1
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 Quarter Ended June 30, 1995 Commission File Number 0-13611
SPARTAN MOTORS, INC.
(Exact name of registrant as specified in its charter)
Michigan 38-2078923
(State of incorporation) (I.R.S. Employer
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
NONE
Former name, former address and former fiscal year,
if changed since last report.
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.
Common shares outstanding at August 9, 1995 12,810,872
2
SPARTAN MOTORS, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
QUARTER ENDED JUNE 30, 1995
Page No.
--------
Part I. Financial Information
Consolidated Balance Sheets - June 30, 1995
(Unaudited) and December 31, 1994 1
Consolidated Statements of Operations -
Three Months Ended June 30, 1995 and 1994
(Unaudited) 3
Consolidated Statements of Operations -
Six Months Ended June 30, 1995 and 1994
(Unaudited) 4
Consolidated Statements of Cash Flows -
Six Months Ended June 30, 1995 and 1994
(Unaudited) 5
Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Part II. Other Information 13
Signatures 14
3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SPARTAN MOTORS, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1995 DECEMBER 31, 1994
------------- -----------------
(UNAUDITED)
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 1,045,601 $ 2,930,270
Investment securities 12,192,778 11,294,216
Accounts receivable, less allowance
for doubtful accounts of $675,000 and
$540,000 in 1995 and 1994, respectively 17,860,790 23,316,271
Inventories
26,684,330 23,444,234
Deferred tax benefit 1,117,000 1,450,000
Federal taxes receivable
1,085,781 1,446,781
Other current assets 1,597,238 1,661,639
----------- -----------
TOTAL CURRENT ASSETS 61,583,518 65,543,411
PROPERTY, PLANT AND EQUIPMENT,
net of accumulated depreciation of
$5,322,533 and $4,732,590 in 1995 and
1994, respectively 12,820,917 12,886,838
DEFERRED TAX BENEFIT 981,000 751,000
OTHER ASSETS
1,698,117 1,885,720
----------- -----------
TOTAL $77,083,552 $81,066,969
=========== ===========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
1
4
SPARTAN MOTORS, INC.
CONSOLIDATED BALANCE SHEETS - (CONTINUED)
JUNE 30, 1995 DECEMBER 31, 1994
------------- -----------------
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 5,185,438 $ 7,143,728
Other current liabilities and accrued
expenses 1,542,523 1,164,794
Accrued warranty expense 1,348,543 1,856,358
Accrued customer rebates 1,124,569 952,742
Accrued compensation and related
taxes 1,498,693 1,689,966
Current portion of long-term debt 420,000 420,000
----------- -----------
TOTAL CURRENT LIABILITIES 11,119,766 13,227,588
LONG-TERM DEBT, less current portion
5,974,839 6,211,357
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS' EQUITY:
Common stock, no par value; authorized
23,900,000 shares, issued 12,810,872 shares
in 1995 and 13,060,872 shares in 1994 21,708,178 22,131,928
Retained earnings 40,189,196 41,324,916
Valuation allowance (for unrealized losses on
investments)
(3,946) (370,715)
Cumulative translation adjustment
(1,904,481) (1,458,105)
----------- -----------
TOTAL STOCKHOLDER'S EQUITY
59,988,947 61,628,024
----------- -----------
TOTAL $77,083,552 $81,066,969
=========== ===========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
2
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SPARTAN MOTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED JUNE 30
--------------------------
1995 1994
---- ----
REVENUES:
Net sales $28,426,318 $45,994,124
Other income 365,919 370,260
----------- -----------
TOTAL 28,792,237 46,364,384
COSTS AND EXPENSES:
Costs of products sold 25,182,955 37,403,652
Research and development 685,725 660,657
Selling, general and administrative 3,318,119 2,936,910
Interest 140,384 86,995
----------- -----------
TOTAL 29,327,183 41,088,214
EARNINGS (LOSS) BEFORE TAXES ON INCOME
AND MINORITY INTEREST (534,946) 5,276,170
TAXES ON INCOME (CREDIT) (312,000) 2,228,000
----------- -----------
EARNINGS (LOSS) BEFORE MINORITY INTEREST (222,946) 3,048,170
MINORITY INTEREST IN LOSS OF
CONSOLIDATED SUBSIDIARY 103,979
----------- -----------
NET (LOSS) EARNINGS $ (222,946) $ 3,152,149
=========== ===========
NET (LOSS) EARNINGS PER SHARE $ (0.02) $ 0.24
=========== ===========
DIVIDENDS DECLARED PER SHARE $ 0.05 $ 0.05
=========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 12,982,000 13,234,000
=========== ===========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
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SPARTAN MOTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
SIX MONTHS ENDED JUNE 30
------------------------
1995 1994
---- ----
REVENUES:
Net sales $72,201,251 $100,123,681
Other income 792,260 999,046
----------- ------------
TOTAL 72,993,511 101,122,727
COSTS AND EXPENSES:
Costs of products sold 61,992,720 83,078,275
Research and development 1,473,432 1,286,586
Selling, general and administrative 6,869,203 6,069,778
Interest 256,990 169,940
----------- ------------
70,592,345 90,604,579
TOTAL ----------- ------------
EARNINGS BEFORE TAXES ON INCOME AND
MINORITY INTEREST 2,401,166 10,518,148
TAXES ON INCOME 851,000 3,940,000
----------- ------------
EARNINGS BEFORE MINORITY INTEREST 1,550,166 6,578,148
MINORITY INTEREST IN LOSS OF
CONSOLIDATED SUBSIDIARY 193,808
----------- ------------
NET EARNINGS $ 1,550,166 $ 6,771,956
=========== ============
NET EARNINGS PER SHARE $ 0.12 $ 0.51
=========== ============
DIVIDENDS DECLARED PER SHARE $ 0.05 $ 0.05
=========== ============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 13,032,000 13,232,000
=========== ============
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
4
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SPARTAN MOTORS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED JUNE 30
-------------------------
1995 1994
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 1,550,166 $ 6,771,956
Adjustments to reconcile net earnings to net
cash provided by (used in ) operating
activities:
Depreciation and amortization 794,332 708,871
Minority interest in loss of consolidated
subsidiary (193,808)
Gain on sales of assets (80,591) (65,594)
Decrease (increase) in:
Accounts receivable 4,990,180 (2,995,724)
Inventories (3,592,712) (10,217,028)
Deferred tax benefit 102,000 (166,015)
Federal taxes receivable 361,000
Other current assets 106,382 (889,071)
Restricted assets 347,647
Other assets (68,985) (426,536)
Increase (decrease) in:
Accounts payable (1,777,749) 4,854,258
Other current liabilities and accrued expenses (519,967) 743,269
Accrued warranty expense (507,815) 466,868
Accrued customer rebate 171,827 192,192
Taxes on income 716,000
Accrued compensation and related taxes (191,633) 1,259,328
----------- -----------
TOTAL ADJUSTMENTS (213,731) (5,665,343)
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,336,435 1,106,613
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (959,783) (3,554,968)
Proceeds from sale of property, plant and equipment 150,000
Purchases of marketable securities (6,953,938) (7,215,435)
Proceeds from sales of marketable securities 7,315,496 3,868,806
Advances on note receivable (707,275)
Principal repayments on note receivable 585,955 87,875
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (569,545) (6,813,722)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under line of credit agreement 4,500,000
Proceeds from long-term debt 2,000,000
Proceeds from exercise of stock options 302,120
Payments on long-term debt (236,518) (189,528)
Purchase of treasury stock (2,463,987)
----------- -----------
NET CASH (USED IN ) PROVIDED BY FINANCING
ACTIVITIES (2,700,505) 6,612,592
(CONTINUED)
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SPARTAN MOTORS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - (CONTINUED) (UNAUDITED)
SIX MONTHS ENDED JUNE 30
-------------------------
1995 1994
---- ----
EFFECT OF EXCHANGE RATE CHANGES ON CASH 48,946 30,117
----------- ----------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS (1,884,669) 935,600
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 2,930,270 1,139,121
----------- ----------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 1,045,601 $2,074,721
=========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest was $276,103 and $227,614 for the six months ended June
30, 1995 and 1994, respectively. Cash paid for income taxes was $353,000 and
$3,348,900 for the six months ended June 30, 1995 and 1994, respectively.
Dividends declared for the six months ended June 30, 1995 and 1994 amounted to
$645,649 and $654,898, respectively, and are not included in the change in
other current liabilities or in cash flows from financing activities as no cash
flows will take place until payment has occurred.
See notes to consolidated financial statements.
(CONCLUDED)
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SPARTAN MOTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) For a description of the accounting policies followed refer to the
notes to the Company's annual consolidated financial statements for the
year ended December 31, 1994, included in Form 10-K filed with the
Securities and Exchange Commission March 25, 1995.
(2) The consolidated financial statements include the accounts of Spartan
Motors, Inc., its wholly owned subsidiaries, Spartan Motors Foreign
Sales Corporation, Inc., and Spartan de Mexico, S.A. de C.V.("Spartan
de Mexico"). All material intercompany transactions have been
eliminated. The two joint ventures with Societe D Equipment de
Transport et de Carosserie S.A. ("Setcar") are included in the
consolidated financial statements however the Company has not made any
expenditures for investment purposes as of June 30, 1995.
(3) In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial position
as of June 30, 1995, and the results of operations for the three month
and six month periods ended June 30, 1995 and 1994.
(4) The results of operations for the three month and six month periods
ended June 30, 1995, are not necessarily indicative of the results to
be expected for the full year.
(5) Inventories consist of raw materials and purchased components, work in
process, and finished goods and are summarized as follows:
June 30, 1995 December 31, 1994
------------- -----------------
Finished Goods $ 1,550,756 $ 1,071,424
Raw Materials and
purchased components 19,572,230 17,969,217
Work in Process:
Materials 5,211,496 3,827,738
Direct Labor 364,356 371,285
Manufacturing expenses 285,492 204,570
LIFO Reserve (300,000)
----------- -----------
$26,684,330 $23,444,234
=========== ===========
(6) A cash dividend of $0.05 per outstanding share was declared May 8,
1995 for shareholders of record on June 8, 1995. The dividend payable
of $645,649 is included in other current liabilities at June 30, 1995.
The dividend was paid July 8, 1995.
(7) On March 8, 1995 the Board of Directors authorized management to
repurchase an additional 150,000 shares of its common stock in the open
market. This action increased the total authorization for repurchase
to 250,000 shares of common stock. During April 1995, the Company
repurchased 147,900 shares at an average market price of approximately
$10.45 per share. The Company completed the authorized buyback in June
of 1995 by acquiring 102,100 shares at an average market price of $9.00
per share. The treasury stock has been constructively retired in
accordance with the Michigan Business Corporations Act applicable to
all Michigan corporations.
(8) During the six months ended June 30, 1995, stockholders' equity changed
as follows:
Balance at December 31, 1994 $61,628,024
Net Earnings 1,550,166
Dividends declared (645,649)
Purchase of treasury stock (2,463,987)
Valuation Allowance - Investment
Securities 366,769
Cumulative Translation Adjustment
Change (446,376)
-----------
Balance at June 30, 1995 $59,988,947
===========
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SPARTAN MOTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(9) SUBSEQUENT EVENTS:
On July 11, 1995, the Board of Directors authorized management to
repurchase up to 1,000,000 shares of its common stock in the open
market. Repurchase of common stock is contingent upon market
conditions. No expiration date was set for the completion of the
repurchase program.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is a discussion of the major elements impacting Spartan Motors,
Inc. financial and operating results for the three month and six month periods
ended June 30, 1995 compared to the same periods ended June 30, 1994. The
comments that follow should be read in conjunction with the Company's
consolidated financial statements and related notes.
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 revenues:
Three Months Six Months
Ended June 30, 1995 Ended June 30, 1995
--------------------- --------------------
1995 1994 1995 1994
---- ---- ---- ----
Revenues 100 % 100% 100% 100%
Costs and expenses:
Cost of products sold 87.5 % 80.7% 84.9% 82.1%
Research and development 2.4 % 1.4% 2.0% 1.3%
Selling, general, and administrative 11.5 % 6.3% 9.4% 6.0%
Interest 0.5 % 0.2% 0.4% 0.2%
----- ---- ---- ----
Total costs and expenses 101.9 % 88.6% 96.7% 89.6%
----- ---- ---- ----
Earnings (loss) before taxes on
income and minority interest (1.9)% 11.4% 3.3% 10.4%
Taxes on income (credits) (1.1)% 4.8% 1.2% 3.9%
----- ---- ---- ----
Earnings (loss) before minority interest (0.8)% 6.6% 2.1% 6.5%
Minority interest in loss of
consolidated subsidiary 0.2% 0.2%
----- ---- ---- ----
Net earnings (loss) (0.8)% 6.8% 2.1% 6.7%
===== ==== ==== ====
THREE MONTH PERIOD ENDED JUNE 30, 1995, COMPARED TO THE THREE MONTH PERIOD
ENDED JUNE 30, 1994
Revenues for the three months ended June 30, 1995, were $28.8 million
compared to $46.4 million in 1994, a decrease of 38%. For the three months
ended June 30, 1995 the Company had a net loss of $.2 million ($0.02 per
share), compared to net income of $3.2 million ($0.24 per share) in 1994. The
decrease in revenues and earnings is primarily due to soft retail market
conditions in recreational vehicles during 1995 brought about by high interest
rates and conservative OEM order levels in preparation for 1996 new model
changeover. Total chassis production for the three months ended June 30, 1995
consisted of 459 units as compared to 998 chassis for the same period in 1994.
Sales of fire truck chassis units actually increased by 10% due to the
continued shift from commercial to custom chassis, and the Company's ability to
compete with the commercial fire truck market with its Diamond, Metro Star and
GT-ONE series chassis. Sales of motorhome chassis decreased overall by 64%, as
unit sales of all recreational vehicle product lines declined. The lower
priced, lower margin chassis offered by the Company contributed most
significantly to the decrease. Domestic bus/specialty chassis unit sales
increased 93% to 52 units as the school bus and low floor transit bus chassis
production commenced during the quarter.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - CONTINUED
Total costs and expenses as a percentage of revenues increased to
101.9% for the 1995 period as compared to 88.6% for 1994. Cost of products
sold increased to 87.5% of revenues as compared to 80.7% for the same period in
1994. The increase is primarily the result of fixed manufacturing overhead
being absorbed by fewer units produced, the mix of chassis produced and the
proportion of these costs relative to the level of revenues. Selling, general
and administrative expenses increased by $.4 million for the 1995 period
compared with the 1994 period. The increase is the result of additional
expenditures relating to advertising, sales travel and trade shows, and the
Company's commitment to customer service. Research and development costs for
the 1995 period remained consistent with the same period of 1994. The Company
is continuing its efforts to expand the applications of rear engine diesel
technology to additional market segments in the industry. Examples of this are
the development of school bus and the low floor transit bus chassis.
Total chassis orders received increased 13.0% during the three months
ended June 30, 1995, to 900 units from 797 units for the same period of 1994.
This increase is primarily attributed to school and low floor bus chassis
product lines, and to a lesser extent OEM orders for recreational vehicle
chassis as the retail market activities began to improve late in the quarter.
SIX MONTH PERIOD ENDED JUNE 30, 1995, COMPARED TO THE SIX MONTH PERIOD ENDED
JUNE 30, 1994
Revenues for the six months ended June 30, 1995 were $73.0 million
compared with $101.1 million in 1994, a decrease of 28%. Net income was $1.6
million for the six months ended June 30, 1995 ($0.12 per share), compared to
$6.8 million ($0.51 per share) in 1994 a decrease of 76%. The decrease in
revenues and earnings is primarily due to soft retail market conditions in
recreational vehicles during 1995 resulting in a decrease of OEM orders. Total
chassis production for the six months ended June 30, 1995 consisted of 1,235
units as compared to 2,312 chassis for the same period in 1994. Sales of fire
truck chassis units actually increased by 39% due to the continued shift from
commercial to custom chassis, and the Company's ability to compete with the
commercial fire truck market with its Diamond, Metro Star and GT-ONE series
chassis. Sales of motorhome chassis decreased overall by 54%, while unit sales
of the recently introduced premium line Mountain Master K2 chassis and the
Alpine chassis totaled 135 units during the six months ended June 30, 1995.
The chassis contributing most significantly to the decrease were the lower
priced, lower margin chassis offered by the Company. Domestic bus/specialty
chassis unit sales increased 23% as the school bus and low floor transit bus
chassis production commenced during the second quarter. The Company will
continue its efforts to diversify into other product lines reducing its
dependence on any single product line.
Total costs and expenses as a percentage of revenues increased to
96.7% for the 1995 period as compared to 89.6% for 1994. Cost of products sold
increased to 84.9% of revenues as compared to 82.1% for the same period in
1994. The increase is primarily the result of fixed manufacturing overhead
being absorbed by fewer units produced, the mix of chassis produced and the
proportion of these costs relative to the level of revenues. Selling, general
and administrative expenses increased by $.8 million for the 1995 period
compared with the 1994 period. The increase is the result of additional
expenditures relating to advertising, sales travel and trade shows, and the
Company's commitment to customer service. Research and development costs for
the 1995 period remained consistent with the same period of 1994. The Company is
continuing its efforts to expand the applications of rear engine diesel
technology to additional market segments in the industry. Examples of this are
the development of school bus and the low floor transit bus chassis.
Total chassis orders received decreased 7.5% during the six months
ended June 30, 1995, to 1,664 units from 1,798 units for the same period of
1994. This decrease is primarily the result of the softening in the lower end
retail motorhome market brought about by high interest rates and conservative
OEM order levels in preparation for the 1996 new model changeover. However, as
discussed earlier, order intake during the second quarter increased 13% as the
retail recreational vehicle market activities began to improve. This is
evidenced by an increase in our backlog of approximately $10 million over the
1995 first quarter backlog.
At June 30, 1995, the Company had approximately $66.5 million in backlog
chassis orders. The Company has increased production levels of fire truck
chassis in an effort to reduce the backlog and respond more promptly to
customer delivery requirements.
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13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - CONTINUED
LIQUIDITY AND CAPITAL RESOURCES
Over the years, the Company has financed its growth through a
combination of funds provided from equity offerings, operations and long and
short-term debt financing. During the six months ended June 30, 1995, cash
provided by the operating activities amounted to approximately $1.3 million.
On June 30, 1995, the Company had working capital of $50.5 million compared to
$52.3 million at December 31, 1994, a decrease of 3.4%. The current ratio on
June 30, 1995 increased to 5.5 compared with 5.0 on December 31, 1994. The
change in working capital was the result of decreases in accounts receivable,
and accounts payable and an increase in inventories. Accounts receivable
decreased approximately $5.0 million primarily due to the 28% decline in
revenues for the six months. Accounts payable decreased by approximately $1.8
million and is the result of reducing vendor deliveries and the timing of
vendor payments. Inventories increased approximately $3.6 million primarily
due to the decrease in production of the recreational vehicle chassis and
inventory purchases related to the new school and low floor bus chassis product
lines.
The Company anticipates that cash generated from operations, the
liquidity of short-term investment securities and the existing credit line will
be sufficient to satisfy all working capital and capital expenditure
requirements for the foreseeable future. This will provide the Company with
financial flexibility to respond quickly to business opportunities as they
arise, including opportunities for growth either through internal development
or through strategic joint ventures or acquisitions.
On July 11, 1995, the Board of Directors authorized management to
repurchase up to 1,000,000 shares of its common stock in the open market.
Repurchase of common stock is contingent upon market conditions. No expiration
date was set for the completion of the repurchase program.
Spartan de Mexico S.A. de C.V., in an effort to generate bus chassis
orders, is continuing its aggressive sales and marketing efforts by attending
trade shows and directly contacting customers both in Mexico and in Latin and
South American countries including Costa Rica, Venezuela, Chile, Argentina and
Guatemala. The Company is also conducting body builder surveys and attempting
to align commercial financing packages for its potential customers. Spartan de
Mexico posted a $.04 per share loss during the six months ended June 30, 1995,
consistent with the same period in 1994. The reduced production work force is
being used to perform service and warranty repairs on customer chassis but was
unable to produce bus chassis during the six months ended June 30, 1995 due to
the slow progress of the Mexican economy stabilization. The Company is
currently looking for alternative opportunities for use of the excess
production capacity until the economy and order levels improve.
The two joint ventures with Societe D, Equipement de Transport et de
Carosserie S.A. ("Setcar") have not commenced operations as of June 30, 1995.
However, since entering the joint ventures Spartan has sold and shipped twenty
chassis kits directly to Setcar. Spartan has not made any expenditures for
investment purposes in either joint venture as of June 30, 1995.
Stockholders' equity decreased by approximately $1.6 million for the
six months ended June 30, 1995, a decrease of 2.7%. The decrease is the
result of dividends of $.6 million declared May 8, 1995, paid July 8, 1995 and
the $2.5 million repurchase of 250,000 shares of the Company's common stock.
The Company's debt to equity ratio decreased to 10.7% on June 30, 1995 compared
with 10.8% at December 31, 1994.
The Company's unsecured line of credit with a bank provides for maximum
borrowings of $15,000,000 at 2% above the LIBOR rate (LIBOR rate at June 30,
1995 was 6 1/8%). As of June 30, 1995, there were no borrowings against this
line. In addition, under the terms of its credit agreement with its bank, the
Company has the ability to issue letters of credit totaling $400,000. At June
30, 1995, the Company had outstanding letters of credit totaling $200,000.
11
14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - CONTINUED
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 selling prices of its products. However, the Company
normally does not attempt to negotiate inflation-based price adjustment
provisions into its contracts. Since order lead times can be as much as six
months, Spartan has limited ability to pass on cost increases to its customers
on a short-term basis. In addition, markets served by the Company are
competitive in nature, and competition limits the pass through of cost
increases in many cases. Internally, the Company strives to improve profits by
implementing cost effective methods of production.
12
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
---------------------------------------------------------------
The Company is party, both as plaintiff and defendant, to a number of
lawsuits and claims arising out of the normal course of business. It
is the best judgment of management that the financial position of the
Company will not be materially affected by the final outcome of these
legal proceedings.
Item 2. Changes in Securities
---------------------------------------------------------------
NONE
Item 3. Defaults Upon Senior Securities
---------------------------------------------------------------
NONE
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------------------
Spartan Motors, Inc. Annual Stockholder's Meeting was held June 8,
1995. The results of the proxy vote were as follows:
1) Election of directors for a three year term expiring at the
1998 Annual Stockholder's Meeting:
Anthony G. Sommer
George Tesseris
2) Ratification of Deloitte & Touche, LLP as independent auditors
for the year ending December 31, 1995.
Item 5. Other Information
--------------------------------------------------
NONE
Item 6. Exhibits and Reports on Form 8-K
--------------------------------------------------
(a) NOT APPLICABLE
(b) There were no reports on Form 8-K for the six months ended
June 30, 1995.
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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.
By: /s/ James R. Jenks
-------------------
James R. Jenks, CPA
Secretary/Treasurer
Date: August 9, 1995
14
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EXHIBIT INDEX
Exhibit Description Page
No. ----------- ----
-------
Ex-27 Financial Data Schedule
5
0000743238
SPARTAN MOTORS, INC.
1
U.S. DOLLARS
6-MOS
DEC-31-1995
JAN-01-1995
JUN-30-1995
1
1,045,601
12,192,778
17,860,790
675,000
26,684,330
61,583,518
12,820,917
5,322,533
77,083,552
11,119,766
6,394,839
21,708,178
0
0
38,280,769
77,083,552
72,201,251
72,993,511
61,992,720
70,592,345
8,599,625
398,881
256,990
2,401,166
851,000
1,550,166
0
0
0
1,550,166
.12
.12
