Research & Development
During fiscal 2011, Sparton incurred internally funded research and development (R&D) expenses of $1.1 million for the internal
development of technologies for use in navigation, oil and gas exploration and port security. These efforts relate to the company's DSS segment.
During fiscal 2010 and 2009, Sparton incurred no expenditures for research and development not funded by customers. Customer
funded R&D costs, which are usually part of a larger production agreement, totaled approximately $9.1 million, $10.0 million and $4.4
million for the years ended June 30, 2011, 2010 and 2009, respectively, all of which relates to our Sparton's segment.