SPARTAN MOTORS INC, 10-Q, 2000-08-14

SPARTAN MOTORS INC
10-Q, 2000-08-14
MOTOR VEHICLES & PASSENGER CAR BODIES

Previous: DECORA INDUSTRIES INC, 10-Q, EX-27.1, 2000-08-14

Next: BAR HARBOR BANKSHARES, 10-Q, 2000-08-14

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the Quarter Ended	Commission File Number
June 30, 2000	0-13611

SPARTAN MOTORS, INC.
(Exact Name of Registrant as Specified in Its Charter)

Michigan	38-2078923
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)

1000 Reynolds Road
Charlotte, Michigan	48813
(Address of Principal Executive Offices)	(Zip Code)

Registrant's Telephone Number, Including Area Code: (517) 543-6400

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 X No

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

	Outstanding at
Class	August 8, 2000

Common stock, $.01 par value	11,288,077 shares

SPARTAN MOTORS, INC.

INDEX

PART I. FINANCIAL INFORMATION			Page


	Item 1. Financial Statements:

		Condensed Consolidated Balance Sheets - June 30, 2000
		(Unaudited) and December 31, 1999	3

		Condensed Consolidated Statements of Operations -
		Three Months Ended June 30, 2000 and 1999 (Unaudited)	5

		Condensed Consolidated Statements of Operations -
		Six Months Ended June 30, 2000 and 1999 (Unaudited)	6

		Condensed Consolidated Statements of Shareholders'
		Equity - Six Months Ended June 30, 2000 (Unaudited)	7

		Condensed Consolidated Statements of Cash Flows -
		Six Months Ended June 30, 2000 and 1999 (Unaudited)	8

		Notes to Condensed Consolidated Financial Statements	10

	Item 2. Management's Discussion and Analysis of Financial
		Condition and Results of Operations	12

	Item 3. Quantitative and Qualitative Disclosures About Market Risk		18

PART II. OTHER INFORMATION

	Item 4. Submission of Matters to a Vote of Security Holders		19

	Item 6. Exhibits and Reports on Form 8-K		19

SIGNATURES			21

EXHIBIT INDEX			22

-2-

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

SPARTAN MOTORS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
__________________________________________

			June 30, 2000		December 31, 1999
			(Unaudited)
ASSETS

Current assets:
	Cash and cash equivalents		$	2,103,384	$	35,797
	Accounts receivable, less allowance
		for doubtful accounts of $2,719,000
		in 2000 and $2,491,000 in 1999		43,765,763		37,765,807
	Inventories (Note 4)			44,843,396		47,111,727
	Deferred tax benefit			3,487,305		3,487,305
	Taxes receivable			178,145		1,427,945
	Other current assets			1,279,058		1,106,105
		Total current assets		95,657,051		90,934,686

Property, plant, and equipment, net				21,858,697		22,568,177

Goodwill, net of accumulated amortization
	of $1,286,000 in 2000 and $1,001,000
	in 1999, respectively			7,180,773		7,462,995
Other assets				1,841,958		1,731,885

Total assets			$	126,538,479	$	122,697,743

-3-

SPARTAN MOTORS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
__________________________________________

			June 30, 2000		December 31, 1999
				(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
	Accounts payable		$	21,063,080	$	25,115,388
	Notes payable			7,274,302		6,290,131
	Other current liabilities and accrued expenses			4,438,499		4,881,179
	Accrued warranty			4,065,842		3,645,363
	Accrued customer rebates			557,031		629,311
	Accrued compensation and related taxes			1,752,420		1,809,332
	Accrued vacation			1,503,229		1,348,941
	Deposits from customers			4,185,735		3,761,249
	Current portion of long-term debt			1,068,495		1,587,201
		Total current liabilities		45,908,633		49,068,095

Accounts payable, long-term				1,482,403		1,631,904
Long-term debt				35,557,684		27,476,993
Notes payable to related parties				1,342,310		1,342,310

Shareholders' equity:
	Preferred stock, no par value: 2,000,000
		shares authorized (none issued)		-		-
	Common stock, $.01 par value, 23,900,000
		shares authorized, issued 11,348,077 shares
		in 2000 and 12,273,977 shares in 1999		113,481		122,740
	Additional paid in capital			21,858,164		23,645,151
	Retained earnings, net of effect of minority
		interest in shareholders' deficit of subsidiary
		of ($4,828,324) in 2000 and 1999		20,275,804		19,410,550
		Total shareholders' equity		42,247,449		43,178,441

Total liabilities and shareholders' equity			$	126,538,479	$	122,697,743

See notes to condensed consolidated financial statements.

-4-

SPARTAN MOTORS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
________________________________________

			Three Months Ended June 30,
			2000			1999

Sales		$	73,226,363		$	75,262,770
Cost of products sold			63,339,390			65,470,269
Gross profit			9,886,973			9,792,501

Operating expenses
	Research and development		1,822,545			1,678,560
	Selling, general and administrative		5,781,399			5,518,807
Operating income			2,283,029			2,595,134

Other income / (expense)
	Interest expense		(759,141	)		(561,172	)
	Interest and other income		496,808			111,429
Earnings before taxes on income			2,020,696			2,145,391

Taxes on income			1,006,404			1,142,834
Net earnings		$	1,014,292		$	1,002,557

Basic and diluted net earnings per share		$	0.09		$	0.08

Basic weighted average common shares outstanding			11,694,000			12,535,000

Diluted weighted average common shares
	outstanding		11,700,000			12,547,000


See notes to condensed consolidated financial statements.

-5-

SPARTAN MOTORS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
________________________________________

			Six Months Ended June 30,
			2000			1999

Sales		$	157,851,189		$	150,888,341
Cost of products sold			137,034,346			130,256,957
Gross profit			20,816,843			20,631,384

Operating expenses
	Research and development		3,577,566			3,422,024
	Selling, general and administrative		10,471,680			10,980,155
Operating income			6,767,597			6,229,205

Other income / (expense)
	Interest expense		(1,532,097	)		(1,319,104	)
	Interest and other income		362,999			227,749
Earnings before taxes on income			5,598,499			5,137,850

Taxes on income			2,615,669			2,690,240
Net earnings		$	2,982,830		$	2,447,610

Basic and diluted net earnings per share		$	0.25		$	0.20

Basic weighted average common shares outstanding			11,887,000			12,535,000

Diluted weighted average common shares
	outstanding		11,901,000			12,543,000


See notes to condensed consolidated financial statements.

-6-

SPARTAN MOTORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(UNAUDITED)

	Number of Shares		Common Stock		Additional Paid In Capital		Retained Earnings		Total

Balance at January 1, 2000	12,273,977		$ 122,740		$ 23,645,151		$ 19,410,550		$ 43,178,441

Purchase and constructive
retirement of stock	(925,900	)	(9,259	)	(1,786,987	)	(2,117,576	)	(3,913,822	)
Comprehensive income:
Net earnings							2,982,830		2,982,830
Balance at June 30, 2000	11,348,077		$ 113,481		$ 21,858,164		$ 20,275,804		$ 42,247,449

See notes to condensed consolidated financial statements.

-7-

SPARTAN MOTORS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

___________________________________

				Six Months Ended June 30,
				2000		1999
Cash flows from operating activities:
	Net earnings			$ 2,982,830		$ 2,447,610
	Adjustments to reconcile net earnings to net cash
	provided by operating activities:
		Depreciation and amortization		1,832,800		2,052,054
		Loss (gain) on sales of assets		2,439		(68,180	)
		Decrease (increase) in assets:
			Accounts receivable	(5,999,956	)	(4,412,514	)
			Inventories	2,320,571		(1,256,515	)
			Federal taxes receivable	1,249,800		-
			Other assets	(283,026	)	(954,478	)
		Increase (decrease) in liabilities:
			Accounts payable	(4,201,809	)	(583,420	)
			Other current liabilities and accrued expenses	(442,680	)	166,342
			Accrued warranty	420,479		(107,147	)
			Accrued customer rebates	(72,280	)	(73,832	)
			Taxes on income	-		(745,405	)
			Accrued vacation	154,288		218,784
			Accrued compensation and related taxes	(56,912	)	597,550
			Deposits from customers	424,486		642,327
	Total adjustments			(4,651,800	)	(4,524,434	)
Net cash used in operating activities				(1,668,970	)	(2,076,824	)
Cash flows from investing activities:
	Purchases of property, plant and equipment			(900,827	)	(865,222	)
	Proceeds from sales of property, plant and equipment			5,050		35,348
	Proceeds from sales of investment securities			-		500,000
	Purchase price adjustment related to acquisition of subsidiary			-		(249,103	)
	Minority interest contributions			-		750,000
Net cash provided by (used in) investing activities				(895,777	)	171,023

						(Continued	)

-8-

SPARTAN MOTORS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Continued)

_____________________________________

		Six Months Ended June 30,
		2000		1999
Cash flows from financing activities:
	Proceeds from notes payable	$ 2,791,614		$ 34,136
	Payments on notes payable	(1,807,443	)	-
	Proceeds from long-term debt	8,100,000		3,985,713
	Payments on long-term debt	(538,015	)	(729,841	)
	Net proceeds from exercise of stock options	-		3,180
	Dividends paid	-		(877,430	)
	Purchase of previously-issued stock	(3,913,822	)	-
Net cash provided by financing activities		4,632,334		2,415,758

Net increase in cash and cash equivalents		2,067,587		509,957

Cash and cash equivalents at beginning of period		35,797		37,645

Cash and cash equivalents at end of period		$ 2,103,384		$ 547,602

See notes to condensed consolidated financial statements.

-9-

SPARTAN MOTORS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

______________________________________

Note 1	For a description of the accounting policies followed refer to the notes to the Spartan Motors, Inc. (the "Company") annual consolidated financial statements for the year ended December 31, 1999, included in the Company's Form 10-K filed with the Securities and Exchange Commission on March 7, 2000.

Note 2	The accompanying unaudited interim consolidated financial statements reflect all normal and recurring adjustments that are necessary for the fair presentation of the Company's financial position as of June 30, 2000, and the results of operations and cash flows for the periods presented.

Note 3	The results of operations for the three and six month periods ended June 30, 2000, are not necessarily indicative of the results to be expected for the full year.

Note 4	Inventories consist of raw materials and purchased components, work in process, and finished goods and are summarized as follows:

	June 30, 2000		December 31, 1999

Finished goods	$ 4,682,967		$ 9,148,018
Raw materials and purchased components	34,800,140		36,026,149
Work in process	8,672,009		6,479,813
Obsolescence reserve	(3,311,720	)	(4,542,253	)
	$ 44,843,396		$ 47,111,727

Note 5

Sales and other financial information by business segment are as follows (amounts in thousands):

Three Months Ended June 30, 2000
		Business Segments
		Chassis	EVTeam	Carpenter		Intangibles		Other		Consolidated

Net Sales		$ 52,945	$ 13,974	$ 9,564				$ (3,257	)	$ 73,226
Interest expense		7	174	575				3		759
Depreciation and
	amortization expense	249	107	337		$ 141		142		976
Income tax expense		1,156	124	-				(273	)	1,007
Segment earnings		1,861	210	(771	)	(141	)	(145	)	1,014
Segment assets		71,183	24,531	27,667		7,181		(4,024	)	126,538

-10-

Note 5 (continued)

Three Months Ended June 30, 1999
		Business Segments
		Chassis	EVTeam	Carpenter		Intangibles		Other		Consolidated

Net Sales		$ 55,571	$ 14,197	$ 7,866				$ (2,372	)	$ 75,262
Interest expense		267	100	197				(3	)	561
Depreciation and
	amortization expense	269	87	385		$ 235		81		1,057
Income tax expense		1,090	101	-				(48	)	1,143
Segment earnings		2,111	174	(994	)	(235	)	(55	)	1,001
Segment assets		81,066	22,492	26,147		7,100		(5,592	)	131,213

Six Months Ended June 30, 2000
		Business Segments
		Chassis	EVTeam	Carpenter		Intangibles		Other		Consolidated

Net Sales		$ 116,337	$ 30,453	$ 16,794				$ (5,733	)	$ 157,851
Interest expense		136	334	1,004				58		1,532
Depreciation and
	amortization expense	474	213	670		$ 229		247		1,833
Income tax expense		2,708	331	-				(423	)	2,616
Segment earnings		4,566	587	(1,752	)	(229	)	(189	)	2,983
Segment assets		71,183	24,531	27,667		7,181		(4,024	)	126,538

Six Months Ended June 30, 1999
		Business Segments
		Chassis	EVTeam	Carpenter		Intangibles		Other		Consolidated

Net Sales		$ 116,026	$ 27,102	$ 12,538				$ (4,778	)	$ 150,888
Interest expense		568	234	547				(30	)	1,319
Depreciation and
	amortization expense	526	166	780		$ 417		163		2,052
Income tax expense		2,563	315	-				(188	)	2,690
Segment earnings		4,919	517	(2,404	)	(417	)	(168	)	2,447
Segment assets		81,066	22,492	26,147		7,100		(5,592	)	131,213

-11-

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following is a discussion of the major elements impacting the Company's financial and operating results for the three and six month periods ended June 30, 2000 compared to the same periods ended June 30, 1999. The comments that follow should be read in conjunction with the Company's consolidated financial statements and related notes contained in this Form 10-Q.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the components of the Company's consolidated statements of operations, on an actual basis, as a percentage of sales:

		Three Months Ended June 30,		Six Months Ended June 30,
		2000	1999	2000	1999

Sales		100.0%	100.0%	100.0%	100.0%
Cost of product sold		86.5%	87.0%	86.8%	86.3%
Gross profit		13.5%	13.0%	13.2%	13.7%
Operating expenses:
	Research and development	2.5%	2.2%	2.3%	2.3%
	Selling, general, and administrative	7.9%	7.3%	6.6%	7.3%
Operating income		3.1%	3.5%	4.3%	4.1%
Other		-0.3%	-0.6%	-0.8%	-0.7%
Earnings before taxes on income		2.8%	2.9%	3.5%	3.4%
Taxes on income		1.4%	1.5%	1.6%	1.8%
Net earnings		1.4%	1.4%	1.9%	1.6%

Three-Month Period Ended June 30, 2000, Compared to the Three-Month Period Ended June 30, 1999

For the three months ended June 30, 2000, consolidated sales decreased $2.0 million (2.7%) over the amount reported for the same period in the previous year. Chassis Group sales for the second quarter of 2000 decreased by $2.6 million (4.7%) compared to the sales reported for the same period of 1999. The majority of this decrease is due to decreased sales of motorhome chassis. For the second quarter of 2000, motorhome chassis sales decreased 15.7% compared to the quarter ended June 30, 1999. Rising interest rates coupled with higher gasoline prices have contributed to the slower demand in the motorhome market.

-12-

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Fire truck chassis sales in the second quarter of 2000 were 14.2% higher than sales for the same period of 1999. The fire truck market continues to be strong in 2000, as it is not typically impacted by interest rate fluctuations. Transit bus sales increased 595.0% for the second quarter of 2000 compared to the sales reported for the same period in 1999. This is primarily attributable to increased sales to the Company's primary transit bus customer that resulted from a large order placed by that customer.

EVTeam sales dropped slightly ($0.2 million or 1.6%) from their sales level in the prior year's second quarter while Carpenter sales were up $1.7 million (21.6%). Carpenter's growth in sales is due to increased order intake and, consequently, an increased level of produced units over the prior year. The school bus market continues to increase their confidence in the Carpenter bus product.

Gross margin increased from 13.0% for the quarter ended June 30, 1999 to 13.5% for the same period of 2000. This increase is primarily due to operating efficiencies realized by both Carpenter and the EVTeam.

Operating expenses increased from 9.5% of sales for the second quarter of 1999 to 10.4% for the second quarter of 2000. The Chassis Group is primarily responsible for this increase. While their operating expenses in dollars dropped slightly (1.8%), their sales volume dropped 4.7%, resulting in an increase in operating expenses as a percentage of sales. The decrease in the Company's income taxes as a percentage of sales is primarily due to the loss of Carpenter that is not included in the consolidated tax return.

Total chassis orders received decreased 17.9% during the second quarter of 2000 compared to the same period in 1999. Based on average order lead-time, the Company estimates that approximately one-half of the motorhome, one-third of the bus/specialty, and none of the fire truck chassis orders received during the three-month period ended June 30, 2000 were produced and delivered by June 30, 2000.

At June 30, 2000, the Company had $95.7 million in backlog compared with a backlog of $111.9 million at June 30, 1999. The majority of the decrease is due to transit bus chassis backlog, which has decreased 90.4% due to the fourth quarter 1999 bankruptcy filing by the Company's primary transit bus chassis customer, Metrotrans. This company made up the majority of the backlog number for transit bus chassis at June 30, 1999.

While orders in the backlog are subject to modification, cancellation or rescheduling by customers, the Company has not experienced significant modification, cancellation or rescheduling of orders in the past. Although the backlog of unfilled orders is one of many indicators of market demand, several factors, such as changes in production rates, available capacity, new product introductions and competitive pricing actions, may affect actual sales. Accordingly, a comparison of backlog from period to period is not necessarily indicative of eventual actual shipments.

-13-

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Six-Month Period Ended June 30, 2000, Compared to the Six-Month Period Ended June 30, 1999

For the six months ended June 30, 2000, consolidated sales increased $7.0 million (4.6%) over the amount reported for the same period in the previous year. Chassis Group 2000 sales for this period were consistent with the same period of 1999, with only a slight increase of $0.3 million (0.3%). This is primarily due to offsetting swings within motorhome and firetruck chassis sales. Motorhome chassis sales decreased slightly (4.3%) while fire truck chassis sales increased slightly (7.1%). For the first six months of 2000, transit bus sales increased 81.0% over the same period in 1999. As mentioned earlier, this is due to increased sales to the Company's primary transit bus customer that are a result of a large order placed by that customer.

The Company's other business segments all recorded sales increases over the prior year's first six months. EVTeam sales and Carpenter sales were up $3.4 million (12.4%) and $4.3 million (33.9%), respectively, in the current period over the prior year's period. The EVTeam's increase is primarily due to a large fire department order that was completed in the first six months of 2000. Carpenter has experienced an increase in order intake which has generated an increase in the sales volume so far in 2000 when compared to 1999. Confidence in Carpenter continues to grow within the school bus market.

Gross margin decreased from 13.7% for the six months ended June 30, 1999 to 13.2% for the same period of 2000. The EVTeam and Carpenter operate at lower margins than the Chassis Group since the value added is only in the body rather than the complete vehicle. Thus, the gross margin on the body is diluted by the pass-through nature of the chassis cost. Even though the EVTeam and Carpenter experienced higher operating efficiencies in the second quarter of 2000, the majority of the increase in consolidated sales over the prior year is attributable to increases for the EVTeam and Carpenter. Therefore, the sales growth over the six-month period has diluted the increase in efficiency realized in the second quarter of 2000 and caused the gross margin for the Company as a whole to be lower in 2000 than the same period of 1999.

Operating expenses decreased from 9.6% of sales for the first six months of 1999 to 8.9% for the same time frame in 2000. One reason for this decrease is that the Company has been focused on finding ways to decrease operating expenses. A reversal of previously accrued management fees at Carpenter is the other reason that operating expenses as a percentage of sales are lower in the first six months of 2000 than in the comparable six months of 1999. The primary minority shareholder of Carpenter, Recovery Equity Investors, Inc., restructured the management fees it charges Carpenter to more accurately reflect the actual expenses that it incurs. This resulted in lower selling, general and administrative expenses of approximately $425,000 for the first six months of 2000. The decrease in the Company's income taxes as a percentage of sales is primarily due to the loss of Carpenter that is not included in the consolidated tax return.

-14-

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Total chassis orders received decreased 30.7% during the six months period ended June 30, 2000 compared to the same period in 1999. Based on average order lead-time, the Company estimates that approximately one-half of the motorhome, one-third of the bus/specialty, and one-sixth of the fire truck chassis orders received during the three-month period ended June 30, 2000 were produced and delivered by June 30, 2000.

LIQUIDITY AND CAPITAL RESOURCES

For the six months ended June 30, 2000, cash used in operating activities was approximately $1.7 million which was a $0.4 million improvement over the $2.1 million of cash used in operating activities for the six months ended June 30, 1999. The Company's working capital increased by $7.8 million from $41.9 million at December 31, 1999 to $49.7 million at June 30, 2000. See the "Condensed Consolidated Statements of Cash Flows" contained in this Form 10-Q for further information regarding the increase in cash and cash equivalents, from $35,797 at December 31, 1999 to $2,103,384 at June 30, 2000.

Shareholders' equity decreased approximately $0.9 million in the six months ended June 30, 2000 to approximately $42.2 million. This change primarily is due to net earnings of $3.0 million and the repurchase of Company stock of $3.9 million. The Company's debt to equity ratio increased to 90.9% on June 30, 2000 compared with 70.5% at December 31, 1999 due to the increase in borrowings resulting from the cash used to fund operations and the repurchase of the Company's common stock.

The Company's primary line of credit is a $30.0 million revolving note payable to a bank. The Company also has a $5.0 million term note under the same debt agreement. Under the terms of the line of credit and term note agreement, the Company is required to maintain certain financial ratios and other financial conditions. The agreement also prohibits the Company from incurring additional indebtedness, limits certain acquisitions, investments, advances or loans and restricts substantial asset sales. At June 30, 2000 the Company was in compliance with all debt covenants.

-15-

The Company also has an unsecured line of credit for $1.0 million and secured lines of credit for $0.2 million and $4.3 million. The $4.3 million line carries an interest rate of 1/2% above the bank's prime rate (prime rate at June 30, 2000, was 9.5%) and has an expiration date of June 2001. This line of credit is secured by accounts receivable and inventory. Borrowings under this line totaled $4.0 million at June 30, 2000. The $0.2 million line carries an interest rate of 2% above the bank's prime rate and has an expiration date of June 1, 2001. This line of credit is secured by accounts receivable, inventory and equipment. There were no borrowings on this line at June 30, 2000. The $1.0 million line carries an interest rate of 1% above the bank's prime rate and expires only if there is a change in management. There were no borrowings on the $1.0 million line at June 30, 2000. The Company believes it has sufficient resources from cash flows from operating activities and, if necessary, from additional borrowings under its lines of credit to satisfy ongoing cash requirements for the next 12 months.

EFFECT OF INFLATION

Inflation affects the Company in two principal ways. First, the Company's debt is tied to the prime and LIBOR rates so that increases affecting interest rates may be translated into additional interest expense. Second, general inflation impacts prices paid for labor, parts and supplies. Whenever possible, the Company attempts to cover increased costs of production and capital by adjusting the prices of its products. However, the Company generally does not attempt to negotiate inflation-based price adjustment provisions into its contracts. Since order lead times can be as much as six months, the Company has limited ability to pass on cost increases to its customers on a short-term basis. In addition, the markets served by the Company are competitive in nature, and competition limits the pass through of cost increases in many cases. The Company strives to minimize the effect of inflation through cost reductions and improved productivity.

FORWARD-LOOKING STATEMENTS

This Form 10-Q contains statements that are not historical facts. These statements are called "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements involve important known and unknown risks, uncertainties and other factors and can be identified by phrases using "estimate," "anticipate," "believe," "project," "expect," "intend," "predict," "potential," "future," "may," "should" and similar expressions or words. Our future results, performance or achievements may differ materially from the results, performance or achievements discussed in the forward-looking statements. There are numerous factors that could cause actual results to differ materially from the results discussed in forward-looking statements, including:

•

Changes in existing products liability, tort or warranty laws or the introduction of new laws, regulations or policies that could affect our business practices: these laws, regulations or policies could impact our industry as a whole, or could impact only those portions in which we are currently active, for example, laws regulating the design or manufacture of emergency vehicles or regulations issued by the National Fire Protection Association; in either case, our profitability could be injured due to a industry-wide market decline or due to our inability to compete with other companies that are unaffected by these laws, regulations or policies.

-16-

•	Changes in environmental regulations: these regulations could have a negative impact on our earnings; for example, laws mandating greater fuel efficiency could increase our research and development costs.

•	Changes in economic conditions, including changes in interest rates, financial market performance and the industry: these types of changes can impact the economy in general, resulting in a downward trend that impacts not only our business, but all companies with which we compete; or, the changes can impact only those parts of the economy upon which we rely in a unique fashion, including, by way of example:

	•	Factors that impact our attempts to expand internationally, such as the introduction of trade barriers in the United States or abroad.

•	Factors that we have discussed in previous public reports and other documents filed with the Securities and Exchange Commission.

This list provides examples of factors that could affect the results described by forward-looking statements contained in this Form 10-Q. However, this list is not intended to be exhaustive; many other factors could impact our business and it is impossible to predict with any accuracy which factors could result in which negative impacts. Although we believe that the forward-looking statements contained in this Form 10-Q are reasonable, we cannot provide you with any guarantee that the anticipated results will be achieved. All forward-looking statements in this Form 10-Q are expressly qualified in their entirety by the cautionary statements contained in this section and you are cautioned not to place undue reliance on the forward-looking statements contained in this Form 10-Q. In addition to the risks listed above, other risks may arise in the future, and we disclaim any obligation to update information contained in any forward-looking statement.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The Company's primary market risk exposure is a change in interest rates in connection with its outstanding variable rate short-term and long-term debt. Due to variable interest rates on the Company's short-term and long-term debt, an increase in interest rates of 1% could result in the Company incurring an additional $0.4 million in annual interest expense. Conversely, a decrease in interest rates of 1% could result in the Company saving $0.4 million in annual interest expense. The Company does not expect such market risk exposure to have a material adverse effect on the Company. The Company does not enter into market risk sensitive instruments for trading purposes.

-17-

PART II. OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders.

The annual meeting of shareholders of Spartan Motors, Inc. was held on June 13, 2000. The purpose of the meeting was to elect directors, ratify the appointment of Ernst & Young LLP as independent auditors for the current fiscal year and transact any other business that properly came before the meeting.

The name of each director elected (along with the number of votes cast for or authority withheld) is as follows:

	Votes Cast
		Authority
Elected Directors	For	Withheld/Against
John E. Sztykiel	9,632,577	958,579
Charles E. Nihart	10,383,460	207,696
James C. Penman	10,383,572	207,584

The following persons continue to serve as directors: William F. Foster, Richard J. Schalter, Anthony G. Sommer, George W. Sztykiel, George Tesseris and David R. Wilson.

The following proposal was acted on:

Proposal	For	Against	Abstain
Proposal to ratify the appointment of Ernst & Young LLP as independent auditors for the current fiscal year	10,518,047	52,460	20,649

Item 6. Exhibits and Reports on Form 8-K.

	(a)	Exhibits. The following documents are filed as exhibits to this report on Form 10-Q:

	Exhibit No.	Document

	3.1	Spartan Motors, Inc. Restated Articles of Incorporation. Previously filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1996, and incorporated herein by reference.

	3.2	Spartan Motors, Inc. Bylaws (restated to reflect all amendments). Previously filed as an exhibit to the Company's Annual Report on Form 10-K for the period ended December 31, 1995, and incorporated herein by reference.

-18-

Financial Data Schedule.

(b)

Reports on Form 8-K. During the second quarter ended June 30, 2000, the Company did not file a current report on Form 8-K.

-19-

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, Spartan Motors, Inc. has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SPARTAN MOTORS, INC.

Date: August 14, 2000	By/s/Richard J. Schalter Richard J. Schalter Secretary/Treasurer (Principal Accounting and Financial Officer)

-20-

EXHIBIT INDEX

	Exhibit No.	Document

	3.1	Spartan Motors, Inc. Restated Articles of Incorporation. Previously filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1996, and incorporated herein by reference.

	3.2	Spartan Motors, Inc. Bylaws (restated to reflect all amendments). Previously filed as an exhibit to the Company's Annual Report on Form 10-K for the period ended December 31, 1995, and incorporated herein by reference.

	27	Financial Data Schedule.

-22-