<HTML> <HEAD> <META NAME="Generator" CONTENT="Word 97"> <META NAME="Author" CONTENT="RIVARDTL"> <TITLE>Spartan Motors, Inc. Form 10-Q for 3rd Quarter 1999</TITLE> </HEAD> <BODY TEXT="#000000" LINK="#0000ff" VLINK="#551a8b" ALINK="#ff0000" BGCOLOR="#c0c0c0"> <center>SECURITIES AND EXCHANGE COMMISSION <p>WASHINGTON, D.C. 20549</center> <p> <hr WIDTH="100%"> <BR> <center> <p>FORM 10-Q <p>QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF <br>THE SECURITIES EXCHANGE ACT OF 1934</center> <p><br> <table BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%" > <tr> <td VALIGN=TOP WIDTH="51%"> <center>For the Quarter Ended</center> </td> <td VALIGN=TOP WIDTH="49%"> <center>Commission File Number</center> </td> </tr> <tr> <td VALIGN=TOP WIDTH="51%"> <center><b>September 30, 1999</b></center> </td> <td VALIGN=TOP WIDTH="49%"> <center><b>0-13611</b></center> </td> </tr> </TABLE> <br> <center> <p><b>SPARTAN MOTORS, INC.</b> <br>(Exact Name of Registrant as Specified in Its Charter)</center> <p><br> <table BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%" > <tr> <td VALIGN=TOP WIDTH="52%"> <center><b>Michigan</b></center> </td> <td VALIGN=TOP WIDTH="48%"> <center><b>38-2078923</b></center> </td> </tr> <tr> <td VALIGN=TOP WIDTH="52%"> <center>(State or Other Jurisdiction of</center> </td> <td VALIGN=TOP WIDTH="48%"> <center>(I.R.S. Employer</center> </td> </tr> <tr> <td VALIGN=TOP WIDTH="52%"> <center>Incorporation or Organization)</center> </td> <td VALIGN=TOP WIDTH="48%"> <center>Identification No.)</center> </td> </tr> <tr> <td VALIGN=TOP WIDTH="52%"> </td> <td VALIGN=TOP WIDTH="48%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="52%"> <center><b>1000 Reynolds Road</b></center> </td> <td VALIGN=TOP WIDTH="48%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="52%"> <center><b>Charlotte, Michigan</b></center> </td> <td VALIGN=TOP WIDTH="48%"> <center><b>48813</b></center> </td> </tr> <tr> <td VALIGN=TOP WIDTH="52%"> <center>(Address of Principal Executive Offices)</center> </td> <td VALIGN=TOP WIDTH="48%"> <center>(Zip Code)</center> </td> </tr> </TABLE> <p>Registrant's Telephone Number, Including Area Code: <b>(517) 543-6400</b> <p>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. <br> <table BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%" > <tr> <td VALIGN=TOP WIDTH="29%"> </td> <td VALIGN=TOP WIDTH="27%">Yes <u> X </u></td> <td VALIGN=TOP WIDTH="43%">No _____</td> </tr> </TABLE> <p>Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. <br> <center><table BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%" > <tr> <td VALIGN=TOP WIDTH="66%"> </td> <td VALIGN=TOP WIDTH="34%"> <center>Outstanding at</center> </td> </tr> <tr> <td VALIGN=TOP WIDTH="66%"> <center><u>Class</u></center> </td> <td VALIGN=TOP WIDTH="34%"> <center><u>November 10, 1999</u></center> </td> </tr> <tr> <td VALIGN=TOP WIDTH="66%"> </td> <td VALIGN=TOP WIDTH="34%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="66%"> <center>Common stock, $.01 par value</center> </td> <td VALIGN=TOP WIDTH="34%"> <center>12,534,702 shares</center> </td> </tr> </TABLE> <P> <hr WIDTH="100%"> <BR> <BR> <BR> <CENTER> </CENTER> <HR SIZE="4" NOSHADE> <BR> <p><b>SPARTAN MOTORS, INC.</b> <p><b>INDEX</b></center> <p><br> <br> <br> <br> <table BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%" > <tr> <td VALIGN=TOP COLSPAN="5"><b>PART I. FINANCIAL INFORMATION</b></td> </tr> <tr> <td VALIGN=TOP COLSPAN="4"> </td> <td VALIGN=TOP WIDTH="9%"><u>Page</u></td> </tr> <tr> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP COLSPAN="4" >Item 1. Financial Statements:</td> </tr> <TR> <TD COLSPAN="5"> </TD> </TR> <tr> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP COLSPAN="2" WIDTH="81%">Condensed Consolidated Balance Sheets - - September 30, 1999</td> <td VALIGN=TOP WIDTH="9%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="76%">(Unaudited) and December 31, 1998</td> <td VALIGN=TOP WIDTH="9%">1</td> </tr> <TR> <TD COLSPAN="5"> </TD> </TR> <tr> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP COLSPAN="2" WIDTH="81%">Condensed Consolidated Statements of Operations -</td> <td VALIGN=TOP WIDTH="9%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="76%">Three and Nine Months Ended September 30, 1999 and 1998</td> <td VALIGN=TOP WIDTH="9%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="76%">(Unaudited)</td> <td VALIGN=TOP WIDTH="9%">3</td> </tr> <TR> <TD COLSPAN="5"> </TD> </TR> <tr> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP COLSPAN="2" WIDTH="81%">Condensed Consolidated Statements of Shareholders' Equity -</td> <td VALIGN=TOP WIDTH="9%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="76%">Three and Nine Months Ended September 30, 1999 and 1998</td> <td VALIGN=TOP WIDTH="9%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="76%">(Unaudited)</td> <td VALIGN=TOP WIDTH="9%">5</td> </tr> <TR> <TD COLSPAN="7"> </TD> </TR> <tr> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP COLSPAN="2" WIDTH="81%">Condensed Consolidated Statements of Cash Flows -</td> <td VALIGN=TOP WIDTH="9%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="76%">Nine Months Ended September 30, 1999 and 1998</td> <td VALIGN=TOP WIDTH="9%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="76%">(Unaudited)</td> <td VALIGN=TOP WIDTH="9%">6</td> </tr> <TR> <TD COLSPAN="5"> </TD> </TR> <tr> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP COLSPAN="2" WIDTH="81%">Notes to Condensed Consolidated Financial Statements</td> <td VALIGN=TOP WIDTH="9%">8</td> </tr> <TR> <TD COLSPAN="5"> </TD> </TR> <tr> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP COLSPAN="3" WIDTH="86%">Item 2. Management's Discussion and Analysis of Financial</td> <td VALIGN=TOP WIDTH="9%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="76%">Condition and Results of Operations</td> <td VALIGN=TOP WIDTH="9%">10</td> </tr> <TR> <TD COLSPAN="5"> </TD> </TR> <tr> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP COLSPAN="3" WIDTH="86%">Item 3. Quantitative and Qualitative Disclosure About Market Risk</td> <td VALIGN=TOP WIDTH="9%">15</td> </tr> <TR> <TD COLSPAN="5"> </TD> </TR> <tr> <td VALIGN=TOP COLSPAN="5"><b>PART II. OTHER INFORMATION</b></td> </tr> <TR> <TD COLSPAN="5"> </TD> </TR> <tr> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP COLSPAN="3" WIDTH="86%">Item 6. Exhibits and Reports on Form 8-K</td> <td VALIGN=TOP WIDTH="9%">15</td> </tr> <TR> <TD COLSPAN="5"> </TD> </TR> <tr> <td VALIGN=TOP COLSPAN="4" WIDTH="91%"><b>SIGNATURES</b></td> <td VALIGN=TOP WIDTH="9%">17</td> </tr> </TABLE> <BR> <BR> <BR> <CENTER> </CENTER> <HR SIZE="4" NOSHADE> <BR> <center> <p><b><font size=+0>PART I. FINANCIAL INFORMATION</font></b></center> <p><b>Item 1. Financial Statements</b> <center> <p><b>SPARTAN MOTORS, INC.</b> <br><b>CONDENSED CONSOLIDATED BALANCE SHEETS</b> <br><b><u>______________________________________</u></b></center> <P> <table BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%" > <tr> <td VALIGN=TOP WIDTH="50%"> </td> <td VALIGN=TOP WIDTH="12%"> </td> <td VALIGN=TOP WIDTH="17%"> <center><b><font size=+0>September 30,<BR> 1999</font></b></center><hr size="1"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> <center><b><font size=+0>December 31,<BR> 1998</font></b></center><hr size="1"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="50%"> </td> <td VALIGN=TOP WIDTH="12%"> </td> <td VALIGN=TOP WIDTH="17%"> <center><b><font size=+0>(Unaudited)</font></b></center> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="50%"><b><font size=+0>ASSETS</font></b></td> <td VALIGN=TOP WIDTH="12%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="50%"> </td> <td VALIGN=TOP WIDTH="12%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="50%"><b><font size=+0>Current Assets</font></b></td> <td VALIGN=TOP WIDTH="12%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="50%"><font size=+0> Cash and cash equivalents</font></td> <td VALIGN=TOP WIDTH="12%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>$ 57,900</font></div> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>$ 37,645</font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="50%"><font size=+0> Investment securities</font></td> <td VALIGN=TOP WIDTH="12%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>--</font></div> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>500,000</font></div> </td> </tr> <tr> <td VALIGN=BOTTOM WIDTH="50%"><font size=+0> Accounts receivable, less allowance for doubtful</font> <br><font size=+0> accounts of $2,770,000 in 1999 and </font> <br><font size=+0> $2,600,000 in 1998</font></td> <td VALIGN=BOTTOM WIDTH="12%"> </td> <td VALIGN=BOTTOM WIDTH="17%"> <div align=right><font size=+0>47,759,238</font></div> </td> <td VALIGN=BOTTOM WIDTH="5%"> </td> <td VALIGN=BOTTOM WIDTH="16%"> <div align=right><font size=+0>43,110,400</font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="50%"><font size=+0> Inventories (Note 5)</font></td> <td VALIGN=TOP WIDTH="12%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>50,677,216</font></div> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>47,244,529</font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="50%"><font size=+0> Deferred tax benefit</font></td> <td VALIGN=TOP WIDTH="12%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>2,148,867</font></div> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>2,165,250</font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="50%"><font size=+0> Other current assets</font></td> <td VALIGN=TOP WIDTH="12%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>1,010,627</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>1,042,762</font></div><hr size="1"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="50%"> </td> <td VALIGN=TOP WIDTH="12%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="50%"><b><font size=+0> Total Current Assets</font></b></td> <td VALIGN=TOP WIDTH="12%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>101,653,848</font></div> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>94,100,586</font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="50%"> </td> <td VALIGN=TOP WIDTH="12%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> </tr> <tr> <td VALIGN=bottom WIDTH="50%"><b><font size=+0>Property, Plant and Equipment</font>, </b>net of <br> accumulated depreciation of $16,357,000 and <br> $14,003,000 in 1999 and 1998, respectively</td> <td VALIGN=TOP WIDTH="12%"> </td> <td VALIGN=bottom WIDTH="17%"> <div align=right><font size=+0>22,570,332</font></div> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=bottom WIDTH="16%"> <div align=right><font size=+0>23,420,603</font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="50%"> </td> <td VALIGN=TOP WIDTH="12%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> </tr> <tr> <td VALIGN=bottom WIDTH="50%"><b><font size=+0>Goodwill</font>, </b>net of accumulated amortization of <br> $868,000 and $478,000 in 1999 and 1998, <br> respectively</td> <td VALIGN=TOP WIDTH="12%"> </td> <td VALIGN=bottom WIDTH="17%"> <div align=right><font size=+0>6,970,151</font></div> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=bottom WIDTH="16%"> <div align=right><font size=+0>7,315,035</font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="50%"><b><font size=+0>Other Assets</font></b></td> <td VALIGN=TOP WIDTH="12%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>1,363,042</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>1,080,253</font></div><hr size="1"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="50%" HEIGHT="21"><b><font size=+0> Total Assets</font></b></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="21"></td> <td VALIGN=TOP WIDTH="17%" HEIGHT="21"> <div align=right><font size=+0>$ 132,557,373</font></div><hr> </td> <td VALIGN=TOP WIDTH="5%" HEIGHT="21"></td> <td VALIGN=TOP WIDTH="16%" HEIGHT="21"> <div align=right><font size=+0>$ 125,916,477</font></div><hr> </td> </tr> </TABLE> <P> <div align=right><font size=+0>(Continued)</font></div> <BR> <BR> <BR> <CENTER> </CENTER> <HR SIZE="4" NOSHADE> <BR> <center><b><font size=+0>SPARTAN MOTORS, INC.</font></b> <br><b><font size=+0>CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)</font></b> <br><u><font size=+0>______________________________________</font></u></center> <p><br> <br> <br> <br> <table BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%" > <tr> <td VALIGN=TOP WIDTH="59%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <center><b><font size=+0>September 30,<BR> 1999</font></b></center><hr size="1"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> <center><b><font size=+0>December 31,<BR> 1998</font></b></center><hr size="1"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <center><b><font size=+0>(Unaudited)</font></b></center> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><b><font size=+0>LIABILITIES AND SHAREHOLDERS' EQUITY </font></b></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><b><font size=+0>Current Liabilities</font></b></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><font size=+0> Accounts payable</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>$ 25,856,016</font></div> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>$ 23,969,302 </font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><font size=+0> Notes payable</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>7,938,035</font></div> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>7,134,297 </font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><font size=+0> Other current liabilities and accrued expenses</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>4,708,204</font></div> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>5,184,466 </font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><font size=+0> Accrued warranty expense</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>3,445,434</font></div> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>3,888,364 </font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><font size=+0> Accrued customer rebates</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>581,501</font></div> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>563,152 </font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><font size=+0> Taxes on income</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>360,797</font></div> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>1,446,432 </font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><font size=+0> Accrued compensation and related taxes</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>2,423,217</font></div> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>1,327,923 </font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><font size=+0> Accrued vacation</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>1,328,064</font></div> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>1,253,460 </font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><font size=+0> Deposits from customers</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>3,982,499</font></div> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>3,133,676 </font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><font size=+0> Current portion of long-term debt</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>281,516</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>991,251 </font></div><hr size="1"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><font size=+0> <b>Total Current Liabilities</b></font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>50,905,283</font></div> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>48,892,323 </font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><b><font size=+0>Accounts Payable, long-term</font></b></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>1,622,562</font></div> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>1,655,607 </font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><b><font size=+0>Long-Term Debt</font></b></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>30,293,177</font></div> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>27,641,888 </font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><b><font size=+0>Notes Payable to Related Parties</font></b></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>1,330,091</font></div> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>2,593,874 </font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><b><font size=+0>Shareholders' Equity:</font></b></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> </tr> <tr> <td VALIGN=BOTTOM WIDTH="59%"><font size=+0> Preferred stock, no par value: 2,000,000 shares authorized </font> <br><font size=+0> (none issued)</font></td> <td VALIGN=BOTTOM WIDTH="3%"> </td> <td VALIGN=BOTTOM WIDTH="17%"> <div align=right><font size=+0>--</font></div> </td> <td VALIGN=BOTTOM WIDTH="5%"> </td> <td VALIGN=BOTTOM WIDTH="16%"> <div align=right><font size=+0>-- </font></div> </td> </tr> <tr> <td VALIGN=BOTTOM WIDTH="59%"><font size=+0> Common stock, $.01 par value: 23,900,000 shares</font> <br><font size=+0> authorized, issued 12,534,702 shares in 1999 and </font> <br><font size=+0> 12,536,891 shares in 1998</font></td> <td VALIGN=BOTTOM WIDTH="3%"> </td> <td VALIGN=BOTTOM WIDTH="17%"> <div align=right><font size=+0>125,347</font></div> </td> <td VALIGN=BOTTOM WIDTH="5%"> </td> <td VALIGN=BOTTOM WIDTH="16%"> <div align=right><font size=+0>125,369 </font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><font size=+0> Additional paid in capital</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>24,149,071</font></div> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>24,152,744 </font></div> </td> </tr> <tr> <td VALIGN=BOTTOM WIDTH="59%"><font size=+0> Retained earnings, net of effect of minority interest in</font> <br><font size=+0> shareholders' deficit of subsidiary of ($5,457,000) in </font> <br><font size=+0> 1999 and ($6,207,000) in 1998</font></td> <td VALIGN=BOTTOM WIDTH="3%"> </td> <td VALIGN=BOTTOM WIDTH="17%"> <div align=right><font size=+0>24,131,842</font></div> </td> <td VALIGN=BOTTOM WIDTH="5%"> </td> <td VALIGN=BOTTOM WIDTH="16%"> <div align=right><font size=+0>20,883,094 </font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><font size=+0> Accumulated other comprehensive loss</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>--</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>(28,422)</font></div><hr size="1"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><font size=+0> <b>Total Shareholders' Equity</b></font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>48,406,260</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>45,132,785 </font></div><hr size="1"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><b><font size=+0>Total Liabilities and Shareholders' Equity</font></b></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>$ 132,557,373</font></div><hr> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>$ 125,916,477 </font></div><hr> </td> </tr> </TABLE> <p><font size=+0>See notes to condensed consolidated financial statements.</font> <br> <BR> <BR> <BR> <CENTER>-2- </CENTER> <HR SIZE="4" NOSHADE> <BR> <br> <center> <p><b><font size=+0>SPARTAN MOTORS, INC.</font></b> <br><b><font size=+0>CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS</font></b> <br><b><font size=+0>(UNAUDITED)</font></b> <br><u><font size=+0>______________________________________</font></u></center> <p><br> <br> <table BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%" > <tr> <td VALIGN=TOP WIDTH="59%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP COLSPAN="4" WIDTH="39%"> <center><b><font size=+0>Three Months Ended </font></b> <br><b><font size=+0>September 30,</font></b></center><hr size="1"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <center><b><font size=+0>1999</font></b></center><hr size="1"> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="14%"> <center><b><font size=+0>1998</font></b></center><hr size="1"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="14%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><b><font size=+0>Sales</font></b></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>$ 83,483,570</font></div> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="14%"> <div align=right><font size=+0>$ 69,633,280</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="14%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><font size=+0>Cost of products sold</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>72,367,160</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="14%"> <div align=right><font size=+0>59,924,532</font></div><hr size="1"></td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="14%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><b><font size=+0>Gross Profit</font></b></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>11,116,410</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="14%"> <div align=right><font size=+0>9,708,748</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="14%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><b><font size=+0>Operating Expenses</font></b></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="14%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><font size=+0> Research and development</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>1,745,268</font></div> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="14%"> <div align=right><font size=+0>1,412,045</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><font size=+0> Selling, general and administrative</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>6,202,486</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="14%"> <div align=right><font size=+0>4,434,705</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><b><font size=+0>Operating Income</font></b></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>3,168,656</font></div> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="14%"> <div align=right><font size=+0>3,861,998</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="14%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><b><font size=+0>Other Income (Expense)</font></b></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="14%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><font size=+0> Interest expense</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>(734,703</font></div> </td> <td VALIGN=TOP WIDTH="6%"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="14%"> <div align=right><font size=+0>(284,894</font></div> </td> <td VALIGN=TOP WIDTH="2%"><font size=+0>)</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><font size=+0> Interest and other income</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>47,576</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="14%"> <div align=right><font size=+0>223,770</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="14%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=BOTTOM WIDTH="59%"><b><font size=+0>Earnings Before Equity in Loss of Affiliate and Taxes on </font><BR> Income</b></td> <td VALIGN=BOTTOM WIDTH="3%"> </td> <td VALIGN=BOTTOM WIDTH="17%"> <div align=right><font size=+0>2,481,529</font></div> </td> <td VALIGN=BOTTOM WIDTH="6%"> </td> <td VALIGN=BOTTOM WIDTH="14%"> <div align=right><font size=+0>3,800,874</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="14%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><b><font size=+0>Equity in Loss of Affiliate</font></b></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>--</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="14%"> <div align=right><font size=+0>332,500</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="14%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><b><font size=+0>Earnings Before Taxes on Income</font></b></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>2,481,529</font></div> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="14%"> <div align=right><font size=+0>3,468,374</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="14%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><b><font size=+0>Taxes on Income</font></b></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>1,552,961</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="14%"> <div align=right><font size=+0>1,409,897</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="14%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><b><font size=+0>Net Earnings </font></b></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>$ 928,568</font></div><hr> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="14%"> <div align=right><font size=+0>$ 2,058,477</font></div><hr> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="14%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><b><font size=+0>Basic and Diluted Net Earnings Per Share</font></b></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>$ 0.07</font></div><hr> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="14%"> <div align=right><font size=+0>$ 0.16</font></div><hr> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="14%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"><b><font size=+0>Basic Weighted Average Common Shares Outstanding</font></b></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>12,535,000</font></div><hr> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="14%"> <div align=right><font size=+0>12,552,000</font></div><hr> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="59%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="14%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=top WIDTH="59%" HEIGHT="31"><b><font size=+0>Diluted Weighted Average Common Shares Outstanding</font></b> <BR><b> Solely due to Impact of Outstanding Stock Options</b></td> <td VALIGN=BOTTOM WIDTH="3%" HEIGHT="31"></td> <td VALIGN=BOTTOM WIDTH="17%" HEIGHT="31"> <div align=right><font size=+0>12,556,000</font></div><hr> </td> <td VALIGN=BOTTOM WIDTH="6%" HEIGHT="31"></td> <td VALIGN=BOTTOM WIDTH="14%" HEIGHT="31"> <div align=right><font size=+0>12,581,000</font></div><hr> </td> <td VALIGN=BOTTOM WIDTH="2%" HEIGHT="31"></td> </tr> </TABLE> <p><font size=+0>See notes to condensed consolidated financial statements.</font> <BR> <BR> <BR> <CENTER>-3- </CENTER> <HR SIZE="4" NOSHADE> <BR> <center> <p><b><font size=+0>SPARTAN MOTORS, INC.</font></b> <br><b><font size=+0>CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS</font></b> <br><b><font size=+0>(UNAUDITED)</font></b> <br><u><font size=+0>______________________________________</font></u></center> <p><br> <br> <br> <br> <table BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%" > <tr> <td VALIGN=TOP WIDTH="60%"></td> <td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=TOP COLSPAN="5" WIDTH="37%"> <center><b><font size=+0>Nine Months Ended </font></b> <br><b><font size=+0>September 30,</font></b></center><hr SIZE="1"> </td> </tr> <tr> <td VALIGN=TOP COLSPAN="2" WIDTH="60%"> </td> <td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> <center><b><font size=+0>1999</font></b></center><hr SIZE="1"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> <center><b><font size=+0>1998</font></b></center><hr SIZE="1"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP COLSPAN="2" WIDTH="60%"> </td> <td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP COLSPAN="2" WIDTH="60%"><b><font size=+0>Sales</font></b></td> <td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>$234,371,911</font></div> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>$184,293,792</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP COLSPAN="2" WIDTH="60%"> </td> <td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP COLSPAN="2" WIDTH="60%"><font size=+0>Cost of products sold</font></td> <td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>202,624,117</font></div><hr size="1"></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>158,327,275</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP COLSPAN="2" WIDTH="60%"> </td> <td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP COLSPAN="2" WIDTH="60%"><b><font size=+0>Gross Profit</font></b></td> <td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>31,747,794</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>25,966,517</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP COLSPAN="2" WIDTH="60%"> </td> <td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP COLSPAN="2" WIDTH="60%"><b><font size=+0>Operating Expenses</font></b></td> <td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP COLSPAN="2" WIDTH="60%"><font size=+0> Research and development</font></td> <td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>5,167,292</font></div> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>4,031,092</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP COLSPAN="2" WIDTH="60%"><font size=+0> Selling, general and administrative</font></td> <td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>17,182,641</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>13,290,019</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP COLSPAN="2" WIDTH="60%"><b><font size=+0>Operating Income</font></b></td> <td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>9,397,861</font></div> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>8,645,406</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP COLSPAN="2" WIDTH="60%"> </td> <td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP COLSPAN="2" WIDTH="60%"><b><font size=+0>Other Income (Expense)</font></b></td> <td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP COLSPAN="2" WIDTH="60%"><font size=+0> Interest expense</font></td> <td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>(2,053,807</font></div> </td> <td VALIGN=TOP WIDTH="3%"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>(769,603</font></div> </td> <td VALIGN=TOP WIDTH="2%"><font size=+0>)</font></td> </tr> <tr> <td VALIGN=TOP COLSPAN="2" WIDTH="60%"><font size=+0> Interest and other income</font></td> <td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>275,325</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>719,160</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP COLSPAN="2" WIDTH="60%"> </td> <td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=BOTTOM COLSPAN="2" WIDTH="60%"><b><font size=+0>Earnings Before Equity in Loss of Affiliate and Taxes on</font></b> <br><b> Income</b></td> <td VALIGN=BOTTOM COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=BOTTOM WIDTH="16%"> <div align=right><font size=+0>7,619,379</font></div> </td> <td VALIGN=BOTTOM WIDTH="3%"> </td> <td VALIGN=BOTTOM WIDTH="16%"> <div align=right><font size=+0>8,594,963</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP COLSPAN="2" WIDTH="60%"> </td> <td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP COLSPAN="2" WIDTH="60%"><b><font size=+0>Equity in Loss of Affiliate</font></b></td> <td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>--</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>3,103,500</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP COLSPAN="2" WIDTH="60%"> </td> <td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP COLSPAN="2" WIDTH="60%"><b><font size=+0>Earnings Before Taxes on Income</font></b></td> <td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>7,619,379</font></div> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>5,491,463</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP COLSPAN="2" WIDTH="60%"> </td> <td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP COLSPAN="2" WIDTH="60%"><b><font size=+0>Taxes on Income</font></b></td> <td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>4,243,201</font></div><hr size="1"></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>2,948,885</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP COLSPAN="2" WIDTH="60%"> </td> <td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP COLSPAN="2" WIDTH="60%"><b><font size=+0>Net Earnings </font></b></td> <td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>$ 3,376,178</font></div><hr> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>$ 2,542,578</font></div><hr> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP COLSPAN="2" WIDTH="60%"> </td> <td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP COLSPAN="2" WIDTH="60%"><b><font size=+0>Basic and Diluted Net Earnings per Share</font></b></td> <td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>$ 0.27</font></div><hr></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>$ 0.20</font></div><hr> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP COLSPAN="2" WIDTH="60%"> </td> <td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP COLSPAN="2" WIDTH="60%"><b><font size=+0>Basic Weighted Average Common Shares Outstanding</font></b></td> <td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>12,535,000</font></div><hr> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> <div align=right><font size=+0>12,500,000</font></div><hr> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP COLSPAN="2" WIDTH="60%"> </td> <td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="16%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=top COLSPAN="2" WIDTH="60%" HEIGHT="31"><b><font size=+0>Diluted Weighted Average Common Shares Outstanding </font></b> <br><b> Solely due to Impact of Outstanding Stock Options</b></td> <td VALIGN=BOTTOM COLSPAN="2" WIDTH="3%" HEIGHT="31"></td> <td VALIGN=BOTTOM WIDTH="16%" HEIGHT="31"> <div align=right><font size=+0>12,558,000</font></div><hr> </td> <td VALIGN=BOTTOM WIDTH="3%" HEIGHT="31"> </td> <td VALIGN=BOTTOM WIDTH="16%" HEIGHT="31"> <div align=right><font size=+0>12,527,000</font></div><hr> </td> <td VALIGN=TOP WIDTH="2%" HEIGHT="31"></td> </tr> </TABLE> <p><font size=+0>See notes to condensed consolidated financial statements.</font> <BR> <BR> <BR> <CENTER>-4- </CENTER> <HR SIZE="4" NOSHADE> <BR> <center> <p><b><font size=+0>SPARTAN MOTORS, INC.</font></b> <br><b><font size=+0>CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY</font></b> <br><b><font size=+0>(UNAUDITED)</font></b> <br><u><font size=+0>______________________________________</font></u></center> <p><br> <table BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%" > <tr> <td VALIGN=TOP WIDTH="28%" HEIGHT="26"></td> <td VALIGN=BOTTOM WIDTH="10%" HEIGHT="26"></td> <td VALIGN=BOTTOM WIDTH="2%" HEIGHT="26"></td> <td VALIGN=BOTTOM WIDTH="9%" HEIGHT="26"></td> <td VALIGN=BOTTOM WIDTH="2%" HEIGHT="26"></td> <td VALIGN=BOTTOM WIDTH="11%" HEIGHT="26"></td> <td VALIGN=BOTTOM WIDTH="2%" HEIGHT="26"></td> <td VALIGN=BOTTOM WIDTH="11%" HEIGHT="26"></td> <td VALIGN=BOTTOM WIDTH="2%" HEIGHT="26"></td> <td VALIGN=BOTTOM WIDTH="12%" HEIGHT="26"> <center><b><font size=-2>Accumulated</font></b> <br><b><font size=-2>Other</font></b> <br><b><font size=-2>Comprehensive</font></b> <br><b><font size=-2>Income (Loss)</font></b></center><hr size="1"> </td> <td VALIGN=BOTTOM WIDTH="2%" HEIGHT="26"></td> <td VALIGN=BOTTOM WIDTH="9%" HEIGHT="26"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="26"></td> </tr> <tr> <td VALIGN=TOP WIDTH="28%" HEIGHT="26"></td> <td VALIGN=BOTTOM WIDTH="10%" HEIGHT="26"> <center><b><font size=-2>Number</font></b> <br><b><font size=-2>of Shares</font></b></center><hr size="1"> </td> <td VALIGN=BOTTOM WIDTH="2%" HEIGHT="26"></td> <td VALIGN=BOTTOM WIDTH="9%" HEIGHT="26"> <center><b><font size=-2>Common<BR> Stock</font></b></center><hr size="1"> </td> <td VALIGN=BOTTOM WIDTH="2%" HEIGHT="26"></td> <td VALIGN=BOTTOM WIDTH="11%" HEIGHT="26"> <center><b><font size=-2>Additional</font></b> <br><b><font size=-2>Paid In</font></b> <br><b><font size=-2>Capital</font></b></center><hr size="1"> </td> <td VALIGN=BOTTOM WIDTH="2%" HEIGHT="26"></td> <td VALIGN=BOTTOM WIDTH="11%" HEIGHT="26"> <center><b><font size=-2>Retained</font></b> <br><b><font size=-2>Earnings</font></b></center><hr size="1"> </td> <td VALIGN=BOTTOM WIDTH="2%" HEIGHT="26"></td> <td VALIGN=BOTTOM WIDTH="12%" HEIGHT="26"> <center><b><font size=-2>Valuation</font></b> <br><b><font size=-2>Allowance</font></b></center><hr size="1"> </td> <td VALIGN=BOTTOM WIDTH="2%" HEIGHT="26"></td> <td VALIGN=BOTTOM WIDTH="9%" HEIGHT="26"> <center><b><font size=-2>Total</font></b></center><hr size="1"> </td> <td VALIGN=TOP WIDTH="2%" HEIGHT="26"></td> </tr> <tr> <td VALIGN=TOP WIDTH="28%" HEIGHT="4"></td> <td VALIGN=TOP WIDTH="10%" HEIGHT="4"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="4"></td> <td VALIGN=TOP WIDTH="9%" HEIGHT="4"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="4"></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="4"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="4"></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="4"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="4"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="4"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="4"></td> <td VALIGN=TOP WIDTH="9%" HEIGHT="4"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="4"></td> </tr> <tr> <td VALIGN=TOP WIDTH="28%" HEIGHT="13"><b><font size=-2>Balance at January 1, 1999</font></b></td> <td VALIGN=TOP WIDTH="10%" HEIGHT="13"> <div align=right><font size=-2>12,536,891</font></div> </td> <td VALIGN=TOP WIDTH="2%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="9%" HEIGHT="13"> <div align=right><font size=-2>$125,369</font></div> </td> <td VALIGN=TOP WIDTH="2%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="13"> <div align=right><font size=-2>$24,152,744</font></div> </td> <td VALIGN=TOP WIDTH="2%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="13"> <div align=right><font size=-2>$20,883,094</font></div> </td> <td VALIGN=TOP WIDTH="2%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="13"> <div align=right><font size=-2>$ (28,422)</font></div> </td> <td VALIGN=TOP WIDTH="2%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="9%" HEIGHT="13"> <div align=right><font size=-2>$45,132,785</font></div> </td> <td VALIGN=TOP WIDTH="2%" HEIGHT="13"></td> </tr> <tr> <td VALIGN=TOP WIDTH="28%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="10%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="9%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="9%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="13"></td> </tr> <tr> <td VALIGN=TOP WIDTH="28%" HEIGHT="14"><font size=-2>Stock options exercised</font></td> <td VALIGN=TOP WIDTH="10%" HEIGHT="14"> <div align=right><font size=-2>1,325</font></div> </td> <td VALIGN=TOP WIDTH="2%" HEIGHT="14"></td> <td VALIGN=TOP WIDTH="9%" HEIGHT="14"> <div align=right><font size=-2>13</font></div> </td> <td VALIGN=TOP WIDTH="2%" HEIGHT="14"></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="14"> <div align=right><font size=-2>3,167</font></div> </td> <td VALIGN=TOP WIDTH="2%" HEIGHT="14"></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="14"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="14"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="14"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="14"></td> <td VALIGN=TOP WIDTH="9%" HEIGHT="14"> <div align=right><font size=-2>3,180</font></div> </td> <td VALIGN=TOP WIDTH="2%" HEIGHT="14"></td> </tr> <tr> <td VALIGN=TOP WIDTH="28%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="10%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="9%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="9%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="15"></td> </tr> <tr> <td VALIGN=BOTTOM WIDTH="28%" HEIGHT="15"><font size=-2>Shares issued in purchase price</font> <br><font size=-2> adjustment related to acquisition of<BR> subsidiary</font></td> <td VALIGN=BOTTOM WIDTH="10%" HEIGHT="15"> <div align=right><font size=-2>39,149</font></div> </td> <td VALIGN=BOTTOM WIDTH="2%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="9%" HEIGHT="15"> <div align=right><font size=-2>392</font></div> </td> <td VALIGN=BOTTOM WIDTH="2%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="11%" HEIGHT="15"> <div align=right><font size=-2>248,711</font></div> </td> <td VALIGN=BOTTOM WIDTH="2%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="11%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="2%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="12%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="2%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="9%" HEIGHT="15"> <div align=right><font size=-2>249,103</font></div> </td> <td VALIGN=BOTTOM WIDTH="2%" HEIGHT="15"></td> </tr> <tr> <td VALIGN=TOP WIDTH="28%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="10%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="9%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="9%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td> </tr> <tr> <td VALIGN=TOP WIDTH="28%" HEIGHT="15"><font size=-2>Assets sold in exchange for stock</font></td> <td VALIGN=TOP WIDTH="10%" HEIGHT="15"> <div align=right><font size=-2>(42,663</font></div> </td> <td VALIGN=TOP WIDTH="2%" HEIGHT="15"><font size=-2>)</font></td> <td VALIGN=TOP WIDTH="9%" HEIGHT="15"> <div align=right><font size=-2>(427</font></div> </td> <td VALIGN=TOP WIDTH="2%" HEIGHT="15"><font size=-2>)</font></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="15"> <div align=right><font size=-2>(255,551</font></div> </td> <td VALIGN=TOP WIDTH="2%" HEIGHT="15"><font size=-2>)</font></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="9%" HEIGHT="15"> <div align=right><font size=-2>(255,978</font></div> </td> <td VALIGN=TOP WIDTH="2%" HEIGHT="15"><font size=-2>)</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="28%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="10%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="9%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="9%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="15"></td> </tr> <tr> <td VALIGN=BOTTOM WIDTH="28%" HEIGHT="15"><font size=-2>Minority funding of shareholders' deficit</font> <br><font size=-2> of subsidiary</font></td> <td VALIGN=BOTTOM WIDTH="10%" HEIGHT="15"> </td> <td VALIGN=BOTTOM WIDTH="2%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="9%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="2%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="11%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="2%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="11%" HEIGHT="15"> <div align=right><font size=-2>750,000</font></div> </td> <td VALIGN=BOTTOM WIDTH="2%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="12%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="2%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="9%" HEIGHT="15"> <div align=right><font size=-2>750,000</font></div> </td> <td VALIGN=BOTTOM WIDTH="2%" HEIGHT="15"></td> </tr> <tr> <td VALIGN=TOP WIDTH="28%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="10%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="9%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="9%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td> </tr> <tr> <td VALIGN=TOP WIDTH="28%" HEIGHT="7"><font size=-2>Dividends paid ($0.07 per share)</font></td> <td VALIGN=TOP WIDTH="10%" HEIGHT="7"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="7"></td> <td VALIGN=TOP WIDTH="9%" HEIGHT="7"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="7"></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="7"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="7"></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="7"> <div align=right><font size=-2>(877,430</font></div> </td> <td VALIGN=TOP WIDTH="2%" HEIGHT="7"><font size=-2>)</font></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="7"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="7"></td> <td VALIGN=TOP WIDTH="9%" HEIGHT="7"> <div align=right><font size=-2>(877,430</font></div> </td> <td VALIGN=TOP WIDTH="2%" HEIGHT="7"><font size=-2>)</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="28%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="10%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="9%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="9%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td> </tr> <tr> <td VALIGN=TOP WIDTH="28%" HEIGHT="12"><font size=-2>Comprehensive income:</font></td> <td VALIGN=TOP WIDTH="10%" HEIGHT="12"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="12"></td> <td VALIGN=TOP WIDTH="9%" HEIGHT="12"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="12"></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="12"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="12"></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="12"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="12"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="12"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="12"></td> <td VALIGN=TOP WIDTH="9%" HEIGHT="12"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="12"></td> </tr> <tr> <td VALIGN=TOP WIDTH="28%" HEIGHT="5"><font size=-2> Net earnings</font></td> <td VALIGN=TOP WIDTH="10%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="9%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="5"> <div align=right><font size=-2>3,376,178</font></div> </td> <td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="9%" HEIGHT="5"> <div align=right><font size=-2>3,376,178</font></div> </td> <td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td> </tr> <tr> <td VALIGN=TOP WIDTH="28%" HEIGHT="5"><font size=-2> Other comprehensive items, net of tax:</font></td> <td VALIGN=TOP WIDTH="10%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="9%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="9%" HEIGHT="5"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="5"></td> </tr> <tr> <td VALIGN=BOTTOM WIDTH="28%" HEIGHT="18"><font size=-2> Change in valuation allowance (net </font> <br><font size=-2> of tax benefit of $16,400)</font></td> <td VALIGN=BOTTOM WIDTH="10%" HEIGHT="18"></td> <td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td> <td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"></td> <td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td> <td VALIGN=BOTTOM WIDTH="11%" HEIGHT="18"></td> <td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td> <td VALIGN=BOTTOM WIDTH="11%" HEIGHT="18"></td> <td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td> <td VALIGN=BOTTOM WIDTH="12%" HEIGHT="18"> <div align=right><font size=-2><BR> 28,422</font></div> </td> <td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td> <td VALIGN=BOTTOM WIDTH="9%" HEIGHT="18"> <div align=right><font size=-2><U> 28,422</U></font></div> </td> <td VALIGN=BOTTOM WIDTH="2%" HEIGHT="18"></td> </tr> <tr> <td VALIGN=TOP WIDTH="28%" HEIGHT="16"><font size=-2> Total comprehensive income</font></td> <td VALIGN=TOP WIDTH="10%" HEIGHT="16"> <hr size="1"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="16"></td> <td VALIGN=TOP WIDTH="9%" HEIGHT="16"> <hr size="1"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="16"></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="16"> <hr size="1"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="16"></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="16"> <hr size="1"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="16"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="16"> <hr size="1"></td> <td VALIGN=TOP WIDTH="2%" HEIGHT="16"></td> <td VALIGN=BOTTOM WIDTH="9%" HEIGHT="16"> <div align=right><font size=-2>3,404,600</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="2%" HEIGHT="16"></td> </tr> <tr> <td VALIGN=TOP WIDTH="28%" HEIGHT="13"><b><font size=-2>Balance at September 30, 1999</font></b></td> <td VALIGN=TOP WIDTH="10%" HEIGHT="13"> <div align=right><font size=-2>12,534,702</font></div><hr> </td> <td VALIGN=TOP WIDTH="2%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="9%" HEIGHT="13"> <div align=right><font size=-2>$125,347</font></div><hr> </td> <td VALIGN=TOP WIDTH="2%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="13"> <div align=right><font size=-2>$24,149,071</font></div><hr> </td> <td VALIGN=TOP WIDTH="2%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="11%" HEIGHT="13"> <div align=right><font size=-2>$24,131,842</font></div><hr> </td> <td VALIGN=TOP WIDTH="2%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="13"> <div align=right><font size=-2>$ 0</font></div><hr> </td> <td VALIGN=TOP WIDTH="2%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="9%" HEIGHT="13"> <div align=right><font size=-2>$48,406,260</font></div><hr> </td> <td VALIGN=TOP WIDTH="2%" HEIGHT="13"></td> </tr> </TABLE> <p><font size=+0>See notes to condensed consolidated financial statements.</font> <BR> <BR> <BR> <CENTER>-5- </CENTER> <HR SIZE="4" NOSHADE> <BR> <center> <p><b><font size=+0>SPARTAN MOTORS, INC.</font></b> <br><b><font size=+0>CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS</font></b> <br><b><font size=+0>(UNAUDITED)</font></b> <br><u><font size=+0>______________________________________</font></u></center> <p><br> <br> <br> <br> <table BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%" > <tr> <td VALIGN=TOP WIDTH="60%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP COLSPAN="4" WIDTH="38%"> <center><b><font size=+0>Nine Months Ended </font></b> <br><b><font size=+0>September 30,</font></b></center><hr SIZE="1"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <center><b><font size=+0>1999</font></b></center><hr SIZE="1"> </td> <td VALIGN=TOP WIDTH="4%"> </td> <td VALIGN=TOP WIDTH="15%"> <center><b><font size=+0>1998</font></b></center><hr SIZE="1"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><b><font size=+0>Cash Flows From Operating Activities:</font></b></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="4%"> </td> <td VALIGN=TOP WIDTH="15%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Net earnings</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>$ 3,376,178</font></div> </td> <td VALIGN=TOP WIDTH="4%"> </td> <td VALIGN=TOP WIDTH="15%"> <div align=right><font size=+0>$ 2,542,578</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Adjustments to reconcile net earnings to net cash provided</font> <BR><font size=+0> by (used in) operating activities:</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="4%"> </td> <td VALIGN=TOP WIDTH="15%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Depreciation and amortization</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>3,052,043</font></div> </td> <td VALIGN=TOP WIDTH="4%"> </td> <td VALIGN=TOP WIDTH="15%"> <div align=right><font size=+0>1,762,582</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Gain on sales of assets and marketable securities</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>(66,022</font></div> </td> <td VALIGN=TOP WIDTH="4%"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="15%"> <div align=right><font size=+0>(83,653</font></div> </td> <td VALIGN=TOP WIDTH="2%"><font size=+0>)</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Equity in net loss of affiliate</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>--</font></div> </td> <td VALIGN=TOP WIDTH="4%"> </td> <td VALIGN=TOP WIDTH="15%"> <div align=right><font size=+0>3,103,500</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Decrease (increase) in assets net of effects of </font> <BR><font size=+0> acquisitions of subsidiaries:</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="4%"> </td> <td VALIGN=TOP WIDTH="15%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Accounts receivable</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>(4,648,838</font></div> </td> <td VALIGN=TOP WIDTH="4%"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="15%"> <div align=right><font size=+0>(14,109,768</font></div> </td> <td VALIGN=TOP WIDTH="2%"><font size=+0>)</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Inventories</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>(3,779,402</font></div> </td> <td VALIGN=TOP WIDTH="4%"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="15%"> <div align=right><font size=+0>(7,644,501</font></div> </td> <td VALIGN=TOP WIDTH="2%"><font size=+0>)</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Federal taxes receivable</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>--</font></div> </td> <td VALIGN=TOP WIDTH="4%"> </td> <td VALIGN=TOP WIDTH="15%"> <div align=right><font size=+0>401,181</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Other assets</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>(250,654</font></div> </td> <td VALIGN=TOP WIDTH="4%"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="15%"> <div align=right><font size=+0>426,809</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Increase (decrease) in liabilities net of effects of</font> <BR><font size=+0> acquisitions of subsidiaries:</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="4%"> </td> <td VALIGN=TOP WIDTH="15%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Accounts payable</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>1,853,669</font></div> </td> <td VALIGN=TOP WIDTH="4%"> </td> <td VALIGN=TOP WIDTH="15%"> <div align=right><font size=+0>10,122,448</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Other current liabilities and accrued expenses</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>21,944</font></div> </td> <td VALIGN=TOP WIDTH="4%"> </td> <td VALIGN=TOP WIDTH="15%"> <div align=right><font size=+0>781,057</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Accrued warranty expense</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>(442,930</font></div> </td> <td VALIGN=TOP WIDTH="4%"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="15%"> <div align=right><font size=+0>330,281</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Accrued customer rebates</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>18,349</font></div> </td> <td VALIGN=TOP WIDTH="4%"> </td> <td VALIGN=TOP WIDTH="15%"> <div align=right><font size=+0>27,350</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Taxes on income</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>(1,085,635</font></div> </td> <td VALIGN=TOP WIDTH="4%"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="15%"> <div align=right><font size=+0>1,640,648</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Accrued vacation</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>74,604</font></div> </td> <td VALIGN=TOP WIDTH="4%"> </td> <td VALIGN=TOP WIDTH="15%"> <div align=right><font size=+0>(40,160</font></div> </td> <td VALIGN=TOP WIDTH="2%"><font size=+0>)</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Accrued compensation and related taxes</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>1,095,294</font></div> </td> <td VALIGN=TOP WIDTH="4%"> </td> <td VALIGN=TOP WIDTH="15%"> <div align=right><font size=+0>208,581</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Deposits from customers</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>803,823</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="4%"> </td> <td VALIGN=TOP WIDTH="15%"> <div align=right><font size=+0>(614,308</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="2%"><font size=+0>)</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> <b>Total Adjustments</b></font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>(3,353,755</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="4%"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="15%"> <div align=right><font size=+0>(3,687,953</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="2%"><font size=+0>)</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="4%"> </td> <td VALIGN=TOP WIDTH="15%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><b><font size=+0>Net Cash Provided By (Used In) Operating Activities</font></b></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>22,423</font></div> </td> <td VALIGN=TOP WIDTH="4%"> </td> <td VALIGN=TOP WIDTH="15%"> <div align=right><font size=+0>(1,145,375</font></div> </td> <td VALIGN=TOP WIDTH="2%"><font size=+0>)</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><b><font size=+0>Cash Flows From Investing Activities:</font></b></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="4%"> </td> <td VALIGN=TOP WIDTH="15%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Purchases of property, plant and equipment</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>(1,734,537</font></div> </td> <td VALIGN=TOP WIDTH="4%"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="15%"> <div align=right><font size=+0>(624,999</font></div> </td> <td VALIGN=TOP WIDTH="2%"><font size=+0>)</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Proceeds from sales of property, plant and equipment</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>124,213</font></div> </td> <td VALIGN=TOP WIDTH="4%"> </td> <td VALIGN=TOP WIDTH="15%"> <div align=right><font size=+0>171,724</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Purchases of investment securities</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>--</font></div> </td> <td VALIGN=TOP WIDTH="4%"> </td> <td VALIGN=TOP WIDTH="15%"> <div align=right><font size=+0>(364,976</font></div> </td> <td VALIGN=TOP WIDTH="2%"><font size=+0>)</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Proceeds from sales of investment securities</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>500,000</font></div> </td> <td VALIGN=TOP WIDTH="4%"> </td> <td VALIGN=TOP WIDTH="15%"> <div align=right><font size=+0>400,000</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Investment in affiliate</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>--</font></div> </td> <td VALIGN=TOP WIDTH="4%"> </td> <td VALIGN=TOP WIDTH="15%"> <div align=right><font size=+0>(3,103,500</font></div> </td> <td VALIGN=TOP WIDTH="2%"><font size=+0>)</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Note receivable advanced </font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>--</font></div> </td> <td VALIGN=TOP WIDTH="4%"> </td> <td VALIGN=TOP WIDTH="15%"> <div align=right><font size=+0>(1,354,000</font></div> </td> <td VALIGN=TOP WIDTH="2%"><font size=+0>)</font></td> </tr> <tr> <td VALIGN=BOTTOM WIDTH="60%"><font size=+0> Purchase price adjustment related to acquisition of </font> <BR><font size=+0> subsidiary</font></td> <td VALIGN=BOTTOM WIDTH="3%"> </td> <td VALIGN=BOTTOM WIDTH="17%"> <div align=right><font size=+0>(249,103</font></div> </td> <td VALIGN=BOTTOM WIDTH="4%"><font size=+0>)</font></td> <td VALIGN=BOTTOM WIDTH="15%"> <div align=right><font size=+0>--</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Minority funding of shareholders' deficit of subsidiary</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>750,000</font></div> </td> <td VALIGN=TOP WIDTH="4%"> </td> <td VALIGN=TOP WIDTH="15%"> <div align=right><font size=+0>--</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Acquisition of subsidiary, net of cash received</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>--</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="4%"> </td> <td VALIGN=TOP WIDTH="15%"> <div align=right><font size=+0>(1,661,787</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="2%"><font size=+0>)</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><b><font size=+0>Net Cash Used In Investing Activities</font></b></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>(609,427</font></div> </td> <td VALIGN=TOP WIDTH="4%"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="15%"> <div align=right><font size=+0>(6,537,538</font></div> </td> <td VALIGN=TOP WIDTH="2%"><font size=+0>)</font></td> </tr> </TABLE> <P> <div align=right><font size=+0>(Continued)</font></div> <BR> <BR> <BR> <CENTER>-6- </CENTER> <HR SIZE="4" NOSHADE> <BR> <center> <p><b><font size=+0>SPARTAN MOTORS, INC.</font></b> <br><b><font size=+0>CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS</font></b> <br><b><font size=+0>(UNAUDITED) (Continued)</font></b> <br><u><font size=+0>______________________________________</font></u></center> <p><br> <table BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%" > <tr> <td VALIGN=TOP WIDTH="60%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP COLSPAN="4" WIDTH="38%"> <center><b><font size=+0>Nine Months Ended </font></b> <br><b><font size=+0>September 30,</font></b></center><hr size="1"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <center><b><font size=+0>1999</font></b></center><hr size="1"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="14%"> <center><b><font size=+0>1998</font></b></center><hr size="1"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><b><font size=+0>Cash Flows From Financing Activities:</font></b></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="14%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Proceeds from notes payable</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>$ - --</font></div> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="14%"> <div align=right><font size=+0>$ 55,000</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Payments on notes payable</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>(460,045</font></div> </td> <td VALIGN=TOP WIDTH="5%"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="14%"> <div align=right><font size=+0>(291,177</font></div> </td> <td VALIGN=TOP WIDTH="2%"><font size=+0>)</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Proceeds from long-term debt</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>2,695,713</font></div> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="14%"> <div align=right><font size=+0>5,396,215</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Payments on long-term debt</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>(754,159</font></div> </td> <td VALIGN=TOP WIDTH="5%"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="14%"> <div align=right><font size=+0>(679,766</font></div> </td> <td VALIGN=TOP WIDTH="2%"><font size=+0>)</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Net proceeds from exercise of stock options</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>3,180</font></div> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="14%"> <div align=right><font size=+0>63,265</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Purchase of treasury stock</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>--</font></div> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="14%"> <div align=right><font size=+0>(293,736</font></div> </td> <td VALIGN=TOP WIDTH="2%"><font size=+0>)</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><font size=+0> Dividends paid</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>(877,430</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="5%"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="14%"> <div align=right><font size=+0>(879,655</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="2%"><font size=+0>)</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="14%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><b><font size=+0>Net Cash Provided By Financing Activities</font></b></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>607,259</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="14%"> <div align=right><font size=+0>3,370,146</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="14%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><b><font size=+0>Net Increase (Decrease) in Cash and Cash Equivalents</font></b></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>20,255</font></div> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="14%"> <div align=right><font size=+0>(4,312,767</font></div> </td> <td VALIGN=TOP WIDTH="2%"><font size=+0>)</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="14%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><b><font size=+0>Cash and Cash Equivalents at Beginning of Period</font></b></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>37,645</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="14%"> <div align=right><font size=+0>4,812,438</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="14%"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="60%"><b><font size=+0>Cash and Cash Equivalents at End of Period</font></b></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="17%"> <div align=right><font size=+0>$ 57,900</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="14%"> <div align=right><font size=+0>$ 499,671</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> </TABLE> <p><font size=+0>See notes to condensed consolidated financial statements.</font> <BR> <BR> <BR> <CENTER>-7- </CENTER> <HR SIZE="4" NOSHADE> <BR> <center> <p><b><font size=+0>SPARTAN MOTORS, INC.</font></b> <P><b><font size=+0>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</font></b> <br><u><font size=+0>______________________________________</font></u></center> <table BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%" > <tr> <td VALIGN=TOP WIDTH="11%"><b><font size=+0>Note 1</font></b></td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="82%"><font size=+0>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, 1998, included in the Company's Form 10-K filed with the Securities and Exchange Commission on March 19, 1999.</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="11%"> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="82%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="11%"><b><font size=+0>Note 2</font></b></td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="82%"><font size=+0>The accompanying unaudited interim condensed consolidated financial statements reflect all normal and recurring adjustments that are necessary for the fair presentation of the Company's financial position as of September 30, 1999, and the results of operations and cash flows for the periods presented.</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="11%"> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="82%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="11%"><b><font size=+0>Note 3</font></b></td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="82%"><font size=+0>The results of operations for the nine-month period ended September 30, 1999 are not necessarily indicative of the results to be expected for the full year.</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="11%"> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="82%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="11%"><b><font size=+0>Note 4</font></b></td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="82%"><font size=+0>As of January 1, 1998, the Company adopted Financial Accounting Standards Board (FASB) Statement No. 130, "Reporting Comprehensive Income." Statement No. 130 establishes rules for the reporting of comprehensive income and its components. The adoption of this statement had no impact on the Company's net earnings or shareholders' equity. Other comprehensive gain for the nine months ended September 30, 1998 was $2,538,685.</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="11%"> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="82%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="11%"><b><font size=+0>Note 5</font></b></td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="82%"><font size=+0>Inventories consist of raw materials and purchased components, work in process and finished goods and are summarized as follows:</font></td> </tr> </TABLE> <P> <table BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%" > <tr> <td VALIGN=TOP WIDTH="11%"> </td> <td VALIGN=BOTTOM WIDTH="42%"> </td> <td VALIGN=top wIDTH="22%"> <center><b><font size=+0>September 30, 1999</font></b><hr size="1"> <b><font size=+0>(Unaudited)</font></b></center> </td> <td VALIGN=BOTTOM WIDTH="2%"> </td> <td VALIGN=top WIDTH="21%"> <center><b><font size=+0>December 31, 1998</font></b></center><hr size="1"> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <TR> <TD COLSPAN="6"> </TD> </TR> <tr> <td VALIGN=TOP WIDTH="11%"> </td> <td VALIGN=TOP WIDTH="42%"><font size=+0>Finished goods</font></td> <td VALIGN=TOP WIDTH="22%"> <div align=right><font size=+0>$ 7,668,684</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> <td VALIGN=TOP WIDTH="21%"> <div align=right><font size=+0>$ 4,688,880</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="11%"> </td> <td VALIGN=TOP WIDTH="42%"><font size=+0>Raw materials and purchased components</font></td> <td VALIGN=TOP WIDTH="22%"> <div align=right><font size=+0>38,512,136</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> <td VALIGN=TOP WIDTH="21%"> <div align=right><font size=+0>38,477,149</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="11%"> </td> <td VALIGN=TOP WIDTH="42%"><font size=+0>Work in process</font></td> <td VALIGN=TOP WIDTH="22%"> <div align=right><font size=+0>7,026,750</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> <td VALIGN=TOP WIDTH="21%"> <div align=right><font size=+0>5,698,500</font></div> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="11%"> </td> <td VALIGN=TOP WIDTH="42%"><font size=+0>Obsolescence reserve</font></td> <td VALIGN=TOP WIDTH="22%"> <div align=right><font size=+0>(2,530,354</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="2%"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="21%"> <div align=right><font size=+0>(1,620,000</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="2%"><font size=+0>)</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="11%"> </td> <td VALIGN=TOP WIDTH="42%"> </td> <td VALIGN=TOP WIDTH="22%"> <div align=right><font size=+0>$ 50,677,216</font></div><hr> </td> <td VALIGN=TOP WIDTH="2%"> </td> <td VALIGN=TOP WIDTH="21%"> <div align=right><font size=+0>$ 47,244,529</font></div><hr> </td> <td VALIGN=TOP WIDTH="2%"> </td> </tr> </TABLE> <BR> <table BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%" > <tr> <td VALIGN=TOP WIDTH="11%"><b><font size=+0>Note 6</font></b></td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="82%"><font size=+0>Sales and other financial information by business segment are as follows (in thousands). The Chassis Group consists of the Company's wholly owned subsidiary, Spartan Motors Chassis, Inc. The Bodies Group consists of the Company's wholly owned subsidiaries: Luverne Fire Apparatus Co., Ltd., Quality Manufacturing, Inc. and Road Rescue, Inc., as well as Carpenter Industries, Inc., the Company's 49.9% subsidiary.</font></td> </tr> </TABLE> <P> <table BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%" > <tr> <td VALIGN=TOP COLSPAN="3" WIDTH="52%" HEIGHT="16"><b><font size=+0>Three months ended September 30, 1999</font></b></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="16"></td> <td VALIGN=TOP WIDTH="3%" HEIGHT="16"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="16"></td> <td VALIGN=TOP WIDTH="3%" HEIGHT="16"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="16"></td> </tr> <TR> <TD COLSPAN="8"> </TD> </TR> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="26"></td> <td VALIGN=BOTTOM COLSPAN="3" WIDTH="28%" HEIGHT="26"> <center><b><font size=+0>Manufacturing of</font></b></center><hr size="1"> </td> <td VALIGN=BOTTOM WIDTH="3%" HEIGHT="26"></td> <td VALIGN=BOTTOM ROWSPAN="2" WIDTH="15%" HEIGHT="26"> <center><b><font size=+0>Other/</font></b> <br><b><font size=+0>Consolidation<BR> Entries</font></b></center><hr size="1"> </td> <td VALIGN=BOTTOM WIDTH="3%" HEIGHT="26"></td> <td VALIGN=BOTTOM WIDTH="15%" HEIGHT="26"></td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="12"></td> <td VALIGN=BOTTOM WIDTH="13%" HEIGHT="12"> <center><b><font size=+0>Chassis</font></b></center><hr size="1"> </td> <td VALIGN=BOTTOM WIDTH="3%" HEIGHT="12"></td> <td VALIGN=BOTTOM WIDTH="12%" HEIGHT="12"> <center><b><font size=+0>Bodies</font></b></center><hr size="1"> </td> <td VALIGN=BOTTOM WIDTH="3%" HEIGHT="12"></td> <td VALIGN=BOTTOM WIDTH="3%" HEIGHT="12"></td> <td VALIGN=BOTTOM WIDTH="15%" HEIGHT="12"> <center><b><font size=+0>Consolidated</font></b></center><hr size="1"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="13%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="3%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="3%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="3%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="15"></td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="15"><font size=+0>Net sales</font></td> <td VALIGN=TOP WIDTH="13%" HEIGHT="15"> <div align=right><font size=+0>$64,179</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="15"> <div align=right><font size=+0>$21,582</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="15"> <div align=right><font size=+0>$(2,277</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="15"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="15"> <div align=right><font size=+0>$83,484</font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="10"><font size=+0>Interest expense</font></td> <td VALIGN=TOP WIDTH="13%" HEIGHT="10"> <div align=right><font size=+0>299</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="10"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="10"> <div align=right><font size=+0>468</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="10"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="10"> <div align=right><font size=+0>(33</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="10"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="10"> <div align=right><font size=+0>734</font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="11"><font size=+0>Depreciation and amortization<BR> expense</font></td> <td VALIGN=TOP WIDTH="13%" HEIGHT="11"> <div align=right><font size=+0>308</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="11"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="11"> <div align=right><font size=+0>588</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="11"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="11"> <div align=right><font size=+0>100</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="11"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="11"> <div align=right><font size=+0>996</font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="13"><font size=+0>Income tax expense</font></td> <td VALIGN=TOP WIDTH="13%" HEIGHT="13"> <div align=right><font size=+0>1,401</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="13"> <div align=right><font size=+0>144</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="13"> <div align=right><font size=+0>8</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="13"> <div align=right><font size=+0>1,553</font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="13"><font size=+0>Segment earnings</font></td> <td VALIGN=TOP WIDTH="13%" HEIGHT="13"> <div align=right><font size=+0>2,583</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="13"> <div align=right><font size=+0>(1,592</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="13"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="13"> <div align=right><font size=+0>(62</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="13"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="13"> <div align=right><font size=+0>929</font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="14"><font size=+0>Segment assets</font></td> <td VALIGN=TOP WIDTH="13%" HEIGHT="14"> <div align=right><font size=+0>69,092</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="14"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="14"> <div align=right><font size=+0>54,293</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="14"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="14"> <div align=right><font size=+0>9,172</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="14"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="14"> <div align=right><font size=+0>132,557</font></div> </td> </tr> </TABLE> <BR> <BR> <BR> <CENTER>-8- </CENTER> <HR SIZE="4" NOSHADE> <BR> <br><b><font size=+0>Note 6 (Continued)</font></b> <P> <table BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%" > <tr> <td VALIGN=BOTTOM COLSPAN="3" WIDTH="52%" HEIGHT="19"><b><font size=+0>Three months ended September 30, 1998</font></b></td> <td VALIGN=BOTTOM WIDTH="12%" HEIGHT="19"></td> <td VALIGN=BOTTOM WIDTH="3%" HEIGHT="19"></td> <td VALIGN=BOTTOM WIDTH="15%" HEIGHT="19"></td> <td VALIGN=BOTTOM WIDTH="3%" HEIGHT="19"></td> <td VALIGN=BOTTOM WIDTH="15%" HEIGHT="19"></td> </tr> <TR> <TD COLSPAN="8"> </TD> </TR> <tr> <td VALIGN=BOTTOM WIDTH="37%" HEIGHT="26"></td> <td VALIGN=BOTTOM COLSPAN="3" WIDTH="28%" HEIGHT="26"> <center><b><font size=+0>Manufacturing of</font></b></center><hr size="1"> </td> <td VALIGN=BOTTOM WIDTH="3%" HEIGHT="26"></td> <td VALIGN=BOTTOM ROWSPAN="2" WIDTH="15%" HEIGHT="26"> <center><b><font size=+0>Other/</font></b> <br><b><font size=+0>Consolidation<BR> Entries</font></b></center><hr size="1"> </td> <td VALIGN=BOTTOM WIDTH="3%" HEIGHT="26"></td> <td VALIGN=BOTTOM WIDTH="15%" HEIGHT="26"></td> </tr> <tr> <td VALIGN=BOTTOM WIDTH="37%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="13%" HEIGHT="15"> <center><b><font size=+0>Chassis</font></b></center><hr size="1"> </td> <td VALIGN=BOTTOM WIDTH="3%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="12%" HEIGHT="15"> <center><b><font size=+0>Bodies</font></b></center><hr size="1"> </td> <td VALIGN=BOTTOM WIDTH="3%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="3%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="15%" HEIGHT="15"> <center><b><font size=+0>Consolidated</font></b></center><hr size="1"> </td> </tr> <tr> <td VALIGN=BOTTOM WIDTH="37%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="13%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="3%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="12%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="3%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="15%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="3%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="15%" HEIGHT="15"></td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="15"><font size=+0>Net sales</font></td> <td VALIGN=TOP WIDTH="13%" HEIGHT="15"> <div align=right><font size=+0>$ 57,124</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="15"> <div align=right><font size=+0>$ 14,451</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="15"> <div align=right><font size=+0>$ (1,942</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="15"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="15"> <div align=right><font size=+0>$ 69,633</font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="10"><font size=+0>Interest expense</font></td> <td VALIGN=TOP WIDTH="13%" HEIGHT="10"> <div align=right><font size=+0>253</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="10"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="10"> <div align=right><font size=+0>94</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="10"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="10"> <div align=right><font size=+0>(62</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="10"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="10"> <div align=right><font size=+0>285</font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="11"><font size=+0>Depreciation and amortization<BR> expense</font></td> <td VALIGN=TOP WIDTH="13%" HEIGHT="11"> <div align=right><font size=+0>408</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="11"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="11"> <div align=right><font size=+0>178</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="11"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="11"> <div align=right><font size=+0>--</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="11"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="11"> <div align=right><font size=+0>586</font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="13"><font size=+0>Equity in the loss of affiliate</font></td> <td VALIGN=TOP WIDTH="13%" HEIGHT="13"> <div align=right><font size=+0>--</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="13"> <div align=right><font size=+0>--</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="13"> <div align=right><font size=+0>333</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="13"> <div align=right><font size=+0>333</font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="13"><font size=+0>Income tax expense</font></td> <td VALIGN=TOP WIDTH="13%" HEIGHT="13"> <div align=right><font size=+0>1,325</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="13"> <div align=right><font size=+0>85</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="13"> <div align=right><font size=+0>--</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="13"> <div align=right><font size=+0>1,410</font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="14"><font size=+0>Segment earnings</font></td> <td VALIGN=TOP WIDTH="13%" HEIGHT="14"> <div align=right><font size=+0>2,224</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="14"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="14"> <div align=right><font size=+0>(7</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="14"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="14"> <div align=right><font size=+0>(159</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="14"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="14"> <div align=right><font size=+0>2,058</font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="14"><font size=+0>Segment assets</font></td> <td VALIGN=TOP WIDTH="13%" HEIGHT="14"> <div align=right><font size=+0>114,174</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="14"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="14"> <div align=right><font size=+0>24,394</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="14"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="14"> <div align=right><font size=+0>(33,932</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="14"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="14"> <div align=right><font size=+0>104,636</font></div> </td> </tr> </TABLE> <P> <table BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%" > <tr> <td VALIGN=TOP COLSPAN="3" WIDTH="52%" HEIGHT="19"><b><font size=+0>Nine months ended September 30, 1999</font></b></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="19"></td> <td VALIGN=TOP WIDTH="3%" HEIGHT="19"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="19"></td> <td VALIGN=TOP WIDTH="3%" HEIGHT="19"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="19"></td> </tr> <TR> <TD COLSPAN="8"> </TD> </TR> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="26"></td> <td VALIGN=BOTTOM COLSPAN="3" WIDTH="28%" HEIGHT="26"> <center><b><font size=+0>Manufacturing of</font></b></center><hr size="1"> </td> <td VALIGN=BOTTOM WIDTH="3%" HEIGHT="26"></td> <td VALIGN=BOTTOM ROWSPAN="2" WIDTH="15%" HEIGHT="26"> <center><b><font size=+0>Other/</font></b> <br><b><font size=+0>Consolidation<BR> Entries</font></b></center><hr size="1"> </td> <td VALIGN=BOTTOM WIDTH="3%" HEIGHT="26"></td> <td VALIGN=BOTTOM WIDTH="15%" HEIGHT="26"></td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="13%" HEIGHT="15"> <center><b><font size=+0>Chassis</font></b></center><hr size="1"> </td> <td VALIGN=BOTTOM WIDTH="3%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="12%" HEIGHT="15"> <center><b><font size=+0>Bodies</font></b></center><hr size="1"> </td> <td VALIGN=BOTTOM WIDTH="3%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="3%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="15%" HEIGHT="15"> <center><b><font size=+0>Consolidated</font></b></center><hr size="1"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="13%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="3%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="3%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="3%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="15"></td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="15"><font size=+0>Net sales</font></td> <td VALIGN=TOP WIDTH="13%" HEIGHT="15"> <div align=right><font size=+0>$ 180,205</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="15"> <div align=right><font size=+0>$ 61,222</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="15"> <div align=right><font size=+0>$ (7,055</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="15"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="15"> <div align=right><font size=+0>$ 234,372</font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="10"><font size=+0>Interest expense</font></td> <td VALIGN=TOP WIDTH="13%" HEIGHT="10"> <div align=right><font size=+0>867</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="10"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="10"> <div align=right><font size=+0>1,249</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="10"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="10"> <div align=right><font size=+0>(63</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="10"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="10"> <div align=right><font size=+0>2,053</font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="11"><font size=+0>Depreciation and amortization <BR> expense</font></td> <td VALIGN=TOP WIDTH="13%" HEIGHT="11"> <div align=right><font size=+0>997</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="11"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="11"> <div align=right><font size=+0>1,742</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="11"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="11"> <div align=right><font size=+0>313</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="11"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="11"> <div align=right><font size=+0>3,052</font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="13"><font size=+0>Income tax expense</font></td> <td VALIGN=TOP WIDTH="13%" HEIGHT="13"> <div align=right><font size=+0>3,964</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="13"> <div align=right><font size=+0>459</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="13"> <div align=right><font size=+0>(180</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="13"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="13"> <div align=right><font size=+0>4,243</font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="14"><font size=+0>Segment earnings</font></td> <td VALIGN=TOP WIDTH="13%" HEIGHT="14"> <div align=right><font size=+0>7,502</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="14"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="14"> <div align=right><font size=+0>(3,687</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="14"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="14"> <div align=right><font size=+0>(439</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="14"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="14"> <div align=right><font size=+0>3,376</font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="14"><font size=+0>Segment assets</font></td> <td VALIGN=TOP WIDTH="13%" HEIGHT="14"> <div align=right><font size=+0>69,092</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="14"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="14"> <div align=right><font size=+0>54,293</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="14"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="14"> <div align=right><font size=+0>9,172</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="14"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="14"> <div align=right><font size=+0>132,557</font></div> </td> </tr> </TABLE> <table BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%" > <tr> <td VALIGN=TOP COLSPAN="3" WIDTH="52%" HEIGHT="19"><b><font size=+0>Nine months ended September 30, 1998</font></b></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="19"></td> <td VALIGN=TOP WIDTH="3%" HEIGHT="19"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="19"></td> <td VALIGN=TOP WIDTH="3%" HEIGHT="19"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="19"></td> </tr> <TR> <TD COLSPAN="8"> </TD> </TR> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="26"></td> <td VALIGN=BOTTOM COLSPAN="3" WIDTH="28%" HEIGHT="26"> <center><b><font size=+0>Manufacturing of</font></b></center><hr size="1"> </td> <td VALIGN=BOTTOM WIDTH="3%" HEIGHT="26"></td> <td VALIGN=BOTTOM ROWSPAN="2" WIDTH="15%" HEIGHT="26"> <center><b><font size=+0>Other/</font></b> <br><b><font size=+0>Consolidation <BR> Entries</font></b></center><hr size="1"> </td> <td VALIGN=BOTTOM WIDTH="3%" HEIGHT="26"></td> <td VALIGN=BOTTOM WIDTH="15%" HEIGHT="26"></td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="13%" HEIGHT="15"> <center><b><font size=+0>Chassis</font></b></center><hr size="1"> </td> <td VALIGN=BOTTOM WIDTH="3%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="12%" HEIGHT="15"> <center><b><font size=+0>Bodies</font></b></center><hr size="1"> </td> <td VALIGN=BOTTOM WIDTH="3%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="3%" HEIGHT="15"></td> <td VALIGN=BOTTOM WIDTH="15%" HEIGHT="15"> <center><b><font size=+0>Consolidated</font></b></center><hr size="1"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="13%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="3%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="3%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="3%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="15"></td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="15"><font size=+0>Net sales</font></td> <td VALIGN=TOP WIDTH="13%" HEIGHT="15"> <div align=right><font size=+0>$ 150,612</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="15"> <div align=right><font size=+0>$ 39,548</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="15"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="15"> <div align=right><font size=+0>$ (5,867</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="15"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="15"> <div align=right><font size=+0>$ 184,293</font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="10"><font size=+0>Interest expense</font></td> <td VALIGN=TOP WIDTH="13%" HEIGHT="10"> <div align=right><font size=+0>705</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="10"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="10"> <div align=right><font size=+0>204</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="10"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="10"> <div align=right><font size=+0>(139</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="10"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="10"> <div align=right><font size=+0>770</font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="11"><font size=+0>Depreciation and amortization <BR> expense</font></td> <td VALIGN=TOP WIDTH="13%" HEIGHT="11"> <div align=right><font size=+0>1,233</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="11"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="11"> <div align=right><font size=+0>530</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="11"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="11"> <div align=right><font size=+0>--</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="11"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="11"> <div align=right><font size=+0>1,763</font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="13"><font size=+0>Equity in the loss of affiliate</font></td> <td VALIGN=TOP WIDTH="13%" HEIGHT="13"> <div align=right><font size=+0>--</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="13"> <div align=right><font size=+0>--</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="13"> <div align=right><font size=+0>3,104</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="13"> <div align=right><font size=+0>3,104</font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="13"><font size=+0>Income tax expense</font></td> <td VALIGN=TOP WIDTH="13%" HEIGHT="13"> <div align=right><font size=+0>2,775</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="13"> <div align=right><font size=+0>174</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="13"> <div align=right><font size=+0>--</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="13"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="13"> <div align=right><font size=+0>2,949</font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="14"><font size=+0>Segment earnings</font></td> <td VALIGN=TOP WIDTH="13%" HEIGHT="14"> <div align=right><font size=+0>5,419</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="14"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="14"> <div align=right><font size=+0>193</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="14"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="14"> <div align=right><font size=+0>(3,070</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="14"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="14"> <div align=right><font size=+0>2,542</font></div> </td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="14"><font size=+0>Segment assets</font></td> <td VALIGN=TOP WIDTH="13%" HEIGHT="14"> <div align=right><font size=+0>114,174</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="14"></td> <td VALIGN=TOP WIDTH="12%" HEIGHT="14"> <div align=right><font size=+0>24,394</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="14"></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="14"> <div align=right><font size=+0>(33,932</font></div> </td> <td VALIGN=TOP WIDTH="3%" HEIGHT="14"><font size=+0>)</font></td> <td VALIGN=TOP WIDTH="15%" HEIGHT="14"> <div align=right><font size=+0>104,636</font></div> </td> </tr> </TABLE> <BR> <BR> <BR> <CENTER>-9- </CENTER> <HR SIZE="4" NOSHADE> <BR> <br> <p><b><font size=+0>Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations</font></b> <p>The following is a discussion of the major elements impacting the Company's financial and operating results for the period ended September 30, 1999 compared to the period ended September 30, 1998. The comments that follow should be read in conjunction with the Company's condensed consolidated financial statements and related notes contained in this Quarterly Report on Form 10-Q. <p><b>RESULTS OF OPERATIONS</b> <p>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: <br> <table BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%" > <tr> <td VALIGN=TOP WIDTH="37%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP COLSPAN="3" WIDTH="29%"> <center><b><font size=+0>Three Months</font></b> <br><b><font size=+0>Ended September 30,</font></b></center><hr size="1"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP COLSPAN="3" WIDTH="29%"> <center><b><font size=+0>Nine Months</font></b> <br><b><font size=+0>Ended September 30,</font></b></center><hr size="1"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="37%"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="12%"> <center><b><font size=+0>1999</font></b></center><hr size="1"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="13%"> <center><b><font size=+0>1998</font></b></center><hr size="1"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="13%"> <center><b><font size=+0>1999</font></b></center><hr size="1"> </td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="12%"> <center><b><font size=+0>1998</font></b></center><hr size="1"> </td> </tr> </TABLE> <table BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%" > <tr> <td VALIGN=TOP WIDTH="37%"><font size=+0>Sales</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="10%"> <div align=right><font size=+0>100.0</font></div> </td> <td VALIGN=TOP WIDTH="5%"><font size=+0>%</font></td> <td VALIGN=TOP WIDTH="10%"> <div align=right><font size=+0>100.0</font></div> </td> <td VALIGN=TOP WIDTH="6%"><font size=+0>%</font></td> <td VALIGN=TOP WIDTH="10%"> <div align=right><font size=+0>100.0</font></div> </td> <td VALIGN=TOP WIDTH="6%"><font size=+0>%</font></td> <td VALIGN=TOP WIDTH="8%"> <div align=right><font size=+0>100.0</font></div> </td> <td VALIGN=TOP WIDTH="4%"><font size=+0>%</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="37%"><font size=+0>Cost of product sold</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="10%"> <div align=right><font size=+0>86.7</font></div> </td> <td VALIGN=TOP WIDTH="5%"><font size=+0>%</font></td> <td VALIGN=TOP WIDTH="10%"> <div align=right><font size=+0>86.1</font></div> </td> <td VALIGN=TOP WIDTH="6%"><font size=+0>%</font></td> <td VALIGN=TOP WIDTH="10%"> <div align=right><font size=+0>86.5</font></div> </td> <td VALIGN=TOP WIDTH="6%"><font size=+0>%</font></td> <td VALIGN=TOP WIDTH="8%"> <div align=right><font size=+0>85.9</font></div> </td> <td VALIGN=TOP WIDTH="4%"><font size=+0>%</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="37%"><font size=+0>Gross profit</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="10%"> <div align=right><font size=+0>13.3</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="5%"><font size=+0>%</font></td> <td VALIGN=TOP WIDTH="10%"> <div align=right><font size=+0>13.9</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="6%"><font size=+0>%</font></td> <td VALIGN=TOP WIDTH="10%"> <div align=right><font size=+0>13.5</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="6%"><font size=+0>%</font></td> <td VALIGN=TOP WIDTH="8%"> <div align=right><font size=+0>14.1</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="4%"><font size=+0>%</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="37%"><font size=+0>Operating expenses:</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="10%"> </td> <td VALIGN=TOP WIDTH="5%"> </td> <td VALIGN=TOP WIDTH="10%"> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="10%"> </td> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="8%"> </td> <td VALIGN=TOP WIDTH="4%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="37%"><font size=+0> Research and development</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="10%"> <div align=right><font size=+0>2.1</font></div> </td> <td VALIGN=TOP WIDTH="5%"><font size=+0>%</font></td> <td VALIGN=TOP WIDTH="10%"> <div align=right><font size=+0>2.0</font></div> </td> <td VALIGN=TOP WIDTH="6%"><font size=+0>%</font></td> <td VALIGN=TOP WIDTH="10%"> <div align=right><font size=+0>2.2</font></div> </td> <td VALIGN=TOP WIDTH="6%"><font size=+0>%</font></td> <td VALIGN=TOP WIDTH="8%"> <div align=right><font size=+0>2.2</font></div> </td> <td VALIGN=TOP WIDTH="4%"><font size=+0>%</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="37%"><font size=+0> Selling, general and administrative</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="10%"> <div align=right><font size=+0>7.4</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="5%"><font size=+0>%</font></td> <td VALIGN=TOP WIDTH="10%"> <div align=right><font size=+0>6.4</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="6%"><font size=+0>%</font></td> <td VALIGN=TOP WIDTH="10%"> <div align=right><font size=+0>7.3</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="6%"><font size=+0>%</font></td> <td VALIGN=TOP WIDTH="8%"> <div align=right><font size=+0>7.2</font></div><hr size="1"></td> <td VALIGN=TOP WIDTH="4%"><font size=+0>%</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="37%"><font size=+0>Operating income</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="10%"> <div align=right><font size=+0>3.8</font></div> </td> <td VALIGN=TOP WIDTH="5%"><font size=+0>%</font></td> <td VALIGN=TOP WIDTH="10%"> <div align=right><font size=+0>5.5</font></div> </td> <td VALIGN=TOP WIDTH="6%"><font size=+0>%</font></td> <td VALIGN=TOP WIDTH="10%"> <div align=right><font size=+0>4.0</font></div> </td> <td VALIGN=TOP WIDTH="6%"><font size=+0>%</font></td> <td VALIGN=TOP WIDTH="8%"> <div align=right><font size=+0>4.7</font></div> </td> <td VALIGN=TOP WIDTH="4%"><font size=+0>%</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="37%"><font size=+0>Other</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="10%"> <div align=right><font size=+0>(0.8</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="5%"><font size=+0>)%</font></td> <td VALIGN=TOP WIDTH="10%"> <div align=right><font size=+0>(0.0</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="6%"><font size=+0>)%</font></td> <td VALIGN=TOP WIDTH="10%"> <div align=right><font size=+0>(0.7</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="6%"><font size=+0>)%</font></td> <td VALIGN=TOP WIDTH="8%"> <div align=right><font size=+0>0.0</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="4%"><font size=+0>%</font></td> </tr> <tr> <td VALIGN=BOTTOM WIDTH="37%"><font size=+0>Earnings before loss on equity</font> <BR><font size=+0> investment and taxes on income</font></td> <td VALIGN=BOTTOM WIDTH="3%"> </td> <td VALIGN=BOTTOM WIDTH="10%"> <div align=right><font size=+0>3.0</font></div> </td> <td VALIGN=BOTTOM WIDTH="5%"><font size=+0>%</font></td> <td VALIGN=BOTTOM WIDTH="10%"> <div align=right><font size=+0>5.5</font></div> </td> <td VALIGN=BOTTOM WIDTH="6%"><font size=+0>%</font></td> <td VALIGN=BOTTOM WIDTH="10%"> <div align=right><font size=+0>3.3</font></div> </td> <td VALIGN=BOTTOM WIDTH="6%"><font size=+0>%</font></td> <td VALIGN=BOTTOM WIDTH="8%"> <div align=right><font size=+0>4.7</font></div> </td> <td VALIGN=BOTTOM WIDTH="4%"><font size=+0>%</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="37%"><font size=+0>Equity in loss of affiliate</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="10%"> <div align=right><font size=+0>0.0</font></div> </td> <td VALIGN=TOP WIDTH="5%"><font size=+0>%</font></td> <td VALIGN=TOP WIDTH="10%"> <div align=right><font size=+0>0.5</font></div> </td> <td VALIGN=TOP WIDTH="6%"><font size=+0>%</font></td> <td VALIGN=TOP WIDTH="10%"> <div align=right><font size=+0>0.0</font></div> </td> <td VALIGN=TOP WIDTH="6%"><font size=+0>%</font></td> <td VALIGN=TOP WIDTH="8%"> <div align=right><font size=+0>1.7</font></div> </td> <td VALIGN=TOP WIDTH="4%"><font size=+0>%</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="37%"><font size=+0>Taxes on income</font></td> <td VALIGN=TOP WIDTH="3%"> </td> <td VALIGN=TOP WIDTH="10%"> <div align=right><font size=+0>1.9</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="5%"><font size=+0>%</font></td> <td VALIGN=TOP WIDTH="10%"> <div align=right><font size=+0>2.0</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="6%"><font size=+0>%</font></td> <td VALIGN=TOP WIDTH="10%"> <div align=right><font size=+0>1.8</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="6%"><font size=+0>%</font></td> <td VALIGN=TOP WIDTH="8%"> <div align=right><font size=+0>1.6</font></div><hr size="1"> </td> <td VALIGN=TOP WIDTH="4%"><font size=+0>%</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="37%" HEIGHT="19"><font size=+0>Net earnings </font></td> <td VALIGN=TOP WIDTH="3%" HEIGHT="19"></td> <td VALIGN=TOP WIDTH="10%" HEIGHT="19"> <div align=right><font size=+0>1.1</font></div><hr> </td> <td VALIGN=TOP WIDTH="5%" HEIGHT="19"><font size=+0>%</font></td> <td VALIGN=TOP WIDTH="10%" HEIGHT="19"> <div align=right><font size=+0>3.0</font></div><hr> </td> <td VALIGN=TOP WIDTH="6%" HEIGHT="19"><font size=+0>%</font></td> <td VALIGN=TOP WIDTH="10%" HEIGHT="19"> <div align=right><font size=+0>1.5</font></div><hr> </td> <td VALIGN=TOP WIDTH="6%" HEIGHT="19"><font size=+0>%</font></td> <td VALIGN=TOP WIDTH="8%" HEIGHT="19"> <div align=right><font size=+0>1.4</font></div><hr> </td> <td VALIGN=TOP WIDTH="4%" HEIGHT="19"><font size=+0>%</font></td> </tr> </TABLE> <p><b><i><font size=+0>Three-Month Period Ended September 30, 1999 Compared to the Three-Month Period Ended September 30, 1998</font></i></b> <p><font size=+0>For the three months ended September 30, 1999, consolidated sales increased $13.9 million (19.9%) over the amount reported for the same period in the previous year. The consolidation of Carpenter Industries, Inc. ("Carpenter") in the third quarter of 1999 accounts for $7.1 million of the increase, or 51.1%. Chassis Group sales for the third quarter of 1999 increased by $7.1 million (12.4%) compared to the sales reported for the same period of 1998. The two product lines responsible for this increase are motorhome chassis and fire truck chassis. For the third quarter of 1999, motorhome chassis sales increased 27.0% compared to the quarter ended September 30, 1998, primarily due to the increase in market demand for recreational vehicles.</font> <p><font size=+0>Fire truck chassis sales increased 17.2% during the third quarter of 1999 compared to the same period of 1998. The success of the Company's Advantage fire truck product line, coupled with a strong market, resulted in the increase.</font> <p><font size=+0>Transit bus sales declined 87.5% for the third quarter of 1999 compared to the sales reported for the same period in 1998. The decline is primarily attributable to a reduction in sales to a customer that had a dramatic change in their management structure during the second quarter of 1999. The Company expects sales to improve during the fourth quarter, however sales are not expected to achieve the fiscal year 1998 volume. Transit bus sales comprised less than 8% of the Company's annual revenues in 1998.</font> <p><font size=+0>Gross profit increased $1.4 million for the third quarter of 1999 compared to the third quarter of 1998. This improvement is due to increased sales by the Company. Gross profit as a percentage of sales decreased from 13.9% for the third quarter of 1998 to 13.3% for the third quarter of 1999. The Bodies Group operates at lower margins than the Chassis Group since the value added is only in the body rather than the complete</font> <BR> <BR> <BR> <CENTER>-10- </CENTER> <HR SIZE="4" NOSHADE> <BR> <p><b><font size=+0>Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)</font></b> <p><font size=+0>vehicle. Thus, the gross profit percentage on the body is diluted by the pass-through nature of the chassis cost. The Bodies Group impact was increased with the consolidation of Carpenter in the third quarter of 1999.</font> <p><font size=+0>Operating expenses increased from 8.4% of sales for the third quarter of 1998 to 9.5% of sales for the third quarter of 1999. The primary reason for this increase is the consolidation of Carpenter, whose operating expenses are running at a higher percentage of sales than the remaining Bodies Group and the Chassis Group. This higher level of operating expenses as a percentage of sales is due to lower than expected sales levels at Carpenter. An increase in the Company's interest-bearing debt resulted in increased interest expense for the third quarter of 1999 compared to the same period in 1998. This increase and the change in the equity in loss of affiliate are related to the consolidation of Carpenter as well, versus the entity being accounted for on the equity method for the third quarter of 1998. Carpenter is not consolidated for tax purposes, however, because the Company owns less than 80% of Carpenter. Accordingly, Carpenter's losses cannot be deducted for tax purposes. Therefore, the Company's tax rate appears higher than the actual effective tax rate for the Company.</font> <p><font size=+0>Total chassis orders received increased 1.8% during the third quarter of 1999 compared to the same period in 1998. The increase in orders primarily is attributable to the Company's fire truck and motorhome product lines. 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 orders received during the three-month period ended September 30, 1999 were produced and delivered by September 30, 1999.</font> <p><font size=+0>At September 30, 1999, the Company had $95.1 million in backlog compared with a backlog of $104.5 million for the same period in 1998. The majority of the decrease is due to school bus backlog, which has decreased 96.2% when comparing the third quarter of 1999 to the amount of backlog reported for the same period in 1998. This decrease is due to a lower sales volume at Carpenter.</font> <p><font size=+0>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.</font> <p><b><i><font size=+0>Nine-Month Period Ended September 30, 1999 Compared to the Nine-Month Period Ended September 30, 1998</font></i></b> <p><font size=+0>Revenues for the nine months ended September 30, 1999 were $234.4 million compared with $184.3 million for the same period in 1998, an increase of 27.2%. The consolidation of Carpenter during the nine months ended September 30, 1999 accounts for $19.7 million of the increase, or 39.3%. The remaining increase is primarily attributable to Chassis Group revenues, which are up 19.6% over the comparable nine months of 1998. Net income for the nine months ended September 30, 1999 was $3.4 million compared with net income of $2.5 million for the nine months ended September 30, 1998. The increase in net income is primarily due to the increase in income of the Chassis Group of $2.1 million.</font> <p><font size=+0>Gross profit as a percentage of sales declined to 13.5% for the first nine months of 1999 as compared to 14.1% for the first nine months of 1998. These lower margins are due to the Bodies Group. The Bodies Group operates at lower margins than the Chassis Group, since the value added is only in the body rather than the complete vehicle. Thus, the gross profit percentage on the body is diluted by the pass-through nature of the chassis cost. The Bodies Group impact was increased with the consolidation of Carpenter in the third quarter of 1999.</font> <BR> <BR> <BR> <CENTER>-11- </CENTER> <HR SIZE="4" NOSHADE> <BR> <p><b><font size=+0>Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)</font></b> <p><font size=+0>Operating expenses for the nine months ended September 30, 1999 were 9.5% of sales, which is consistent with 9.4% for the nine months ended September 30, 1998. An increase in the Company's interest-bearing debt resulted in increased interest expense for the nine months ended September 30, 1999 compared to same period in the prior year. This increase is related to the consolidation of Carpenter versus the entity being accounted for on the equity method for the nine months ended September 30, 1998. Carpenter is not consolidated for tax purposes, however, because the Company owns less than 80% of Carpenter. Accordingly, Carpenter's losses cannot be deducted for tax purposes. Therefore, the Company's tax rate appears higher than the actual effective tax rate for the Company.</font> <p><font size=+0>Total chassis orders increased 6.1% during the nine-month period ended September 30, 1999 versus the same period in 1998. This increase primarily is attributable to slight increases in motorhome and fire truck chassis orders partially offset by a decrease in transit bus orders. Based on average order lead-time, the Company estimates that approximately three-quarters of the motorhome, one-half of the bus/specialty and one-third of the fire truck orders received during the nine-month period ended September 30, 1999 were produced and delivered by September 30, 1999.</font> <p><font size=+0>At September 30, 1999, the Company had approximately $95.1 million in backlog compared with a backlog of approximately $104.5 million for the same period in 1998. The majority of the decrease is due to school bus backlog, which has decreased 96.2% when comparing the third quarter of 1999 to the amount of backlog reported for the same period in 1998. This decrease is due to a lower sales volume at Carpenter.</font> <p><font size=+0>While orders in 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.</font> <p><b><font size=+0>LIQUIDITY AND CAPITAL RESOURCES</font></b> <p><font size=+0>For the nine months ended September 30, 1999, cash provided by operating activities was $22,000 compared to cash used in operating activities of $1.1 million for the nine months ended September 30, 1998. The decrease in cash used primarily relates to an increase in earnings. Working capital increased $5.5 million, from $45.2 million to $50.7 million, during the nine months ended September 30, 1999. See the "Condensed Consolidated Statement of Cash Flows" contained in this Form 10-Q for further information regarding the change in cash and cash equivalents from December 31, 1998 to September 30, 1999.</font> <p><font size=+0>Shareholders' equity increased $3.3 million in the nine months ended September 30, 1999, to approximately $48.4 million. This change primarily is due to net earnings of $3.4 million and a $0.8 million contribution by the minority shareholder of Carpenter, which were partially offset by a dividend paid to shareholders of $0.9 million. The Company's debt to equity ratio decreased to 69.3% compared with 72.9% at December 31, 1998, due to earnings growth that exceeded borrowing requirements.</font> <p><font size=+0>The Company's primary line of credit is a $30.0 million revolving note payable to a bank. Under the terms of the line of credit 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 September 30, 1999, the Company was in compliance with all debt covenants.</font> <BR> <BR> <BR> <CENTER>-12- </CENTER> <HR SIZE="4" NOSHADE> <BR> <br> <p><b><font size=+0>Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)</font></b> <p><font size=+0>The Company also has unsecured lines of credit at its subsidiary locations for $0.2 million and $1.0 million and a secured line of credit for $4.3 million. The $4.3 million line carries an interest rate of 1/2% above the bank's prime rate (prime rate at September 30, 1999 was 8.25%) and has an expiration date of June 2000. This line of credit is secured by accounts receivable and inventory. Borrowings under this line totaled approximately $4.0 million at September 30, 1999. The other two lines carry an interest rate of 1% above the bank's prime rate. The $0.2 million line has an expiration date of June 1, 2000. The $1.0 million line expires only if there is a change in management. There were no borrowings on either of these lines at September 30, 1999. 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.</font> <p><font size=+0>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 $0.3 million in annual interest expense. Conversely, a decrease in interest rates of 1% could result in the Company saving $0.3 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.</font> <p><b><font size=+0>Effect of Inflation</font></b> <p><font size=+0>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, 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.</font> <p><b><font size=+0>Year 2000 Compliance</font></b> <p><font size=+0>This Year 2000 Readiness Disclosure is based upon and partially repeats information provided by the Company's outside consultants and other regarding the Year 2000 readiness of the Company and its customers, suppliers, financial institutions and other parties. Although the Company believes this information to be accurate, it has not independently verified this information.</font> <p><font size=+0>The Company is currently in the process of addressing a potential problem that is facing all users of automated information systems. The problem is that many computer systems that process transactions based on two digits representing the year of transaction may recognize a date using "00" as the year 1900 rather than the year 2000. The problem could affect a wide variety of automated information systems, in the form of software failure, errors or miscalculations.</font> <p><font size=+0>The Company established a Year 2000 task force and developed a plan to prepare for the year 2000 in 1998. This plan began with the performance of an inventory of software applications and communicating with third party vendors and suppliers. The plan regularly is updated and monitored by the Company's technical personnel and management. The Company's plan to address the Year 2000 issue involves the following four phases: assessment, remediation, testing and implementation. The status of these phases is summarized in the chart below.</font> <BR> <BR> <BR> <CENTER>-13- </CENTER> <HR SIZE="4" NOSHADE> <BR> <p><b><font size=+0>Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)</font></b> <br> <table BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%" > <tr> <td VALIGN=TOP WIDTH="23%"> </td> <td VALIGN=TOP WIDTH="17%"> <center><b><u><font size=+0>Assessment</font></u></b></center> </td> <td VALIGN=TOP WIDTH="17%"> <center><b><u><font size=+0>Remediation</font></u></b></center> </td> <td VALIGN=TOP WIDTH="20%"> <center><b><u><font size=+0>Testing</font></u></b></center> </td> <td VALIGN=TOP WIDTH="23%"> <center><b><u><font size=+0>Implementation</font></u></b></center> </td> </tr> <tr> <td VALIGN=TOP WIDTH="23%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="20%"> </td> <td VALIGN=TOP WIDTH="23%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="23%"><font size=+0>Information Technology</font></td> <td VALIGN=TOP WIDTH="17%"><font size=+0>100% Complete</font></td> <td VALIGN=TOP WIDTH="17%"><font size=+0>100% Complete</font></td> <td VALIGN=TOP WIDTH="20%"><font size=+0>99% Complete</font></td> <td VALIGN=TOP WIDTH="23%"><font size=+0>99% Complete</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="23%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="20%"> </td> <td VALIGN=TOP WIDTH="23%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="23%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="20%"><font size=+0>Expected</font></td> <td VALIGN=TOP WIDTH="23%"><font size=+0>Expected</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="23%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="20%"><font size=+0>completion date </font></td> <td VALIGN=TOP WIDTH="23%"><font size=+0>completion date</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="23%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="20%"><font size=+0>is end of </font></td> <td VALIGN=TOP WIDTH="23%"><font size=+0>is end of</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="23%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="20%"><font size=+0>November 1999</font></td> <td VALIGN=TOP WIDTH="23%"><font size=+0>November 1999</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="23%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="20%"> </td> <td VALIGN=TOP WIDTH="23%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="23%"><font size=+0>Operating Equipment</font></td> <td VALIGN=TOP WIDTH="17%"><font size=+0>100% Complete</font></td> <td VALIGN=TOP WIDTH="17%"><font size=+0>100% Complete</font></td> <td VALIGN=TOP WIDTH="20%"><font size=+0>100% Complete</font></td> <td VALIGN=TOP WIDTH="23%"><font size=+0>100% Complete</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="23%"><font size=+0>with Embedded Chips</font></td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="20%"> </td> <td VALIGN=TOP WIDTH="23%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="23%"><font size=+0>or Software</font></td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="20%"> </td> <td VALIGN=TOP WIDTH="23%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="23%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="20%"> </td> <td VALIGN=TOP WIDTH="23%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="23%"><font size=+0>Products</font></td> <td VALIGN=TOP WIDTH="17%"><font size=+0>100% Complete</font></td> <td VALIGN=TOP WIDTH="17%"><font size=+0>100% Complete</font></td> <td VALIGN=TOP WIDTH="20%"><font size=+0>100% Complete</font></td> <td VALIGN=TOP WIDTH="23%"><font size=+0>100% Complete</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="23%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="20%"> </td> <td VALIGN=TOP WIDTH="23%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="23%"><font size=+0>Third Parties</font></td> <td VALIGN=TOP WIDTH="17%"><font size=+0>100% Complete</font></td> <td VALIGN=TOP WIDTH="17%"><font size=+0>100% Complete</font></td> <td VALIGN=TOP WIDTH="20%"><font size=+0>100% Complete</font></td> <td VALIGN=TOP WIDTH="23%"><font size=+0>95% Complete</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="23%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="20%"> </td> <td VALIGN=TOP WIDTH="23%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="23%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="20%"> </td> <td VALIGN=TOP WIDTH="23%"><font size=+0>Implement</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="23%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="20%"> </td> <td VALIGN=TOP WIDTH="23%"><font size=+0>contingency plans</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="23%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="20%"> </td> <td VALIGN=TOP WIDTH="23%"><font size=+0>or other alternatives</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="23%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="20%"> </td> <td VALIGN=TOP WIDTH="23%"><font size=+0>as necessary by end</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="23%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="20%"> </td> <td VALIGN=TOP WIDTH="23%"><font size=+0>of November</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="23%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="20%"> </td> <td VALIGN=TOP WIDTH="23%"><font size=+0>1999</font></td> </tr> </TABLE> <p><font size=+0>As referenced in the previous chart, management has reviewed its Year 2000 exposure to third party customers, distributors, suppliers and financial institutions. Lack of readiness by these third parties could expose the Company to the potential for loss and impairment of business processes and activities. The Company is assessing these risks and is considering the need for contingency plans intended to address perceived risks. The Company cannot predict what effect the failure of such a third party to address, in a timely manner, the Year 2000 problem would have on the Company.</font> <p><font size=+0>As of September 30, 1999, the Company had not incurred any material costs in connection with identifying, assessing, remediating and testing Year 2000 issues and does not expect to incur material costs in the future. The immaterial costs consist primarily of personnel expense for employees who have only a portion of their time dedicated to the Year 2000 remediation effort. It is the Company's policy to expense these costs as incurred. These costs will be funded through operating cash flows. The Company has not replaced, nor does it anticipate replacing, any systems due to Year 2000 issues. In addition, the Company has not accelerated any system replacement due to Year 2000 issues. Any system replacement that the Company has undertaken was due to regular, scheduled maintenance. Based on currently available information, management does not presently anticipate that the costs to address the Year 2000 issues will have an adverse impact on the Company's financial condition, results of operation or liquidity. However, the extent to which the computer operations and other systems of the Company's important third parties are adversely affected could, in turn, affect the Company's ability to communicate with third parties and could have a material adverse effect on the operations of the Company.</font> <p><font size=+0>Management of the Company believes that it has an effective program in place to resolve the Year 2000 issue in a timely manner. As noted above, the Company has not yet completed all necessary phases of the Year 2000 program. In the event that the Company does not complete any additional phases, the Company may have some employees with personal computers that will malfunction. In addition, disruptions in the economy generally resulting from Year 2000 issues could also materially adversely affect the Company. The amount of potential liability and lost revenue cannot be reasonably estimated at this time. The Company has contingency plans for certain critical applications and is working on such plans for other</font> <BR> <BR> <BR> <CENTER>-14- </CENTER> <HR SIZE="4" NOSHADE> <BR> <p><b><font size=+0>Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)</font></b> <p><font size=+0>applications. These contingency plans involve, among other actions, manual workarounds, increasing inventories, and adjusting staffing strategies.</font> <p><font size=+0>The costs of the project and the date on which the Company believes it will complete the Year 2000 modifications are based on management's best estimates. There can be no guarantee that these estimates will be achieved and actual results could differ from those anticipated. Specific factors that might cause differences include, but are not limited to, the ability of other companies on which the Company's systems rely to modify or convert their systems to be Year 2000 compliant, the ability to locate and correct all relevant computer code, the ability of all third parties who have business relationships with the Company to continue their businesses without interruption and similar circumstances.</font> <p><b><font size=+0>Forward-Looking Statements</font></b> <p><font size=+0>This report contains forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about the chassis market, the economy and about the Company itself. These forward-looking statements include the Company's expectation that sales will improve in the fourth quarter of 1999 and the Company's estimation of the date of completion and related costs of Year 2000 compliance. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "is likely," "plans," "projects," variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("Future Factors") that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may differ materially from what may be expressed or forecasted in such forward-looking statements. The Company undertakes no obligation to update, amend or clarify forward-looking statements, as a result of new information, future events or otherwise.</font> <p><font size=+0>Future Factors that could cause a difference between an ultimate actual outcome and a preceding forward-looking statement include, but are not limited to, changes in interest rates; demand for products and services; the effects of the Year 2000 issues on the Company's business; the degree of competition by competitors; changes in laws or regulations, including changes related to safety standards adopted by the National Fire Protection Association; changes in prices, levies and assessments; the impact of technological advances; government and regulatory policy changes; trends in customer behaviors; dependence on key personnel; and the vicissitudes of the world and national economy.</font> <p><b><font size=+0>Item 3. Quantitative and Qualitative Disclosures About Market Risk</font></b> <p><font size=+0>See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources," which is incorporated by reference in this Item 3, for discussion of market risk related to variable interest rates on short-term and long-term debt.</font> <br> <p><br> <center> <p><b><font size=+0>PART II. OTHER INFORMATION</font></b></center> <p><b><font size=+0>Item 6. Exhibits and Reports on Form 8-K</font></b> <p><font size=+0> (a) <u>Exhibits</u>. The following documents are filed as exhibits to this report on Form 10-Q:</font> <br> <table BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%" > <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> <center><u><font size=+0>Exhibit No.</font></u></center> </td> <td VALIGN=TOP WIDTH="77%"><font size=+0> <u>Document</u></font></td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="77%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> <center><font size=+0>3.1</font></center> </td> <td VALIGN=TOP WIDTH="77%"><font size=+0>Spartan Motors, Inc. Restated Articles of Incorporation. Previously filed as an</font></td> </tr> </TABLE> <BR> <BR> <BR> <CENTER>-15- </CENTER> <HR SIZE="4" NOSHADE> <BR> <TABLE BORDER="0" CELLSPACING="0" CELLPADDING="0" WIDTH="100%"> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> <center><font size=+0> </font></center> </td> <td VALIGN=TOP WIDTH="77%"><font size=+0>exhibit to the Company's Annual Report on Form 10-Q for the period ended September 30, 1996, and incorporated herein by reference.</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="77%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> <center><font size=+0>3.2</font></center> </td> <td VALIGN=TOP WIDTH="77%"><font size=+0>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.</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="77%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> <center><font size=+0>4.1</font></center> </td> <td VALIGN=TOP WIDTH="77%"><font size=+0>Restated Articles of Incorporation. See Exhibit 3.1 above.</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="77%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> <center><font size=+0>4.2</font></center> </td> <td VALIGN=TOP WIDTH="77%"><font size=+0>Bylaws. See Exhibit 3.2 above.</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="77%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> <center><font size=+0>4.3</font></center> </td> <td VALIGN=TOP WIDTH="77%"><font size=+0>Form of Stock Certificate. Previously filed as an exhibit to the Registration Statement on Form S-18 (Registration No. 2-90021-C) filed on March 31, 1984, and incorporated herein by reference.</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="77%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> <center><font size=+0>4.4</font></center> </td> <td VALIGN=TOP WIDTH="77%"><font size=+0>Rights Agreement dated June 4, 1997, between Spartan Motors, Inc. and American Stock Transfer and Trust Company. Previously filed as an Exhibit to the Company's Form 8-A filed on June 25, 1997, and incorporated herein by reference.</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="77%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> <center><font size=+0>10.1</font></center> </td> <td VALIGN=TOP WIDTH="77%"><font size=+0>Restated Spartan Motors, Inc. 1988 Non-Qualified Stock Option Plan.* 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.</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="77%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> <center><font size=+0>10.2</font></center> </td> <td VALIGN=TOP WIDTH="77%"><font size=+0>Restated Spartan Motors, Inc. 1994 Incentive Stock Option Plan.* 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.</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="77%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> <center><font size=+0>10.3</font></center> </td> <td VALIGN=TOP WIDTH="77%"><font size=+0>Restated Spartan Motors, Inc. 1994 Incentive Stock Option Plan.* 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.</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="77%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> <center><font size=+0>10.4</font></center> </td> <td VALIGN=TOP WIDTH="77%"><font size=+0>Carpenter Industries, Inc. Stockholders' Agreement. Previously filed as an Exhibit to the Company's Form 8-K Current Report filed on January 21, 1997, and incorporated herein by reference.</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="77%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> <center><font size=+0>10.5</font></center> </td> <td VALIGN=TOP WIDTH="77%"><font size=+0>Contribution Agreement between Carpenter Industries LLC and Carpenter Industries, Inc. Previously filed as an Exhibit to the Company's Form 8-K Current Report filed on January 21, 1997, and incorporated herein by reference.</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="77%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> <center><font size=+0>10.6</font></center> </td> <td VALIGN=TOP WIDTH="77%"><font size=+0>Carpenter Industries, Inc. Registration Rights Agreement. Previously filed as an Exhibit to the Company's Form 8-K Current Report filed on January 21, 1997, and incorporated herein by reference.</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="77%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> <center><font size=+0>10.7</font></center> </td> <td VALIGN=TOP WIDTH="77%"><font size=+0>Spartan Motors, Inc. Stock Option and Restricted Stock Plan of 1998. Previously filed with the Company's Definitive Proxy Statement filed on April 30, 1999.</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="77%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> <center><font size=+0>27</font></center> </td> <td VALIGN=TOP WIDTH="77%"><font size=+0>Financial Data Schedule.</font></td> </tr> </TABLE> <p><font size=+0> (b) <u>Reports</u> <u>on</u> <u>Form</u> <u>8-K</u>. During the third quarter ended September 30, 1999, the Company did not file a current report on Form 8-K.</font> <br> <br> <BR> <BR> <BR> <CENTER>-16- </CENTER> <HR SIZE="4" NOSHADE> <BR> <br> <br> <center> <p><font size=+0>SIGNATURES</font></center> <p><br> <br> <p><font size=+0> 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.</font> <br> <table BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%" > <tr> <td VALIGN=TOP WIDTH="45%"> <br> <br> <p><font size=+0>Date: November 15, 1999</font></td> <td VALIGN=TOP WIDTH="55%"><font size=+0>SPARTAN MOTORS, INC.</font> <br> <br> <p><font size=+0>By /s/ Richard J. Schalter<hr size="1" width="94%" align="right"></font> <font size=+0> Richard J. Schalter</font> <br><font size=+0> Secretary, Treasurer and Chief Financial Officer</font></td> </tr> </TABLE> <BR> <BR> <BR> <CENTER>-17- </CENTER> <HR SIZE="4" NOSHADE> <BR> <center> <p><b><font size=+0>EXHIBIT INDEX</font></b></center> <p><br> <br> <br> <table BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%" > <tr> <td VALIGN=TOP WIDTH="6%"></td> <td VALIGN=TOP WIDTH="13%"> <center><u><font size=+0>Exhibit No.</font></u></center> </td> <td VALIGN=TOP WIDTH="81%"><font size=+0> <u>Document</u></font></td> </tr> <tr> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="13%"> </td> <td VALIGN=TOP WIDTH="81%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="13%"> <center><font size=+0>3.1</font></center> </td> <td VALIGN=TOP WIDTH="81%"><font size=+0>Spartan Motors, Inc. Restated Articles of Incorporation. Previously filed as an exhibit to the Company's Annual Report on Form 10-Q for the period ended September 30, 1996, and incorporated herein by reference.</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="13%"> </td> <td VALIGN=TOP WIDTH="81%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="13%"> <center><font size=+0>3.2</font></center> </td> <td VALIGN=TOP WIDTH="81%"><font size=+0>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.</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="13%"> </td> <td VALIGN=TOP WIDTH="81%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="13%"> <center><font size=+0>4.1</font></center> </td> <td VALIGN=TOP WIDTH="81%"><font size=+0>Restated Articles of Incorporation. See Exhibit 3.1 above.</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="13%"> </td> <td VALIGN=TOP WIDTH="81%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="13%"> <center><font size=+0>4.2</font></center> </td> <td VALIGN=TOP WIDTH="81%"><font size=+0>Bylaws. See Exhibit 3.2 above.</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="13%"> </td> <td VALIGN=TOP WIDTH="81%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="13%"> <center><font size=+0>4.3</font></center> </td> <td VALIGN=TOP WIDTH="81%"><font size=+0>Form of Stock Certificate. Previously filed as an exhibit to the Registration Statement on Form S-18 (Registration No. 2-90021-C) filed on March 31, 1984, and incorporated herein by reference.</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="13%"> </td> <td VALIGN=TOP WIDTH="81%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="13%"> <center><font size=+0>4.4</font></center> </td> <td VALIGN=TOP WIDTH="81%"><font size=+0>Rights Agreement dated June 4, 1997, between Spartan Motors, Inc. and American Stock Transfer and Trust Company. Previously filed as an Exhibit to the Company's Form 8-A filed on June 25, 1997, and incorporated herein by reference.</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="13%"> </td> <td VALIGN=TOP WIDTH="81%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="13%"> <center><font size=+0>10.1</font></center> </td> <td VALIGN=TOP WIDTH="81%"><font size=+0>Restated Spartan Motors, Inc. 1988 Non-Qualified Stock Option Plan.* 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.</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="13%"> </td> <td VALIGN=TOP WIDTH="81%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="13%"> <center><font size=+0>10.2</font></center> </td> <td VALIGN=TOP WIDTH="81%"><font size=+0>Restated Spartan Motors, Inc. 1994 Incentive Stock Option Plan.* 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.</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="13%"> </td> <td VALIGN=TOP WIDTH="81%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="6%"> </td> <td VALIGN=TOP WIDTH="13%"> <center><font size=+0>10.3</font></center> </td> <td VALIGN=TOP WIDTH="81%"><font size=+0>Restated Spartan Motors, Inc. 1994 Incentive Stock Option Plan.* 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.</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="77%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> <center><font size=+0>10.4</font></center> </td> <td VALIGN=TOP WIDTH="77%"><font size=+0>Carpenter Industries, Inc. Stockholders' Agreement. Previously filed as an Exhibit to the Company's Form 8-K Current Report filed on January 21, 1997, and incorporated herein by reference.</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="77%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> <center><font size=+0>10.5</font></center> </td> <td VALIGN=TOP WIDTH="77%"><font size=+0>Contribution Agreement between Carpenter Industries LLC and Carpenter Industries, Inc. Previously filed as an Exhibit to the Company's Form 8-K Current Report filed on January 21, 1997, and incorporated herein by reference.</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="77%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> <center><font size=+0>10.6</font></center> </td> <td VALIGN=TOP WIDTH="77%"><font size=+0>Carpenter Industries, Inc. Registration Rights Agreement. Previously filed as an Exhibit to the Company's Form 8-K Current Report filed on January 21, 1997, and incorporated herein by reference.</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="77%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> <center><font size=+0>10.7</font></center> </td> <td VALIGN=TOP WIDTH="77%"><font size=+0>Spartan Motors, Inc. Stock Option and Restricted Stock Plan of 1998. Previously filed with the Company's Definitive Proxy Statement filed on April 30, 1999.</font></td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> </td> <td VALIGN=TOP WIDTH="77%"> </td> </tr> <tr> <td VALIGN=TOP WIDTH="7%"> </td> <td VALIGN=TOP WIDTH="17%"> <center><font size=+0>27</font></center> </td> <td VALIGN=TOP WIDTH="77%"><font size=+0>Financial Data Schedule.</font></td> </tr> </TABLE> <BR> <BR> <BR> <CENTER>-i- </CENTER> <HR SIZE="4" NOSHADE> <BR> </body> </HTML>