UNITED STATES SECURITIES AND EXCHANGE
COMMISSION WASHINGTON, D.C. 20549

# FORM 10-Q

|[ X ] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|----- | ---------------------------------------------------------------------------------------

| | For
the quarterly period ended June 30, 2009
| | --------------------------------------------

|[__] | TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES           EXCHANGE ACT OF
1934
|---- | --------------------------------------------------------------------------------------------------

| | For
the transition period from ___________________ to ____________________
| | --------------------------------------------------------------------------

| | Commission
File Number:  0-13611
| | --------------------------------

SPARTAN MOTORS, INC.(Exact Name of
Registrant as Specified in Its Charter)

|Michigan(State
or Other Jurisdiction ofIncorporation or Organization)1000 Reynolds Road Charlotte, Michigan          
(Address of Principal Executive Offices | 38-2078923 (I.R.S. EmployerIdentification No.)48813
(Zip Code)
|------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------

Registrant's Telephone
Number, Including Area Code:   (517) 543-6400

Indicate by check mark whether the
registrant: (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.

Yes [ X ] No [__]

Indicate by check mark whether the
registrant has submitted electronically and posted on its corporate Web site, if any,
every Interactive Date File required to be submitted and posted pursuant to Rule 405
of Regulation S-T (§ 232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and
post such files).

Yes [__] No [__]

Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or
a smaller reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of
the Exchange Act.

|Large accelerated filer    [__]
Non-accelerated filer      [__] | Accelerated filer              [ X ]
Smaller Reporting Company      [__]
|--------------------------------------------------------------- | ------------------------------------------------------------------------

Indicate by check mark whether the
registrant is a shell company (as defined in Exchange Act Rule 12b-2).

Yes [__] No [ X ]

Indicate the number of shares
outstanding of each of the issuers classes of common stock, as of the latest
practicable date.

|ClassCommon stock, $.01 par value | Outstanding atJuly 31, 200932,888,039 shares
|--------------------------------- | --------------------------------------------

---



# SPARTAN MOTORS, INC.

# INDEX

_______________________________________________

| | Page
| | ----

|FORWARD-LOOKING
STATEMENTS | 3
|-------------------------- | -

|PART I.  FINANCIAL INFORMATION | 
|------------------------------ | 

| | Item 1. | Financial
Statements: | 
| | ------- | --------------------- | 

| | Condensed
 Consolidated  Balance  Sheets  -  June 30,  2009  and  December 31,  2008
                      (Unaudited) | 4
| | ---------------------------------------------------------------------------------------------------------------------- | -

| | Condensed
 Consolidated  Statements of Income - Three Months Ended June 30, 2009 and
                      2008 (Unaudited) | 6
| | --------------------------------------------------------------------------------------------------------------------------- | -

| | Condensed
 Consolidated  Statements of Income - Six Months Ended  June 30,  2009 and
                      2008 (Unaudited) | 7
| | --------------------------------------------------------------------------------------------------------------------------- | -

| | Condensed
 Consolidated  Statements of Cash Flows - Six Months Ended  June 30,  2009
                      and 2008 (Unaudited) | 8
| | ------------------------------------------------------------------------------------------------------------------------------- | -

| | Condensed
 Consolidated  Statements  of  Shareholders'  Equity  - Six  Months  Ended
                      June 30, 2009 (Unaudited) | 9
| | ------------------------------------------------------------------------------------------------------------------------------------ | -

| | Notes
to Condensed Consolidated Financial Statements | 10
| | ---------------------------------------------------- | --

| | Item 2. | Management's   Discussion  and  Analysis  of  Financial  Condition  and  Results  of
                      Operations | 16
| | ------- | --------------------------------------------------------------------------------------------------------------------- | --

| | Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 26
| | ------- | ---------------------------------------------------------- | --

| | Item 4. | Controls and Procedures | 26
| | ------- | ----------------------- | --

|PART II.  OTHER INFORMATION | 27
|--------------------------- | --

| | Item 1A. | Risk Factors | 27
| | -------- | ------------ | --

| | Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 27
| | ------- | ----------------------------------------------------------- | --

| | Item 4. | Submission of Matters to a Vote of Security Holders | 28
| | ------- | --------------------------------------------------- | --

| | Item 6. | Exhibits | 29
| | ------- | -------- | --

|SIGNATURES | 30
|---------- | --

|EXHIBIT INDEX | 31
|------------- | --

-2-

---



# FORWARD-LOOKING
STATEMENTS

There are certain statements within
this report that are not historical facts. These statements are called
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements
involve important known and unknown risks, uncertainties and other factors and can be
identified by phrases using estimate, anticipate,
believe, project, expect, intend,
predict, potential, future, may,
should and similar expressions or words. Our future results, performance or
achievements may differ materially from the results, performance or achievements discussed
in the forward-looking statements. There are numerous factors that could cause actual
results to differ materially from the results discussed in forward-looking statements,
including, among others:

| | The recent global economic and financial market crisis has had and may continue to have
a negative effect on  the Companys business and its operations.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------

| | Changes
in economic conditions, including changes in interest rates, credit availability,
financial marketperformance and the Companys industries, can have adverse
affects on its earnings and financial condition,as well as its customers, dealers
and suppliers. In particular, the Company could be adversely affected bythe
economic impact to its supply base that supports the automobile industry.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Changes
in relationships with major customers and suppliers could significantly affect the Companysrevenues and profits.
|- | -------------------------------------------------------------------------------------------------------------------------

| | The Company depends in
part on U.S. government contracts, which are subject to unique risks, some of which are beyond
its control.
|- | ----------------------------------------------------------------------------------------------------------------------------------

| | The Company's businesses
are cyclical and this can lead to fluctuations in its operating results.
|- | -------------------------------------------------------------------------------------------------

| | Amendments of the regulations
governing our businesses could have a material impact on the Company's operations.
|- | ----------------------------------------------------------------------------------------------------------------

This list provides examples of
factors that could affect the results described by forward-looking statements contained in
this Report. However, this list is not intended to be all inclusive; many other factors,
including the risk factors disclosed in Item 1A Risk Factors of Part II of
this Quarterly Report on Form 10-Q and of Part I of our Annual Report on Form 10-K for the
year ended December 31, 2008, could impact our business and it is impossible to
predict with any accuracy which factors could adversely affect the Company. Although we
believe that the forward-looking statements contained in this Report are reasonable, we
cannot provide you with any guarantee that the anticipated results will be achieved. All
forward-looking statements in this Report are expressly qualified in their entirety by the
cautionary statements contained in this section and you are cautioned not to place undue
reliance on the forward-looking statements contained in this Report. In addition to the
risks listed above, other risks may arise in the future, and we disclaim any obligation to
update information contained in any forward-looking statement.

-3-

---



# PART
I.  FINANCIAL INFORMATION

# Item 1.
  Financial Statements.

SPARTAN MOTORS, INC.
AND SUBSIDIARIESCONDENSED CONSOLIDATED
BALANCE SHEETS (UNAUDITED)

|                                        | June 30, 2009 | December 31, 2008
|--------------------------------------- | ------------- | -----------------
|ASSETS                                  |               |                  
|                                        |               |                  
|Current assets:                         |               |                  
|Cash and cash equivalents               |               |                  
|Accounts receivable, less allowance for |               |                  
|doubtful accounts of $435,100 in 2009   |               |                  
|and $146,000 in 2008                    |               |                  
|Inventories                             |               |                  
|Deferred income tax assets              |               |                  
|Taxes receivable                        |               |                  
|Deposits on engines                     |               |                  
|Other current assets                    |               |                  
|Total current assets                    |               |                  
|                                        |               |                  
|Property, plant, and equipment, net     |               |                  
|Goodwill                                |               |                  
|Deferred income tax assets              |               |                  
|Other assets                            |               |                  
|Total assets                            |               |                  

See Accompanying Notes to Condensed
Consolidated Financial Statements.

-4-

---



SPARTAN MOTORS, INC.
AND SUBSIDIARIES CONDENSED CONSOLIDATED
BALANCE SHEETS(UNAUDITED) (Continued)

|                                                             | June 30, 2009 | December 31, 2008
|------------------------------------------------------------ | ------------- | -----------------
|LIABILITIES AND SHAREHOLDERS' EQUITY                         |               |                  
|                                                             |               |                  
|Current liabilities:                                         |               |                  
|Accounts payable                                             |               |                  
|Accrued warranty                                             |               |                  
|Accrued customer rebates                                     |               |                  
|Accrued compensation and related taxes                       |               |                  
|Accrued vacation                                             |               |                  
|Deposits from customers                                      |               |                  
|Other current liabilities and accrued expenses               |               |                  
|Taxes on income                                              |               |                  
|Current portion of long-term debt                            |               |                  
|Total current liabilities                                    |               |                  
|                                                             |               |                  
|Other non-current liabilities                                |               |                  
|Long-term debt, less current portion                         |               |                  
|                                                             |               |                  
|Shareholders' equity:                                        |               |                  
|Preferred stock, no par value: 2,000,000                     |               |                  
|shares authorized (none issued)                              |               |                  
|Common stock, $0.01 par value; 40,000,000 shares authorized; |               |                  
|issued 32,908,904 shares and 32,572,289 shares in 2009 and   |               |                  
|2008, respectively                                           |               |                  
|Additional paid in capital                                   |               |                  
|Retained earnings                                            |               |                  
|Total shareholders' equity                                   |               |                  
|Total liabilities and shareholders' equity                   |               |                  

See Accompanying Notes to Condensed
Consolidated Financial Statements.

-5-

---



SPARTAN MOTORS, INC.
AND SUBSIDIARIESCONDENSED CONSOLIDATED
STATEMENTS OF INCOME (UNAUDITED)

|                                                   | Three Months Ended June 30,
|-------------------------------------------------- | ---------------------------
|                                                   |                            
|Sales                                              |                            
|Cost of products sold                              |                            
|Gross profit                                       |                            
|                                                   |                            
|Operating expenses:                                |                            
|Research and development                           |                            
|Selling, general and administrative                |                            
|Operating income                                   |                            
|                                                   |                            
|Other income (expense):                            |                            
|Interest expense                                   |                            
|Interest and other income                          |                            
|Earnings before taxes on income                    |                            
|                                                   |                            
|Taxes on income                                    |                            
|Net earnings                                       |                            
|                                                   |                            
|Basic net earnings per share                       |                            
|                                                   |                            
|Diluted net earnings per share                     |                            
|                                                   |                            
|Basic weighted average common shares outstanding   |                            
|                                                   |                            
|Diluted weighted average common shares outstanding |                            
|                                                   |                            
|Cash dividends per common share                    |                            

See Accompanying Notes to Condensed
Consolidated Financial Statements.

-6-

---



SPARTAN MOTORS, INC.
AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (UNAUDITED)

|                                                   | Six Months Ended June 30,
|-------------------------------------------------- | -------------------------
|                                                   |                          
|Sales                                              |                          
|Cost of products sold                              |                          
|Gross profit                                       |                          
|                                                   |                          
|Operating expenses:                                |                          
|Research and development                           |                          
|Selling, general and administrative                |                          
|Operating income                                   |                          
|                                                   |                          
|Other income (expense):                            |                          
|Interest expense                                   |                          
|Interest and other income                          |                          
|Earnings before taxes on income                    |                          
|                                                   |                          
|Taxes on income                                    |                          
|Net earnings                                       |                          
|                                                   |                          
|Basic net earnings per share                       |                          
|                                                   |                          
|Diluted net earnings per share                     |                          
|                                                   |                          
|Basic weighted average common shares outstanding   |                          
|                                                   |                          
|Diluted weighted average common shares outstanding |                          
|                                                   |                          
|Cash dividends per common share                    |                          

See Accompanying Notes to Condensed
Consolidated Financial Statements.

-7-

---



SPARTAN MOTORS, INC.
AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)

|                                                             | Six Months Ended June 30,
|------------------------------------------------------------ | -------------------------
|                                                             |                          
|Cash flows from operating activities:                        |                          
|Net earnings                                                 |                          
|Adjustments to reconcile net earnings to net cash            |                          
|provided by (used in)  operating activities:                 |                          
|Depreciation                                                 |                          
|Loss on disposal of assets                                   |                          
|Tax expense (benefit) from stock incentive plan transactions |                          
|Stock based compensation related to restricted stock         |                          
|Decrease (increase) in operating assets:                     |                          
|Accounts receivable                                          |                          
|Inventories                                                  |                          
|Taxes receivable                                             |                          
|Other current assets                                         |                          
|Increase (decrease) in operating liabilities:                |                          
|Accounts payable                                             |                          
|Accrued warranty                                             |                          
|Accrued customer rebates                                     |                          
|Accrued compensation and related taxes                       |                          
|Accrued vacation                                             |                          
|Deposits from customers                                      |                          
|Other current liabilities and accrued expenses               |                          
|Taxes on income                                              |                          
|Total adjustments                                            |                          
|Net cash provided by operating activities                    |                          
|Cash flows from investing activities:                        |                          
|Purchases of property, plant and equipment                   |                          
|Proceeds from sale of property, plant and equipment          |                          
|Net cash used in investing activities                        |                          
|Cash flows from financing activities:                        |                          
|Proceeds from long-term debt                                 |                          
|Payments on long-term debt                                   |                          
|Purchase and retirement of common stock                      |                          
|Issuance of stock                                            |                          
|Net proceeds (use of cash) from the exercise, vesting or     |                          
|cancelation of stock incentive awards                        |                          
|Cash retained (paid) related to tax impact of stock          |                          
|incentive plan transactions                                  |                          
|Payment of dividends                                         |                          
|Net cash used in financing activities                        |                          
|Net increase (decrease) in cash and cash equivalents         |                          
|Cash and cash equivalents at beginning of period             |                          
|Cash and cash equivalents at end of period                   |                          

See Accompanying Notes to Condensed
Consolidated Financial Statements.

-8-

---



SPARTAN MOTORS, INC.
AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF SHAREHOLDERS EQUITY (UNAUDITED)

---

|                                                   | Number ofShares | CommonStock | AdditionalPaid InCapital | RetainedEarnings | TotalShareholders'Equity
|-------------------------------------------------- | --------------- | ----------- | ------------------------ | ---------------- | ------------------------
|                                                   |                 |             |                          |                  |                         
|                                                   |                 |             |                          |                  |                         
|Balance at December 31, 2008                       |                 |             |                          | 32,572,289       |                         
|                                                   |                 |            
|Issuance of common stock and the tax benefit of    |                 |            
|stock incentive plan transactions                  |                 |             |                          | 132,832          |                         
|                                                   |                 |            
|Issuance of restricted stock, net of cancellations |                 |             |                          | 344,521          |                         
|                                                   |                 |            
|Stock based compensation related                   |                 |            
|to restricted stock                                |                 |             |                          | --               |                         
|                                                   |                 |            
|Purchase and retirement of common stock            |                 |             |                          | (140,738         | )                       
|                                                   |                 |            
|Payment of dividends                               |                 |             |                          | --               |                         
|                                                   |                 |            
|Net earnings                                       |                 |             |                          | --               |                         
|                                                   |                 |            
|                                                   |                 |             |                          |                  |                         
|Balance at June 30, 2009                           |                 |             |                          | 32,908,904       |                         
|                                                   |                 |             |                          |                  |                         

| | See
Accompanying Notes to Condensed Consolidated Financial Statements.
| | ----------------------------------------------------------------------

-9-

---



SPARTAN MOTORS, INC.
AND SUBSIDIARIES NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS _______________________

# Note 1  GENERAL
AND SUMMARY OF ACCOUNTING POLICIES

For a description of key accounting
policies followed refer to the notes to the Spartan Motors, Inc. (the
Company) consolidated financial statements for the year ended
December 31, 2008, included in the Companys Annual Report on Form 10-K filed
with the Securities and Exchange Commission on March 13, 2009. There have been no changes
in such accounting policies.

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 June 30, 2009, the results of operations for the three- and six-month periods
ended June 30, 2009 and 2008 and the cash flows for the six-month period ended
June 30, 2009.

The results of operations for the
three and six-month periods ended June 30, 2009 are not necessarily indicative of the
results to be expected for the full year.

The Company is required to disclose
the fair value of its financial instruments in accordance with Statement of Financial
Accounting Standards (SFAS) No. 107, Disclosures about Fair Values
of Financial Instruments. The carrying amounts of cash and cash equivalents,
accounts receivable, accounts payable and variable rate debt instruments approximate their
fair value. The fair value of these financial instruments, as well as the Companys
fixed rate debt instruments, approximates their carrying value at June 30, 2009.

Certain immaterial amounts in the
prior years financial statements have been reclassified to conform to the current
years presentation.

We evaluated subsequent events
through August 7, 2009, the date of the financial statement issuance.

New Accounting Standards.In September 2006, the Financial Accounting Standards Board (FASB) issued
SFAS No. 157, Fair Value Measurements.
This statement clarifies the definition of fair value, establishes a framework for
measuring fair value and expands the disclosures on fair value measurements. SFAS No. 157
was initially effective for the Company beginning January 1, 2008. In February 2008, the
FASB approved the issuance of FSP FAS 157-2. FSP FAS 157-2 allowed entities to electively
defer the effective date of SFAS No. 157 until January 1, 2009 for nonfinancial assets and
nonfinancial liabilities except those items recognized or disclosed at fair value on an
annual or more frequently recurring basis. Through June 30, 2009, SFAS No. 157 had no
effect on the Companys consolidated results of operations or financial position with
respect to its financial assets and liabilities. Effective January 1, 2009, the Company
applied the fair value measurement and disclosure provisions of SFAS No. 157 to its
nonfinancial assets and liabilities measured on a nonrecurring basis. Such also had no
effect on its consolidated results of operations or financial position through
June 30, 2009 and is also not expected to have a material impact on the
Companys future consolidated results of operations or financial position.

-10-

---



In December 2007, the FASB
issued SFAS No. 141(R), Business Combinations, to further enhance the
accounting and financial reporting related to business combinations. SFAS No.
141(R) establishes principles and requirements for how the acquirer in a business
combination (1) recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree,
(2) recognizes and measures the goodwill acquired in the business combination or a
gain from a bargain purchase, and (3) determines what information to disclose to
enable users of the financial statements to evaluate the nature and financial effects of
the business combination. SFAS No. 141(R) applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the first
annual reporting period beginning on or after December 15, 2008. Therefore, the
effects of the Companys adoption of SFAS No. 141(R) will depend upon the extent
and magnitude of acquisitions going forward. SFAS No. 141(R) had no impact on the
Companys consolidated results of operation or financial position through
June 30, 2009.

In June 2008, the FASB
issued FSP EITF 03-6-1, Determining Whether
Instruments Granted in Share-Based Payment Transactions are Participating
Securities. This FSP provides that unvested share-based payment awards that contain
nonforfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are
participating securities and are required to be included in the computation of earnings
per share pursuant to the two-class method described in Statement of Financial Accounting
Standards (SFAS) No. 128, Earnings Per Share. The two-class method of
computing earnings per share includes an earnings allocation formula that determines
earnings per share for common stock and any participating securities according to
dividends declared, whether paid or unpaid, and participation rights in undistributed
earnings. This FSP is effective for financial statements issued for fiscal years beginning
after December 15, 2008, and interim periods within those years. All prior period
earnings per share data presented are required to be adjusted retrospectively to conform
to the provisions of this FSP. Adoption of this FSP reduced basic earnings per share by
$.01 for both the three and six month periods ended June 30, 2008. However, the
adoption of this FSP had no impact on earnings per share for the three and six month
periods ending June 30, 2009.

In April 2009 the FASB issued FSP No.
FAS 107-1, Disclosures about Fair Value of Financial Instruments to require
disclosures about fair value of financial instruments for interim reporting periods of
publicly traded companies in addition to annual reporting periods. The Company adopted FSP
FAS 107-1 during the quarter ended June 30, 2009.

In May 2009, the FASB issued SFAS No.
165, Subsequent Events, which establishes general standards of accounting for
and disclosure of events that occur after the balance sheet date but before the financial
statements are issued or are available to be issued. It requires the disclosure of the
date through which an entity has evaluated subsequent events and the basis for that date.
SFAS No. 165 is effective for interim or annual financial periods ending after
June 15, 2009. The adoption of this standard during the quarter ended June 30,
2009 did not have any impact on the Companys results of operations or financial
position.

In June 2009, the FASB issued
SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of
Generally Accepted Accounting Principles  a replacement of FASB Statement No.
162. SFAS No. 168 establishes the FASB Accounting Standard Codification
(Codification) as the source of authoritative accounting principles recognized by the
FASB to be applied by nongovernmental entities in the preparation of financial statements
in conformity with generally accepted accounting principles in the United States (U.S.
GAAP). All guidance contained in the Codification carries an equal level of authority. The
Codification does not change current U.S. GAAP, but is intended to simplify user access to
all authoritative U.S.

-11-

---



GAAP by providing all the  authoritative literature related to a particular
topic in one place. On the effective date of SFAS No. 168, the Codification will supersede
all then-existing non-SEC accounting and reporting standards. All other nongrandfathered
non-SEC accounting literature not included in the Codification will become
nonauthoritative. SFAS No. 168 is effective for financial statements issued for interim
and annual periods ending after September 15, 2009. The implementation of SFAS No. 168
will have no impact on the Companys results of operations or financial position.

# Note 2  INVENTORIES

Inventories are summarized as
follows:

|                                       | June 30, 2009 | December 31, 2008
|-------------------------------------- | ------------- | -----------------
|Finished goods                         |               |                  
|Work in process                        |               |                  
|Raw materials and purchased components |               |                  
|Obsolescence reserve                   |               |                  
|                                       |               |                  

# Note 3  WARRANTIES

The Companys products generally
carry limited warranties based on terms that are generally accepted in the marketplace.
Some components included in the Companys end products (such as engines,
transmissions, tires, etc.) may include manufacturers warranties. These
manufacturers warranties are generally passed onto the end customer of the
Companys products.

The Companys policy is to
record a provision for the estimated cost of warranty-related claims at the time of the
sale and periodically adjust the provision and liability to reflect actual experience. The
amount of warranty liability accrued reflects managements best estimate of the
expected future cost of honoring the Companys obligations under the warranty
agreements. Historically, the cost of fulfilling the Companys warranty obligations
has principally involved replacement parts and labor for field retrofit campaigns. The
Companys estimates are based on historical experience, the number of units involved
and the extent of features and components included in product models. The estimates for
military vehicles were adjusted during the second quarter to reflect actual experience
specific to these vehicles, whereas prior estimates were based on the Companys
actual experience with commercial vehicles due to the limited availability of vehicle
specific data. This adjustment resulted in a net reduction of the warranty liability of
approximately $1.4 million and is included in changes in liability for pre-existing
warranties below.

Certain warranty and other related
claims involve matters of dispute that ultimately are resolved by negotiation, arbitration
or litigation. Infrequently, a material warranty issue can arise which is beyond the scope
of the Companys historical experience. The Company provides for any such warranty
issues as they become known and are estimable. It is reasonably possible that additional
warranty and other related claims could arise from disputes or other matters beyond the
scope of the Companys historical experience.

-12-

---



Changes in the Companys
warranty liability were as follows for the six months ended June 30:

|                                                 | 2009 | 2008
|------------------------------------------------ | ---- | ----
|Balance of accrued warranty at January 1         |      |     
|                                                 |      |     
|Warranties accrued during the period             |      |     
|                                                 |      |     
|Cash settlements made during the period          |      |     
|                                                 |      |     
|Changes in liability for pre-existing warranties |      |     
|during the period, including expirations         |      |     
|                                                 |      |     
|Balance of accrued warranty at June 30           |      |     

# Note 4 
COMMITMENTS AND CONTINGENT LIABILITIES

At June 30, 2009, the Company
and its subsidiaries were parties, both as plaintiff and defendant, to a number of
lawsuits and claims arising out of the normal course of their businesses. In the opinion
of management, the financial position, future operating results or cash flows of the
Company will not be materially affected by the final outcome of these legal proceedings.

# Note 5  EARNINGS
PER SHARE

Basic earnings per share is based on
the weighted average number of common shares, share equivalents of stock appreciation
rights (SARs) and participating securities outstanding during the period. Diluted
earnings per share include the dilutive effect of additional potential common shares
issuable from stock options and are determined using the treasury stock method. As
discussed in Note 1 under the caption, New Accounting Standards, FSP EITF
03-6-1 was adopted effective January 1, 2009. This FSP requires that unvested stock awards
which contain non-forfeitable rights to dividends or dividend equivalents, whether paid or
unpaid (referred to as participating securities), be included in the number of
shares outstanding for both basic and diluted earnings per share calculations. The
Companys unvested restricted stock is considered a participating security and thus
is fully included in the both earnings per share computations.

All prior period earnings per share
data presented are required to be adjusted retrospectively to conform to the provisions of
the FSP. Previously reported basic EPS was adjusted down by $.01 for both the three- and
six-month periods ended June 30, 2008, to $0.32 and $0.78, respectively. The change
was the result of including unvested restricted shares in the basic computation as
required by this new FSP.

The table below reconciles basic
weighted average common shares outstanding to diluted weighted average shares outstanding
for the respective three- and six-month periods. The stock awards noted as antidilutive
were not included in the basic (SAR awards) and diluted (stock option
awards) weighted average common shares outstanding. Although these stock awards were
not included in the Companys calculation of basic or diluted EPS, they may have a dilutive effect
on our EPS calculation in future periods if the price of our common stock increases.

-13-

---



|                                       | Three Months Ended | Six Months Ended
|-------------------------------------- | ------------------ | ----------------
|                                       |                    |                 
|                                       |                    |                 
|Basic weighted average common shares   |                    |                 
|outstanding                            |                    |                 
|                                       |                    |                 
|Effect of dilutive stock options       |                    |                 
|                                       |                    |                 
|Diluted weighted average common shares |                    |                 
|outstanding                            |                    |                 
|                                       |                    |                 
|                                       |                    |                 
|Antidilutive stock awards              |                    |                 
|SARs                                   |                    |                 
|Stock Options                          |                    |                 
|Total                                  |                    |                 

FSP EITF 03-6-1 permits additional
disclosure of EPS for common stock detailing distributed and undistributed earnings.
Earnings per share attributable to Spartan common stockholders were as follows:

|                       | Three Months Ended | Six Months Ended
|---------------------- | ------------------ | ----------------
|                       |                    |                 
|                       |                    |                 
|Basic EPS              |                    |                 
|Distributed earnings   |                    |                 
|Undistributed earnings |                    |                 
|Total                  |                    |                 
|                       |                    |                 
|Diluted EPS            |                    |                 
|Distributed earnings   |                    |                 
|Undistributed earnings |                    |                 
|Total                  |                    |                 

# Note 6  BUSINESS
SEGMENTS

Sales and other financial information
by business segment are detailed below. The Company has four wholly owned subsidiaries:
Spartan Motors Chassis, Inc. (Chassis); Crimson Fire, Inc., (Crimson); Crimson Fire
Aerials, Inc., (Crimson Aerials); and Road Rescue, Inc. (Road Rescue). Crimson, Crimson
Aerials and Road Rescue make up the Companys emergency vehicle team (EVTeam). The
2008 EVTeam amounts were adjusted to conform to the current years presentation.  Other
product sales include sales of all specialty vehicles, such as those to the military,
garage and service, and service parts and sub-assemblies (SPA), to all markets.

-14-

---



Three Months Ended June 30, 2009
(amounts in thousands)

|                          | Business Segments
|------------------------- | -----------------
|                          |                  
|                          |                  
|Fire truck chassis sales  |                  
|Motorhome chassis sales   |                  
|EVTeam product sales      |                  
|Other product sales       |                  
|Total sales               |                  
|                          |                  
|Interest expense (income) |                  
|Depreciation expense      |                  
|Taxes (credit) on income  |                  
|Segment earnings (loss)   |                  
|Segment assets            |                  

Three Months Ended June 30, 2008 (amounts
in thousands)

|                          | Business Segments
|------------------------- | -----------------
|                          |                  
|                          |                  
|Fire truck chassis sales  |                  
|Motorhome chassis sales   |                  
|EVTeam product sales      |                  
|Other product sales       |                  
|Total sales               |                  
|                          |                  
|Interest expense (income) |                  
|Depreciation expense      |                  
|Taxes (credit) on income  |                  
|Segment earnings (loss)   |                  
|Segment assets            |                  

Six Months Ended June 30, 2009
(amounts in thousands)

|                          | Business Segments
|------------------------- | -----------------
|                          |                  
|                          |                  
|Fire truck chassis sales  |                  
|Motorhome chassis sales   |                  
|EVTeam product sales      |                  
|Other product sales       |                  
|Total sales               |                  
|                          |                  
|Interest expense (income) |                  
|Depreciation expense      |                  
|Taxes (credit) on income  |                  
|Segment earnings (loss)   |                  
|Segment assets            |                  

-15-

---



Six Months Ended June 30, 2008 (amounts
in thousands)

|                          | Business Segments
|------------------------- | -----------------
|                          |                  
|                          |                  
|Fire truck chassis sales  |                  
|Motorhome chassis sales   |                  
|EVTeam product sales      |                  
|Other product sales       |                  
|Total sales               |                  
|                          |                  
|Interest expense (income) |                  
|Depreciation expense      |                  
|Taxes (credit) on income  |                  
|Segment earnings (loss)   |                  
|Segment assets            |                  

# Item 2.  Management's
Discussion and Analysis of Financial Condition and Results of Operations.

OVERVIEW

Spartan Motors, Inc. (the
Company) is known as a leading niche market engineer and manufacturer in
the heavy-duty, custom vehicles marketplace. The Company has four wholly owned
subsidiaries: Spartan Motors Chassis, Inc., located at the corporate headquarters in
Charlotte, Michigan (Chassis); Crimson Fire, Inc., located in Brandon, South
Dakota (Crimson); Crimson Fire Aerials, Inc., located in Lancaster,
Pennsylvania (Crimson Aerials); and Road Rescue, Inc., located in Marion,
South Carolina (Road Rescue). Crimson, Crimson Aerials and Road Rescue make up
the Companys emergency vehicle team (EVTeam). The Companys brand names,
Spartan, Crimson Fireand Road Rescue, are known
for quality, value, service and innovation.

Chassis is a leading designer,
engineer and manufacturer of custom heavy-duty chassis. The chassis consist of a frame
assembly, engine, transmission, electrical system, running gear (wheels, tires, axles,
suspension and brakes) and, for fire trucks and some specialty chassis applications,
a cab. Chassis customers are original equipment manufacturers (OEMs) who
complete their heavy-duty vehicle product by either mounting the body or apparatus on the
Companys chassis or integrating the drive train with the armored body. Crimson and
Road Rescue engineer and manufacture emergency vehicles built on chassis platforms
purchased from either Chassis or outside sources. Crimson Aerials engineers and
manufactures aerial ladder components for fire trucks.

-16-

---



The Companys business strategy
is to further diversify product lines and develop innovative design, engineering and
manufacturing expertise in order to be the best value producer of custom vehicle products.
Chassis sells its custom chassis to three principal markets: fire truck, motorhome and
other product sales which include specialty vehicles and service parts and accessories.
Other product sales have grown in recent years reflecting increased sales of specialty
vehicles to the military and service, parts and subassemblies (SPA) to all markets,
particularly the defense industry. The
Companys diversification across several sectors creates numerous opportunities while
minimizing overall risk. Additionally, the Companys business model provides the
ability to quickly respond to market needs, take advantage of strategic opportunities when
they arise and correctly size operations to ensure stability and growth.

The Company has an innovative team
focused on building lasting relationships with its customers. This is accomplished by
striving to deliver premium custom vehicles and services. The Company believes that it can
best carry out its long-term business plan and obtain optimal financial flexibility by
using a combination of borrowings under the Companys credit facilities, as well as
internally or externally generated equity capital, as sources of expansion capital.

The Company remains financially solid
with a strong cash balance, little debt and an open line of credit. The current macro
economic environment will make the second half of 2009 challenging for both sales and net
earnings, and still
create long-term opportunities as a result of:

| |  | Its diversified business model.
The Company believes the major strength of its business model is market diversity and customization, with
a growing foundation in emergency rescue.  The emergency rescue market is relatively less affected by
geo-political events compared to the recreational vehicle and the military markets.  The Company
intends to continue to pursue additional areas that build on its core competencies in order to
further diversify its business.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The Company's ability
to react nimbly when opportunities arise, as demonstrated with its defense initiatives.
| | - | -------------------------------------------------------------------------------------------------------------

| |  | Operational
improvements currently underway to realign the Companys cost structure to match the
current demand environment.
| | - | ----------------------------------------------------------------------------------------------------------------------------

| |  | The addition of a newly created
Chief Operating Officer (COO) position and the appointment of a new Chief Financial Officer (CFO).  The
new COO will focus on key strategic initiatives, including lean manufacturing, while the new CFO brings
a strong background in economic value added financial management.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Increased
SPA capabilities for all the Companys markets,
including the defense industry. The Company continues to receive service part orders for
units produced under various programs, including the Mine Resistant Ambush Protected
(MRAP) program, the Iraqi Light Armored Vehicle (ILAV) program, the Joint
IED-Defeat Organization (JIEDDO) program, the Yemen Light Armored Vehicle (YLAV) program
and the Special Operations Command (SOCOM) program.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Continued demand
in specialty vehicles and micro-niche markets.  The Company continues to produce
specialized mine-resistant variants for the U.S. and other nations military on a
smaller scale, such as the ILAV vehicles.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Market
potential for increased sales from the EVTeam, and related chassis sales, due to
increased demand in response to the engine emissions change in 2010 and the introduction
of new products. The expected increase is already being reflected in increased fire truck
sales and backlog for the quarter compared to 2008.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-17-

---



| |  | Strategic
fabrication at Chassis. The Company believes that it can improve operating margins and
throughput, and reduce supply chain issues by implementing limited strategic fabrication
activities at its Charlotte facilities.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Introduction
of the Legend Series fire truck. In April 2009, the Company unveiled the Legend, which is
an entry-level fire truck and the first in this new series in the Crimson Fire product
line.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Redesign
of the Road Rescue Ultramedic ambulance to improve safety, add functionality and enhance
durability.
| | - | -------------------------------------------------------------------------------------------------------------

| |  | The growing
strength of the Spartan brands, including Spartan, Crimson Fire and Road Rescue.
| | - | --------------------------------------------------------------------------------------------

The following section provides a
narrative discussion about the Companys financial condition and results of
operations. The comments that follow should be read in conjunction with the Companys
Condensed Consolidated Financial Statements and related Notes thereto included elsewhere
within this Form 10-Q and in conjunction with the Companys annual report on Form
10-K filed with the Securities and Exchange Commission on March 13, 2009. The following is
a discussion of the major elements impacting the Companys financial and operating
results for the three- and six-month periods ended June 30, 2009 compared to the
three- and six-month periods ended June 30, 2008.

# RESULTS OF OPERATIONS

The following tables set forth, for
the periods indicated, the components of the Companys business segment statements of
operations, on an actual basis, as a percentage of sales. The amounts detailed below for
2008 EVTeam results were adjusted to conform to the current years presentation.

Three months ended:

|                                     | June 30, 2009 | June 30, 2008
|------------------------------------ | ------------- | -------------
|                                     |               |              
|                                     |               |              
|                                     |               |              
|Sales                                |               |              
|Cost of product sold                 |               |              
|Gross profit                         |               |              
|Operating expenses:                  |               |              
|Research and development             |               |              
|Selling, general, and administrative |               |              
|Operating income                     |               |              
|Other income (expense)               |               |              
|Earnings before taxes on income      |               |              
|Taxes on income                      |               |              
|Net earnings                         |               |              

-18-

---



Six months ended:

|                                     | June 30, 2009 | June 30, 2008
|------------------------------------ | ------------- | -------------
|                                     |               |              
|                                     |               |              
|                                     |               |              
|Sales                                |               |              
|Cost of product sold                 |               |              
|Gross profit                         |               |              
|Operating expenses:                  |               |              
|Research and development             |               |              
|Selling, general, and administrative |               |              
|Operating income                     |               |              
|Other income (expense)               |               |              
|Earnings before taxes on income      |               |              
|Taxes on income                      |               |              
|Net earnings                         |               |              

# Quarter Ended June 30,
2009, Compared to the Quarter Ended June 30, 2008

For the three months ended
June 30, 2009, consolidated sales decreased $72.2 million (36.8%) to $124.3
million, from $196.5 million in the second quarter of 2008. The decrease was primarily due
to a $76.4 million (42.3%) decrease in Chassis sales.

Other product sales drove the
decrease in Chassis sales with a decline of $61.5 million (49.2%) over the same
period in 2008. The decrease was primarily a result of lower vehicle sales to the defense
industry due to the completion of several large military orders in 2008, particularly
under the MRAP program. This reduction was driven by the timing and nature of the related
military contracts. The continued weakness in the RV market, given the current economic
climate, resulted in a sales decrease of $27.9 million (92.3%) compared to the same
quarter last year. The other product and motorhome sales decrease was partially offset by
fire truck chassis sales, which increased $13.0 million (50.7%), compared to the same
quarter last year. Changes to the 2010 engine emission standards resulted in increased
demand and thus sales for fire truck chassis.

Increased EVTeam sales helped in
offsetting the overall decrease in sales. Compared to the same quarter in 2008, sales
increased $6.7 million (32.9%) primarily due to an increase in fire truck shipments
which were a result of the 2010 emissions change. In addition, the results were favorably
impacted by approximately $1.0 million of price increases implemented to cover increasing
costs. Intercompany eliminations account for the remaining consolidated sales change
differential quarter over quarter.

Gross profit decreased from $33.7
million for the quarter ended June 30, 2008 to $25.2 million for the quarter
June 30, 2009. This was primarily driven by the lower sales volume in the specialty
vehicle business in 2009. Gross margin increased to 20.3% from 17.2% for the quarter ended
June 30, 2009 and 2008, respectively. The improvement was a result of favorable
product mix shifts to fire trucks and SPA, material cost improvements and reductions in
warranty costs.

Operating expenses as a percentage of
sales increased from 9.0% in the second quarter of 2008 to 13.7% in the second quarter of
2009. The increased percentage year over year was driven by the decrease in sales over the
same period.
In terms of actual dollars, operating expenses decreased by $.6 million from the same
quarter in 2008 as a result of cost containment measures employed.  The Company will continue
to evaluate and reduce these costs to bring them more in line with current sales volumes.

-19-

---



Interest expense decreased by $.1
million (24.4%) for the 3 months ended June 30, 2009 compared to June 30,
2008. Lower working capital needs attributed to the lower borrowing levels in 2009.

The effective income tax rate was
33.3% in the second quarter of 2009 and 34.4% for the same quarter of 2008.  The
Companys effective tax rate fluctuates based upon the states where sales occur and
with the level of export sales.  The tax rate for 2009 was impacted by adjustments to
state tax reserves.   The effective tax rates for 2009 and 2008 are consistent
with the applicable federal and state statutory tax rates.

Net earnings decreased $5.0 million
($0.16 per diluted share) from $10.4 million ($0.32 per diluted share) in 2008
to $5.4 million ($0.16 per diluted share) in 2009 as a result of the factors
discussed above.

Total chassis unit orders received
during the second quarter of 2009 decreased by 82.4% compared to the same period in 2008.
This is the result of decreases in both the specialty chassis and motorhome orders
received in 2009, which were partially offset by the increase in fire truck orders
received. As previously discussed, the reduction in specialty chassis business is
primarily a result of several large government contracts that ended in 2008.

At June 30, 2009, the Company
had $160.7 million in backlog compared with a June 30, 2008 backlog of $320.2
million, which did not include SPA backlog. The decrease in backlog is mainly attributed
to Chassis which saw backlog decrease $162.5 million, primarily as a result of the
previously described government contracts that ended in 2008. This was partially offset
by an increase in the EVTeam backlog of $12.5 million. Intercompany eliminations in the
backlog increased $9.5 million related to chassis sales to the EVTeam for the same time
period. The Company anticipates filling its current backlog orders by February 2010.

While orders in the backlog are
subject to modification, cancellation or rescheduling by customers, this has not been a
major factor 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.

# Six Months Ended June 30,
2009, Compared to the Six Months Ended June 30, 2008

For the six months ended
June 30, 2009, consolidated sales decreased $220.8 million (47.9%) to $239.8
million, from $460.6 million in the first six months of 2008. This decrease in sales is
mainly due to a decrease in sales of $223.5 million (52.5%) at Chassis. The decrease
in sales at Chassis was primarily due to the reduction of other product sales of $177.2
million (58.6%) coupled with the decrease in motorhome sales of $62.8 million
(91.9%) for the six months ending June 30, 2009 compared to six months ending
June 30, 2008. The decline in sales was partially offset by an increase in fire truck
chassis sales of $16.5 million (29.8%). The decrease in other product chassis sales was
due to the completion of shipments under the MRAP program. See Item 1A Risk
Factors of Part II of this Quarterly Report on Form 10-Q and of Part I of the
Companys Annual Report on Form 10-K for the year ended December 31, 2008,
relating to governmental contracts for more details. The decrease in motorhome chassis
sales was due to lower order volume as a result of weakened economic conditions impacting
the motorhome market as a whole. Increased sales in the fire truck sales were a result of
increased sales volume for the reason discussed above.

-20-

---



Increased EVTeam sales helped offset
the overall decline in sales with an increase of $5.5 million (12.7%) to $48.5
million during the first six months of 2009 compared with the prior years first six
months. The majority of this increase is due to higher fire truck sales volumes, which
were up $5.3 million (17.5%) over the prior year, in light of the 2010 emissions
change and the implemented price increases of $1.6 million. Intercompany eliminations
account for the remaining sales difference.

Gross margin increased from 16.1% to
21.4% for the six months ending June 30, 2009 versus June 30, 2008. This
increase is due primarily to a change in the product sales mix in addition to a change in
warranty estimate for military vehicles and material cost savings. The product sales mix
has shifted more heavily toward service parts and assemblies for the first six months in
2009 compared to the same period in 2008. Lastly, the EVTeam increased its portion of the
sales mix by almost 11 percentage points in 2009 with improved margins to almost double
that in the same period of 2008. The improved margin results for the EVTeam were driven by
an increased focus on lean manufacturing and reduced material costs.

Operating expenses increased as a
percentage of sales to 14.1% for the six-month period ended June 30, 2009 compared to
7.6% for the same period of 2008. This is primarily a result of the large decrease in
sales volumes as noted above. Operating expense dollars actually decreased $1.0 million
year over year, and the Company will continue to evaluate and reduce these costs to bring
them more in line with current sales volumes.

The effective income tax rate was
33.9% in the first six months of 2009 and 34.8% in the same period of 2008.  The
Companys effective tax rate fluctuates based upon the states where sales occur and
with the level of export sales.  The tax rate for 2009 was impacted by adjustments to
state tax reserves.  The effective tax rates for 2009 and 2008 are consistent with
the applicable federal and state statutory tax rates.

Net earnings decreased by $13.8
million ($0.42 per diluted share) to $11.4 million ($0.35 per diluted share) in
the first six months of 2009 from $25.2 million ($0.77 per diluted share) in the same
period of 2008 as a result of the factors discussed above.

Total orders received
during the first six months of 2009 decreased 38.8% compared to the same period in 2008.
This reflects a decrease of 42.5% from the chassis segment and 45.3% from the EVteam
segment consistent with prior explanations.

# FINANCIAL CONDITION

# Balance Sheet at June 30,
2009 compared to December 31, 2008

The change in accounts receivable was
negligible when comparing June 30, 2009 to December 31, 2008. This was expected
given the timing of sales within the quarters and noting that the 2008 sales had extended
terms related to the defense business.

-21-

---



Accounts payable as of June 30,
2009 increased $7.7 million (35.4%) compared to December 31, 2008 due to lower
projected 2009 sales. The reason
for the increase is twofold. First, there were reduced purchases of inventory through
December of 2008 due to lower projected 2009 sales, which drove down accounts
payable balances. Second, there is a
payment timing difference between the noted periods as the Companys offices are
closed during the holiday period between Christmas Eve and New Years Day.
Consequently, more obligations were processed and paid before the year-end break, as
opposed to the quarter ended June 30, 2009.

Accrued warranties decreased $3.5
million (41.5%) for June 30, 2009 as compared to December 31, 2008 due to
the expiration of warranty policies, a reduction in new policies generated as a result of
lower related sales volume and a positive change in warranty estimate for military units based on
historical experience. See Note 3 of this quarterly report on Form 10-Q for further
detail.

Accrued compensation and related
taxes decreased $5.2 million (43.5%) from $12.1 million at December 31, 2008 to
$6.9 million at June 30, 2009, as a result of higher incentive compensation expense
for incentive plans in 2008.

# LIQUIDITY AND CAPITAL
RESOURCES

The Company generated an estimated
annualized return on invested capital (ROIC) of 12.1% in the second quarter of 2009,
compared to the ROIC of 27.7% for the same period in 2008. The Company uses ROIC for
internal performance benchmarking, and defines ROIC as operating income, less taxes, on an
annualized basis, divided by total shareholders equity.

For the six months ended
June 30, 2009, cash provided by operating activities was $10.1 million, which was a
$1.4 million increase from the $8.7 million of cash generated in operating activities for
the six months ended June 30, 2008.  Even though there was a decrease in net
earnings for the same period of $13.8 million, there was less cash used in working capital
for the six months ending June 30, 2009 due to the substantial decrease in sales.

The net impact of changes in accounts
receivable, inventory and accounts payable which are the largest drivers of working
capital changes represented the largest source of cash at $24.0 million. For the six-month
period ended June 30, 2008, accounts receivable generated $30.3 million of cash
compared to a use of $1.3 million for the same period in 2009. Record 2007 fourth quarter
sales followed by higher sales in the first quarter of 2008 drove the source of cash in
2008. These net to a $31.6 million change in use of cash between the periods noted for
accounts receivable. Inventory balances provided $7.9 million in cash for these same
periods while accounts payable provided $47.7 million. The increase in cash provided by
accounts payable is primarily a result of high accounts payable balances in
December of 2007 and moderate increases to inventory balances, both in preparation
for the ramp up of production in early 2008. See the Financial Condition section in Item 2
of this Form 10-Q for further discussion regarding the accounts receivable and accounts
payable balances at June 30, 2009.

Additionally, accrued compensation
and related taxes accounted for $4.5 million use in cash for the six-month period ended
June 30, 2009 over the same period of 2008. This variance is largely a result of
greater wages and benefit accruals in 2008 related to higher staffing levels to support
the increased sales and higher compensation accruals for that period. See the Condensed
Consolidated Statements of Cash Flows contained in Item 1 of this Form 10-Q for the other
various factors that represented the remaining fluctuation of cash used in operations of
$4.3 during the six-month period ended June 30, 2009.

-22-

---



Uses of cash for investing activities
for the six-months ended June 30, 2009 consisted of $4.3 million related to purchases
of property, plant and equipment (PP&E), net of proceeds from sales of PP&E, while
the use of $2.7 million for financing activities was primarily for dividends paid of $2.6
million. See the Condensed Consolidated Statements of Cash Flows contained in Item 1 of
this Form 10-Q for further information regarding the increase in cash and cash equivalents
from $13.7 million at December 31, 2008 to $16.8 million as of June 30, 2009.

Shareholders equity increased
$10.2 million, from $170.6 million as of December 31, 2008 to $180.8 million as of
June 30, 2009. The increase was driven by $11.4 million in net income and $1.8
million from compensation related to restricted stock and direct stock grants. These were
partially offset by $2.6 million paid in dividends and $0.4 million used to repurchase
stock.

On July 22, 2008, the Board of
Directors authorized management to repurchase, over the course of the subsequent 12-month
period, up to a total of 1,000,000 shares of its common stock in open market transactions.
That authorization expired on July 21, 2009 with 140,738 shares being repurchased for an
average price of $3.09 per share. On July 21, 2009, the Board of Directors authorized
management to repurchase, over the course of the subsequent 12-month period, up to a total
of 1,000,000 shares of its common stock in open market transactions. That authorization
will expire on July 20, 2010. Repurchase of common stock is based upon market
conditions and other investment opportunities.

In October 2008, the Board of
Directors approved a restructuring of its revolving note payable with JP Morgan Chase
Bank. The Company renegotiated the line to obtain a locked interest rate of 75 basis
points over LIBOR for draws and a 20 basis point commitment fee on the unused portion of
the line. The interest rates will be in effect until the $50.0 million line matures in
September 2010. As of June 30, 2009, the Company had no borrowings under this debt
agreement in the form of a line of credit. The unsecured line of credit includes three
one-year automatic extensions unless the bank provides notice of non-renewal 14 months in
advance of the expiration date.

The Company also has a $10.0 million
unsecured term note outstanding, which carried an interest rate of 4.70%, as of
June 30, 2009 under the same debt agreement as above which terminates effective
November 30, 2009.

The Company has a private shelf
agreement with Prudential Investment Management, Inc. This agreement allows the Company to
borrow up to an additional $40.0 million to be issued in $5.0 million minimum increments.
The interest rate is determined based on applicable rates at time of issuance. The Company
had a $10.0 million term note issued under this shelf agreement as of June 30, 2009,
which carried an interest rate of 4.93%.

The Company has an unsecured fixed
rate long term note which bears interest at 4.99%. The loan is repayable in equal monthly
installments and matures in October 2011. At June 30, 2009, the total outstanding
amount on this note was $5.8 million of which $233,333 is payable in 2009.

Under the terms of the line of credit
and the term notes detailed above, the Company is required to maintain certain financial
ratios and other financial conditions. The agreements prohibit the Company from incurring
additional indebtedness, limit certain acquisitions, investments, advances or loans and
restrict substantial asset sales. At June 30, 2009, the Company was in compliance
with all debt covenants.

-23-

---



The Company has a $1.1 million
secured mortgage note as of June 30, 2009. The mortgage note carries a fixed rate of
3.00% payable in monthly installments (for principal and interest) of $6,933, with
the balance due on July 1, 2010. The mortgage note is secured by real estate and
buildings.

On February 17, 2009, the Board of
Directors approved a special dividend of $0.03 per common share to shareholders of record
on April 15, 2009 in recognition of the Companys 2008 financial performance.
Additionally, in recognition of the Companys financial strength and future
prospects, the Board of Directors has continued to approve the payment of regular
dividends to its shareholders. At this same meeting, regular dividends of $0.10 per share
payable in the amount of $0.05 per share on May 15, 2009 and $0.05 per share on
December 16, 2009 to shareholders of record on April 15, 2009 and November 16, 2009,
respectively, were declared. The amount paid out on May 15, 2009 was $2.6 million.

The Company believes it has
sufficient resources from cash on hand, future cash flows from operating activities and
borrowing capacity to fund ongoing cash requirements for the next 12 months.

# CRITICAL ACCOUNTING
POLICIES

The following discussion of
accounting policies is intended to supplement Note 1, General and Summary of Accounting
Policies, of the Notes to Consolidated Financial Statements included in the
Companys Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 13, 2009. These policies were selected because they are broadly
applicable within the Companys operating units, and they involve additional
management judgment due to the sensitivity of the methods, assumptions and estimates
necessary in determining the related income statement, asset and/or liability amounts.

Revenue Recognition  The
Company recognizes revenue in accordance with SEC Staff Accounting Bulletin (SAB) No.
104,Revenue Recognition. Accordingly, revenue is recognized when title
to the product and risk of ownership passes to the buyer. In certain instances, risk of
ownership and title passes when the unit has been completed in accordance with purchase
order specifications and has been tendered for delivery to the customer. Sales are shown
net of returns, discounts and sales incentives, which historically have not been
significant. The collectability of any related receivable is reasonably assured before
revenue is recognized.

Accounts Receivable  The
Company maintains an allowance for customer accounts that reduces receivables to amounts
that are expected to be collected. In estimating the allowance, management considers
factors such as current overall economic conditions, industry-specific economic
conditions, historical and anticipated customer performance, historical experience with
write-offs and the level of past-due amounts. Changes in these conditions may result in
additional allowances.

Inventory  Estimated
inventory allowances for slow-moving and obsolete inventory are based upon current
assessments about future demands, market conditions and related management initiatives. If
market conditions are less favorable than those projected by management, additional
inventory allowances may be required.

Impairment of Goodwill 
Goodwill represents the difference between the purchase price and the related underlying
tangible and identifiable intangible net asset values resulting from business
acquisitions. Annually, or if conditions indicate an earlier review is necessary, the
carrying value of the reporting unit is compared to an estimate of its fair value. If the
estimated fair value is less than the carrying value, goodwill is impaired and will be
written down to its estimated fair value. Goodwill is allocated to the reporting unit from
which it was created.

-24-

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Based upon the estimated fair value
of the Companys reporting unit using a discounted cash flow valuation, the goodwill
at its Crimson Fire subsidiary which is included in the Companys EVTeam reportable
segment was not impaired as of October 1, 2008, the most recent annual impairment test
date.

Warranties  The
Companys policy is to record a provision for the estimated cost of warranty-related
claims at the time of the sale, and periodically adjust the provision to reflect actual
experience. The amount of warranty liability accrued reflects managements best
estimate of the expected future cost of honoring the Companys obligations under the
warranty agreements. The Companys estimates are based on historical experience, the
number of units involved and the extent of features and components included in product
models. For military vehicles with limited historical data, estimates were based upon
historical experience of commercial vehicles. See also Note 3 to the Condensed
Consolidated Financial Statements included in Item 1 of this Form 10-Q.

Equity Compensation 
SFAS 123(R), Share-Based Payment, addresses the accounting for share-based
employee compensation and was adopted by the Company on January 1, 2006 utilizing the
modified prospective approach. SFAS 123(R) requires that share options and stock
appreciation rights (SARs) awarded to employees are recognized as compensation
expense based on their fair value at grant date. The fair market value of options and SARs
granted under the Companys stock compensation plans was estimated on the date of
grant using the Black-Scholes option-pricing model using assumptions for inputs such as
interest rates, expected dividends, volatility measures and specific employee exercise
behavior patterns based on historical statistical data. Some of the inputs we use are not
market-observable and have to be estimated or derived from available data. Use of
different estimates would produce different values, which in turn would result in higher
or lower compensation expense recognized. The Company has not run the model with
alternative inputs to quantify their effects on the fair value of the options or SARs.

To value options and SARs, several
recognized valuation models exist. None of these models can be singled out as being the
best or most correct one. The model we apply is able to handle some of the specific
features included in the awards we grant, which is the reason for its use. If we were to
use a different model, the values would differ despite using the same inputs. Accordingly,
using different assumptions coupled with using a different valuation model could have a
significant impact on the fair value of employee stock options and SARs. Fair value could
be either higher or lower than the ones produced by the model we apply and the inputs we
used.

# NEW AND PENDING
ACCOUNTING POLICIES

See note 1 to the Condensed
Consolidated Financial Statements included in Item 1 of this Form 10-Q.

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# EFFECT OF INFLATION

Inflation affects the Company in two
principal ways. First, the Companys revolving notes payable are generally tied to
the prime and LIBOR interest rates so that increases in those interest rates would result
in additional interest expense. Second, general inflation impacts prices paid for labor,
parts and supplies. Whenever possible, the Company attempts to cover increased costs of
production and capital by adjusting the prices of its products. However, the Company
generally does not attempt to negotiate inflation-based price adjustment provisions into
its contracts. Since order lead times can be as much as ten 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 Companys ability to pass through cost increases in many cases. The
Company strives to minimize the effect of inflation through cost reductions and improved
productivity.

# Item 3.
  Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes
to our exposures to market risk since December 31, 2008. 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. At June 30, 2009, the Company had no
debt outstanding under its variable rate short-term and long term debt agreements. The
Company does not enter into market risk sensitive instruments for trading purposes.

# Item 4.
  Controls and Procedures.

An evaluation was performed under the
supervision and with the participation of the Companys management, including the
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design
and operation of the Companys disclosure controls and procedures (as defined in Rule
13a-15(e) under the Securities Exchange Act of 1934) as of June 30, 2009.
Based on and as of the time of such evaluation, the Companys management, including
the Chief Executive Officer and Chief Financial Officer, concluded that the Companys
disclosure controls and procedures were effective as of the end of the period covered by
this report to ensure that information required to be disclosed by us in the reports that
we file or submit is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commissions rules and forms. Disclosure
controls and procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by us in the reports that we file or
submit under the Securities Exchange Act of 1934 is accumulated and communicated to our
management, including our Chief Executive Officer and Chief Financial Officer, as
appropriate to allow timely decisions regarding required disclosure. In addition, there
has been no change in the Companys internal controls over financial reporting during
the quarter ended June 30, 2009 that have materially affected, or are reasonably
likely to materially affect, its internal control over financial reporting.

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# PART
II.  OTHER INFORMATION

# Item 1A.  Risk
Factors.

The Company may incur
adjustments to the sale price of its products under the terms of limited contracts and in
certain arrangements.The Company sells certain of its products to
customers who, in turn, sell to the U.S. government. Under the terms of certain contracts
for the sale of these goods by the Company, the Company ships its products to the customer
subject to purchase orders under which the final price of the product is subject to
potential adjustment. Historically, the Company has incurred only minor adjustments to the
price of its products subsequent to the date the product is shipped. However, the Company
may incur adjustments to the sale price of its products under these arrangements. The
circumstances under which a customer may seek an adjustment to the purchase price are
limited to various conditions, many of which would require the consent of the Company.
While the Company is limiting the number and scope of contracts under which it is exposed
to these post-delivery price adjustments, any such adjustments, once incurred, could have
an adverse impact on the Companys results of operations.

The Companys suppliers may be
affected by adverse conditions in the automotive industry. The Company depends
on many third party
suppliers for numerous parts and components. Many of these suppliers sell products to
automotive manufacturers and their lower-tier suppliers. The automotive industry is
experiencing significant economic distress due to the sudden and substantial drop in
industry sales volumes affecting all manufacturers and suppliers. Dramatically lower
industry sales volume has made existing debt obligations and fixed cost levels difficult
for many suppliers to manage, especially with the tight credit markets. In addition,
General Motors Corporation (GM) and Chrysler LLC (Chrysler) have recently
emerged from Chapter 11 bankruptcy protection and continue to restructure their
organizations. These events have idled and may continue to idle many of GMs and
Chryslers respective manufacturing plants during 2009. These factors may cause
suppliers to cut production, cease operations, or seek bankruptcy protection. Disruptions
to our supplier base could adversely affect our ability to obtain certain parts and
components in a timely manner, may increase the prices we pay for parts and components,
and may cause us to incur additional costs associated with the transition to new suppliers
or in-house production.

# Item
2.  Unregistered Sales of Equity Securities and Use of Proceeds.

# Issuer Purchases of
Equity Securities

A summary of the Companys
purchases of its common stock during the second quarter of fiscal year 2009 is as follows:

|Period              | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased
as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased
Under the Plans or Programs(2)
|------------------- | -------------------------------- | ---------------------------- | -------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------
|April 1 to April 30 |                                  |                              |                                                                                  | --                                                                               
|May 1 to May 31     |                                  |                              |                                                                                  | --                                                                               
|June 1 to June 30   |                                  |                              |                                                                                  | 46,407                                                                           
|Total               |                                  |                              |                                                                                  | 46,407                                                                           

| | (1) | These shares were
delivered by associates in
                    satisfaction of tax withholding obligations that occur upon the
vesting of                     restricted shares.  These shares are not repurchased pursuant
to the Board authorization disclosed in footnote two below.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | On
July 22, 2008 the Board of Directors authorized management to repurchase,
                    over the course of subsequent 12 month period, up to a total of
1,000,000 shares                     of its common stock in open market transactions. The
program expired July 21,                     2009. The Company repurchased 140,738 shares
under that program. On July 21,                     2009, the Board of Directors
authorized management to repurchase, over the                     course of the
subsequent 12-month period, up to a total of 1,000,000 shares of                     its
common stock in open market transactions. Repurchase of common stock is
                    contingent upon market conditions. If the Company was to repurchase
the full                     1,000,000 shares of stock under the current repurchase
program, it would cost                     the Company approximately $7 million based
on the closing price                     of the Companys stock on July 31, 2009.
The Company believes that it has                     sufficient resources to fund any
potential stock buyback in which it may engage.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-27-

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# Item
4.  Submission of Matters to a Vote of Security Holders.

The annual meeting of shareholders of
Spartan Motors, Inc. was held on May 20, 2009. The purpose of the meeting was to elect
directors, to ratify the appointment of BDO Seidman, LLP as the Companys independent
registered public accounting firm for the current fiscal year, and to transact any other
business that properly came before the meeting.

The name of each director elected to
a term expiring in 2012 (along with the number of votes cast for or authority
withheld) is as follows:

|Elected Directors | For | AuthorityWithheld /Against
|----------------- | --- | --------------------------
|Kenneth Kaczmarek |     |                           
|John E. Sztykiel  |     |                           

The following persons continue to
serve as directors:  Richard R. Current,  William F. Foster,  Hugh W. Sloan, Jr., George
 Tesseris,  and David R. Wilson.  In addition,  on April 23, 2009 the Board of  Directors
 appointed  Ronald Harbour to the Board.

The following proposals were acted
on:

|Proposal                               | For | Against | Abstain | BrokerNon-Vote
|-------------------------------------- | --- | ------- | ------- | --------------
|To ratify the Audit                    |     |         |         | 27,112,408    
|Committee's appointment of BDO Seidman |     |        
|LLP as the Company's independent       |     |        
|registered public accounting firm for  |     |        
|the current fiscal year                |     |        

-28-

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# Item
6.  Exhibits

(a)      Exhibits.  The following documents
are filed as exhibits to this report on Form 10-Q:

|Exhibit No. | Document
|----------- | --------

| | 3.1 | Spartan
Motors, Inc. Restated Articles of Incorporation,  as amended to date.  Previously
                         filed as an exhibit to the Company's  Quarterly  Report on Form
10-Q for the period ended                          June 30, 2007, and incorporated herein
by reference.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.2 | Spartan
Motors,  Inc.  Bylaws,  as amended to date, and previously filed as an exhibit to
                         the  Company's  Quarterly  Report on Form 10-Q for the period
ended  June 30,  2008,  and                          incorporated herein by reference.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.1 | Form
of Restricted Stock Agreement.*
| | ---- | ------------------------------------

| | 31.1 | Certification
of Chief Executive  Officer  pursuant to Section 302 of the  Sarbanes-Oxley
                         Act.
| | ---- | -----------------------------------------------------------------------------------------------------------------------

| | 31.2 | Certification
of Chief Financial  Officer  pursuant to Section 302 of the  Sarbanes-Oxley
                         Act.
| | ---- | -----------------------------------------------------------------------------------------------------------------------

| | 32 | Certification
 of Chief  Executive  Officer and Chief  Financial  Officer  pursuant to 18
                         U.S.C.ss. 1350.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------

*Management contract or compensatory
plan or arrangement.

-29-

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# SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|Date:  August 7, 2009 | SPARTAN MOTORS, INC.
|--------------------- | --------------------
|                      | By                  
|                      |                     

-30-

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# EXHIBIT INDEX

|Exhibit No. | Document
|----------- | --------

| | 3.1 | Spartan
Motors,  Inc.  Restated  Articles of  Incorporation,  as amended to date.  Previously
                     filed as an  exhibit to the  Company's  Quarterly  Report on Form
10-Q for the  period  ended                      June 30, 2007, and incorporated herein
by reference.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.2 | Spartan
Motors,  Inc.  Bylaws,  as amended to date, and previously filed as an exhibit to the
                     Company's Quarterly Report on Form 10-Q for the period ended June
30,  2008, and incorporated                      herein by reference.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.1 | Form
of Restricted Stock Agreement.*
| | ---- | ------------------------------------

| | 31.1 | Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act.
| | ---- | -------------------------------------------------------------------------------------------

| | 31.2 | Certification
of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act.
| | ---- | -------------------------------------------------------------------------------------------

| | 32 | Certification
 of Chief Executive  Officer and Chief Financial  Officer pursuant to 18 U.S.C.
                   ss. 1350.
| | -- | --------------------------------------------------------------------------------------------------------------------------

*Management contract or compensatory
plan or arrangement.

---