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 |
SPARTAN MOTORS, INC.
(Exact Name of Registrant as Specified in Its Charter)
|
Michigan |
38-2078923 |
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1165 Reynolds Road |
48813 |
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 |
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|
|
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Common stock, $.01 par value |
10,518,077 shares |
SPARTAN MOTORS, INC.
INDEX
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PART I. FINANCIAL INFORMATION |
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Page |
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Item 1. |
Financial Statements: |
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Condensed Consolidated Balance Sheets -- March 31, 2001 |
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(Unaudited) and December 31, 2000 |
3 |
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Condensed Consolidated Statements of Operations - |
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Three Months Ended March 31, 2001 and 2000 (Unaudited) |
5 |
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Condensed Consolidated Statements of Shareholders' |
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Equity - Three Months Ended March 31, 2001 (Unaudited) |
6 |
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Condensed Consolidated Statements of Cash Flows - |
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Three Months Ended March 31, 2001 and 2000 (Unaudited) |
7 |
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Notes to Condensed Consolidated Financial Statements |
9 |
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Item 2. |
Management's Discussion and Analysis of Financial |
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Condition and Results of Operations |
12 |
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Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
16 |
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PART II. OTHER INFORMATION |
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Item 6. |
Exhibits and Reports on Form 8-K |
17 |
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SIGNATURES |
18 |
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EXHIBIT INDEX |
19 |
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SPARTAN MOTORS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
___________________________________
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|
March 31, 2001 |
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|
December 31, 2000 |
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|
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(Unaudited) |
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ASSETS |
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|
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|
|
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Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
392,121 |
|
$ |
535,030 |
|
|
Accounts receivable, less allowance for |
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|
|
|
|
|
|
|
doubtful accounts of $450,000 in 2001 |
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|
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and $599,000 in 2000 |
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|
27,088,783 |
|
|
32,070,887 |
|
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Inventories (Note 4) |
|
|
30,271,895 |
|
|
30,437,792 |
|
|
Deferred tax benefit |
|
|
4,023,269 |
|
|
4,023,269 |
|
|
Taxes receivable |
|
|
1,556,508 |
|
|
5,697,352 |
|
|
Other current assets |
|
|
1,049,097 |
|
|
944,406 |
|
|
Current assets of discontinued operations |
|
|
2,363,593 |
|
|
3,783,007 |
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Total current assets |
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|
66,745,266 |
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|
77,491,743 |
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|
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|
|
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Property, plant, and equipment, net |
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|
10,578,435 |
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10,595,662 |
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|
|
|
|
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Deferred tax benefit |
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1,183,836 |
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1,183,836 |
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Goodwill, net of accumulated amortization |
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of $1,929,000 in 2001 and $1,295,000 |
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in 2000 |
|
|
4,856,170 |
|
|
4,960,421 |
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Other assets |
|
|
299,043 |
|
|
359,811 |
|
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Long-term assets of discontinued |
|
|
|
|
|
|
|
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operations |
|
|
3,713,884 |
|
|
3,713,884 |
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Total assets |
|
$ |
87,376,634 |
|
$ |
98,305,357 |
|
SPARTAN MOTORS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
_______________________________________
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March 31, 2001 |
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December 31, 2000 |
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(Unaudited) |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
$ |
18,252,110 |
|
$ |
19,182,332 |
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Notes payable |
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- |
|
|
30,000 |
||
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Other current liabilities and accrued expenses |
|
2,961,054 |
|
|
3,701,040 |
||
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Accrued warranty |
|
4,072,686 |
|
|
3,973,331 |
||
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Accrued customer rebates |
|
416,283 |
|
|
421,338 |
||
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Accrued compensation and related taxes |
|
1,177,662 |
|
|
1,633,117 |
||
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Accrued vacation |
|
1,197,739 |
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|
1,018,989 |
||
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Deposits from customers |
|
2,714,400 |
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2,458,566 |
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Current portion of long-term debt |
|
1,190,238 |
|
|
915,238 |
||
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Current liabilities of discontinued operations |
|
3,934,681 |
|
|
6,100,868 |
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Total current liabilities |
$ |
35,916,853 |
|
$ |
39,434,819 |
||
|
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|
|
|
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||
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Long-term debt |
|
15,625,000 |
|
|
24,503,809 |
||
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Long-term liabilities of discontinued operations |
|
3,713,884 |
|
|
3,713,884 |
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Shareholders' equity: |
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Preferred stock, no par value: 2,000,000 |
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shares authorized (none issued) |
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- |
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- |
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Common stock, $.01 par value, 23,900,000 |
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shares authorized, issued 10,518,077 shares |
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|
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in 2001 and 2000 |
|
105,181 |
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|
105,181 |
||
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Additional paid in capital |
|
20,271,653 |
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|
20,271,653 |
||
|
Retained earnings |
|
11,744,063 |
|
|
10,276,011 |
||
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Total shareholders' equity |
|
32,120,897 |
|
|
30,652,845 |
||
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|
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Total liabilities and shareholders' equity |
$ |
87,376,634 |
|
$ |
98,305,357 |
||
See Notes to Condensed Consolidated Financial Statements.
SPARTAN MOTORS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
________________________________
|
Three Months Ended March 31, |
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2001 |
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2000 |
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Sales |
$ |
58,657,558 |
|
$ |
77,395,130 |
|
||
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Cost of products sold |
|
49,528,793 |
|
|
65,902,322 |
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||
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Gross profit |
|
9,128,765 |
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11,492,808 |
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Operating expenses |
|
|
|
|
|
|
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Research and development |
|
1,596,060 |
|
|
1,640,013 |
|
||
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Selling, general and administrative |
|
4,428,758 |
|
|
4,790,939 |
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||
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Operating income |
|
3,103,947 |
|
|
5,061,856 |
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Other income / (expense) |
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|
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Interest expense |
|
(526,787 |
) |
|
(344,191 |
) |
||
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Interest and other income |
|
105,078 |
|
|
(158,500 |
) |
||
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Earnings before taxes on income |
|
2,682,238 |
|
|
4,559,165 |
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||
|
|
|
|
|
|
|
||
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Taxes on income |
|
1,214,186 |
|
|
1,609,265 |
|
||
|
|
|
|
|
|
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Net earnings from continuing operations |
|
1,468,052 |
|
|
2,949,900 |
|
||
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|
|
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Discontinued operations: |
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Loss from operations of Carpenter (less applicable |
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|
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income taxes of $0) |
|
- |
|
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981,362 |
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Loss on disposal of Carpenter |
|
- |
|
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- |
|
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Net earnings |
$ |
1,468,052 |
|
$ |
1,968,538 |
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Basic and diluted net earnings per share: |
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|
|
|
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Net earnings from continuing operations |
$ |
0.14 |
|
$ |
0.24 |
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Loss from discontinued operations: |
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|
|
|
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Loss from operations of Carpenter |
|
- |
|
|
(0.08 |
) |
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Loss on disposal of Carpenter |
|
- |
|
|
- |
|
||
|
Basic and diluted net earnings per share |
$ |
0.14 |
|
$ |
0.16 |
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|
|
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|
|
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Basic weighted average common shares outstanding |
|
10,518,000 |
|
|
12,157,000 |
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|
|
|
|
|
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Diluted weighted average common shares outstanding |
|
10,523,000 |
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|
12,157,000 |
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||
See Notes to Condensed Consolidated Financial Statements.
SPARTAN MOTORS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
(UNAUDITED)
____________________________________
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Additional |
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Balance at January 1, 2001 |
10,518,077 |
|
$ |
105,181 |
|
$ |
20,271,653 |
|
$ |
10,276,011 |
|
$ |
30,652,845 |
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|
|
|
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|
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|
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|
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Comprehensive income: |
|
|
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|
|
|
|
|
|
|
|
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Net earnings |
|
|
|
|
|
|
|
|
|
1,468,052 |
|
|
1,468,052 |
|
Balance at March 31, 2001 |
10,518,077 |
|
$ |
105,181 |
|
$ |
20,271,653 |
|
$ |
11,744,063 |
|
$ |
32,120,897 |
See Notes to Condensed Consolidated Financial Statements.
SPARTAN MOTORS, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
_________________________________________
|
Three Months Ended March 31, |
|
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|
2001 |
|
2000 |
|
|||||
|
Cash flows from operating activities: |
|
|
|
|
|
|
|||
|
Net earnings from continuing operations |
$ |
1,468,052 |
|
$ |
2,949,900 |
|
|||
|
Adjustments to reconcile net earnings to net cash |
|
|
|
|
|
|
|||
|
provided by operating activities: |
|
|
|
|
|
|
|||
|
Depreciation |
|
416,355 |
|
|
434,855 |
|
|||
|
Amortization |
|
104,251 |
|
|
88,871 |
|
|||
|
Loss (gain) on sales of assets |
|
2,800 |
|
|
1,205 |
|
|||
|
Decrease (increase) in assets: |
|
|
|
|
|
|
|||
|
Accounts receivable |
|
4,982,104 |
|
|
(3,740,430 |
) |
|||
|
Inventories |
|
165,897 |
|
|
2,444,719 |
|
|||
|
Federal taxes receivable |
|
4,140,844 |
|
|
1,427,945 |
|
|||
|
Other assets |
|
(43,923 |
) |
|
(120,528 |
) |
|||
|
Increase (decrease) in liabilities: |
|
|
|
|
|
|
|||
|
Accounts payable |
|
(930,222 |
) |
|
2,617,564 |
|
|||
|
Other current liabilities and accrued expenses |
|
(739,986 |
) |
|
417,702 |
|
|||
|
Accrued warranty |
|
99,355 |
|
|
21,372 |
|
|||
|
Accrued customer rebates |
|
(5,055 |
) |
|
(2,696 |
) |
|||
|
Taxes on income |
|
- |
|
|
111,431 |
|
|||
|
Accrued vacation |
|
178,750 |
|
|
121,768 |
|
|||
|
Accrued compensation and related taxes |
|
(455,455 |
) |
|
(345,821 |
) |
|||
|
Deposits from customers |
|
255,834 |
|
|
846,871 |
|
|||
|
Total adjustments |
|
8,171,549 |
|
|
4,324,828 |
|
|||
|
Net cash provided by continuing operating activities |
|
9,639,601 |
|
|
7,274,728 |
|
|||
|
|
|
|
|
|
|
|||
|
Net cash used in discontinued operating activities |
|
(746,773 |
) |
|
- |
|
|||
|
Net cash provided by operating activities |
|
8,892,828 |
|
|
7,274,728 |
|
|||
|
|
|
|
|
|
|
|||
|
Cash flows from investing activities: |
|
|
|
|
|
|
|||
|
Purchases of property, plant and equipment |
|
(409,928 |
) |
|
(410,564 |
) |
|||
|
Proceeds from sales of property, plant and equipment |
|
8,000 |
|
|
5,000 |
|
|||
|
Net cash used in investing activities |
|
(401,928 |
) |
|
(405,564 |
) |
|||
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|||
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|
(Continued) |
|
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SPARTAN MOTORS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Continued)
_________________________________________
|
Three Months Ended March 31, |
|
|||||||
|
2001 |
|
2000 |
|
|||||
|
Cash flows from financing activities: |
|
|
|
|
|
|
|||
|
Payments on notes payable |
$ |
(30,000 |
) |
$ |
(35,000 |
) |
|||
|
Payments on long-term debt |
|
(8,603,809 |
) |
|
(5,064,299 |
) |
|||
|
Purchase of previously-issued stock |
|
- |
|
|
(993,154 |
) |
|||
|
Net cash used in financing activities |
$ |
(8,633,809 |
) |
$ |
(6,092,453 |
) |
|||
|
|
|
|
|
|
|
|||
|
Net increase (decrease) in cash and cash equivalents |
|
(142,909 |
) |
|
776,711 |
|
|||
|
|
|
|
|
|
|
|||
|
Cash and cash equivalents at beginning of period |
|
535,030 |
|
|
35,797 |
|
|||
|
|
|
|
|
|
|
|||
|
Cash and cash equivalents at end of period |
$ |
392,121 |
|
$ |
812,508 |
|
|||
See Notes to Condensed Consolidated Financial Statements.
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, 2000, included in the Company's Form 10-K filed with the Securities and Exchange Commission on March 22, 2001.
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 March 31, 2001, and the results of operations and cash flows for the periods presented.
Note 3
The results of operations for the three-month period ended March 31, 2001 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:
|
March 31, 2001 |
|
December 31, 2000 |
|
||
|
Finished goods |
$ |
4,360,651 |
|
$ |
6,291,203 |
|
|
Raw materials and purchased components |
|
20,563,876 |
|
|
18,882,881 |
|
|
Work in process |
|
7,001,818 |
|
|
7,190,832 |
|
|
Obsolescence reserve |
|
(1,654,450 |
) |
|
(1,927,124 |
) |
|
$ |
30,271,895 |
|
$ |
30,437,792 |
|
Note 5
Since October 23, 1998, the Company has consolidated its majority-owned subsidiary, Carpenter Industries, Inc. ("Carpenter"), and recognized 100% of Carpenter's operating results. On September 28, 2000, the Company's Board of Directors passed a resolution to cease funding of Carpenter. Carpenter's Board of Directors then voted on September 29, 2000 to begin the orderly liquidation of Carpenter. Since Carpenter was a separate segment of the Company's business, the operating results and the disposition of Carpenter's net assets is being accounted for as a discontinued operation. Accordingly, previously reported financial results for all periods presented have been restated to reflect this business as a discontinued operation. Carpenter's sales for the three months ended March 31, 2001 and 2000, which have been properly removed from the restated consolidated sales totals, were $0.7 million and $7.2 million, respectively.
Note 5 (continued)
The net assets and liabilities of the discontinued operations have been segregated in the consolidated balance sheets. Details of such amounts at March 31, 2001 and December 31, 2000, are as follows:
|
March 31, |
|
December 31, |
|
||
|
|
|
|
|
|
|
|
Accounts receivable |
$ |
150,000 |
|
$ |
1,257,180 |
|
|
Inventories |
|
140,000 |
|
|
1,129,476 |
|
|
Other current assets |
|
2,073,593 |
|
|
1,396,351 |
|
|
Current assets of discontinued operations |
$ |
2,363,593 |
|
$ |
3,783,007 |
|
|
|
|
|
|
|
|
|
Notes payable |
$ |
3,805,555 |
|
$ |
4,531,687 |
|
|
Accounts payable |
|
- |
|
|
302,481 |
|
|
Other current liabilities |
|
129,126 |
|
|
1,266,700 |
|
|
Current liabilities of discontinued operations |
$ |
3,934,681 |
|
$ |
6,100,868 |
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
$ |
3,713,884 |
|
$ |
3,713,884 |
|
|
Long-term assets of discontinued operations |
$ |
3,713,884 |
|
$ |
3,713,884 |
|
|
|
|
|
|
|
|
|
Long-term debt |
$ |
3,713,884 |
|
$ |
3,713,884 |
|
|
Long-term liabilities of discontinued operations |
$ |
3,713,884 |
|
$ |
3,713,884 |
|
The counter-party of the long-term debt noted above has begun foreclosure proceedings. The long-term assets will be used to satisfy all of the long-term debt of discontinued operations.
Note 6
Sales and other financial information by business segment are as follows (amounts in thousands):
|
Three Months Ended March 31, 2001 |
|
||||||||||||||
|
|
Business Segments |
|
|
|
|
|
|
|
|||||||
|
|
Chassis |
|
EVTeam |
|
Intangibles |
|
Other |
|
Consolidated |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
44,574 |
|
$ |
17,191 |
|
|
|
|
$ |
(3,107 |
) |
$ |
58,658 |
|
|
Interest expense |
|
134 |
|
|
229 |
|
|
|
|
|
164 |
|
|
527 |
|
|
Depreciation and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
954 |
|
|
173 |
|
|
|
|
|
87 |
|
|
1,214 |
|
|
Segment earnings (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
Segment earnings (loss) |
|
1,525 |
|
|
298 |
|
|
(104 |
) |
|
(251 |
) |
|
1,468 |
|
|
Segment assets |
|
51,318 |
|
|
27,746 |
|
|
4,856 |
|
|
3,457 |
|
|
87,377 |
|
|
Three Months Ended March 31, 2000 |
|
|||||||||||||||
|
|
Business Segments |
|
|
|
|
|
|
|
||||||||
|
|
Chassis |
|
EVTeam |
|
Intangibles |
|
Other |
|
Consolidated |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
63,392 |
|
$ |
16,479 |
|
|
|
|
$ |
(2,476 |
) |
$ |
77,395 |
|
|
|
Interest expense |
|
129 |
|
|
160 |
|
|
|
|
|
55 |
|
|
344 |
|
|
|
Depreciation and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
1,552 |
|
|
207 |
|
|
|
|
|
(150 |
) |
|
1,609 |
|
|
|
Segment earnings (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations |
|
- |
|
|
- |
|
|
- |
|
|
(981 |
) |
|
(981 |
) |
|
|
Segment earnings (loss) |
|
2,705 |
|
|
378 |
|
|
(89 |
) |
|
(1,025 |
) |
|
1,969 |
|
|
|
Segment assets |
|
73,922 |
|
|
23,482 |
|
|
7,322 |
|
|
20,516 |
|
|
125,242 |
|
|
Note 7
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities." The Company was required to adopt Statement No. 133 beginning in the first quarter of 2001. The new statement did not have any effect on the earnings or financial position of the Company since the Company does not utilize derivatives.
|
Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of |
The following is a discussion of the major elements impacting the Company's financial and operating results for the three-month period ended March 31, 2001 compared to the three-month period ended March 31, 2000. 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 March 31, |
||||
|
|
2001 |
|
2000 |
||
|
|
|
|
|
|
|
|
Sales |
100.0 |
% |
|
100.0 |
% |
|
Cost of product sold |
84.4 |
% |
|
85.2 |
% |
|
Gross profit |
15.6 |
% |
|
14.8 |
% |
|
Operating expenses: |
|
|
|
|
|
|
Research and development |
2.7 |
% |
|
2.1 |
% |
|
Selling, general, and administrative |
7.6 |
% |
|
6.2 |
% |
|
Operating income |
5.3 |
% |
|
6.5 |
% |
|
Other |
(0.7 |
%) |
|
(0.6 |
%) |
|
Earnings before taxes on income |
4.6 |
% |
|
5.9 |
% |
|
Taxes on income |
2.1 |
% |
|
2.1 |
% |
|
Net earnings from continuing operations |
2.5 |
% |
|
3.8 |
% |
|
Discontinued operations: |
|
|
|
|
|
|
Loss from operations of Carpenter |
- |
|
|
(1.3 |
%) |
|
Loss on disposal of Carpenter |
- |
|
|
- |
|
|
Net earnings |
2.5 |
% |
|
2.5 |
% |
For the three months ended March 31, 2001, consolidated sales decreased $18.7 million (24.2%) over the amount reported for the same period in the previous year. Chassis Group sales for these periods decreased by $18.8 million (29.7%). The majority of this decrease is due to lower sales of motorhome chassis. During the first three months of 2001, motorhome chassis sales were 40.2% lower than the first three months of 2000. Higher gasoline prices and a fluctuating stock market have contributed to the slower demand in the motorhome market. In addition, high dealer inventories have lessened chassis demand at the original equipment manufacturer ("OEM") level, which represents the Company's customers.
|
Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of |
Fire truck chassis sales in the first quarter of 2001 were up 13.3% over the same period of 2000. The fire truck market continues to be strong in 2001, as it is not typically impacted by higher gasoline prices or stock market fluctuations. Transit bus sales continued to decrease as the Company winds down its backlog of transit buses. The Company made the decision in 2000 to transition out of the transit bus market.
EVTeam sales increased $0.7 million, or 4.3%, from their sales level in the prior year's first quarter. The strong fire truck market mentioned above was primarily responsible for this increase.
Gross margin increased from 14.8% for the quarter ended March 31, 2000 to 15.6% for the same period of 2001. This improvement is primarily due to decreased warranty and obsolete inventory expense resulting from increased management and associate attention to these items.
Operating expenses increased from 8.3% of sales for the first quarter of 2000 to 10.3% for the first quarter of 2001. While operating expenses in dollars dropped (6.3%), sales volume dropped 24.2%, resulting in an increase in operating expenses as a percentage of sales.
On September 28, 2000, the Company's Board of Directors passed a resolution to cease funding of the Company's majority-owned subsidiary, Carpenter Industries, Inc. Carpenter's Board of Directors then voted on September 29, 2000, to begin the orderly liquidation of Carpenter. The disposition of Carpenter's assets is being accounted for as a discontinued operation. The $1.0 million loss from operations of Carpenter reflects a loss generated from operating the business segment during the first quarter of 2000. There was no impact from the discontinued operation in the first quarter of 2001. Details of Carpenter's assets and liabilities at March 31, 2001 and December 31, 2000 are set forth in Note 5 to the condensed consolidated financial statements included in this Form 10-Q.
Total chassis orders received during the first quarter of 2001 decreased 41.6% compared to the same period in 2000. This is primarily due to a decrease of 48.5% in motorhome chassis orders. 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 March 31, 2001 were produced and delivered by March 31, 2001.
At March 31, 2001, the Company had $91.4 million in backlog compared with a backlog of $83.6 million related to continuing operations at March 31, 2000. The backlog of the EVTeam was up $16.1 million at March 31, 2001, or 60.7%, compared to March 31, 2000. This increase was tempered by a decrease in chassis backlog of $8.3 million, or 14.5%.
|
Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of |
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.
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended March 31, 2001, cash provided by operating activities from continuing operations was $9.6 million, which was a $2.3 million improvement over the $7.3 million of cash provided by operating activities from continuing operations for the three months ended March 31, 2000. The Company's working capital decreased $7.2 million from $38.0 million at December 31, 2000 to $30.8 million at March 31, 2001. See the "Condensed Consolidated Statements of Cash Flows" contained in Item 1 of this Form 10-Q for further information regarding the decrease in cash and cash equivalents, from $0.5 million at December 31, 2000 to $0.4 million at March 31, 2001.
Shareholders' equity increased $1.5 million in the three months ended March 31, 2001 to $32.1 million. This change resulted from the $1.5 million in net earnings of the Company.
The Company's primary line of credit is a $30.0 million revolving note payable to a bank. The Company also has a $3.75 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 March 31, 2001 the Company was in compliance with all debt covenants.
The Company also has secured lines of credit for $4.3 million and $0.2 million and an unsecured line of credit for $1.0 million. The $4.3 million line is due from Carpenter and carries an interest rate of 1/2% above the bank's prime rate (prime rate at March 31, 2001 was 8.0%) and has an expiration date of June 2001. This line of credit is secured by accounts receivable and inventory and is guaranteed by the Company. Borrowings under this line totaled $3.8 million at March 31, 2001. 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 March 31, 2001. 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 March 31, 2001. 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.
|
Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of |
EFFECT OF INFLATION
Inflation affects the Company in two principal ways. First, the Company's debt is tied to the prime and LIBOR interest 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 the Company serves are competitive in nature, and competition limits the Company's ability to pass through 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. |
|
|
|
|
• |
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 our 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. |
|
• |
Changes in relationships with major customers: an adverse change in our relationship with major customers would have a negative impact on our earnings and financial position. |
|
|
|
|
• |
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 $0.2 million in annual interest expense. Conversely, a decrease in interest rates of 1% could result in the Company saving $0.2 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.
PART II. OTHER INFORMATION
|
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, as amended to date. Previously filed as an exhibit to the Company's Annual Report on Form 10-K for the period ended December 31, 2000, and incorporated herein by reference. |
|
|
|
|
|
|
|
3.2 |
|
Spartan Motors, Inc. Bylaws, as amended to date. Previously filed as an exhibit to the Company's Annual Report on Form 10-K for the period ended December 31, 2000, and incorporated herein by reference. |
(b) Reports on Form 8-K. The Company filed the following Current Reports on Form 8-K during the quarter ended March 31, 2001. All of the foregoing Forms 8-K were furnished pursuant to Regulation FD and are considered to have been "furnished" but not "filed" with the Securities and Exchange Commission.
|
Date of Report |
|
Filing Date |
|
Item(s) Reported |
|
|
|
|
|
|
|
January 9, 2001 |
|
January 9, 2001 |
|
This Form 8-K included a press release that announced that the Company's CEO and chairman, George Sztykiel, will not run for re-election to his board seat in 2002. No financial statements were included or required to be included with this Form 8-K. |
|
|
|
|
|
|
|
January 22, 2001 |
|
January 22, 2001 |
|
This Form 8-K included a press release that announced that the Company had completed its two million share buyback program. No financial statements were included or required to be included with this Form 8-K. |
|
|
|
|
|
|
|
February 28, 2001 |
|
February 28, 2001 |
|
This Form 8-K included a press release that announced that the Company's board of directors had formed a search committee to find a replacement for outgoing CEO and chairman George Sztykiel. No financial statements were included or required to be included with this Form 8-K. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
SPARTAN MOTORS, INC. Richard J. Schalter Executive Vice President, Chief Financial Officer, Secretary and Treasurer (Principal Accounting and Financial Officer) |
EXHIBIT INDEX
|
|
Exhibit No. |
|
Document |
|
|
|
|
|
|
|
3.1 |
|
Spartan Motors, Inc. Restated Articles of Incorporation, as amended to date. Previously filed as an exhibit to the Company's Annual Report on Form 10-K for the period ended December 31, 2000, and incorporated herein by reference. |
|
|
|
|
|
|
|
3.2 |
|
Spartan Motors, Inc. Bylaws, as amended to date. Previously filed as an exhibit to the Company's Annual Report on Form 10-K for the period ended December 31, 2000, and incorporated herein by reference. |