
and James N. DeBoer, establishes the remuneration, including stock options, to
be paid or offered to the Company's executive officers.
The Executive Committee, which consisted of Messrs. John J. Smith, David W.
Hockenbrocht, James N. DeBoer, Rory B. Riggs and Bradley O. Smith, did not meet
last year.
All Directors attended at least 75% of the meetings of the Board and
committees on which they serve except Mr. Rory B. Riggs, who attended 25% of the
Board Meetings held and did not attend the one Compensation Committee meeting
held last year.
Directors who are not employees of the Company are compensated at the rate
of $350 per month and $500 for each directors' meeting attended. Members of the
Audit Committee receive $500 for each Audit Committee meeting attended.
Directors who are employees of the Company receive $350 for each directors'
meeting attended.
The Executive Compensation Committee Report and Performance Graph set forth
herein are not deemed to be soliciting material or to be filed with the
Securities and Exchange Commission under the Securities Act of 1933 or the
Securities Exchange Act of 1934 or incorporated by reference in any document so
filed.
------------------------------------------------
COMPENSATION OF EXECUTIVE OFFICERS
The following tables provide certain data and information on the
compensation of the Company's Chief Executive Officer and its four most highly
compensated executive officers (other than the CEO) whose annual salary and
bonus exceeded $100,000 (collectively referred to as the "Named Executives").
This report addresses the Company's compensation policies and programs for the
year ended June 30, 2000, the details of which are reflected in the tables set
forth in the following pages of this Proxy Statement. The Company's and the
Board's policies and practices pertaining to the compensation of executive
officers and management have been in effect for a number of years.
EXECUTIVE COMPENSATION COMMITTEE REPORT
Decisions on the compensation of the Company's executive officers are made
by the Board's Compensation Committee. This Committee is composed of Mr. John J.
Smith, Chairman of the
5
<PAGE> 8
Board and Chief Executive Officer, Mr. David W. Hockenbrocht, President and
Chief Operating Officer and three non-employee directors; Messrs. Riggs, Slusser
and DeBoer.
The Company has long-established policies and practices intended to
compensate its salaried employees in a manner that will enable the Company to
attract, retain and motivate them to accomplish corporate goals and objectives.
These policies and practices encourage management to remain dedicated to the
maximization of shareholder value.
The Company's compensation program is comprised of several elements: cash
compensation (including salary and incentive bonus), incentive stock options and
defined benefit and defined contribution retirement plans. Reflective of the
Company's goal of relating compensation to corporate performance, the incentive
bonus compensation plan permits certain executive officers to earn additional
compensation if the pretax earnings of their operating unit is in excess of an
established goal. The performance goals for this plan are reviewed and approved
annually by the Compensation Committee. In addition, at the discretion of the
Committee, bonuses may be paid in addition to or in lieu of bonuses earned under
the incentive bonus plan based on the Committee's evaluation of the employee's
individual performance, level of responsibility and experience. During the past
fiscal year, there were no discretionary bonuses or bonuses under the incentive
bonus compensation plan paid to the Named Executives.
The Company's Chief Executive Officer has been compensated pursuant to
employment agreements that have been in existence since 1950. A description of
the current employment agreement and related compensation of the Company's Chief
Executive Officer is set forth below under the caption "Employment Agreement and
Related Compensation."
<TABLE>
<S> <C>
James N. DeBoer W. Peter Slusser
David W. Hockenbrocht John J. Smith
Rory B. Riggs
</TABLE>
EMPLOYMENT AGREEMENT AND RELATED COMPENSATION
An employment agreement with Mr. John J. Smith, the Company's Chief
Executive Officer, expired on June 30, 1997. In September 1998, that agreement
was extended for an additional three years, effective July 1, 1997 and ended
June 30, 2000. Mr. Smith's annual salary is set at $302,969 for each of these
three years. According to its terms, the Board of Directors will consider a
discretionary bonus at the end of each fiscal year. For fiscal 2000, Mr. Smith
received no discretionary bonus.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. John J. Smith and Mr. David W. Hockenbrocht are members of the
Compensation Committee and as such participate in establishing compensation for
executives of the Company.
6
<PAGE> 9
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The Summary Compensation Table shows certain compensation information for
the Named Executives for services rendered in all capacities during the fiscal
years ended June 30, 2000, 1999 and 1998.
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
ALL OTHER
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY BONUS COMPENSATION
--------------------------- ----------- -------- ------- ------------
<S> <C> <C> <C> <C>
John J. Smith 2000 $302,969 $ -0- $1,400(1)
Chairman of the Board and 1999 302,969 -0- 1,400(1)
Chief Executive Officer 1998 302,969 -0- 1,750(1)
David W. Hockenbrocht 2000 270,000 -0- 2,801(2)
President and Chief 1999 235,000 35,000 1,400(1)
Operating Officer 1998 210,384 35,000 1,750(1)
Richard D. Mico, Vice 2000 118,000 -0- 5,476(3)
President and General 1999 114,005 5,000 2,666(3)
Manager 1998 110,628 -0- 3,046(3)
Douglas E. Johnson, Vice 2000 128,479 -0- 835(3)
President and General 1999 117,590 31,617 -0-
Manager 1998 108,860 27,000 -0-
Richard L. Langley 2000 115,820 -0- 594(3)
Vice President and Treasurer 1999 98,060 10,000 -0-
1998 95,300 5,000 -0-
</TABLE>
---------------
(1) Directors fees.
(2) Directors' fees of $1,400 plus Company contribution to defined contribution
benefit plan of $1,401.
(3) Company contributions to the employee's defined contribution benefit plan.
OPTION GRANTS IN LAST FISCAL YEAR
There were no options granted to any of the Named Executives for the fiscal
year ended June 30, 2000. By action of the Board of Directors, Mr.
Hockenbrocht's option for 32,000 shares was extended for three years under the
same terms and conditions, expiring on August 28, 2002.
7
<PAGE> 10
OPTION/SAR EXERCISES AND HOLDINGS
The following table sets forth information, with respect to the Named
Executives, concerning the exercise of stock options or stock appreciation
rights ("SARs") during the year and unexercised options and SARs held at June
30, 2000.
AGGREGATED OPTION/SARS EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED IN THE
UNEXERCISED OPTIONS/SARS AT MONEY OPTIONS/SARS AT FISCAL
FISCAL YEAR-END YEAR-END(L)
SHARES ----------------------------- -----------------------------
ACQUIRED VALUE
NAME ON EXERCISE REALIZED EXERCISEABLE UNEXERCISEABLE EXERCISEABLE UNEXERCISEABLE
---- ----------- -------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
John J. Smith -0- $-0- -0- -0- $-0- $-0-
David W. Hockenbrocht -0- -0- 32,000 -0- -0- -0-
Richard D. Mico -0- -0- 7,500 2,500 -0- -0-
Douglas E. Johnson -0- -0- 15,000 5,000 -0- -0-
Richard L. Langley -0- -0- 7,500 2,500 -0- -0-
</TABLE>
---------------
(1) The closing price of the Company's Common Stock was $4.125 at June 30, 2000,
which price was less than the exercise price of outstanding stock options.
RETIREMENT PROGRAMS
The Company maintains a defined benefit retirement plan for domestic
employees of the Company which provides for monthly pensions following
retirement. During the past year, no cash contributions were made by the Company
to the plan as in the judgment of the Company's independent actuaries, the
pension plan was fully funded. The plan provides a basic benefit of $2.25 per
month for each year of credited service up to a maximum of $90 per month. In
addition, for those participants who contribute 5% of their monthly compensation
(excluding bonuses) per month, the plan provides for an additional monthly
pension amount equal to 1 1/2% of the participant's final five year average
monthly compensation (excluding bonuses) times the participant's years of
contributory credited service to a maximum of 30 years.
Effective April 1, 2000, the Company amended its defined benefit retirement
plan to determine benefits by a cash balance formula. Under the cash balance
formula, each participant has a benefit equal to their cash balance account
which is credited yearly with 2% of their salary, as well as the interest earned
on their previous year-end account balance. Service under the Company's prior
salary-based formula was frozen as of March 31, 2000, and the benefit formula
amended to calculate the monthly pension based upon the participant's final
five-year average earnings as defined.
8
<PAGE> 11
The following table shows the estimated annual retirement benefits, payable
under the prior salary-based formula, in specified remuneration and service
classifications upon normal retirement at age 65. The benefits shown are not
subject to any deduction for Social Security or other offset amounts. The
maximum amount of annual compensation allowed to be included in determining
final average compensation has been limited by Federal statute to $160,000 for
2000. This amount is subject to future adjustment by the Internal Revenue
Service.
<TABLE>
<CAPTION>
FINAL 5-YEAR AVERAGE YEARS OF CONTRIBUTORY AND CREDITED SERVICE AT AGE 65
ANNUAL EARNINGS ----------------------------------------------------
(EXCLUDES BONUSES) 10 15 20 25 30
-------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 60,000 $ 9,270 $13,905 $18,540 $23,175 $27,810
80,000 12,270 18,405 24,540 30,675 36,810
100,000 15,270 22,905 30,540 38,175 45,810
120,000 18,270 27,405 36,540 45,675 54,810
140,000 21,270 31,905 42,540 53,175 63,810
160,000 24,270 36,405 48,540 60,675 72,810
180,000 27,270 40,905 54,540 68,175 81,810
</TABLE>
The following Named Executives have years of contributory credited service
and current annual earnings under the plan as of June 30, 2000:
<TABLE>
<CAPTION>
YEARS OF CONTRIBUTORY CURRENT ANNUAL EARNINGS
OFFICER CREDITED SERVICE (EXCLUDING BONUS)
------- --------------------- -----------------------
<S> <C> <C>
David W. Hockenbrocht 22.25 $270,000
Douglas E. Johnson 11.75 124,000
Richard L. Langley 13.75 115,000
</TABLE>
Mr. John J. Smith does not participate in the Company's retirement plans. Mr.
Richard D. Mico did not participate in the Company's defined benefit retirement
plan prior to conversion to the cash balance formula.
In addition to benefits payable under the salary-based formula of the
defined benefit plan, benefits are available under the cash balance formula.
Estimated lump sum benefits equal to their cash balance account under the cash
balance formula upon retirement at age 65 (or June 30, 2000 if the individual is
currently age 65 or older) for Messrs. Hockenbrocht, Johnson, Langley, and Mico
are $800, $49,000, $31,500, and $600, respectively, assuming each Named
Executive receives no pay increase. These cash balances have been credited with
interest at a rate of 6.15% per annum.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16 of the Securities Exchange Act of 1934, the
Company's directors and executive officers, as well as any person holding more
than ten percent of a registered class of the Company's equity securities, are
required to report any changes in their ownership of the Company's securities to
the Securities and Exchange Commission and the New York Stock Exchange. To the
Company's knowledge, all required reports were properly filed by such persons
during the fiscal year ended June 30, 2000, except that Mr. Michael G. Woods'
Report on Form 3 was delinquent.
9
<PAGE> 12
PERFORMANCE GRAPH
The following is a line-graph presentation comparing cumulative, five-year
shareholder returns, on an indexed basis, of the Company's Common Stock with
that of a broad market index (the S&P 500 Composite Index) and the Electronics
Component of the NASDAQ. The comparison assumes a $100 investment on June 30,
1995, and the reinvestment of dividends.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG
SPARTON CORPORATION, S&P 500 INDEX AND INDUSTRY INDEXES
(INDEX JUNE 30, 1995 = 100)
[COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN]
<TABLE>
<CAPTION>
NASDAQ S&P 500 INDEX SPARTON CORPORATION
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<S> <C> <C> <C>
1995 100 100 100
1996 106 123 83
1997 174 163 232
1998 172 209 162
1999 306 252 117
2000 759 267 80
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CERTAIN RELATIONSHIPS AND TRANSACTIONS
Mr. W. Peter Slusser's investment banking firm, Slusser Associates, Inc.,
represented the Company with respect to the unsuccessful sale of Sparton
Engineered Products, Inc., Flora Group. Slusser Associates received $10,000 for
services and expenses with respect to the Flora Group in fiscal 1999. Slusser
Associates also received an investment banking fee of $237,500 from Cybernet
Systems, Inc. in 1999 in connection with the private placement of common stock
of Cybernet. Sparton Corporation acquired 64% of the total placement for
$3,000,000. Mr. John J. Smith and Mr. W. Peter Slusser are members of the Board
of Directors of Cybernet Systems, Inc.
10
<PAGE> 13
INDEPENDENT AUDITORS
Representatives of Ernst & Young LLP, the Company's independent auditors
for many years, are expected to be present at the Annual Meeting. They will have
an opportunity to make a statement if they desire to do so and are expected to
be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS -- 2001 ANNUAL MEETING
Shareholder proposals intended to be presented at the 2001 Annual Meeting
of Shareholders of the Company must be received by the Company not later than
May 31, 2001, at its principal executive offices, 2400 East Ganson Street,
Jackson, Michigan 49202, Attention: Secretary, for inclusion in the Proxy
Statement and Proxy relating to the 2001 Annual Meeting of Shareholders. Proxies
solicited by management will be entitled to exercise discretionary voting
authority on any shareholder proposals, other than those included in the Proxy
Statement and Proxy relating to the 2001 Annual Meeting of Shareholders, unless
the Company receives notice of such proposal at the above address on or before
August 13, 2001.
By Order of the Board of Directors
R. JAN APPEL,
Secretary
Dated: September 27, 2000
11
<PAGE> 14
September 27, 2000
Dear Shareholder,
The Annual Meeting of your Company will be held on
October 25, 2000. At the meeting, we will be
electing three directors each for a term of three
years as set forth in the Proxy Statement.
We ask that you please give us your support by
signing, dating and returning the attached proxy
card in the postage paid envelope as soon as
possible. Your vote is important, regardless of the
number of shares that you own.
If your shares are held in the name of a bank or
brokerage firm, only that firm can execute a proxy
on your behalf. Please contact the person
responsible for your account with your voting
instructions.
Very truly yours,
John J. Smith, Chairman
DETACH PROXY CARD HERE
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REVOCABLE PROXY SPARTON CORPORATION
John J. Smith, Bradley O. Smith and R. Jan Appel, and each of them, are
hereby appointed proxies of the undersigned with full power of
substitution, to represent the undersigned at the Annual Meeting of
Shareholders of SPARTON CORPORATION on October 25, 2000 at 10:00 A.M.,
local time, and any and all adjournments thereof, and to vote thereat as
designated on this Proxy, all the shares of said Corporation which the
undersigned would be entitled to vote if personally present.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder and as described in the Proxy
Statement. If no direction is made, this Proxy will be voted "FOR" the
election of all nominees as described in Item 1.
The Board of Directors recommends a vote "FOR" the election of the three
named nominees.
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<S> <C> <C> <C>
FOR WITHHELD
1. Election of Directors: James N. DeBoer
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David W. Hockenbrocht
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Rory B. Riggs
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2. To transact such other business that may properly come before the meeting or at any adjournments thereof.
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SIGNATURE(S) _____________________ Dated: ___________
SIGNATURE(S) _____________________ Dated: ___________
Please sign and date this Proxy exactly as your
name(s) appears herein and return in the enclosed
envelope which requires no postage. If executing on
behalf of a corporation, minor, etc., sign that name
and add signature and capacity of authorized signer.
--------------------------
IMPORTANT: THE PROMPT
RETURN OF PROXIES WILL
SAVE THE CORPORATION THE
EXPENSE OF FURTHER
REQUESTS FOR PROXIES TO
ENSURE A QUORUM AT THE
MEETING. A SELF-ADDRESSED,
POSTAGE-PREPAID ENVELOPE
IS ENCLOSED FOR YOUR
CONVENIENCE.
--------------------------
