View:
Mail Stop 3561
April 5, 2006
Mr. James W. Knapp
Chief Financial Officer
Spartan Motors, Inc.
1165 Reynolds Road
Charlotte, MI 48813
Re: Spartan Motors, Inc.
Form 10-K for the year ended December 31, 2005
File No. 000-13611
Dear Mr. Knapp:
We have reviewed the above referenced filing and have the
following comments. Where expanded or revised disclosure is
requested, you may comply with these comments in future filings.
If you disagree, we will consider your explanation as to why our
comments are inapplicable or a revision is unnecessary. In some
of our comments, we may ask you to provide us with information so
we may better understand your disclosure. Please be as detailed
as necessary in your explanation.
Please understand that the purpose of our review process is
to assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filings.
We look forward to working with you in these respects and welcome
any questions you may have about any aspects of our review.
Management`s Discussion and Analysis, page 16
1. We believe your MD&A may benefit from an introductory or overview
section that would facilitate a readers understanding on the most
important matters in which management focuses in evaluating financial
condition and operating performance. Among other matters, this
introductory or overview section could:
* inform readers how you earn revenue and income and generate
cash;
* discuss your line of business and principal products and
services;
* include economic or industry-wide factors relevant to the
company; and
* provide insight into material opportunities, challenges and
risks presented by known trends and uncertainties, as well as
actions being taken to address these matters.
In addition, we recommend that you identify and discuss key
performance indicators, including non-financial performance
indicators, which management uses to manage the business. With
respect to key financial metrics, we note that you discuss "Return
on Invested Capital ("ROIC") and Consolidated Return on Equity
("ROE") in earnings releases. If these are important financial based
metrics used by management in assessing performance, your MD&A should
discuss these indicators as well as all other relevant financial and
non- financial performance indicators (e.g. manufacturing plant
capacity and utilization, backlog and its trends, product development,
market demand, customer and vendor relations, etc.).
Results of Operations, page 16
2. We note that you include tabular information and narrative
discussion of your results of operations on a consolidated basis.
For a clearer and enhanced results of operations discussion that may
provide a reader with a better understanding of the major components
of your business, we also suggest that you include tabular financial
data that details the year-to-year (and changes in) results of
operations for each of the business segments as well as a detailed
narrative discussion and analysis on a separate segment basis. In
view of the of the significant difference in operating results
between your business segments, we believe this would be especially
relevant and meaningful as the Chassis segment has been generating
profits while the EVT segment has been incurring losses. Refer to
guidance in Section III (A) in Financial Reporting Release ("FR")-
72 (Release No. 33-8350).
3. Please enhance your disclosure with a narrative discussion of the
extent to which your increases in sales are attributable to the
introduction of new products, or increases in prices or amount of
products being sold. Refer to the guidance in Item 303 (a) (3)
(iii) of Regulation S-K.
Critical Accounting Policies, page 20
4. From disclosures in Note 1 to the financial statements, we note
that compensation expense under the fair value method would have
been material to your results of operations in each of the last
three fiscal years. Upon the adoption of SFAS 123(R), please
consider whether the critical accounting policy disclosures should
include stock based compensation. Disclosure should be included
where the nature of the estimates or assumptions is material due
to the level of subjectivity and judgment involved or the
susceptibility of such matter to change and the impact of these
estimates or assumptions is material to operating performance.
In this regard, you should address why the accounting estimates or
assumptions are subject to change and the disclosure should
supplement, not repeat, the description of accounting policy included
in the Notes. Your MD&A discussion should focus on the estimates or
assumptions in applying the accounting principle and how this principle
may have different effects on the operating results over time. In
addition, you should analyze how you arrived at your estimates and
assumptions, how accurate they have been in the past and whether they
are reasonable likely to change in the future. Refer to the guidance
in Section V in FR-72 (Release No. 33-8350).
Consolidated Financial Statements, page 22
Consolidated Balance Sheets, page 22
5. Please disclose the facts and circumstance concerning the unearned
compensation balance included in the shareholders` equity section
of the balance sheet. You should disclose the person(s) who were
issued the restricted stock as well as the terms and nature of the
restrictions encompassing this compensation arrangement. In
addition, your MD&A should also discuss any significant fluctuations
in financial statement line items. Refer to the guidance in
Instruction 4 of Item 303 (a) in Regulation S-K.
Note 1: General and Summary of Accounting Policies, page 27
6. Please disclose your accounting policy for customer deposits, as
the amount reported on your balance sheet is significant.
Note 13: Business Segments, page 37
7. Please provide the disclosures required by paragraph 37 of SFAS
131. It appears that you should disclose the revenue attributable
to each of your major product lines including Crimson Fire, Crimson
Fire Aerials, and Road Rescue.
* * * * *
Please file your response to our comments via EDGAR within ten
business days from the date of this letter. Please understand that
we may have additional comments after reviewing your response.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be certain that they have provided all information investors require.
Since the company and its management are in possession of all facts
relating to a company`s disclosure, they are responsible for the
accuracy and adequacy of the disclosures they have made.
In connection with responding to our comments, please provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Patrick Kuhn at 202-551-3308 with any
questions. You may also contact Joe Foti at 202-551-3316 or the
undersigned at 202-551-3812 with any concerns as we supervised the
review of your filing.
Sincerely,
Michael Fay
Branch Chief