Spartan Chassis Pleads Guilty In Military-Contract Case

Spartan Chassis announced it has reached an agreement with the U.S. government in connection with an investigation of military contracting in South Carolina.

The plea is expected to be finalized at a hearing in U.S. District Court in South Carolina on Monday. Spartan Chassis, a subsidiary of Spartan Motors, Inc., said it will plead guilty to one charge of making a false statement related to the terms and conditions in a military contract and will pay a total of $6 million in related fines and penalties. The plea, along with a civil settlement with the Department of Justice, will provide for a global resolution to all civil and criminal matters related to the investigation.

The plea agreement and civil settlement will conclude the investigation conducted by the U.S. Attorney's Office in South Carolina into the Company's military business involving a former Spartan independent contractor. Spartan initially reported news of the investigation in January 2008. As a result of the fine, Spartan Motors will record a $6.0 million one-time charge in its fourth quarter 2008 results, reducing its net earnings by approximately $0.17 per share.

As part of its response to the investigation, Spartan conducted an extensive internal investigation, and undertook a comprehensive review of its compliance program with the assistance of outside counsel. This review resulted in, among other things, a revision of the Company's Business Code of Conduct and Compliance, as well as the naming of Chief Financial Officer James Knapp as Spartan's Chief Compliance Officer.

In addition, Spartan hired Thomas Kivell as Vice President and General Counsel. He is responsible for Spartan's legal and compliance activities, including managing the legal process for contracting with the U.S. military. Further, Spartan implemented an extensive compliance training program for all associates and instituted new internal procedures to ensure adherence to the unique and complex rules and requirements of government contracting.

"We cooperated fully with the government's investigation and have taken a number of proactive steps to ensure both that Spartan has an effective compliance program in place and that everyone in our organization understands and appreciates the military's stringent contracting and reporting requirements," said John Sztykiel, president and CEO of Spartan Motors. "Though clearly a painful lesson, we are looking forward to putting this incident behind us. We are fully focused on our future in the military market and expect to remain a supplier in good standing with all our customers."

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