1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 <TABLE> <S><C> For Quarter Ended June 30, 1996 Commission File Number 0-13611 ------------- ------- SPARTAN MOTORS, INC. (Exact name of registrant as specified in its charter) - ------------------------------- Michigan 38-2078923 - ------------------------------- ---------------- (State of incorporation) (I.R.S. Employer Identification no.) 1000 Reynolds Road, Charlotte, Michigan 48813 - -------------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (517) 543-6400 ----------------- NONE Former name, former address and - -------------------------------------------- former fiscal year, if changed since last report. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common shares outstanding at August 5, 1996 12,523,572 ---------- </TABLE>
2 SPARTAN MOTORS, INC. INDEX TO QUARTERLY REPORT ON FORM 10-Q QUARTER ENDED JUNE 30, 1996 Page No. -------- Part I. Financial Information Consolidated Balance Sheets - June 30, 1996 (Unaudited) and December 31, 1995 1 Consolidated Statements of Net Earnings - Three Months Ended June 30, 1996 and 1995 (Unaudited) 3 Consolidated Statements of Operations - Six Months Ended June 30, 1996 and 1995 (Unaudited) 4 Consolidated Statements of Cash Flows - Six Months Ended June 30, 1996 and 1995 (Unaudited) 5 Notes to Consolidated Financial Statements 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Part II. Other Information 12 Signatures 14 Exhibits 15
3 PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS SPARTAN MOTORS, INC. CONSOLIDATED BALANCE SHEETS <TABLE> <CAPTION> June 30, 1996 December 31, 1995 ------------- ----------------- (Unaudited) <S> <C> <C> ASSETS CURRENT ASSETS: Cash and cash equivalents $ 2,714,341 $ 5,202,595 Investment securities 8,977,963 7,688,693 Accounts receivable, less allowance for doubtful accounts of $589,000 and $591,000 in 1996 and 1995, respectively 25,503,238 20,202,534 Inventories 25,684,578 24,394,303 Deferred tax benefit 1,488,000 1,453,000 Other current assets 1,511,672 1,539,765 ----------- ----------- TOTAL CURRENT ASSETS 65,879,792 60,480,890 PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $7,049,089 and $6,281,734 in 1996 and 1995, respectively 12,245,689 12,267,287 DEFERRED TAX BENEFIT 1,105,000 1,163,000 OTHER ASSETS 1,113,603 1,299,890 ----------- ----------- TOTAL $80,344,084 $75,211,067 =========== =========== </TABLE> See notes to consolidated financial statements. 1
4 SPARTAN MOTORS, INC. CONSOLIDATED BALANCE SHEETS <TABLE> <CAPTION> June 30, 1996 December 31, 1995 ------------- ----------------- (Unaudited) <S> <C> <C> LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 6,882,194 $ 3,801,135 Other current liabilities and accrued expenses 2,629,323 1,652,930 Accrued warranty expense 1,724,098 1,621,954 Accrued customer rebates 998,988 1,030,658 Accrued compensation and related taxes 1,389,398 1,064,368 Current portion of long-term debt 502,000 420,000 ----------- ----------- TOTAL CURRENT LIABILITIES 14,126,001 9,591,045 LONG-TERM DEBT, less current portion 5,472,520 5,791,728 COMMITMENTS AND CONTINGENT LIABILITIES STOCKHOLDERS' EQUITY: Preferred stock, no par value, authorized 2,000,000 shares. Common stock, $.01 par value; authorized 23,900,000 shares, issued 12,523,572 shares in 1996 and issued 12,623,872 shares 1995 125,236 21,482,878 Additional paid in capital 21,255,232 Retained earnings 41,592,945 40,543,432 Valuation allowance (81,321) 61,025 Cumulative translation adjustment (2,146,529) (2,259,041) ----------- ----------- TOTAL STOCKHOLDERS EQUITY 60,745,563 59,828,294 ----------- ----------- TOTAL $80,344,084 $75,211,067 =========== =========== </TABLE> See notes to consolidated financial statements. 2
5 SPARTAN MOTORS, INC. CONSOLIDATED STATEMENTS OF NET EARNINGS (UNAUDITED) <TABLE> <CAPTION> Three Months Ended June 30 --------------------------- 1996 1995 ----------- ----------- <S> <C> <C> REVENUES: Net sales $44,394,773 $28,426,318 Other income 307,782 365,919 ----------- ----------- TOTAL 44,702,555 28,792,237 COSTS AND EXPENSES: Costs of products sold 37,609,927 25,182,955 Research and development 1,080,672 685,725 Selling, general and administrative 3,881,993 3,318,119 Interest 110,694 140,384 ----------- ----------- TOTAL 42,683,286 29,327,183 EARNINGS (LOSS) BEFORE TAXES ON INCOME 2,019,269 (534,946) TAXES ON INCOME (CREDIT) 876,000 (312,000) ----------- ----------- NET EARNINGS (LOSS) 1,143,269 (222,946) NET EARNINGS (LOSS) PER SHARE $ 0.09 $ (0.02) =========== =========== DIVIDENDS PAID PER SHARE $ 0.05 $ 0.05 =========== =========== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 12,533,000 12,982,000 =========== =========== </TABLE> See notes to consolidated financial statements. 3
6 SPARTAN MOTORS, INC. CONSOLIDATED STATEMENTS OF NET EARNINGS (UNAUDITED) <TABLE> <CAPTION> Six Months Ended June 30 -------------------------- 1996 1995 ----------- ----------- <S> <C> <C> REVENUES: Net sales $91,483,052 $72,201,251 Other income 607,705 792,260 ----------- ----------- TOTAL 92,090,757 72,993,511 COSTS AND EXPENSES: Costs of products sold 78,491,068 61,992,720 Research and development 2,080,090 1,473,432 Selling, general and administrative 7,392,944 6,869,203 Interest 239,358 256,990 ----------- ----------- TOTAL 88,203,460 70,592,345 ----------- ----------- EARNINGS BEFORE TAXES ON INCOME 3,887,297 2,401,166 TAXES ON INCOME 1,532,000 851,000 ----------- ----------- NET EARNINGS $ 2,355,297 $ 1,550,166 =========== =========== NET EARNINGS PER SHARE $ 0.19 $ 0.12 =========== =========== DIVIDENDS PAID PER SHARE $ 0.05 $ 0.05 =========== =========== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 12,567,000 13,032,000 =========== =========== </TABLE> See notes to financial statements. 4
7 SPARTAN MOTORS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) <TABLE> <CAPTION> Six Months Ended June 30 --------------------------------------- 1996 1995 ------------ ------------ <S> <C> <C> CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 2,355,297 $ 1,550,166 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 884,896 794,332 Gain on sales of assets (4,903) (80,591) Decrease (increase) in: Accounts receivable (5,299,053) 4,990,180 Inventories (1,271,081) (3,592,712) Deferred tax benefit 102,000 Federal taxes receivable 361,000 Other assets 52,422 (37,397) Increase (decrease) in: Accounts payable 3,080,661 (1,777,749) Other current liabilities and accrued expenses 976,141 (519,967) Accrued warranty expense 102,144 (507,815) Accrued customer rebate (31,670) 171,827 Accrued compensation and related taxes 325,232 (191,633) ----------- ----------- TOTAL ADJUSTMENTS (1,185,213) (213,731) ----------- ----------- NET CASH PROVIDED BY OPERATING ACTIVITIES 1,170,084 1,336,435 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment (835,406) (959,783) Proceeds from sale of property, plant and equipment 150,000 Purchases of marketable securities (3,051,290) (6,953,938) Proceeds from sales of marketable securities 1,640,822 7,315,496 Advances on note receivable (707,275) Principal repayments on note receivable 103,997 585,955 ----------- ----------- NET CASH USED IN INVESTING ACTIVITIES (2,141,877) (569,545) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from exercise of stock options 85,360 Payments on long-term debt (237,208) (236,518) Purchase of treasury stock (866,875) (2,463,987) Dividends paid (626,679) ----------- ----------- NET CASH USED IN FINANCING ACTIVITIES (1,645,402) (2,700,505) EFFECT OF EXCHANGE RATE CHANGES ON CASH 128,941 48,946 ----------- ----------- NET DECREASE IN CASH AND CASH EQUIVALENTS (2,488,254) (1,884,669) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 5,202,595 2,930,270 ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,714,341 $ 1,045,601 =========== =========== </TABLE> 5
8 SPARTAN MOTORS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid for interest was $240,158 and $276,103 for the six months ended June 30, 1996 and 1995, respectively. Cash paid for income taxes was $905,000 and $353,000 for the six months ended June 30, 1996 and 1995, respectively. See notes to consolidated financial statements. (Concluded) 6
9 SPARTAN MOTORS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) For a description of the accounting policies followed refer to the notes to the Company's annual consolidated financial statements for the year ended December 31, 1995, included in Form 10-K filed with the Securities and Exchange Commission March 29, 1996. (2) The consolidated financial statements include the accounts of Spartan Motors, Inc., its wholly owned subsidiaries, Spartan Motors Foreign Sales Corporation, Inc., and Spartan de Mexico, S.A. de C.V.("Spartan de Mexico"). All material intercompany transactions have been eliminated. The two joint ventures with Societe D' Equipment de Transport et de Carosserie S.A. ("Setcar") are included in the consolidated financial statements. However, the Company has not made any expenditures for investment purposes as of June 30, 1996. (3) In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of June 30, 1996, and the results of operations for the three month and six month periods ended June 30, 1996 and 1995. (4) The results of operations for the three month and six month periods ended June 30, 1996, are not necessarily indicative of the results to be expected for the full year. (5) Inventories consist of raw materials and purchased components, work in process, and finished goods and are summarized as follows: <TABLE> <CAPTION> June 30, 1996 December 31, 1995 ------------- ----------------- <S> <C> <C> Finished Goods $ 2,045,437 $ 1,779,551 Raw Materials and purchased components 21,952,119 19,844,049 Work in Process 2,237,022 3,270,703 Obsolescence reserve (500,000) (500,000) LIFO reserve (50,000) ----------- ----------- $25,684,578 $24,394,303 =========== =========== </TABLE> (6) A cash dividend of $0.05 per share was declared February 27, 1996 for shareholders of record on March 27, 1996. The dividend of $626,679 was paid April 29, 1996. (7) During March and June of 1996 the Company repurchased a total of 110,000 shares of its common stock at an average market price of approximately $7.90 per share. The treasury stock was constructively retired in accordance with the Michigan Business Corporations Act applicable to all Michigan corporations. (8) During the six months ended June 30, 1996, stockholders' equity changed as follows: <TABLE> <S> <C> Balance at December 31, 1995 $59,828,294 Net Earnings 2,355,297 Exercise of stock options 85,360 Dividends paid (626,679) Purchase of treasury stock (866,875) Valuation Allowance - Investment Securities (142,346) Cumulative Translation Adjustment Change 112,512 ----------- Balance at June 30, 1996 $60,745,563 =========== </TABLE> 7
10 SPARTAN MOTORS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (9) NEW ACCOUNTING PRONOUNCEMENTS The Financial Accounting Standards Board has issued Statement of Financial Accounting Standards (SFAS) No. 121 "Accounting for the Impairment of Long-Lived Assets To Be Disposed Of." This standard requires that long-lived assets held by and used by an entity may be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. SFAS No. 121 also requires that long-lived assets to be disposed of be reported at the lower of carrying amount or fair value less costs to sell. The Company has adopted this standard during the first quarter of 1996. Adoption of this statement did not have a material effect on the Company's results of operations or financial position. The Financial Accounting Standards Board has issued SFAS No. 123, "Accounting for Stock-Based Compensation", which was effective for the Company beginning January 1, 1996. SFAS No. 123 requires expanded disclosures of stock-based compensation arrangements with employees and encourages (but does not require) compensation to be measured based on the fair value of the equity instrument awarded. Companies are permitted, however, to continue to apply APB Opinion No. 25, which recognizes compensation cost based on the intrinsic value of the equity instrument awarded. The Company will continue to apply APB Opinion No. 25 to its stock based compensation awards to employees and will disclose the required pro forma effect on net income and earnings per share in the financial statement for the year ending December 31, 1996. (10) SUBSEQUENT EVENTS During July 1996, the Company repurchased 90,000 shares of its common stock at an average market price of approximately $7.20. The treasury stock was constructively retired in accordance with the Michigan Business Corporations Act applicable to all Michigan corporations. 8
11 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is a discussion of the major elements impacting Spartan Motors, Inc. financial and operating results for the three month and six month periods ended June 30, 1996 compared to the same periods ended June 30, 1995. The comments that follow should be read in conjunction with the Company's consolidated financial statements and related notes. RESULTS OF OPERATIONS The following table sets forth, for the periods indicated, the components of the Company's consolidated statements of net earnings, on an actual basis, as a percentage of revenues: <TABLE> <CAPTION> Three Months Six Months Ended June 30 Ended June 30 --------------------- --------------------- 1996 1995 1996 1995 ----- ----- ----- ----- <S> <C> <C> <C> <C> Revenues 100% 100% 100% 100% Cost and expenses: Cost of products sold 84.1% 87.5% 85.2% 84.9% Research and development 2.4% 2.4% 2.3% 2.0% Selling, general, and administrative 8.7% 11.5% 8.0% 9.4% Interest 0.2% 0.5% 0.3% 0.4% ---- ----- ---- ---- Total costs and expenses 95.4% 101.9% 95.8% 96.7% ---- ----- ---- ---- Earnings (loss) before taxes on income 4.6% (1.9)% 4.2% 3.3% Taxes on income (credits) 2.0% (1.1)% 1.7% 1.2% ---- ----- ---- ---- Net earnings (loss) 2.6% (0.8)% 2.5% 2.1% ---- ----- ---- ---- </TABLE> THREE MONTH PERIOD ENDED JUNE 30, 1996, COMPARED TO THE THREE MONTH PERIOD ENDED JUNE 30, 1995 Revenues for the three months ended June 30, 1996, were $44.7 million compared to $28.8 million in 1995, an increase of 55%. For the three months ended June 30, 1996 the Company had net income of $1.1 million ($0.09 per share), compared to a net loss of $0.2 million in 1995 ($0.02 per share). The increase in revenues and earnings is primarily due to increased production of fire truck, transit bus and school bus chassis. Additionally, motorhome production rebounded from the historically low level due to soft retail market conditions in recreational vehicles during 1995. Total chassis production for the three months ended June 30, 1996 consisted of 801 units as compared to 459 chassis for the same period in 1995. Bus chassis unit sales increased to 143 units as compared to 52 units in the prior year period as the Company further penetrates the school and transit bus markets. The Company continues to compete with the commercial fire truck market with its Diamond, Metrostar, and Advantage series chassis. Total costs and expenses as a percentage of revenues decreased to 95.4% for the 1996 period as compared to 101.9% for 1995. Costs of products sold decreased to 84.1% of revenues as compared to 87.5% for the same period in 1995. The decrease is the result of fixed manufacturing overhead costs being absorbed by more units produced than in the prior period and the effects of price increases on certain chassis. Selling, general and administrative expenses decreased to 8.7% of revenues for the 1996 period compared with 11.5% for the 1995 period reflecting the Company's emphasis on cost control and efficiency improvements. Research and development costs for the 1996 period remained consistent with the same period of 1995. The Company is continuing its efforts to expand the applications of rear engine diesel technology to additional market segments in the industry. Examples of this are the development of school bus and low floor transit bus chassis. Total chassis orders received decreased 13.0% during the three months ended June 30, 1996, to 783 units from 900 units for the same period of 1995. This decrease is primarily attributed to the cyclical nature of the school bus chassis market, and to a lesser extent a decline in OEM orders for recreational vehicle chassis in preparation for the model year changeover. 9
12 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED SIX MONTH PERIOD ENDED JUNE 30, 1996, COMPARED TO THE SIX MONTH PERIOD ENDED JUNE 30, 1995 Revenues for the six months ended June 30, 1996 were $92 million compared with $73 million in 1995, an increase of 26%. Net income was $2.4 million for the six months ended June 30, 1996 ($0.19 per share), compared to $1.6 million in 1995 ($0.12 per share). The increase in revenues and earnings is primarily due to the rebound from soft retail market conditions in recreational vehicles during 1995 and to a lesser extent an increase in fire truck chassis production. In addition, school and transit bus chassis production has increased as the Company further penetrates these markets. Total chassis production for the six months ended June 30, 1996 consisted of 1,661 units as compared to 1,235 chassis for the same period in 1995. Sales of fire truck chassis units increased by 15% due to the continued shift from commercial to custom chassis, and the Company's ability to compete with the commercial fire truck market with its Diamond, Metro Star and Advantage series chassis. Sales of motorhome chassis increased overall by 18% during the six months ended June 30, 1996. The school and transit bus sales improved to 283 units compared with 59 units during the same period in 1995 as the company continues to penetrate these markets. The Company will continue its efforts to diversify into other product lines to reduce the dependence on any single product line. Total costs and expenses as a percentage of revenues decreased to 95.8% for 1996 as compared to 96.7% for 1995. Cost of products sold increased to 85.2% of revenues as compared to 84.9% for the same period in 1995. The increase is primarily the result of the mix of chassis produced and the proportion of these costs relative to the level of revenues. Selling, general and administrative expenses decreased to 8.0% of revenues for the 1996 period compared with 9.4% for 1995. The decrease is due to the proportion of these costs relative to the level of sales for the period. Research and development costs increased to 2.3% for the 1996 period as compared to 2.0% for 1995. This is primarily due to the Company's continuing efforts to diversify into specialty chassis product lines, the development of the independent front suspension, and ongoing bus developments. Total chassis orders received increased 4.4% during the six months ended June 30, 1996, to 1,737 units from 1,664 units for the same period of 1995. This increase is primarily the result of the improvement in the recreational vehicle market over the prior year. At June 30, 1996, the Company had approximately $49.3 million in backlog chassis orders, consisting of higher volume, lower margin units. 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. LIQUIDITY AND CAPITAL RESOURCES Over the years, the Company has financed its growth through a combination of funds provided from equity offerings, operations and long and short-term debt financing. During the six months ended June 30, 1996, cash provided by the operating activities amounted to approximately $1.3 million. On June 30, 1996, the Company had working capital of $51.8 million compared to $50.9 million at December 31, 1995, an increase of 2.0%. The current ratio on June 30, 1996 decreased to 4.7 compared with 6.3 on December 31, 1995. The change in working capital is the result of increases in accounts receivable, inventory and accounts payable. Accounts receivable increased approximately $5.3 million primarily due to sales growth during the period. Inventories increased approximately $1.2 million primarily to support increased production levels. Accounts payable increased by approximately $3.1 million due to higher inventory levels and the timing of vendor payments. The Company anticipates that cash generated from operations, the liquidity of short-term investment securities and the existing credit line will be sufficient to satisfy all working capital and capital expenditure requirements for the foreseeable future. This will provide the Company with financial flexibility to respond quickly to business opportunities as they arise, including opportunities for growth either through internal development or through strategic joint ventures or acquisitions. 10
13 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED Due to the effects of the peso devaluation, the ongoing financial crisis in Mexico and the lack of order activity, the Company has not produced chassis at its Mexican facility during 1996. The current staff continues to perform service and warranty repairs on products sold, maintain customer contacts, and promote the Company's custom chassis products. Spartan de Mexico recorded revenues of $14,000 and incurred losses of $333,000 ($0.03 per share) for the six month period ended June 30, 1996. This compares to revenues of $9,600 and losses of approximately $247,000 ($0.02 per share) for the same period in 1995. The effect on earnings related to the devaluation of the peso was immaterial to the consolidated financial statements of the Company. Spartan remains committed to supporting the operations of Spartan de Mexico. Stockholders' equity increased to $60.7 million as of June 30, 1996, an increase of 1.5%. The change is the result of earnings of $2.4 million, net of dividends of $0.6 million paid April 29, 1996 and the $0.9 million used to acquire 110,000 shares of the Company's common stock. The Company's debt to equity ratio decreased to 9.8% on June 30, 1996 compared with 10.4% at December 31, 1995. The Company's unsecured line of credit with a bank provides for maximum borrowings of $15,000,000 at 2% above the London Inter Bank Offering Rate (LIBOR), which was 5.5% at June 30, 1996. As of June 30, 1996, there were no borrowings against this line. In addition, under the terms of its credit agreement with its bank, the Company has the ability to issue letters of credit totaling $400,000. At June 30, 1996, the Company had outstanding letters of credit totaling $200,000. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Except for the historical information contained herein, the matters discussed in this Form 10-Q are forward-looking statements which involve risks and uncertainties, including but not limited to economic, competitive, governmental and technological factors affecting the Company's operations, markets, products, services and prices, and other factors discussed in the Company's filings with the Securities and Exchange Commission. 11
14 PART II. OTHER INFORMATION Item 1. Legal Proceedings The Company is party, both as plaintiff and defendant, to a number of lawsuits and claims arising out of the normal course of business. It is the best judgment of management that the financial position of the Company will not be materially affected by the final outcome of these legal proceedings. Item 2. Changes in Securities The total number of shares of which the corporation shall have authority to issue is twenty-five million, nine hundred thousand (25,900,000) divided into two classes, as follows: (1) Twenty-three million, nine hundred thousand (23,900,000) shares of common stock of the par value of One Cent ($.01). (2) Two million (2,000,000) shares of preferred stock, having no par value. The authorized shares of Preferred Stock may be issued in one or more series, each of such series to have such designations, powers, preferences, and relative, participating, optional or other rights, and such qualifications, limitations, restrictions, as may be stated in a resolution or resolutions providing for the issue of such series adopted by the Board of Directors. The holders of shares of each series of Preferred Stock shall be entitled to receive, when and if declared, dividends pursuant to the rate fixed for the series. On liquidation, dissolution or winding up of the affairs of the corporation, the holders of each share of Preferred Stock shall be entitled to available assets of the corporation before any amounts are distributed to the holders of Common Stock. The voting rights of holders of Preferred Stock shall in no event exceed more than one vote per share. None of the shares of the Common Stock shall be entitled to any preferences. Dividends on the shares of Common Stock may be declared and paid, as determined by the Board of Directors, after declaration or payment of full dividends on all shares having priority over the Common Stock. On any liquidation, dissolution, or winding up of the affairs of the corporation, the holders of the Common Stock shall be entitled to receive pro rata the remaining assets of the corporation available for distribution after there shall have been paid or set aside for the holders of all shares having priority over the Common Stock the full preferential amounts to which they are respectively entitled. The holders of Common Stock shall be entitled to one vote for each share of Common Stock held by them respectively. Item 4. Submission of Matters to a Vote of Security Holders The annual meeting of shareholders of Spartan Motors, Inc. was held on June 5, 1996, with the business portion of the meeting being adjourned to June 20, 1996. The purpose of the meeting was to elect directors, adopt Restated Articles of Incorporation, approve an amendment to the 1988 Nonqualified Stock Option Plan, approve the 1996 Stock Option and Restricted Stock Plan for Outside Market Advisors, and to transact any other business that may properly come before the meeting. The name of each director elected (along with the number of votes cast for or authority withheld) is as follows: <TABLE> <CAPTION> Votes Cast Authority Elected Directors For Withheld - ------------------ ---------- -------- <S> <C> <C> George W. Sztykiel 11,598,680 664,001 William F. Foster 11,598,280 664,401 </TABLE> The following persons continue to serve as directors: John E. Sztykiel, Charles E. Nihart, Max A. Coon, Anthony G. Sommer, and George Tesseris. 12
15 OTHER INFORMATION - CONTINUED The shareholders also acted on the following matters: <TABLE> <CAPTION> For Against Abstain --------- --------- ------- <S> <C> <C> <C> Restated Articles of Incorporation 6,381,263 2,278,073 111,828 Approval of Amendment to 1988 Nonqualified Stock Option Plan 9,992,806 1,231,796 595,002 Approval of 1996 Stock Option and Restricted Stock Plan for Outside Market Advisors 9,925,318 1,776,849 148,882 </TABLE> Item 5. Other Information Pursuant to the corporate bylaws of Spartan Motors, Inc., the Board of Directors increased the number of members of the Board from seven to eight members and filled the newly created board position on July 1, 1996 by appointing David R. Wilson to the Board. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. The following documents are filed as exhibits to this report on Form 10-Q: Exhibit Number Description - ------- ---------------------------------- 3.1 Restated Articles of Incorporation 10.1 Restated 1988 Nonqualified Stock Option Plan, reflecting amendment approved by the Board of Directors on February 27, 1996, and approved by Shareholders at the adjourned meeting on June 20, 1996 (original plan was previously filed as an exhibit to the Registration Statement on Form S-8, Registration No. 33-28432, filed on April 28, 1989). 10.2 Restated 1994 Incentive Stock Option Plan, reflecting amendment approved by the Board of Directors on February 27, 1996, and approved by Shareholders at the adjourned meeting on June 20, 1996 (original plan was previously filed as an exhibit to the Registration Statement on Form S-8, Registration No. 33-80980, filed on June 30, 1994). 10.3 1996 Stock Option and Restricted Stock Plan for Outside Market Advisors, approved by the Board of Directors on February 27, 1996, and approved by Shareholders at the adjourned meeting on June 20, 1996. 27 Financial Data Schedule (b) There were no reports on Form 8-K filed during the quarter ended June 30, 1996. 13
16 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, Spartan Motors, Inc., has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Spartan Motors, Inc. By: /s/ James R. Jenks ---------------------- James R. Jenks, CPA Secretary/Treasurer Date: August 5, 1996 14
17 EXHIBIT INDEX Exhibit Number 3.1 Restated Articles of Incorporation 10.1 Restated 1988 Nonqualified Stock Option Plan, reflecting amendment approved by the Board of Directors of February 27, 1996, and approved by Shareholders at the adjourned meeting on June20, 1996 (original plan was previously filed as an exhibit to the Registration Statement on Form S-8, Registration No. 33-28432, filed on April 28, 1989). 10.2 Restated 1994 Incentive Stock Option Plan, reflecting amendment approved by the Board of Directors on February 27, 1996, and approved by Shareholders at the adjourned meeting on June 20, 1996 (original plan was previously filed as an exhibit to the Registration Statement on Form S-8, Registration No. 33-80980, filed on June 30, 1994). 10.3 1996 Stock Option and Restricted Stock Plan for Outside Market Advisors, approved by the Board of Directors on February 27, 1996, and approved by Shareholders at the adjourned meeting on June 20, 1996. 27 Financial Data Schedule 15