Item 2.05 Costs Associated with Exit or Disposal Activities.
On March 27, 2009, the Board of Directors of Sparton Corporation, an Ohio
corporation ("Sparton" or the "Company") determined that it was in the best
interests of Sparton to idle the manufacturing operations at its London,
Ontario, Canada facility (the "Facility") on or about March 31, 2009. Sparton
will significantly reduce its workforce at the Facility, retaining only certain
key employees necessary to wind-down commercial activities and to prepare the
site for closure. Twenty-four salaried and sixty three hourly employees will be
affected. Management believes that the reduction of its workforce and cessation
of operations at the Facility will be substantially completed by April 30, 2009.
The decision to idle and close the Facility was made in response to
underutilized capacity at the Facility. The closure will support Sparton's
overall plan to return to profitability.
The Company estimates that it will incur total costs relating to the closure
of the Facility of approximately $2.9 million to $3.8 million but is unable at
this time to provide more specific information on the costs and amount of the
costs it expects it will incur. Sparton expects to incur costs related to
employee severance, transfer of production to its Brooksville, Florida facility,
closure of the Facility, contract termination costs, associated costs and
expenses, as well as impairment charges. Sparton estimates that approximately
$3.0 million of the total costs will be in the form of future cash expenditures.
In accordance with the requirements of the Securities and Exchange Commission,
the Company will file an amendment to this Form 8-K within four business days
after determination of the estimated amounts or range of amounts for the
specific costs.
A copy of the press release issued by the Company announcing the planned
closure is attached hereto as Exhibit 99.1 and incorporated herein by reference.
Certain statements, including, without limitation, statements regarding the
anticipated size of the Company's workforce reductions and the estimated costs,
and cash expenditures associated with the closing of the Facility described in
this Current Report on Form 8-K are forward-looking statements within the scope
of the Securities Act of 1933, as amended (the "Securities Act"), and the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
Forward-looking statements may be identified by the words "believe," "expect,"
"anticipate," "project," "plan," "estimate," "will" or "intend" and similar
words or expressions. These forward-looking statements reflect our current views
with respect to future events and are based on currently available financial,
economic and competitive data and our current business plans. Actual results
could vary materially depending on risks and uncertainties that may affect our
operations, markets, prices and other factors. Important factors that could
cause actual results to differ materially from those forward-looking statements
include, but are not limited to, our financial performance and the
implementations and results of our ongoing strategic initiatives. For a more
detailed discussion of these and other risk factors, see Part I, Item 1A, Risk
Factors and Part II, Item 7, Management's Discussion and Analysis of Financial
Condition and Results of Operations, in our Form 10-K for the year ended
June 30, 2008, which is incorporated herein by reference. We undertake no
obligation to publicly update or revise any forward-looking statement as a
result of new information, future events or otherwise, except as otherwise
required by law.
