##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended October 1, 2006
 OR
 o
    
    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 0-21682
 SPARTA, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    63-0775889(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 25531 Commercentre Drive, Suite 120, Lake Forest, CA 92630-8874
  (949) 768-8161
 (Registrants telephone number, including area code)
 Not Applicable
 (Former name, former address and former fiscal year, if changed since last report)
 þ o
  o o þ
 o þ




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##### 



SPARTA, Inc.
   PART I FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsConsolidated balance sheet  September 30, 2006 (unaudited) and December 31, 2005Consolidated statement of income  Three months ended September 30, 2006 and 2005
(unaudited); Nine months ended September 30, 2006 and 2005 (unaudited)Consolidated statement of cash flows  Nine months ended September 30, 2006 and 2005
(unaudited)Notes to consolidated financial statements  September 30, 2006 (unaudited)Item 2.
    

Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3.
    

Quantitative and Qualitative Disclosures About Market RiskItem 4.
    

Controls and ProceduresPART
II OTHER INFORMATIONItem 1.
    

Legal ProceedingsItem 1A.
    

Risk FactorsItem 2.
    

Unregistered Sales of Equity Securities and Use of ProceedsItem 3.
    

Defaults Upon Senior SecuritiesItem 4.
    

Submission of Matters to a Vote of Security HoldersItem 5.
    

Other InformationItem 6.
    

ExhibitsSignaturesEXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
  - 1 -




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PART I
 
 Item 1 Financial Statements
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SPARTA, Inc.
 
 CONSOLIDATED BALANCE SHEET
 September 30,2006
    
    
    December 31,(Unaudited)
    
    
    2005ASSETSCurrent AssetsCash and cash equivalents
    
    $
    32,810,000
    
    
    $
    29,254,000Short-term investments
    
    
    12,711,000
    
    
    
    Receivables, net
    
    
    47,321,000
    
    
    
    64,891,000Prepaid expenses
    
    
    2,070,000
    
    
    
    1,348,000Prepaid income taxes
    
    
    1,564,000
    
    
    
    2,112,000Assets of discontinued operations
    
    
    1,367,000
    
    
    
    Total current assets
    
    
    97,843,000
    
    
    
    97,605,000Equipment and improvements, net
    
    
    11,583,000
    
    
    
    10,725,000Intangible assets, net
    
    
    343,000
    
    
    
    858,000Other assets
    
    
    3,066,000
    
    
    
    3,358,000Total Assets
    
    $
    112,835,000
    
    
    $
    112,546,000LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesAccrued compensation
    
    $
    19,734,000
    
    
    $
    20,660,000Accounts payable and other accrued expenses
    
    
    9,936,000
    
    
    
    9,519,000Billings in excess of costs plus earnings
    
    
    2,358,000
    
    
    
    2,620,000Current portion of subordinated notes payable
    
    
    3,616,000
    
    
    
    2,432,000Deferred income taxes
    
    
    2,700,000
    
    
    
    2,700,000Liabilities of discontinued operations
    
    
    921,000
    
    
    
    Total current liabilities
    
    
    39,265,000
    
    
    
    37,931,000Subordinated notes payable
    
    
    6,241,000
    
    
    
    5,993,000Deferred income taxes
    
    
    580,000
    
    
    
    580,000Commitments and Contingencies (Note F)Stockholders EquityCommon stock, $.01 par value, 25,000,000 shares
authorized; 8,964,605 and 8,396,762 shares issued;
5,062,231 and 5,316,493 shares outstanding
    
    
    90,000
    
    
    
    84,000Additional paid-in capital
    
    
    122,747,000
    
    
    
    102,685,000Retained earnings
    
    
    64,940,000
    
    
    
    51,813,000Treasury stock, at cost
    
    
    (121,028,000
    )
    
    
    (86,540,000
    )Total stockholders equity
    
    
    66,749,000
    
    
    
    68,042,000Total Liabilities and Stockholders Equity
    
    $
    112,835,000
    
    
    $
    112,546,000
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SPARTA, Inc.
 
 CONSOLIDATED STATEMENT OF INCOME
 (Unaudited)
 Three Months ended
    
    
    Nine Months endedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Sales
    
    $
    77,270,000
    
    
    $
    67,883,000
    
    
    $
    217,739,000
    
    
    $
    198,147,000Costs and expenses:Labor costs and related benefits
    
    
    35,731,000
    
    
    
    36,238,000
    
    
    
    109,301,000
    
    
    
    103,793,000Subcontractor costs
    
    
    26,304,000
    
    
    
    17,774,000
    
    
    
    65,370,000
    
    
    
    53,299,000Facility costs
    
    
    4,471,000
    
    
    
    3,965,000
    
    
    
    12,634,000
    
    
    
    11,607,000Travel and general administrative costs
    
    
    3,020,000
    
    
    
    2,664,000
    
    
    
    8,762,000
    
    
    
    7,919,000Total costs and expenses
    
    
    69,526,000
    
    
    
    60,641,000
    
    
    
    196,067,000
    
    
    
    176,618,000Operating income
    
    
    7,744,000
    
    
    
    7,242,000
    
    
    
    21,672,000
    
    
    
    21,529,000Interest income
    
    
    (446,000
    )
    
    
    (258,000
    )
    
    
    (1,209,000
    )
    
    
    (648,000
    )Interest expense
    
    
    148,000
    
    
    
    98,000
    
    
    
    398,000
    
    
    
    316,000Income from continuing operations
before provision for taxes on income
    
    
    8,042,000
    
    
    
    7,402,000
    
    
    
    22,483,000
    
    
    
    21,861,000Provision for taxes on income
    
    
    3,319,000
    
    
    
    2,990,000
    
    
    
    9,357,000
    
    
    
    8,817,000Income from continuing operations
    
    
    4,723,000
    
    
    
    4,412,000
    
    
    
    13,126,000
    
    
    
    13,044,000Discontinued operations (Note E)Income (loss) from discontinued operations of
Spiral Technology, Inc. before income taxes
    
    
    (37,000
    )
    
    
    13,000
    
    
    
    2,000
    
    
    
    40,000Provision (benefit) for taxes on income (loss)
    
    
    (15,000
    )
    
    
    5,000
    
    
    
    1,000
    
    
    
    16,000Income (loss) from discontinued operations
    
    
    (22,000
    )
    
    
    8,000
    
    
    
    1,000
    
    
    
    24,000Net income
    
    $
    4,701,000
    
    
    $
    4,420,000
    
    
    $
    13,127,000
    
    
    $
    13,068,000Earnings per share:Basic:Income from continuing operations
    
    $
    0.92
    
    
    $
    0.84
    
    
    $
    2.52
    
    
    $
    2.50Income (loss) from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    0.92
    
    
    $
    0.84
    
    
    $
    2.52
    
    
    $
    2.50Diluted:Income from continuing operations
    
    $
    0.87
    
    
    $
    0.77
    
    
    $
    2.37
    
    
    $
    2.28Income (loss) from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    0.87
    
    
    $
    0.77
    
    
    $
    2.37
    
    
    $
    2.28Weighted average common
equivalent shares:Basic
    
    
    5,102,829
    
    
    
    5,287,193
    
    
    
    5,206,050
    
    
    
    5,222,297Diluted
    
    
    5,392,172
    
    
    
    5,777,576
    
    
    
    5,547,917
    
    
    
    5,736,718
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SPARTA, Inc.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
 Nine Months ended September 30,2006
    
    
    2005Cash flows from operating activities:Net income
    
    $
    13,127,000
    
    
    $
    13,068,000Adjustments to reconcile net income to net
cash provided by operating activities:Depreciation and amortization:
    
    
    2,799,000
    
    
    
    2,615,000Loss on sale of equipment
    
    
    54,000
    
    
    
    Stock-based compensation
    
    
    7,841,000
    
    
    
    7,337,000Changes in assets and liabilities:Receivables, net
    
    
    16,455,000
    
    
    
    744,000Prepaid expenses
    
    
    (783,000
    )
    
    
    (307,000
    )Prepaid income taxes
    
    
    548,000
    
    
    
    (809,000
    )Other assets
    
    
    287,000
    
    
    
    (686,000
    )Accrued compensation
    
    
    (97,000
    )
    
    
    5,591,000Accounts payable and other accrued expenses
    
    
    399,000
    
    
    
    (4,504,000
    )Billings in excess of costs plus earnings
    
    
    (152,000
    )
    
    
    57,000Net cash provided by operating activities
    
    
    40,478,000
    
    
    
    23,106,000Cash flows from investing activities:Purchases of equipment and improvements
    
    
    (3,382,000
    )
    
    
    (2,380,000
    )Asset acquisition
    
    
    
    
    
    
    (1,500,000
    )Purchase of short-term investments
    
    
    (12,711,000
    )
    
    
    Net cash used for investing activities
    
    
    (16,093,000
    )
    
    
    (3,880,000
    )Cash flows from financing activities:Proceeds from issuance of common stock
    
    
    9,271,000
    
    
    
    10,048,000Excess tax benefit from stock-based compensation
    
    
    2,956,000
    
    
    
    3,423,000Purchases of treasury stock
    
    
    (30,447,000
    )
    
    
    (20,256,000
    )Principal payments on subordinated notes payable
    
    
    (2,609,000
    )
    
    
    (2,402,000
    )Net cash used for financing activities
    
    
    (20,829,000
    )
    
    
    (9,187,000
    )Net increase in cash and cash equivalents
    
    
    3,556,000
    
    
    
    10,039,000Cash and cash equivalents at beginning of period
    
    
    29,254,000
    
    
    
    29,455,000Cash and cash equivalents at end of period
    
    $
    32,810,000
    
    
    $
    39,494,000Supplemental disclosures of cash flow information:Cash paid during the period for:Interest
    
    $
    398,000
    
    
    $
    306,000Income taxes
    
    $
    5,903,000
    
    
    $
    6,225,000Non-cash investing and financing activities:Issuance of subordinated notes payable in connection
with purchases of treasury stock
    
    $
    4,041,000
    
    
    $
    1,129,000Receipt of notes receivable in exchange for exercise of
stock options
    
    $
    563,000
    
    
    $
    1,096,000
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SPARTA, Inc.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 Note A  Basis of Presentation
    Note B  Short-term Investments
 Accounting for Certain Investments in Debt and
Equity Securities
 Note C  Accounts Receivable
  September 30,
    
    
    December 31,2006
    
    
    2005Billed
    
    $
    21,512,000
    
    
    $
    33,729,000Unbilled
    
    
    26,716,000
    
    
    
    32,035,00048,228,000
    
    
    
    65,764,000Less allowances for unallowable contract costs
    
    
    (907,000
    )
    
    
    (873,000
    )$
    47,321,000
    
    
    $
    64,891,000
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SPARTA, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Note D  Income Taxes
  Note E  Discontinued Operations
 Accounting for the Impairment or Disposal of
Long-Lived Assets
  Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Sales
    
    $
    2,583,000
    
    
    $
    2,660,000
    
    
    $
    8,439,000
    
    
    $
    7,984,000Costs and expenses
    
    
    (2,620,000
    )
    
    
    (2,647,000
    )
    
    
    (8,437,000
    )
    
    
    (7,944,000
    )Income (loss) before income taxes
    
    
    (37,000
    )
    
    
    13,000
    
    
    
    2,000
    
    
    
    40,000Income tax (expense) benefit
    
    
    15,000
    
    
    
    (5,000
    )
    
    
    (1,000
    )
    
    
    (16,000
    )Income (loss) from discontinued operations
    
    $
    (22,000
    )
    
    $
    8,000
    
    
    $
    1,000
    
    
    $
    24,000
 Note F  Commitments and Contingencies
  Note G  Stockholders Equity
  - 7 -




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SPARTA, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
   Note H  Share-Based Compensation
  Share-Based Payment Accounting for Stock Issued to Employees Accounting for Stock-Based Compensation
  - 8 -




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SPARTA, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
   1997 Stock Plan
   - 9 -




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SPARTA, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Nine Months EndedKey Assumptions
    
    September 30, 2006Expected volatility factor
    
    
    5.4% - 9.2
    %Expected option term (in years)Short-term options
    
    
    0.125All other options
    
    
    3.0Risk-free interest rate
    
    
    4.2% - 5.1
    %Expected annual dividend yield
    
    
    
  Nine Months Ended September 30, 2006Weighted AverageStock options subject to SFAS123(R)
    
    Number of Shares
    
    
    Exercise PriceOutstanding at January 1, 2006
    
    
    
    
    
    $
    Granted
    
    
    278,174
    
    
    
    42.42Forfeited or Expired
    
    
    (7,205
    )
    
    
    42.11Exercised
    
    
    (7,514
    )
    
    
    41.94Outstanding at September 30, 2006
    
    
    263,455
    
    
    $
    42.44Exercisable at September 30, 2006
    
    
    6,183
    
    
    $
    41.96
   Nine Months Ended September 30, 2006Weighted AverageNonvested stock options subject
    
    Number of
    
    
    Grant-Date Fairto SFAS 123(R)
    
    Shares
    
    
    valueNonvested at January 1, 2006
    
    
    
    
    
    $
    Granted
    
    
    278,174
    
    
    
    5.66Vested
    
    
    (18,972
    )
    
    
    0.62Forfeited
    
    
    (1,930
    )
    
    
    6.01Nonvested at September 30, 2006
    
    
    257,272
    
    
    $
    6.03
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SPARTA, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
   Nine Months Ended September 30, 2006Stock options subject to
    
    
    
    
    
    Weighted AverageAPB 25
    
    Number of Shares
    
    
    Exercise PriceOutstanding at January 1, 2006
    
    
    2,490,869
    
    
    $
    30.80Forfeited or Expired
    
    
    (116,010
    )
    
    
    32.36Exercised
    
    
    (401,199
    )
    
    
    22.28Outstanding at September 30, 2006
    
    
    1,973,660
    
    
    $
    32.44Exercisable at September 30, 2006
    
    
    753,336
    
    
    $
    26.81
   Nine Months Ended September 30, 2006Nonvested stock options subject to
    
    Number of
    
    
    Weighted AverageAPB 25
    
    Shares
    
    
    Exercise PriceNonvested at January 1, 2006
    
    
    1,594,352
    
    
    $
    34.71Vested
    
    
    (282,220
    )
    
    
    29.48Forfeited
    
    
    (91,808
    )
    
    
    34.82Nonvested at September 30, 2006
    
    
    1,220,324
    
    
    $
    35.91
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SPARTA, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
  Stock Compensation Plan
   Nine Months Ended September 30, 2006Weighted AverageNumber of
    
    
    Grant-Date FairShares of Restricted Stock
    
    Shares
    
    
    ValueOutstanding at January 1, 2006
    
    
    60,937
    
    
    $
    14.60Granted
    
    
    1,880
    
    
    
    42.53Distributed
    
    
    (7,489
    )
    
    
    19.80Forfeited
    
    
    (3,248
    )
    
    
    30.27Outstanding at September 30, 2006
    
    
    52,080
    
    
    $
    13.89Vested, undistributed at September 30, 2006
    
    
    33,875
    
    
    $
    6.64
   Nine Months Ended September 30, 2006Weighted AverageGrant-Date FairNonvested Shares of Restricted Stock
    
    Number of Shares
    
    
    ValueNonvested at January 1, 2006
    
    
    28,441
    
    
    $
    24.14Granted
    
    
    1,880
    
    
    
    42.53Vested
    
    
    (8,868
    )
    
    
    19.16Forfeited
    
    
    (3,248
    )
    
    
    30.27Nonvested at September 30, 2006
    
    
    18,205
    
    
    $
    27.37
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SPARTA, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Note I  Computation of Earnings Per Share
 Three months ended September 30,
    
    
    Nine months ended September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Basic EPSNet income
    
    $
    4,701,000
    
    
    $
    4,420,000
    
    
    $
    13,127,000
    
    
    $
    13,068,000Weighted average
shares outstanding
    
    
    5,102,829
    
    
    
    5,287,193
    
    
    
    5,206,050
    
    
    
    5,222,297Per share amounts
    
    $
    0.92
    
    
    $
    0.84
    
    
    $
    2.52
    
    
    $
    2.50Diluted EPSNet income
    
    $
    4,701,000
    
    
    $
    4,420,000
    
    
    $
    13,127,000
    
    
    $
    13,068,000Weighted average
shares outstanding
    
    
    5,102,829
    
    
    
    5,287,193
    
    
    
    5,206,050
    
    
    
    5,222,297Stock options
    
    
    272,341
    
    
    
    461,942
    
    
    
    322,498
    
    
    
    485,980Restricted stock
    
    
    17,002
    
    
    
    28,441
    
    
    
    19,369
    
    
    
    28,4415,392,172
    
    
    
    5,777,576
    
    
    
    5,547,917
    
    
    
    5,736,718Per share amounts
    
    $
    0.87
    
    
    $
    0.77
    
    
    $
    2.37
    
    
    $
    2.28
 Note J  Recent Accounting Pronouncements
 Fair Value Measurements
 Employers Accounting for Defined Benefit Pension and Other Postretirement Plans ( ),
 Considering the Effects of Prior Year Misstatements When Quantifying
Misstatements in Current Year Financial Statements.
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SPARTA, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Accounting for Uncertainty in Income
Taxes
 Transition Election Related to Accounting for the Tax Effects of Share-Based Payment Awards
 - 14 -




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Item 2 Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Results of Operations
    Operating Results(amounts in thousands, except percentages)Three months ended
    
    Nine months endedSeptember 30,
    
    September 30,2006
    
    2005
    
    2006
    
    2005Sales
    
    $
    77,270
    
    
    $
    67,883
    
    
    $
    217,739
    
    
    $
    198,147Sales by business area, as a
percentage of total sales:Ballistic Missile Defense (BMD)
    
    
    48
    %
    
    
    43
    %
    
    
    47
    %
    
    
    46
    %Other Dept of Defense (DoD)
    
    
    49
    %
    
    
    54
    %
    
    
    50
    %
    
    
    51
    %Non-DoD
    
    
    3
    %
    
    
    3
    %
    
    
    3
    %
    
    
    3
    %Operating Income
    
    $
    7,744
    
    
    $
    7,242
    
    
    $
    21,672
    
    
    $
    21,529Operating Margin
    
    
    10.0
    %
    
    
    10.7
    %
    
    
    10.0
    %
    
    
    10.9
    %Income from Continuing Operations
    
    $
    4,723
    
    
    $
    4,412
    
    
    $
    13,126
    
    
    $
    13,044Income (loss) from Discontinued Operations
    
    $
    (22
    )
    
    $
    8
    
    
    $
    1
    
    
    $
    24Net income
    
    $
    4,701
    
    
    $
    4,420
    
    
    $
    13,127
    
    
    $
    13,068
    - 15 -




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Backlog
   - 16 -




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##### Table of Contents



September 30,
    
    
    December 31,
    
    
    September 30,2006
    
    
    2005
    
    
    2005(amounts in thousands)Annualized funded contract backlog
    
    $
    105,100
    
    
    $
    78,100
    
    
    $
    98,900Annualized unfunded contract backlog
    
    
    70,500
    
    
    
    110,700
    
    
    
    108,000Total annualized contract backlog
    
    
    175,600
    
    
    
    188,800
    
    
    
    206,900Expected 12-month value of future
funding on proposals with high
probability of winning procurement
    
    
    97,800
    
    
    
    84,800
    
    
    
    59,200Total annualized Company-defined backlog
    
    $
    273,400
    
    
    $
    273,600
    
    
    $
    266,100Total multi-year contract backlog
    
    $
    484,500
    
    
    $
    535,200
    
    
    $
    621,000Expected value of future funding on
proposals with high probability of
winning procurement
    
    
    491,200
    
    
    
    302,700
    
    
    
    154,300Total multi-year Company-defined backlog
    
    $
    975,700
    
    
    $
    837,900
    
    
    $
    775,300Annualized Company-defined backlog (by
business area):BMD
    
    $
    134,300
    
    
    $
    12 8,000
    
    
    $
    120,800Other DoD
    
    
    131,700
    
    
    
    137,800
    
    
    
    136,000Non-DoD
    
    
    7,400
    
    
    
    7,800
    
    
    
    9,300Total annualized Company-defined backlog
    
    $
    273,400
    
    
    $
    273,600
    
    
    $
    266,100
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##### Table of Contents



Liquidity and Capital Resources
  Balance atSeptember 30,
    
    December 31,
    
    September 30,2006
    
    2005
    
    2005Cash and cash equivalents
    
    $
    32,810,000
    
    
    $
    29,254,000
    
    
    $
    39,494,000Short-term investments
    
    $
    12,711,000
    
    
    $
    
    
    
    $
    Stockholders equity
    
    $
    66,749,000
    
    
    $
    68,042,000
    
    
    $
    63,218,000Subordinated notes payable
    
    $
    9,857,000
    
    
    $
    8,425,000
    
    
    $
    9,134,000Borrowings under line of credit
    
    $
    
    
    
    $
    
    
    
    $
    Current ratio
    
    
    2.5
    
    
    
    2.6
    
    
    
    2.5
 Overview
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Cash Flow Information
      - 20 -




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##### Table of Contents



Payments Due by Period(amounts in thousands)Less than 1
    
    
    
    
    
    
    
    
    
    
    More than 5Total
    
    
    year
    
    
    1-3 years
    
    
    4-5 years
    
    
    yearsSubordinated Promissory Notes
    
    $
    9,857
    
    
    $
    3,616
    
    
    $
    5,128
    
    
    $
    1,113
    
    
    $
    Operating Leases
    
    
    48,332
    
    
    
    10,054
    
    
    
    26,568
    
    
    
    4,502
    
    
    
    7,208Total Contractual Obligations
    
    $
    58,189
    
    
    $
    13,670
    
    
    $
    31,696
    
    
    $
    5,615
    
    
    $
    7,208
 Effects of Federal Funding for Defense Programs
   Recent Accounting Pronouncements
 Fair Value Measurements
 Employers Accounting for Defined Benefit Pension and Other Postretirement Plans ( ),
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##### Table of Contents



Considering the Effects of Prior Year Misstatements When Quantifying
Misstatements in Current Year Financial Statements.
 Accounting for Uncertainty in Income
Taxes
 Transition Election Related to Accounting for the Tax Effects of Share-Based Payment Awards
 Forward-Looking Statements
  
 Item 3 Quantitative and Qualitative Disclosures about Market Risk
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##### Table of Contents



Item 4 Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Controls
  
 PART II OTHER INFORMATION
 
 Item 1 Legal Proceedings
  
 Item 1A Risk Factors
  
 Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
  Issuer Purchases of Equity Securities
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##### Table of Contents



Maximum Number (orTotal
    
    
    
    
    
    
    Total Number of Shares
    
    
    Approximate Dollar Value)Number of
    
    
    Average
    
    
    Purchased as Part of Publicly
    
    
    of Shares that May Yet BeShares
    
    
    Price Paid
    
    
    Announced Plans or
    
    
    Purchased Under the PlansPeriod
    
    Purchased
    
    
    per Share
    
    
    Programs
    
    
    or ProgramsJuly(7/3/06  7/30/06)
    
    
    185,821
    
    
    $
    41.25
    
    
    
    76,795
    
    
    
    August(7/31/06  8/27/06)
    
    
    46,287
    
    
    
    42.45
    
    
    
    27,960
    
    
    $
    1,200,000September(8/28/06  10/1/06)
    
    
    19,960
    
    
    
    42.28
    
    
    
    
    
    
    
    Total
    
    
    252,068
    
    
    $
    41.55
    
    
    
    104,755
    
    
    $
    1,200,000
     
 Item 3 Defaults Upon Senior Securities
  
 Item 4 Submission of Matters to a Vote of Security Holders
  
 Item 5 Other Information
  - 24 -




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##### Table of Contents



Item 6 Exhibits
 Exhibit 31.1
    
    Certification of Chief
Executive Officer Adopted
Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002Exhibit 31.2
    
    Certification of Chief
Financial Officer Adopted
Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002Exhibit 32.1
    
    Certification of Chief
Executive Officer Pursuant to
18 U.S.C. Section 1350, As
Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act
of 2002.Exhibit 32.2
    
    Certification of Chief
Financial Officer Pursuant to
18 U.S.C. Section 1350, As
Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act
of 2002.
 - 25 -




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##### Table of Contents



Signature
  SPARTA, INC.(Registrant)Date: November 10, 2006
    
    By:
    
    /s/ David E. SchreimanDavid E. SchreimanVice President andChief Financial Officer(Principal Accounting Officer)
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##### Table of Contents



Exhibit No
    
    Description31.1
    
    Certification of Chief
Executive Officer Adopted
Pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief
Financial Officer Adopted
Pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232.1
    
    Certification of Chief
Executive Officer Pursuant to
18 U.S.C. Section 1350, As
Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act
of 2002.32.2
    
    Certification of Chief
Financial Officer Pursuant to
18 U.S.C. Section 1350, As
Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act
of 2002.
 - 27 -