The Shyft Group, Inc. (SHYF) 8-K Spartan Motors Reports Third Quarter Results; Continued Profitability and Swift Realignment of its Cost Structure

1000 REYNOLDS RD. • CHARLOTTE, MI 48813 • USA

TELEPHONE 517.543.6400 • FACSIMILE 517.543.5403

WEB PAGE – WWW.SPARTANMOTORS.COM

FOR IMMEDIATE RELEASE

Spartan Motors Reports Third Quarter Results; Continued
Profitability and Swift Realignment of its Cost Structure

CHARLOTTE, Michigan, Oct. 22, 2009 – Spartan Motors, Inc. (NASDAQ: SPAR) today announced results for its 2009 third quarter highlighted by continued profitability as a result of the swift actions taken by the company to aggressively realign its cost structure to current volume levels. Net earnings for the quarter were $0.8 million, or $0.02 per share, which includes pre-tax restructuring charges of $0.9 million. Excluding these charges, the adjusted earnings per share would have been $0.04 cents. Consolidated net sales for the quarter were $89.7 million, down 62.2 percent from the same period last year due to the completion of a large-scale defense contract in the prior year’s quarter, coupled with the weaker macroeconomic environment. Despite the lower volume levels, the actions taken by the company allowed it to maintain gross margins at 17.6 percent of sales and reduce operating expenses by 30.4 percent from the same quarter of the prior year. In addition, an increased focus on the balance sheet drove a 115.3 percent increase in the cash balance over second quarter 2009, to end the quarter at $36.3 million.

• Net sales of $89.7 million

• Total restructuring charges of $0.9 million

• Net earnings of $0.02 per diluted share ($0.04 excluding restructuring charges)

• Gross margin of 17.6 percent of sales vs. 18.1 percent in 3Q08

• Operating expenses of $14.6 million (a 30.4 percent decline from 3Q08)

• Ending cash balance of $36.3 million (a 115.3 percent increase over 2Q09)

• Year-to-date return on invested capital of 9.1 percent

• Consolidated backlog of $157.5 million

“We are very pleased with our progress in the quarter, and in particular, our ability to maintain margins and continue our history of positive earnings in the face of a significant revenue decline following the conclusion of a large defense contract,” said John Sztykiel, President and CEO of Spartan Motors. “We moved decisively in the quarter to realign our cost structure with current market demand. As a result, we took a significant one-time charge to our financials, which allows us to position the business at the right size and scale to drive continued profitability into the future. We are also starting to see an increase in order volume, with orders up 28.0 percent compared to the 2009 second quarter, which may be an early indication that demand is heading in the right direction.”

Spartan reported net sales of $89.7 million in the 2009 third quarter compared with net sales of $237.5 million in the same quarter of 2008. The majority of the decline was in other products sales, which includes specialty chassis for defense vehicles as well as service, parts and assemblies (SPA) sales. The decline was mostly due to the completion of a large-scale defense vehicle contract in 2008. Spartan’s EVTeam operating unit, consisting of its Crimson Fire, Crimson Fire Aerials and Road Rescue subsidiaries, reported a 5.4 percent year-over-year increase in sales for the 2009 third quarter. Sales of fire truck chassis in the quarter also increased 19.9 percent compared to the same period in 2008. Spartan’s chassis sales to the Class A diesel motor home market decreased 29.9 percent year-over-year in the quarter.

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Spartan Motors / Page 2 of 8

Spartan reported consolidated gross margin of 17.6 percent of sales in the third quarter of 2009, comparable to 18.1 percent in the same period in 2008. Spartan attributed its continued strong gross margins to improved product mix from increased sales of fire trucks and SPA and lower commodity costs, offset by $0.2 million in restructuring costs.

Operating expenses for the 2009 third quarter, which include $0.7 million in restructuring charges, declined by $6.4 million, or 30.4 percent, compared to the same period last year. Spartan attributed the improvement to the cost reduction activities taken by the company primarily in the third quarter, which include workforce reductions, plant and operation consolidations and overall improved cost management.

Excluding restructuring charges, adjusted operating income was 2.4 percent of sales and adjusted earnings were $0.04 per share. Including the restructuring charges of $0.9 million incurred during the quarter, earnings were $0.02 per share compared to $0.45 per share during the same period last year.

Spartan reported positive operating cash flow of $30.7 million in the nine months ended Sept. 30, 2009, due to reduced working capital requirements. The company ended the third quarter with $36.3 million in cash and cash equivalents and $15.2 million in long-term debt, a reduction from $74.3 million at Sept. 30, 2008. In the 2009 third quarter, Spartan reduced inventory levels by 3.2 percent and accounts receivable by 36.6 percent compared to levels at Dec. 31, 2008.

Joe Nowicki, Chief Financial Officer, added: “The operating results in the quarter are a preview of where we are moving as a company; to a business model where we can maintain solid gross margins and operating income despite volatile demand, while also strengthening our balance sheet along the way. Moving forward, we are taking further steps to lean out our business, including realigning the company to focus on both market-facing activities that drive value to customers, and leverage activities that drive efficiency and process improvements across the organization.”

On a consolidated basis, Spartan posted a year-to-date return on invested capital (ROIC) of 9.1 percent. Spartan uses ROIC, defined as operating income less taxes, on an annualized basis, divided by total shareholders’ equity, for internal performance benchmarking.

Sztykiel concluded: “As society changes, markets are changing and so are the vehicles they use, which creates opportunities for Spartan to enter and grow in micro-niches, transforming them from commercial to custom. Some of these strategic opportunities are within existing markets with current OEM customers. Others are in new markets, where we can expand organically, such as our recent orders for custom ambulance chassis, or through strategic acquisitions that fit our business model and have immediate positive bottom-line impact. Our improved cost structure is not only allowing us to manage through the current economic challenges, but also facilitates aggressive growth into new and emerging markets in line with our strategic plan.”

Reconciliation of Non-GAAP Financial Measures

This release contains Adjusted Earnings Per Share and Adjusted Operating Income measures, which are both Non-GAAP financial measures. Adjusted Earnings Per Share and Adjusted Operating Income are calculated by excluding from Earnings Per Share and Operating Income items that we believe to be infrequent or not indicative of our operating performance. For the period covered by this release such items consist of expenses associated with restructuring actions taken to adjust our cost structure to the current business climate. We present Adjusted Earnings Per Share and Adjusted Operating Income because we consider them to be important supplemental measures of our performance and believe them to be useful to show ongoing results from operations distinct from items that are infrequent or not indicative of our operating performance.

Adjusted Earnings Per Share and Adjusted Operating Income are not measurements of our financial performance under GAAP and should not be considered as an alternative to Earnings Per Share or Operating Income under GAAP. Adjusted Earnings Per Share and Adjusted Operating Income have limitations as analytical tools, and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. In addition, in evaluating Adjusted Earnings Per Share and Adjusted Operating Income, you should be aware that in the future we may incur expenses similar to the adjustments in this presentation. Our presentation of Adjusted Earnings Per Share and Adjusted Operating Income should not be construed as an inference that our future results will be unaffected by unusual or infrequent items. We compensate for these limitations by providing equal prominence of our GAAP results and using Adjusted Earnings Per Share and Adjusted Operating Income only as a supplement.

Spartan Motors / Page 3 of 8

The following table reconciles Adjusted Earnings Per Share to Earnings Per Share and Adjusted Operating Income to Operating Income for the periods indicated.

	Financial Summary (Non-GAAP)
	(unaudited)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2009		2008		2009		2008
Operating Income (000s)	$	1,200	$	22,048	$	18,711	$	61,570
Add back: Restructuring Charges		909		-		957		-
Adjusted Operating Income		2,109		22,048		19,668		61,570
Earnings per Share - Diluted	$	0.02	$	0.45	$	0.37	$	1.21
Add Back: Restructuring Charges		0.02		-		0.02		-
Adjusted Earnings per Share - Diluted	$	0.04	$	0.45	$	0.39	$	1.21

Conference Call, Webcast and Roadcast
Spartan Motors will host a conference call for analysts and portfolio managers at 10 a.m. ET today to discuss these results and current business trends. To listen to a live webcast of the call, please visitwww.spartanmotors.com, click on “Shareholders,” and then on “Webcasts.”

Spartan also will update the financial information on its Roadcast “digital roadshow” for investors. To launch the Spartan Motors Roadcast, please visitwww.spartanmotors.com on the web and look for the “Virtual Road Show” link on the right side of the page.

About Spartan Motors
Spartan Motors, Inc. (www.spartanmotors.com) designs, engineers and manufactures custom chassis and vehicles for the recreational vehicle, fire truck, ambulance, emergency-rescue and specialty vehicle markets. The company’s brand names –Spartan^TM, Crimson Fire^TM, Crimson Fire Aerials^TM, andRoad Rescue^TM – are known for quality, value, service and being the first to market with innovative products. The company employs approximately 1,000 at facilities in Michigan, Pennsylvania, South Carolina and South Dakota. Spartan reported sales of $844.4 million in 2008 and is focused on becoming the premier manufacturer of specialty vehicles and chassis in North America.

Spartan Motors / Page 4 of 8

This release contains forward-looking statements, including, without limitation, statements concerning our business, future plans and objectives and the performance of our products. Forward looking statements are identifiable by words such as “believe,” “anticipate,” “will,” “sustain,” and “continue.” These forward-looking statements involve certain risks and uncertainties that ultimately may not prove to be accurate. For example, we may encounter unforeseen difficulties and challenges in entering new markets or in pursuing strategic acquisitions. In addition, technical and other complications may arise that could prevent the timely implementation of our plans or that may impact the expected outcome of those plans. As a result, actual results and future events could differ materially from those anticipated in such statements. The company cautions that these forward-looking statements are further qualified by other factors including, but not limited to, those set forth in the company’s Annual Report on Form 10-K filing and other filings with the United States Securities and Exchange Commission (available at http://www.sec.gov). Government contracts and subcontracts typically involve long payment and purchase cycles, competitive bidding, qualification requirements, delays or changes in funding, extensive specification development and changes, price negotiations and milestone requirements. An announced award of a governmental contract is not equivalent to a finalized executed contract and does not assure that orders will be issued and filled. Government agencies also often retain some portion of fees payable upon completion of a project and collection of contract fees may be delayed for long periods, which can negatively impact both prime contractors and subcontractors. The company undertakes no obligation to publicly update or revise any statements in this release, whether as a result of new information, future events or otherwise, except as required by law.

CONTACT:
John Sztykiel, CEO, or Joe Nowicki, CFO
Spartan Motors, Inc.
(517) 543-6400
Jeff Lambert or Ryan McGrath
Lambert, Edwards & Associates
(616) 233-0500 /rmcgrath@lambert-edwards.com

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Spartan Motors / Page 5 of 8

Spartan Motors, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
Three Months Ended September 30, 2009 and 2008

	September 30, 2009						September 30, 2008
	(Unaudited)						(Unaudited)
	$–000–			%			$–000–			%
Sales		89,704						237,461
Cost of Products Sold		73,716						194,496
Restructuring Charges		223
Gross Profit		15,765			17.6			42,965			18.1
Operating Expenses:
Research and Development		4,136			4.6			5,216			2.2
Selling, General and Administrative		9,743			10.9			15,701			6.6
Restructuring Charges		686			0.8
Total Operating Expenses		14,565			16.3			20,917			8.8
Operating Income		1,200			1.3			22,048			9.3
Other Income (Expense):
Interest Expense		(329	)		(0.4	)		(642	)		(0.3	)
Interest and Other Income		266			0.4			331			0.2
Total Other Income (Expense)		(63	)		0.0			(311	)		(0.1	)
Earnings before Taxes on Income		1,137			1.3			21,737			9.2
Taxes on Income		388			0.5			7,081			3.0
Net Earnings		749			0.8			14,656			6.2
Basic Net Earnings per Share		0.02						0.45
Diluted Net Earnings per Share		0.02						0.45
Basic Weighted Average Common Shares Outstanding		32,914						32,710
Diluted Weighted Average Common Shares Outstanding		33,126						32,837

Spartan Motors / Page 6 of 8

Spartan Motors, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
Nine Months Ended September 30, 2009 and 2008

	September 30, 2009						September 30, 2008
	(Unaudited)						(Unaudited)
	$–000–			%			$–000–			%
Sales		329,471						698,076
Cost of Products Sold		262,121						580,733
Restructuring Charges		265
Gross Profit		67,085			20.4			117,343			16.8
Operating Expenses:
Research and Development		13,241			4.0			14,646			2.1
Selling, General and Administrative		34,441			10.5			41,127			5.9
Restructuring Charges		692			0.2
Total Operating Expenses		48,374			14.7			55,773			8.0
Operating Income		18,711			5.7			61,570			8.8
Other Income (Expense):
Interest Expense		(984	)		(0.3	)		(1,811	)		(0.3	)
Interest and Other Income		722			0.2			623			0.1
Total Other Income (Expense)		(262	)		(0.1	)		(1,188	)		(0.2	)
Earnings before Taxes on Income		18,449			5.6			60,382			8.6
Taxes on Income		6,264			1.9			20,530			2.9
Net Earnings		12,185			3.7			39,852			5.7
Basic Net Earnings per Share		0.37						1.22
Diluted Net Earnings per Share		0.37						1.21
Basic Weighted Average Common Shares Outstanding		32,678						32,559
Diluted Weighted Average Common Shares Outstanding		32,892						32,866

Spartan Motors / Page 7 of 8

Spartan Motors, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

	September 30, 2009		December 31, 2008
	(Unaudited)		(Unaudited)
	$–000–		$–000–
ASSETS
Current assets:
Cash and cash equivalents	$	36,254	$	13,741
Accounts receivable, net		48,172		75,935
Inventories		83,879		86,648
Deferred income tax assets		7,076		7,076
Taxes receivable		1,089
Deposits on engines		4,457		5,457
Other current assets		2,225		2,606
Total current assets		183,152		191,463
Property, plant and equipment, net		65,815		66,786
Goodwill		2,457		2,457
Deferred income tax assets		241		241
Other assets		999		193
Total assets	$	252,664	$	261,140
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	17,326	$	21,776
Accrued warranty		4,890		8,352
Accrued compensation and related taxes		5,144		12,136
Accrued vacation		1,957		1,904
Accrued customer rebates		1,583		1,498
Deposits from customers		6,763		9,922
Taxes on income				1,972
Other current liabilities and accrued expenses		4,677		4,584
Current portion of long-term debt		11,513		10,640
Total current liabilities		53,853		72,784
Other non-current liabilities		1,775		1,157
Long-term debt, less current portion		15,172		16,556
Shareholders' equity:
Common stock		329		326
Additional paid in capital		66,387		64,606
Retained earnings		115,148		105,711
Total shareholders' equity		181,864		170,643
Total liabilities and shareholders' equity	$	252,664	$	261,140

Spartan Motors / Page 8 of 8

Spartan Motors, Inc. and Subsidiaries
Sales and Other Financial Information by Business Segment
Three and Nine Months Ended September 30, 2009
Unaudited

Three Months Ended September 30, 2009 (amounts in thousands of dollars)

	Business Segments
	Chassis		EVTeam			Other			Consolidated
Fire Truck Chassis Sales		40,352					(10,042	)		30,310
Motorhome Chassis Sales		11,071								11,071
EVTeam Product Sales				21,863						21,863
Other Product Sales		26,460								26,460
Total Net Sales		77,883		21,863			(10,042	)		89,704
Interest Expense (Income)				426			(97	)		329
Depreciation Expense		1,068		238			526			1,832
Segment Net Earnings (Loss)		3,190		(1,201	)		(1,240	)		749

Nine Months Ended September 30, 2009 (amounts in thousands of dollars)

	Business Segments
	Chassis		EVTeam			Other			Consolidated
Fire Truck Chassis Sales		112,219					(21,325	)		90,894
Motorhome Chassis Sales		16,574								16,574
EVTeam Product Sales				70,383						70,383
Other Product Sales		151,620								151,620
Total Net Sales		280,413		70,383			(21,325	)		329,471
Interest Expense (Income)				1,320			(336	)		984
Depreciation Expense		3,064		692			1,736			5,492
Segment Net Earnings (Loss)		16,635		(1,054	)		(3,396	)		12,185

Period End Backlog (amounts in thousands of dollars)

	September 30, 2008			December 31, 2008			March 31, 2009			June 30, 2009			September 30, 2009
Fire Truck Chassis *		70,815			73,473			98,025			84,840			82,386
Motorhome Chassis *		9,069			5,552			4,365			6,743			9,589
Other Product *		46,038			8,500			55,827			23,030			12,939
Total Chassis		125,922			87,525			158,217			114,613			104,914
EVTeam Product *		73,056			96,383			83,344			72,352			72,615
Intercompany Eliminations		(15,206	)		(14,009	)		(24,050	)		(26,232	)		(20,056	)
Total Backlog		183,772			169,899			217,511			160,733			157,473

* Anticipated time to fill backlog orders; 2 months or less for motorhome chassis and 8 months or less for fire truck chassis, other product and EVTeam product. Service, parts and accessories were included in the backlog beginning in March 31, 2009.