10-Q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2013

Or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-1000

Sparton Corporation

(Exact name of registrant as specified in its charter)

Ohio	38-1054690
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
425 N. Martingale Road, Suite 2050, Schaumburg, Illinois	60173-2213
(Address of principal executive offices)	(Zip code)

(847) 762-5800

(Registrant’s telephone number, including zip code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	ý
Non-accelerated filer	¨ (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý

As of January 31, 2014, there were 10,124,422 shares of common stock, $1.25 par value per share, outstanding.

Table of Contents

TABLE OF CONTENTS

PART I	FINANCIAL INFORMATION	3
ITEM 1.	FINANCIAL STATEMENTS	3
	CONDENSED CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2013 AND JUNE 30, 2013 (UNAUDITED)	3
	CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2013 AND 2012 (UNAUDITED)	4
	CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE AND SIX MONTHS MONTHS ENDED DECEMBER 31, 2013 AND 2012 (UNAUDITED)	5
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED DECEMBER 31, 2013 AND 2012 (UNAUDITED)	6
	CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY FOR THE SIX MONTHS MONTHS ENDED DECEMBER 31, 2013 AND 2012 (UNAUDITED)	7
	NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	8
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	25
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	39
ITEM 4.	CONTROLS AND PROCEDURES	39
PART II	OTHER INFORMATION	39
ITEM 1.	LEGAL PROCEEDINGS	39
ITEM 1A.	RISK FACTORS	40
ITEM 1A.	OTHER INFORMATION	41
ITEM 6.	EXHIBITS	41
SIGNATURES		42
CERTIFICATIONS

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

SPARTON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(Dollars in thousands, except per share amounts)

	December 31, 2013			June 30, 2013 (a)
Assets
Current Assets:
Cash and cash equivalents	$	1,009		$	6,085
Accounts receivable, net of allowance for doubtful accounts of $107 and $61, respectively	44,806			49,572
Inventories and cost of contracts in progress, net	52,393			46,334
Deferred income taxes	3,054			2,951
Prepaid expenses and other current assets	3,844			1,731
Total current assets	105,106			106,673
Property, plant and equipment, net	28,627			28,904
Goodwill	30,156			14,767
Other intangible assets, net	11,756			10,713
Deferred income taxes — non-current	3,931			4,075
Other non-current assets	2,980			790
Total assets	$	182,556		$	165,922
Liabilities and Shareholders’ Equity
Current Liabilities:
Current portion of long-term debt	$	141		$	136
Accounts payable	16,885			19,596
Accrued salaries and wages	6,648			6,329
Accrued health benefits	1,586			1,793
Performance based payments on customer contracts	19,111			20,902
Other accrued expenses	7,180			6,733
Total current liabilities	51,551			55,489
Pension liability — non-current portion	275			274
Long-term debt — non-current portion	26,331			11,403
Environmental remediation — non-current portion	2,541			2,684
Total liabilities	80,698			69,850
Commitments and contingencies
Shareholders’ Equity:
Preferred stock, no par value; 200,000 shares authorized, none issued	—			—
Common stock, $1.25 par value; 15,000,000 shares authorized, 10,124,422 and 10,095,716 shares issued and outstanding, respectively	12,656			12,619
Capital in excess of par value	18,689			18,751
Retained earnings	71,727			65,957
Accumulated other comprehensive loss	(1,214		)	(1,255		)
Total shareholders’ equity	101,858			96,072
Total liabilities and shareholders’ equity	$	182,556		$	165,922

(a) Derived from the Company’s audited financial statements as of June 30, 2013.

See Notes to unaudited condensed consolidated financial statements.

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SPARTON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(Dollars in thousands, except per share amounts)

	For the Three Months Ended						For the Six Months Ended
	December 31, 2013			December 31, 2012			December 31, 2013			December 31, 2012
Net sales	$	84,562		$	67,254		$	158,760		$	118,055
Cost of goods sold	69,585			55,159			131,589			97,960
Gross profit	14,977			12,095			27,171			20,095
Operating Expense:
Selling and administrative expenses	8,687			7,375			16,332			12,847
Internal research and development expenses	402			243			791			548
Amortization of intangible assets	636			273			1,234			375
Restructuring charges	—			—			188			—
Other operating expenses	(5		)	4			(8		)	(6		)
Total operating expense, net	9,720			7,895			18,537			13,764
Operating income	5,257			4,200			8,634			6,331
Other income (expense):
Interest expense	(202		)	(173		)	(360		)	(254		)
Interest income	—			23			2			51
Other, net	165			59			337			169
Total other expense, net	(37		)	(91		)	(21		)	(34		)
Income before provision for income taxes	5,220			4,109			8,613			6,297
Provision for (benefit from) income taxes	1,736			(732		)	2,843			(1		)
Net income	$	3,484		$	4,841		$	5,770		$	6,298
Income per share of common stock:
Basic	$	0.34		$	0.47		$	0.57		$	0.62
Diluted	$	0.34		$	0.47		$	0.57		$	0.62
Weighted average shares of common stock outstanding:
Basic	10,115,255			10,229,320			10,093,973			10,185,464
Diluted	10,147,518			10,248,424			10,123,542			10,206,913

See Notes to unaudited condensed consolidated financial statements.

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SPARTON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(Dollars in thousands)

	For the Three Months Ended					For the Six Months Ended
	December 31, 2013		December 31, 2012			December 31, 2013		December 31, 2012
Net income	$	3,484	$	4,841		$	5,770	$	6,298
Other comprehensive income (loss) - Change in unrecognized pension costs, net of tax:
Amortization of unrecognized net actuarial loss, net of tax benefit of $7 and $30 for the three months ended December 31, 2013 and 2012, respectively, and net of tax benefit of $23 and $34 for the six months ended December 31, 2013 and 2012, respectively	11		51			41		58
Pro rata recognition of lump-sum settlements, net of tax expense of $10 for the three months ended December 31, 2012	—		(15		)	—		—
Other comprehensive income, net of tax	11		36			41		58
Comprehensive income	$	3,495	$	4,877		$	5,811	$	6,356

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SPARTON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(Dollars in thousands)

	For the Six Months Ended
	December 31, 2013			December 31, 2012
Cash Flows from Operating Activities:
Net income	$	5,770		$	6,298
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	3,640			1,472
Deferred income tax expense	239			760
Stock-based compensation expense	917			597
Gross profit effect of capitalized profit in inventory from acquisition	108			566
Excess tax benefit of stock-based compensation	(496		)	—
Other	44			47
Changes in operating assets and liabilities:
Accounts receivable	8,097			(4,306		)
Inventories and cost of contracts in progress	2,441			(1,845		)
Prepaid expenses and other assets	(1,702		)	(2,798		)
Performance based payments on customer contracts	(1,791		)	(6,592		)
Accounts payable and accrued expenses	(4,791		)	(3,128		)
Net cash provided by (used in) operating activities	12,476			(8,929		)
Cash Flows from Investing Activities:
Purchase of Onyx	—			(43,250		)
Purchase of certain assets of Creonix	105			—
Purchase of certain assets and liabilities of Aydin Displays, Inc.	(15,000		)	—
Purchase of Beckwood	(15,300		)	—
Purchases of property, plant and equipment	(1,412		)	(1,602		)
Change in restricted cash	—			(535		)
Proceeds from sale of property, plant and equipment	68			—
Net cash used in investing activities	(31,539		)	(45,387		)
Cash Flows from Financing Activities:
Short-term bank borrowings, net	—			14,000
Borrowings of long-term debt	41,000			—
Repayment of long-term debt	(26,071		)	(70		)
Payment of debt financing costs	—			(408		)
Repurchase of stock	(1,559		)	(234		)
Proceeds from the exercise of stock options	121			144
Excess tax benefit from stock-based compensation	496			—
Net cash provided by financing activities	13,987			13,432
Net decrease in cash and cash equivalents	(5,076		)	(40,884		)
Cash and cash equivalents at beginning of period	6,085			46,950
Cash and cash equivalents at end of period	$	1,009		$	6,066
Supplemental disclosure of cash flow information:
Cash paid for interest	$	320		$	258
Cash paid for income taxes	$	2,963		$	1,603
Supplemental disclosure of non-cash investing activities:
Accounts payable recognized in relation to acquisition purchase consideration adjustments	$	393		$	2,188

See Notes to unaudited condensed consolidated financial statements.

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SPARTON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED)

(Dollars in thousands)

	Six Months Ended December 31, 2013
	Common Stock					Capital In Excess of Par Value			Retained Earnings		Accumulated Other Comprehensive Loss
	Shares		Amount											Total
Balance at June 30, 2013	10,095,716		$	12,619		$	18,751		$	65,957	$	(1,255	)	$	96,072
Issuance of stock	94,811		119			(119		)	—		—			—
Forfeiture of restricted stock	(3,344	)	(4		)	4			—		—			—
Repurchase of stock	(76,880	)	(96		)	(1,463		)	—		—			(1,559		)
Exercise of stock options	14,119		18			103			—		—			121
Stock-based compensation	—		—			917			—		—			917
Excess tax benefit from stock-based compensation	—		—			496			—		—			496
Comprehensive income, net of tax									5,770		41			5,811
Balance at December 31, 2013	10,124,422		12,656			18,689			71,727		(1,214		)	101,858

	Six Months Ended December 31, 2012
	Common Stock					Capital In Excess of Par Value			Retained Earnings		Accumulated Other Comprehensive Loss
	Shares		Amount											Total
Balance at June 30, 2012	10,105,759		$	12,632		$	19,579		$	51,995	$	(1,718	)	$	82,488
Cumulative impact of change in accounting principle	—		—			—			492		—			492
Balance at June 30, 2012 - as adjusted	10,105,759		12,632			19,579			52,487		(1,718		)	82,980
Issuance of stock	159,433		199			(199		)	—		—			—
Forfeiture of restricted stock	(39,811	)	(50		)	50			—		—			—
Repurchase of stock	(20,564	)	(25		)	(209		)	—		—			(234		)
Exercise of stock options	24,304		30			114			—		—			144
Stock-based compensation	—		—			597			—		—			597
Comprehensive income, net of tax	—		—			—			6,298		58			6,356
Balance at December 31, 2012	10,229,121		12,786			19,932			58,785		(1,660		)	89,843

See Notes to unaudited condensed consolidated financial statements.

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SPARTON CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1) Business and Basis of Presentation

Sparton Corporation and subsidiaries (the “Company” or “Sparton”) has been in continuous existence since 1900. It was last reorganized in 1919 as an Ohio corporation. The Company is a provider of complex and sophisticated electromechanical devices with capabilities that include concept development, design and manufacturing engineering, production, distribution, and field service. The Company serves the Medical & Biotechnology, Military & Aerospace and Industrial & Commercial markets through three reportable business segments; Medical Device (“Medical”), Complex Systems (“CS”) and Defense & Security Systems (“DSS”). Financial information by segment is presented in Note 16. All of the Company's facilities are registered to ISO standards, including 9001 or 13485, with most having additional certifications. The Company's products and services include products for Original Equipment Manufacturers (“OEM”) and Emerging Technology (“ET”) customers that are microprocessor-based systems that include transducers, printed circuit boards and assemblies, sensors, and electromechanical components, as well as development and design engineering services relating to these product sales. Sparton also develops and manufactures sonobuoys, anti-submarine warfare (“ASW”) devices used by the United States Navy and other free-world countries. Many of the physical and technical attributes in the production of sonobuoys are similar to those required in the production of the Company's other electrical and electromechanical products and assemblies.

The unaudited condensed financial statements and related footnotes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The financial information presented herein should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2013, which includes information and disclosures not presented herein. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain reclassifications of prior period amounts have been made to conform to the current year presentation. Subsequent events have been evaluated through the date these financial statements were issued. In the opinion of management, the unaudited condensed consolidated financial statements contain all of the adjustments, consisting of normal recurring adjustments, necessary to present fairly, in summarized form, the consolidated financial position, results of operations and cash flows of the Company. The results of operations for the three and six months ended December 31, 2013 are not necessarily indicative of the results that may be expected for the full fiscal year 2014.

(2) Change in Accounting Principle

In the first quarter of fiscal 2014, the Company voluntarily changed its revenue recognition policy related to DSS sonobuoy sales to the U.S. Navy and foreign government customers under long-term contracts that require lot acceptance testing. The new policy continues to recognize revenue under the percentage of completion method, but changes the measurement of progress under these contracts from a completed units accepted basis (whereby revenue was recognized for each lot of sonobuoys produced when that lot was formally accepted by the customer) to a units-of-production basis (whereby revenue is recognized when production and internal testing of each lot of sonobuoys is completed). The Company now has significant experience in producing sonobuoys to customer specifications and internal testing to assess compliance with those specifications and, as such, now has an adequate history of continuous customer acceptance of all sonobuoys produced. Accordingly, the Company believes the new method is preferable primarily because it eliminates delays in revenue and related cost of goods sold recognition due to timing of customer testing and acceptance delays. Such delays commonly occur due to customer circumstances that are unrelated to the product produced. Under the new policy, the revenue and related costs of goods sold of these manufactured sonobuoy lots will more closely match the period in which the product was produced and the related revenue earned, thereby better reflecting the economic activity of the DSS segment. Additionally, this new method provides better matching of periodic operating expenses incurred during production.

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For the three months ended December 31, 2013, this change in accounting policy decreased DSS and consolidated net sales and gross profit by $2.5 million and $0.7 million, respectively, and basic and diluted income per share each by $0.04. For the six months ended December 31, 2013, this change in accounting policy (decreased) increased DSS and consolidated net sales and gross margin by $(0.3) million and $0.4 million, respectively, and increased basic and diluted income per share each by $0.03. The following tables present the effects of the retrospective application of this voluntary change in accounting principle (Dollars in thousands, except share amounts):

Consolidated Statement of Income Data:
	For the Three Months Ended December 31, 2012
	As Originally Reported			Adjustment		As Restated
Net Sales	$	65,979		$	1,275	$	67,254
Cost of goods sold	54,571			588		55,159
Gross profit	11,408			687		12,095
Income before provision for income taxes	3,422			687		4,109
Provision for (benefit from) income taxes	(979		)	247		(732		)
Net income	4,401			440		4,841
Income per share of common stock - Basic	0.43			0.04		0.47
Income per share of common stock - Diluted	0.43			0.04		0.47
Weighted average shares outstanding - Basic	10,229,320					10,229,320
Weighted average shares outstanding - Diluted	10,248,424					10,248,424

Consolidated Statement of Income Data:
	For the Six Months Ended December 31, 2012
	As Originally Reported			Adjustment		As Restated
Net Sales	$	114,999		$	3,056	$	118,055
Cost of goods sold	96,378			1,582		97,960
Gross profit	18,621			1,474		20,095
Income before provision for income taxes	4,823			1,474		6,297
Provision for (benefit from) income taxes	(531		)	530		(1		)
Net income	5,354			944		6,298
Income per share of common stock - Basic	0.53			0.09		0.62
Income per share of common stock - Diluted	0.52			0.10		0.62
Weighted average shares outstanding - Basic	10,185,464					10,185,464
Weighted average shares outstanding - Diluted	10,206,913					10,206,913

Consolidated Balance Sheet Data:
	As of June 30, 2013
	As Originally Reported		Adjustment			As Restated
Inventory	$	46,334	$	—		$	46,334
Deferred income taxes	3,167		(216		)	2,951
Performance based payments on customer contracts	21,504		(602		)	20,902
Retained earnings	65,571		386			65,957

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(3) Acquisitions

Beckwood Services, Inc. — On December 11, 2013, the Company completed the acquisition of Beckwood Services, Inc. ("Beckwood”) in a $15.3 million all-cash transaction, subject to certain post-closing adjustments and financed through the use of cash on hand and borrowings under the Company's Credit Facility. At December 31, 2013, the Company has recorded additional estimated contingent consideration of accounts receivable of less than $0.1 million in relation to a post-closing working capital adjustment, which is expected to be settled in the third quarter of the Company's fiscal 2014 year. The transaction includes an approximate $1.5 million escrowed holdback which is available to fund the working capital adjustment and potential seller indemnification obligations in relation to the acquisition agreement.

The acquired business, which is part of the Company's Complex Systems segment and which is expected to add $18 million in annualized revenue, develops electronic or electro-mechanical controls and electronic assemblies. Their customer profile includes international Fortune 1000 manufacturers of industrial control systems, analytical instruments, measuring and detecting equipment and military, defense and Homeland Security equipment.

The Company is in the process of obtaining valuations of certain tangible and intangible assets and liabilities and expects to complete the purchase price allocation in fiscal year 2014 after these valuations are finalized. The following table represents the preliminary allocation of the total consideration to assets acquired and liabilities assumed in the acquisition of Beckwood based on Sparton’s preliminary estimate of their respective fair values (in thousands):

Total purchase consideration:
Cash	$	15,300
Estimated additional consideration payable for post-closing working capital adjustment	36
Total purchase consideration	$	15,336
Assets acquired and liabilities assumed:
Accounts receivable, net	$	1,157
Inventory	2,008
Deferred income taxes	213
Other current assets	122
Property, plant and equipment	110
Goodwill	13,353
Deferred income taxes - non-current	7
Other long-term assets	8
Accounts payable	(977		)
Other current liabilities	(665		)
Total assets acquired and liabilities assumed	$	15,336

Total purchase consideration has been allocated to the tangible assets acquired and liabilities assumed based on their provisionally estimated fair values at the acquisition date. It is possible that acquired assets may additionally include customer relationships and the Beckwood name. The Company was unable at December 31, 2013 to assign provisionally estimated fair values to these potential assets. The Beckwood acquisition has preliminarily resulted in approximately $13 million of goodwill, which will be adjusted downward or upward based on the final values assigned to all acquired assets and liabilities. The Company believes that any goodwill remaining after the valuations are finalized will primarily relate to strategic fit, resulting synergies and the acquired workforce that this business brings to existing operations. Goodwill associated with this acquisition is not expected to be deductible for tax purposes and has been assigned entirely to the Company’s Complex Systems segment.

Included in the Company’s Condensed Consolidated Statements of Income for the three and six months ended December 31, 2013 are net sales of approximately $0.8 million and income before provision from income taxes of approximately $0.1 million, resulting from the acquisition of Beckwood since December 11, 2013.

The Company incurred legal, professional and other costs related to this acquisition aggregating approximately $0.1 million. These costs were recognized as selling and administrative expenses in the three months ended December 31, 2013.

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Aydin Displays, Inc. — On August 30, 2013, the Company completed the acquisition of certain assets and liabilities of Aydin Displays, Inc. ("Aydin Displays" or “Aydin”) in a $15.0 million all-cash transaction, subject to certain post-closing adjustments and financed through the use of borrowings under the Company's Credit Facility. At December 31, 2013, the Company has recorded additional estimated contingent consideration of accounts receivable of $0.4 million in relation to a post-closing working capital adjustment, which is expected to be settled during the Company's fiscal 2014 year. Additional acquisition consideration of up to $6.6 million is contingent upon Aydin attaining certain performance thresholds during the twelve month period following the transaction. The transaction includes an approximate $1.2 million escrowed holdback which is available to fund the working capital adjustment and potential seller indemnification obligations in relation to the acquisition agreement.

The acquired business, which is part of the Company's DSS segment and which is expected to add $18 million in annualized revenue, develops enhanced flat panel display and touch-screen solutions with application-critical performance criteria including ruggedization, high resolution, color accuracy, response/refresh times, sunlight readability and other criteria such as magnetic interference and emanations security for the Military & Aerospace and Civil Marine markets. These products are currently specified in the U.S. Navy P8A Poseidon ASW aircraft behind-the-cockpit control center, the command and control centers of many U.S. Navy ships, Federal Aviation Administration air traffic control systems, and cockpit command centers for various civil marine applications. The acquired business will continue to operate as Aydin Displays.

The following table represents the preliminary allocation of the total consideration to assets acquired and liabilities assumed in the acquisition of Aydin based on Sparton’s preliminary estimate of their respective fair values (in thousands):

Total purchase consideration:
Cash	$	15,000
Estimated additional consideration payable for post-closing working capital adjustment	357
Total purchase consideration	$	15,357
Assets acquired and liabilities assumed:
Accounts receivable, net	$	2,279
Inventory	6,601
Other current assets	895
Property, plant and equipment	582
Intangible asset - customer relationships	1,500
Intangible asset - trade names and trademarks	180
Intangible asset - unpatented technology	650
Goodwill	2,036
Other long-term assets - favorable leasehold	590
Other long-term assets	1,702
Accounts payable	(1,215		)
Other current liabilities	(443		)
Total assets acquired and liabilities assumed	$	15,357

Total purchase consideration has been preliminarily allocated to the tangible assets acquired and liabilities assumed based on their provisionally estimated fair values at the acquisition date. Additional acquisition consideration of up to $6.6 million is contingent upon Aydin attaining certain performance thresholds. The Company has assigned no fair value to this contingent liability. The Aydin acquisition has preliminarily resulted in approximately $2 million of goodwill, which is expected to be deductible for tax purposes and has been assigned entirely to the Company’s DSS segment. The Company believes goodwill primarily relates to strategic fit, resulting synergies and the acquired workforce that this business brings to existing operations. The provisional fair values of acquired identifiable assets have been determined to be Level 3 under the fair value hierarchy and have been estimated based on projected future cash flows and customer attrition rates, discounted using an estimated weighted average cost of capital. The customer relationships are being amortized using an accelerated methodology over fifteen years. Trade names and trademarks are being amortized using a straight-line methodology over ten years. The unpatented technology is being amortized using an accelerated methodology over seven years. The favorable leasehold is reflected in other long-term assets on the consolidated balance sheet and is being amortized on a straight-line basis over the five year life of the lease. Amortization related to Aydin unpatented technology and favorable leasehold is reflected within cost of goods sold on the consolidated statement of income.

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Included in the Company’s Condensed Consolidated Statements of Income for the three and six months ended December 31, 2013 are net sales of approximately $4.0 million and $5.2 million, respectively, and loss before benefit from income taxes of less than $0.1 million and approximately $0.1 million, respectively, resulting from the acquisition of Aydin since August 30, 2013.

The Company incurred legal, professional and other costs related to this acquisition aggregating approximately $0.0 million and $0.2 million for the three and six months ended December 31, 2013, respectively. These costs were recognized as selling and administrative expenses.

A portion of Aydin's revenue is derived from contracts to manufacture video displays and other related products to a buyer’s specification under long-term contracts. Revenue and profit is recognized under these contracts using the percentage of completion method based on units shipped to estimated total costs at completion. Certain upfront engineering costs in relation to long-term contracts are capitalized and amortized over the life of the contract.

Creonix, LLC — On June 6, 2013, the Company completed the acquisition of certain assets related to the contract manufacturing business of Creonix, LLC (“Creonix”) in a $2.0 million all-cash transaction, after settlement of a $0.1 million working capital adjustment during the second quarter of the Company's fiscal 2014 year. The transaction was financed through the use of borrowings under the Company's credit facility. The transaction includes an approximate $0.3 million escrowed holdback which is available to fund the working capital adjustment and potential seller indemnification obligations in relation to the acquisition agreement.

The acquired business, which is reported in the Company's Complex Systems segment, provides the Company with the capability of cable and wire harness engineering and assembly. Additionally, the acquisition provides further expansion into the Industrial and Military & Aerospace markets, diversifies Sparton's customer base and increases utilization of the Company's existing assets through the expected consolidation of this business into Complex Systems's Brooksville, Florida plant during the first six months of fiscal 2014. Creonix primarily manufactures products and components for battery monitoring, high speed optical imaging, neuromuscular incapacitation, imaging and wiring assemblies for military applications, and electrical grid transformer protection systems.

During the six months ended December 31, 2013, the Company finalized the inventory adjustment under the Creonix asset purchase agreement resulting in a decrease in the previously recorded related receivable from the seller. This measurement period increase in total purchase consideration resulted in the retrospective elimination of the previously recognized gain on acquisition recorded in the fourth quarter of fiscal 2013 of less than $0.1 million and resulting in the recognition of approximately $0.1 million of goodwill. The Company's June 30, 2013 balance sheet has been restated to reflect this adjustment. The following table presents the final allocation of the total consideration to assets acquired and liabilities assumed from Creonix based on Sparton’s estimate of their respective fair values (in thousands):

Total purchase consideration:
Cash	$	2,100
Reduction in cash consideration in relation to working capital adjustment	(105		)
Total purchase consideration	$	1,995
Assets acquired and liabilities assumed:
Inventory	$	1,321
Equipment	304
Intangible assets — customer relationships	270
Goodwill	100
Total assets acquired and liabilities assumed	$	1,995

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Pro Forma Results — The following table summarizes, on a pro forma basis, the combined results of operations of the Company and the acquired businesses of Aydin and Beckwood as though the acquisitions had occurred as of July 1, 2012. The pro forma amounts presented are not necessarily indicative of either the actual consolidated results had the acquisition occurred as of July 1, 2012 or of future consolidated operating results (in thousands, except per share amounts):

	For the Three Months Ended				For the Six Months Ended
	December 31, 2013		December 31, 2012		December 31, 2013		December 31, 2012
Net sales	$	87,662	$	76,519	$	168,743	$	138,059
Income before provision for income taxes	$	5,625	$	4,800	$	9,710	$	7,636
Net income	$	3,749	$	5,391	$	6,516	$	7,429
Net income per share — basic	$	0.37	$	0.53	$	0.65	$	0.73
Net income per share — diluted	$	0.37	$	0.53	$	0.64	$	0.73

Pro forma results presented above reflect: (1) incremental depreciation relating to fair value adjustments to property, plant and equipment; (2) amortization adjustments relating to fair value estimates of intangible assets; (3) elimination of Aydin and Beckwood interest expense relating to debt paid off in conjunction with the transaction; and (4) incremental interest expense on assumed indebtedness and amortization of capitalized financing costs incurred in connection with the transactions as though the transactions occurred as of July 1, 2012.

Additionally, acquisition related expenses of approximately $0.3 million recognized as selling and administrative expenses in the six months ended December 31, 2013 are reflected in the pro forma results above as though they were recognized during the six months ended December 31, 2012 and have been removed from the pro forma results for the year ended June 30, 2013. Similarly, the capitalization of approximately $0.3 million of gross profit recognized as part of the purchase accounting for Aydin, of which $0.1 million has been recognized as additional cost of goods sold during the six months ended December 31, 2013, is reflected in the pro forma results above as though it was recognized during fiscal 2013 and has been removed from the pro forma results for the six months ended December 31, 2013.

Pro forma adjustments described above have been tax effected using Sparton's effective rate during the respective periods.

(4) Inventories and Cost of Contracts in Progress

The following are the major classifications of inventory, net of interim billings, at December 31, 2013 and June 30, 2013 (in thousands):

	December 31, 2013			June 30, 2013
Raw materials	$	42,344		$	43,550
Work in process	15,434			10,170
Finished goods	8,368			7,793
Total inventory and cost of contracts in progress, gross	66,146			61,513
Inventory to which the U.S. government has title due to interim billings	(13,753		)	(15,179		)
Total inventory and cost of contracts in progress, net	$	52,393		$	46,334

The Company recorded inventory write-downs of approximately $0.2 million for both of the three and six months ended December 31, 2013. For the three and six months ended December 31, 2012, the Company recorded inventory write-downs of approximately $0.5 million. These charges are included in cost of goods sold for the periods presented.

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(5) Property, Plant and Equipment, Net

Property, plant and equipment, net consists of the following at December 31, 2013 and June 30, 2013 (in thousands):

	December 31, 2013			June 30, 2013
Land and land improvements	$	1,429		$	1,405
Buildings and building improvements	25,695			24,920
Machinery and equipment	29,035			27,183
Construction in progress	827			767
Total property, plant and equipment	56,986			54,275
Less accumulated depreciation	(28,359		)	(25,371		)
Total property, plant and equipment, net	$	28,627		$	28,904

(6) Goodwill and Other Intangible Assets

Goodwill represents the excess of purchase price over the fair value of the net assets acquired in conjunction with the Company’s purchases of Astro Instrumentation, LLC (“Astro”) in May 2006, Byers Peak, Incorporated (“Byers Peak”) in March 2011, Onyx EMS, LLC ("Onyx") in November 2012, Creonix in June 2013, Aydin in August 2013 and Beckwood in December 2013. Goodwill related to Astro, Byers Peak and Onyx is reflected within the Company’s Medical operating segment. Goodwill related to Creonix and Beckwood are reflected within the Company's Complex Systems operating segment. Goodwill related to Aydin Displays is reflected within the Company's DSS operating segment. Changes in the carrying value of goodwill for the six months ended December 31, 2013 and year ended June 30, 2013 and the ending composition of goodwill as of December 31, 2013 and June 30, 2013 are as follows (in thousands):

	December 31, 2013
	Medical			CS		DSS		Total
Goodwill, beginning of period	$	14,667		$	100	$	—	$	14,767
Additions to goodwill during the period	—			13,353		2,036		15,389
Goodwill, end of period	$	14,667		$	13,453	$	2,036	$	30,156
	June 30, 2013
	Medical			CS		DSS		Total
Goodwill, beginning of period	$	7,472		$	—	$	—	$	7,472
Additions to goodwill during the period	7,195			100		—		7,295
Goodwill, end of period	$	14,667		$	100	$	—	$	14,767
	December 31, 2013
	Medical			CS		DSS		Total
Acquired Goodwill	$	27,820		$	13,453	$	2,036	$	43,309
Accumulated impairment	(13,153		)	—		—		(13,153		)
Goodwill	$	14,667		$	13,453	$	2,036	$	30,156
	June 30, 2013
	Medical			CS		DSS		Total
Acquired Goodwill	$	27,820		$	100	$	—	$	27,920
Accumulated impairment	(13,153		)	—		—		(13,153		)
Goodwill	$	14,667		$	100	$	—	$	14,767

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Other intangible assets represent the values assigned to customer relationships acquired in conjunction with the Company’s purchases of Astro, Byers Peak, Onyx, Creonix and Aydin, values assigned to non-compete agreements acquired in conjunction with the Company’s purchase of Onyx and values assigned to Trademarks and tradenames and unpatented technology acquired with the Company's purchase of Aydin. The amortization periods, gross carrying amounts, accumulated amortization, accumulated impairments and net carrying values of intangible assets at December 31, 2013 and June 30, 2013 are as follows (in thousands):

	Amortization Period in Months		Gross Carrying Amount		Accumulated Amortization			Accumulated Impairments			Net Carrying Value
	December 31, 2013
Amortized intangible assets:
Non-compete agreements		12	$	200	$	(200	)	$	—		$	—
Customer relationships	120	-180	19,870		(5,221		)	(3,663		)	10,986
Trademarks/Tradenames		120	180		(6		)	—			174
Unpatented Technology		84	650		(54		)				596
			$	20,900	$	(5,481	)	$	(3,663	)	$	11,756
	June 30, 2013
Amortized intangible assets:
Non-compete agreements		12	$	358	$	(274	)	$	—		$	84
Customer relationships	120	-180	18,370		(4,078		)	(3,663		)	10,629
			$	18,728	$	(4,352	)	$	(3,663	)	$	10,713

Sparton did not incur any significant costs to renew or alter the term of its intangible assets during the six months ended December 31, 2013. Amortization expense for the three months ended December 31, 2013 and 2012 was approximately $0.6 million and $0.3 million, respectively. Amortization expense for the six months ended December 31, 2013 and 2012 was approximately $1.2 million and $0.4 million, respectively. Aggregate amortization expense relative to existing intangible assets for the periods shown is currently estimated to be as follows (in thousands):

Fiscal Year Ending June 30,
2014	$	2,468
2015	2,190
2016	1,927
2017	1,665
2018	1,402
Thereafter	3,391
Total	$	13,043

(7) Debt

Debt consists of the following at December 31, 2013 and June 30, 2013 (in thousands):

	December 31, 2013			June 30, 2013
Industrial revenue bonds, face value	$	1,552		$	1,623
Less unamortized purchase discount	(80		)	(84		)
Industrial revenue bonds, carrying value	1,472			1,539
Borrowings under revolving credit facilities	25,000			10,000
Total debt	26,472			11,539
Less: current portion	(141		)	(136		)
Long-term debt, net of current portion	$	26,331		$	11,403

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Industrial Revenue Bonds

In connection with its acquisition of Astro in May 2006, the Company assumed repayment of principal and interest on bonds originally issued to Astro by the State of Ohio. These bonds are Ohio State Economic Development Revenue Bonds, series 2002-4. Astro originally entered into the loan agreement with the State of Ohio for the issuance of these bonds to finance the construction of the Company’s Ohio operating facility. The principal amount, including premium, was issued in 2002 and totaled approximately $2.9 million. These bonds have interest rates which vary, dependent on the maturity date of the bonds ranging from 5.00% to 5.45%. Due to an increase in interest rates since the original issuance of the bonds, a discount amounting to approximately $0.2 million on the date of assumption by Sparton was recorded.

The bonds carry certain sinking fund requirements generally obligating the Company to make monthly deposits of one twelfth of the annual obligation plus accrued interest. The purchase discount is being amortized ratably over the remaining term of the bonds. The Company also has an irrevocable letter of credit in the amount of approximately $0.3 million, which is renewable annually, to secure repayment of a portion of the bonds.

Short-term debt at December 31, 2013 and June 30, 2013 reflects the current portion of the Company’s industrial revenue bonds.

Revolving Credit Facility

On November 15, 2012, the Company replaced its previous revolving line-of-credit facility with a new $65 million credit facility with BMO Harris Bank N.A., consisting of a $35 million revolving line-of-credit facility (the “Revolving Credit”) to support the Company’s working capital needs and other general corporate purposes, and a $30 million acquisition loan commitment (the “Acquisition Facility” and together with the Revolving Credit, the “Credit Facility”) to finance permitted acquisitions.

The Credit Facility expires on November 15, 2017, is secured by substantially all assets of the Company and provides for up to an additional $35 million in uncommitted loans available for additional Revolving Credit loans or Acquisition loans.

Advances under the Acquisition Facility are available until November 15, 2014. Loans under the Acquisition Facility amortize in two tranches, such that loans outstanding on November 15, 2013 begin amortizing in quarterly installments equal to 2.5% of the principal amount outstanding on such date, and advances made after November 15, 2013 and outstanding on November 15, 2014 begin amortizing on the same basis.

Outstanding borrowings under the Credit Facility bear interest, at the Company’s option, at either LIBOR, fixed for interest periods of one, two, three or six month periods, plus 1.25% to 2.00%, or at the bank’s base rate, as defined, plus 0.25% to 1.00%, based upon the Company’s Total Funded Debt/EBITDA Ratio, as defined. The Company is also required to pay commitment fees on unused portions of the Credit Facility ranging from 0.25% to 0.375%, based on the Company’s Total Funded Debt/EBITDA Ratio, as defined. The effective interest rate on outstanding borrowings under the Credit Facility was 1.67% at December 31, 2013.

As a condition of the Credit Facility, the Company is subject to certain customary covenants, which it was in compliance with at December 31, 2013. The Company had $25.0 million of borrowings drawn against the Credit Facility at December 31, 2013 and additionally had certain letters of credit outstanding totaling $0.5 million.

(8) Fair Value Measurements

The Company’s long-term debt instruments, consisting of industrial revenue bonds, are carried at historical cost. As of December 31, 2013 and June 30, 2013, the fair value of the industrial revenue bonds was approximately $1.8 million and $2.0 million, respectively, compared to carrying values of approximately $1.5 million and $1.5 million, respectively. These fair values, which were derived from discounted cash flow analyses based on the terms of the contracts and observable market data, and adjustment for nonperformance risk, are classified as Level 3 in the fair value hierarchy. The fair value of the Company's Credit Facility debt at December 31, 2013 and June 30, 2013 approximated its carrying value of $25.0 million and $10.0 million, respectively, as the rates on these borrowings are variable in nature. In relation to the acquisition of Creonix, Aydin and Beckwood, the Company estimated the fair value of the assets acquired and liabilities assumed at acquisition date. See Note 3 for a further discussion of these estimated fair values. The fair value of accounts receivable and accounts payable approximated their carrying values at both December 31, 2013 and June 30, 2013.

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(9) Income Taxes

The Company recognized income tax provisions of approximately $1.7 million and $2.8 million, or approximately 33.3% and 33.0% of income before provision for income taxes, for the three and six months ended December 31, 2013, respectively. During the three months ended December 31, 2012, the Company recognized a $2.1 million income tax benefit from claiming a worthless stock and bad debt deduction with respect to its investments and advances to its 100% owned Canadian subsidiary, Sparton of Canada, Ltd. Sparton of Canada, Ltd. is the legal entity that held the Company’s Canadian operations until these operations were ceased during fiscal 2009. Excluding this discrete tax benefit, the Company recognized income tax provisions of approximately $1.4 million and $2.1 million, or approximately 32.7% and 32.9%, respectively, of income before provision for income taxes, for the three and six months ended December 31, 2012. The Company’s effective income tax rate for the interim periods presented is based on management’s estimate of the Company’s effective tax rate for the applicable year and differs from the Federal statutory income tax rate primarily due to applicable permanent differences, foreign income taxes and state income taxes.

(10) Defined Benefit Pension Plan

Approximately 400 employees and retirees of the Company are covered by a defined benefit pension plan. Effective April 1, 2009, participation and the accrual of benefits in this pension plan were frozen, at which time all participants became fully vested and all prior service costs were recognized. The components of net periodic pension expense are as follows for the three and six months ended December 31, 2013 and 2012 (in thousands):

	For the Three Months Ended						For the Six Months Ended
	December 31, 2013			December 31, 2012			December 31, 2013			December 31, 2012
Service cost	$	—		$	—		$	—		$	—
Interest cost	91			67			177			171
Expected return on plan assets	(133		)	(117		)	(262		)	(257		)
Amortization of prior service cost	—			—			—			—
Amortization of unrecognized net actuarial loss	18			81			64			92
Net pension expense (income)	(24		)	31			(21		)	6
Pro rata recognition of lump-sum settlements	—			(25		)	—			—
Total pension expense (income)	$	(24	)	$	6		$	(21	)	$	6

The Company’s policy is to fund the plan based upon legal requirements and tax regulations. During each of the six months ended December 31, 2013 and 2012, less than $0.1 million was contributed to the pension plan. For further information on future funding projections and other pension disclosures see Part II, Item 8, Note 9 “Employee Retirement Benefit Plans” of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2013.

(11) Commitments and Contingencies

Environmental Remediation — Sparton has been involved with ongoing environmental remediation since the early 1980’s related to one of its former manufacturing facilities, located in Albuquerque, New Mexico (“Coors Road”). Although the Company entered into a long-term lease of the Coors Road property that was accounted for as a sale of property during fiscal 2010, it remains responsible for the remediation obligations related to its past operation of this facility. At December 31, 2013, Sparton had accrued approximately $2.9 million as its estimate of the remaining minimum future undiscounted financial liability with respect to this matter, of which approximately $0.4 million is classified as a current liability and included on the balance sheet in other accrued expenses. The Company’s minimum cost estimate is based upon existing technology and excludes certain legal costs, which are expensed as incurred. The Company’s estimate includes equipment and operating and maintenance costs for onsite and offsite pump and treat containment systems, as well as continued onsite and offsite monitoring. It also includes periodic reporting requirements.

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In fiscal 2003, Sparton reached an agreement with the United States Department of Energy (“DOE”) and others to recover certain remediation costs. Under the settlement terms, Sparton received cash and obtained some degree of risk protection as the DOE agreed to reimburse Sparton for 37.5% of certain future environmental expenses in excess of $8.4 million incurred from the date of settlement, if any, of which approximately $4.9 million has been expended as of December 31, 2013 toward the $8.4 million threshold. Uncertainties associated with environmental remediation contingencies are pervasive and often result in wide ranges of reasonably possible outcomes. Estimates developed in the early stages of remediation can vary significantly. Normally a finite estimate of cost does not become fixed and determinable at a specific point in time. Rather, the costs associated with environmental remediation become estimable over a continuum of events and activities that help to frame and define a liability. Factors which cause uncertainties for the Company include, but are not limited to, the effectiveness of the current work plans in achieving targeted results and proposals of regulatory agencies for desired methods and outcomes. It is possible that cash flows and results of operations could be materially affected by the impact of changes associated with the ultimate resolution of this contingency. At December 31, 2013, the Company estimates that it is reasonably possible, but not probable, that future environmental remediation costs associated with the Company’s past operations at the Coors Road property, in excess of amounts already recorded and net of DOE reimbursement, could be up to $2.4 million before income taxes over the next seventeen years.

The Company and its subsidiaries are also involved in certain existing compliance issues with the EPA and various state agencies, including being named as a potentially responsible party at several sites. Potentially responsible parties (“PRP“s) can be held jointly and severally liable for the clean-up costs at any specific site. The Company’s past experience, however, has indicated that when it has contributed relatively small amounts of materials or waste to a specific site relative to other PRPs, its ultimate share of any clean-up costs has been minor. Based upon available information, the Company believes it has contributed only small amounts to those sites in which it is currently viewed as a PRP and that reasonably possible losses related to these compliance issues are immaterial.

Litigation — On September 24, 2013, L-3 Communications Corporation, doing business as L-3 Linkabit (“Linkabit”) filed a complaint in the United States District Court for the Middle District of Florida, Orlando Division, alleging, among other things, that the Company failed to follow Linkabit drawings for the manufacture and assembly of certain products and that the Company changed its manufacturing process resulting in shipment of defective products to Linkabit. Linkabit seeks damages for breach of contract, breach of covenants, breach of warranties and negligence. In response to the Company's motion to dismiss on January 10, 2014, Linkabit filed its first amended complaint deleting the alleged negligence claims. The Company believes that its defenses to the claims are very strong and it intends to defend this action vigorously.  Given the stage of the litigation and the unresolved remaining questions of fact, the Company cannot estimate any loss, or range of loss, with confidence at this time.

U.S. Government Audits — Federal government agencies, including the Defense Contract Audit Agency (“DCAA”) and the Defense Contract Management Agency (“DCMA”), routinely audit and evaluate government contracts and government contractors’ administrative processes and systems. These agencies review the Company’s performance on contracts, pricing practices, cost structure, financial capability and compliance with applicable laws, regulations and standards. They also review the adequacy of the Company’s internal control systems and policies, including the Company’s purchasing, accounting, estimating, compensation and management information processes and systems.

The Company implemented a new enterprise resource planning system in November 2012 and currently remains eligible to receive cost reimbursable contracts from the U.S. Government. The Company responded in June 2013 to DCAA review comments received in the fourth quarter of fiscal 2013 regarding corrective actions to improve the reliability for accumulating costs under government contracts. While the Company’s corrective actions remain open for further review, the Company remains confident formal resolution of DCAA cost accounting practices findings will not have a material adverse impact on the Company’s financial results.

Other — In addition to the foregoing, from time to time, the Company is involved in various legal proceedings relating to claims arising in the ordinary course of business. The Company is not currently a party to any other such legal proceedings, the adverse outcome of which, individually or in the aggregate, is expected to have a material adverse effect on our business, financial condition or results of operations.

(12) Stock-Based Compensation

The Company has two long-term incentive plans. The Sparton Corporation Stock Incentive Plan, as amended and restated (the “2001 Plan”) was approved by the Company’s shareholders on October 24, 2001. The Sparton Corporation 2010 Long-Term Incentive Plan (the “2010 Plan”) was approved by the Company’s shareholders on October 28, 2009.

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2001 Plan.Under the 2001 Plan, the Company may grant to employees and non-employee directors incentive and non-qualified stock options, stock appreciation rights, restricted stock and other stock-based awards. All of the stock options issued to date under the 2001 Plan have either three, five or ten-year lives with either immediate vesting or vesting on an annual basis over four years beginning one year after grant date. Restricted stock awards granted to date to employees under the 2001 Plan vest annually over periods ranging from approximately 2.5 to 4.0 years, in some cases subject to achievement of certain financial performance metrics in addition to the service requirements. Unrestricted stock awards granted to date under the 2001 Plan represent annual stock grants to directors as a component of their overall compensation. The 2001 Plan’s termination date with respect to the granting of new awards was October 24, 2011. The total number of shares authorized to be granted under the 2001 Plan was 970,161 shares of the Company’s common stock, which equals the number of underlying awards previously made under the 2001 Plan.

2010 Plan.Under the 2010 Plan, the Company may grant to employees, officers and directors of the Company or its subsidiaries incentive and non-qualified stock options, stock appreciation rights, restricted stock or restricted stock units, performance awards and other stock-based awards, including grants of shares. Restricted stock awards granted to date to employees under the 2010 Plan vest annually over four years, subject to achievement of certain financial performance metrics in addition to the service requirements. Unrestricted stock awards granted to date under the 2010 Plan represent annual stock grants to directors as a component of their overall compensation. The 2010 Plan has a term of ten years. The total number of shares that may be awarded under the 2010 Plan is 1,000,000 shares of common stock, of which amount, 500,952 shares remain available for awards as of December 31, 2013.

The following table shows stock-based compensation expense by type of share-based award for the three and six months ended December 31, 2013 and 2012, respectively, included in the condensed consolidated statements of income (in thousands):

	For the Three Months Ended				For the Six Months Ended
	December 31, 2013		December 31, 2012		December 31, 2013		December 31, 2012
Fair value expense of stock option awards	$	—	$	—	$	—	$	—
Restricted and unrestricted stock	620		333		917		597
Total stock-based compensation	$	620	$	333	$	917	$	597

The following table shows the total remaining unrecognized compensation cost related to restricted stock grants and the fair value expense of stock option awards, as well as the weighted average remaining required service period over which such costs will be recognized as of December 31, 2013:

	Total Remaining Unrecognized Compensation Cost		Weighted Average Remaining Required Service Period
	(in thousands)		(in years)
Fair value expense of stock option awards	$	—	0
Restricted stock	2,059		2.03
	$	2,059	2.03

The following is a summary of options outstanding and exercisable at December 31, 2013:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
					(in years)	(in thousands)
Outstanding at June 30, 2013	55,418		$	8.56
Granted	—		—
Exercised	(14,119	)	8.54
Forfeited	—		—
Expired	—		—
Outstanding and exercisable at December 31, 2013	41,299		$	8.57	1.33	$	800

The intrinsic value of options exercised during the six months ended December 31, 2013 and 2012 was $0.2 million and $0.1 million, respectively.

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The following is a summary of activity for the six months ended December 31, 2013 related to shares granted under the Company’s long-term incentive plans:

	Shares		Weighted Average Grant Date Fair Value
Restricted shares at June 30, 2013	311,253		$	8.34
Granted	94,811		21.80
Vested	(87,576	)	8.54
Forfeited	(3,344	)	14.39
Restricted shares at December 31, 2013	315,144		$	12.27

The total fair value of restricted stock vested in the six months ended December 31, 2013 and 2012 was approximately $1.6 million and $1.0 million, respectively.

(13) Earnings Per Share Data

Basic earnings per share is based on the weighted average number of common shares and participating securities outstanding during the period. Diluted earnings per share include the dilutive effect of additional potential common shares issuable under our stock-based compensation plan and are determined using the treasury stock method. Unvested restricted stock awards, which contain non-forfeitable rights to dividends whether paid or unpaid, are included in the number of shares outstanding for both basic and diluted earnings per share calculations. In the event of a net loss, unvested restricted stock awards are excluded from the calculation of both basic and diluted loss per share.

Earnings per share calculations, including weighted average number of shares of common stock outstanding used in calculating basic and diluted income per share, for the three and six months ended December 31, 2013 and 2012 are as follows:

	For the Three Months Ended				For the Six Months Ended
	December 31, 2013		December 31, 2012		December 31, 2013		December 31, 2012
Net income (in thousands)	$	3,484	$	4,841	$	5,770	$	6,298
Weighted average shares outstanding – Basic	10,115,255		10,229,320		10,093,973		10,185,464
Net effect of dilutive stock options	32,263		19,104		29,569		21,449
Weighted average shares outstanding – Diluted	10,147,518		10,248,424		10,123,542		10,206,913
Net income per share:
Basic	$	0.34	$	0.47	$	0.57	$	0.62
Diluted	$	0.34	$	0.47	$	0.57	$	0.62

For the three months ended December 31, 2013 and 2012, 315,144 and 346,783, respectively, unvested restricted shares were included in determining both basic and diluted earnings per share. For the six months ended December 31, 2013 and 2012, 315,144 and 346,783, respectively, unvested restricted shares were included in determining both basic and diluted earnings per share. No potential shares of common stock were excluded from diluted income per share computations for either of the three or six months ended December 31, 2013 or 2012.

(14) Stock Repurchase Plan

On May 1, 2013, the Company’s Board of Directors approved a repurchase by the Company of up to $3.0 million of shares of its common stock over a 12-month period. The Company has been authorized to purchase shares from time to time in open market, block transactions and privately negotiated transactions at prices deemed appropriate by management, depending on market conditions, applicable laws and other factors. The stock repurchase program does not require the Company to repurchase any specific number of shares and can be modified, extended or terminated by the Board of Directors at any time. 

Pursuant to this stock repurchase program, during the three months ended September 30, 2013, the Company purchased 47,119 shares of its common stock at an average price of $18.51 per share for approximately $0.9 million. Previously, during the year ended June 30, 2013, the Company purchased 128,158 shares of its common stock at an average price of $16.55 per share for approximately $2.1 million. Total shares purchased pursuant to this stock repurchase program total 175,277 at an average price of $17.08. Shares purchased under the plan were cancelled upon repurchase. As of December 31, 2013, all authorized funds under the stock repurchase program have been expended.

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(15) Restructuring Activities

Creonix Acquisition Related Restructuring

In conjunction with the Creonix acquisition, the Company consolidated the Creonix operations into the Company’s Brooksville, Florida facility. These restructuring activities consisted primarily of approximately $0.2 million of workforce severance and retention costs, less than $0.1 million of production transfer costs and less than $0.1 million of facility closing costs. Inception to date restructuring charges recognized within the Complex Systems segment of approximately $0.2 million were incurred as of September 30, 2013 related to these acquisition related restructuring activities. The Company does not expect to recognize any additional costs related to these restructuring activities. All cash expenditures related to these activities have been made as of December 31, 2013.

Summary of Restructuring Charges

The table below summarizes the nature and amount of all restructuring actions for the six months ended December 31, 2013 (in thousands):

	Workforce Reduction (principally severance and retention bonuses)			Production Transfer			Facility Closing			Total
Accrual balance at June 30, 2013	44			—			—			44
Restructuring charges	111			68			9			188
Less: cash payments	(155		)	(68		)	(9		)	(232		)
Restructuring reversals	—			—			—			—
Accrual balance at December 31, 2013	$	—		$	—		$	—		$	—

(16) Business Segments

The Company is a provider of complex and sophisticated electromechanical devices with capabilities that include concept development, design and manufacturing engineering, production, distribution, and field service. Reportable segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or group, in assessing performance and allocating resources. The Company serves the Medical & Biotechnology, Military & Aerospace and Industrial & Commercial markets through three reportable business segments; Medical Device (“Medical”), Complex Systems (“CS”) and Defense & Security Systems (“DSS”).

The Company uses an internal management reporting system, which provides important financial data to evaluate performance and allocate the Company's resources on a segment basis. Net sales are attributed to the segment in which the product is manufactured or service is performed. A segment's performance is evaluated based upon its operating income (loss). A segment's operating income (loss) includes its gross profit on sales less its selling and administrative expenses, including allocations of certain corporate operating expenses. Certain corporate operating expenses are allocated to segment results based on the nature of the service provided. Other corporate operating expenses, including certain administrative, financial and human resource activities as well as items such as interest expense, interest income, other income (expense) and income tax expense (benefit), are not allocated to operations and are excluded from segment profit. These costs are not allocated to the segments, as management excludes such costs when assessing the performance of the segments. Inter-segment transactions are generally accounted for at amounts that approximate arm's length transactions. Identifiable assets by segments are those assets that are used in each segment's operations. The accounting policies for each of the segments are the same as for the Company taken as a whole.

Medical segmentoperations are comprised of contract design, manufacturing, and aftermarket repair and refurbishment of sophisticated medical and biotechnology devices and sub-assemblies. Customers include industry leaders, emerging technologies companies and start-ups. In manufacturing devices for its customers, this business unit follows specific design and manufacturing processes to assure product reliability and safety in accordance with Food and Drug Administration (“FDA”) guidelines and approvals. This group specializes in technologies, systems and processes required by medical OEM and ET customers primarily in the diagnostic, therapeutic, surgical and laboratory device segments of the medical and biotechnology marketplaces. The Medical segment also includes environmental monitoring and industrial systems and controls customers.

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Complex Systems segment operationsare comprised of manufacturing and aftermarket repair and refurbishment of sophisticated printed circuit card assemblies, sub-assemblies, full product assemblies, and cable/wire harnesses. Customers include military and aerospace, as well as industrial and commercial OEM's. In manufacturing for its customers, this segment adheres to very strict military and aerospace specifications in addition to product and process certifications. Customers are primarily engaged in applications that include: flight controls, cockpit displays, fuel system controls, secure communications, early warning detection, security systems, satellite communications, and audio.

Defense & Security Systems segment operations are comprised of design, development and production of products for both domestic and foreign defense as well as commercial needs. Sparton designs and manufactures anti-submarine warfare ("ASW") devices known as sonobuoys for the U.S. Navy and foreign governments that meet Department of State licensing requirements. This segment also performs an engineering development function for the United States military and prime defense contractors for advanced technologies ultimately leading to future defense products as well as replacements for existing products. The sonobuoy product line is built to stringent military specifications. These products are restricted by International Tariff and Arms Regulations (“ITAR”) and qualified by the U.S. Navy, which limits opportunities for competition. Sparton is also a provider of ruggedized flat panel display systems for military panel PC workstations, air traffic control and industrial applications. Ruggedized displays are manufactured for prime contractors to specific military grade specifications. Additionally, this business unit internally develops and markets commercial products for underwater acoustics and microelectromechanical (“MEMS”)-based inertial measurement.

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Operating results and certain other financial information about the Company’s three reportable segments for the three and six months ended December 31, 2013 and 2012 and as of December 31, 2013 and June 30, 2013 were as follows (in thousands):

	For the Three Months Ended December 31, 2013
	Medical		CS		DSS		Other Unallocated			Eliminations			Total
Sales	$	44,316	$	18,304	$	26,078	$	—		$	(4,136	)	$	84,562
Gross profit	$	6,824	$	1,944	$	6,209	$	—		$	—		$	14,977
Operating income (loss)	$	3,663	$	1,019	$	3,590	$	(3,015	)	$	—		$	5,257
Selling and administrative expenses	$	2,606	$	913	$	2,148	$	3,020		$	—		$	8,687
Internal research and development expenses	$	—	$	—	$	402	$	—		$	—		$	402
Restructuring Charges	$	—	$	—	$	—	$	—		$	—		$	—
Depreciation/amortization	$	1,225	$	204	$	390	$	100		$	—		$	1,919
Capital expenditures	$	352	$	66	$	324	$	196		$	—		$	938
	For the Three Months Ended December 31, 2012
	Medical		CS		DSS		Other Unallocated			Eliminations			Total
Sales	$	34,804	$	14,059	$	22,677	$	—		$	(4,286	)	$	67,254
Gross profit	$	4,344	$	1,428	$	6,323	$	—		$	—		$	12,095
Operating income (loss)	$	1,803	$	777	$	4,830	$	(3,210	)	$	—		$	4,200
Selling and administrative expenses	$	2,268	$	651	$	1,250	$	3,206		$	—		$	7,375
Internal research and development expenses	$	—	$	—	$	243	$	—		$	—		$	243
Depreciation/amortization	$	634	$	148	$	153	$	58		$	—		$	993
Capital expenditures	$	335	$	20	$	132	$	57		$	—		$	544
	For the Six Months Ended December 31, 2013
	Medical		CS		DSS		Other Unallocated			Eliminations			Total
Sales	$	86,324	$	36,569	$	43,971	$	—		$	(8,104	)	$	158,760
Gross profit	$	13,802	$	3,812	$	9,557	$	—		$	—		$	27,171
Operating income (loss)	$	7,604	$	1,904	$	4,874	$	(5,748	)	$	—		$	8,634
Selling and administrative expenses	$	5,057	$	1,696	$	3,823	$	5,756		$	—		$	16,332
Internal research and development expenses	$	—	$	—	$	791	$	—		$	—		$	791
Restructuring charges	$	—	$	188	$	—	$	—		$	—		$	188
Depreciation/amortization	$	2,462	$	422	$	564	$	192		$	—		$	3,640
Capital expenditures, net	$	420	$	66	$	619	$	307		$	—		$	1,412
	For the Six Months Ended December 31, 2012
	Medical		CS		DSS		Other Unallocated			Eliminations			Total
Sales	$	62,863	$	26,406	$	37,664	$	—		$	(8,878	)	$	118,055
Gross profit	$	8,538	$	2,524	$	9,033	$	—		$	—		$	20,095
Operating income (loss)	$	4,425	$	1,163	$	6,155	$	(5,412	)	$	—		$	6,331
Selling and administrative expenses	$	3,738	$	1,361	$	2,330	$	5,418		$	—		$	12,847
Internal research and development expenses	$	—	$	—	$	548	$	—		$	—		$	548
Depreciation/amortization	$	807	$	291	$	297	$	77		$	—		$	1,472
Capital expenditures	$	344	$	726	$	256	$	276		$	—		$	1,602

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	As of December 31, 2013
	Medical		CS		DSS		Other Unallocated		Eliminations		Total
Total assets	$	91,609	$	50,939	$	26,927	$	13,081	$	—	$	182,556
	As of June 30, 2013
	Medical		CS		DSS		Other Unallocated		Eliminations		Total
Total assets	$	95,776	$	36,039	$	16,952	$	17,155	$	—	$	165,922

(17) New Accounting Standards

In July 2013, the Financial Accounting Standards Board (the "FASB") issued authoritative guidance under Accounting Standards Update No. 2013-11 ("ASU 2013-11"), which provides guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss (“NOL”) carryforward, a similar tax loss, or a tax credit carryforward exists. ASU 2013-11 requires entities to present an unrecognized tax benefit as a reduction of a deferred tax asset for a NOL or tax credit carryforward whenever the NOL or tax credit carryforward would be available to reduce the additional taxable income or tax due if the tax position is disallowed. This accounting standard update requires entities to assess whether to net the unrecognized tax benefit with a deferred tax asset as of the reporting date. ASU 2013-11 will be effective for the Company’s first quarter of fiscal 2015. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following is management’s discussion and analysis of certain significant events affecting Sparton Corporation’s (the “Company” or “ Sparton”) results of operations and financial condition during the periods included in the accompanying financial statements. Additional information regarding the Company can be accessed via Sparton’s website at www.sparton.com. Information provided at the website includes, among other items, the Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Quarterly Earnings Releases, News Releases, and the Code of Business Conduct and Ethics, as well as various corporate charters and documents.

The Private Securities Litigation Reform Act of 1995 reflects Congress’ determination that the disclosure of forward-looking information is desirable for investors and encourages such disclosure by providing a safe harbor for forward-looking statements by corporate management. This report on Form 10-Q contains forward-looking statements within the scope of the Securities Act of 1933 and the Securities Exchange Act of 1934. The words “expects,” “anticipates,” “believes,” “intends,” “plans,” “will,” “shall,” and similar expressions, and the negatives of such expressions, are intended to identify forward-looking statements. In addition, any statements which refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. The Company undertakes no obligation to publicly disclose any revisions to these forward-looking statements to reflect events or circumstances occurring subsequent to filing this Form 10-Q with the Securities and Exchange Commission (“SEC”). These forward-looking statements are subject to risks and uncertainties, including, without limitation, those discussed below. Accordingly, Sparton’s future results may differ materially from historical results or from those discussed or implied by these forward-looking statements. The Company notes that a variety of factors could cause the actual results and experience to differ materially from anticipated results or other expectations expressed in the Company’s forward-looking statements.

Business Overview

General

Sparton is a provider of complex and sophisticated electromechanical devices with capabilities that include concept development, design and manufacturing engineering, production, distribution, and field service. The Company serves the Medical & Biotechnology, Military & Aerospace and Industrial & Commercial markets through three reportable business segments; Medical Device (“Medical”), Complex Systems (“CS”) and Defense & Security Systems (“DSS”).

All of the Company's facilities are registered to ISO standards, including 9001 or 13485, with most having additional certifications. The Company's products and services include products for Original Equipment Manufacturers (“OEM”) and Emerging Technology (“ET”) customers that are microprocessor-based systems that include transducers, printed circuit boards and assemblies, sensors, and electromechanical components, as well as development and design engineering services relating to these product sales. Sparton also develops and manufactures sonobuoys, anti-submarine warfare (“ASW”) devices used by the United States Navy and other free-world countries. Many of the physical and technical attributes in the production of sonobuoys are similar to those required in the production of the Company's other electrical and electromechanical products and assemblies.

The Company uses an internal management reporting system, which provides important financial data to evaluate performance and allocate the Company's resources on a segment basis. Net sales are attributed to the segment in which the product is manufactured or service is performed. A segment's performance is evaluated based upon its operating income (loss). A segment's operating income (loss) includes its gross profit on sales less its selling and administrative expenses, including allocations of certain corporate operating expenses. Certain corporate operating expenses are allocated to segment results based on the nature of the service provided. Other corporate operating expenses, including certain administrative, financial and human resource activities as well as items such as interest expense, interest income, other income (expense) and income tax expense (benefit), are not allocated to operations and are excluded from segment profit. These costs are not allocated to the segments, as management excludes such costs when assessing the performance of the segments. Inter-segment transactions are generally accounted for at amounts that approximate arm's length transactions. Identifiable assets by segments are those assets that are used in each segment's operations. The accounting policies for each of the segments are the same as for the Company taken as a whole.

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Medical Segment

Medical segment operations are comprised of contract design, manufacturing, and aftermarket repair and refurbishment of sophisticated medical and biotechnology devices and sub-assemblies. Customers include industry leaders, emerging technologies companies and start-ups. In manufacturing devices for its customers, this business unit follows specific design and manufacturing processes to assure product reliability and safety in accordance with Food and Drug Administration (“FDA”) guidelines and approvals. This group specializes in technologies, systems and processes required by medical OEM and ET customers primarily in the diagnostic, therapeutic, surgical and laboratory device segments of the medical and biotechnology marketplaces. The Medical segment also includes environmental monitoring and industrial systems and controls customers.

Complex Systems Segment

Complex Systems segment operations are comprised of manufacturing and aftermarket repair and refurbishment of sophisticated printed circuit card assemblies, sub-assemblies, full product assemblies, and cable/wire harnesses. Customers include military and aerospace, as well as industrial and commercial OEM's. In manufacturing for its customers, this segment adheres to very strict military and aerospace specifications in addition to product and process certifications. Customers are primarily engaged in applications that include: flight controls, cockpit displays, fuel system controls, secure communications, early warning detection, security systems, satellite communications, and audio.

DSS Segment

Defense & Security segment operations are comprised of design, development and production of products for both domestic and foreign defense as well as commercial needs. Sparton designs and manufactures anti-submarine warfare ("ASW") devices known as sonobuoys for the U.S. Navy and foreign governments that meet Department of State licensing requirements. This segment also performs an engineering development function for the United States military and prime defense contractors for advanced technologies ultimately leading to future defense products as well as replacements for existing products. The sonobuoy product line is built to stringent military specifications. These products are restricted by International Tariff and Arms Regulations (“ITAR”) and qualified by the U.S. Navy, which limits opportunities for competition. Sparton is also a provider of ruggedized flat panel display systems for military panel PC workstations, air traffic control and industrial applications. Ruggedized displays are manufactured for prime contractors to specific military grade specifications. Additionally, this business unit internally develops and markets commercial products for underwater acoustics and microelectromechanical (“MEMS”)-based inertial measurement.

Risks and Uncertainties

Sparton, as a high-mix, low to medium volume supplier, provides rapid product turnaround for customers. High-mix describes customers needing multiple product types with generally low to medium volume manufacturing runs. As a contract manufacturer with customers in a variety of markets, the Company has substantially less visibility of end user demand and, therefore, forecasting sales can be problematic. Customers may cancel their orders, change production quantities and/or reschedule production for a number of reasons. Depressed economic conditions may result in customers delaying delivery of product, or the placement of purchase orders for lower volumes than previously anticipated. Unplanned cancellations, reductions, or delays by customers may negatively impact the Company's results of operations. As many of the Company's costs and operating expenses are relatively fixed within given ranges of production, a reduction in customer demand can disproportionately affect the Company's gross margins and operating income. The majority of the Company's sales have historically come from a limited number of customers. Significant reductions in sales to, or a loss of, one of these customers could materially impact our operating results if the Company were not able to replace those sales with new business.

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Other risks and uncertainties that may affect our operations, performance, growth forecasts and business results include, but are not limited to, timing and fluctuations in U.S. and/or world economies, sharp volatility of world financial markets over a short period of time, competition in the overall contract manufacturing business, availability of production labor and management services under terms acceptable to the Company, Congressional budget outlays for sonobuoy development and production, Congressional legislation, uncertainties associated with the outcome of litigation, changes in the interpretation of environmental laws and the uncertainties of environmental remediation and customer labor and work strikes. Further risk factors are the availability and cost of materials, as well as non-cancelable purchase orders we have committed to in relation to customer forecasts that can be subject to change. A number of events can impact these risks and uncertainties, including potential escalating utility and other related costs due to natural disasters, as well as political uncertainties such as the unrest in Africa and the Middle East. Additional trends, risks and uncertainties include dependence on key personnel, risks surrounding acquisitions, uncertainties surrounding the global economy, U.S. healthcare legislation, U.S. budget sequestration and debt ceiling negotiations and the effects of those uncertainties on OEM behavior, including heightened inventory management, product development cycles and outsourcing strategies. Finally, the Sarbanes-Oxley Act, and more recently the Dodd-Frank Act, have required or will require changes in, and formalization of, some of the Company's corporate governance and compliance practices. The SEC and the New York Stock Exchange have also passed or will pass related rules and regulations requiring additional compliance activities, including those implementing the conflict minerals provisions of the Dodd-Frank Act. Compliance with these rules has increased administrative costs and may increase these costs further in the future. A further discussion of the Company’s risk factors has been included in Part I, Item 1A, “Risk Factors”, of this Annual Report on Form 10-K. Management cautions readers not to place undue reliance on forward-looking statements, which are subject to influence by the enumerated risk factors as well as unanticipated future events.

Acquisition of Beckwood Services, Inc.

On December 11, 2013, the Company completed the acquisition of Beckwood Services, Inc. ("Beckwood”) in a $15.3 million all-cash transaction, subject to certain post-closing adjustments and financed through the use of cash on hand and borrowings under the Company's Credit Facility. At December 31, 2013, the Company has recorded additional estimated contingent consideration of accounts receivable of less than $0.1 million in relation to a post-closing working capital adjustment, which is expected to be settled in the third quarter of the Company's fiscal 2014 year. The transaction includes an approximate $1.5 million escrowed holdback which is available to fund the working capital adjustment and potential seller indemnification obligations in relation to the acquisition agreement.

The acquired business, which is part of the Company's Complex Systems segment and which is expected to add $18 million in annualized revenue, develops electronic or electro-mechanical controls and electronic assemblies. Their customer profile includes international Fortune 1000 manufacturers of industrial control systems, analytical instruments, measuring and detecting equipment and military, defense and Homeland Security equipment.

Total purchase consideration has been allocated to the tangible assets acquired and liabilities assumed based on their provisionally estimated fair values at the acquisition date. It is possible that acquired assets may additionally include customer relationships and the Beckwood name. The Company was unable at December 31, 2013 to assign provisionally estimated fair values to these potential assets. The Beckwood acquisition has preliminarily resulted in approximately $13 million of goodwill, which will be adjusted downward or upward based on the final values assigned to all acquired assets and liabilities. The Company believes that any goodwill remaining after the valuations are finalized will primarily relate to strategic fit, resulting synergies and the acquired workforce that this business brings to existing operations. Goodwill associated with this acquisition is not expected to be deductible for tax purposes and has been assigned entirely to the Company’s Complex Systems segment.

Included in the Company’s Condensed Consolidated Statements of Income for the three and six months ended December 31, 2013 are net sales of approximately $0.8 million and income before provision from income taxes of approximately $0.1 million, resulting from the acquisition of Beckwood since December 11, 2013.

The Company incurred legal, professional and other costs related to this acquisition aggregating approximately $0.1 million. These costs were recognized as selling and administrative expenses in the three months ended December 31, 2013.

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Acquisition of Aydin Displays, Inc.

On August 30, 2013, the Company completed the acquisition of certain assets and liabilities of Aydin Displays, Inc. ("Aydin Displays" or “Aydin”) in a $15.0 million all-cash transaction, subject to certain post-closing adjustments and financed through the use of borrowings under the Company's Credit Facility. At December 31, 2013, the Company has recorded additional estimated contingent consideration of accounts receivable of $0.4 million in relation to a post-closing working capital adjustment, which is expected to be settled during the Company's fiscal 2014 year. Additional acquisition consideration of up to $6.6 million is contingent upon Aydin attaining certain performance thresholds during the twelve month period following the transaction. The transaction includes an approximate $1.2 million escrowed holdback which is available to fund the working capital adjustment and potential seller indemnification obligations in relation to the acquisition agreement.

The acquired business, which is part of the Company's DSS segment and which is expected to add $18 million in annualized revenue, develops enhanced flat panel display and touch-screen solutions with application-critical performance criteria including ruggedization, high resolution, color accuracy, response/refresh times, sunlight readability and other criteria such as magnetic interference and emanations security for the Military & Aerospace and Civil Marine markets. These products are currently specified in the U.S. Navy P8A Poseidon ASW aircraft behind-the-cockpit control center, the command and control centers of many U.S. Navy ships, Federal Aviation Administration air traffic control systems, and cockpit command centers for various civil marine applications. The acquired business will continue to operate as Aydin Displays.

Total purchase consideration has been preliminarily allocated to the tangible assets acquired and liabilities assumed based on their provisionally estimated fair values at the acquisition date. Additional acquisition consideration of up to $6.6 million is contingent upon Aydin attaining certain performance thresholds. The Company has assigned no fair value to this contingent liability. The Aydin acquisition has preliminarily resulted in approximately $2 million of goodwill, which is expected to be deductible for tax purposes and has been assigned entirely to the Company’s DSS segment. The Company believes goodwill primarily relates to strategic fit, resulting synergies and the acquired workforce that this business brings to existing operations. The provisional fair values of acquired identifiable assets have been determined to be Level 3 under the fair value hierarchy and have been estimated based on projected future cash flows and customer attrition rates, discounted using an estimated weighted average cost of capital. The customer relationships are being amortized using an accelerated methodology over fifteen years. Trade names and trademarks are being amortized using a straight-line methodology over ten years. The unpatented technology is being amortized using an accelerated methodology over seven years. The favorable leasehold is reflected in Other long-term assets on the consolidated balance sheet and is being amortized on a straight-line basis over the five year life of the lease. Amortization related to Aydin unpatented technology and favorable leasehold is reflected within Cost of goods sold on the consolidated statement of income.

Included in the Company’s Condensed Consolidated Statements of Income for the three and six months ended December 31, 2013 are net sales of approximately $4.0 million and $5.2 million, respectively, and loss before benefit from income taxes of less than $0.1 million and approximately $0.1 million, respectively, resulting from the acquisition of Aydin since August 30, 2013.

The Company incurred legal, professional and other costs related to this acquisition aggregating approximately $0.0 million and $0.2 million for the three and six months ended December 31, 2013, respectively. These costs were recognized as selling and administrative expenses.

A portion of Aydin's revenue is derived from contracts to manufacture video displays and other related products to a buyer’s specification under long-term contracts. Revenue and profit is recognized under these contracts using the percentage of completion method based on units shipped to estimated total costs at completion. Certain upfront engineering costs in relation to long-term contracts are capitalized and amortized over the life of the contract.

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Consolidated Results of Operations

Presented below is comparative data and discussions regarding our consolidated results of operations for the three and six months ended December 31, 2013 compared to the three and six months ended December 31, 2012. Results of operations for any period less than one year are not necessarily indicative of results of operations that may be expected for a full year. The following discussion should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and Notes thereto included in Item 1 of this report.

For the Three Months Ended December 31, 2013 compared to the Three Months Ended December 31, 2012

The following table presents selected consolidated statement of income data for the three months ended December 31, 2013 and 2012 (in thousands):

	2013					2012
	Total			% of Sales		Total			% of Sales
Net sales	$	84,562		100.0	%	$	67,254		100.0	%
Cost of goods sold	69,585			82.3		55,159			82.0
Gross profit	14,977			17.7		12,095			18.0
Selling and administrative expenses	8,687			10.3		7,375			11.0
Internal research and development expenses	402			0.5		243			0.4
Amortization of intangible assets	636			0.7		273			0.4
Restructuring charges	—			—		—			—
Other operating (income) expense, net	(5		)	—		4			—
Operating income	5,257			6.2		4,200			6.2
Total other expense, net	(37		)	—		(91		)	(0.1	)
Income before provision for income taxes	5,220			6.2		4,109			6.1
Provision for (benefit from) income taxes	1,736			2.1		(732		)	(1.1	)
Net income	$	3,484		4.1	%	$	4,841		7.2	%

The following table presents net sales for the three months ended December 31, 2013 and 2012 (in thousands):

	2013					2012
SEGMENT	Total			% of Total		Total			% of Total		% Change
Medical	$	44,316		52.4	%	$	34,804		51.8	%	27.3	%
CS	18,304			21.6		14,059			20.9		30.2
DSS	26,078			30.8		22,677			33.7		15.0
Eliminations	(4,136		)	(4.8	)	(4,286		)	(6.4	)	(3.5	)
Totals	$	84,562		100.0	%	$	67,254		100.0	%	25.7

The following table presents gross profit and gross profit as a percent of net sales for the three months ended December 31, 2013 and 2012 (in thousands):

	2013				2012
SEGMENT	Total		GP%		Total		GP%
Medical	$	6,824	15.4	%	$	4,344	12.5	%
CS	1,944		10.6		1,428		10.2
DSS	6,209		23.8		6,323		27.9
Totals	$	14,977	17.7		$	12,095	18.0

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The following table presents operating income and operating income as a percent of net sales for the three months ended December 31, 2013 and 2012 (in thousands):

	2013					2012
SEGMENT	Total			% of Sales		Total			% of Sales
Medical	$	3,663		8.3	%	$	1,803		5.2	%
CS	1,019			5.6		777			5.5
DSS	3,590			13.8		4,830			21.3
Other unallocated	(3,015		)	—		(3,210		)	—
Totals	$	5,257		6.2		$	4,200		6.2

Medical

Included in the results for the Company’s Medical segment for the three months ended December 31, 2013 are net sales of approximately $13.1 million resulting from the acquisition of Onyx compared to $6.1 million in net sales from the acquisition of Onyx in the prior year quarter. Excluding the $7.0 million from the incremental sales from the acquisition of Onyx, legacy Medical sales increased approximately $2.5 million, or 9%, in the three months ended December 31, 2013 as compared with the prior year quarter. Reflected within this increase in legacy sales is $4.4 million of increased sales to three customers, including this business unit’s largest customer, reflecting relative demand for these customers' products. Offsetting these increases were decreased sales to one customer totaling $1.6 million, reflecting a supplier issue this customer is having with a subcomponent of their product unrelated to that supplied by the Company. Fenwal Blood Technologies contributed 18% and 20% of consolidated company net sales during the three months ended December 31, 2013 and 2012, respectively. Medical backlog was approximately $70.1 million at December 31, 2013 compared to $67.4 at December 31, 2012. Commercial orders, in general, may be rescheduled or cancelled without significant penalty, and, as a result, may not be a meaningful measure of future sales. A majority of the December 31, 2013 Medical backlog is currently expected to be realized in the next 12 months.

Gross profit varies from period to period and can be affected by a number of factors, including product mix, production efficiencies, capacity utilization, and costs associated with new program introduction. The gross profit percentage on Medical sales increased to 15.4% from 12.5% for the three months ended December 31, 2013 and 2012, respectively. This increase in margin percentage on Medical sales primarily reflects certain favorable product mix between the two periods, partially offset by the impact of increased depreciation at the Onyx facility.

Selling and administrative expenses relating to the Medical segment were $2.6 million and $2.3 million for the three months ended December 31, 2013 and 2012, respectively. The current year quarter includes $0.6 million of incremental direct and allocated incremental expenses related to Onyx operations.

Amortization of intangible assets was $0.6 million and $0.3 million for the three months ended December 31, 2013 and 2012, respectively. The increase relates to amortization of customer relationships and non-compete agreements acquired as part of the Onyx transaction.

Complex Systems

Included in the results for the Company’s Complex Systems segment for the three months ended December 31, 2013 are net sales of approximately $3.1 million resulting from the acquisitions of Creonix, LLC ("Creonix") and Beckwood. Excluding these sales and a decrease in intercompany sales of $0.1 million, CS sales to legacy external customers for the three months ended December 31, 2013 increased $1.3 million, or 13%, as compared with the same quarter last year, primarily reflecting $2.4 million of increased sales to three customers, reflecting relative increased demand for each of these customers’ products. Partially offsetting these increases was decreased sales of $0.9 million to one customer reflecting this customer's disengagement during fiscal 2014. CS intercompany sales result primarily from the production of circuit boards that are then utilized in DSS product sales. These intercompany sales are eliminated in consolidation. CS backlog was approximately $42.8 million at December 31, 2013 compared to $35.1 million at December 31, 2012. Commercial orders, in general, may be rescheduled or cancelled without significant penalty, and, as a result, may not be a meaningful measure of future sales. A majority of the December 31, 2013 CS backlog is currently expected to be realized in the next 12 months.

The gross profit percentage on CS sales increased to 10.6% for the three months ended December 31, 2013 compared to 10.2% for the three months ended December 31, 2012, primarily reflecting increased capacity utilization, partially offset by unfavorable product mix between the comparative periods.

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Selling and administrative expenses relating to the CS segment were $0.9 million and $0.7 million for the three months ended December 31, 2013 and 2012, respectively, primarily due to the inclusion of operating expenses of Creonix and Beckwood.

There were no additional restructuring charges related to the CS segment for the three months ended December 31, 2013. For a further discussion of this restructuring activity see Note 15, Restructuring Activities, of the "Notes to Unaudited Consolidated Financial Statements" in this Quarterly Report on Form 10-Q.

Defense and Security Systems

Included in the results for the Company’s Defense and Security Systems segment for the three months ended December 31, 2013 are net sales of approximately $4.0 million resulting from the acquisition of Aydin. Excluding the fiscal year 2014 incremental sales from the acquisition of Aydin, DSS legacy sales decreased approximately $0.6 million, or 3%, in the three months ended December 31, 2013 as compared with the same quarter last year, reflecting decreased sonobuoy sales to foreign governments, partially offset by increased U.S. Navy sonobouy sales. Total sales to the U.S. Navy in the three months ended December 30, 2013 and 2012 was approximately $17.2 million and $12.8 million, or 20% and 19%, respectively, of consolidated Company net sales for those periods. Sonobuoy sales to foreign governments were $4.3 million and $9.1 million in the three months ended December 31, 2013 and 2012, respectively. DSS backlog was approximately $78.8 million at December 31, 2013 compared to $109.0 million at December 31, 2012. A majority of the December 31, 2013 DSS backlog is currently expected to be realized in the next 14 months.

The gross profit percentage on DSS sales decreased to 23.8% for the three months ended December 31, 2013 compared to 27.9% for the three months ended December 31, 2012. Gross profit percentage was negatively affected in the current year quarter by decreased foreign sonobuoy sales as compared to the prior year quarter.

Selling and administrative expenses relating to the DSS segment were $2.1 million and $1.2 million for the three months ended December 31, 2013 and 2012, respectively, reflecting incremental expenses related to Aydin operations.

Internal research and development expenses reflect costs incurred for the internal development of technologies for use in navigation, oil and gas exploration and flat panel display technology. These costs include salaries and related expenses, contract labor and consulting costs, materials and the cost of certain research and development specific equipment. The Company incurred $0.4 million and $0.2 million of internally funded research and development expenses in the three months ended December 31, 2013 and 2012, respectively.

Other Unallocated

Total corporate selling and administrative expenses were $5.2 million and $5.0 million for the three months ended December 30, 2013 and 2012, respectively, or 6.2% and 7.5% of consolidated sales, respectively, reflecting relative economies of scale achieved due to the Company's growth between the two comparative quarters. Of these costs, $2.2 million and $1.8 million, respectively, were allocated to segment operations in each of these periods. Allocations of corporate selling and administrative expenses are based on the nature of the service provided and can fluctuate from period to period.

Interest expense consists of interest and fees on the Company's outstanding debt and revolving credit facility, including amortization of financing costs. Interest expense was $0.2 million for each of the three months ended December 31, 2013 and 2012. See Note 7, Debt, of the “Notes to Unaudited Condensed Consolidated Financial Statements” in this Quarterly Report on Form 10-Q for a further discussion of debt.

The Company recognized an income tax provision of approximately $1.7 million, or approximately 33.3% of income before provision for income taxes, for the three months ended December 31, 2013. During the three months ended December 31, 2012, the Company recognized a $2.1 million income tax benefit with respect to the Company's investments in a Canadian subsidiary that held the Company's Canadian operations until these operations were ceased during fiscal 2009. Excluding this discrete tax benefit, the Company recognized an income tax provision of approximately $1.4 million, or approximately 32.7% of income before provision for income taxes, for the three months ended December 31, 2012. See Note 9, Income Taxes, of the “Notes to Unaudited Condensed Consolidated Financial Statements” in this Quarterly Report on Form 10-Q for a further discussion of income taxes.

Due to the factors described above, the Company reported net income of $3.5 million ($0.34 per share, basic and diluted) for the three months ended December 31, 2013, compared to net income of $4.8 million ($0.47 per share, basic and diluted) for the corresponding quarter last year.

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For the Six Months Ended December 31, 2013 compared to the Six Months Ended December 31, 2012

The following table presents selected consolidated statement of income data for the six months ended December 31, 2013 and 2012 (in thousands):

	2013					2012
	Total			% of Sales		Total			% of Sales
Net sales	$	158,760		100.0	%	$	118,055		100.0	%
Cost of goods sold	131,589			82.9		97,960			83.0
Gross profit	27,171			17.1		20,095			17.0
Selling and administrative expenses	16,332			10.3		12,847			10.9
Internal research and development expenses	791			0.5		548			0.5
Amortization of intangible assets	1,234			0.8		375			0.3
Restructuring charges	188			0.1		—			—
Other operating expense, net	(8		)	—		(6		)	—
Operating income	8,634			5.4		6,331			5.3
Total other income, net	(21		)	—		(34		)	—
Income before provision for income taxes	8,613			5.4		6,297			5.3
Provision for (benefit from) income taxes	2,843			1.8		(1		)	—
Net income	$	5,770		3.6	%	$	6,298		5.3	%

The following table presents net sales for the six months ended December 31, 2013 and 2012 (in thousands):

	2013					2012
SEGMENT	Total			% of Total		Total			% of Total		% Change
Medical	$	86,324		54.4	%	$	62,863		53.2	%	37.3	%
CS	36,569			23.0		26,406			22.4		38.5
DSS	43,971			27.7		37,664			31.9		16.7
Eliminations	(8,104		)	(5.1	)	(8,878		)	(7.5	)	(8.7	)
Totals	$	158,760		100.0	%	$	118,055		100.0	%	34.5

The following table presents gross profit and gross profit as a percent of net sales for the six months ended December 31, 2013 and 2012 (in thousands):

	2013				2012
SEGMENT	Total		GP%		Total		GP%
Medical	$	13,802	16.0	%	$	8,538	13.6	%
CS	3,812		10.4		2,524		9.6
DSS	9,557		21.7		9,033		24.0
Totals	$	27,171	17.1		$	20,095	17.0

The following table presents operating income and operating income as a percent of net sales for the six months ended December 31, 2013 and 2012 (in thousands):

	2013					2012
SEGMENT	Total			% of Sales		Total			% of Sales
Medical	$	7,604		8.8	%	$	4,425		7.0	%
CS	1,904			5.2		1,163			4.4
DSS	4,874			11.1		6,155			16.3
Other unallocated	(5,748		)	—		(5,412		)	—
Totals	$	8,634		5.4		$	6,331		5.4

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Medical

Included in the results for the Company’s Medical segment for the six months ended December 31, 2013 are net sales of approximately $26.0 million resulting from the acquisition of Onyx compared to $6.1 million in net sales from the acquisition of Onyx in the prior year period. Excluding the $19.9 million incremental sales from the acquisition of Onyx, legacy Medical sales increased approximately $3.5 million, or 6%, in the six months ended December 31, 2013 as compared with the prior year. Reflected within this increase in legacy sales is $11.5 million of increased sales to five customers, including this business unit’s largest customer, reflecting relative demand for these customers' products. Offsetting these increases were decreased sales to three customers totaling $8.1 million. Decreased sales to one customer reflects relative demand for this customer's products. Decreased sales to the second customer reflects a supplier issue this customer is having with a subcomponent of their product unrelated to that supplied by the Company. Decreased sales to the third customer reflects this customer’s decision to insource one of its programs during fiscal 2013. Medical sales are dependent on a small number of key strategic customers. Fenwal Blood Technologies contributed 19% and 21% of consolidated company net sales during the six months ended December 31, 2013 and 2012, respectively.

The gross profit percentage on Medical sales increased to 16.0% from 13.6% for the six months ended December 31, 2013 and 2012, respectively. This increase in margin percentage on Medical sales primarily reflects certain favorable product mix between the two periods, partially offset by the impact of increased depreciation relating to the write-up in value of the Watertown, South Dakota facility assets in connection with the acquisition accounting for Onyx purchase.

Selling and administrative expenses relating to the Medical segment were $5.1 million and $3.7 million for the six months ended December 31, 2013 and 2012, respectively. The current year includes $1.8 million of direct and allocated incremental expenses related to Onyx operations.

Amortization of intangible assets was $1.2 million and $0.4 million for the six months ended December 31, 2013 and 2012, respectively. The increase relates to amortization of customer relationships and non-compete agreements acquired as part of the Onyx transaction.

Complex Systems

Included in the results for the Company’s Complex Systems segment for the six months ended December 31, 2013 are net sales of approximately $0.8 million resulting from the acquisition of Beckwood Services, Inc. ("Beckwood") and $4.5 million from the acquisition of Creonix, LLC ("Creonix"). Excluding these sales and a decrease in intercompany sales of $0.8 million, CS sales to legacy external customers for the six months ended December 31, 2013 increased $5.7 million, or 32%, as compared with the same period last year, primarily reflecting increased sales to four customers, reflecting relative increased demand for each of these customers’ products. CS intercompany sales result primarily from the production of circuit boards that are then utilized in DSS product sales. These intercompany sales are eliminated in consolidation.

The gross profit percentage on CS sales increased to 10.4% for the six months ended December 31, 2013 compared to 9.6% for the six months ended December 31, 2012, primarily reflecting increased capacity utilization, partially offset by unfavorable product mix between the comparative periods.

Selling and administrative expenses relating to the CS segment were $1.7 million and $1.4 million for the six months ended December 31, 2013 and 2012, respectively., largely due to the inclusion of operating expenses of Creonix and Beckwood.

Restructuring charges related to the CS segment were $0.2 million for the six months ended December 31, 2013 and relate to the consolidation of the recently acquired Creonix business into the Company's Brooksville, Florida facility. For a further discussion of this restructuring activity see Note 15, Restructuring Activities, of the "Notes to Unaudited Consolidated Financial Statements" in this Quarterly Report on Form 10-Q.

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Defense and Security Systems

Included in the results for the Company’s Defense and Security Systems segment for the six months ended December 31, 2013 are net sales of approximately $5.2 million resulting from the acquisition of Aydin. Excluding the fiscal year 2014 incremental sales from the acquisition of Aydin, DSS legacy sales increased approximately $1.1 million, or 3%, in the six months ended December 31, 2013 as compared with the period last year, reflecting increased sonobuoy sales to the U. S. Navy, partially offset by decreased sonobuoy sales to foreign governments and lower U.S. Navy engineering sales. Total sales to the U.S. Navy for the six months ended December 31, 2013 and 2012 was approximately $26.0 million and $23.2 million, or 16% and 20%, respectively, of consolidated Company net sales for those periods. Sonobuoy sales to foreign governments were $11.8 million and $13.5 million in the six months ended December 31, 2013 and 2012, respectively.

The gross profit percentage on DSS sales decreased to 21.7% for the six months ended December 31, 2013 compared to 24.0% for the six months ended December 31, 2012. Gross profit percentage was negatively affected by unfavorable product mix in the current year.

Selling and administrative expenses relating to the DSS segment were $3.8 million and $2.3 million for the six months ended December 31, 2013 and 2012, respectively, reflecting incremental expenses related to Aydin operations and increased business development efforts in the current fiscal quarter.

Internal research and development expenses reflect costs incurred for the internal development of technologies for use in navigation, oil and gas exploration and flat panel display technology. These costs include salaries and related expenses, contract labor and consulting costs, materials and the cost of certain research and development specific equipment. The Company incurred $0.8 million and $0.5 million of internally funded research and development expenses for the six months ended December 31, 2013 and 2012, respectively.

Other Unallocated

Total corporate selling and administrative expenses were $10.1 million and $9.1 million for the six months ended December 31, 2013 and 2012, respectively, or 6.4% and 7.7% of consolidated sales, respectively, reflecting relative economies of scale achieved due to the Company's growth between the two comparative quarters. Of these costs, $4.4 million and $3.7 million, respectively, were allocated to segment operations in each of these periods. Allocations of corporate selling and administrative expenses are based on the nature of the service provided and can fluctuate from period to period.

Interest expense consists of interest and fees on the Company's outstanding debt and revolving credit facility, including amortization of financing costs. Interest expense was $0.4 million and $0.3 million for the six months ended December 31, 2013 and 2012, respectively. The comparative interest expense reflects comparative borrowings under the Company’s credit facility between the two periods, partially offset by lower facility fees in the current period as compared to the prior year period. See Note 7, Debt, of the “Notes to Unaudited Condensed Consolidated Financial Statements” in this Quarterly Report on Form 10-Q for a further discussion of debt.

The Company recognized an income tax provisions of approximately $2.9 million, or approximately 33.0% of income before provision for income taxes, for the six months ended December 31, 2013. During the six months ended December 31, 2012, the Company recognized a $2.1 million income tax benefit with respect to the Company's investments in a Canadian subsidiary that held the Company's Canadian operations until these operations were ceased during fiscal 2009. Excluding this discrete tax benefit, the Company recognized an income tax provision of approximately $2.1 million, or approximately 32.9%, of income before provision for income taxes, for the six months ended December 31, 2012. See Note 9, Income Taxes, of the “Notes to Unaudited Condensed Consolidated Financial Statements” in this Quarterly Report on Form 10-Q for a further discussion of income taxes.

Due to the factors described above, the Company reported net income of $5.8 million ($0.57 per share, basic and diluted) for the six months ended December 30, 2013, compared to net income of $6.3 million ($0.62 per share, basic and diluted) for the corresponding period last year.

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Liquidity and Capital Resources

The Company has a $65 million credit facility with BMO Harris Bank N.A., consisting of a $35 million revolving line-of-credit facility (the “Revolving Credit”) to support the Company’s working capital needs and other general corporate purposes, and a $30 million acquisition loan commitment (the “Acquisition Facility” and together with the Revolving Credit, the “Credit Facility”) to finance permitted acquisitions. The Credit Facility expires on November 15, 2017, is secured by substantially all assets of the Company and provides for up to an additional $35 million in uncommitted loans available for additional Revolving Credit loans or Acquisition loans. As a condition of the Credit Facility, the Company is subject to certain customary covenants, which it was in compliance with at December 31, 2013. The Company had $25.0 million of borrowings drawn against the Credit Facility at December 31, 2013. The Company also has approximately $1.5 million of industrial revenue bonds outstanding at December 31, 2013. See Note 7, Debt, of the “Notes to Unaudited Condensed Consolidated Financial Statements” in this Quarterly Report on Form 10-Q for a further discussion of the Company’s debt.

Certain of the Company’s DSS contracts allow for billings to occur when certain milestones under the applicable program are reached, independent of the amount shipped by Sparton as of such date. These performance based billings reduce the amount of cash that would otherwise be required during the performance of these contracts. As of December 31, 2013 and June 30, 2013, $19.1 million and $20.9 million, respectively, of proceeds from billings in excess of costs were received.

The Company currently expects to meet its liquidity needs through a combination of sources including, but not limited to, operations, existing cash balances, its revolving line-of-credit and anticipated continuation of performance based billings on certain DSS contracts. With the above sources providing the expected cash flows, the Company currently believes that it will have sufficient liquidity for its anticipated needs over the next 12 months, but no assurances regarding liquidity can be made.

Operating activities provided $12.5 million and used $8.9 million of net cash flows in six months ended December 31, 2013 and 2012, respectively. Excluding changes in working capital, operating activities provided $10.2 million and $9.8 million in the first six months of fiscal 2014 and 2013, respectively, reflecting the Company’s relative operating performance during those periods. Working capital provided $2.3 million and used $18.7 million of net cash flows in the six months ended December 31, 2013 and 2012, respectively. Working capital related cash flows in the first six months of fiscal 2014 primarily reflect decreased receivables and inventory, partially offset by increased other assets, the funding of production related to U.S. Navy contracts during the year in excess of performance based payments received, and decreased accounts payable and accrued expenses. Working capital related cash flows in the six months of fiscal 2013 primarily reflect increased inventory, reduced accounts payable and accrued expenses and funding of production related to U.S. Navy contracts during the year in excess of advance billings received.

Cash flows used in investing activities in six months ended December 31, 2013 and 2012 totaled $31.5 million and $45.4 million, respectively. The six months ended December 31, 2013 reflect the $15.0 million acquisition of Aydin and the $15.3 million acquisition of Beckwood. Both acquisitions are subject to certain post-closing adjustments. The Aydin acquisition was funded through borrowings under the Company’s Credit Facility. The Beckwood acquisition was funded through a combination of cash on hand and borrowings under the Company's Credit Facility. The six months ended December 31, 2012 reflect the $43.25 million paid through that date in relation to the acquisition of Onyx. The six months ended December 31, 2013 additionally reflects the receipt of $0.1 million in relation to the settlement of the inventory adjustment to the purchase price of Creonix. Net capital expenditures for the six months ended December 31, 2013 and 2012 were approximately $1.3 million and $1.6 million, respectively. The six months ended December 31, 2012 reflects the utilization of $0.5 million as cash collateral for certain letters of credit outstanding issued by PNC Bank, National Association. These letters of credit were issued under the Company's Credit Facility during the Company’s third quarter of fiscal 2013, eliminating the need for this cash collateral.

Financing activities provided $14.0 million and $13.4 million in the six months ended December 31, 2013 and 2012, respectively. The six months ended December 31, 2013 reflect $15.0 million of net borrowing under the Company’s Credit Facility, $0.5 million of tax benefits in excess of recorded stock-based compensation and the repurchase of $0.9 million of the Company's common stock under Company's stock repurchase plan (see below for a further discussion of this program). The six months ended December 31, 2013 and 2012 additionally reflect the use of cash of $0.7 million and $0.2 million, respectively, to satisfy income tax withholding requirements in relation to the vesting of executives’ restricted stock in exchange for the surrender of a portion of the vesting shares. Each of the six months ended December 31, 2013 and 2012 also reflect repayments on the Company’s outstanding industrial revenue bonds with the state of Ohio of less than $0.1 million. The six months ended December 31, 2012 additionally reflects the receipt of $0.1 million from the exercise of stock options and the payment of $0.4 million of financing fees.

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On May 1, 2013, the Company’s Board of Directors approved a repurchase by the Company of up to $3.0 million of shares of its common stock over a 12-month period. The Company has been authorized to purchase shares from time to time in open market, block transactions and privately negotiated transactions at prices deemed appropriate by management, depending on market conditions, applicable laws and other factors. The stock repurchase program does not require the Company to repurchase any specific number of shares and can be modified, extended or terminated by the Board of Directors at any time. 

Pursuant to this stock repurchase program, during the six months ended December 31, 2013, the Company purchased 47,119 shares of its common stock at an average price of $18.51 per share for approximately $0.9 million. Previously, during the year ended June 30, 2013, the Company purchased 128,158 shares of its common stock at an average price of $16.55 per share for approximately $2.1 million. Total shares purchased pursuant to this stock repurchase program total 175,277 at an average price of $17.08. Shares purchased under the plan were cancelled upon repurchase. As of December 31, 2013, all authorized funds under the stock repurchase program have been expended.

Commitments and Contingencies

Environmental Remediation

Sparton has been involved with ongoing environmental remediation since the early 1980’s related to one of its former manufacturing facilities, located in Albuquerque, New Mexico (“Coors Road”). Although the Company entered into a long-term lease of the Coors Road property that was accounted for as a sale of property during fiscal 2010, it remains responsible for the remediation obligations related to its past operation of this facility. At December 31, 2013, Sparton had accrued approximately $2.9 million as its estimate of the remaining minimum future undiscounted financial liability with respect to this matter, of which approximately $0.4 million is classified as a current liability and included on the balance sheet in other accrued expenses. The Company’s minimum cost estimate is based upon existing technology and excludes certain legal costs, which are expensed as incurred. The Company’s estimate includes equipment and operating and maintenance costs for onsite and offsite pump and treat containment systems, as well as continued onsite and offsite monitoring. It also includes periodic reporting requirements.

In fiscal 2003, Sparton reached an agreement with the United States Department of Energy (“DOE”) and others to recover certain remediation costs. Under the settlement terms, Sparton received cash and obtained some degree of risk protection as the DOE agreed to reimburse Sparton for 37.5% of certain future environmental expenses in excess of $8.4 million incurred from the date of settlement, if any, of which approximately $4.9 million has been expended as of December 31, 2013 toward the $8.4 million threshold. Uncertainties associated with environmental remediation contingencies are pervasive and often result in wide ranges of reasonably possible outcomes. Estimates developed in the early stages of remediation can vary significantly. Normally a finite estimate of cost does not become fixed and determinable at a specific point in time. Rather, the costs associated with environmental remediation become estimable over a continuum of events and activities that help to frame and define a liability. Factors which cause uncertainties for the Company include, but are not limited to, the effectiveness of the current work plans in achieving targeted results and proposals of regulatory agencies for desired methods and outcomes. It is possible that cash flows and results of operations could be materially affected by the impact of changes associated with the ultimate resolution of this contingency. At December 31, 2013, the Company estimates that it is reasonably possible, but not probable, that future environmental remediation costs associated with the Company’s past operations at the Coors Road property, in excess of amounts already recorded and net of DOE reimbursement, could be up to $2.4 million before income taxes over the next seventeen years.

The Company and its subsidiaries are also involved in certain existing compliance issues with the EPA and various state agencies, including being named as a potentially responsible party at several sites. Potentially responsible parties (“PRP“s) can be held jointly and severally liable for the clean-up costs at any specific site. The Company’s past experience, however, has indicated that when it has contributed relatively small amounts of materials or waste to a specific site relative to other PRPs, its ultimate share of any clean-up costs has been minor. Based upon available information, the Company believes it has contributed only small amounts to those sites in which it is currently viewed as a PRP and that reasonably possible losses related to these compliance issues are immaterial.

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Litigation

On September 24, 2013, L-3 Communications Corporation, doing business as L-3 Linkabit (“Linkabit”) filed a complaint in the United States District Court for the Middle District of Florida, Orlando Division, alleging, among other things, that the Company failed to follow Linkabit drawings for the manufacture and assembly of certain products and that the Company changed its manufacturing process resulting in shipment of defective products to Linkabit. Linkabit seeks damages for breach of contract, breach of covenants, breach of warranties and negligence. In response to the Company's motion to dismiss on January 10, 2014, Linkabit filed its first amended complaint deleting the alleged negligence claims. The Company believes that its defenses to the claims are very strong and it intends to defend this action vigorously.  Given the stage of the litigation and the unresolved remaining questions of fact, the Company cannot estimate any loss, or range of loss, with confidence at this time.

U.S. Government Audits

Federal government agencies, including the Defense Contract Audit Agency (“DCAA”) and the Defense Contract Management Agency (“DCMA”), routinely audit and evaluate government contracts and government contractors’ administrative processes and systems. These agencies review the Company’s performance on contracts, pricing practices, cost structure, financial capability and compliance with applicable laws, regulations and standards. They also review the adequacy of the Company’s internal control systems and policies, including the Company’s purchasing, accounting, estimating, compensation and management information processes and systems.

The Company implemented a new enterprise resource planning system in November 2012 and currently remains eligible to receive cost reimbursable contracts from the U.S. Government. The Company responded in June 2013 to DCAA review comments received in the fourth quarter of fiscal 2013 regarding corrective actions to improve the reliability for accumulating costs under government contracts. While the Company’s corrective actions remain open for further review, the Company remains confident formal resolution of DCAA cost accounting practices findings will not have a material adverse impact on the Company’s financial results.

Other

In addition to the foregoing, from time to time, the Company is involved in various legal proceedings relating to claims arising in the ordinary course of business. The Company is not currently a party to any other such legal proceedings, the adverse outcome of which, individually or in the aggregate, is expected to have a material adverse effect on our business, financial condition or results of operations.

Contractual Obligations and Off-Balance Sheet Arrangements

Information regarding the Company’s long-term debt obligations, environmental liability payments, operating lease payments, and other commitments is provided in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2013. As of June 30, 2013, there were $13.6 million of debt and a liability related to performance based billings on customer contracts of $20.9 million. As of December 31, 2013, debt increased to $26.3 million and the liability related to performance based billings has decreased to $19.1 million. Other than as noted above, there have been no material changes in the nature or amount of the Company’s contractual obligations since June 30, 2013.

Critical Accounting Policies

Our financial statements are prepared in conformity with GAAP and require us to select appropriate accounting policies. The assumptions and judgments we use in applying our accounting policies have a significant impact on our reported amounts of assets, liabilities, revenue and expenses. While we believe that the assumptions and judgments used in our estimates are reasonable, actual results may differ from these estimates under different assumptions or conditions.

We have identified the most critical accounting policies upon which our financial status depends. The critical policies were determined by considering accounting policies that involve the most complex or subjective decisions or assessments. We also have other policies considered key accounting policies; however, these policies do not meet the definition of critical accounting policies because they do not generally require us to make estimates or judgments that are complex or subjective. Our critical accounting policies include the following:

• Business combinations

• Goodwill and intangible assets

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• Government contract cost estimates

• Environmental contingencies

• Income taxes

• Commercial inventory valuation

• Allowance for probable losses on receivables

• Valuation of property, plant and equipment

• Stock-based compensation

• Pension obligations

There have been no significant changes to our critical accounting policies that are described in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Annual Report on Form 10-K for the year ended June 30, 2013.

New Accounting Pronouncements

See Note 17, New Accounting Standards, of the “Notes to Unaudited Condensed Consolidated Financial Statements” in this Quarterly Report on Form 10-Q for a discussion of new accounting pronouncements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The Company manufactures its products in the United States and Vietnam. Sales of the Company’s products are in the U.S. and foreign markets. The Company is subject to foreign currency exchange rate risk relating to intercompany activity and balances and to receipts from customers and payments to suppliers in foreign currencies. Adjustments related to the remeasurement of the Company's Vietnamese financial statements into U.S. dollars are included in current earnings. As a result, the Company's financial results could be affected by factors such as changes in foreign currency exchange rates or economic conditions in the domestic and foreign markets in which the Company operates. However, minimal third party receivables and payables are denominated in foreign currency and the related market risk exposure is considered to be immaterial.

The Company’s revolving credit line, when drawn upon, is subject to future interest rate fluctuations which could potentially have a negative impact on cash flows of the Company. The Company had $25.0 million outstanding under its Credit Facility at December 31, 2013. A prospective increase of 100 basis points in the interest rate applicable to the Company’s outstanding borrowings under its Credit Facility would result in an increase of approximately $0.3 million in our annual interest expense. The Company is not party to any currency exchange or interest rate protection agreements as of December 31, 2013.

Item 4. Controls and Procedures.

Each of our Chief Executive Officer and Chief Financial Officer has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934) as of the end of the period covered by this quarterly report. Based on such evaluation, such officers have concluded that, as of the end of the period covered by this quarterly report, our disclosure controls and procedures are effective.

There have been no changes in our internal controls over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2013 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Commitments and Contingencies” of this report.

In addition to the above, from time to time, we are involved in various legal proceedings relating to claims arising in the ordinary course of business. We are not currently a party to any such legal proceedings, the outcome of which, individually or in the aggregate, is expected to have a material adverse effect on our business, financial condition or results of operations.

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Item 1A. Risk Factors.

You should carefully consider the risks and uncertainties described in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended June 30, 2013 and the other information in our subsequent filings with the SEC, including this Quarterly Report on Form 10-Q. Our business, financial condition, results of operations and stock price could be materially adversely affected by any of these risks. The risks described in our Annual Report on Form 10-K are not the only ones we face. Additional risks and uncertainties that are currently unknown to us or that we currently consider to be immaterial may also impair our business or adversely affect our financial condition, results of operations and stock price.

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Item 5.  Other Information

On January 29, 2014, the Company adopted a form of indemnification agreement to be entered into with each of its directors and officers.  Under the terms of the agreement, consistent with the provisions of the Company’s Code of Regulations and applicable law, the Company agrees to indemnify each director and officer, to the fullest extent permitted by Ohio law, from claims and losses arising from their service as an officer or director, as applicable.  Subject to certain procedures outlined in the agreement, the Company is required to advance expenses incurred as a result of any such proceeding as to which an officer or director could be indemnified.  The agreement provides for procedures for the determination of a person’s right to receive indemnification consistent with Ohio law.  The Company anticipates it will enter into substantially similar agreements with any new directors and officers.  The form of indemnification agreement is attached hereto as Exhibit 10.___ and incorporated by reference herein.  The foregoing summary of the indemnification agreement is qualified in its entirety by the text of the Exhibit. 

Item 6. Exhibits.

Exhibit Number	Description
3.1	Second Amended Articles of Incorporation of the Registrant, incorporated herein by reference from the Registrant’s Proxy Statement on Form DEF 14A filed with the SEC on September 21, 2010.
3.2	Amended and Restated Code of Regulations of the Registrant, incorporated herein by reference from the Registrant’s Proxy Statement on Form DEF 14A filed with the SEC on September 21, 2010.
3.3	Amendment to Amended and Restated Code of Regulations of the Registrant, incorporated herein by reference from exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 9, 2011.
3.4	Amendment to Amended and Restated Code of Regulations of the Registrant, incorporated herein by reference from exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 7, 2012.
3.5	Amendment to Amended and Restated Code of Regulations of the Registrant, incorporated herein by reference from exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on October 26, 2012.
10.1*	Form of Director and Officer Indemnification Agreement.
18.1	Preferability Letter from Independent Registered Public Accounting Firm Regarding Change in Accounting Principle, incorporated herein by reference from the Registrant's Quarterly Report on Form 10-Q filed with the SEC on November 5, 2013.
31.1*	Chief Executive Officer certification under Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Chief Financial Officer certification under Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Chief Executive Officer and Chief Financial Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

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SIGNATURES

Pursuant to the requirements 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: February 3, 2014	By:	/s/ CARY B. WOOD
		Cary B. Wood
		President and Chief Executive Officer
		(Principal Executive Officer)
Date: February 3, 2014	By:	/s/ MARK SCHLEI
		Mark Schlei
		Senior Vice President and Chief Financial Officer
		(Principal Financial Officer)

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EX-10.1

DIRECTOR AND OFFICER INDEMNIFICATION AGREEMENT

This Director and Officer Indemnification Agreement, dated as of     ____________________, 2014 (this “Agreement”), is made by and between Sparton Corporation, an Ohio corporation (the “Company”) and (the “Indemnitee”), a director and/or officer of the Company.

RECITALS

A.The Indemnitee has agreed to serve or is currently serving as a director and/or officer of the Company, and the Company desires that the Indemnitee continue serving in such capacity. The Indemnitee is willing, subject to certain conditions, including the execution and performance of this Agreement by the Company, to continue serving in such capacity.

B.In addition to the indemnification to which the Indemnitee is entitled under the Code of Regulations of the Company, as may be amended (the “Regulations”), the Company has obtained, at its sole expense, insurance protecting the Company and its officers and directors, including the Indemnitee, against certain losses arising out of any threatened, pending or completed action, suit, or proceeding to which such persons may be made or are threatened to be made parties.

NOW, THEREFORE, in order to induce the Indemnitee to serve or continue to serve in his current capacity, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Indemnitee agree as follows:

1.CONTINUED SERVICE

The Indemnitee shall serve or continue to serve as a director and/or officer of the Company so long as he is duly elected or appointed in accordance with the Regulations or until he resigns in writing or is removed from office in accordance with applicable law.

2.INITIAL INDEMNITY

(a)The Company shall indemnify the Indemnitee if or when he is a party or is threatened to be made a party to any threatened, pending or completed action, suit, proceeding or claim, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Company), by reason of the fact that he is or was a director and/or officer of the Company or is or was serving at the request of the Company as a director, trustee, officer, employee, member, manager or agent of another corporation, domestic or foreign, nonprofit or for profit, a limited liability company, or a partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in any such capacity, against any and all costs, charges, expenses (including fees and expenses of attorneys or others; all such costs, charges and expenses being herein jointly referred to as “Expenses”), judgments, fines and amounts paid in settlement actually incurred by the Indemnitee in connection therewith, including any appeal of or from any judgment or decision, (i) in the case of an Indemnitee who is a director of the Company, unless it is proved by clear and convincing evidence in a court of competent jurisdiction that the Indemnitee’s action or failure to act involved an act or omission undertaken with deliberate intent to cause injury to the Company or undertaken with reckless disregard for the best interests of the Company and (ii) in the case of an Indemnitee who is an officer of the Company but not a director of the Company, if the Indemnitee acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company. In addition,

with respect to any criminal action or proceeding, indemnification hereunder shall be made only if the Indemnitee had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit, proceeding or claim by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the Indemnitee did not satisfy the foregoing applicable standard of conduct.

(b)The Company shall indemnify the Indemnitee if or when he is a party or is threatened to be made a party, to any threatened, pending or completed action, suit, proceeding or claim by or in the right of the Company to procure a judgment in its favor, by reason of the fact that the Indemnitee is or was a director and/or officer of the Company or is or was serving at the request of the Company as a director, trustee, officer, employee, member, manager or agent of another corporation, domestic or foreign, nonprofit or for profit, a limited liability company, or a partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in any such capacity, against any and all Expenses, judgments, fines and amounts paid in settlement actually incurred by the Indemnitee in connection therewith, including any appeal of or from any judgment or decision, (i) in the case of an Indemnitee who is a director of the Company, unless it is proved by clear and convincing evidence in a court of competent jurisdiction that the Indemnitee’s action or failure to act involved an act or omission undertaken with deliberate intent to cause injury to the Company or undertaken with reckless disregard for the best interests of the Company and (ii) in the case of an Indemnitee who is an officer of the Company but not a director of the Company, if the Indemnitee acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company. Notwithstanding the foregoing provisions of this Section 2(b), no indemnification pursuant to this Section 2(b) shall be made (A) in the case of an Indemnitee who is an officer but not a director of the Company, in respect of any claim, issue or matter as to which the Indemnitee is adjudged to be liable for negligence or misconduct in the performance of his duty to the Company unless, and only to the extent that, the court of common pleas or other court in which such action, suit, proceeding or claim was brought determines, notwithstanding any adjudication of liability, that in view of all the circumstances of the case the Indemnitee is fairly and reasonably entitled to indemnity for such Expenses, judgments, fines and amounts paid in settlement as such court of common pleas or other court shall deem proper, or (B) in the case of an Indemnitee who is a director of the Company, in respect of any action, suit, proceeding or claim in which the only liability asserted against the Indemnitee is pursuant to Section 1701.95 of the Ohio Revised Code (the “ORC”).

(c)Any indemnification under Section 2(a) or 2(b) hereof (unless ordered by a court) shall be made by the Company only upon a determination relating to a specific case that indemnification of the Indemnitee is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 2(a) or 2(b) hereof. Such determination shall be made (i) by the Board of Directors of the Company (the “Board”) by a majority vote or consent of a quorum consisting of Directors who were not and are not parties to or threatened with such action, suit, proceeding or claim, or (ii) if such a quorum of disinterested Directors is not available or if a majority of such quorum so directs, in a written opinion by independent legal counsel (designated for such purpose by the Board) who shall not be an attorney, or a firm having associated with it an attorney, who has been retained by or who has performed services for the Company, or any person to be indemnified, within the five years preceding such determination, or (iii) by the shareholders of the Company (the “Shareholders”), or (iv) by the court of common pleas or other court in which such action, suit, proceeding or claim was brought. Any determination made by the disinterested directors or by independent legal counsel under this Section 2(c) shall be promptly communicated to the person who threatened or brought the action or suit by or in the right of the corporation under Section 2(b) hereof, and, within ten days after receipt of that notification, the person shall have the right to petition the court of common pleas or the court in which the action or suit was brought to review the reasonableness of that determination.

(d)To the extent that the Indemnitee has been successful on the merits or otherwise, including the dismissal of an action without prejudice, in defense of any action, suit, proceeding or claim referred to

in Section 2(a) or 2(b) hereof, or in defense of any claim, issue or matter therein, he shall be indemnified against Expenses actually incurred by him in connection therewith.

(e)Expenses actually incurred by the Indemnitee in defending any action, suit, proceeding or claim referred to in Section 2(a) or 2(b) hereof, or in defense of any claim, issue or matter therein, shall be paid by the Company as they are incurred in advance of the final disposition of such action, suit, proceeding or claim under the procedure set forth in Section 6(b) hereof.

(f)For purposes of this Agreement, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on the Indemnitee with respect to any employee benefit plan; references to “serving at the request of the Company” shall include any service as a director, officer, employee, member, manager or agent of the Company which imposes duties on, or involves services by, the Indemnitee with respect to an employee benefit plan, its participants or beneficiaries; references to the masculine shall include the feminine; references to the singular shall include the plural and vice versa; and the word including is used by way of illustration only and not by way of limitation.

(g)No amendment to the Second Amended Articles of Incorporation of the Company (the “Articles”) or the Regulations may deny, diminish or encumber the Indemnitee’s rights to indemnity pursuant to the Regulations, the ORC or any other applicable law as applied to any act or failure to act occurring in whole or in part prior to the date (the “Effective Date”) upon which the amendment was approved by the shareholders of the Company. In the event that the Company shall purport to adopt any amendment to its Articles or Regulations or take any other action the effect of which is to deny, diminish or encumber the Indemnitee’s rights to indemnity pursuant to the Articles, the Regulations, the ORC or any such other law, such amendment shall apply only to acts or failures to act occurring entirely after the Effective Date thereof.

3.ADDITIONAL INDEMNIFICATION

(a)Pursuant to Section 1701.13(E)(6) of the ORC, without limiting any right which the Indemnitee may have pursuant to Section 2 hereof or any other provision of this Agreement or the Articles, the Regulations, the ORC, any policy of insurance or otherwise, but subject to any limitation on the maximum permissible indemnity which may exist under applicable law at the time of any request for indemnity hereunder and subject to the following provisions of this Section 3, the Company shall indemnify the Indemnitee against any amount which he is or becomes obligated to pay relating to or arising out of any claim made against him because of any act, failure to act or neglect or breach of duty, including any actual or alleged error, misstatement or misleading statement, that he commits, suffers, permits or acquiesces in while acting in his capacity as a director of the Company. The payments which the Company is obligated to make pursuant to this Section 3 shall include any and all Expenses, judgments, fines and amounts paid in settlement, actually incurred by the Indemnitee in connection therewith including any appeal of or from any judgment or decision; provided, however, that the Company shall not be obligated under this Section 3 to make any payment in connection with any claim against the Indemnitee:

(i) to the extent of any fine or similar governmental imposition which the Company is prohibited by applicable law from paying (as determined by final order of a court of competent jurisdiction); or

(ii) to the extent based upon or attributable to the Indemnitee having actually realized a personal profit to which he was not legally entitled, including profit (A) from the purchase and sale by the Indemnitee of equity securities of the Company which are recoverable by the Company pursuant to Section 16(b) of the Securities Exchange Act of 1934 or (B) arising from transactions in publicly traded securities of the Company which were effected by the Indemnitee in violation of Section 10(b) of the Securities Exchange Act of 1934 or Rule 10b-5 promulgated thereunder.

(b)A determination as to whether the Indemnitee shall be entitled to indemnification under this Section 3 shall be made in accordance with Section 6(a) hereof. Expenses incurred by the Indemnitee in defending any claim to which this Section 3 applies shall be paid by the Company as they are actually and

reasonably incurred in advance of the final disposition of such claim under the procedure set forth in Section 6(b) hereof.

4.ADDITIONAL RIGHTS

The rights to indemnification provided by this Agreement shall not be exclusive of any other rights of indemnification to which the Indemnitee may be entitled under the Articles, the Regulations, the ORC or any other statute, any insurance policy, other agreement or vote of shareholders or directors or otherwise, as to any actions or failures to act by the Indemnitee, and shall continue after he has ceased to be a director, officer, employee or agent of the Company or other entity for which his service gives rise to a right hereunder, and shall inure to the benefit of his heirs, executors and administrators. For the avoidance of doubt, limitations on indemnification under any such other agreement or right will not affect the parties’ relative rights hereunder.

5.PARTIAL INDEMNITY

If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the Expenses actually or reasonably incurred by him in the investigation, defense, appeal or settlement of any proceeding, but not for all of the total amount thereof, the Company shall nevertheless indemnify the Indemnitee for the portion thereof to which Indemnitee is entitled.

6.CERTAIN PROCEDURES RELATING TO INDEMNIFICATION

(a)For purposes of pursuing his rights to indemnification under Section 3 hereof, the Indemnitee shall (i) submit to the Board a sworn statement of request for indemnification substantially in the form of Exhibit l attached hereto and made a part hereof (the “Indemnification Statement”) averring that he is entitled to indemnification hereunder and (ii) present to the Company evidence in reasonable detail of all amounts for which indemnification is requested. Submission of an Indemnification Statement to the Board shall create a presumption that the Indemnitee is entitled to indemnification hereunder, and the Company shall, within 30 calendar days after submission of the Indemnification Statement, make the payments requested in the Indemnification Statement to or for the benefit of the Indemnitee, unless (A) within such 30-calendar-day period by the vote or consent of a majority of the Directors, even if less than a quorum, shall determine that the Indemnitee is not entitled to indemnification under Section 3 hereof, (B) such vote shall be based upon clear and convincing evidence sufficient to rebut the foregoing presumption, and (C) the Company shall notify the Indemnitee within such period of such vote, which notice shall disclose with particularity the evidence upon which the vote is based. The foregoing notice shall be sworn to by all persons who participated in the vote and voted to deny indemnification. The provisions of this Section 6(a) are intended to be procedural only and shall not affect the right of Indemnitee to indemnification under Section 3 hereof so long as Indemnitee follows the prescribed procedure, and any determination by a majority of the Directors that the Indemnitee is not entitled to indemnification and any failure to make the payments requested in the Indemnification Statement shall be subject to de novo judicial review by any court of competent jurisdiction.

(b)For purposes of obtaining payments of Expenses in advance of final disposition pursuant to Section 2(e) hereof or the last sentence of Section 3(b) hereof, the Indemnitee shall submit to the Company a sworn request for advancement of Expenses substantially in the form of Exhibit 2 attached hereto and made a part hereof (the “Undertaking”), averring that he has incurred or in good faith expects to incur actual Expenses in defending an action, suit, proceeding or claim referred to in Section 2(a) or 2(b) hereof or any claim referred to in Section 3 hereof, or pursuant to Section 11 hereof. Unless determined in a final order of a court of competent jurisdiction to be prohibited from payment at the time of the Indemnitee’s act or omission at issue, or unless the only liability asserted against the Indemnitee in the subject action, suit, proceeding or claim is pursuant to ORC Section 1701.95, the Indemnitee shall be eligible to execute Part A of the Undertaking by which he undertakes to: (i) (A) in the case of an Indemnitee who is a director of the Company, repay such

amount if it is proved by clear and convincing evidence in a court of competent jurisdiction that the Indemnitee’s action or failure to act involved an act or omission undertaken with deliberate intent to cause injury to the Company or undertaken with reckless disregard for the best interests of the Company and (B) in the case of an Indemnitee who is an officer of the Company but not a director of the Company, repay such amount if (x) with respect to any action, suit, proceeding or claim (other than an action by or in the right of the Company) brought against the Indemnitee by reason of the fact that the Indemnitee is or was an officer of the Company for which the Indemnitee has received advancement of Expenses, it is determined that the Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company or (y) with respect to any action, suit, proceeding or claim brought against the Indemnitee by or in the right of the Company for which the Indemnitee has received advancement of Expenses, the Indemnitee is adjudged to be liable for negligence or for misconduct in the performance of his duty to the Company and the court has not determined that Indemnitee is entitled to indemnification and (ii) reasonably cooperate, at the Company’s sole cost and expense, with the Company concerning the action, suit, proceeding or claim. In all cases, the Indemnitee shall be eligible to execute Part B of the Undertaking by which he undertakes to repay such amount if it ultimately is determined by a final order of a court of competent jurisdiction that he is not entitled to be indemnified by the Company under this Agreement or otherwise. In the event that the Indemnitee is eligible to and does execute both Part A and Part B of the Undertaking, the Expenses which are paid by the Company pursuant thereto shall be required to be repaid by the Indemnitee only if he is required to do so under the terms of both Part A and Part B of the Undertaking. Upon receipt of the Undertaking, the Company shall thereafter promptly pay such Expenses of the Indemnitee as are noticed to the Company in reasonable detail arising out of the matter described in the Undertaking. No security shall be required in connection with any Undertaking.

7.LIMITATION ON INDEMNITY

Notwithstanding anything contained herein to the contrary, the Company shall not be

required hereby to indemnify the Indemnitee with respect to any action, suit, proceeding or claim that was initiated by the Indemnitee unless (i) such action, suit, proceeding or claim was initiated by the Indemnitee to enforce any rights to indemnification arising hereunder and such person shall have been formally adjudged to be entitled to indemnity by reason hereof, (ii) authorized by another agreement to which the Company is a party whether heretofore or hereafter entered, or (iii) otherwise ordered by the court in which the suit was brought.

8.SUBROGATION; DUPLICATION OF PAYMENTS

(a)In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights; provided, however, that such subrogation shall be subject to the Company executing an instrument in writing satisfactory to the Indemnitee in his discretion under which the Company agrees to fully indemnify, defend and hold harmless the Indemnitee from any Expense or other liability that may arise therein or therefrom.

(b)The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent Indemnitee has actually received payment (under any insurance policy, the Regulations or otherwise) of the amounts otherwise payable hereunder without any reservation of rights or other claim for potential disgorgement thereof, as determined by the Indemnitee in good faith.

9.DEFENSE OF CLAIMS; NOTICE

(a)The Company shall be entitled to participate in the defense of any threatened or pending action, suit, proceeding or claim in respect of which the Indemnitee requests indemnification hereunder or to assume the defense thereof, with counsel reasonably satisfactory to the Indemnitee; provided that if the Indemnitee believes, after consultation with counsel selected by the Indemnitee, that (i) the use of counsel

chosen by the Company to represent the Indemnitee would present such counsel with an actual or potential conflict, (ii) the named parties in any such action, suit, proceeding or claim (including any impleaded parties) include both the Company and the Indemnitee and the Indemnitee shall conclude that there may be one or more legal defenses available to him that are different from or in addition to those available to the Company, (iii) any such representation by such counsel would be precluded under the applicable standards of professional conduct then prevailing or (iv) any such representation could be reasonably expected to increase Indemnitee's risk of liability, then the Indemnitee shall be entitled to retain separate counsel (but not more than one law firm plus, if applicable, local counsel in respect of any particular action, suit, proceeding or claim) at the Company’s expense. The Company shall not, without the prior written consent of the Indemnitee, effect any settlement of any threatened or pending action, suit, proceeding or claim to which the Indemnitee is, or could have been, a party unless such settlement solely involves the payment of money and includes a complete and unconditional release of the Indemnitee from all liability on any claims that are the subject matter of such action, suit, proceeding or claim. The Indemnitee shall not unreasonably withhold its consent to any proposed settlement; provided that the Indemnitee may withhold consent to any settlement that does not provide a complete and unconditional release of the Indemnitee. Indemnitee shall not make any admission or effect any settlement without the Company’s written consent unless Indemnitee shall have determined to undertake his/her own defense in such matter and has waived the benefits of this Agreement.

(b) Indemnitee shall provide to the Company prompt written notice of any proceeding brought, threatened, asserted or commenced against Indemnitee with respect to which Indemnitee may assert a right to indemnification hereunder; provided that failure to provide such notice shall not, in any way, limit Indemnitee’s rights under this Agreement

10.LIABILITY INSURANCE

For the duration of the Indemnitee’s service as a director and/or officer of the Company, and thereafter for so long as the Indemnitee shall be subject to any pending or possible action, suit, proceeding or claim of the type described in Section 2 hereof or any pending or possible claim of the type described in Section 3 hereof, the Company shall cause to be maintained in effect policies of directors’ and officers’ liability insurance providing coverage for directors and/or officers of the Company that is at least substantially comparable in scope and amount to that provided by the Company’s current policies of directors’ and officers’ liability insurance. The Company shall provide, upon request, the Indemnitee with a copy of all directors’ and officers’ liability insurance applications, binders, policies, declarations, endorsements and other related materials, and shall provide the Indemnitee with a reasonable opportunity to review and comment on the same. In all policies of directors’ and officers’ liability insurance obtained by the Company, the Indemnitee shall be named as an insured in such a manner as to provide the Indemnitee the same rights and benefits, subject to the same limitations, as are accorded to the Company’s directors and officers most favorably insured by such policy.

11.FEES AND EXPENSES OF ENFORCEMENT

It is the intent of the Company that the Indemnitee not be required to incur the expenses associated with the enforcement of his rights under this Agreement by litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Indemnitee hereunder. Accordingly, if it should appear to the Indemnitee that the Company has failed to comply with any of its obligations under this Agreement or in the event that the Company or any other person initiates any litigation or other legal action to declare this Agreement void or unenforceable or to deny to, or to recover from, the Indemnitee the benefits intended to be provided to the Indemnitee hereunder, the Company irrevocably authorizes the Indemnitee from time to time to retain counsel of his choice, at the expense of the Company as hereafter provided, to represent the Indemnitee in connection with the initiation and prosecution by the Indemnitee of any litigation or other legal action to enforce his rights under this Agreement or in connection with the defense by the Indemnitee of any litigation or other legal action initiated by the Company

or any other person to declare this Agreement void or unenforceable or to deny to, or to recover from, the Indemnitee the benefits intended to be provided to the Indemnitee hereunder. Regardless of the outcome thereof, the Company shall pay and be solely responsible for any and all costs, charges, and expenses, including fees and expenses of attorneys and others, reasonably incurred by the Indemnitee in connection with any litigation or other legal action referred to in the immediately preceding sentence of this Section 11. In addition, the Company shall pay and be solely responsible for the fees and expenses of any Independent Counsel.

12.MERGER OR CONSOLIDATION

In the event that the Company shall be a constituent corporation in a consolidation, merger, or other reorganization, the Company, if it shall not be the surviving, resulting, or acquiring corporation therein, shall require as a condition thereto that the surviving, resulting, or acquiring corporation agree to assume all of the obligations of the Company hereunder and to indemnify the Indemnitee to the full extent provided herein. Whether or not the Company is the resulting, surviving, or acquiring corporation in any such transaction, the Indemnitee shall stand in the same position under this Agreement with respect to the resulting, surviving, or acquiring corporation as he would have with respect to the Company if its separate existence had continued.

13.SEVERABILITY

If any provision of this Agreement or the application of any provision hereof to any person or circumstances is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected, and the provision so held to be invalid, unenforceable or otherwise illegal shall be reformed to the extent (and only to the extent) necessary to make it enforceable, valid and legal.

14.NON-TRANSFERRABILITY; SUCCESSORS

Except as provided in Section 4 hereof, the rights to indemnification provided by this Agreement are personal to Indemnitee and are non-transferable by Indemnitee, and no party other than the Indemnitee is entitled to indemnification under this Agreement.

15.SECURITY

To ensure that the Company’s obligations pursuant to this Agreement can be enforced by Indemnitee, the Company may, at its option, establish a trust pursuant to which the Company’s obligations pursuant to this Agreement and other similar agreements can be funded.

16.NOTICES

All notices and other communications hereunder shall be in writing and shall be personally delivered or sent by recognized overnight courier service (a) if to the Company, to the then-current principal executive offices of the Company (Attention: General Counsel) or (b) if to the Indemnitee, to the last known address of Indemnitee as reflected in the Company’s records. Either party may change its address for the delivery of notices or other communications hereunder by providing notice to the other party as provided in this Section 16. All notices shall be effective upon actual delivery by the methods specified in this Section 16.

17.GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of the State of Ohio, without giving effect to the principles of conflict of laws thereof.

18.MODIFICATION

This Agreement and the rights and duties of the Indemnitee and the Company hereunder may be modified only by an instrument in writing signed by both parties hereto.

19.COUNTERPARTS

This Agreement may be executed in any number of counterparts and each of such counterparts will for all purposes be deemed to be an original, and all counterparts together will constitute but one and the same instrument.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written.

SPARTON CORPORATION

By:

Name:

Title:

[Signature of Indemnitee]

Exhibit 1

INDEMNIFICATION STATEMENT

STATE OF )

) ss

COUNTY OF )

I, , being first duly sworn, do depose and say as follows:

20.This Indemnification Statement is submitted pursuant to the Indemnification Agreement, dated , 20__, between Sparton Corporation, an Ohio corporation (the “Company”), and the undersigned.

21.I am requesting indemnification against costs, charges, expenses (which may include fees and expenses of attorneys and/or others), judgments, fines and amounts paid in settlement (collectively, “Liabilities”), which have been actually and reasonably incurred by me in connection with a claim referred to in Section 3 of the aforesaid Indemnification Agreement.

22.With respect to all matters related to any such claim, I am entitled to be indemnified as herein contemplated pursuant to the aforesaid Indemnification Agreement.

23.Without limiting any other rights which I have or may have, I am requesting indemnification against Liabilities which have or may arise out of

[Signature of Indemnitee]

Subscribed and sworn to before me, a Notary Public in and for said County and State, this _____ day of , 20__.

[Seal]

My commission expires the _____ day of , 20___.

13

Exhibit 2

UNDERTAKING

STATE OF )

) ss

COUNTY OF )

I, , being first duly sworn, do depose and say as follows:

24.This Undertaking is submitted pursuant to the Indemnification Agreement, dated ___________, 20__, between Sparton Corporation an Ohio corporation (the “Company”) and the undersigned.

25.I am requesting payment of costs, charges and expenses which I have reasonably incurred or will reasonably incur in defending an action, suit, proceeding or claim, referred to in Section 2(a) or 2(b) or any claim referred to in Section 3, or pursuant to Section 11, of the aforesaid Indemnification Agreement.

26.The costs, charges, and expenses for which payment is requested are, in general, all expenses related to

27.Part A The Indemnitee shall not be eligible to execute Part A of this Undertaking if, at the time of the Indemnitee’s act or omission at issue, the Articles of Incorporation, as may be amended, or the Code of Regulations, as may be amended, of the Company prohibit such advances by specific reference to the Ohio Revised Code (the “ORC”) Section 1701.13(E)(5)(a), or if the only liability asserted against the Indemnitee is in an action, suit, proceeding or claim on the Company’s behalf pursuant to ORC Section 1701.95. In the event that the Indemnitee is eligible to and does execute both Part A and Part B hereof, the costs, charges and expenses which are paid by the Company pursuant hereto shall be required to be repaid by the Indemnitee only if he is required to do so under the terms of both Part A and Part B hereof.

If the Indemnitee is going to be both a director and officer, then use both of the following paragraphs.

[Use only this paragraph if the Indemnitee is only a director of the Company] With respect to any claim for indemnification related to my position as a Director for which I received an advancement of

Expenses, I hereby undertake to (a) repay all amounts paid pursuant hereto if it is proved by clear and convincing evidence in a court of competent jurisdiction that my action or failure to act which is the subject of the matter described herein involved an act or omission undertaken with deliberate intent to cause injury to the Company or undertaken with reckless disregard for the best interests of the Company and (b) reasonably cooperate, at the Company’s sole cost and expense, with the Company concerning the action, suit, proceeding or claim.

[Use only this paragraph if the Indemnitee is only an officer of the Company but not a director of the Company] With respect to any claim for indemnification related to my position as an officer for which I received an advancement of Expenses, I hereby undertake to (a) repay all amounts paid pursuant hereto (i) with respect to any action, suit, proceeding (other than an action by or in the right of the Company) brought against me by reason of the fact that I am or was an officer of the Company for which I received advancement of Expenses, it is determined that I did not act in good faith and in a manner which I reasonably believed to be in or not opposed to the best interests of the Company or (ii) with respect to any action, suit, proceeding or claim brought against me by or in the right of the Company for which I received advancement of Expenses, I am adjudged to be liable for negligence or for misconduct in the performance of my duty to the Company and the court has not determined that I am entitled to indemnification and (b) reasonably cooperate, at the Company’s sole cost and expense, with the Company concerning the action, suit, proceeding or claim.

[Signature of Indemnitee]

4.Part B

I hereby undertake to repay all amounts paid pursuant hereto if it ultimately is determined that I am not entitled to be indemnified by the Company under the aforesaid Indemnification Agreement or otherwise.

[Signature of Indemnitee]

Subscribed and sworn to before me, a Notary Public in and for said County and State, this _____ day of , 20__.

[Seal]

My commission expires the _____ day of , 20___.

EX-31.1

Exhibit 31.1

CERTIFICATION UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Cary B. Wood, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Sparton Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 3, 2014

/s/ CARY B. WOOD

Cary B. Wood, President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Mark Schlei, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Sparton Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 3, 2014

/s/ MARK SCHLEI

Mark Schlei, Senior Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Sparton Corporation (the “Company”) on Form 10-Q for the period ended December 31, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Periodic Report”), we, Cary B. Wood, President and Chief Executive Officer of the Company, and Mark Schlei, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1 The Periodic Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2 The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 3, 2014	/s/ CARY B. WOOD
	Cary B. Wood, President and Chief Executive Officer
Date: February 3, 2014	/s/ MARK SCHLEI
	Mark Schlei, Senior Vice President and Chief Financial Officer

XML

Acquisitions - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended					0 Months Ended	3 Months Ended	6 Months Ended		0 Months Ended	3 Months Ended	6 Months Ended		0 Months Ended	3 Months Ended	6 Months Ended	0 Months Ended	6 Months Ended	0 Months Ended			3 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Jun. 30, 2013		Jun. 30, 2012	Dec. 11, 2013 Beckwood Services Inc. [Member]	Dec. 31, 2013 Beckwood Services Inc. [Member]	Dec. 31, 2013 Beckwood Services Inc. [Member]	Dec. 11, 2013 Beckwood Services Inc. [Member] Accounts Receivable [Member]	Aug. 30, 2013 Aydin Displays, LLC [Member]	Dec. 31, 2013 Aydin Displays, LLC [Member]	Dec. 31, 2013 Aydin Displays, LLC [Member]	Aug. 30, 2013 Aydin Displays, LLC [Member] Accounts Receivable [Member]	Jun. 06, 2013 Creonix LLC [Member]	Dec. 31, 2013 Creonix LLC [Member]	Dec. 31, 2013 Trademarks and Tradenames [Member]	Aug. 30, 2013 Trademarks and Tradenames [Member] Aydin Displays, LLC [Member]	Dec. 31, 2013 Unpatented Technology [Member]	Aug. 30, 2013 Unpatented Technology [Member] Aydin Displays, LLC [Member]	Aug. 30, 2013 Customer relationships [Member] Aydin Displays, LLC [Member]	Aug. 30, 2013 Off-Market Favorable Lease [Member] Aydin Displays, LLC [Member]	Dec. 31, 2013 Selling, General and Administrative Expenses [Member] Beckwood Services Inc. [Member]
Business Acquisition [Line Items]
Cash								$ 15,300,000				$ 15,000,000				$ 2,000,000
Accounts receivable, net								1,157,000			100,000	2,279,000			400,000
Escrow cash								1,500,000				1,200,000				300,000
Net sales	87,662,000	76,519,000	168,743,000	138,059,000						18,000,000				18,000,000
Goodwill	30,156,000		30,156,000		14,767,000	[1]	7,472,000	13,353,000				2,036,000				100,000	100,000
Net sales	84,562,000	67,254,000	158,760,000	118,055,000					800,000				4,000,000	5,200,000
Income (loss) before provision for income taxes	5,220,000	4,109,000	8,613,000	6,297,000					100,000				100,000	100,000
Acquisition related selling and administrative expenses			300,000										0	200,000										100,000
Estimated additional consideration payable for post-closing working capital adjustment								36,000				357,000	6,600,000	6,600,000		(105,000)
Amortization period																		120 months	10 years	84 months	7 years	15 years	5 years
Payments after settlements																100,000
Pre-acquisition fee																	100,000
Gross profit effect of capitalized profit in inventory from acquisition			300,000
Additional cost of goods sold														$ 100,000

[1] Derived from the Company’s audited financial statements as of June 30, 2013.

XML

Income Taxes - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012
Income Tax Disclosure [Abstract]
Provision for income taxes	$ 1.7	$ 1.4	$ 2.8	$ 2.1
Income tax benefit from worthless stock	$ 2.1
Effective income tax rates before provision for income taxes	33.30%	32.70%	33.00%	32.90%

XML

Goodwill and Other Intangible Assets - Summary of Intangible Assets, Net (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Dec. 31, 2013	Jun. 30, 2013
Goodwill [Line Items]
Gross Carrying Amount	$ 20,900	$ 18,728
Accumulated Amortization	(5,481)	(4,352)
Accumulated Impairments	(3,663)	(3,663)
Net Carrying Value	11,756	10,713
Non-compete agreements [Member]
Goodwill [Line Items]
Amortization Period in Months	12 months	12 months
Gross Carrying Amount	200	358
Accumulated Amortization	(200)	(274)
Net Carrying Value	0	84
Customer relationships [Member]
Goodwill [Line Items]
Gross Carrying Amount	19,870	18,370
Accumulated Amortization	(5,221)	(4,078)
Accumulated Impairments	(3,663)	(3,663)
Net Carrying Value	10,986	10,629
Trademarks/Tradenames [Member]
Goodwill [Line Items]
Amortization Period in Months	120 months
Gross Carrying Amount	180
Accumulated Amortization	(6)
Accumulated Impairments	0
Net Carrying Value	174
Unpatented Technology [Member]
Goodwill [Line Items]
Amortization Period in Months	84 months
Gross Carrying Amount	650
Accumulated Amortization	(54)
Net Carrying Value	$ 596
Minimum [Member] | Customer relationships [Member]
Goodwill [Line Items]
Amortization Period in Months	120 months	120 months
Maximum [Member] | Customer relationships [Member]
Goodwill [Line Items]
Amortization Period in Months	180 months	180 months

XML

Defined Benefit Pension Plan - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Dec. 31, 2013 employee	Dec. 31, 2012
Compensation and Retirement Disclosure [Abstract]
Number of employees and retirees covered by a defined benefit pension plan	400
Employer Contribution	$ 0.1	$ 0.1

XML

Property, Plant and Equipment, Net - Property Plant and Equipment, Net (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Jun. 30, 2013
Property, Plant and Equipment [Line Items]
Total property, plant and equipment	$ 56,986	$ 54,275
Less accumulated depreciation	(28,359)	(25,371)
Total property, plant and equipment, net	28,627	28,904	[1]
Land and land improvements [Member]
Property, Plant and Equipment [Line Items]
Total property, plant and equipment	1,429	1,405
Buildings and building improvements [Member]
Property, Plant and Equipment [Line Items]
Total property, plant and equipment	25,695	24,920
Machinery and equipment [Member]
Property, Plant and Equipment [Line Items]
Total property, plant and equipment	29,035	27,183
Construction in progress [Member]
Property, Plant and Equipment [Line Items]
Total property, plant and equipment	$ 827	$ 767

[1] Derived from the Company’s audited financial statements as of June 30, 2013.

XML

Stock-Based Compensation (Tables)

6 Months Ended

Dec. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation Expense by Type of Share-Based Award

The following table shows stock-based compensation expense by type of share-based award for the three and six months ended December 31, 2013 and 2012, respectively, included in the condensed consolidated statements of income (in thousands):

	For the Three Months Ended				For the Six Months Ended
	December 31, 2013		December 31, 2012		December 31, 2013		December 31, 2012
Fair value expense of stock option awards	$	—	$	—	$	—	$	—
Restricted and unrestricted stock	620		333		917		597
Total stock-based compensation	$	620	$	333	$	917	$	597

Unrecognized Compensation Cost Related to Restricted Stock Grants and Fair Value Expense of Stock Option Awards

The following table shows the total remaining unrecognized compensation cost related to restricted stock grants and the fair value expense of stock option awards, as well as the weighted average remaining required service period over which such costs will be recognized as of December 31, 2013:

	Total Remaining Unrecognized Compensation Cost		Weighted Average Remaining Required Service Period
	(in thousands)		(in years)
Fair value expense of stock option awards	$	—	0
Restricted stock	2,059		2.03
	$	2,059	2.03

Summary of Options Outstanding and Exercisable

The following is a summary of options outstanding and exercisable at December 31, 2013:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
					(in years)	(in thousands)
Outstanding at June 30, 2013	55,418		$	8.56
Granted	—		—
Exercised	(14,119	)	8.54
Forfeited	—		—
Expired	—		—
Outstanding and exercisable at December 31, 2013	41,299		$	8.57	1.33	$	800

Shares Granted Under Long-Term Incentive Plans

The following is a summary of activity for the six months ended December 31, 2013 related to shares granted under the Company’s long-term incentive plans:

	Shares		Weighted Average Grant Date Fair Value
Restricted shares at June 30, 2013	311,253		$	8.34
Granted	94,811		21.80
Vested	(87,576	)	8.54
Forfeited	(3,344	)	14.39
Restricted shares at December 31, 2013	315,144		$	12.27

XML

Commitments and Contingencies - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Dec. 31, 2013
Commitments and Contingencies Disclosure [Abstract]
Accrual amount of minimum future undiscounted financial liabilities related to Coors Road Property	$ 2.9
Amount of financial liability included in other accrued expenses of current liability	0.4
Percentage of certain future environmental expenses over the threshold reimbursed	37.50%
Certain future environmental expenses threshold amount whose excess in percentage reimbursed	8.4
Environmental expenses subject to reimbursement over the threshold incurred from the date of settlement	4.9
Estimated Additional Possible Future Environmental Remediation Costs	$ 2.4
Period for reimbursement before income taxes	17 years

XML

New Accounting Standards

6 Months Ended

Dec. 31, 2013

Accounting Changes and Error Corrections [Abstract]

New Accounting Standards

Change in Accounting Principle

In the first quarter of fiscal 2014, the Company voluntarily changed its revenue recognition policy related to DSS sonobuoy sales to the U.S. Navy and foreign government customers under long-term contracts that require lot acceptance testing. The new policy continues to recognize revenue under the percentage of completion method, but changes the measurement of progress under these contracts from a completed units accepted basis (whereby revenue was recognized for each lot of sonobuoys produced when that lot was formally accepted by the customer) to a units-of-production basis (whereby revenue is recognized when production and internal testing of each lot of sonobuoys is completed). The Company now has significant experience in producing sonobuoys to customer specifications and internal testing to assess compliance with those specifications and, as such, now has an adequate history of continuous customer acceptance of all sonobuoys produced. Accordingly, the Company believes the new method is preferable primarily because it eliminates delays in revenue and related cost of goods sold recognition due to timing of customer testing and acceptance delays. Such delays commonly occur due to customer circumstances that are unrelated to the product produced. Under the new policy, the revenue and related costs of goods sold of these manufactured sonobuoy lots will more closely match the period in which the product was produced and the related revenue earned, thereby better reflecting the economic activity of the DSS segment. Additionally, this new method provides better matching of periodic operating expenses incurred during production.

For the three months ended December 31, 2013, this change in accounting policy decreased DSS and consolidated net sales and gross profit by $2.5 million and $0.7 million, respectively, and basic and diluted income per share each by $0.04. For the six months ended December 31, 2013, this change in accounting policy (decreased) increased DSS and consolidated net sales and gross margin by $(0.3) million and $0.4 million, respectively, and increased basic and diluted income per share each by $0.03. The following tables present the effects of the retrospective application of this voluntary change in accounting principle (Dollars in thousands, except share amounts):

Consolidated Statement of Income Data:
	For the Three Months Ended December 31, 2012
	As Originally Reported			Adjustment		As Restated
Net Sales	$	65,979		$	1,275	$	67,254
Cost of goods sold	54,571			588		55,159
Gross profit	11,408			687		12,095
Income before provision for income taxes	3,422			687		4,109
Provision for (benefit from) income taxes	(979		)	247		(732		)
Net income	4,401			440		4,841
Income per share of common stock - Basic	0.43			0.04		0.47
Income per share of common stock - Diluted	0.43			0.04		0.47
Weighted average shares outstanding - Basic	10,229,320					10,229,320
Weighted average shares outstanding - Diluted	10,248,424					10,248,424

Consolidated Statement of Income Data:
	For the Six Months Ended December 31, 2012
	As Originally Reported			Adjustment		As Restated
Net Sales	$	114,999		$	3,056	$	118,055
Cost of goods sold	96,378			1,582		97,960
Gross profit	18,621			1,474		20,095
Income before provision for income taxes	4,823			1,474		6,297
Provision for (benefit from) income taxes	(531		)	530		(1		)
Net income	5,354			944		6,298
Income per share of common stock - Basic	0.53			0.09		0.62
Income per share of common stock - Diluted	0.52			0.10		0.62
Weighted average shares outstanding - Basic	10,185,464					10,185,464
Weighted average shares outstanding - Diluted	10,206,913					10,206,913

Consolidated Balance Sheet Data:
	As of June 30, 2013
	As Originally Reported		Adjustment			As Restated
Inventory	$	46,334	$	—		$	46,334
Deferred income taxes	3,167		(216		)	2,951
Performance based payments on customer contracts	21,504		(602		)	20,902
Retained earnings	65,571		386			65,957

New Accounting Standards

In July 2013, the Financial Accounting Standards Board (the "FASB") issued authoritative guidance under Accounting Standards Update No. 2013-11 ("ASU 2013-11"), which provides guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss (“NOL”) carryforward, a similar tax loss, or a tax credit carryforward exists. ASU 2013-11 requires entities to present an unrecognized tax benefit as a reduction of a deferred tax asset for a NOL or tax credit carryforward whenever the NOL or tax credit carryforward would be available to reduce the additional taxable income or tax due if the tax position is disallowed. This accounting standard update requires entities to assess whether to net the unrecognized tax benefit with a deferred tax asset as of the reporting date. ASU 2013-11 will be effective for the Company’s first quarter of fiscal 2015. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements.

XML

Goodwill and Other Intangible Assets - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization of intangible assets	$ 636	$ 273	$ 1,234	$ 375

XML

Acquisitions - Creonix, LLC (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Jun. 30, 2013		Jun. 30, 2012	Dec. 31, 2013 Creonix LLC [Member]	Jun. 06, 2013 Creonix LLC [Member]	Jun. 06, 2013 Customer relationships [Member] Creonix LLC [Member]
Business Acquisition [Line Items]
Cash						$ 2,100
Reduction in cash consideration in relation to working capital adjustment						(105)
Total purchase consideration						1,995
Assets acquired and liabilities assumed:
Inventory						1,321
Property, plant and equipment						304
Intangible assets — customer relationships							270
Goodwill	30,156	14,767	[1]	7,472	100	100
Total assets acquired and liabilities assumed						$ 1,995

[1] Derived from the Company’s audited financial statements as of June 30, 2013.

XML

Change in Accounting Principle (Details Textual) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net sales	$ 84,562	$ 67,254	$ 158,760	$ 118,055
Gross profit	14,977	12,095	27,171	20,095
Adjustments for New Accounting Pronouncements [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net sales		67,254		118,055
Gross profit		12,095		20,095
Adjustments for New Accounting Pronouncements [Member] | Adjustment [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net sales		1,275		3,056
Gross profit		687		1,474
Adjustments for New Accounting Pronouncements [Member] | DSS [Member] | Adjustment [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net sales		2,500	(300)
Gross profit		$ 700	$ 400
Net income per share: Diluted (in dollars per share)		$ 0.04	$ 0.03

XML

Debt - Additional Information (Detail) (USD $)	6 Months Ended			6 Months Ended					6 Months Ended	12 Months Ended	6 Months Ended			6 Months Ended
	Dec. 31, 2013	Jun. 30, 2013	Nov. 15, 2012	Dec. 31, 2013 Revolving Credit Facility [Member]	Jun. 30, 2013 Revolving Credit Facility [Member]	Nov. 15, 2012 Revolving Credit Facility [Member]	Nov. 15, 2012 Acquisition Facility [Member]	Dec. 31, 2013 Letter of Credit [Member]	Dec. 31, 2013 Ohio State Economic Development Revenue Bonds, series 2002-4 [Member]	Mar. 31, 2002 Ohio State Economic Development Revenue Bonds, series 2002-4 [Member]	Dec. 31, 2013 Minimum [Member]	Dec. 31, 2013 Minimum [Member] Libor Rate [Member]	Dec. 31, 2013 Minimum [Member] Bank Base Rate [Member]	Dec. 31, 2013 Maximum [Member]	Dec. 31, 2013 Maximum [Member] Libor Rate [Member]	Dec. 31, 2013 Maximum [Member] Bank Base Rate [Member]
Debt Instrument [Line Items]
Principal amount, including premium										$ 2,900,000
Bonds issued, Interest rate									5.00%
Bonds issued, Interest rate									5.45%
Discount on bonds issued									200,000
Irrevocable letter of credit	300,000
Revolving line-of-credit facility			65,000,000			35,000,000	30,000,000
The Credit Facility expiry Date				Nov. 15, 2017
Additional revolving credit loan	35,000,000
Amortization percentage	2.50%
Effective interest rate on outstanding borrowings under the Credit Facility	1.67%											1.25%	0.25%		2.00%	1.00%
Unused commitment fees											0.25%			0.375%
Current borrowings drawn against credit facility	$ 25,000,000	$ 10,000,000		$ 25,000,000	$ 10,000,000			$ 500,000

XML

Restructuring Activities (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Dec. 31, 2013	Jun. 30, 2013
Restructuring Reserve [Roll Forward]
Beginning Balance		$ 44
Restructuring charges	188
Less: cash payments	(232)
Restructuring reversals	0
Ending Balance	0	44
Production Transfer [Member]
Restructuring Reserve [Roll Forward]
Beginning Balance		0
Restructuring charges	68
Less: cash payments	(68)
Restructuring reversals	0
Ending Balance	0	0
Facility Closing [Member]
Restructuring Reserve [Roll Forward]
Beginning Balance		0
Restructuring charges	9
Less: cash payments	(9)
Restructuring reversals	0
Ending Balance	0	0
Employee Severance [Member]
Restructuring Reserve [Roll Forward]
Beginning Balance		44
Restructuring charges	111
Less: cash payments	(155)
Restructuring reversals	0
Ending Balance	$ 0	$ 44

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Stock-Based Compensation - Summary of Options Outstanding and Exercisable (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	6 Months Ended
	Dec. 31, 2013
Number of Shares
Number of Shares, Outstanding, beginning balance	55,418
Granted, Number of Shares	0
Exercised, Number of Shares	(14,119)
Forfeited, Number of Shares	0
Expired, Number of Shares	0
Number of Shares, Outstanding And Exercisable, ending balance	41,299
Weighted Average Exercise Price
Weighted Average Exercise Price, Outstanding , beginning balance (in dollars per share)	$ 8.56
Weighted Average Exercise Price, Granted (in dollars per share)	$ 0.00
Weighted Average Exercise Price, Exercised (in dollars per share)	$ 8.54
Weighted Average Exercise Price Forfeited (in dollars per share)	$ 0.00
Weighted Average Exercise Price, Expired (in dollars per share)	$ 0.00
Weighted Average Exercise Price, Outstanding and Exercisable, ending balance (in dollars per share)	$ 8.57
Weighted Average Remaining Contractual Life, Outstanding and Exercisable ending balance	1 year 3 months 29 days
Aggregate Intrinsic Value, Outstanding and Exercisable, ending balance	$ 800

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Goodwill and Other Intangible Assets - Summary of Changes in Carrying Amount of Goodwill (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended		12 Months Ended
	Dec. 31, 2013		Jun. 30, 2013
Goodwill [Roll Forward]
Goodwill, beginning of period	$ 14,767	[1]	$ 7,472
Additions to goodwill during the period	15,389		7,295
Goodwill, end of period	30,156		14,767	[1]
Acquired Goodwill	43,309		27,920
Accumulated impairment	(13,153)		(13,153)
Medical [Member]
Goodwill [Roll Forward]
Goodwill, beginning of period	14,667		7,472
Additions to goodwill during the period	0		7,195
Goodwill, end of period	14,667		14,667
Acquired Goodwill	27,820		27,820
Accumulated impairment	(13,153)		(13,153)
CS [Member]
Goodwill [Roll Forward]
Goodwill, beginning of period	100		0
Additions to goodwill during the period	13,353		100
Goodwill, end of period	13,453		100
Acquired Goodwill	13,453		100
Accumulated impairment	0		0
DSS [Member]
Goodwill [Roll Forward]
Goodwill, beginning of period	0		0
Additions to goodwill during the period	2,036		0
Goodwill, end of period	2,036		0
Acquired Goodwill	2,036		0
Accumulated impairment	$ 0		$ 0

[1] Derived from the Company’s audited financial statements as of June 30, 2013.

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Business and Basis of Presentation

6 Months Ended

Dec. 31, 2013

Accounting Policies [Abstract]

Business and Basis of Presentation

Business and Basis of Presentation

Sparton Corporation and subsidiaries (the “Company” or “Sparton”) has been in continuous existence since 1900. It was last reorganized in 1919 as an Ohio corporation. The Company is a provider of complex and sophisticated electromechanical devices with capabilities that include concept development, design and manufacturing engineering, production, distribution, and field service. The Company serves the Medical & Biotechnology, Military & Aerospace and Industrial & Commercial markets through three reportable business segments; Medical Device (“Medical”), Complex Systems (“CS”) and Defense & Security Systems (“DSS”). Financial information by segment is presented in Note 16. All of the Company's facilities are registered to ISO standards, including 9001 or 13485, with most having additional certifications. The Company's products and services include products for Original Equipment Manufacturers (“OEM”) and Emerging Technology (“ET”) customers that are microprocessor-based systems that include transducers, printed circuit boards and assemblies, sensors, and electromechanical components, as well as development and design engineering services relating to these product sales. Sparton also develops and manufactures sonobuoys, anti-submarine warfare (“ASW”) devices used by the United States Navy and other free-world countries. Many of the physical and technical attributes in the production of sonobuoys are similar to those required in the production of the Company's other electrical and electromechanical products and assemblies.

The unaudited condensed financial statements and related footnotes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The financial information presented herein should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2013, which includes information and disclosures not presented herein. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain reclassifications of prior period amounts have been made to conform to the current year presentation. Subsequent events have been evaluated through the date these financial statements were issued. In the opinion of management, the unaudited condensed consolidated financial statements contain all of the adjustments, consisting of normal recurring adjustments, necessary to present fairly, in summarized form, the consolidated financial position, results of operations and cash flows of the Company. The results of operations for the three and six months ended December 31, 2013 are not necessarily indicative of the results that may be expected for the full fiscal year 2014.

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Stock-Based Compensation - Shares Granted Under Long-Term Incentive Plans (Detail) (USD $)	6 Months Ended
	Dec. 31, 2013
Shares
Restricted shares, beginning balance	311,253
Restricted shares, granted	94,811
Restricted shares, vested	(87,576)
Restricted shares, forfeited	(3,344)
Restricted shares, ending balance	315,144
Weighted Average Grant Date Fair Value
Restricted shares, Weighted average grant date fair value, beginning balance (in dollars per share)	$ 8.34
Restricted shares, granted, Weighted average grant date fair value (in dollars per share)	$ 21.80
Restricted shares, vested, Weighted average grant date fair value (in dollars per share)	$ 8.54
Restricted shares, forfeited, Weighted average grant date fair value (in dollars per share)	$ 14.39
Restricted shares, Weighted average grant date fair value, ending balance (in dollars per share)	$ 12.27

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Acquisitions Acquisitions - Pro Forma (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items]
Net sales	$ 87,662	$ 76,519	$ 168,743	$ 138,059
Income before provision for income taxes	5,625	4,800	9,710	7,636
Net income	$ 3,749	$ 5,391	$ 6,516	$ 7,429
Net income per share — basic (in dollars per share)	$ 0.37	$ 0.53	$ 0.65	$ 0.73
Net income per share — diluted (in dollars per share)	$ 0.37	$ 0.53	$ 0.64	$ 0.73

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Property, Plant and Equipment, Net (Tables)

6 Months Ended

Dec. 31, 2013

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment, Net

Property, plant and equipment, net consists of the following at December 31, 2013 and June 30, 2013 (in thousands):

	December 31, 2013			June 30, 2013
Land and land improvements	$	1,429		$	1,405
Buildings and building improvements	25,695			24,920
Machinery and equipment	29,035			27,183
Construction in progress	827			767
Total property, plant and equipment	56,986			54,275
Less accumulated depreciation	(28,359		)	(25,371		)
Total property, plant and equipment, net	$	28,627		$	28,904

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Inventories and Cost of Contracts in Progress (Tables)

6 Months Ended

Dec. 31, 2013

Inventory Disclosure [Abstract]

Classifications of Inventory, Net of Interim Billings

The following are the major classifications of inventory, net of interim billings, at December 31, 2013 and June 30, 2013 (in thousands):

	December 31, 2013			June 30, 2013
Raw materials	$	42,344		$	43,550
Work in process	15,434			10,170
Finished goods	8,368			7,793
Total inventory and cost of contracts in progress, gross	66,146			61,513
Inventory to which the U.S. government has title due to interim billings	(13,753		)	(15,179		)
Total inventory and cost of contracts in progress, net	$	52,393		$	46,334

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Defined Benefit Pension Plan - Components of Net Periodic Pension Expense (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012
Compensation and Retirement Disclosure [Abstract]
Service cost	$ 0	$ 0	$ 0	$ 0
Interest cost	91	67	177	171
Expected return on plan assets	(133)	(117)	(262)	(257)
Amortization of prior service cost	0	0	0	0
Amortization of unrecognized net actuarial loss	18	81	64	92
Net pension expense (income)	(24)	31	(21)	6
Pro rata recognition of lump-sum settlements	0	(25)	0	0
Total pension expense (income)	$ (24)	$ 6	$ (21)	$ 6

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Inventories and Cost of Contracts in Progress - Classifications of Inventory, Net of Interim Billings (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Jun. 30, 2013
Inventory Disclosure [Abstract]
Raw materials	$ 42,344	$ 43,550
Work in process	15,434	10,170
Finished goods	8,368	7,793
Total inventory and cost of contracts in progress, gross	66,146	61,513
Inventory to which the U.S. government has title due to interim billings	(13,753)	(15,179)
Total inventory and cost of contracts in progress, net	$ 52,393	$ 46,334	[1]

[1] Derived from the Company’s audited financial statements as of June 30, 2013.

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Goodwill and Other Intangible Assets (Tables)

6 Months Ended

Dec. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of Changes in Carrying Amount of Goodwill

Changes in the carrying value of goodwill for the six months ended December 31, 2013 and year ended June 30, 2013 and the ending composition of goodwill as of December 31, 2013 and June 30, 2013 are as follows (in thousands):

	December 31, 2013
	Medical			CS		DSS		Total
Goodwill, beginning of period	$	14,667		$	100	$	—	$	14,767
Additions to goodwill during the period	—			13,353		2,036		15,389
Goodwill, end of period	$	14,667		$	13,453	$	2,036	$	30,156
	June 30, 2013
	Medical			CS		DSS		Total
Goodwill, beginning of period	$	7,472		$	—	$	—	$	7,472
Additions to goodwill during the period	7,195			100		—		7,295
Goodwill, end of period	$	14,667		$	100	$	—	$	14,767
	December 31, 2013
	Medical			CS		DSS		Total
Acquired Goodwill	$	27,820		$	13,453	$	2,036	$	43,309
Accumulated impairment	(13,153		)	—		—		(13,153		)
Goodwill	$	14,667		$	13,453	$	2,036	$	30,156
	June 30, 2013
	Medical			CS		DSS		Total
Acquired Goodwill	$	27,820		$	100	$	—	$	27,920
Accumulated impairment	(13,153		)	—		—		(13,153		)
Goodwill	$	14,667		$	100	$	—	$	14,767

Summary of Intangible Assets, Net

The amortization periods, gross carrying amounts, accumulated amortization, accumulated impairments and net carrying values of intangible assets at December 31, 2013 and June 30, 2013 are as follows (in thousands):

	Amortization Period in Months		Gross Carrying Amount		Accumulated Amortization			Accumulated Impairments			Net Carrying Value
	December 31, 2013
Amortized intangible assets:
Non-compete agreements		12	$	200	$	(200	)	$	—		$	—
Customer relationships	120	-180	19,870		(5,221		)	(3,663		)	10,986
Trademarks/Tradenames		120	180		(6		)	—			174
Unpatented Technology		84	650		(54		)				596
			$	20,900	$	(5,481	)	$	(3,663	)	$	11,756
	June 30, 2013
Amortized intangible assets:
Non-compete agreements		12	$	358	$	(274	)	$	—		$	84
Customer relationships	120	-180	18,370		(4,078		)	(3,663		)	10,629
			$	18,728	$	(4,352	)	$	(3,663	)	$	10,713

Aggregate Amortization Expense Relative to Existing Intangible Assets

Aggregate amortization expense relative to existing intangible assets for the periods shown is currently estimated to be as follows (in thousands):

Fiscal Year Ending June 30,
2014	$	2,468
2015	2,190
2016	1,927
2017	1,665
2018	1,402
Thereafter	3,391
Total	$	13,043

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Debt (Tables)

6 Months Ended

Dec. 31, 2013

Debt Disclosure [Abstract]

Summary of Long-term Debt

Debt consists of the following at December 31, 2013 and June 30, 2013 (in thousands):

	December 31, 2013			June 30, 2013
Industrial revenue bonds, face value	$	1,552		$	1,623
Less unamortized purchase discount	(80		)	(84		)
Industrial revenue bonds, carrying value	1,472			1,539
Borrowings under revolving credit facilities	25,000			10,000
Total debt	26,472			11,539
Less: current portion	(141		)	(136		)
Long-term debt, net of current portion	$	26,331		$	11,403

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CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (USD $) In Thousands, except Share data, unless otherwise specified	Total		Common Stock [Member]	Capital In Excess of Par Value [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Loss [Member]
Balance at Jun. 30, 2012 (As Originally Reported [Member])	$ 82,488		$ 12,632	$ 19,579	$ 51,995	$ (1,718)
Balance at Jun. 30, 2012	82,980		12,632	19,579	52,487	(1,718)
Balance (in shares) at Jun. 30, 2012 (As Originally Reported [Member])			10,105,759
Balance (in shares) at Jun. 30, 2012			10,105,759
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cumulative impact of change in accounting principle	492				492
Issuance of stock			199	(199)
Issuance of stock, (in shares)			159,433
Forfeiture of restricted stock	0		(50)	50
Forfeiture of restricted stock, (in shares)			(39,811)
Repurchase of stock	(234)		(25)	(209)
Repurchase of stock, (in shares)			(20,564)
Exercise of stock options	144		30	114
Exercise of stock options, (in shares)			24,304
Stock-based compensation	597			597
Comprehensive income, net of tax	6,356				6,298	58
Balance at Dec. 31, 2012	89,843		12,786	19,932	58,785	(1,660)
Balance (in shares) at Dec. 31, 2012			10,229,121
Balance at Jun. 30, 2013	96,072	[1]	12,619	18,751	65,957	(1,255)
Balance (in shares) at Jun. 30, 2013	10,095,716		10,095,716
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of stock			119	(119)
Issuance of stock, (in shares)			94,811
Forfeiture of restricted stock			(4)	4
Forfeiture of restricted stock, (in shares)			(3,344)
Repurchase of stock	(1,559)		(96)	(1,463)
Repurchase of stock, (in shares)			(76,880)
Exercise of stock options	121		18	103
Exercise of stock options, (in shares)	14,119		14,119
Stock-based compensation	917			917
Excess tax benefit from stock-based compensation	496			496
Comprehensive income, net of tax	5,811				5,770	41
Balance at Dec. 31, 2013	$ 101,858		$ 12,656	$ 18,689	$ 71,727	$ (1,214)
Balance (in shares) at Dec. 31, 2013	10,124,422		10,124,422

[1] Derived from the Company’s audited financial statements as of June 30, 2013.

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Defined Benefit Pension Plan (Tables)

6 Months Ended

Dec. 31, 2013

Compensation and Retirement Disclosure [Abstract]

Components of Net Periodic Pension Expense

The components of net periodic pension expense are as follows for the three and six months ended December 31, 2013 and 2012 (in thousands):

	For the Three Months Ended						For the Six Months Ended
	December 31, 2013			December 31, 2012			December 31, 2013			December 31, 2012
Service cost	$	—		$	—		$	—		$	—
Interest cost	91			67			177			171
Expected return on plan assets	(133		)	(117		)	(262		)	(257		)
Amortization of prior service cost	—			—			—			—
Amortization of unrecognized net actuarial loss	18			81			64			92
Net pension expense (income)	(24		)	31			(21		)	6
Pro rata recognition of lump-sum settlements	—			(25		)	—			—
Total pension expense (income)	$	(24	)	$	6		$	(21	)	$	6

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Acquisitions Acquisitions - Beckwood Services (Details) (USD $) In Thousands, unless otherwise specified					0 Months Ended
	Dec. 31, 2013	Jun. 30, 2013		Jun. 30, 2012	Dec. 11, 2013 Beckwood Services Inc. [Member]
Business Acquisition [Line Items]
Cash					$ 15,300
Estimated additional consideration payable for post-closing working capital adjustment					36
Total purchase consideration					15,336
Accounts receivable, net					1,157
Inventory					2,008
Deferred income taxes					213
Other current assets					122
Property, plant and equipment					110
Goodwill	30,156	14,767	[1]	7,472	13,353
Deferred income taxes - non-current					7
Other long-term assets					8
Accounts payable					977
Other current liabilities					665
Total assets acquired and liabilities assumed					$ 15,336

[1] Derived from the Company’s audited financial statements as of June 30, 2013.

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Fair Value Measurements - Additional Information (Detail) (USD $)	Dec. 31, 2013	Jun. 30, 2013
Fair Value Of Financial Instruments [Line Items]
Carrying values of the industrial revenue bonds	$ 1,472,000	$ 1,539,000
Borrowings under revolving credit facilities	25,000,000	10,000,000
Fair Value, Inputs, Level 3 [Member] | Industrial revenue bonds [Member]
Fair Value Of Financial Instruments [Line Items]
Fair value of the industrial revenue bonds	1,800,000	2,000,000
Carrying values of the industrial revenue bonds	1,500,000	1,500,000
Revolving Credit Facility [Member]
Fair Value Of Financial Instruments [Line Items]
Borrowings under revolving credit facilities	$ 25,000,000	$ 10,000,000

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Jun. 30, 2013
Current Assets:
Cash and cash equivalents	$ 1,009	$ 6,085	[1]
Accounts receivable, net of allowance for doubtful accounts of $107 and $61, respectively	44,806	49,572	[1]
Inventories and cost of contracts in progress, net	52,393	46,334	[1]
Deferred income taxes	3,054	2,951	[1]
Prepaid expenses and other current assets	3,844	1,731	[1]
Total current assets	105,106	106,673	[1]
Property, plant and equipment, net	28,627	28,904	[1]
Goodwill	30,156	14,767	[1]
Other intangible assets, net	11,756	10,713	[1]
Deferred income taxes — non-current	3,931	4,075	[1]
Other non-current assets	2,980	790	[1]
Total assets	182,556	165,922	[1]
Current Liabilities:
Current portion of long-term debt	141	136	[1]
Accounts payable	16,885	19,596	[1]
Accrued salaries and wages	6,648	6,329	[1]
Accrued health benefits	1,586	1,793	[1]
Performance based payments on customer contracts	19,111	20,902	[1]
Other accrued expenses	7,180	6,733	[1]
Total current liabilities	51,551	55,489	[1]
Pension liability — non-current portion	275	274	[1]
Long-term debt — non-current portion	26,331	11,403	[1]
Environmental remediation — non-current portion	2,541	2,684	[1]
Total liabilities	80,698	69,850	[1]
Commitments and contingencies			[1]
Shareholders’ Equity:
Preferred stock, no par value; 200,000 shares authorized, none issued	0	0	[1]
Common stock, $1.25 par value; 15,000,000 shares authorized, 10,124,422 and 10,095,716 shares issued and outstanding, respectively	12,656	12,619	[1]
Capital in excess of par value	18,689	18,751	[1]
Retained earnings	71,727	65,957	[1]
Accumulated other comprehensive loss	(1,214)	(1,255)	[1]
Total shareholders’ equity	101,858	96,072	[1]
Total liabilities and shareholders’ equity	$ 182,556	$ 165,922	[1]

[1] Derived from the Company’s audited financial statements as of June 30, 2013.

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Inventories and Cost of Contracts in Progress - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012
Inventory Disclosure [Abstract]
Inventory write-downs	$ 0.2	$ 0.5	$ 0.2	$ 0.5

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012
Amortization of unrecognized net actuarial loss, tax benefit (provision)	$ 7	$ 23	$ 30	$ 34
Pro rata recognition of lump-sum settlements, tax provision		$ 10

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Stock-Based Compensation - Expense by Type of Share-Based Award (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012
Stock Based Compensation [Line Items]
Total stock-based compensation	$ 620	$ 333	$ 917	$ 597
Fair value expense of stock option awards [Member]
Stock Based Compensation [Line Items]
Total stock-based compensation	0	0	0	0
Restricted and unrestricted stock [Member]
Stock Based Compensation [Line Items]
Total stock-based compensation	$ 620	$ 333	$ 917	$ 597

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Restructuring Activities (Tables)

6 Months Ended

Dec. 31, 2013

Restructuring and Related Activities [Abstract]

Schedule of the Nature and Amount of all Restructuring

The table below summarizes the nature and amount of all restructuring actions for the six months ended December 31, 2013 (in thousands):

	Workforce Reduction (principally severance and retention bonuses)			Production Transfer			Facility Closing			Total
Accrual balance at June 30, 2013	44			—			—			44
Restructuring charges	111			68			9			188
Less: cash payments	(155		)	(68		)	(9		)	(232		)
Restructuring reversals	—			—			—			—
Accrual balance at December 31, 2013	$	—		$	—		$	—		$	—

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Stock Repurchase Plan (Details Textual) (Share Repurchase Program [Member], Common Stock [Member], USD $)	3 Months Ended	8 Months Ended	12 Months Ended
	Sep. 30, 2013	Dec. 31, 2013	Jun. 30, 2013
Share Repurchase Program [Member] | Common Stock [Member]
Class of Stock [Line Items]
Shares authorized for repurchase			$ 3,000,000.0
Period beginning on the date of authorization			12 months
Share repurchased during the period (in shares)	47,119	175,277	128,158
Average price of common stock per share (in dollars per share)	$ 18.51	$ 17.08	$ 16.55
Shares repurchased during the period	$ 900,000		$ 2,100,000

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Stock Repurchase Plan

6 Months Ended

Dec. 31, 2013

Equity [Abstract]

Stock Repurchase Plan

Stock Repurchase Plan

On May 1, 2013, the Company’s Board of Directors approved a repurchase by the Company of up to $3.0 million of shares of its common stock over a 12-month period. The Company has been authorized to purchase shares from time to time in open market, block transactions and privately negotiated transactions at prices deemed appropriate by management, depending on market conditions, applicable laws and other factors. The stock repurchase program does not require the Company to repurchase any specific number of shares and can be modified, extended or terminated by the Board of Directors at any time. 

Pursuant to this stock repurchase program, during the three months ended September 30, 2013, the Company purchased 47,119 shares of its common stock at an average price of $18.51 per share for approximately $0.9 million. Previously, during the year ended June 30, 2013, the Company purchased 128,158 shares of its common stock at an average price of $16.55 per share for approximately $2.1 million. Total shares purchased pursuant to this stock repurchase program total 175,277 at an average price of $17.08. Shares purchased under the plan were cancelled upon repurchase. As of December 31, 2013, all authorized funds under the stock repurchase program have been expended.

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Business Segments (Tables)

6 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

Operating Results and Other Financial Information by Segment

Operating results and certain other financial information about the Company’s three reportable segments for the three and six months ended December 31, 2013 and 2012 and as of December 31, 2013 and June 30, 2013 were as follows (in thousands):

	For the Three Months Ended December 31, 2013
	Medical		CS		DSS		Other Unallocated			Eliminations			Total
Sales	$	44,316	$	18,304	$	26,078	$	—		$	(4,136	)	$	84,562
Gross profit	$	6,824	$	1,944	$	6,209	$	—		$	—		$	14,977
Operating income (loss)	$	3,663	$	1,019	$	3,590	$	(3,015	)	$	—		$	5,257
Selling and administrative expenses	$	2,606	$	913	$	2,148	$	3,020		$	—		$	8,687
Internal research and development expenses	$	—	$	—	$	402	$	—		$	—		$	402
Restructuring Charges	$	—	$	—	$	—	$	—		$	—		$	—
Depreciation/amortization	$	1,225	$	204	$	390	$	100		$	—		$	1,919
Capital expenditures	$	352	$	66	$	324	$	196		$	—		$	938
	For the Three Months Ended December 31, 2012
	Medical		CS		DSS		Other Unallocated			Eliminations			Total
Sales	$	34,804	$	14,059	$	22,677	$	—		$	(4,286	)	$	67,254
Gross profit	$	4,344	$	1,428	$	6,323	$	—		$	—		$	12,095
Operating income (loss)	$	1,803	$	777	$	4,830	$	(3,210	)	$	—		$	4,200
Selling and administrative expenses	$	2,268	$	651	$	1,250	$	3,206		$	—		$	7,375
Internal research and development expenses	$	—	$	—	$	243	$	—		$	—		$	243
Depreciation/amortization	$	634	$	148	$	153	$	58		$	—		$	993
Capital expenditures	$	335	$	20	$	132	$	57		$	—		$	544
	For the Six Months Ended December 31, 2013
	Medical		CS		DSS		Other Unallocated			Eliminations			Total
Sales	$	86,324	$	36,569	$	43,971	$	—		$	(8,104	)	$	158,760
Gross profit	$	13,802	$	3,812	$	9,557	$	—		$	—		$	27,171
Operating income (loss)	$	7,604	$	1,904	$	4,874	$	(5,748	)	$	—		$	8,634
Selling and administrative expenses	$	5,057	$	1,696	$	3,823	$	5,756		$	—		$	16,332
Internal research and development expenses	$	—	$	—	$	791	$	—		$	—		$	791
Restructuring charges	$	—	$	188	$	—	$	—		$	—		$	188
Depreciation/amortization	$	2,462	$	422	$	564	$	192		$	—		$	3,640
Capital expenditures, net	$	420	$	66	$	619	$	307		$	—		$	1,412
	For the Six Months Ended December 31, 2012
	Medical		CS		DSS		Other Unallocated			Eliminations			Total
Sales	$	62,863	$	26,406	$	37,664	$	—		$	(8,878	)	$	118,055
Gross profit	$	8,538	$	2,524	$	9,033	$	—		$	—		$	20,095
Operating income (loss)	$	4,425	$	1,163	$	6,155	$	(5,412	)	$	—		$	6,331
Selling and administrative expenses	$	3,738	$	1,361	$	2,330	$	5,418		$	—		$	12,847
Internal research and development expenses	$	—	$	—	$	548	$	—		$	—		$	548
Depreciation/amortization	$	807	$	291	$	297	$	77		$	—		$	1,472
Capital expenditures	$	344	$	726	$	256	$	276		$	—		$	1,602

	As of December 31, 2013
	Medical		CS		DSS		Other Unallocated		Eliminations		Total
Total assets	$	91,609	$	50,939	$	26,927	$	13,081	$	—	$	182,556
	As of June 30, 2013
	Medical		CS		DSS		Other Unallocated		Eliminations		Total
Total assets	$	95,776	$	36,039	$	16,952	$	17,155	$	—	$	165,922

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Business Segments

6 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

Business Segments

Business Segments

The Company is a provider of complex and sophisticated electromechanical devices with capabilities that include concept development, design and manufacturing engineering, production, distribution, and field service. Reportable segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or group, in assessing performance and allocating resources. The Company serves the Medical & Biotechnology, Military & Aerospace and Industrial & Commercial markets through three reportable business segments; Medical Device (“Medical”), Complex Systems (“CS”) and Defense & Security Systems (“DSS”).

The Company uses an internal management reporting system, which provides important financial data to evaluate performance and allocate the Company's resources on a segment basis. Net sales are attributed to the segment in which the product is manufactured or service is performed. A segment's performance is evaluated based upon its operating income (loss). A segment's operating income (loss) includes its gross profit on sales less its selling and administrative expenses, including allocations of certain corporate operating expenses. Certain corporate operating expenses are allocated to segment results based on the nature of the service provided. Other corporate operating expenses, including certain administrative, financial and human resource activities as well as items such as interest expense, interest income, other income (expense) and income tax expense (benefit), are not allocated to operations and are excluded from segment profit. These costs are not allocated to the segments, as management excludes such costs when assessing the performance of the segments. Inter-segment transactions are generally accounted for at amounts that approximate arm's length transactions. Identifiable assets by segments are those assets that are used in each segment's operations. The accounting policies for each of the segments are the same as for the Company taken as a whole.

Medical segmentoperations are comprised of contract design, manufacturing, and aftermarket repair and refurbishment of sophisticated medical and biotechnology devices and sub-assemblies. Customers include industry leaders, emerging technologies companies and start-ups. In manufacturing devices for its customers, this business unit follows specific design and manufacturing processes to assure product reliability and safety in accordance with Food and Drug Administration (“FDA”) guidelines and approvals. This group specializes in technologies, systems and processes required by medical OEM and ET customers primarily in the diagnostic, therapeutic, surgical and laboratory device segments of the medical and biotechnology marketplaces. The Medical segment also includes environmental monitoring and industrial systems and controls customers.

Complex Systems segment operationsare comprised of manufacturing and aftermarket repair and refurbishment of sophisticated printed circuit card assemblies, sub-assemblies, full product assemblies, and cable/wire harnesses. Customers include military and aerospace, as well as industrial and commercial OEM's. In manufacturing for its customers, this segment adheres to very strict military and aerospace specifications in addition to product and process certifications. Customers are primarily engaged in applications that include: flight controls, cockpit displays, fuel system controls, secure communications, early warning detection, security systems, satellite communications, and audio.

Defense & Security Systems segment operations are comprised of design, development and production of products for both domestic and foreign defense as well as commercial needs. Sparton designs and manufactures anti-submarine warfare ("ASW") devices known as sonobuoys for the U.S. Navy and foreign governments that meet Department of State licensing requirements. This segment also performs an engineering development function for the United States military and prime defense contractors for advanced technologies ultimately leading to future defense products as well as replacements for existing products. The sonobuoy product line is built to stringent military specifications. These products are restricted by International Tariff and Arms Regulations (“ITAR”) and qualified by the U.S. Navy, which limits opportunities for competition. Sparton is also a provider of ruggedized flat panel display systems for military panel PC workstations, air traffic control and industrial applications. Ruggedized displays are manufactured for prime contractors to specific military grade specifications. Additionally, this business unit internally develops and markets commercial products for underwater acoustics and microelectromechanical (“MEMS”)-based inertial measurement.

Operating results and certain other financial information about the Company’s three reportable segments for the three and six months ended December 31, 2013 and 2012 and as of December 31, 2013 and June 30, 2013 were as follows (in thousands):

	For the Three Months Ended December 31, 2013
	Medical		CS		DSS		Other Unallocated			Eliminations			Total
Sales	$	44,316	$	18,304	$	26,078	$	—		$	(4,136	)	$	84,562
Gross profit	$	6,824	$	1,944	$	6,209	$	—		$	—		$	14,977
Operating income (loss)	$	3,663	$	1,019	$	3,590	$	(3,015	)	$	—		$	5,257
Selling and administrative expenses	$	2,606	$	913	$	2,148	$	3,020		$	—		$	8,687
Internal research and development expenses	$	—	$	—	$	402	$	—		$	—		$	402
Restructuring Charges	$	—	$	—	$	—	$	—		$	—		$	—
Depreciation/amortization	$	1,225	$	204	$	390	$	100		$	—		$	1,919
Capital expenditures	$	352	$	66	$	324	$	196		$	—		$	938
	For the Three Months Ended December 31, 2012
	Medical		CS		DSS		Other Unallocated			Eliminations			Total
Sales	$	34,804	$	14,059	$	22,677	$	—		$	(4,286	)	$	67,254
Gross profit	$	4,344	$	1,428	$	6,323	$	—		$	—		$	12,095
Operating income (loss)	$	1,803	$	777	$	4,830	$	(3,210	)	$	—		$	4,200
Selling and administrative expenses	$	2,268	$	651	$	1,250	$	3,206		$	—		$	7,375
Internal research and development expenses	$	—	$	—	$	243	$	—		$	—		$	243
Depreciation/amortization	$	634	$	148	$	153	$	58		$	—		$	993
Capital expenditures	$	335	$	20	$	132	$	57		$	—		$	544
	For the Six Months Ended December 31, 2013
	Medical		CS		DSS		Other Unallocated			Eliminations			Total
Sales	$	86,324	$	36,569	$	43,971	$	—		$	(8,104	)	$	158,760
Gross profit	$	13,802	$	3,812	$	9,557	$	—		$	—		$	27,171
Operating income (loss)	$	7,604	$	1,904	$	4,874	$	(5,748	)	$	—		$	8,634
Selling and administrative expenses	$	5,057	$	1,696	$	3,823	$	5,756		$	—		$	16,332
Internal research and development expenses	$	—	$	—	$	791	$	—		$	—		$	791
Restructuring charges	$	—	$	188	$	—	$	—		$	—		$	188
Depreciation/amortization	$	2,462	$	422	$	564	$	192		$	—		$	3,640
Capital expenditures, net	$	420	$	66	$	619	$	307		$	—		$	1,412
	For the Six Months Ended December 31, 2012
	Medical		CS		DSS		Other Unallocated			Eliminations			Total
Sales	$	62,863	$	26,406	$	37,664	$	—		$	(8,878	)	$	118,055
Gross profit	$	8,538	$	2,524	$	9,033	$	—		$	—		$	20,095
Operating income (loss)	$	4,425	$	1,163	$	6,155	$	(5,412	)	$	—		$	6,331
Selling and administrative expenses	$	3,738	$	1,361	$	2,330	$	5,418		$	—		$	12,847
Internal research and development expenses	$	—	$	—	$	548	$	—		$	—		$	548
Depreciation/amortization	$	807	$	291	$	297	$	77		$	—		$	1,472
Capital expenditures	$	344	$	726	$	256	$	276		$	—		$	1,602

	As of December 31, 2013
	Medical		CS		DSS		Other Unallocated		Eliminations		Total
Total assets	$	91,609	$	50,939	$	26,927	$	13,081	$	—	$	182,556
	As of June 30, 2013
	Medical		CS		DSS		Other Unallocated		Eliminations		Total
Total assets	$	95,776	$	36,039	$	16,952	$	17,155	$	—	$	165,922

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Business Segments - Operating Results and Other Financial Information by Segment (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Jun. 30, 2013
Segment Reporting Information [Line Items]
Sales	$ 84,562	$ 67,254	$ 158,760	$ 118,055
Gross profit	14,977	12,095	27,171	20,095
Operating income (loss)	5,257	4,200	8,634	6,331
Selling and administrative expenses	8,687	7,375	16,332	12,847
Internal research and development expenses	402	243	791	548
Restructuring charges	0	0	188	0
Depreciation/amortization	1,919	993	3,640	1,472
Capital expenditures	938	544	1,412	1,602
Total assets	182,556		182,556		165,922	[1]
Medical [Member]
Segment Reporting Information [Line Items]
Sales	44,316	34,804	86,324	62,863
Gross profit	6,824	4,344	13,802	8,538
Operating income (loss)	3,663	1,803	7,604	4,425
Selling and administrative expenses	2,606	2,268	5,057	3,738
Internal research and development expenses	0	0	0	0
Restructuring charges	0		0
Depreciation/amortization	1,225	634	2,462	807
Capital expenditures	352	335	420	344
Total assets	91,609		91,609		95,776
CS [Member]
Segment Reporting Information [Line Items]
Sales	18,304	14,059	36,569	26,406
Gross profit	1,944	1,428	3,812	2,524
Operating income (loss)	1,019	777	1,904	1,163
Selling and administrative expenses	913	651	1,696	1,361
Internal research and development expenses	0	0	0	0
Restructuring charges	0		188
Depreciation/amortization	204	148	422	291
Capital expenditures	66	20	66	726
Total assets	50,939		50,939		36,039
DSS [Member]
Segment Reporting Information [Line Items]
Sales	26,078	22,677	43,971	37,664
Gross profit	6,209	6,323	9,557	9,033
Operating income (loss)	3,590	4,830	4,874	6,155
Selling and administrative expenses	2,148	1,250	3,823	2,330
Internal research and development expenses	402	243	791	548
Restructuring charges	0		0
Depreciation/amortization	390	153	564	297
Capital expenditures	324	132	619	256
Total assets	26,927		26,927		16,952
Other Unallocated [Member]
Segment Reporting Information [Line Items]
Sales	0	0	0	0
Gross profit	0	0	0	0
Operating income (loss)	(3,015)	(3,210)	(5,748)	(5,412)
Selling and administrative expenses	3,020	3,206	5,756	5,418
Internal research and development expenses	0	0	0	0
Restructuring charges	0		0
Depreciation/amortization	100	58	192	77
Capital expenditures	196	57	307	276
Total assets	13,081		13,081		17,155
Eliminations [Member]
Segment Reporting Information [Line Items]
Sales	(4,136)	(4,286)	(8,104)	(8,878)
Gross profit	0	0	0	0
Operating income (loss)	0	0	0	0
Selling and administrative expenses	0	0	0	0
Internal research and development expenses	0	0	0	0
Restructuring charges	0		0
Depreciation/amortization	0	0	0	0
Capital expenditures	0	0	0	0
Total assets	$ 0		$ 0		$ 0

[1] Derived from the Company’s audited financial statements as of June 30, 2013.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	6 Months Ended
	Dec. 31, 2013		Dec. 31, 2012
Cash Flows from Operating Activities:
Net income	$ 5,770,000		$ 6,298,000
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	3,640,000		1,472,000
Deferred income tax expense	239,000		760,000
Stock-based compensation expense	917,000		597,000
Gross profit effect of capitalized profit in inventory from acquisition	108,000		566,000
Excess tax benefit of stock-based compensation	(496,000)		0
Other	44,000		47,000
Changes in operating assets and liabilities:
Accounts receivable	8,097,000		(4,306,000)
Inventories and cost of contracts in progress	2,441,000		(1,845,000)
Prepaid expenses and other assets	(1,702,000)		(2,798,000)
Performance based payments on customer contracts	(1,791,000)		(6,592,000)
Accounts payable and accrued expenses	(4,791,000)		(3,128,000)
Net cash provided by (used in) operating activities	12,476,000		(8,929,000)
Cash Flows from Investing Activities:
Purchases of property, plant and equipment	(1,412,000)		(1,602,000)
Change in restricted cash	0		(535,000)
Proceeds from sale of property, plant and equipment	68,000		0
Net cash used in investing activities	(31,539,000)		(45,387,000)
Cash Flows from Financing Activities:
Short-term bank borrowings, net	0		14,000,000
Borrowings of long-term debt	41,000,000		0
Repayment of long-term debt	(26,071,000)		(70,000)
Payment of debt financing costs	0		(408,000)
Repurchase of stock	(1,559,000)		(234,000)
Proceeds from the exercise of stock options	121,000		144,000
Excess tax benefit from stock-based compensation	496,000		0
Net cash provided by financing activities	13,987,000		13,432,000
Net decrease in cash and cash equivalents	(5,076,000)		(40,884,000)
Cash and cash equivalents at beginning of period	6,085,000	[1]	46,950,000
Cash and cash equivalents at end of period	1,009,000		6,066,000
Supplemental disclosure of cash flow information:
Cash paid for interest	320,000		258,000
Cash paid for income taxes	2,963,000		1,603,000
Supplemental disclosure of non-cash investing activities:
Accounts payable recognized in relation to acquisition purchase consideration adjustments	393,000		2,188,000
Onyx [Member]
Cash Flows from Investing Activities:
Purchase of certain assets and liabilities	0		(43,250,000)
Creonix [Member]
Cash Flows from Investing Activities:
Purchase of certain assets and liabilities	105,000		0
Aydin Displays, LLC [Member]
Cash Flows from Investing Activities:
Purchase of certain assets and liabilities	(15,000,000)		0
Beckwood Services Inc. [Member]
Cash Flows from Investing Activities:
Purchase of certain assets and liabilities	$ (15,300,000)		$ 0

[1] Derived from the Company’s audited financial statements as of June 30, 2013.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 31, 2013	Jun. 30, 2013
Accounts receivable, allowance for doubtful accounts	$ 107	$ 61
Preferred stock, shares authorized	200,000	200,000
Preferred stock, shares issued	0	0
Common stock, par value (usd per share)	$ 1.25	$ 1.25
Common stock, shares authorized	15,000,000	15,000,000
Common stock, shares issued	10,124,422	10,095,716
Common stock, shares outstanding	10,124,422	10,095,716

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Income Taxes

6 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company recognized income tax provisions of approximately $1.7 million and $2.8 million, or approximately 33.3% and 33.0% of income before provision for income taxes, for the three and six months ended December 31, 2013, respectively. During the three months ended December 31, 2012, the Company recognized a $2.1 million income tax benefit from claiming a worthless stock and bad debt deduction with respect to its investments and advances to its 100% owned Canadian subsidiary, Sparton of Canada, Ltd. Sparton of Canada, Ltd. is the legal entity that held the Company’s Canadian operations until these operations were ceased during fiscal 2009. Excluding this discrete tax benefit, the Company recognized income tax provisions of approximately $1.4 million and $2.1 million, or approximately 32.7% and 32.9%, respectively, of income before provision for income taxes, for the three and six months ended December 31, 2012. The Company’s effective income tax rate for the interim periods presented is based on management’s estimate of the Company’s effective tax rate for the applicable year and differs from the Federal statutory income tax rate primarily due to applicable permanent differences, foreign income taxes and state income taxes.

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Document and Entity Information	6 Months Ended
	Dec. 31, 2013	Jan. 31, 2014
Document And Entity Information [Abstract]
Entity Registrant Name	Sparton Corp.
Entity Central Index Key	0000092679
Current Fiscal Year End Date	--06-30
Entity Filer Category	Accelerated Filer
Document Type	10-Q
Document Period End Date	Dec. 31, 2013
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		10,124,422

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Defined Benefit Pension Plan

6 Months Ended

Dec. 31, 2013

Compensation and Retirement Disclosure [Abstract]

Defined Benefit Pension Plan

Defined Benefit Pension Plan

Approximately 400 employees and retirees of the Company are covered by a defined benefit pension plan. Effective April 1, 2009, participation and the accrual of benefits in this pension plan were frozen, at which time all participants became fully vested and all prior service costs were recognized. The components of net periodic pension expense are as follows for the three and six months ended December 31, 2013 and 2012 (in thousands):

	For the Three Months Ended						For the Six Months Ended
	December 31, 2013			December 31, 2012			December 31, 2013			December 31, 2012
Service cost	$	—		$	—		$	—		$	—
Interest cost	91			67			177			171
Expected return on plan assets	(133		)	(117		)	(262		)	(257		)
Amortization of prior service cost	—			—			—			—
Amortization of unrecognized net actuarial loss	18			81			64			92
Net pension expense (income)	(24		)	31			(21		)	6
Pro rata recognition of lump-sum settlements	—			(25		)	—			—
Total pension expense (income)	$	(24	)	$	6		$	(21	)	$	6

The Company’s policy is to fund the plan based upon legal requirements and tax regulations. During each of the six months ended December 31, 2013 and 2012, less than $0.1 million was contributed to the pension plan. For further information on future funding projections and other pension disclosures see Part II, Item 8, Note 9 “Employee Retirement Benefit Plans” of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2013.

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012
Net sales	$ 84,562	$ 67,254	$ 158,760	$ 118,055
Cost of goods sold	69,585	55,159	131,589	97,960
Gross profit	14,977	12,095	27,171	20,095
Operating Expense:
Selling and administrative expenses	8,687	7,375	16,332	12,847
Internal research and development expenses	402	243	791	548
Amortization of intangible assets	636	273	1,234	375
Restructuring charges	0	0	188	0
Other operating expenses	(5)	4	(8)	(6)
Total operating expense, net	9,720	7,895	18,537	13,764
Operating income	5,257	4,200	8,634	6,331
Interest expense
Interest expense	(202)	(173)	(360)	(254)
Interest income	0	23	2	51
Other, net	165	59	337	169
Total other expense, net	(37)	(91)	(21)	(34)
Income before provision for income taxes	5,220	4,109	8,613	6,297
Provision for (benefit from) income taxes	1,736	(732)	2,843	(1)
Net income	$ 3,484	$ 4,841	$ 5,770	$ 6,298
Income per share of common stock:
Basic (in dollars per share)	$ 0.34	$ 0.47	$ 0.57	$ 0.62
Diluted (in dollars per share)	$ 0.34	$ 0.47	$ 0.57	$ 0.62
Weighted average shares of common stock outstanding:
Basic (in shares)	10,115,255	10,229,320	10,093,973	10,185,464
Diluted (in shares)	10,147,518	10,248,424	10,123,542	10,206,913

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Inventories and Cost of Contracts in Progress

6 Months Ended

Dec. 31, 2013

Inventory Disclosure [Abstract]

Inventories and Cost of Contracts in Progress

Inventories and Cost of Contracts in Progress

The following are the major classifications of inventory, net of interim billings, at December 31, 2013 and June 30, 2013 (in thousands):

	December 31, 2013			June 30, 2013
Raw materials	$	42,344		$	43,550
Work in process	15,434			10,170
Finished goods	8,368			7,793
Total inventory and cost of contracts in progress, gross	66,146			61,513
Inventory to which the U.S. government has title due to interim billings	(13,753		)	(15,179		)
Total inventory and cost of contracts in progress, net	$	52,393		$	46,334

The Company recorded inventory write-downs of approximately $0.2 million for both of the three and six months ended December 31, 2013. For the three and six months ended December 31, 2012, the Company recorded inventory write-downs of approximately $0.5 million. These charges are included in cost of goods sold for the periods presented.

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Acquisitions

6 Months Ended

Dec. 31, 2013

Business Combinations [Abstract]

Acquisitions

Acquisitions

Beckwood Services, Inc. — On December 11, 2013, the Company completed the acquisition of Beckwood Services, Inc. ("Beckwood”) in a $15.3 million all-cash transaction, subject to certain post-closing adjustments and financed through the use of cash on hand and borrowings under the Company's Credit Facility. At December 31, 2013, the Company has recorded additional estimated contingent consideration of accounts receivable of less than $0.1 million in relation to a post-closing working capital adjustment, which is expected to be settled in the third quarter of the Company's fiscal 2014 year. The transaction includes an approximate $1.5 million escrowed holdback which is available to fund the working capital adjustment and potential seller indemnification obligations in relation to the acquisition agreement.

The acquired business, which is part of the Company's Complex Systems segment and which is expected to add $18 million in annualized revenue, develops electronic or electro-mechanical controls and electronic assemblies. Their customer profile includes international Fortune 1000 manufacturers of industrial control systems, analytical instruments, measuring and detecting equipment and military, defense and Homeland Security equipment.

The Company is in the process of obtaining valuations of certain tangible and intangible assets and liabilities and expects to complete the purchase price allocation in fiscal year 2014 after these valuations are finalized. The following table represents the preliminary allocation of the total consideration to assets acquired and liabilities assumed in the acquisition of Beckwood based on Sparton’s preliminary estimate of their respective fair values (in thousands):

Total purchase consideration:
Cash	$	15,300
Estimated additional consideration payable for post-closing working capital adjustment	36
Total purchase consideration	$	15,336
Assets acquired and liabilities assumed:
Accounts receivable, net	$	1,157
Inventory	2,008
Deferred income taxes	213
Other current assets	122
Property, plant and equipment	110
Goodwill	13,353
Deferred income taxes - non-current	7
Other long-term assets	8
Accounts payable	(977		)
Other current liabilities	(665		)
Total assets acquired and liabilities assumed	$	15,336

Total purchase consideration has been allocated to the tangible assets acquired and liabilities assumed based on their provisionally estimated fair values at the acquisition date. It is possible that acquired assets may additionally include customer relationships and the Beckwood name. The Company was unable at December 31, 2013 to assign provisionally estimated fair values to these potential assets. The Beckwood acquisition has preliminarily resulted in approximately $13 million of goodwill, which will be adjusted downward or upward based on the final values assigned to all acquired assets and liabilities. The Company believes that any goodwill remaining after the valuations are finalized will primarily relate to strategic fit, resulting synergies and the acquired workforce that this business brings to existing operations. Goodwill associated with this acquisition is not expected to be deductible for tax purposes and has been assigned entirely to the Company’s Complex Systems segment.

Included in the Company’s Condensed Consolidated Statements of Income for the three and six months ended December 31, 2013 are net sales of approximately $0.8 million and income before provision from income taxes of approximately $0.1 million, resulting from the acquisition of Beckwood since December 11, 2013.

The Company incurred legal, professional and other costs related to this acquisition aggregating approximately $0.1 million. These costs were recognized as selling and administrative expenses in the three months ended December 31, 2013.

Aydin Displays, Inc. — On August 30, 2013, the Company completed the acquisition of certain assets and liabilities of Aydin Displays, Inc. ("Aydin Displays" or “Aydin”) in a $15.0 million all-cash transaction, subject to certain post-closing adjustments and financed through the use of borrowings under the Company's Credit Facility. At December 31, 2013, the Company has recorded additional estimated contingent consideration of accounts receivable of $0.4 million in relation to a post-closing working capital adjustment, which is expected to be settled during the Company's fiscal 2014 year. Additional acquisition consideration of up to $6.6 million is contingent upon Aydin attaining certain performance thresholds during the twelve month period following the transaction. The transaction includes an approximate $1.2 million escrowed holdback which is available to fund the working capital adjustment and potential seller indemnification obligations in relation to the acquisition agreement.

The acquired business, which is part of the Company's DSS segment and which is expected to add $18 million in annualized revenue, develops enhanced flat panel display and touch-screen solutions with application-critical performance criteria including ruggedization, high resolution, color accuracy, response/refresh times, sunlight readability and other criteria such as magnetic interference and emanations security for the Military & Aerospace and Civil Marine markets. These products are currently specified in the U.S. Navy P8A Poseidon ASW aircraft behind-the-cockpit control center, the command and control centers of many U.S. Navy ships, Federal Aviation Administration air traffic control systems, and cockpit command centers for various civil marine applications. The acquired business will continue to operate as Aydin Displays.

The following table represents the preliminary allocation of the total consideration to assets acquired and liabilities assumed in the acquisition of Aydin based on Sparton’s preliminary estimate of their respective fair values (in thousands):

Total purchase consideration:
Cash	$	15,000
Estimated additional consideration payable for post-closing working capital adjustment	357
Total purchase consideration	$	15,357
Assets acquired and liabilities assumed:
Accounts receivable, net	$	2,279
Inventory	6,601
Other current assets	895
Property, plant and equipment	582
Intangible asset - customer relationships	1,500
Intangible asset - trade names and trademarks	180
Intangible asset - unpatented technology	650
Goodwill	2,036
Other long-term assets - favorable leasehold	590
Other long-term assets	1,702
Accounts payable	(1,215		)
Other current liabilities	(443		)
Total assets acquired and liabilities assumed	$	15,357

Total purchase consideration has been preliminarily allocated to the tangible assets acquired and liabilities assumed based on their provisionally estimated fair values at the acquisition date. Additional acquisition consideration of up to $6.6 million is contingent upon Aydin attaining certain performance thresholds. The Company has assigned no fair value to this contingent liability. The Aydin acquisition has preliminarily resulted in approximately $2 million of goodwill, which is expected to be deductible for tax purposes and has been assigned entirely to the Company’s DSS segment. The Company believes goodwill primarily relates to strategic fit, resulting synergies and the acquired workforce that this business brings to existing operations. The provisional fair values of acquired identifiable assets have been determined to be Level 3 under the fair value hierarchy and have been estimated based on projected future cash flows and customer attrition rates, discounted using an estimated weighted average cost of capital. The customer relationships are being amortized using an accelerated methodology over fifteen years. Trade names and trademarks are being amortized using a straight-line methodology over ten years. The unpatented technology is being amortized using an accelerated methodology over seven years. The favorable leasehold is reflected in other long-term assets on the consolidated balance sheet and is being amortized on a straight-line basis over the five year life of the lease. Amortization related to Aydin unpatented technology and favorable leasehold is reflected within cost of goods sold on the consolidated statement of income.

Included in the Company’s Condensed Consolidated Statements of Income for the three and six months ended December 31, 2013 are net sales of approximately $4.0 million and $5.2 million, respectively, and loss before benefit from income taxes of less than $0.1 million and approximately $0.1 million, respectively, resulting from the acquisition of Aydin since August 30, 2013.

The Company incurred legal, professional and other costs related to this acquisition aggregating approximately $0.0 million and $0.2 million for the three and six months ended December 31, 2013, respectively. These costs were recognized as selling and administrative expenses.

A portion of Aydin's revenue is derived from contracts to manufacture video displays and other related products to a buyer’s specification under long-term contracts. Revenue and profit is recognized under these contracts using the percentage of completion method based on units shipped to estimated total costs at completion. Certain upfront engineering costs in relation to long-term contracts are capitalized and amortized over the life of the contract.

Creonix, LLC — On June 6, 2013, the Company completed the acquisition of certain assets related to the contract manufacturing business of Creonix, LLC (“Creonix”) in a $2.0 million all-cash transaction, after settlement of a $0.1 million working capital adjustment during the second quarter of the Company's fiscal 2014 year. The transaction was financed through the use of borrowings under the Company's credit facility. The transaction includes an approximate $0.3 million escrowed holdback which is available to fund the working capital adjustment and potential seller indemnification obligations in relation to the acquisition agreement.

The acquired business, which is reported in the Company's Complex Systems segment, provides the Company with the capability of cable and wire harness engineering and assembly. Additionally, the acquisition provides further expansion into the Industrial and Military & Aerospace markets, diversifies Sparton's customer base and increases utilization of the Company's existing assets through the expected consolidation of this business into Complex Systems's Brooksville, Florida plant during the first six months of fiscal 2014. Creonix primarily manufactures products and components for battery monitoring, high speed optical imaging, neuromuscular incapacitation, imaging and wiring assemblies for military applications, and electrical grid transformer protection systems.

During the six months ended December 31, 2013, the Company finalized the inventory adjustment under the Creonix asset purchase agreement resulting in a decrease in the previously recorded related receivable from the seller. This measurement period increase in total purchase consideration resulted in the retrospective elimination of the previously recognized gain on acquisition recorded in the fourth quarter of fiscal 2013 of less than $0.1 million and resulting in the recognition of approximately $0.1 million of goodwill. The Company's June 30, 2013 balance sheet has been restated to reflect this adjustment. The following table presents the final allocation of the total consideration to assets acquired and liabilities assumed from Creonix based on Sparton’s estimate of their respective fair values (in thousands):

Total purchase consideration:
Cash	$	2,100
Reduction in cash consideration in relation to working capital adjustment	(105		)
Total purchase consideration	$	1,995
Assets acquired and liabilities assumed:
Inventory	$	1,321
Equipment	304
Intangible assets — customer relationships	270
Goodwill	100
Total assets acquired and liabilities assumed	$	1,995

Pro Forma Results — The following table summarizes, on a pro forma basis, the combined results of operations of the Company and the acquired businesses of Aydin and Beckwood as though the acquisitions had occurred as of July 1, 2012. The pro forma amounts presented are not necessarily indicative of either the actual consolidated results had the acquisition occurred as of July 1, 2012 or of future consolidated operating results (in thousands, except per share amounts):

	For the Three Months Ended				For the Six Months Ended
	December 31, 2013		December 31, 2012		December 31, 2013		December 31, 2012
Net sales	$	87,662	$	76,519	$	168,743	$	138,059
Income before provision for income taxes	$	5,625	$	4,800	$	9,710	$	7,636
Net income	$	3,749	$	5,391	$	6,516	$	7,429
Net income per share — basic	$	0.37	$	0.53	$	0.65	$	0.73
Net income per share — diluted	$	0.37	$	0.53	$	0.64	$	0.73

Pro forma results presented above reflect: (1) incremental depreciation relating to fair value adjustments to property, plant and equipment; (2) amortization adjustments relating to fair value estimates of intangible assets; (3) elimination of Aydin and Beckwood interest expense relating to debt paid off in conjunction with the transaction; and (4) incremental interest expense on assumed indebtedness and amortization of capitalized financing costs incurred in connection with the transactions as though the transactions occurred as of July 1, 2012.

Additionally, acquisition related expenses of approximately $0.3 million recognized as selling and administrative expenses in the six months ended December 31, 2013 are reflected in the pro forma results above as though they were recognized during the six months ended December 31, 2012 and have been removed from the pro forma results for the year ended June 30, 2013. Similarly, the capitalization of approximately $0.3 million of gross profit recognized as part of the purchase accounting for Aydin, of which $0.1 million has been recognized as additional cost of goods sold during the six months ended December 31, 2013, is reflected in the pro forma results above as though it was recognized during fiscal 2013 and has been removed from the pro forma results for the six months ended December 31, 2013.

Pro forma adjustments described above have been tax effected using Sparton's effective rate during the respective periods.

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Restructuring Activities

6 Months Ended

Dec. 31, 2013

Restructuring and Related Activities [Abstract]

Restructuring Activities

Restructuring Activities

Creonix Acquisition Related Restructuring

In conjunction with the Creonix acquisition, the Company consolidated the Creonix operations into the Company’s Brooksville, Florida facility. These restructuring activities consisted primarily of approximately $0.2 million of workforce severance and retention costs, less than $0.1 million of production transfer costs and less than $0.1 million of facility closing costs. Inception to date restructuring charges recognized within the Complex Systems segment of approximately $0.2 million were incurred as of September 30, 2013 related to these acquisition related restructuring activities. The Company does not expect to recognize any additional costs related to these restructuring activities. All cash expenditures related to these activities have been made as of December 31, 2013.

Summary of Restructuring Charges

The table below summarizes the nature and amount of all restructuring actions for the six months ended December 31, 2013 (in thousands):

	Workforce Reduction (principally severance and retention bonuses)			Production Transfer			Facility Closing			Total
Accrual balance at June 30, 2013	44			—			—			44
Restructuring charges	111			68			9			188
Less: cash payments	(155		)	(68		)	(9		)	(232		)
Restructuring reversals	—			—			—			—
Accrual balance at December 31, 2013	$	—		$	—		$	—		$	—

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Commitments and Contingencies

6 Months Ended

Dec. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Environmental Remediation — Sparton has been involved with ongoing environmental remediation since the early 1980’s related to one of its former manufacturing facilities, located in Albuquerque, New Mexico (“Coors Road”). Although the Company entered into a long-term lease of the Coors Road property that was accounted for as a sale of property during fiscal 2010, it remains responsible for the remediation obligations related to its past operation of this facility. At December 31, 2013, Sparton had accrued approximately $2.9 million as its estimate of the remaining minimum future undiscounted financial liability with respect to this matter, of which approximately $0.4 million is classified as a current liability and included on the balance sheet in other accrued expenses. The Company’s minimum cost estimate is based upon existing technology and excludes certain legal costs, which are expensed as incurred. The Company’s estimate includes equipment and operating and maintenance costs for onsite and offsite pump and treat containment systems, as well as continued onsite and offsite monitoring. It also includes periodic reporting requirements.

In fiscal 2003, Sparton reached an agreement with the United States Department of Energy (“DOE”) and others to recover certain remediation costs. Under the settlement terms, Sparton received cash and obtained some degree of risk protection as the DOE agreed to reimburse Sparton for 37.5% of certain future environmental expenses in excess of $8.4 million incurred from the date of settlement, if any, of which approximately $4.9 million has been expended as of December 31, 2013 toward the $8.4 million threshold. Uncertainties associated with environmental remediation contingencies are pervasive and often result in wide ranges of reasonably possible outcomes. Estimates developed in the early stages of remediation can vary significantly. Normally a finite estimate of cost does not become fixed and determinable at a specific point in time. Rather, the costs associated with environmental remediation become estimable over a continuum of events and activities that help to frame and define a liability. Factors which cause uncertainties for the Company include, but are not limited to, the effectiveness of the current work plans in achieving targeted results and proposals of regulatory agencies for desired methods and outcomes. It is possible that cash flows and results of operations could be materially affected by the impact of changes associated with the ultimate resolution of this contingency. At December 31, 2013, the Company estimates that it is reasonably possible, but not probable, that future environmental remediation costs associated with the Company’s past operations at the Coors Road property, in excess of amounts already recorded and net of DOE reimbursement, could be up to $2.4 million before income taxes over the next seventeen years.

The Company and its subsidiaries are also involved in certain existing compliance issues with the EPA and various state agencies, including being named as a potentially responsible party at several sites. Potentially responsible parties (“PRP“s) can be held jointly and severally liable for the clean-up costs at any specific site. The Company’s past experience, however, has indicated that when it has contributed relatively small amounts of materials or waste to a specific site relative to other PRPs, its ultimate share of any clean-up costs has been minor. Based upon available information, the Company believes it has contributed only small amounts to those sites in which it is currently viewed as a PRP and that reasonably possible losses related to these compliance issues are immaterial.

Litigation — On September 24, 2013, L-3 Communications Corporation, doing business as L-3 Linkabit (“Linkabit”) filed a complaint in the United States District Court for the Middle District of Florida, Orlando Division, alleging, among other things, that the Company failed to follow Linkabit drawings for the manufacture and assembly of certain products and that the Company changed its manufacturing process resulting in shipment of defective products to Linkabit. Linkabit seeks damages for breach of contract, breach of covenants, breach of warranties and negligence. In response to the Company's motion to dismiss on January 10, 2014, Linkabit filed its first amended complaint deleting the alleged negligence claims. The Company believes that its defenses to the claims are very strong and it intends to defend this action vigorously.  Given the stage of the litigation and the unresolved remaining questions of fact, the Company cannot estimate any loss, or range of loss, with confidence at this time.

U.S. Government Audits — Federal government agencies, including the Defense Contract Audit Agency (“DCAA”) and the Defense Contract Management Agency (“DCMA”), routinely audit and evaluate government contracts and government contractors’ administrative processes and systems. These agencies review the Company’s performance on contracts, pricing practices, cost structure, financial capability and compliance with applicable laws, regulations and standards. They also review the adequacy of the Company’s internal control systems and policies, including the Company’s purchasing, accounting, estimating, compensation and management information processes and systems.

The Company implemented a new enterprise resource planning system in November 2012 and currently remains eligible to receive cost reimbursable contracts from the U.S. Government. The Company responded in June 2013 to DCAA review comments received in the fourth quarter of fiscal 2013 regarding corrective actions to improve the reliability for accumulating costs under government contracts. While the Company’s corrective actions remain open for further review, the Company remains confident formal resolution of DCAA cost accounting practices findings will not have a material adverse impact on the Company’s financial results.

Other — In addition to the foregoing, from time to time, the Company is involved in various legal proceedings relating to claims arising in the ordinary course of business. The Company is not currently a party to any other such legal proceedings, the adverse outcome of which, individually or in the aggregate, is expected to have a material adverse effect on our business, financial condition or results of operations.

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Debt

6 Months Ended

Dec. 31, 2013

Debt Disclosure [Abstract]

Debt

Debt

Debt consists of the following at December 31, 2013 and June 30, 2013 (in thousands):

	December 31, 2013			June 30, 2013
Industrial revenue bonds, face value	$	1,552		$	1,623
Less unamortized purchase discount	(80		)	(84		)
Industrial revenue bonds, carrying value	1,472			1,539
Borrowings under revolving credit facilities	25,000			10,000
Total debt	26,472			11,539
Less: current portion	(141		)	(136		)
Long-term debt, net of current portion	$	26,331		$	11,403

Industrial Revenue Bonds

In connection with its acquisition of Astro in May 2006, the Company assumed repayment of principal and interest on bonds originally issued to Astro by the State of Ohio. These bonds are Ohio State Economic Development Revenue Bonds, series 2002-4. Astro originally entered into the loan agreement with the State of Ohio for the issuance of these bonds to finance the construction of the Company’s Ohio operating facility. The principal amount, including premium, was issued in 2002 and totaled approximately $2.9 million. These bonds have interest rates which vary, dependent on the maturity date of the bonds ranging from 5.00% to 5.45%. Due to an increase in interest rates since the original issuance of the bonds, a discount amounting to approximately $0.2 million on the date of assumption by Sparton was recorded.

The bonds carry certain sinking fund requirements generally obligating the Company to make monthly deposits of one twelfth of the annual obligation plus accrued interest. The purchase discount is being amortized ratably over the remaining term of the bonds. The Company also has an irrevocable letter of credit in the amount of approximately $0.3 million, which is renewable annually, to secure repayment of a portion of the bonds.

Short-term debt at December 31, 2013 and June 30, 2013 reflects the current portion of the Company’s industrial revenue bonds.

Revolving Credit Facility

On November 15, 2012, the Company replaced its previous revolving line-of-credit facility with a new $65 million credit facility with BMO Harris Bank N.A., consisting of a $35 million revolving line-of-credit facility (the “Revolving Credit”) to support the Company’s working capital needs and other general corporate purposes, and a $30 million acquisition loan commitment (the “Acquisition Facility” and together with the Revolving Credit, the “Credit Facility”) to finance permitted acquisitions.

The Credit Facility expires on November 15, 2017, is secured by substantially all assets of the Company and provides for up to an additional $35 million in uncommitted loans available for additional Revolving Credit loans or Acquisition loans.

Advances under the Acquisition Facility are available until November 15, 2014. Loans under the Acquisition Facility amortize in two tranches, such that loans outstanding on November 15, 2013 begin amortizing in quarterly installments equal to 2.5% of the principal amount outstanding on such date, and advances made after November 15, 2013 and outstanding on November 15, 2014 begin amortizing on the same basis.

Outstanding borrowings under the Credit Facility bear interest, at the Company’s option, at either LIBOR, fixed for interest periods of one, two, three or six month periods, plus 1.25% to 2.00%, or at the bank’s base rate, as defined, plus 0.25% to 1.00%, based upon the Company’s Total Funded Debt/EBITDA Ratio, as defined. The Company is also required to pay commitment fees on unused portions of the Credit Facility ranging from 0.25% to 0.375%, based on the Company’s Total Funded Debt/EBITDA Ratio, as defined. The effective interest rate on outstanding borrowings under the Credit Facility was 1.67% at December 31, 2013.

As a condition of the Credit Facility, the Company is subject to certain customary covenants, which it was in compliance with at December 31, 2013. The Company had $25.0 million of borrowings drawn against the Credit Facility at December 31, 2013 and additionally had certain letters of credit outstanding totaling $0.5 million.

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Stock-Based Compensation - Unrecognized Compensation Cost Related to Restricted Stock Grants and Fair Value Expense of Stock Option Awards (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Dec. 31, 2013
Stock Based Compensation [Line Items]
Total Remaining Unrecognized Compensation Cost	$ 2,059
Weighted Average Remaining Required Service Period	2 years 0 months 11 days
Fair value expense of stock option awards [Member]
Stock Based Compensation [Line Items]
Total Remaining Unrecognized Compensation Cost	0
Weighted Average Remaining Required Service Period	0 years
Restricted stock [Member]
Stock Based Compensation [Line Items]
Total Remaining Unrecognized Compensation Cost	$ 2,059
Weighted Average Remaining Required Service Period	2 years 0 months 11 days

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Property, Plant and Equipment, Net

6 Months Ended

Dec. 31, 2013

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment, Net

Property, Plant and Equipment, Net

Property, plant and equipment, net consists of the following at December 31, 2013 and June 30, 2013 (in thousands):

	December 31, 2013			June 30, 2013
Land and land improvements	$	1,429		$	1,405
Buildings and building improvements	25,695			24,920
Machinery and equipment	29,035			27,183
Construction in progress	827			767
Total property, plant and equipment	56,986			54,275
Less accumulated depreciation	(28,359		)	(25,371		)
Total property, plant and equipment, net	$	28,627		$	28,904

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Goodwill and Other Intangible Assets

6 Months Ended

Dec. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

Goodwill represents the excess of purchase price over the fair value of the net assets acquired in conjunction with the Company’s purchases of Astro Instrumentation, LLC (“Astro”) in May 2006, Byers Peak, Incorporated (“Byers Peak”) in March 2011, Onyx EMS, LLC ("Onyx") in November 2012, Creonix in June 2013, Aydin in August 2013 and Beckwood in December 2013. Goodwill related to Astro, Byers Peak and Onyx is reflected within the Company’s Medical operating segment. Goodwill related to Creonix and Beckwood are reflected within the Company's Complex Systems operating segment. Goodwill related to Aydin Displays is reflected within the Company's DSS operating segment. Changes in the carrying value of goodwill for the six months ended December 31, 2013 and year ended June 30, 2013 and the ending composition of goodwill as of December 31, 2013 and June 30, 2013 are as follows (in thousands):

	December 31, 2013
	Medical			CS		DSS		Total
Goodwill, beginning of period	$	14,667		$	100	$	—	$	14,767
Additions to goodwill during the period	—			13,353		2,036		15,389
Goodwill, end of period	$	14,667		$	13,453	$	2,036	$	30,156
	June 30, 2013
	Medical			CS		DSS		Total
Goodwill, beginning of period	$	7,472		$	—	$	—	$	7,472
Additions to goodwill during the period	7,195			100		—		7,295
Goodwill, end of period	$	14,667		$	100	$	—	$	14,767
	December 31, 2013
	Medical			CS		DSS		Total
Acquired Goodwill	$	27,820		$	13,453	$	2,036	$	43,309
Accumulated impairment	(13,153		)	—		—		(13,153		)
Goodwill	$	14,667		$	13,453	$	2,036	$	30,156
	June 30, 2013
	Medical			CS		DSS		Total
Acquired Goodwill	$	27,820		$	100	$	—	$	27,920
Accumulated impairment	(13,153		)	—		—		(13,153		)
Goodwill	$	14,667		$	100	$	—	$	14,767

Other intangible assets represent the values assigned to customer relationships acquired in conjunction with the Company’s purchases of Astro, Byers Peak, Onyx, Creonix and Aydin, values assigned to non-compete agreements acquired in conjunction with the Company’s purchase of Onyx and values assigned to Trademarks and tradenames and unpatented technology acquired with the Company's purchase of Aydin. The amortization periods, gross carrying amounts, accumulated amortization, accumulated impairments and net carrying values of intangible assets at December 31, 2013 and June 30, 2013 are as follows (in thousands):

	Amortization Period in Months		Gross Carrying Amount		Accumulated Amortization			Accumulated Impairments			Net Carrying Value
	December 31, 2013
Amortized intangible assets:
Non-compete agreements		12	$	200	$	(200	)	$	—		$	—
Customer relationships	120	-180	19,870		(5,221		)	(3,663		)	10,986
Trademarks/Tradenames		120	180		(6		)	—			174
Unpatented Technology		84	650		(54		)				596
			$	20,900	$	(5,481	)	$	(3,663	)	$	11,756
	June 30, 2013
Amortized intangible assets:
Non-compete agreements		12	$	358	$	(274	)	$	—		$	84
Customer relationships	120	-180	18,370		(4,078		)	(3,663		)	10,629
			$	18,728	$	(4,352	)	$	(3,663	)	$	10,713

Sparton did not incur any significant costs to renew or alter the term of its intangible assets during the six months ended December 31, 2013. Amortization expense for the three months ended December 31, 2013 and 2012 was approximately $0.6 million and $0.3 million, respectively. Amortization expense for the six months ended December 31, 2013 and 2012 was approximately $1.2 million and $0.4 million, respectively. Aggregate amortization expense relative to existing intangible assets for the periods shown is currently estimated to be as follows (in thousands):

Fiscal Year Ending June 30,
2014	$	2,468
2015	2,190
2016	1,927
2017	1,665
2018	1,402
Thereafter	3,391
Total	$	13,043

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Fair Value Measurements

6 Months Ended

Dec. 31, 2013

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The Company’s long-term debt instruments, consisting of industrial revenue bonds, are carried at historical cost. As of December 31, 2013 and June 30, 2013, the fair value of the industrial revenue bonds was approximately $1.8 million and $2.0 million, respectively, compared to carrying values of approximately $1.5 million and $1.5 million, respectively. These fair values, which were derived from discounted cash flow analyses based on the terms of the contracts and observable market data, and adjustment for nonperformance risk, are classified as Level 3 in the fair value hierarchy. The fair value of the Company's Credit Facility debt at December 31, 2013 and June 30, 2013 approximated its carrying value of $25.0 million and $10.0 million, respectively, as the rates on these borrowings are variable in nature. In relation to the acquisition of Creonix, Aydin and Beckwood, the Company estimated the fair value of the assets acquired and liabilities assumed at acquisition date. See Note 3 for a further discussion of these estimated fair values. The fair value of accounts receivable and accounts payable approximated their carrying values at both December 31, 2013 and June 30, 2013.

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Earnings Per Share Data - Additional Information (Detail)	3 Months Ended		6 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012
Earnings Per Share [Abstract]
Unvested restricted shares included in determining both basic and diluted earnings per share	315,144	346,783	315,144	346,783
Potential shares	0	0	0	0

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Restructuring Activities (Details Textual) (Creonix Acquisition Related Restructuring [Member], USD $) In Millions, unless otherwise specified	6 Months Ended
	Dec. 31, 2013
Employee Severance [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring or impairment charges related acquisition related restructuring activities	$ 0.2
Production Transfer [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring or impairment charges related acquisition related restructuring activities	0.1
Facility Closing [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring or impairment charges related acquisition related restructuring activities	0.1
CS [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 0.2

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Earnings Per Share Data (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012
Earnings Per Share [Abstract]
Net income	$ 3,484	$ 4,841	$ 5,770	$ 6,298
Weighted average shares outstanding - Basic (in shares)	10,115,255	10,229,320	10,093,973	10,185,464
Net effect of dilutive stock options (in shares)	32,263	19,104	29,569	21,449
Weighted average shares outstanding - Diluted (in shares)	10,147,518	10,248,424	10,123,542	10,206,913
Net income per share:
Net income per share: Basic (in dollars per share)	$ 0.34	$ 0.47	$ 0.57	$ 0.62
Net income per share: Diluted (in dollars per share)	$ 0.34	$ 0.47	$ 0.57	$ 0.62

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Earnings Per Share Data (Tables)

6 Months Ended

Dec. 31, 2013

Earnings Per Share [Abstract]

Earnings Per Share

Earnings per share calculations, including weighted average number of shares of common stock outstanding used in calculating basic and diluted income per share, for the three and six months ended December 31, 2013 and 2012 are as follows:

	For the Three Months Ended				For the Six Months Ended
	December 31, 2013		December 31, 2012		December 31, 2013		December 31, 2012
Net income (in thousands)	$	3,484	$	4,841	$	5,770	$	6,298
Weighted average shares outstanding – Basic	10,115,255		10,229,320		10,093,973		10,185,464
Net effect of dilutive stock options	32,263		19,104		29,569		21,449
Weighted average shares outstanding – Diluted	10,147,518		10,248,424		10,123,542		10,206,913
Net income per share:
Basic	$	0.34	$	0.47	$	0.57	$	0.62
Diluted	$	0.34	$	0.47	$	0.57	$	0.62

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Debt - Summary of Long Term Debt (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Jun. 30, 2013
Debt Disclosure [Abstract]
Industrial revenue bonds, face value	$ 1,552	$ 1,623
Less unamortized purchase discount	(80)	(84)
Industrial revenue bonds, carrying value	1,472	1,539
Borrowings under revolving credit facilities	25,000	10,000
Total debt	26,472	11,539
Less: current portion	(141)	(136)	[1]
Long-term debt, net of current portion	$ 26,331	$ 11,403	[1]

[1] Derived from the Company’s audited financial statements as of June 30, 2013.

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Earnings Per Share Data

6 Months Ended

Dec. 31, 2013

Earnings Per Share [Abstract]

Earnings Per Share Data

Earnings Per Share Data

Basic earnings per share is based on the weighted average number of common shares and participating securities outstanding during the period. Diluted earnings per share include the dilutive effect of additional potential common shares issuable under our stock-based compensation plan and are determined using the treasury stock method. Unvested restricted stock awards, which contain non-forfeitable rights to dividends whether paid or unpaid, are included in the number of shares outstanding for both basic and diluted earnings per share calculations. In the event of a net loss, unvested restricted stock awards are excluded from the calculation of both basic and diluted loss per share.

Earnings per share calculations, including weighted average number of shares of common stock outstanding used in calculating basic and diluted income per share, for the three and six months ended December 31, 2013 and 2012 are as follows:

	For the Three Months Ended				For the Six Months Ended
	December 31, 2013		December 31, 2012		December 31, 2013		December 31, 2012
Net income (in thousands)	$	3,484	$	4,841	$	5,770	$	6,298
Weighted average shares outstanding – Basic	10,115,255		10,229,320		10,093,973		10,185,464
Net effect of dilutive stock options	32,263		19,104		29,569		21,449
Weighted average shares outstanding – Diluted	10,147,518		10,248,424		10,123,542		10,206,913
Net income per share:
Basic	$	0.34	$	0.47	$	0.57	$	0.62
Diluted	$	0.34	$	0.47	$	0.57	$	0.62

For the three months ended December 31, 2013 and 2012, 315,144 and 346,783, respectively, unvested restricted shares were included in determining both basic and diluted earnings per share. For the six months ended December 31, 2013 and 2012, 315,144 and 346,783, respectively, unvested restricted shares were included in determining both basic and diluted earnings per share. No potential shares of common stock were excluded from diluted income per share computations for either of the three or six months ended December 31, 2013 or 2012.

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Change in Accounting Principle (Tables)

6 Months Ended

Dec. 31, 2013

Accounting Changes and Error Corrections [Abstract]

Schedule of the Effects of Changes in Accounting Principle

The following tables present the effects of the retrospective application of this voluntary change in accounting principle (Dollars in thousands, except share amounts):

Consolidated Statement of Income Data:
	For the Three Months Ended December 31, 2012
	As Originally Reported			Adjustment		As Restated
Net Sales	$	65,979		$	1,275	$	67,254
Cost of goods sold	54,571			588		55,159
Gross profit	11,408			687		12,095
Income before provision for income taxes	3,422			687		4,109
Provision for (benefit from) income taxes	(979		)	247		(732		)
Net income	4,401			440		4,841
Income per share of common stock - Basic	0.43			0.04		0.47
Income per share of common stock - Diluted	0.43			0.04		0.47
Weighted average shares outstanding - Basic	10,229,320					10,229,320
Weighted average shares outstanding - Diluted	10,248,424					10,248,424

Consolidated Statement of Income Data:
	For the Six Months Ended December 31, 2012
	As Originally Reported			Adjustment		As Restated
Net Sales	$	114,999		$	3,056	$	118,055
Cost of goods sold	96,378			1,582		97,960
Gross profit	18,621			1,474		20,095
Income before provision for income taxes	4,823			1,474		6,297
Provision for (benefit from) income taxes	(531		)	530		(1		)
Net income	5,354			944		6,298
Income per share of common stock - Basic	0.53			0.09		0.62
Income per share of common stock - Diluted	0.52			0.10		0.62
Weighted average shares outstanding - Basic	10,185,464					10,185,464
Weighted average shares outstanding - Diluted	10,206,913					10,206,913

Consolidated Balance Sheet Data:
	As of June 30, 2013
	As Originally Reported		Adjustment			As Restated
Inventory	$	46,334	$	—		$	46,334
Deferred income taxes	3,167		(216		)	2,951
Performance based payments on customer contracts	21,504		(602		)	20,902
Retained earnings	65,571		386			65,957

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Goodwill and Other Intangible Assets - Aggregate Amortization Expense Relative to Existing Intangible Assets (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013
Goodwill and Intangible Assets Disclosure [Abstract]
2014	$ 2,468
2015	2,190
2016	1,927
2017	1,665
2018	1,402
Thereafter	3,391
Net Carrying Value	$ 13,043

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Acquisitions Acquisitions - Aydin Displays LLC (Detail) (USD $) In Thousands, unless otherwise specified					0 Months Ended		0 Months Ended
	Dec. 31, 2013	Jun. 30, 2013		Jun. 30, 2012	Aug. 30, 2013 Aydin Displays, LLC [Member]	Dec. 31, 2013 Aydin Displays, LLC [Member]	Dec. 11, 2013 Beckwood Services Inc. [Member]	Aug. 30, 2013 Customer relationships [Member] Aydin Displays, LLC [Member]	Aug. 30, 2013 Trademarks and Tradenames [Member] Aydin Displays, LLC [Member]	Aug. 30, 2013 Unpatented Technology [Member] Aydin Displays, LLC [Member]
Business Acquisition [Line Items]
Cash					$ 15,000		$ 15,300
Estimated additional consideration payable for post-closing working capital adjustment					357	6,600	36
Total purchase consideration					15,357		15,336
Assets acquired and liabilities assumed:
Accounts receivable, net					2,279		1,157
Inventory					6,601		2,008
Other current assets					895		122
Property, plant and equipment					582		110
Intangible asset								1,500	180	650
Goodwill	30,156	14,767	[1]	7,472	2,036		13,353
Other long-term assets - favorable leasehold					590
Other long-term assets					1,702		8
Accounts payable					(1,215)		(977)
Other current liabilities					(443)		(665)
Total assets acquired and liabilities assumed					$ 15,357		$ 15,336

[1] Derived from the Company’s audited financial statements as of June 30, 2013.

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012
Net income	$ 3,484	$ 4,841	$ 5,770	$ 6,298
Amortization of unrecognized net actuarial loss, net of tax benefit of $7 and $30 for the three months ended December 31, 2013 and 2012, respectively, and net of tax benefit of $23 and $34 for the six months ended December 31, 2013 and 2012, respectively	11	51	41	58
Pro rata recognition of lump-sum settlements, net of tax expense of $10 for the three months ended December 31, 2012	0	(15)	0	0
Other comprehensive income, net of tax	11	36	41	58
Comprehensive income	$ 3,495	$ 4,877	$ 5,811	$ 6,356

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Change in Accounting Principle

6 Months Ended

Dec. 31, 2013

Accounting Changes and Error Corrections [Abstract]

Change in Accounting Principle

Change in Accounting Principle

In the first quarter of fiscal 2014, the Company voluntarily changed its revenue recognition policy related to DSS sonobuoy sales to the U.S. Navy and foreign government customers under long-term contracts that require lot acceptance testing. The new policy continues to recognize revenue under the percentage of completion method, but changes the measurement of progress under these contracts from a completed units accepted basis (whereby revenue was recognized for each lot of sonobuoys produced when that lot was formally accepted by the customer) to a units-of-production basis (whereby revenue is recognized when production and internal testing of each lot of sonobuoys is completed). The Company now has significant experience in producing sonobuoys to customer specifications and internal testing to assess compliance with those specifications and, as such, now has an adequate history of continuous customer acceptance of all sonobuoys produced. Accordingly, the Company believes the new method is preferable primarily because it eliminates delays in revenue and related cost of goods sold recognition due to timing of customer testing and acceptance delays. Such delays commonly occur due to customer circumstances that are unrelated to the product produced. Under the new policy, the revenue and related costs of goods sold of these manufactured sonobuoy lots will more closely match the period in which the product was produced and the related revenue earned, thereby better reflecting the economic activity of the DSS segment. Additionally, this new method provides better matching of periodic operating expenses incurred during production.

For the three months ended December 31, 2013, this change in accounting policy decreased DSS and consolidated net sales and gross profit by $2.5 million and $0.7 million, respectively, and basic and diluted income per share each by $0.04. For the six months ended December 31, 2013, this change in accounting policy (decreased) increased DSS and consolidated net sales and gross margin by $(0.3) million and $0.4 million, respectively, and increased basic and diluted income per share each by $0.03. The following tables present the effects of the retrospective application of this voluntary change in accounting principle (Dollars in thousands, except share amounts):

Consolidated Statement of Income Data:
	For the Three Months Ended December 31, 2012
	As Originally Reported			Adjustment		As Restated
Net Sales	$	65,979		$	1,275	$	67,254
Cost of goods sold	54,571			588		55,159
Gross profit	11,408			687		12,095
Income before provision for income taxes	3,422			687		4,109
Provision for (benefit from) income taxes	(979		)	247		(732		)
Net income	4,401			440		4,841
Income per share of common stock - Basic	0.43			0.04		0.47
Income per share of common stock - Diluted	0.43			0.04		0.47
Weighted average shares outstanding - Basic	10,229,320					10,229,320
Weighted average shares outstanding - Diluted	10,248,424					10,248,424

Consolidated Statement of Income Data:
	For the Six Months Ended December 31, 2012
	As Originally Reported			Adjustment		As Restated
Net Sales	$	114,999		$	3,056	$	118,055
Cost of goods sold	96,378			1,582		97,960
Gross profit	18,621			1,474		20,095
Income before provision for income taxes	4,823			1,474		6,297
Provision for (benefit from) income taxes	(531		)	530		(1		)
Net income	5,354			944		6,298
Income per share of common stock - Basic	0.53			0.09		0.62
Income per share of common stock - Diluted	0.52			0.10		0.62
Weighted average shares outstanding - Basic	10,185,464					10,185,464
Weighted average shares outstanding - Diluted	10,206,913					10,206,913

Consolidated Balance Sheet Data:
	As of June 30, 2013
	As Originally Reported		Adjustment			As Restated
Inventory	$	46,334	$	—		$	46,334
Deferred income taxes	3,167		(216		)	2,951
Performance based payments on customer contracts	21,504		(602		)	20,902
Retained earnings	65,571		386			65,957

New Accounting Standards

In July 2013, the Financial Accounting Standards Board (the "FASB") issued authoritative guidance under Accounting Standards Update No. 2013-11 ("ASU 2013-11"), which provides guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss (“NOL”) carryforward, a similar tax loss, or a tax credit carryforward exists. ASU 2013-11 requires entities to present an unrecognized tax benefit as a reduction of a deferred tax asset for a NOL or tax credit carryforward whenever the NOL or tax credit carryforward would be available to reduce the additional taxable income or tax due if the tax position is disallowed. This accounting standard update requires entities to assess whether to net the unrecognized tax benefit with a deferred tax asset as of the reporting date. ASU 2013-11 will be effective for the Company’s first quarter of fiscal 2015. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements.

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Stock-Based Compensation - Additional Information (Detail) (USD $) In Millions, except Share data, unless otherwise specified	6 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Stock Based Compensation [Line Items]
Number of long term incentive plans	2
Maximum [Member]
Stock Based Compensation [Line Items]
Intrinsic value of options exercised	$ 0.2	$ 0.1
2001 Plan [Member]
Stock Based Compensation [Line Items]
Share-based compensation, description	Under the 2001 Plan, the Company may grant to employees and non-employee directors incentive and non-qualified stock options, stock appreciation rights, restricted stock and other stock-based awards.
Contractual terms	under the 2001 Plan have either three, five or ten-year lives with either immediate vesting or vesting on an annual basis over four years beginning one year after grant date.
Shares authorized (in shares)	970,161
Vesting period	4 years
Expiration date	Oct. 24, 2011
2001 Plan [Member] | Minimum [Member]
Stock Based Compensation [Line Items]
Vesting period	2 years 6 months
2001 Plan [Member] | Maximum [Member]
Stock Based Compensation [Line Items]
Vesting period	4 years
2010 Plan [Member]
Stock Based Compensation [Line Items]
Share-based compensation, description	Under the 2010 Plan, the Company may grant to employees, officers and directors of the Company or its subsidiaries incentive and non-qualified stock options, stock appreciation rights, restricted stock or restricted stock units, performance awards and other stock-based awards, including grants of shares.
Contractual terms	2010 Plan vest annually over four years, subject to achievement of certain financial performance metrics in addition to the service requirements.
Shares authorized (in shares)	1,000,000
Vesting period	4 years
Term of 2010 plan	10 years
Shares available for award (in shares)	500,952
Total fair value of restricted stock vested	$ 1.6	$ 1.0
Expiration Period One [Member] | 2001 Plan [Member]
Stock Based Compensation [Line Items]
Expiration period	3 years
Expiration Period Two [Member] | 2001 Plan [Member]
Stock Based Compensation [Line Items]
Expiration period	5 years
Expiration Period Three [Member] | 2001 Plan [Member]
Stock Based Compensation [Line Items]
Expiration period	10 years

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Acquisitions (Tables)

6 Months Ended

Dec. 31, 2013

Business Combinations [Abstract]

Allocation of Total Consideration to Assets Acquired and Liabilities Assumed

The following table presents the final allocation of the total consideration to assets acquired and liabilities assumed from Creonix based on Sparton’s estimate of their respective fair values (in thousands):

Total purchase consideration:
Cash	$	2,100
Reduction in cash consideration in relation to working capital adjustment	(105		)
Total purchase consideration	$	1,995
Assets acquired and liabilities assumed:
Inventory	$	1,321
Equipment	304
Intangible assets — customer relationships	270
Goodwill	100
Total assets acquired and liabilities assumed	$	1,995

The following table represents the preliminary allocation of the total consideration to assets acquired and liabilities assumed in the acquisition of Beckwood based on Sparton’s preliminary estimate of their respective fair values (in thousands):

Total purchase consideration:
Cash	$	15,300
Estimated additional consideration payable for post-closing working capital adjustment	36
Total purchase consideration	$	15,336
Assets acquired and liabilities assumed:
Accounts receivable, net	$	1,157
Inventory	2,008
Deferred income taxes	213
Other current assets	122
Property, plant and equipment	110
Goodwill	13,353
Deferred income taxes - non-current	7
Other long-term assets	8
Accounts payable	(977		)
Other current liabilities	(665		)
Total assets acquired and liabilities assumed	$	15,336

The following table represents the preliminary allocation of the total consideration to assets acquired and liabilities assumed in the acquisition of Aydin based on Sparton’s preliminary estimate of their respective fair values (in thousands):

Total purchase consideration:
Cash	$	15,000
Estimated additional consideration payable for post-closing working capital adjustment	357
Total purchase consideration	$	15,357
Assets acquired and liabilities assumed:
Accounts receivable, net	$	2,279
Inventory	6,601
Other current assets	895
Property, plant and equipment	582
Intangible asset - customer relationships	1,500
Intangible asset - trade names and trademarks	180
Intangible asset - unpatented technology	650
Goodwill	2,036
Other long-term assets - favorable leasehold	590
Other long-term assets	1,702
Accounts payable	(1,215		)
Other current liabilities	(443		)
Total assets acquired and liabilities assumed	$	15,357

Business Acquisition, Pro Forma Results

The pro forma amounts presented are not necessarily indicative of either the actual consolidated results had the acquisition occurred as of July 1, 2012 or of future consolidated operating results (in thousands, except per share amounts):

	For the Three Months Ended				For the Six Months Ended
	December 31, 2013		December 31, 2012		December 31, 2013		December 31, 2012
Net sales	$	87,662	$	76,519	$	168,743	$	138,059
Income before provision for income taxes	$	5,625	$	4,800	$	9,710	$	7,636
Net income	$	3,749	$	5,391	$	6,516	$	7,429
Net income per share — basic	$	0.37	$	0.53	$	0.65	$	0.73
Net income per share — diluted	$	0.37	$	0.53	$	0.64	$	0.73

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Change in Accounting Principle (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Jun. 30, 2013
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net sales	$ 84,562	$ 67,254	$ 158,760	$ 118,055
Cost of goods sold	69,585	55,159	131,589	97,960
Gross profit	14,977	12,095	27,171	20,095
Income before provision for income taxes	5,220	4,109	8,613	6,297
Provision for (benefit from) income taxes	1,736	(732)	2,843	(1)
Net income	3,484	4,841	5,770	6,298
Net income per share: Basic (in dollars per share)	$ 0.34	$ 0.47	$ 0.57	$ 0.62
Net income per share: Diluted (in dollars per share)	$ 0.34	$ 0.47	$ 0.57	$ 0.62
Weighted average shares outstanding - Basic (in shares)	10,115,255	10,229,320	10,093,973	10,185,464
Weighted average shares outstanding - Diluted (in shares)	10,147,518	10,248,424	10,123,542	10,206,913
Inventory	52,393		52,393		46,334	[1]
Deferred income taxes	3,054		3,054		2,951	[1]
Performance based payments on customer contracts	19,111		19,111		20,902	[1]
Retained earnings	71,727		71,727		65,957	[1]
Adjustments for New Accounting Pronouncements [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net sales		67,254		118,055
Cost of goods sold		55,159		97,960
Gross profit		12,095		20,095
Income before provision for income taxes		4,109		6,297
Provision for (benefit from) income taxes		(732)		(1)
Net income		4,841		6,298
Net income per share: Basic (in dollars per share)		$ 0.47		$ 0.62
Net income per share: Diluted (in dollars per share)		$ 0.47		$ 0.62
Weighted average shares outstanding - Basic (in shares)		10,229,320		10,185,464
Weighted average shares outstanding - Diluted (in shares)		10,248,424		10,206,913
Inventory					46,334
Deferred income taxes					2,951
Performance based payments on customer contracts					20,902
Retained earnings					65,957
Adjustments for New Accounting Pronouncements [Member] | As Originally Reported [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net sales		65,979		114,999
Cost of goods sold		54,571		96,378
Gross profit		11,408		18,621
Income before provision for income taxes		3,422		4,823
Provision for (benefit from) income taxes		(979)		(531)
Net income		4,401		5,354
Net income per share: Basic (in dollars per share)		$ 0.43		$ 0.53
Net income per share: Diluted (in dollars per share)		$ 0.43		$ 0.52
Weighted average shares outstanding - Basic (in shares)		10,229,320		10,185,464
Weighted average shares outstanding - Diluted (in shares)		10,248,424		10,206,913
Inventory					46,334
Deferred income taxes					3,167
Performance based payments on customer contracts					21,504
Retained earnings					65,571
Adjustments for New Accounting Pronouncements [Member] | Adjustment [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net sales		1,275		3,056
Cost of goods sold		588		1,582
Gross profit		687		1,474
Income before provision for income taxes		687		1,474
Provision for (benefit from) income taxes		247		530
Net income		440		944
Net income per share: Basic (in dollars per share)		$ 0.04		$ 0.09
Net income per share: Diluted (in dollars per share)		$ 0.04		$ 0.10
Inventory					0
Deferred income taxes					(216)
Performance based payments on customer contracts					(602)
Retained earnings					$ 386

[1] Derived from the Company’s audited financial statements as of June 30, 2013.

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Stock-Based Compensation

6 Months Ended

Dec. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

Stock-Based Compensation

The Company has two long-term incentive plans. The Sparton Corporation Stock Incentive Plan, as amended and restated (the “2001 Plan”) was approved by the Company’s shareholders on October 24, 2001. The Sparton Corporation 2010 Long-Term Incentive Plan (the “2010 Plan”) was approved by the Company’s shareholders on October 28, 2009.

2001 Plan.Under the 2001 Plan, the Company may grant to employees and non-employee directors incentive and non-qualified stock options, stock appreciation rights, restricted stock and other stock-based awards. All of the stock options issued to date under the 2001 Plan have either three, five or ten-year lives with either immediate vesting or vesting on an annual basis over four years beginning one year after grant date. Restricted stock awards granted to date to employees under the 2001 Plan vest annually over periods ranging from approximately 2.5 to 4.0 years, in some cases subject to achievement of certain financial performance metrics in addition to the service requirements. Unrestricted stock awards granted to date under the 2001 Plan represent annual stock grants to directors as a component of their overall compensation. The 2001 Plan’s termination date with respect to the granting of new awards was October 24, 2011. The total number of shares authorized to be granted under the 2001 Plan was 970,161 shares of the Company’s common stock, which equals the number of underlying awards previously made under the 2001 Plan.

2010 Plan.Under the 2010 Plan, the Company may grant to employees, officers and directors of the Company or its subsidiaries incentive and non-qualified stock options, stock appreciation rights, restricted stock or restricted stock units, performance awards and other stock-based awards, including grants of shares. Restricted stock awards granted to date to employees under the 2010 Plan vest annually over four years, subject to achievement of certain financial performance metrics in addition to the service requirements. Unrestricted stock awards granted to date under the 2010 Plan represent annual stock grants to directors as a component of their overall compensation. The 2010 Plan has a term of ten years. The total number of shares that may be awarded under the 2010 Plan is 1,000,000 shares of common stock, of which amount, 500,952 shares remain available for awards as of December 31, 2013.

The following table shows stock-based compensation expense by type of share-based award for the three and six months ended December 31, 2013 and 2012, respectively, included in the condensed consolidated statements of income (in thousands):

	For the Three Months Ended				For the Six Months Ended
	December 31, 2013		December 31, 2012		December 31, 2013		December 31, 2012
Fair value expense of stock option awards	$	—	$	—	$	—	$	—
Restricted and unrestricted stock	620		333		917		597
Total stock-based compensation	$	620	$	333	$	917	$	597

The following table shows the total remaining unrecognized compensation cost related to restricted stock grants and the fair value expense of stock option awards, as well as the weighted average remaining required service period over which such costs will be recognized as of December 31, 2013:

	Total Remaining Unrecognized Compensation Cost		Weighted Average Remaining Required Service Period
	(in thousands)		(in years)
Fair value expense of stock option awards	$	—	0
Restricted stock	2,059		2.03
	$	2,059	2.03

The following is a summary of options outstanding and exercisable at December 31, 2013:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
					(in years)	(in thousands)
Outstanding at June 30, 2013	55,418		$	8.56
Granted	—		—
Exercised	(14,119	)	8.54
Forfeited	—		—
Expired	—		—
Outstanding and exercisable at December 31, 2013	41,299		$	8.57	1.33	$	800

The intrinsic value of options exercised during the six months ended December 31, 2013 and 2012 was $0.2 million and $0.1 million, respectively.

The following is a summary of activity for the six months ended December 31, 2013 related to shares granted under the Company’s long-term incentive plans:

	Shares		Weighted Average Grant Date Fair Value
Restricted shares at June 30, 2013	311,253		$	8.34
Granted	94,811		21.80
Vested	(87,576	)	8.54
Forfeited	(3,344	)	14.39
Restricted shares at December 31, 2013	315,144		$	12.27

The total fair value of restricted stock vested in the six months ended December 31, 2013 and 2012 was approximately $1.6 million and $1.0 million, respectively.