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| x | ANNUAL REPORT PURSUANT TO SECTION 13 | ||||||
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(State or other jurisdiction of incorporation or organization) Registrant’s telephone number, including area code:414-259-5333 Common Share Purchase Rights o x Yes o Large accelerated filer Non-accelerated filer Yes 24, 2012 Item 1. Item 1B. Item 2. Item 3. Item 5. Item 6. Item 7. Item 7A. Item 8. Item 9. Item 10. Item 11. Item 12. Item 13. Item 14. Item 15. Briggs & Stratton is recognized worldwide for its strong brand name and a reputation for quality, design, innovation and value. Segment brand. engines directly to independently owned, authorized service dealers throughout the world. These distributors and service dealers incorporate screw machine parts and smaller quantities of other components. Raw material purchases consist primarily of aluminum and steel. Segment Troy-Bilt. quarters and can spike during weather related power outage events. February 2012. we will have to use a portion of our cash flow from operations for debt service rather than for our operations; we may not be able to obtain additional debt financing for future working capital, capital expenditures or other corporate purposes or may have to pay more for such financing; some or all of the debt under our current or future revolving credit facilities will be at a variable interest rate, making us more vulnerable to increases in interest rates; we could be less able to take advantage of significant business opportunities, such as acquisition opportunities, and to react to changes in market or industry conditions; we may be more vulnerable to general adverse economic and industry conditions; and we may be disadvantaged compared to competitors with less leverage. incur more debt; pay dividends, redeem stock or make other distributions; make certain investments; create liens; transfer or sell assets; merge or consolidate; and enter into transactions with our affiliates. Note 5 of the Company’s financial statements included in Item 8 of this report, the Company recorded pre-tax non-cash goodwill impairment charges of $49.5 million in operations. located, which could disrupt manufacturing and commercial operations. In addition, our foreign operations make us subject to certain U.S. laws and regulations, including the Export Administration Regulations administered by the U.S. Department of Commerce, the trade sanctions laws and regulations administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control and the Foreign Corrupt Practices Act. A violation of these laws and regulations could adversely affect our business, financial condition and results of operations. segment and have an adverse impact on operating results. conditioning the offer on either redemption of the rights or amendment of the rights to prevent this dilution. The rights could have the effect of delaying, deferring or preventing a change of control. requiring a supermajority vote of shareholders, in addition to any vote otherwise required, to approve business combinations not meeting adequacy of price standards; prohibiting some business combinations between an interested shareholder and us for a period of three years, unless the combination was approved by our board of directors prior to the time the shareholder became a 10% or greater beneficial owner of our shares or under some other circumstances; limiting actions that we can take while a takeover offer for us is being made or after a takeover offer has been publicly announced; and limiting the voting power of shareholders who own more than 20% of our stock. quarterly fluctuation in our operating income and earnings per share results; decline in demand for our products; significant strategic actions by our competitors, including new product introductions or technological advances; fluctuations in interest rates; cost increases in energy, raw materials or labor; changes in revenue or earnings estimates or publication of research reports by analysts; and domestic and international economic and political factors unrelated to our performance. Segment U.S. Locations: Auburn, Alabama McDonough, Georgia Statesboro, Georgia Murray, Kentucky Poplar Bluff, Missouri Reno, Nevada Munnsville, New York Sherrill, New York Newbern, Tennessee Grand Prairie, Texas Brookfield, Wisconsin Menomonee Falls, Wisconsin Jefferson, Wisconsin Wauwatosa, Wisconsin Melbourne, Australia Sydney, Australia Mississauga, Canada Chongqing, China Shanghai, China Ostrava, Czech Republic Nijmegen, Netherlands On February 24, 2010, the Company entered into a Stipulation of Settlement case. Name, Age, Position Business Experience for Past Five Years 47 55 49 64 47 56 Name, Age, Position 41 64 53 52 Fiscal Year (dollars in thousands, except per share data) SUMMARY OF OPERATIONS(1) NET SALES GROSS PROFIT PROVISION (CREDIT) FOR INCOME TAXES NET INCOME EARNINGS PER SHARE OF COMMON STOCK: Basic Earnings Diluted Earnings PER SHARE OF COMMON STOCK: Cash Dividends Shareholders’ Investment WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING (in 000’s) DILUTED NUMBER OF SHARES OF COMMON STOCK OUTSTANDING (in 000’s) OTHER DATA(1) SHAREHOLDERS’ INVESTMENT LONG-TERM DEBT CAPITAL LEASES TOTAL ASSETS PLANT AND EQUIPMENT PLANT AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION PROVISION FOR DEPRECIATION EXPENDITURES FOR PLANT AND EQUIPMENT WORKING CAPITAL (2) Current Ratio NUMBER OF EMPLOYEES AT YEAR-END NUMBER OF SHAREHOLDERS AT YEAR-END QUOTED MARKET PRICE: High Low fiscal 2010. fiscal 2010. currency. determined by comparing the carrying value of the reporting unit’s goodwill with the implied fair value of goodwill for the reporting unit. This impairment charge is a non-cash expense that did not adversely affect the Company’s debt position, cash flow, liquidity or compliance with financial covenants under its credit facilities. No impairment charges were recorded within the Engines segment. 2010 cash contributions to the pension plan of $29 million in fiscal 2012. years 2012, 2011 and 2010. Revolver as of July 1, 2012. As of the end of fiscal 2012, the Company repurchased 2,409,972 shares on the open market at an average price of $16.30 per share. Subsequent to the end of fiscal 2012, the Company repurchased an additional 479,997 shares at an average price of $17.40 per share. covenants. Total Fiscal Fiscal Fiscal Thereafter Long-Term Debt Interest on Long-Term Debt Capital Leases Operating Leases Purchase Obligations Consulting and Employment Agreements Other Liabilities (a) assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements. future economic conditions, recent sales trends, discussions with customers, planned timing of new product launches and many other variables. Each royalty rate is based on profitability of the business to which it relates and observed market royalty rates. Engines Power Products expected to be earned by the employees’ service adjusted for future potential wage increases. At July year 2013. EU. Hedge Currency Australian Dollar Canadian Dollar Euro Currency Amount Weighted Average Interest Rate U.S. Dollars 2011 2010 CURRENT ASSETS: Cash and Cash Equivalents Receivables, Less Reserves of $4,971 and $11,317, Respectively Inventories: Finished Products and Parts Work in Process Raw Materials Total Inventories Deferred Income Tax Asset Assets Held for Sale Prepaid Expenses and Other Current Assets Total Current Assets GOODWILL INVESTMENTS DEBT ISSUANCE COSTS, Net OTHER INTANGIBLE ASSETS, Net LONG-TERM DEFERRED INCOME TAX ASSET OTHER LONG-TERM ASSETS, Net PLANT AND EQUIPMENT: Land and Land Improvements Buildings Machinery and Equipment Construction in Progress Less - Accumulated Depreciation Total Plant and Equipment, Net 2011 2010 CURRENT LIABILITIES: Accounts Payable Short-term Debt Current Maturity on Long-term Debt Accrued Liabilities: Wages and Salaries Warranty Accrued Postretirement Health Care Obligation Other Total Accrued Liabilities Total Current Liabilities ACCRUED PENSION COST ACCRUED EMPLOYEE BENEFITS ACCRUED POSTRETIREMENT HEALTH CARE OBLIGATION ACCRUED WARRANTY OTHER LONG-TERM LIABILITIES LONG-TERM DEBT SHAREHOLDERS’ INVESTMENT: Common Stock - Authorized 120,000 Shares $.01 Par Value, Issued 57,854 Shares Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock at Cost, 7,373 Shares in 2011 and 7,793 Shares in 2010 Total Shareholders’ Investment FOR THE FISCAL YEARS ENDED JULY 1, 2012, JULY 3, 2011 AND JUNE 27, 2010 2011 2010 2009 NET SALES COST OF GOODS SOLD IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT Gross Profit ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES GOODWILL IMPAIRMENT LITIGATION SETTLEMENT Income from Operations INTEREST EXPENSE OTHER INCOME, Net Income Before Provision for Income Taxes PROVISION FOR INCOME TAXES NET INCOME EARNINGS PER SHARE DATA Weighted Average Shares Outstanding Basic Earnings Per Share Diluted Average Shares Outstanding Diluted Earnings Per Share BALANCES, JUNE 29, Comprehensive Income: Net Income Foreign Currency Translation Unrealized Loss on Change in Pension and Total Comprehensive Loss Cash Dividends Paid ($0.77 per Stock Option Activity, net of tax Restricted Stock Amortization of Unearned Deferred Stock Shares Issued to Directors Adoption of EITF 06-4 and 06-10 BALANCES, JUNE 28, Comprehensive Income: Net Income Foreign Currency Translation Unrealized Gain on Change in Pension and Total Comprehensive Loss Cash Dividends Paid ($0.44 per Stock Option Activity, net of tax Restricted Stock Amortization of Unearned Deferred Stock Shares Issued to Directors Reclassification of EITF 06-4 and BALANCES, JUNE 27, 2010 Comprehensive Income: Net Income Foreign Currency Translation Unrealized Loss on Change in Pension and Total Comprehensive Income Cash Dividends Paid ($0.44 Stock Option Activity, net of tax Restricted Stock Amortization of Unearned Deferred Stock Shares Issued to Directors Modification of Stock-Based BALANCES, JULY 3, 2011 2011 2010 2009 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and Amortization Stock Compensation Expense Impairment Charge Earnings of Unconsolidated Affiliates Dividends Received from Unconsolidated Affiliates Loss on Disposition of Plant and Equipment Loss on Curtailment of Employee Benefits Provision for Deferred Income Taxes Change in Operating Assets and Liabilities: (Increase) Decrease in Receivables (Increase) Decrease in Inventories (Increase) Decrease in Prepaid Expenses and Other Current Assets Increase (Decrease) in Accounts Payable, Accrued Liabilities and Income Taxes Other, Net Net Cash Provided by Operating Activities CASH FLOWS FROM INVESTING ACTIVITIES: Additions to Plant and Equipment Cash Paid for Acquisition, Net of Cash Acquired Proceeds Received on Disposition of Plant and Equipment Other, Net Net Cash Used by Investing Activities CASH FLOWS FROM FINANCING ACTIVITIES: Net Repayments on Revolver Proceeds from Long-Term Debt Financing Repayments on Long-Term Debt Debt Issuance Costs Cash Dividends Paid Stock Option Exercise Proceeds and Tax Benefits Net Cash Used by Financing Activities EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS: Beginning of Year End of Year SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest Paid Income Taxes Paid (Refunded) (1) Nature of Operations: affiliated companies accounted for by the equity method, generally on a lag of 3 months or less, was as follows (in thousands): Results of Operations: Sales Cost of Goods Sold Gross Profit Net Income 2011 2010 Financial Position: Assets: Current Assets Noncurrent Assets Liabilities: Current Liabilities Noncurrent Liabilities Equity 3 to 10 years for software, from 20 to 40 years for land improvements, from 20 to 50 years for buildings, and 3 to 20 years for machinery and equipment. Expenditures for repairs and maintenance are charged to expense as incurred. Expenditures for major renewals and betterments, which significantly extend the useful lives of existing plant and equipment, are capitalized and depreciated. Upon retirement or disposition of plant and equipment, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in cost of goods sold. assets. Refer to Note 16 of the Notes 2011 2010 Balance, Beginning of Period Payments Provision for Current Year Warranties Changes in Estimates Balance, End of Period 2010. Net Income Less: Dividends Attributable to Unvested Shares Net Income available to Common Shareholders Average Shares of Common Stock Outstanding Incremental Common Shares Applicable to Common Stock Options Based on the Common Stock Average Market Price During the Period Incremental Common Shares Applicable to Deferred and Restricted Common Stock Based on the Common Stock Average Market Price During the Period Diluted Average Shares of Common Stock Outstanding Basic Earnings Per Share Diluted Earnings Per Share Options to Purchase Shares of Common Stock (in thousands) Weighted Average Exercise Price of Options Excluded Balance at June 29, 2008 Fiscal Year Change Balance at June 28, 2009 Fiscal Year Change Balance at June 27, 2010 Fiscal Year Change Balance at July 3, 2011 Contract Notional Amount July 3, 2011 June 27, 2010 Foreign Currency: Australian Dollar Australian Dollar Canadian Dollar Euro Japanese Yen Commodity: Copper (Pounds) Natural Gas (Therms) Aluminum (Metric Tons) Steel (Metric Tons) Balance Sheet Location Foreign currency contracts: Other Current Assets Other Long-Term Assets, Net Accrued Liabilities Other Long-Term Liabilities Commodity contracts: Other Current Assets Other Long-Term Assets, Net Accrued Liabilities Other Long-Term Liabilities Foreign currency contracts – sell Foreign currency contracts – buy Commodity contracts Foreign currency contracts – sell Foreign currency contracts – buy Commodity contracts During the next twelve months, the amount of the July $6.6 million. Assets Acquired: Current Assets Property, Plant & Equipment Goodwill Other Intangible Assets Total Assets Acquired Liabilities Assumed: Current Liabilities Total Liabilities Assumed Net Assets Acquired Fair Value Measurement Using July 3, 2011 Level 1 Level 2 Level 3 Assets: Derivatives Liabilities: Derivatives Fair Value Measurement Using June 27, 2010 Level 1 Level 2 Level 3 Assets: Derivatives Liabilities: Derivatives 2011 2010 Beginning Goodwill Balance Impairment Loss Tax Benefit on Amortization Reversal of Tax Valuation Allowance Reclassification Effect of Translation Ending Goodwill Balance The Company’s other intangible assets as of July 1, 2012 and July 3, 2011 Net Net Amortized Intangible Assets: Patents Customer Relationships Effect of Translation Total Amortized Intangible Assets Unamortized Intangible Assets: Trademarks/Brand Names Effect of Translation Total Unamortized Intangible Assets Total Intangible Assets 2012 2013 2014 2015 2016 2011 2010 2009 Current Federal State Foreign Deferred 2011 2010 2009 U.S. Statutory Rate State Taxes, Net of Federal Tax Benefit Foreign Taxes Benefit on Dividends Received Changes to Unrecognized Tax Benefits *Other Effective Tax Rate 2011 2010 Difference Between Book and Tax Related to: Inventory Payroll Related Accruals Warranty Reserves Workers Compensation Accruals Other Accrued Liabilities Pension Cost Miscellaneous Deferred Income Tax Asset (Liability) Long-Term Asset (Liability): 2011 2010 Difference Between Book and Tax Related to: Pension Cost Accumulated Depreciation Intangibles Accrued Employee Benefits Postretirement Health Care Obligation Warranty Valuation Allowance Net Operating Loss/State Credit Carryforwards Miscellaneous Deferred Income Tax Asset (Liability) U.S. income tax. Determination of the amount of unrecognized deferred tax liability related to these earnings is not practicable. Beginning Balance at June 27, 2010 Changes based on tax positions related to prior year Additions based on tax positions related to current year Settlements with taxing authorities Lapse of statute of limitations Balance at July 3, 2011 2002. NET SALES: Engines Power Products Eliminations GROSS PROFIT ON SALES: Engines Power Products Eliminations INCOME (LOSS) FROM OPERATIONS: Engines Power Products Eliminations ASSETS: Engines Power Products Eliminations CAPITAL EXPENDITURES: Engines Power Products DEPRECIATION & AMORTIZATION: Engines Power Products United States All Other Countries Total United States All Other Countries Total Customer: HOP MTD Long-Term Liabilities. Operating leases are not capitalized and lease payments are expensed over the life of the lease. Terms of the leases, including purchase options, renewals, and maintenance costs, vary by lease. Rental expense for fiscal Fiscal Year 2012 2013 2014 2015 2016 Thereafter Total future minimum lease commitments Less: Interest Present value of minimum capital lease payments 2011 2010 Revolving Credit Facility 6.875% Senior Notes 8.875% Senior Notes Total Long-Term Debt 2011 2010 Balance at Fiscal Year-End Weighted Average Interest Rate at Fiscal Year-End 2011 2010 2009 Interest Income Equity in Earnings from Unconsolidated Affiliates Other Items Total On February 24, 2010, the Company entered into a Stipulation of Settlement case. available for future issuance under the Stock Incentive Plan to 2011 2010 2009 Grant Date Fair Value (Since options are only granted once per year, the grant date fair value equals the weighted average grant date fair value.) Assumptions: Risk-free Interest Rate Expected Volatility Expected Dividend Yield Expected Term (In Years) Shares Wtd. Avg. Wtd. Avg. Aggregate Balance, June 29, 2008 Granted During the Year Exercised During the Year Expired During the Year Balance, June 28, 2009 Granted During the Year Exercised During the Year Expired During the Year Balance, June 27, 2010 Granted During the Year Exercised During the Year Expired During the Year Balance, July 3, 2011 Exercisable, July 3, 2011 The total intrinsic value of options exercised during the fiscal year ended Options Outstanding Fiscal Grant Date Date Expiration Exercise Options 2004 2005 2006 2007 2008 2009 2010 2011 Nonvested shares, June 27, 2010 Granted Cancelled Exercised Vested Nonvested shares, July 3, 2011 2011 2010 2009 Stock Options: Pretax compensation expense Tax benefit Stock option expense, net of tax Restricted Stock: Pretax compensation expense Tax benefit Restricted stock expense, net of tax Deferred Stock: Pretax compensation expense Tax benefit Deferred stock expense, net of tax Total Stock-Based Compensation: Pretax compensation expense Tax benefit Total stock-based compensation, net of tax On August 8, 2012, the Board of Directors further amended the rights agreement to extend its term until The Company had the following forward currency contracts outstanding at the end of fiscal In Millions Hedge Notional Value Value Value at Fair Value Currency Expiration Date Currency Australian Dollar Canadian Dollar Euro 2012: In Millions Hedge Notional Value Value Value at Fair Value Currency Expiration Date Currency Australian Dollar Canadian Dollar Euro Japanese Yen Actuarial Assumptions: Discounted Rate Used to Determine Present Value of Projected Benefit Obligation Expected Rate of Future Compensation Level Increases Expected Long-Term Rate of Return on Plan Assets Change in Benefit Obligations: Projected Benefit Obligation at Beginning of Year Service Cost Interest Cost Plan Amendments Plan Participant Contributions Actuarial Loss Benefits Paid Projected Benefit Obligation at End of Year Change in Plan Assets: Fair Value of Plan Assets at Beginning of Year Actual Return on Plan Assets Plan Participant Contributions Employer Contributions Benefits Paid Fair Value of Plan Assets at End of Year Funded Status: Plan Assets (Less Than) in Excess of Projected Benefit Obligation Amounts Recognized on the Balance Sheets: Accrued Pension Cost Accrued Wages and Salaries Accrued Postretirement Health Care Obligation Accrued Liabilities Accrued Employee Benefits Net Amount Recognized at End of Year Amounts Recognized in Accumulated Other Comprehensive Income (Loss): Transition Assets (Obligation) Net Actuarial Loss Prior Service Credit (Cost) Net Amount Recognized at End of Year The accumulated benefit obligation for all defined benefit pension plans was 2011 2010 2009 2011 2010 2009 Components of Net Periodic (Income) Expense: Service Cost-Benefits Earned During the Year Interest Cost on Projected Benefit Obligation Expected Return on Plan Assets Amortization of: Transition Obligation Prior Service Cost (Credit) Actuarial Loss Net Periodic (Income) Expense 2011 2010 2009 2011 2010 2009 Discount Rate Expected Return on Plan Assets Compensation Increase Rate Pension Other Transition Obligation Prior Service Cost (Credit) Net Actuarial Loss case. For measurement purposes an 2012. Plan Assets at Year-end Target % 2011 2010 Domestic Equities International Equities Alternative & Absolute Return Hedge Funds Real Estate Emerging Markets Global Balanced Fixed Income Cash Equivalents Total Level 1 Level 2 Level 3 Short-term Investments: Fixed Income Securities: Equity Securities: U.S. common stocks International mutual funds Other Investments: Venture capital funds Debt funds Real estate funds Private equity funds Global balanced funds Total Investments Securities lending collateral pools, net Fair Value of Plan Assets at End of Year Total Level 1 Level 2 Level 3 Short-term Investments: Fixed Income Securities: Equity Securities: U.S. common stocks International mutual funds Other Investments: Venture capital funds Debt funds Real estate funds Private equity funds Global balanced funds Hedge funds Total Investments Securities lending collateral pools, net Cash and other Fair Value of Plan Assets at End of Year June 27, 2010 Fair Value Purchases, Realized July 3, 2011 Venture capital funds Debt funds Real estate funds Private equity funds Global balanced funds Hedge funds : June 28, 2009 Purchases, Realized June 27, 2010 Venture capital funds Debt funds Real estate funds Private equity funds Global balanced funds Hedge funds Year Ending Qualified Non-Qualified Retiree Retiree Life LTD 2012 2013 2014 2015 2016 2017-2021 10% of the Company's salaried headcount. Additionally, beginning in fiscal 2013, the Company will no longer pursue placement of lawn and garden products at national mass retailers. The Engines segment will continue to support lawn and garden equipment OEMs who provide lawn and garden equipment to these retailers. The Products segment will continue to focus on innovative, higher margin products that are sold through our network of Simplicity, Snapper and Ferris dealers and regional retailers. The Company will also continue to sell pressure washers and portable and standby generators through the U.S. mass retail channel. During fiscal 2012, the Company completed manufacturing operations at its Newbern, Tennessee and Ostrava, Czech Republic plants, carried out the reconfiguration of the Poplar Bluff, Missouri plant and implemented the salaried headcount reductions. Carrying Fair Carrying Fair Long-Term Debt - 6.875% Notes Due 2020 8.875% Notes Due 2011 Borrowings on Revolving Credit Facility reduction. Segment. Maximum 6.875% Senior Notes, due December 15, 2020 Revolving Credit Facility, expiring July 2012 BALANCE SHEET: As of July 3, 2011 Guarantor Non-Guarantor Eliminations Consolidated Current Assets Investment in Subsidiary Noncurrent Assets Current Liabilities Other Long-Term Obligations Shareholders’ Equity As of June 27, 2010 Current Assets Investment in Subsidiary Noncurrent Assets Current Liabilities Other Long-Term Obligations Shareholders’ Equity STATEMENT OF EARNINGS: For the Fiscal Year Ended July 3, 2011 Briggs & Stratton Corporation Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Net Sales Cost of Goods Sold Gross Profit Engineering, Selling, General and Administrative Expenses Goodwill Impairment Equity in Loss from Subsidiaries Income (Loss) from Operations Interest Expense Other Income (Expense), Net Income (Loss) Before Provision for Income Taxes Provision (Credit) for Income Taxes Net Income (Loss) For the Fiscal Year Ended Net Sales Cost of Goods Sold Gross Profit Engineering, Selling, General and Administrative Expenses Litigation Settlement Equity in Earnings from Subsidiaries Income (Loss) from Operations Interest Expense Other Income (Expense), Net Income (Loss) Before Provision for Income Taxes Provision (Credit) for Income Taxes Net Income (Loss) For the Fiscal Year Ended Net Sales Cost of Goods Sold Impairment of Property, Plant and Equipment Gross Profit Engineering, Selling, General and Administrative Expenses Equity in Loss from Subsidiaries Income (Loss) from Operations Interest Expense Other Income (Expense), Net Income (Loss) Before Provision for Income Taxes Provision (Credit) for Income Taxes Net Income (Loss) STATEMENT OF CASH FLOWS: For the Fiscal Year Ended July 3, 2011 Briggs & Stratton Corporation Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated CASH FLOWS FROM OPERATING ACTIVITIES: Net Income (Loss) Adjustments to Reconcile Net Income (Loss) to Net Cash Provided (Used) by Operating Activities: Depreciation and Amortization Stock Compensation Expense Impairment Charge Earnings of Unconsolidated Affiliates, Net of Dividends Equity in Earnings from Subsidiaries Loss on Disposition of Plant and Equipment Long-Term Intercompany Notes Provision (Credit) for Deferred Income Taxes Change in Operating Assets and Liabilities: (Increase) Decrease in Receivables (Increase) Decrease in Inventories (Increase) Decrease in Prepaid Expenses and Other Current Assets Increase (Decrease) in Accounts Payable, Accrued Liabilities and Income Taxes Other, Net Net Cash Provided (Used) by Operating Activities CASH FLOWS FROM INVESTING ACTIVITIES: Additions to Plant and Equipment Proceeds Received on Disposition of Plant and Equipment Cash Investment in Subsidiary Net Cash Used by Investing Activities CASH FLOWS FROM FINANCING ACTIVITIES: Net Borrowings (Repayments) on Loans, Notes Payable and Long-Term Debt Debt Issuance Costs Cash Dividends Paid Stock Option Exercise Proceeds and Tax Benefits Capital Contributions Received Net Cash Provided (Used) by Financing Activities EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS Cash and Cash Equivalents, Beginning of Year Cash and Cash Equivalents, End of Year STATEMENT OF CASH FLOWS: Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated CASH FLOWS FROM OPERATING ACTIVITIES: Net Income (Loss) Adjustments to Reconcile Net Income (Loss) to Net Cash Provided (Used) by Operating Activities: Depreciation and Amortization Stock Compensation Expense Earnings of Unconsolidated Affiliates, Net of Dividends Equity in Earnings from Subsidiaries Loss on Disposition of Plant and Equipment Long-Term Intercompany Notes Provision (Credit) for Deferred Income Taxes Change in Operating Assets and Liabilities: (Increase) Decrease in Receivables Decrease in Inventories (Increase) Decrease in Prepaid Expenses and Other Current Assets Increase (Decrease) in Accounts Payable, Accrued Liabilities and Income Taxes Other, Net Net Cash Provided by Operating Activities CASH FLOWS FROM INVESTING ACTIVITIES: Additions to Plant and Equipment Proceeds Received on Disposition of Plant and Equipment Cash Investment in Subsidiary Other, Net Net Cash Used by Investing Activities CASH FLOWS FROM FINANCING ACTIVITIES: Net Borrowings (Repayments) on Loans, Notes Payable and Long-Term Debt Cash Dividends Paid Stock Option Exercise Proceeds and Tax Benefits Capital Contributions Received Net Cash Used by Financing Activities EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS Cash and Cash Equivalents, Beginning of Year Cash and Cash Equivalents, End of Year STATEMENT OF CASH FLOWS: For the Fiscal Year Ended June 28, 2009 Briggs & Stratton Corporation Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated CASH FLOWS FROM OPERATING ACTIVITIES: Net Income (Loss) Adjustments to Reconcile Net Income (Loss) to Net Cash Provided (Used) by Operating Activities: Depreciation and Amortization Stock Compensation Expense Earnings of Unconsolidated Affiliates, Net of Dividends Impairment Charge Equity in Loss from Subsidiaries Loss on Disposition of Plant and Equipment Long-Term Intercompany Notes Loss on Curtailment of Employee Benefits Provision (Credit) for Deferred Income Taxes Change in Operating Assets and Liabilities: Decrease in Receivables Decrease in Inventories (Increase) Decrease in Prepaid Expenses and Other Current Assets Decrease in Accounts Payable, Accrued Liabilities and Income Taxes Change in Accrued/Prepaid Pension Other, Net Net Cash Provided by Operating Activities CASH FLOWS FROM INVESTING ACTIVITIES: Additions to Plant and Equipment Proceeds Received on Disposition of Plant and Equipment Cash Paid for Acquisition, Net of Cash Received Cash Investment in Subsidiary Other, Net Net Cash Used by Investing Activities CASH FLOWS FROM FINANCING ACTIVITIES: Net Borrowings (Repayments) on Loans, Notes Payable and Long-Term Debt Cash Dividends Paid Capital Contributions Received Net Cash Used by Financing Activities EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS Cash and Cash Equivalents, Beginning of Year Cash and Cash Equivalents, End of Year financial statements. 28, 2012 Quarter Ended Net Sales Gross Profit Net Income (Loss) Fiscal 2011 September December March June Total Fiscal 2010 September December March June Total on New York Stock Exchange Quarter Ended Fiscal 2011 September December March June (2) Total Fiscal 2010 September December March (3) June Total included restructuring charges of $3.5 million ($2.2 million after tax or $0.04 per diluted share) and debt refinancing charges of $3.9 million ($2.4 million after tax or $0.05 per diluted share).
BRIGGS & STRATTON CORPORATION(Exact name of registrant as specified in its charter) A Wisconsin Corporation 39-0182330 (I.R.S. Employer Identification No.) 12301 WEST WIRTH STREET12301 West Wirth Street, Wauwatosa, Wisconsin 53222(Address of Principal Executive Offices) (Zip Code) WAUWATOSA, WISCONSIN 53222 (Address of principal executive offices)(Zip Code)Securities registered pursuant to Section 12(b) of the Act:Title of Each Class Name of Each Exchange on Which Registered Common Stock (par value $0.01 per share) New York Stock Exchange New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes üx NoIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes Noüo NoIndicate 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.Yesxü No NooIndicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes üx NoIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K or any amendment of this Form 10-K. [ ]xIndicate 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,”filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):üx Accelerated filer Smaller reporting company¨ (Do¨ (Do not check if a smaller reporting company)Smaller reporting company ¨ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yeso NoüxThe aggregate market value of Common Stock held by nonaffiliates of the registrant was approximately $959.7$770.1 million based on the reported last sale price of such securities as of December 23, 2010,30, 2011, the last business day of the most recently completed second fiscal quarter.Number of Shares of Common Stock Outstanding at August 22, 2011: 50,588,796.DOCUMENTS INCORPORATED BY REFERENCEPart III incorporates information by reference from the definitive proxy statement for the Annual Meeting to be held on October 17, 2012.BRIGGS & STRATTON CORPORATIONFISCAL 2012 FORM 10-KTABLE OF CONTENTSDocument Part of Form 10-K Into Which Portions of Document are Incorporated The Exhibit Index is located on page 69.Part IIIBRIGGS & STRATTON CORPORATIONFISCAL 2011 FORM 10-KPART IPage Item 1.Business1Page Item 1A. 499Item 4. 10Item 4.(Removed and Reserved)1112PART II 1415162526Item 9A. 65Item 9B. PART III Item 9A.Controls and Procedures65Item 9B.Other Information656566666666PART IV 6668Cautionary Statement on Forward-Looking StatementsThis report contains certain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. The words “believe”, “estimate”, “expect”, “forecast”, “intend”, “plan”, “project”, and similar expressions are intended to identify forward-looking statements. The forward-looking statements are based on the Company’s current views and assumptions and involve risks and uncertainties that include, among other things, the ability to successfully forecast demand for our products; changes in interest rates and foreign exchange rates; the effects of weather on the purchasing patterns of consumers and original equipment manufacturers (OEMs); actions of engine manufacturers and OEMs with whom we compete; changes in laws and regulations; changes in customer and OEM demand; changes in prices of raw materials and parts that we purchase; changes in domestic and foreign economic conditions; the ability to bring new productive capacity on line efficiently and with good quality; outcomes of legal proceedings and claims; and other factors disclosed from time to time in our SEC filings or otherwise, including the factors discussed in Item 1A, Risk Factors, of the Company’s Annual Report on Form 10-K and in its periodic reports on Form 10-Q.PART IBriggs & Stratton (the “Company”) is the world’s largest producer of air cooled gasoline engines for outdoor power equipment. Briggs & Stratton designs, manufactures, markets and services these products for original equipment manufacturers (OEMs) worldwide. In addition, the Company markets and sells related service parts and accessories for its engines.Through its wholly owned subsidiary, Briggs & Stratton Power Products Group, LLC, Briggs & Stratton is also a leading designer, manufacturer and marketer of generators, pressure washers, snow throwers, lawn and garden powered equipment (primarily riding and walk behind mowers) and related service parts and accessories.Briggs & StrattonThe Company conducts its operations in two reportable segments: Engines and Power Products. Further information about Briggs & Stratton’s business segments is contained in Note 7 of the Notes to Consolidated Financial Statements.The Company’s Internetinternet address is www.briggsandstratton.com.www.basco.com. The Company makes available free of charge (other than an investor’s own Internetinternet access charges) through its Internet website the Company’s Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as soon as reasonably practicable after it electronically files such material with, or furnishes such material to, the Securities and Exchange Commission. Charters of the Audit, Compensation, Finance, Nominating and Governance Committees;Committees, Corporate Governance Guidelines, Stock Ownership Guidelines and code of business conduct and ethics contained in the Briggs & Stratton Business Integrity Manual are available on the Company’s website and are available in print to any shareholder upon request to the Corporate Secretary.EnginesGeneralBriggs & Stratton manufactures four-cycle aluminum alloy gasoline engines with displacements ranging from 127125 to 993 cubic centimeters.centimeters through its Engines segment. The Company’s engines are used primarily by the lawn and garden equipment industry, which accounted for 86% of the segment’sEngines segment's fiscal 20112012 engine sales to OEMs. Major lawn and garden equipment applications include walk-behind lawn mowers, riding lawn mowers, garden tillers and snow throwers. The remaining 14% of engine sales to OEMs in fiscal 20112012 were for use on products for industrial, construction, agricultural and other consumer applications, that include generators, pumps and pressure washers. Many retailers specify Briggs & Stratton’sthe Company's engines on the power equipment they sell and the Briggs & Stratton namelogo is often featured prominently on a product despitebecause of the fact thatappeal and reputation of the engine is a component.In fiscal 2011,2012 approximately 37%29% of Briggs & Stratton’sthe Engines segment net sales were derived from sales in international markets, primarily to customers in Europe. Briggs & StrattonThe Company serves its key international markets through its European regional office in Switzerland, its distribution center in the Netherlands and sales and service subsidiaries and offices in Australia, Austria, Brazil, Canada, China, the Czech Republic, England, France, Germany, India, Italy, Japan, Mexico, New Zealand, Poland, Russia, South Africa, Sweden and the United Arab Emirates. Briggs & Stratton is a leading supplier of gasoline engines in developed countries where there is an established lawn and garden equipment market. Briggs & Stratton also exports engines to developing nations where its engines are used in agricultural, marine, construction and other applications. More detailed information about our foreign operations is in Note 7 of the Notes to Consolidated Financial Statements.Briggs & StrattonThe Company's engines are sold primarily by its worldwide sales force through direct calls oninteraction with customers. Briggs & Stratton’sThe Company’s marketing staff and engineers in the United States provide support and technical assistance to its sales force.Briggs & StrattonThe Engines segment also manufactures replacement engines and service parts and sells them to sales and service distributors. Briggs & StrattonThe Company owns its principal international distributors. In the United States the distributors are independently owned and operated.1These distributors supply service parts and replacementBriggs & Stratton’sthe Company’s commitment to reliability and service.CustomersBriggs & Stratton’sThe Company's engine sales are made primarily to OEMs. Briggs & Stratton’sThe Company's three largest external engine customers in fiscal years 2012, 2011 2010 and 20092010 were Husqvarna Outdoor Products Group (HOP), MTD Products Inc. (MTD) and Deere & Company. Engines segment sales to the top three customers combined were 54%45%, 48%47% and 41%48% of Engines segment sales in fiscal 2012, 2011 2010 and 2009,2010, respectively. Under purchasing plans available to all of its gasoline engine customers, Briggs & Stratton typically enters into annual engine supply arrangements.Briggs & StrattonThe Company believes that in fiscal 20112012 more than 80% of all lawn and garden powered equipment sold in the United States was sold through mass merchandisers such as The Home Depot, Inc. (The Home Depot), Lowe’s Companies, Inc. (Lowe’s), Sears Holdings Corporation (Sears) and Wal-Mart Stores, Inc. (Wal-Mart). Given the buying power of the mass merchandisers, Briggs & Stratton, through its customers, has continued to experience pricing pressure; however, the Company attempts to recover increases in commodity costs through increased pricing.CompetitionBriggs & Stratton’sThe Company’s major domestic competitors in engine manufacturing are Honda Motor Co., Ltd. (Honda), Kawasaki Heavy Industries, Ltd. (Kawasaki) and Kohler Co. (Kohler). Several Japanese and Chinese small engine manufacturers, of which Honda and Kawasaki are the largest, compete directly with Briggs & Strattonthe Company in world markets in the sale of engines to other OEMs and indirectly through their sale of end products.Briggs & StrattonThe Company believes it has a significant share of the worldwide market for engines that power outdoor equipment.Briggs & StrattonThe Company believes the major areas of competition from all engine manufacturers include product quality, brand, strength, price, timely delivery and service. Other factors affecting competition are short-term market share objectives, short-term profit objectives, exchange rate fluctuations, technology, product support, distribution strength, and distribution strength. Briggs & Strattonadvertising. The Company believes its technology, product value, distribution, marketing, and service reputation have given it strong brand name recognition and enhanced its competitive position.Seasonality of DemandSales of engines to lawn and garden OEMs are highly seasonal because of consumer buying patterns. The majority of lawn and garden equipment is sold during the spring and summer months when most lawn care and gardening activities are performed. Sales of lawn and garden equipment are also influenced by consumer sentiment, employment levels, housing starts and weather conditions. Engine sales in Briggs & Stratton’sthe Company’s fiscal third quarter have historically been the highest, while sales in the first fiscal quarter have historically been the lowest.In order to efficiently use its capital investments and meet seasonal demand for engines, Briggs & Strattonthe Company pursues a relatively balanced production schedule throughout the year. The schedule is adjusted to reflect changes in estimated demand, customer inventory levels and other matters outside the control of Briggs & Stratton.the Company. Accordingly, inventory levels generally increase during the first and second fiscal quarters in anticipation of customer demand. Inventory levels begin to decrease as sales increase in the third fiscal quarter. This seasonal pattern results in high inventories and low cash flow for Briggs & Strattonthe Company in the first, second and the beginning of the third fiscal quarters. The pattern results in higher cash flow in the latter portion of the third fiscal quarter and in the fourth fiscal quarter as inventories are liquidated and receivables are collected.ManufacturingBriggs & StrattonThe Company manufactures engines and parts at the following locations: Auburn, Alabama; Statesboro, Georgia; Murray, Kentucky; Poplar Bluff, Missouri; Wauwatosa, Wisconsin; and Chongqing, China; and Ostrava, Czech Republic.China. Briggs & Stratton has a parts distribution center in Menomonee Falls, Wisconsin.Briggs & Stratton2In January 2012, the Company announced plans to close its Ostrava, Czech Republic facility. During fiscal 2012, the Engines segment ceased manufacturing operations at the Ostrava, Czech Republic plant, shifting production to its Murray, Kentucky facility.In April 2012, the Company announced that production of horizontal shaft engines currently made in the Auburn, Alabama plant will move to the Company's existing production facility in Chongqing, China or be sourced from third parties in Southeast Asia. The Auburn plant will continue to produce V-Twin engines used in riding mowers and other outdoor power applications.The Company manufactures a majority of the structural components used in its engines, including aluminum die castings, carburetors and ignition systems. Briggs & StrattonThe Company purchases certain parts such as piston rings, spark plugs, valves, ductile and grey iron castings, plastic components, some stampings andBriggs & StrattonThe Company believes its sources of supply are adequate.Briggs & StrattonThe Company has joint ventures with Daihatsu Motor Company for the manufacture of engines in Japan, and with Starting Industrial of Japan for the production of rewind starters and punch press components in the United States. Until its dissolution effective May 31, 2011, the Company’s joint venture with The Toro Company manufactured two-cycle engines in China.Briggs & Stratton has a strategic relationship with Mitsubishi Heavy Industries (MHI) for the global distribution of air cooled gasoline engines manufactured by MHI in Japan under Briggs & Stratton’s Vanguard brand.Power ProductsGeneralPower Products segment’s (Power Products)("Products") principal product lines include portable and standby generators, pressure washers, snow throwers and lawn and garden poweredpower equipment. Power Products sells its products through multiple channels of retail distribution, including consumer home centers, warehouse clubs, mass merchants and independent dealers. Power ProductsThe products segment product lines are marketed under variousits own brands includingsuch as Briggs & Stratton, Brute,Snapper, Simplicity, Ferris, Snapper Pro, Murray, Victa as well as other brands such as Craftsman, Ferris, John Deere, GE, Murray, Simplicity, Snapper, Troy-Bilt and Victa.In April 2012, the Company announced that beginning in fiscal 2013, it will no longer pursue placement of lawn and garden products at national mass retailers. The Engines segment will continue to support lawn and garden equipment OEMs who provide lawn and garden equipment to these retailers. The Products segment will continue to focus on innovative, higher margin products that are sold through its independent dealer network and regional retailers. The Company will also continue to sell pressure washers and portable and standby generators through the U.S. mass retail channel.In October 2011, the Company completed the acquisition of Premier Power Equipments and Products Private Ltd. of Tamil Nadu, India, providing a platform for future growth in India.Products has a network of independent dealers worldwide for the sale and service of snow throwers, standby generators and lawn and garden powered equipment. To support its international business, Power Products has leveraged the existing Briggs & Stratton worldwide distribution network.CustomersHistorically, Power Products’ major customers have been Lowe’s, The Home DepotSears and Sears.Deere & Company. Sales to these three customers combined were 28%27%, 33% and 35%34% of Power Products segment net sales in fiscal 2012, 2011 2010 and 2009,2010, respectively. Other U.S. customers include Wal-Mart, Deere & Company,The Home Depot, Tractor Supply Inc., and a network of independent dealers.CompetitionThe principal competitive factors in the power products industry include price, service, product performance, technicalbrand, innovation and delivery. Power Products has various competitors, depending on the type of equipment. Primary competitors include: Honda (portable generators, pressure washers and lawn and garden equipment), Generac Power Systems, Inc. (portable generators, standby generators and pressure washers), Alfred Karcher GmbH & Co. (pressure washers), Techtronic Industries (pressure washers and portable generators), Deere & Company (commercial and consumer lawn mowers), MTD (commercial and consumer3lawn mowers), The Toro Company (commercial and consumer lawn mowers), Scag Power Equipment, a Division of Metalcraft of Mayville, Inc. (commercial lawn mowers), and HOP (commercial and consumer lawn mowers).Power Products believes it has a significant share of the North American market for portable generators and consumerresidential pressure washers.Seasonality of DemandPower Products’ sales are subject to seasonal patterns. Due to seasonal and regional weather factors, sales of pressure washers and lawn and garden powered equipment are typically higher during the fiscal third and fourth fiscal quarters than at other times of the year. Sales of portable generators and snow throwers are typically higher during the first and second fiscal quarters.ManufacturingPower Products’ manufacturing facilities are located in Auburn, Alabama; McDonough, Georgia; Munnsville, New York; Newbern, Tennessee; Wauwatosa, Wisconsin; Sydney, Australia and Sydney, Australia. PowerCoimbatore, India. Products also purchases certain powered equipment under contract manufacturing agreements.As previously disclosed, Power Products ceased operations at the Port Washington, Wisconsin facility during the second quarter of fiscal 2009 and moved production to the McDonough, Georgia; Newbern, Tennessee and Munnsville, New York facilities.In July 2009,January 2012, the Company announced plans to close its JeffersonNewbern, Tennessee facility. During fiscal 2012, Products ceased manufacturing operations at the Newbern, Tennessee facility and Watertown, Wisconsin facilities. Thismoved production was consolidated during fiscal 2010 into the existing Auburn, Alabama;to its McDonough, Georgia and Wauwatosa, Wisconsin facilities.Power facility.In April 2012, the Company announced that it is evaluating alternatives with respect to manufacturing, assembling or sourcing cost effective portable generators beyond 2012. The Company will continue to manufacture portable generators in Auburn through calendar 2012.Products manufactures core components for its products, where such integration improves operating profitability by providing lower costs.Power Products purchases engines from its parent, Briggs & Stratton, as well as from Honda, Kawasaki and Kohler. Power Products has not experienced any difficulty obtaining necessary engines or other purchased components.Power Products assembles products for the international markets at its U.S. and Australian locations and through contract manufacturing agreements with other OEMs and suppliers.ConsolidatedGeneral InformationBriggs & StrattonThe Company holds patents on features incorporated in its products; however, the success of Briggs & Stratton’sthe Company’s business is not considered to be primarily dependent upon patent protection. The Company owns several trademarks which it believes significantly affect a consumer’s choice of outdoor powered equipment and therefore create value. Licenses, franchises and concessions are not a material factor in Briggs & Stratton’sthe Company’s business.For the fiscal years ended July 1, 2012, July 3, 2011 and June 27, 2010 and June 28, 2009, Briggs & Stratton, the Company spent approximately $19.5$19.8 million $22.3, $19.5 million and $23.0$22.3 million, respectively, on research activities relating to the development of new products or the improvement of existing products.In April 2012, the Company announced that it would reduce its salaried workforce by approximately 10%. The Company implemented these salaried workforce reductions during fiscal 2012.The average number of persons employed by Briggs & Strattonthe Company during fiscal 20112012 was 6,539.6,709. Employment ranged from a low of 6,3356,321 in July 2010June 2012 to a high of 6,7166,887 in June 2011.Export SalesExport sales for fiscal 2012, 2011 and 2010 and 2009 were $392.7 million (19% of net sales), $428.0 million (20% of net sales), and $344.1 million (17% of net sales), and $357.4 million (17% of net sales), respectively. These sales were principally to customers in European countries.4Refer to Note 7 of the Notes to Consolidated Financial Statements for financial information about geographic areas. Also, refer to Item 7A of this Form 10-K and Note 14 of the Notes to Consolidated Financial Statements for information about Briggs & Stratton’s foreign exchange risk management.In addition to the risks referred to elsewhere in this Annual Report on Form 10-K, the following risks, among others, may have affected, and in the future could affect, the Company and its subsidiaries’ business, financial condition or results of operations. Additional risks not discussed or not presently known to the Company or that the Company currently deems insignificant may also impact its business and stock price.Demand for products fluctuates significantly due to seasonality. In addition, changes in the weather and consumer confidence impact demand.Sales of our products are subject to seasonal and consumer buying patterns. Consumer demand in our markets can be reduced by unfavorable weather and weak consumer confidence. Although we manufacture throughout the year, our sales are concentrated in the second half of our fiscal year. This operating method requires us to anticipate demand of our customers many months in advance. If we overestimate or underestimate demand during a given year, we may not be able to adjust our production quickly enough to avoid excess or insufficient inventories, and that may in turn limit our ability to maximize our potential sales or maintain optimum working capital levels.We have only a limited ability to pass through cost increases in our raw materials to our customers during the year.We generally enter into annual purchasing plans with our largest customers, so our ability to raise our prices during a particular year to reflect increased raw materials costs is limited.A significant portion of our net sales comes from major customers and the loss of any of these customers would negatively impact our financial results.In fiscal 2011,2012, our three largest customers accounted for 34%31% of our consolidated net sales. The loss of a significant portion of the business of one or more of these key customers would significantly impact our net sales and profitability.Changes in environmental or other laws could require extensive changes in our operations or to our products.Our operations and products are subject to a variety of foreign, federal, state and local laws and regulations governing, among other things, emissions to air, discharges to water, noise, the generation, handling, storage, transportation, treatment and disposal of waste and other materials and health and safety matters. Additional engine emission regulations were phased in through 2008 by the State of California, and will be phased in between 2009 and 2012 by the U.S. Environmental Protection Agency. We do not expect these changeslaws and regulations to have a material adverse effect on us, but we cannot be certain that these or other proposed changes in applicable laws or regulations will not adversely affect our business or financial condition in the future.Foreign economic conditions and currency rate fluctuations can reduce our sales.In fiscal 2011,2012, we derived approximately 33%30% of our consolidated net sales from international markets, primarily Europe. Weak economic conditions in Europe could reduce our sales and currency fluctuations could adversely affect our sales or profit levels in U.S. dollar terms.Actions of our competitors could reduce our sales or profits.Our markets are highly competitive and we have a number of significant competitors in each market. Competitors may reduce their costs, lower their prices or introduce innovative products that could adversely affect our sales or profits. In addition, our competitors may focus on reducing our market share to improve their results.Disruptions caused by labor disputes or organized labor activities could harm our business.Currently, 10%approximately 13% of our workforce is represented by labor unions. In addition, we may from time to time experience union organizing activities in our non-union facilities. Disputes with the current labor union5or new union organizing activities could lead to work slowdowns or stoppages and make it difficult or impossible for us to meet scheduled delivery times for product shipments to our customers, which could result in loss of business. In addition, union activity could result in higher labor costs, which could harm our financial condition, results of operations and competitive position.Our level of debt and our ability to obtain debt financing could adversely affect our operating flexibility and put us at a competitive disadvantage.Our level of debt and the limitations imposed on us by the indenture for the notes and our other credit agreements could have important consequences, including the following:The terms of the indenture for the senior notesSenior Notes do not fully prohibit us from incurring substantial additional debt in the future and our revolving credit facilities permit additional borrowings, subject to certain conditions. As incremental debt is added to our current debt levels, the related risks we now face could intensify.We expect to obtain the money to pay our expenses and to pay the principal and interest on the outstanding 6.875% senior notesSenior Notes that are due in December 2020, the credit facilities and other debt primarily from ouroperations or by refinancing part of our existing debt. Our ability to meet our expenses thus depends on our future performance, which will be affected by financial, business, economic and other factors. We will not be able to control many of these factors, such as economic conditions in the markets where we operate and pressure from competitors. We cannot be certain that the money we earn will be sufficient to allow us to pay principal and interest on our debt and meet our other obligations. If we do not have enough money, we may be required to refinance all or part of our existing debt, sell assets or borrow more money. We cannot guarantee that we will be able to do so on terms acceptable to us. In addition, the terms of existing or future debt agreements, including the revolving credit facilities and our indentures, may restrict us from adopting certain of these alternatives. Our current revolving credit facilities expire in July 2012.We are restricted by the terms of the outstanding senior notesSenior Notes and our other debt, which could adversely affect us.The indenture relating to the senior notesSenior Notes and our revolvingmulticurrency credit agreement include a number of financial and operating restrictions, which may prevent us from capitalizing on business opportunities and taking some corporate actions. These covenants could adversely affect us by limiting our ability to plan for or react to market conditions or to meet our capital needs. These covenants include, among other things, restrictions on our ability to:In addition, our revolvingmulticurrency credit facilityagreement contains financial covenants that, among other things, require us to maintain a minimum interest coverage ratio and impose a maximum average leverage ratio.6Our failure to comply with the restrictive covenants described above could result in an event of default, which, if not cured or waived, could result in us being required to repay these borrowings before their due date. Non-cash charges, including further goodwill impairments, could impact our convenant compliance. If we are forced to refinance these borrowings on less favorable terms, our results of operations and financial condition could be adversely affected by increased costs and rates.Current worldwide economic conditions may adversely affect our industry, business and results of operations.General worldwide economic conditions have experienced a downturn due to the sequential effects of the subprime lending crisis, general credit market crisis, sovereign debt crisis, collateral effects on the finance and banking industries, increased energy costs, concerns about inflation, slower economic activity, decreased consumer confidence, reduced corporate profits and capital spending, adverse business conditions and liquidity concerns. These conditions make it difficult for our customers, our vendors and us to accurately forecast and plan future business activities, and they may cause U.S. and foreign OEMs and consumers to slow spending on our products. We cannot predict the timing or duration of any economic slowdown or the timing or strength of a subsequent economic recovery, worldwide or in the specific end markets we serve. If the consumer and commercial lawn and garden markets significantly deteriorate due to these economic effects, our business, financial condition and results of operations will likely be materially and adversely affected. Additionally, our stock price could decrease if investors have concerns that our business, financial condition and results of operations will be negatively impacted by a worldwide economic downturn.The ongoing European sovereign debt crisis has caused disruption in global financial markets and is likely to continue to cause economic disruptions, particularly if it leads to any future sovereign debt defaults and/or significant bank failures or defaults in the Eurozone. Despite certain stabilization measures taken by the European Union, the European Central Bank and the International Monetary Fund, yields on government bonds of certain European countries have remained volatile and credit ratings of most European countries have been downgraded by certain of the major rating agencies. The market disruptions in the Eurozone could intensify or spread further, particularly if ongoing stabilization efforts prove insufficient. Continued economic turmoil in the Eurozone could have a significant negative impact on us, both directly through our own global exposures and indirectly due to a decline in general global economic conditions. Further, the effects of the European sovereign debt crisis could be even more significant if they lead to a partial or complete break-up of the European Monetary Union (EMU). The partial or full break-up of the EMU would be unprecedented and its impact highly uncertain. The exit of one or more countries from the EMU or the dissolution of the EMU could lead to redenomination of obligations of obligors in exiting countries. Any such exit and redenomination would cause significant uncertainty with respect to outstanding obligations of counterparties and debtors in any exiting country, whether sovereign or otherwise, and lead to complex, lengthy litigation. The resulting uncertainty and market stress could also cause, among other things, severe disruption to equity markets, significant increases in bond yields generally, potential failure or default of financial institutions, including those of systemic importance, a significant decrease in global liquidity, a freeze-up of global credit markets and worldwide recession. There can be no assurance that the various steps we have taken to protect our business, results of operations and financial condition against the concerns related to the European sovereign debt crisis and/or the partial or full break-up of the EMU will be sufficient. We have a material amount of goodwill, which was written-down.written-down in fiscal 2011. If we determine that goodwill and other intangible assets have become further impaired in the future, net income in such years may be adversely affected.At July 3, 2011,1, 2012, goodwill and other intangible assets represented approximately 17.5%18% of our total assets. Goodwill represents the excess of cost over the fair market value of net assets acquired in business combinations. We are required to evaluate whether our goodwill and indefinite-lived intangible assets have been impaired on an annual basis, or more frequently if indicators of impairment exist. As discussed inthe fourth quarter of fiscal 2011. The impairment was determined as part of the fair value assessment of goodwill. No goodwill impairment charges were recorded in fiscal 2012. Reductions in our net income caused by any additional write-down of our goodwill or intangible assets could materially adversely affect our results of operations and our compliance with covenants under our revolving credit agreement and indenture relating to the senior notes.7We are subject to litigation, including product liability and warranty claims, that may adversely affect our business and results of operations.We are a party to litigation that arises in the normal course of our business operations, including product warranty and liability (strict liability and negligence) claims, patent and trademark matters, contract disputes and environmental, asbestos, employment and other litigation matters. We face an inherent business risk of exposure to product liability and warranty claims in the event that the use of our products is alleged to have resulted in injury or other damage. While we currently maintain general liability and product liability insurance coverage in amounts that we believe are adequate, we cannot be sure that we will be able to maintain this insurance on acceptable terms or that this insurance will provide sufficient coverage against potential liabilities that may arise. Any claims brought against us, with or without merit, may have an adverse effect on our business and results of operations as a result of potential adverse outcomes, the expenses associated with defending such claims, the diversion of our management’s resources and time and the potential adverse effect to our business reputation.Our pension and postretirement benefit plan obligations are currently underfunded, and we may have to make significant cash payments to some or all of these plans, which would reduce the cash available for our businesses.We have unfunded obligations under our domestic and foreign pension and postretirement benefit plans. As of July 3, 2011,1, 2012, our pension plans were underfunded by approximately $194 million.$299 million. The funded status of our pension plans is dependent upon many factors, including returns on invested assets, the level of certain market interest rates and the discount rate used to determine pension obligations. Unfavorable returns on the plan assets or unfavorable changes in applicable laws or regulations could materially change the timing and amount of required plan funding, which would reduce the cash available for our businesses. In addition, a decrease in the discount rate used to determine pension obligations could result in an increase in the valuation of pension obligations, which could affect the reported funding status of our pension plans and future contributions, as well as the periodic pension cost in subsequent fiscal years.Our dependence on, and the price of, raw materials may adversely affect our profits.The principal raw materials used to produce our products are aluminum, copper and steel. We source raw materials on a global or regional basis, and the prices of those raw materials are susceptible to significant price fluctuations due to supply/demand trends, transportation costs, government regulations and tariffs, changes in currency exchange rates, price controls, the economic climate and other unforeseen circumstances. If we are unable to pass on raw material price increases to our customers, our future profitability may be adversely affected.We may be adversely affected by health and safety laws and regulations.We are subject to various laws and regulations relating to the protection of human health and safety and have incurred and will continue to incur capital and other expenditures to comply with these regulations. Failure to comply with regulations could subject us to future liabilities, fines or penalties or the suspension of production.The operations and success of our Company can be impacted by natural disasters, terrorism, acts of war, international conflict and political and governmental actions, which could harm our business.Natural disasters, acts or threats of war or terrorism, international conflicts and the actions taken by the United States and other governments in response to such events could cause damage or disrupt our business operations, our suppliers or our customers, and could create political or economic instability, any of which could have an adverse effect on our business. Although it is not possible to predict such events or their consequences, these events could decrease demand for our products, could make it difficult or impossible for us to deliver products or could disrupt our supply chain. We may also be impacted by actions by foreign governments, including currency devaluation, tariffs and nationalization, where our facilities are8We are subject to tax laws and regulations in many jurisdictions, and the inability to successfully defend claims from taxing authorities could adversely affect our operating results and financial position.We conduct business in many countries, which requires us to interpret the income tax laws and rulings in each of those taxing jurisdictions. Due to the subjectivity of tax laws between those jurisdictions as well as the subjectivity of factual interpretations, our estimates of income tax liabilities may differ from actual payments or assessments. Claims from taxing authorities related to these differences could have an adverse impact on our operating results and financial position.If we fail to remain current with changes in gasoline engine technology or if the technology becomes less important to customers in our markets due to the impact of alternative fuels, our results would be negatively affected.Our ability to remain current with changes in gasoline engine technology may significantly affect our business. Any advances in gasoline engine technology, including the impact of alternative fuels, may inhibit our ability to compete with other manufacturers. Our competitors may also be more effective and efficient at integrating new technologies. In addition, developing new manufacturing technologies and capabilities requires a significant investment of capital. There can be no assurance that our products will remain competitive in the future or that we will continue to be able to timely implement innovative manufacturing technologies.Through our Power Products segment, we compete with certain customers of our Engines segment, thereby creating inherent channel conflict that may impact the actions of engine manufacturers and OEMs with whom we compete.Through our Power Products segment, we compete with certain customers of our Engines segment. Any further forward integration of our products may strain relationships with OEMs that are significant customers of our Engines segment.The financial stability of our suppliers and the ability of our suppliers to produce quality materials could adversely affect our ability to obtain timely and cost-effective raw materials.The loss of certain of our suppliers or interruption of production at certain suppliers from adverse financial conditions, work stoppages, equipment failures or other unfavorable events would adversely affect our ability to obtain raw materials and other inputs used in the manufacturing process. Our cost of purchasing raw materials and other inputs used in the manufacturing process could be higher and could temporarily affect our ability to produce sufficient quantities of its products, which could harm our financial condition, results of operations and competitive position.We have implemented, and Wisconsin law contains, anti-takeover provisions that may adversely affect the rights of holders of our common stock.Our articles of incorporation contain provisions that could have the effect of discouraging or making it more difficult for someone to acquire us through a tender offer, a proxy contest or otherwise, even though such an acquisition might be economically beneficial to our shareholders. These provisions include a board of directors divided into three classes of directors serving staggered terms of three years each and the removal of directors only for cause and only with the affirmative vote of a majority of the votes entitled to be cast in an election of directors.Each currently outstanding share of our common stock includes, and each newly issued share of our common stock will include, a common share purchase right. The rights are attached to and trade with the shares of common stock and are exercisable only under limited circumstances. The rights will become exercisable if a person or group acquires, or announces an intention to acquire, 20% or more of our outstanding common stock, subject to certain exceptions. The rights have some anti-takeover effects and generally will cause substantial dilution to a person or group that attempts to acquire control of us withoutWe are subject to the Wisconsin Business Corporation Law, which contains several provisions that could have the effect of discouraging non-negotiated takeover proposals or impeding a business combination.9These provisions include:Our common stock is subject to substantial price and volume fluctuations.The market price of shares of our common stock may be volatile. Among the factors that could affect our common stock price are those previously discussed, as well as:In addition, the stock markets have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock.None.The Company maintains leased and owned manufacturing, office, warehouse, distribution and testing facilities throughout the world. The Company believes that its owned and leased facilities are adequate to perform its operations in a reasonable manner. As Briggs & Stratton’sthe Company’s business is seasonal, additional warehouse space may be leased when inventory levels are at their peak. Facilities in the United States occupy approximately 7.06.8 million square feet, of which 56%58% is owned. Facilities outside of the United States occupy approximately 855866 thousand square feet, of which 42% is owned. Certain of the Company’s facilities are leased through operating and capital lease agreements. See Note 8 to the Consolidated Financial Statements for information on the Company’s operating and capital leases.10The following table provides information about each of the Company’s facilities (exceeding 25,000 square feet) as of July 3, 2011:1, 2012:Location Location Type of Property Owned/Leased Manufacturing, office and warehouse Owned and Leased Engines, Power Products Manufacturing, office and warehouse Owned and Leased Power Products Manufacturing, office and warehouse Owned and Leased Engines Manufacturing, office and warehouse Owned and Leased Engines Manufacturing, office and warehouse Owned and Leased Engines Warehouse Leased Power Products Manufacturing and office Owned Power Products Warehouse Leased Power ProductsLawrenceburg,Dyersburg, Tennessee Warehouse Leased Power ProductsDyersburg, TennesseeWarehouseLeasedPower Products Manufacturing and office Leased Power Products Warehouse Leased Power Products Office Leased Power Products Distribution and office Leased Engines Manufacturing and office (held for sale) Owned Power Products Manufacturing, office and warehouse Owned Engines, Power Products, CorporateNon-U.S. Locations: Non-U.S. Locations: Office Leased Engines, Products Manufacturing and office Leased Power Products Office and warehouse Leased Power Products Manufacturing, office and warehouse Owned Engines Office and warehouse Leased Engines, Products Manufacturing and office (held for sale) Owned Engines, Products Distribution and office Leased Engines (1) During Fiscal 2012, the Company completed manufacturing operations at its Newbern, Tennessee and Ostrava, Czech Republic facilities.The Company is subject to various unresolved legal actions that arise in the normal course of its business. These actions typically relate to product liability (including asbestos-related liability), patent and trademark matters, and disputes with customers, suppliers, distributors and dealers, competitors and employees.Starting with the first complaint in June 2004, various plaintiff groups filed complaints in state and federal courts across the country against the Company and other engine and lawnmower manufacturers alleging that the horsepower labels on the products they purchased were inaccurate and that the Company conspired with other engine and lawnmower manufacturers to conceal the true horsepower of these engines (“("Horsepower Class Actions”Actions"). On December 5, 2008, the Multidistrict Litigation Panel coordinated and transferred the cases to Judge Adelman of the U. S. District Court for the Eastern District of Wisconsin (In Re: Lawnmower Engine Horsepower Marketing and Sales Practices Litigation, Case No. 2:08-md-01999).(“Settlement”("Settlement") that resolves all of the Horsepower Class Actions. The Settlement resolvesActions including all horsepower-labeling claims brought by all persons or entities in the United States who, beginning January 1, 1994 through the date notice of the11Settlement is first given, purchased, for use and not for resale, a lawn mower containing a gas combustiblevertical shaft internal combustion engine up to 30 horsepower provided that either the lawn mower or the engine of the lawn mower was manufactured or sold by a Defendant. Ondefendant.The Settlement received final court approval on August 16, 2010, Judge Adelman issued a final order approving the Settlement as well as the settlements of all other defendants. In August and September 2010, several class members filed a Notice of Appeal of Judge Adelman’s final approval order to the U. S. Court ofAppeals for the Seventh Circuit. All of those appeals were settled as of February 16, 2011 with no additional contribution from Briggs & Stratton.As part of the Settlement, the Company denies any and all liability and seeks resolution to avoid further protracted and expensive litigation.2010. The settling defendants as a group agreed to pay an aggregate amount of $51$51.0 million. However, the monetary contribution of the amount of each of the settling defendants is confidential. In addition, the Company, along with the other settling defendants, agreed to injunctive relief regarding their future horsepower labeling, as well as procedures that will allow purchasers of lawnmower engines to seek a one-year extended warranty free of charge. Under the termscharge beginning March 1, 2011 for most class members. As part of the Settlement, the balance of settlement funds were paid,Company denies any and the one-year warranty extension program beganall liability and seeks resolution to run, on March 1, 2011.avoid further protracted and expensive litigation. As a result of the Settlement, the Company recorded a totalpre-tax charge of $30.6 million in the third quarter of fiscal year 2010 representing the total of the Company’s monetary portion of the Settlement and the estimated costs of extending the warranty period for one year. 2010.On March 19, 2010, new plaintiffs filed a complaint in the Ontario Superior Court of Justice in Canada (Robert Foster et al. v. Sears Canada, Inc. et al., Docket No. 766-2010). On May 3, 2010, other plaintiffs filed a complaint in the Montreal Superior Court in Canada (Eric Liverman, et al. v. Deere & Company, et al., Docket No. 500-06-000507-109). Both Canadian complaints contain allegations and seek relief under Canadian law that are similar to the Horsepower Class Actions. The Company is evaluating the complaints and has not yet filed an answer or other responsive pleading to either one.On May 14, 2010, the Company notified retirees and certain retirement eligible employees of various changes to the Company-sponsored retiree medical plans. The purpose of the amendments was to better align the plans offered to both hourly and salaried retirees. On August 16, 2010, a putative class of retirees who retired prior to August 1, 2006 and the United Steel Workers filed a complaint in the U.S. District Court for the Eastern District of Wisconsin (Merrill, Weber, Carpenter, et al; United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO/CLC v. Briggs & Stratton Corporation; Group Insurance Plan of Briggs & Stratton Corporation; and Does 1 through 20, Docket No. 10-C-0700), contesting the Company’sCompany's right to make these changes. In addition to a request for class certification, the complaint seeks an injunction preventing the alleged unilateral termination or reduction in insurance coverage to the class of retirees, a permanent injunction preventing defendants from ever making changes to the retirees’retirees' insurance coverage, restitution with interest (if applicable) and attorneys’attorneys' fees and costs. The Company moved to dismiss the complaint and believes the changes are within its rights. On April 21, 2011, the district court issued an order granting the Company’sCompany's motion to dismiss the complaint. The plaintiffs filed a motion with the court to reconsider its order on May 17, 2011. On2011, and on August 24, 2011 the Courtcourt granted the plaintiffs’ motion and vacated the dismissal of the case, and discovery will therefore proceedcase. The Company then filed a motion with the court to appeal its decision directly to the U.S. Court of Appeals for the Seventh Circuit, but the court denied this motion on February 29, 2012. Discovery is now proceeding in the matter.Although it is not possible to predict with certainty the outcome of these unresolved legal actions or the range of possible loss, the Company believes the unresolved legal actions will not have a material adverse effect on its results of operations, financial position or cash flows.Not applicable.12Executive Officers of the Registrant TODD J. TESKE, 46Chairman, President and Chief Executive Officer (1)(2) Mr. Teske was elected to his current position effective October 2010. He previously was President and Chief Executive Officer from January 2010. He served as President and Chief Operating Officer since September 2008. He previously served as Executive Vice President and Chief Operating Officer since September 2005. He previously served as Senior Vice President and President – Briggs & Stratton Power Products Group, LLC from September 2003 to August 2005. Mr. Teske also serves as a director of Badger Meter, Inc. and Lennox International, Inc. RANDALL R. CARPENTER, 54Vice President – Marketing Mr. Carpenter was elected to his current position effective September 2009. He served as Vice President – Marketing since May 2007. He was previously Vice President Marketing and Product Development for Royal Appliance Manufacturing from 2005 to 2007. He was an Independent Marketing Consultant from 2004 to 2005. DAVID G. DEBAETS, 48Vice President – North American Operations(Engines Group) Mr. DeBaets was elected to his current position effective September 2007. He has served as Vice President and General Manager – Large Engine Division since April 2000. ROBERT F. HEATH, 63Vice President, General Counsel and Secretary Mr. Heath was elected to his current position effective February 2010. He previously was elected as Secretary January 2002. He has served as Vice President and General Counsel since January 2001. ANDREA L. GOLVACH, 41Vice President – TreasurerMs. Golvach was elected to her current position effective November 2011 after serving as Vice President of Treasury since May 2011. Prior to joining Briggs & Stratton, she held the position of Director of Finance & Cash Management at Harley-Davidson, Inc., a global motorcycle manufacturer, from December 2007 to May 2011 and Director of Finance & Cash Management for Harley-Davidson Financial Services from August 2005 to December 2007.HAROLD L. REDMAN, 46Senior Vice President and President –Products Group Mr. Redman was elected to his current position in October 2010. He previously served as Senior Vice President and President – Home Power Products Group since September 2009 after serving as Vice President and President – Home Power Products Group since May 2006. He also served as Senior Vice President – Sales & Marketing – Simplicity Manufacturing, Inc. since July 1995. WILLIAM H. REITMAN, 55Senior Vice President –Business Development & Customer Support Mr. Reitman was elected to his current position effective October 2010 after previously serving as Senior Vice President – Sales & Customer Support since September 2007. He previously served as Senior Vice President – Sales & Marketing since May 2006, and Vice President – Sales & Marketing since October 2004. He also served as Vice President – Marketing since November 1995. 13 �� Business Experience for Past Five Years DAVID J. RODGERS, 40Senior Vice President and Chief Financial Officer Mr. Rodgers was elected as Senior Vice President and Chief Financial Officer effective June 28, 2010 after serving as Vice President – Finance since February 2010. He was elected an executive officer in September 2007 and served as Controller from December 2006 to February 2010. He was previously employed by Roundy’s Supermarkets, Inc. as Vice President – Corporate Controller from September 2005 to November 2006 and Vice President – Retail Controller from May 2003 to August 2005. THOMAS R. SAVAGE, 63Senior Vice President – Corporate Development Mr. Savage was elected to his current position effective September 1, 2011. He previously served as Senior Vice President – Administration since 1997. JOSEPH C. WRIGHT, 52Senior Vice President and President –Engines Group Mr. Wright was elected to his current position in October 2010. He previously served as Senior Vice President and President – Engine Power Products Group since May 2006 after serving as Vice President and President – Yard Power Products Group since September 2005. He also served as Vice President and General Manager – Lawn and Garden Division from September 2004 to September 2005. He was elected an executive officer effective September 2002. EDWARD J. WAJDA, 51Vice President and General Manager –International Mr. Wajda was elected to his current position effective January 2011. He previously served as Vice President and General Manager – International since July 2008. Prior to joining Briggs & Stratton, he held the position of Senior Vice President – Global Medical Vehicle Group for Oshkosh Corporation, a manufacturer of security vehicles and bodies for access equipment, defense, fire and emergency and commercial uses, since June 2006. (1) Officer is also a Director of Briggs & Stratton.(2) Member of the Board of Directors Executive Committee.Officers are elected annually and serve until they resign, die, are removed, or a different person is appointed to the office.14PART IIITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Briggs & Stratton common stock and its common share purchase rights are traded on the NYSE under the symbol “BGG”. Information required by this Item is incorporated by reference from the “Quarterly Financial Data, Dividend and Market Information” (unaudited), included in Item 8 of this report.Changes in Securities, Use of Proceeds and Issuer Purchases of Equity SecuritiesBriggs & Stratton did not make anyThe table below sets forth the information with respect to purchases made by or behalf of equity securities registered by the Company pursuant to Section 12 of the Exchange Actits common stock during the fourth quarter of fiscal 2011.Onquarterly period ended 2012 Fiscal Month Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of a Publicly Announced Program (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (1) April 2, 2012 to April 29, 2012 405,400 $ 17.66 405,400 $ 20,153,210 April 30, 2012 to May 27, 2012 260,556 17.65 260,556 15,554,281 May 28, 2012 to July 1, 2012 284,773 17.00 284,773 10,712,996 Total Fourth Quarter 950,729 $ 17.46 950,729 $ 10,712,996 (1) In August 10, 2011, the Board of Directors of Briggs & Strattonthe Company authorized up to $50 million in funds for use in a common share repurchase program with an expiration of June 30, 2013. Briggs & Stratton willIn August 2012, subsequent to the end of fiscal 2012, the Board of Directors authorized up to an additional $50 million in funds associated with the common share repurchase program and an extension of the expiration date to June 30, 2014. The common share repurchase program authorizes the purchase of shares of the Company's common stock using available cash, on the open market or in private transactions from time to time, depending on market conditions and certain governing loan covenants.Five-year Stock Performance GraphThe chartgraph below is a comparison ofshows the cumulative total stockholder return overof an investment of $100 (and the last five fiscal years had $100 been investedreinvestment of any dividends thereafter) at the close of business on June 30, 20062007 in each of Briggs & Stratton common stock, the Standard & Poor’s (S&P) Smallcap 600 Index and the S&P Machinery Index.
15ITEM 6. SELECTED FINANCIAL DATA 2011 2010 2009 2008 2007 $ 2,109,998 $ 2,027,872 $ 2,092,189 $ 2,151,393 $ 2,156,833 398,316 379,935 333,679 307,316 295,198 7,699 12,458 8,437 7,009 (3,399 ) 24,355 36,615 31,972 22,600 6,701 0.49 0.73 0.64 0.46 0.13 0.48 0.73 0.64 0.46 0.13 .44 .44 .77 .88 .88 $ 14.85 $ 13.10 $ 14.01 $ 16.90 $ 16.94 49,677 49,668 49,572 49,549 49,715 50,409 50,064 49,725 49,652 49,827 $ 737,943 $ 650,577 $ 694,684 $ 837,523 $ 838,454 225,000 - 281,104 365,555 384,048 571 1,041 1,807 1,677 2,379 1,666,218 1,690,057 1,619,023 1,833,294 1,884,468 1,026,967 979,898 991,682 1,012,987 1,006,402 339,300 337,763 360,175 391,833 388,318 59,920 62,999 63,981 65,133 70,379 59,919 44,443 43,027 65,513 68,000 $ 624,281 $ 342,132 $ 561,431 $ 644,935 $ 519,023 2.8 to 1 1.6 to 1 2.9 to 1 2.9 to 1 2.1 to 1 6,716 6,362 6,847 7,145 7,260 3,289 3,453 3,509 3,545 3,693 $ 24.18 $ 24.26 $ 21.51 $ 33.40 $ 33.07 $ 16.50 $ 12.89 $ 11.13 $ 12.80 $ 24.29 Fiscal Year 2012 2011 2010 2009 2008 (dollars in thousands, except per share data) SUMMARY OF OPERATIONS (1) NET SALES $ 2,066,533 $ 2,109,998 $ 2,027,872 $ 2,092,189 $ 2,151,393 GROSS PROFIT 336,725 398,316 379,935 333,679 307,316 PROVISION FOR INCOME TAXES 867 7,699 12,458 8,437 7,009 NET INCOME 29,006 24,355 36,615 31,972 22,600 EARNINGS PER SHARE OF COMMON STOCK: Basic Earnings 0.58 0.49 0.73 0.64 0.46 Diluted Earnings 0.57 0.48 0.73 0.64 0.46 PER SHARE OF COMMON STOCK: Cash Dividends 0.44 0.44 0.44 0.77 0.88 Shareholders’ Investment $ 12.91 $ 14.85 $ 13.10 $ 14.01 $ 16.90 WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING (in 000’s) 48,965 49,677 49,668 49,572 49,549 DILUTED NUMBER OF SHARES OF COMMON STOCK OUTSTANDING (in 000’s) 49,909 50,409 50,064 49,725 49,652 OTHER DATA (1) SHAREHOLDERS’ INVESTMENT $ 631,970 $ 737,943 $ 650,577 $ 694,684 $ 837,523 LONG-TERM DEBT 225,000 225,000 — 281,104 365,555 CAPITAL LEASES 133 571 1,041 1,807 1,677 TOTAL ASSETS 1,608,231 1,666,218 1,690,057 1,619,023 1,833,294 PLANT AND EQUIPMENT 1,026,845 1,016,892 979,898 991,682 1,012,987 PLANT AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION 301,249 329,225 337,763 360,175 391,833 PROVISION FOR DEPRECIATION 60,297 59,920 62,999 63,981 65,133 EXPENDITURES FOR PLANT AND EQUIPMENT 49,573 59,919 44,443 43,027 65,513 WORKING CAPITAL (2) $ 605,591 $ 634,356 $ 342,132 $ 561,431 $ 644,935 Current Ratio 3.0 to 1 2.8 to 1 1.6 to 1 2.9 to 1 2.9 to 1 NUMBER OF EMPLOYEES AT YEAR-END 6,321 6,716 6,362 6,847 7,145 NUMBER OF SHAREHOLDERS AT YEAR-END 3,184 3,289 3,453 3,509 3,545 QUOTED MARKET PRICE: High $ 20.81 $ 24.18 $ 24.26 $ 21.51 $ 33.40 Low $ 12.36 $ 16.50 $ 12.89 $ 11.13 $ 12.80 (1) The amounts include the acquisition of Victa Lawncare Pty. Limited since June 30, 2008. (2) Included in working capital as of June 27, 2010 is a Current Maturity of Long-Term Debt of $203,460.$203.5 million.16Results of OperationsFISCAL 2012 COMPARED TO FISCAL 2011Net SalesConsolidated net sales for fiscal 2012 were $2.1 billion, a decrease of $43.5 million, or 2.1% when compared to fiscal 2011.Engines segment net sales for fiscal 2012 were $1.3 billion, which was lower by $89.6 million or 6.4% compared to fiscal 2011. This decrease in net sales was primarily driven by an 11% reduction in shipment volumes of engines to OEMs for lawn and garden products in the North American and European markets due to drought conditions in North America and economic uncertainty in Europe leading to reduced consumer purchases of lawn and garden equipment and unfavorable foreign exchange of $8.7 million primarily related to the Euro. This was partially offset by increased engine pricing, a favorable mix of product shipped that reflected proportionally larger volumes of units used on snow throwers and portable and standby generators.Products segment net sales for fiscal 2012 were $952.1 million, an increase of $73.1 million or 8.3% from fiscal 2011. The increase in net sales was primarily due to increased shipments of portable and standby generators due to widespread power outages in the U.S. as a result of landed hurricane Irene and a subsequent snow storm on the United States East Coast earlier in the fiscal year, increased shipments of snow equipment after channel inventories were depleted from the prior selling season, improved pricing, a favorable mix of lawn and garden sales through the dealer channel and favorable foreign exchange of $2.3 million. This increase was partially offset by reduced shipment volumes of riding lawn and garden equipment domestically and reduced volume in the international markets. There were no landed hurricanes in fiscal 2011. Gross ProfitThe consolidated gross profit percentage was 16.3% in fiscal 2012, down from 18.9% in the same period last year.The Engines segment gross profit percentage for fiscal 2012 was 19.1%, which was 3.7% lower compared to fiscal 2011. The gross profit percentage was unfavorably impacted by 0.8% due to reduced absorption on a 13% reduction in production volumes, 0.5% from unfavorable foreign exchange, 3.0% from higher manufacturing spending associated with rising commodity costs and start-up costs of $8.6 million associated with launching our Phase III emissions compliant engines, and 1.1% due to $14.3 million of restructuring charges. This reduction was partially offset by a 1.7% benefit due to improved engine pricing and a favorable mix of products sold.The Products segment gross profit percentage for fiscal 2012 was 9.1%, which was 0.3% higher compared to fiscal 2011. The gross profit percentage improved by 3.1% from increased pricing and a favorable mix of lawn and garden sales through the dealer channel, 1.5% due to production operational improvements of $13.9 million and 1.7% resulted from improved absorption on higher production volumes. This was offset by a decrease of 2.8% due to increased commodity costs and 3.2% due to $30.5 million of restructuring charges.Engineering, Selling, General and Administrative CostsEngineering, selling, general and administrative expenses were $290.4 million in fiscal 2012, a decrease of $6.7 million or 2.2% from fiscal 2011.The Engines segment engineering, selling, general and administrative expenses were $179.7 million in fiscal 2012, a decrease of $18.9 million from fiscal 2011 primarily due to lower employee compensation expense and a planned reduction of spend in advertising costs and professional services in response to the softness in the global markets.17The Products segment engineering, selling, general and administrative expenses were $110.7 million in fiscal 2012, an increase of $12.2 million from fiscal 2011. The increase was attributable to greater selling expense to support investments in international growth, higher employee compensation expense, and $0.7 million higher bad debt expense recorded in fiscal 2012 primarily attributable to distributors in the European market.Restructuring ActionsIn January 2012, the Company announced plans to reduce manufacturing capacity through closure of its Newbern, Tennessee and Ostrava, Czech Republic plants as well as the reconfiguration of its plant in Poplar Bluff, Missouri. In April 2012, the Company announced plans to further reduce manufacturing costs through consolidation of its Auburn, Alabama manufacturing facility as well as the reduction of approximately 10% of the Company's salaried employees. During fiscal 2012, the Company completed manufacturing operations at its Newbern, Tennessee and Ostrava, Czech Republic plants, carried out the reconfiguration of the Poplar Bluff, Missouri plant and implemented the salaried employee reductions. Pre-tax costs of all restructuring actions totaled $49.9 million in fiscal 2012, of which $44.8 million were included in gross profit as previously mentioned.Additionally, beginning in fiscal 2013, as previously announced, the Company will no longer pursue placement of lawn and garden products at national mass retailers. The Engines segment will continue to support lawn and garden equipment OEMs who provide lawn and garden equipment to these retailers. The Products segment will continue to focus on innovative, higher margin products that are sold through our network of Simplicity, Snapper and Ferris dealers and regional retailers. The Company will also continue to sell pressure washers and portable and standby generators through the U.S. mass retail channel.Interest ExpenseFor fiscal 2012, interest expense was $4.8 million lower compared to fiscal 2011 due to $3.9 million of pre-tax charges associated with the refinancing of Senior Notes in fiscal 2011, which did not recur in fiscal 2012, as well as lower average outstanding borrowings at slightly higher weighted average interest rates in fiscal 2012.Provision for Income TaxesThe effective tax rate for fiscal 2012 was 2.9% compared to 24.0% reported the same period one year ago. The decrease in the effective tax rate for fiscal 2012 compared to fiscal 2011 was primarily due to a net benefit of $5.6 million associated with restructuring charges incurred in connection with closing the Company's Ostrava plant facility and a net benefit of $5.1 million due to the expiration of a non-U.S. statute of limitation period during fiscal 2012 and the settlement of U.S. audits.FISCAL 2011 COMPARED TO FISCAL 2010Net SalesConsolidated net sales for fiscal 2011 were $2.1 billion, an increase of $82.1 million or 4.0% when compared to the same period a year ago.Engines segment net sales for fiscal 2011 were approximately $1.4 billion, which was $39.1 million or 2.9% higher than the same period a year agoin fiscal 2010 despite a 2.1% decline in total unit shipment volumes. This increase from the same period last yearin fiscal 2010 is primarily due to higher international engine unit shipments, a favorable mix of product shipped that reflected proportionately larger volumes of units used on commercial applications, improved engine pricing and a $4.7 million foreign currency benefit, partially offset by reduced engine shipments primarily to customers in North America.Power Products segment net sales for fiscal 2011 were $879.0 million, which was $35.3 million or 4.2% higher than the same period a year ago.in fiscal 2010. This improvement was primarily due to increased sales in our Australia and Europe markets, partially offset by reduced unit shipment volumes of lawn and garden equipment, pressure washers and portable generators in the domestic market.18Gross ProfitThe consolidated gross profit percentage was 18.9% in fiscal 2011, up from 18.7% in the same period last year.The Engines segment gross profit percentage was 22.8% for fiscal 2011, an improvement from 22.1% in fiscal 2010. This improvement was due to a favorable mix of products shipped, improved engine pricing, increased manufacturing efficiencies, a $5.4 million foreign currency benefit and increased absorption on 4.0% higher production volumes, partially offset by higher commodity costs and increased manufacturing wages and benefits, including a $9.6 million increase in pension benefits expense.The Power Products segment gross profit percentage decreased to 8.8% for fiscal 2011 from 10.2% in fiscal 2010. The decline between years resulted from higher manufacturing spending and budget conscious customers purchasing lower margin units, partially offset by increased sales of premium dealer lawn and garden products, increased unit pricing, and a $7.2 million foreign currency benefit. The increase in manufacturing spending relates to higher commodity costs, manufacturing inefficiencies in the first half of the fiscal year2011 in launching new products and increased warranty, and increased freight expenses, partially offset by $8.0 million in incremental cost savings associated with the closure of our Jefferson, Wisconsin manufacturing facility in fiscal 2010.Engineering, Selling, General and Administrative CostsEngineering, selling, general and administrative expenses were $300.7$297.1 million in fiscal 2011, an increase of $20.4$16.9 million or 7.3%6% from fiscal 2010.The Engines segment engineering, selling, general and administrative expenses were $199.2$198.6 million in fiscal 2011, an increase of $13.1$12.5 million from fiscal 2010. The increase was due to higher international selling expenses and increased salaries and benefits, which includeincluded a $7.2 million increase in pension benefits expense.The Power Products segment fiscal 2011 engineering, selling, general and administrative expenses of $101.5$98.5 million increased by $7.3 million in fiscal 2011 primarily related to increased international selling expenses and $1.7 million of unfavorable foreign currency and previously announced organization change costs of $3.0 million.Goodwill ImpairmentDuring the fourth quarter of fiscal 2011, the Company performed its annual goodwill impairment testing. Based on a combination of factors, including the influence of prolonged macro-economic conditions on the lawn and garden market in the U.S. and the operating results of the Power Products segment which lacked the benefit of certain weather related events that are favorable to the business during the past two years, the Company’s forecasted cash flow estimates used in the goodwill assessment were adversely impacted. As a result, the Company concluded that the carrying value of the Power Products reporting unit exceeded its fair value. The non-cash goodwill impairment charge recorded in the fourth quarter of fiscal 2011 was $49.5 million, which wasRestructuring ActionsIn fiscal 2011, the Company made organization changes that involved a reduction of salaried employee headcount. These organization changes resulted in restructuring charges of $3.5 million, consisting of $1.3 million due to the modification of certain vesting conditions for the Company’s stock incentive awards and approximately $2.2 million for severance and other related employee separation costs associated with the reduction.Interest ExpenseInterest expense was $3.2 million lower for fiscal 2011 as compared to fiscal 2010 due to lower average outstanding borrowings and the reduced interest rate associated with the 6.875% Senior Notes due 2020 that were issued in December 2010, partially offset by $3.9 million of pre-tax charges related to the redemption premium on the 8.875% Senior Notes and the write-off of related deferred financing costs.19Other IncomeOther income increased $0.7 million in fiscal 2011 as compared to fiscal 2010. This increase iswas primarily due to a $1.0 million increase in equity in earnings from unconsolidated affiliates.Provision for Income TaxesThe effective tax rate was 24.0% and 25.4% for fiscal 2011 and fiscal 2010, respectively. The current yearfiscal 2011 income tax provision includes $15.1 million of income tax benefit related to the $49.5 million non-cash goodwill impairment charge. Approximately $10.6 million of the goodwill impairment was related to non-deductible goodwill associated with past stock acquisitions for which a tax benefit was not recorded. The remaining goodwill impairment generated the $15.1 million of tax benefit. Due to the significant impact the impairment charge had on the effective tax rate, the Company believes the tax benefit and the effective tax rate excluding the $49.5 million impairment charge are more meaningful comparisons to last year’s comparablethe fiscal 2010 period. Excluding the non-cash goodwill impairment charge, the effective tax rate was 28.0% and 25.4% for fiscal 2011 and fiscal 2010, respectively. The annual fluctuations reflect the impact of changes in foreign earnings at different tax rates, the taxation of dividends from foreign operations as well as the resolution of certain tax matters.FISCAL 2010 COMPARED TO FISCAL 2009Net SalesFiscal 2010 consolidated net sales were approximately $2.03 billion, a decrease of $64.3 million compared to the previous year. This decrease is primarily attributable to reduced generator shipment volumes due to the absence of landed hurricanes as well as lower average prices for engines.Engines segment net sales in fiscal 2010 were $1.36 billion compared to $1.37 billion in fiscal 2009, a decrease of $10.0 million or 0.7%. Total engine volumes for the year were essentially flat as an increase in engines used in lawn and garden applications was offset by reduced demand for engines for portable generators due to no landed hurricane activity. Lower average prices during the year were effectively offset by a favorable mix of higher priced engines shipped for use on riding equipment and a slightly favorable foreign currency impact.Power Products segment net sales in fiscal 2010 were $843.6 million compared to $920.4 million in fiscal 2009, a $76.8 million decrease or 8.3%. The net sales decrease for the year was the result of decreased portable generator sales volume due to the absence of any landed hurricanes in fiscal 2010 partially offset by higher volumes of other power products.Gross ProfitConsolidated gross profit was $379.9 million in fiscal 2010 compared to $333.7 million in fiscal 2009, an increase of $46.3 million or 13.9%. In fiscal 2009 a $5.8 million pretax ($3.5 million after tax) expense was recorded associated with the closing of the Jefferson and Watertown, WI manufacturing facilities. After considering the impact of the closure of the Jefferson and Watertown, WI facilities, consolidated gross profit increased due to reduced manufacturing costs, lower commodity costs and planned manufacturing cost savings.Engines segment gross profit increased to $300.2 million in fiscal 2010 from $262.8 million in fiscal 2009, an increase of $37.4 million. Engines segment gross profit margins increased to 22.1% in fiscal 2010 from 19.2% in fiscal 2009. The gross profit increase year over year was the result of lower manufacturing costs, lower commodity costs, a favorable mix of product shipped that reflected higher priced units and improved productivity, offset by lower average sales prices.The Power Products segment gross profit increased to $86.4 million in fiscal 2010 from $69.9 million in fiscal 2009, an increase of $16.5 million. The Power Products segment gross profit margins increased to 10.2% infiscal 2010 from 7.6% in fiscal 2009. Included in the Power Products segment gross profit was a $4.6 million impairment expense recorded in fiscal 2009 associated with the closing of the Jefferson, WI manufacturing facility. In addition to the Jefferson closure, the gross profit increase primarily resulted from lower manufacturing costs, primarily related to lower commodity costs and planned cost savings initiatives. The improvements were partially offset by lower sales and production volumes primarily related to the significantly lower portable generator production and shipments in fiscal 2010.Engineering, Selling, General and Administrative CostsEngineering, selling, general and administrative costs increased to $280.2 million in fiscal 2010 from $265.3 million in fiscal 2009, an increase of $14.9 million. Engineering, selling, general and administrative costs as a percent of sales increased to 13.8% in fiscal 2010 from 12.7% in fiscal 2009.The increase in engineering, selling, general and administrative expenses was primarily due to increased salaries and fringes of $20.7 million. Offsetting these increases were reduced marketing expenses of $6.5 million.Litigation SettlementOn February 24, 2010, the Company entered into a Stipulation of Settlement (“Settlement”) that resolves over 65 class-action lawsuits that have been filed against Briggs & Stratton and other engine and lawnmower manufacturers alleging, among other things, misleading power labeling on its lawnmower engines. Other parties to the Settlement are Sears, Roebuck and Co., Sears Holdings Corporation, Kmart Holdings Corporation, Deere & Company, Tecumseh Products Company, The Toro Company, Electrolux Home Products, Inc. and Husqvarna Outdoor Products, Inc. (now known as Husqvarna Consumer Outdoor Products, N.A., Inc.) (Collectively with the Company referred to below as the “Settling Defendants”). All other defendants settled all claims separately. The Settlement resolves all horsepower-labeling claims brought by all persons or entities in the United States who, beginning January 1, 1994 through the date notice of the Settlement is first given, purchased, for use and not for resale, a lawn mower containing a gas combustible engine up to 30 horsepower provided that either the lawn mower or the engine of the lawn mower was manufactured or sold by a Defendant. On August 16, 2010, Judge Adelman issued a final order approving the Settlement as well as the settlements of all other defendants. In August and September 2010, several class members filed a Notice of Appeal of Judge Adelman’s final approval order to the United States Court of Appeals for the Seventh Circuit. All of those appeals were settled as of February 16, 2011 with no additional contribution from Briggs & Stratton.As part of the Settlement, the Company denies any and all liability and seeks resolution to avoid further protracted and expensive litigation. The Settling Defendants as a group agreed to pay an aggregate amount of $51 million. However, the monetary contribution of the amount of each of the Settling Defendants is confidential. In addition, the Company, along with the other Settling Defendants, agreed to injunctive relief regarding their future horsepower labeling, as well as procedures that will allow purchasers of lawnmower engines to seek a one-year extended warranty free of charge. Under the terms of the Settlement, the balance of settlement funds were paid, and the one-year warranty extension program began to run, on March 1, 2011. As a result of the Settlement, the Company recorded a total charge of $30.6 million in fiscal 2010 representing the total of the Company’s monetary portion of the Settlement and the estimated costs of extending the warranty period for one year.Interest ExpenseInterest expense decreased $4.7 million in fiscal 2010 compared to fiscal 2009. The decrease is attributable to lower average borrowings between years for working capital requirements, offset by premiums paid on repurchases of outstanding senior notes.Other IncomeOther income increased $3.2 million in fiscal 2010 as compared to fiscal 2009. This increase is primarily due to a $2.6 million increase in equity in earnings from unconsolidated affiliates.Provision for Income TaxesThe effective tax rate was 25.4% for fiscal year 2010 and 20.9% for fiscal year 2009. The fiscal 2010 effective tax rate is less than the statutory 35% rate primarily due to the Company’s ability to exclude from taxable income a portion of the distributions received from investments and from the resolution of prior period tax matters. The fiscal 2009 effective tax rate was reduced due to the Company’s ability to exclude from taxable income a portionof the distributions received from investments, from the resolution of prior period tax matters and increased foreign tax credits.Liquidity and Capital ResourcesFISCAL YEARS 2012, 2011 2010 AND 2009Net cash provided by operating activities were $66 million, $157 million $244 million and $172$244 million in fiscal 2012, 2011 and 2010, respectively.Cash flows provided by operating activities in fiscal 2012 were $91 million lower compared to fiscal 2011. The decrease in cash provided by operating activities was primarily related to a $32 million reduction in the decrease in accounts receivable compared to the previous year, which was partly due to $19 million of delayed funding under the Company's dealer inventory financing facility with GE Capital Commercial Distribution Finance implemented in fiscal 2012, and 2009, respectively.The fiscal 2011 net cash provided by operating activities were $87 million lower than fiscal 2010. The decrease in net cash provided by operating activities iswas primarily due to working capital requirements to replenish inventory from lower levels at the end of fiscal 2010 and due to timing of payments associated with accounts receivable, accounts payable and accrued liabilities.The fiscal 2010 net cash provided by operating activities were $71 million greater than fiscal 2009. The increase is due to higher cash operating earnings and $58 million less of working capital requirements between years.Net cash used byin investing activities were $51 million, $60 million $44 million and $64$44 million in fiscal 2012, 2011 2010 and 2009,2010, respectively. These cash flows include capital expenditures of $50 million, $60 million $44 million and $43$44 million in fiscal 2012, 2011 2010 and 2009,2010, respectively. The capital expenditures relate primarily to reinvestment in equipment, capacity additions and new products. In fiscal 2009, net cash of $25 million was used for the Victa Lawncare Pty. Ltd. acquisition.Net cash used byin financing activities were $63 million, $4 million $99 million and $123$99 million in fiscal 2012, 2011 and 2010, and 2009, respectively. As more fullyIn fiscal 2012, the Company repurchased treasury stock at a total cost of $39 million. There were no treasury stock repurchases in fiscal years 2011 or 2010. In fiscal 2012, as disclosed in Note 9 of the Notes to Consolidated Financial Statements, the Company incurred $2 million of debt issuance costs associated with the refinancing of its revolving credit facility. In fiscal 2011, as disclosed in Note 9 of the Notes to Consolidated Financial Statements, the Company issued $225 million aggregate principal amount of 6.875% Senior Notes due December 15, 2020 during fiscal 2011, the net proceeds of which were primarily used to redeem the $201 million outstanding principal amount of the 8.875% Senior Notes due March 15, 2011. The Company incurred $5 million of deferred financing costs in connection with the issuance of the 6.875% Senior Notes. TheNotes in fiscal 2011. In fiscal 2010, the Company reduced its outstanding debt by $78 million and $85 million in fiscal 2010 and 2009, respectively.million. The Company paid cash dividends on the common stock of $22 million $22 million and $38 million in fiscal 2011, 2010 and 2009, respectively. The quarterly dividend was reduced during the fourth quartereach of fiscal 2009 by 50% to $0.11 per share from the $0.22 per share paid previously in order to preserve cash in light of the continuing uncertainty in the credit markets.20Future Liquidity and Capital ResourcesIn December 2010, the Company issued $225 million aggregate principal amount of 6.875% Senior Notes due December 2020. Net proceeds were primarily used to redeem the remaining outstanding principal of the 8.875% Senior Notes due March 2011. The 8.875% Senior Notes due MarchIn October 2011, were classified as Current Maturity on Long-Term Debt in the Consolidated Balance Sheet as of June 27, 2010.On July 12, 2007, the Company entered into a $500 million multicurrency credit agreement (the “Revolver”). The Revolver replaced the Company's previous amended and restated multicurrency credit agreement. The Amended Credit Agreement (“Revolver”) provides a revolving credit facility for up to $500 million in revolving loans, including up to $25 million in swing-line loans. The Company used proceeds from the Revolver to pay off the remaining amounts outstanding under the Company’s variable rate term notes issued in February 2005 with various financial institutions, retire the 7.25% senior notes that were due in September 2007 and fund seasonal working capital requirements and other financing needs.agreement dated as of July 12, 2007. The Revolver has a term of five years and all outstanding borrowings on the Revolver are due and payable on July 12, 2012. AsOctober 13, 2016. The initial maximum availability under the revolving credit facility is $500 million. Availability under the revolving credit facility is reduced by outstanding letters of July 3, 2011 and June 27, 2010, therecredit. The Company may from time to time increase the maximum availability under the revolving credit facility by up to $250 million if certain conditions are satisfied. There were no borrowings onunder the Revolver.In April 2009,August 2012, subsequent to the end of fiscal 2012, the Company announced that its Board of Directors ofdeclared an increase in the Company declared a quarterly dividend offrom $0.11 per share to $0.12 per share on theits common stock, of the Company, which was payable June 26, 2009on or after October 1, 2012 to shareholders of record at the close of business June 1, 2009. This quarterly dividend was reduced 50% from the prior quarter’s level. The reduced dividend is more comparable with the Company’s historical payout ratio of 50% of net income and dividend yield of 3.5%. on August 20, 2012.In addition, a reduced dividend preserves cash in light of the continuing uncertainty in the credit markets. This action, along with other cash preserving initiatives, should reduce the Company’s need for additional borrowings for working capital in the near to medium term future.On August 10, 2011, the Board of Directors of Briggs & Stratton authorized up to $50 million in funds for use in a common share repurchase program with an expiration of June 30, 2013. Briggs & Stratton willThe common share repurchase program authorizes the purchase of shares of the Company's common stock using available cash, on the open market or in private transactions from time to time, depending on market conditions and certain governing loan covenants.In August 2012, subsequent to the end of fiscal 2012, the Board of Directors of Briggs & Stratton authorized an additional $50 million in funds associated with the common share repurchase program and an extension of the expiration date to June 30, 2014. The common share repurchase program authorizes the purchase of shares of the Company's common stock on the open market or in private transactions from time to time, depending on market conditions and certain governing loan covenants.The Company expects capital expenditures to be approximately $60$50 to $65$60 million in fiscal 2012.2013. These anticipated expenditures reflect our plans to continue to reinvest in efficient equipment and innovative new products.On July 6, 2012, the Moving Ahead for Progress in the 21st Century Act (MAP-21 Act) was signed into law. The MAP-21 Act included certain pension-related provisions which included changes to the methodology used to determine discount rates for ERISA funding purposes for qualified defined benefit pension plans. Based on historical interest rates, the MAP-21 Act allows plan sponsors to utilize a higher discount rate to value pension liabilities, which results in lower required pension plan contributions under ERISA. Based upon current regulations and actuarial studies the Company is required to make minimum contributions of approximately $30 million to the qualified pension plan duringof $45 million in fiscal 2012.2013. The Company may be required to make further contributions in future years depending uponon the actual return on plan assets and the funded status of the plan in future periods.Management believes that available cash, cash generated from operations, existing lines of credit and access to debt markets will be adequate to fund Briggs & Stratton’sthe Company’s capital requirements and operational needs for the foreseeable future.The Revolver and the 6.875% Senior Notes contain restrictive covenants. These covenants include restrictions on the Company’s ability to: pay dividends; repurchase shares; incur indebtedness; create liens; enter into sale and leaseback transactions; consolidate or merge with other entities,entities; sell or lease all or substantially all of its assets; and dispose of assets or the proceeds of sales of its assets. The Revolver contains financial covenants that require the Company to maintain a minimum interest coverage ratio and impose a maximum average leverage ratio. As of July 3, 2011,1, 2012, the Company was in compliance with these covenants, and expects to be in compliance with all covenants during fiscal 2012.21Financial StrategyManagement believes that the value of Briggs & Strattonthe Company is enhanced if the capital invested in operations yields a cash return that is greater than the cost of capital. Consequently, management’s first priority is to reinvest capital into physical assets and products that maintain or grow the global cost leadership and market positions that Briggs & Strattonthe Company has achieved, and drive the economic value of the Company. Management’s next financial objective is to identify strategic acquisitions or alliances that enhance revenues and provide a superior economic return. Finally, management believes that when capital cannot be invested for returns greater than the cost of capital, wethe Company should return capital to the capital providers through dividends and/or share repurchases.Off-Balance Sheet ArrangementsBriggs & StrattonThe Company has no off-balance sheet arrangements or significant guarantees to third parties not fully recorded in our Balance Sheets or fully disclosed in our Notes to Consolidated Financial Statements. Briggs & Stratton’sThe Company’s significant contractual obligations include our debt agreements and certain employee benefit plans.Contractual ObligationsA summary of the Company’s expected payments for significant contractual obligations as of July 3, 20111, 2012 is as follows (in thousands):
2012
2013-2014
2015-2016 $ 225,000 $ - $ - $ - $ 225,000 130,840 15,468 30,938 30,938 53,496 607 474 133 - - 47,556 16,197 22,987 6,755 1,617 61,474 60,211 1,263 - - 487 487 - - - 84,200 30,200 54,000 - - $ 550,164 $ 123,037 $ 109,321 $ 37,693 $ 280,113 (a)Includes an estimate of future expected funding requirements related to our pension and other postretirement benefit plans. Any further funding requirements for pension and other postretirement benefit plans beyond fiscal 2013 cannot be estimated at this time. Because their future cash outflows are uncertain, liabilities for unrecognized tax benefits and other sundry items are excluded from the table above. Total Fiscal2013 Fiscal2014-2015 Fiscal2016-2017 Thereafter Long-Term Debt $ 225,000 $ — $ — $ — $ 225,000 Interest on Long-Term Debt 115,372 15,468 30,938 30,938 38,028 Capital Leases 133 133 — — — Operating Leases 42,549 12,874 18,700 6,801 4,174 Purchase Obligations 58,788 58,788 — — — Other Liabilities (a) 153,200 44,700 40,000 68,500 — $ 595,042 $ 131,963 $ 89,638 $ 106,239 $ 267,202 (a) Includes an estimate of future expected funding requirements related to our pension plans. Any further funding requirements forpension plans beyond fiscal 2017 cannot be estimated at this time. Because their future cash outflows are uncertain, liabilities forunrecognized tax benefits and other sundry items are excluded from the table above.Critical Accounting PoliciesBriggs & Stratton’sThe Company’s critical accounting policies are more fully described in Note 2 and Note 15 of the Notes to Consolidated Financial Statements. As discussed in Note 2, the preparation of financial statements in conformity with accounting principles generally accepted in the U.S. (“GAAP”) requires management to make estimates andThe Company believes the following critical accounting policies represent the more significant judgments and estimates used in preparing the consolidated financial statements. There have been no material changes made to the Company’s critical accounting policies and estimates during the periods presented in the consolidated financial statements.Goodwill and Other Intangible AssetsGoodwill represents the excess of purchase price over tangible and intangible assets acquired less liabilities assumed arising from business combinations. Goodwill is not amortized. The Company evaluates goodwill and other indefinite-lived intangible assets for impairment annually as of the end of the fourth fiscal quarter, or more frequently if events or circumstances indicate that the assets may be impaired, by applying a fair value based test and, if impairment occurs, the amount of impaired goodwill is written off immediately.22Goodwill impairment is determined using a two-step process. The first step of the goodwill impairment test is to identify a potential impairment by comparing the carrying values of each of the Company’s reporting units to their estimated fair values as of the test dates. The Company has determined that its reporting units are the same as its reportable segments.segments, Engines and Products. The estimates of fair value of the reporting units are computed using a combination of an income and market approach. The income approach utilizes a multi-year forecast of estimated cash flows and a terminal value at the end of the cash flow period. The forecast period assumptions consist of internal projections that are based on the Company’s budget and long-range strategic plan. The discount rate used at the test date is the weighted-average cost of capital which reflects the overall level of inherent risk of the reporting unit and the rate of return an outside investor would expect to earn. Under the market approach, the fair value of reporting unit is estimated based on market multiples of cash flow for comparable companies and similar transactions. The sum of the fair values of the reporting units is reconciled to the Company’s current market capitalization (based upon the Company’s trailing 20-day average stock price) plus an estimated control premium.If the fair value of a reporting unit exceeds its book value, goodwill of the reporting unit is not deemed impaired and the second step of the impairment test is not performed. If the book value of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. The implied fair value of goodwill is determined by allocating the estimated fair value of the reporting unit to the estimated fair value of its existing tangible assets and liabilities as well as existing identified intangible assets and previously unrecognized intangible assets in a manner similar to a purchase price allocation. The unallocated portion of the estimated fair value of the reporting unit is the implied fair value of goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.As discussed in Note 5 to the consolidated financial statements, the Company performed the annual impairment test on its Engines and Power Products reporting units as of July 3, 2011.1, 2012. The impairment testing performed by the Company at July 1, 2012 indicated that the estimated fair value assessmentof each reporting unit exceeded its corresponding carrying amount, including recorded goodwill and as such, no further impairment existed. Such impairment testing indicated that the estimated fair value of the Products reporting unit exceeded its corresponding carrying amount by 3%. The estimated fair value of the Engines reporting unit indicated its goodwill balance was not impaired as the reporting unit’s fair value exceededsubstantially in excess of its carrying value. However,In fiscal 2011, the impairment analysis determined that the Powergoodwill balance of the Products reporting units had goodwill balances that wereunit was impaired. Therefore,As a result, the Company recognized a $49.5 million non-cash goodwill impairment charge during the fourth quarter offiscal 2011. The assumptions included in the impairment test require judgment; and changes to these inputs could impact the results of the calculation. Other than management’s internal projections of future cash flows, the primary assumptions used in the impairment test were the weighted-average cost of capital, long-term growth rates and the control premium.Trademarks are not amortized. If impairment occurs, the impaired amount of the trademark is written off immediately. For purposes of the trademark impairment analysis, the Company performs its assessment of fair value based on an income approach using the relief-from-royalty method. This methodology assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to exploit the related benefits of these types of assets. The Company determines the fair value of each trademark by applying a royalty rate to a projection of net sales discounted using a risk adjusted cost of capital. The Company believes the relief-from-royalty method to be an acceptable methodology due to its common use by valuation specialists in determining the fair value of intangible assets. Sales growth rates are determined after considering current andThe methods of assessing fair value for goodwill and trademark impairment purposes require significant judgments to be made by management. Although the Company’s cash flow forecasts are based on assumptions that are considered reasonable by management and consistent with the plans and estimates management is using to operate the underlying businesses, there is significant judgment in determining the expected future cash flows attributable to these businesses.23The growth rates and gross profit margins used for the terminal value calculations and the discount rates of the respective reporting units as of July 3, 20111, 2012 were as follows: Terminal
Growth Rate Terminal Gross
Profit Margin Discount
Rate 2.5% 23.8% 10.3% 3.5% 17.7% 12.2% TerminalGrowth Rate Terminal GrossProfit Margin DiscountRateEngines 2.5% 22.3% 10.6% Products 3.0% 18.1% 13.0% Changes in such estimates or the application of alternative assumptions could produce significantly different results. Assuming no other change in assumptions, a decrease of 1.0% in the Company’s terminal sales growth rate would increase the Power Products segment goodwill impairment charge by approximately $7.8 million; a decrease of 1.0% in the Company’s terminal gross profit margin would increase the Power Products segment goodwill impairment charge by approximately $35.0 million; and an increase of 1.0% in the Company’s discount rate would increase the Power Products segment goodwill impairment charge by approximately $44.9 million.Definite-lived intangible assets consist primarily of customer relationships and patents. These definite-lived intangible assets are amortized over their estimated useful lives and are subject to impairment testing if events or changes in circumstances indicate that an asset may be impaired.Income TaxesThe Company’s estimate of income taxes payable, deferred income taxes, tax contingencies and the effective tax rate is based on a complex analysis of many factors including interpretations of federal, state and foreign income tax laws, the difference between tax and financial reporting bases of assets and liabilities, estimates of amounts currently due or owed in various jurisdictions, and current accounting standards. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. We review and update our estimates on a quarterly basis as facts and circumstances change and actual results are known. In addition, federal, state and foreign taxing authorities periodically review the Company’s estimates and interpretation of income tax laws. Adjustments to the effective income tax rate and recorded tax related assets and liabilities may occur in future periods if actual results differ significantly from original estimates and interpretations.Pension and Other Postretirement PlansThe pension benefit obligation and related pension expense or income are impacted by certain actuarial assumptions, including the discount rate and the expected rate of return on plan assets. These rates are evaluated on an annual basis considering such factors as market interest rates and historical asset performance, which is essential in the current volatile market. Actuarial valuations at July 3, 20111, 2012 used a discount rate of 5.35%4.45% and an expected rate of return on plan assets of 8.50%. Our discount rate was selected using a methodology that matches plan cash flows with a selection of Moody’s Aa or higher rated bonds, resulting in a discount rate that better matches a bond yield curve with comparable cash flows. A 0.25% decrease in the discount rate would decrease annual pension expenseservice and interest costs by approximately $0.4$0.6 million. A 0.25% decrease in the expected return on plan assets would increase our annual pension expenseservice and interest costs by approximately $2.3$2.2 million. In estimating the expected return on plan assets, the Company considers the historical returns on plan assets, adjusted for forward looking considerations, including inflation assumptions and active management of the plan’s invested assets, knowing that our investment performance has been in the top decile compared to other plans. Changes in the discount rate and return on assets can have a significant effect on the funded status of our pension plans, stockholders’ equity and related expense. We cannot predict these changes in discount rates or investment returns and, therefore, cannot reasonably estimate whether the impact in subsequent years will be significant.The funded status of the Company’s pension plan is the difference between the projected benefit obligation and the fair value of its plan assets. The projected benefit obligation is the actuarial present value of all benefits3, 20111, 2012 the fair value of plan assets was less than the projected benefit obligation by approximately $194 million.On July 6, 2012, the Moving Ahead for Progress in the 21st Century Act (MAP-21 Act) was signed into law. The MAP-21 Act included certain pension-related provisions which included changes to the methodology used to determine discount rates for ERISA funding purposes for qualified defined benefit pension plans. Based on historical interest rates, the MAP-21 Act allows plan sponsors to utilize a higher discount rate to value pension liabilities, which results in lower required pension plan contributions under ERISA. Based upon24current regulations and actuarial studies the Company is required to make minimum contributions to the qualified pension plan of $30.2$45 million in fiscal 2012.2013. The Company may be required to make further contributions in future years depending on the actual return on plan assets and the funded status of the plan in future periods.The other postretirement benefits obligation and related expense or income are impacted by certain actuarial assumptions, including the health care trend rate. An increase of one percentage point in health care costs would increase the accumulated postretirement benefit obligation by $3.0$2.5 million and would increase the service and interest cost by $0.1 million.$0.1 million. A corresponding decrease of one percentage point, would decrease the accumulated postretirement benefit by $3.5$2.8 million and decrease the service and interest cost by $0.1 million.$0.1 million.For pension and postretirement benefits, actuarial gains and losses are accounted for in accordance with U.S. GAAP. Refer to Note 15 of the Notes to the Consolidated Financial Statements for additional discussion.Other ReservesThe reserves for customer rebates, warranty, product liability, inventory and doubtful accounts are fact specific and take into account such factors as specific customer situations, historical experience, and current and expected economic conditions.New Accounting PronouncementsIn June 2011,July 2012, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2012-02 "Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment,"which permits an entity to first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired before performing quantitative impairment testing. The amendments do not change the measurement of impairment losses. This update is effective for fiscal years beginning after September 15, 2012, with early adoption permitted. Management does not expect adoption of this ASU to have a material impact on the Company’s results of operations, financial position or cash flow.In September 2011, the FASB issued ASU No. 2011-08, “Intangibles - Goodwill and Other (Topic 350): Testing Goodwill for Impairment,” which permits an entity to make a qualitative assessment of whether it is more likely than not that a reporting unit's fair value is less than its carrying value before applying the two-step goodwill impairment model that is currently in place. If it is determined through the qualitative assessment that a reporting unit's fair value is more likely than not greater than its carrying value, the remaining impairment steps would be unnecessary. The qualitative assessment is optional, allowing companies to go directly to the quantitative assessment. This update is effective for annual and interim goodwill impairment tests performed in fiscal years beginning after December 15, 2011 with early adoption permitted. Management does not expect adoption of this ASU to have a material impact on the Company’s results of operations, financial position or cash flow.In June 2011, the FASB issued ASU No. 2011-05, “Comprehensive Income: Presentation of Comprehensive Income,” which amends current comprehensive income guidance. This ASU eliminates the option to present the components of other comprehensive income as part of the statement of shareholders’ equity. Instead, it requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. Under the two-statement approach, the first statement would include components of net income, which is consistent with the income statement format used today, and the second statement would include components of other comprehensive income (“OCI”). The ASU does not change the items that must be reported in OCI. ASU 2011-05 will be effective for public companies for fiscal years, and interim periods within those years, beginning after December 15, 2011 with early adoption permitted. Management does not expect adoption of this ASU to have a material impact on the Company’s results of operations, financial position or cash flow.In May, 2011, the FASB issued ASU 2011-04 “Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS.” The ASU is the result of joint efforts by the FASB and the International Accounting Standards Board (“IASB”) to develop a single, converged fair value framework. While the ASU is largely consistent with existing fair value measurement principles in U.S. GAAP, it expands existing disclosure requirements for fair value measurements and makes other amendments. Key additional disclosures include quantitative disclosures about unobservable inputs in Level 3 measures, qualitative information about sensitivity of Level 3 measures and valuation process, and classification within the fair value hierarchy for instruments where fair value is only disclosed in the footnotes but carrying amount is on some other basis. For public companies, the ASU is effective for interim and annual periods beginning after December 15, 2011. Management does not expect adoption of this ASU to have a material impact on the Company’s results of operations, financial position or cash flow.In June 2009, the FASB issued new guidance that changes the approach to determining the primary beneficiary of a variable interest entity (VIE) and requires companies to more frequently assess whether they must consolidate VIEs. This standard was effective for the Company’s first quarter of fiscal 2011. As of June 28, 2010 and subsequently, the Company evaluated all entities that fall within the scope of this new guidance, including the Company’s investments in joint ventures, to determine whether consolidation of these entities was required. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.25Other MattersLabor AgreementBriggs & StrattonThe Company has collective bargaining agreements with its unions. These agreements expire at various times ranging fromduring calendar years 2011-2013.EmissionsThe U.S.United States Environmental Protection Agency (EPA) has developed, the California Air Resources Board (CARB), Canada and the European Union (EU) have adopted multiple phasesstages of national emission standards for small air cooled engines. Briggs & StrattonThe Company currently has a complete product offeringofferings that compliescomply with the EPA’s Phase II enginethose standards.In addition, China has adopted emission standards.The EPA issued proposed Phase III standards in 2008 to further reduce engine exhaust emissions and to control evaporative emissions from small off-road engines and equipment in which they are used. The Phase III standards are similar toparallel those adopted by EPA and are being phased in from 2011 to 2013. The Company has specific products that meet these standards and are certified for sale in China. Australia has announced that it will be adopting emission standards. These standards are generally expected to be based on the California Air Resources Board (CARB).EPA standards, but a timetable for their adoption has not yet been published. The Phase III program requires evaporative controls in 2009 and go into full effect in 2011 for Class II engines (225 cubic centimeter displacement and larger) and 2012 for Class I engines (less than 225 cubic centimeter displacement). While Briggs & Stratton believes the cost of the regulation may increase engine and equipment costs per unit, Briggs & StrattonCompany does not believe the cost ofanticipate that compliance with the neweither of these emission standards will have a material adverse effect on its financial position or results of operations.CARB’s Tier 3 regulation requires additional reductionsoperations as they are expected to engine exhaust emissions and new controls on evaporative emissions from small engines. The Tier 3 regulation was fully phased in during fiscal year 2008. While Briggs & Stratton believesbe substantially similar to the cost of the regulation may increase engine and equipment costs per unit, Briggs & Stratton does not believe the regulation will have a material effect on its financial condition or results of operations. This assessment is based on a number of factors, including revisions the CARB made to its adopted regulation from the proposal published in September 2003 in response to recommendations from Briggs & Stratton and others in the regulated category and intention to pass increased costs associated with the regulation on to consumers.The European Commission adopted an engine emission Directive regulating exhaust emissions from small air cooled engines. The Directive parallels the Phase I and II regulationsexisting standards adopted by EPA, CARB, Canada and the U.S. EPA. Stage 1 was effective in February 2004 and Stage 2 was phased in between calendar years 2005 and 2007, with some limited extensions available for specific size and type engines until 2010. Briggs & Stratton has a full product line compliant with Stage 2. Briggs & Stratton does not believe the cost of compliance with the Directive will have a material adverse effect on its financial position or results of operations.The Republic of China has implemented emissions standards for small engines with a compliance date of March 2012. The regulations are based on the EU Stage 2 regulations, so Briggs & Stratton expects to have engines available for sale in China as needed when the regulations are in effect.The Company is exposed to market risk from changes in foreign exchange rates, commodity prices and interest rates. To reduce the risk from changes in certain foreign exchange rates, and commodity prices Briggs & Strattonand interest rates, the Company uses financial instruments. Briggs & StrattonThe Company does not hold or issue financial instruments for trading purposes.Foreign CurrencyBriggs & Stratton’sThe Company’s earnings are affected by fluctuations in the value of the U.S. Dollar against various currencies. Briggs & StrattonThe Company purchases components in Euros from third parties and receives Euros for certain products sold to European customers and receives Canadian dollars for certain products sold to Canadian customers. The Yen is used to purchase engines from Briggs & Stratton’sthe Company's joint venture. Briggs & Stratton’sThe Company's foreign subsidiaries’ earnings are also influenced by fluctuations of local currencies, including the Australian dollar, against the U.S. dollar as these subsidiaries purchase components and inventory from vendors and the parent in U.S. dollars. Forward foreign exchange contracts are used to partially hedge against the earnings effects of such fluctuations. At July 3, 2011, Briggs & Stratton1, 2012, the Company had the following forward foreign exchange contracts outstanding with the fair value (gains) losses shown (in thousands):
Notional
Value
Fair Market
Value
Conversion
Currency
(Gain) Loss
at Fair Value
34,295 $ 35,924 U.S. $ 2,290 10,700 $ 11,119 U.S. $ 274 41,500 $ 59,935 U.S. $ 1,268 HedgeCurrency NotionalValue Fair MarketValue ConversionCurrency (Gain) Lossat Fair ValueAustralian Dollar 28,258 $ 28,494 U.S. $ 103 Euro 53,500 $ 67,937 U.S. $ (1,522 ) Japanese Yen 695,000 $ 8,721 U.S. $ (40 ) Fluctuations in currency exchange rates may also impact the shareholders’ investment in Briggs & Stratton.the Company. Amounts invested in Briggs & Stratton’sthe Company's non-U.S. subsidiaries and joint ventures are translated into U.S. dollars at the exchange rates in effect at fiscal year-end. The resulting cumulative translation adjustments are recorded in Shareholders’ Investment as Accumulated Other Comprehensive Income. The cumulative translation adjustments component of Shareholders’ Investment increased $22.0decreased $13.5 million during the year.fiscal 2012. Using the year-end exchange rates, the total amount invested in non-U.S. subsidiaries on July 3, 20111, 2012 was approximately $153.4$149.8 million.26Commodity PricesBriggs & StrattonThe Company is exposed to fluctuating market prices for commodities, including steel, natural gas, copper and aluminum. The Company has established programs to manage commodity price fluctuations through contracts that fix the price of certain commodities, some of which are financial derivative instruments. The maturities of these contracts coincide with the expected usage of the commodities for periods up to the next twenty-four months.Interest RatesBriggs & StrattonThe Company is exposed to interest rate fluctuations on its borrowings, depending on general economic conditions.On conditions.On 3, 2011, Briggs & Stratton1, 2012, the Company had the following short-term loan outstanding (in thousands): $ 3,000 3.61% Currency Amount Weighted AverageInterest RateU.S. Dollars $ 3,000 3.66% This loan has a variable interest rate. Assuming borrowings are outstanding for an entire year, an increase (decrease) of one percentage point in the weighted average interest rate would increase (decrease) interest expense by $30 thousand.$30 thousand.On July 3, 2011,1, 2012, long-term loans consisted of the following (in thousands):Description Amount Maturity Weighted AverageInterest Rate6.875% Senior Notes $ 225,000 December 2020 6.875% The Senior Notes carry a fixed ratesrate of interest and are therefore not subject to market fluctuation.The Company is also exposed to interest rate risk associated with programs under which the Company shares the expense of financing certain dealer and distributor inventories through a third party financing source. The Company enters into interest rate swaps to manage a portion of this interest rate risk. The swaps are designated as cash flow hedges and are used to effectively fix the interest payments to a third party financing source, exclusive of lender spreads, ranging from 1.17% to 1.60% for a notional principal amount of $85 million with expiration dates ranging from July 2017 to May 2019.27Consolidated Balance SheetsAS OF JULY 1, 2012 AND JULY 3, 2011(in thousands)ASSETS 2012 2011 CURRENT ASSETS: Cash and Cash Equivalents $ 156,075 $ 209,639 Receivables, Less Reserves of $5,780 and $4,971, Respectively 223,996 249,358 Inventories: Finished Products and Parts 319,977 292,527 Work in Process 107,632 127,358 Raw Materials 6,075 7,206 Total Inventories 433,684 427,091 Deferred Income Tax Asset 44,527 42,163 Assets Held for Sale 10,404 14,075 Prepaid Expenses and Other Current Assets 42,814 36,413 Total Current Assets 911,500 978,739 GOODWILL 204,764 202,940 INVESTMENTS 22,163 21,017 DEBT ISSUANCE COSTS, Net 5,717 4,919 OTHER INTANGIBLE ASSETS, Net 87,067 89,275 LONG-TERM DEFERRED INCOME TAX ASSET 66,951 31,001 OTHER LONG-TERM ASSETS, Net 8,820 9,102 PLANT AND EQUIPMENT: Land and Land Improvements 18,263 18,047 Buildings 136,352 131,765 Machinery and Equipment 843,961 833,495 Construction in Progress 28,269 33,585 1,026,845 1,016,892 Less - Accumulated Depreciation 725,596 687,667 Total Plant and Equipment, Net 301,249 329,225 $ 1,608,231 $ 1,666,218 AS OF JULY 1, 2012 AND JULY 3, 2011(in thousands, except per share data)LIABILITIES AND SHAREHOLDERS’ INVESTMENT 2012 2011 CURRENT LIABILITIES: Accounts Payable $ 151,153 $ 183,733 Short-Term Debt 3,000 3,000 Accrued Liabilities: Wages and Salaries 44,756 54,745 Warranty 29,597 31,668 Accrued Postretirement Health Care Obligation 22,891 22,576 Other 54,512 48,661 Total Accrued Liabilities 151,756 157,650 Total Current Liabilities 305,909 344,383 ACCRUED PENSION COST 296,394 191,417 ACCRUED EMPLOYEE BENEFITS 25,035 24,100 ACCRUED POSTRETIREMENT HEALTH CARE OBLIGATION 89,842 116,092 ACCRUED WARRANTY 16,415 14,327 OTHER LONG-TERM LIABILITIES 17,666 12,956 LONG-TERM DEBT 225,000 225,000 SHAREHOLDERS’ INVESTMENT: Common Stock - Authorized 120,000 Shares $.01 Par Value, Issued 57,854 Shares 579 579 Additional Paid-In Capital 81,723 79,354 Retained Earnings 1,099,859 1,092,864 Accumulated Other Comprehensive Loss (322,704 ) (243,498 ) Treasury Stock at Cost, 9,663 and 7,373 Shares, Respectively (227,487 ) (191,356 ) Total Shareholders’ Investment 631,970 737,943 $ 1,608,231 $ 1,666,218 Consolidated Statements of EarningsFOR THE FISCAL YEARS ENDED JULY 1, 2012, JULY 3, 2011 AND JUNE 27, 2010(in thousands, except per share data) 2012 2011 2010 NET SALES $ 2,066,533 $ 2,109,998 $ 2,027,872 COST OF GOODS SOLD 1,685,048 1,711,682 1,647,937 RESTRUCTURING CHARGES 44,760 — — Gross Profit 336,725 398,316 379,935 ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 290,381 297,113 280,248 RESTRUCTURING CHARGES 5,107 3,537 — GOODWILL IMPAIRMENT — 49,450 — LITIGATION SETTLEMENT — — 30,600 Income from Operations 41,237 48,216 69,087 INTEREST EXPENSE (18,542 ) (23,318 ) (26,469 ) OTHER INCOME, Net 7,178 7,156 6,455 Income Before Income Taxes 29,873 32,054 49,073 PROVISION FOR INCOME TAXES 867 7,699 12,458 NET INCOME $ 29,006 $ 24,355 $ 36,615 EARNINGS PER SHARE DATA: Weighted Average Shares Outstanding 48,965 49,677 49,668 Basic Earnings Per Share $ 0.58 $ 0.49 $ 0.73 Diluted Average Shares Outstanding 49,909 50,409 50,064 Diluted Earnings Per Share $ 0.57 $ 0.48 $ 0.73 Consolidated Statements of Shareholders’ InvestmentFOR THE FISCAL YEARS ENDED JULY 1, 2012, JULY 3, 2011 AND JUNE 27, 2010(in thousands, except per share data) CommonStock AdditionalPaid-InCapital RetainedEarnings AccumulatedOther Com-prehensiveIncome (Loss) TreasuryStock ComprehensiveIncome (Loss)BALANCES, JUNE 28, 2009 $ 579 $ 77,522 $ 1,075,838 $ (250,273 ) $ (208,982 ) Comprehensive Loss: Net Income — — 36,615 — — $ 36,615 Foreign Currency Translation Adjustment — — — (4,989 ) — (4,989 ) Unrealized Gain on Derivatives, net of tax — — — 11,626 — 11,626 Change in Pension and Postretirement Plans, net of tax of $41,348 — — — (75,073 ) — (75,073 ) Total Comprehensive Loss $ (31,821 ) Cash Dividends Paid ($0.44 per share) — — (22,125 ) — — Stock Option Activity, net of tax — 2,959 — — 1,514 Restricted Stock — (5,023 ) — — 4,928 Amortization of Unearned Compensation — 2,055 — — — Deferred Stock — 2,877 — — 31 Shares Issued to Directors — (37 ) — — 20 Reclassification of EITF 06-4 and 06-10 — — 515 — — BALANCES, JUNE 27, 2010 $ 579 $ 80,353 $ 1,090,843 $ (318,709 ) $ (202,489 ) Comprehensive Income: Net Income — — 24,355 — — $ 24,355 Foreign Currency Translation Adjustment — — — 22,017 — 22,017 Unrealized Loss on Derivatives, net of tax — — — (10,742 ) — (10,742 ) Change in Pension and Postretirement Plans, net of tax of $40,878 — — — 63,936 — 63,936 Total Comprehensive Income $ 99,566 Cash Dividends Paid ($0.44 per share) — — (22,334 ) — — Stock Option Activity, net of tax — 725 — — 2,681 Restricted Stock — (7,870 ) — — 6,394 Amortization of Unearned Compensation — 2,602 — — — Deferred Stock — 2,686 — — 942 Shares Issued to Directors — (157 ) — — 1,116 Modification of Stock Compensation Awards — 1,015 — — — BALANCES, JULY 3, 2011 $ 579 $ 79,354 $ 1,092,864 $ (243,498 ) $ (191,356 ) Comprehensive Loss: Net Income — — 29,006 — — $ 29,006 Foreign Currency Translation Adjustment — — — (13,487 ) — (13,487 ) Unrealized Loss on Derivatives, net of tax — — — (5,411 ) — (5,411 ) Change in Pension and Postretirement Plans, net of tax of $38,557 — — — (60,308 ) — (60,308 ) Total Comprehensive Loss $ (50,200 ) Cash Dividends Paid ($0.44 per share) — — (22,011 ) — — Stock Option Activity, net of tax — 1,255 — — 390 Restricted Stock — (2,901 ) — — 2,739 Amortization of Unearned Compensation — 3,296 — — — Deferred Stock — 726 — — 23 Shares Issued to Directors — (7 ) — — 3 Treasury Stock Purchases — — — — (39,286 ) BALANCES, JULY 1, 2012 $ 579 $ 81,723 $ 1,099,859 $ (322,704 ) $ (227,487 ) Consolidated Statements of Cash FlowsFOR THE FISCAL YEARS ENDED JULY 1, 2012, JULY 3, 2011 AND JUNE 27, 2010(in thousands)ASSETS $ 209,639 $ 116,554 249,358 286,426 292,527 278,922 127,358 114,483 7,206 6,941 427,091 400,346 42,163 41,138 4,000 4,000 36,413 57,179 968,664 905,643 202,940 252,975 21,017 19,706 4,919 525 89,275 90,345 31,001 72,492 9,102 10,608 18,047 17,303 141,840 136,725 833,495 804,362 33,585 21,508 1,026,967 979,898 687,667 642,135 339,300 337,763 $ 1,666,218 $ 1,690,057 2012 2011 2010 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 29,006 $ 24,355 $ 36,615 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and Amortization 63,714 61,828 66,232 Stock Compensation Expense 5,555 9,595 6,975 Goodwill Impairment Charge — 49,450 — Earnings of Unconsolidated Affiliates (5,100 ) (5,082 ) (4,071 ) Dividends Received from Unconsolidated Affiliates 4,029 6,979 4,005 Loss on Disposition of Plant and Equipment 174 1,651 2,125 Provision for Deferred Income Taxes 3,926 6,117 3,755 Pension Cash Contributions (28,746 ) — — Non-Cash Restructuring Charges 35,910 — — Change in Operating Assets and Liabilities: (Increase) Decrease in Receivables 6,195 37,775 (24,430 ) (Increase) Decrease in Inventories (20,693 ) (20,547 ) 76,389 (Increase) Decrease in Prepaid Expenses and Other Current Assets (6,945 ) 1,843 1,032 Increase (Decrease) in Accounts Payable, Accrued Liabilities and Income Taxes (9,755 ) (14,081 ) 67,947 Other, Net (11,309 ) (2,952 ) 7,167 Net Cash Provided by Operating Activities 65,961 156,931 243,741 CASH FLOWS FROM INVESTING ACTIVITIES: Additions to Plant and Equipment (49,573 ) (59,919 ) (44,443 ) Cash Paid for Acquisition, Net of Cash Acquired (2,673 ) — — Proceeds Received on Disposition of Plant and Equipment 1,457 148 276 Other, Net — — (144 ) Net Cash Used in Investing Activities (50,789 ) (59,771 ) (44,311 ) CASH FLOWS FROM FINANCING ACTIVITIES: Net Repayments on Revolver — — (34,000 ) Proceeds from Long-Term Debt Financing — 225,000 — Repayments on Long-Term Debt — (203,698 ) (44,236 ) Debt Issuance Costs (2,007 ) (4,994 ) — Cash Dividends Paid (22,011 ) (22,334 ) (22,125 ) Stock Option Exercise Proceeds and Tax Benefits 235 1,532 864 Treasury Stock Purchases (39,287 ) — — Net Cash Used in Financing Activities (63,070 ) (4,494 ) (99,497 ) EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (5,666 ) 419 629 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (53,564 ) 93,085 100,562 CASH AND CASH EQUIVALENTS: Beginning of Year 209,639 116,554 15,992 End of Year $ 156,075 $ 209,639 $ 116,554 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest Paid $ 18,630 $ 26,691 $ 26,693 Income Taxes Paid (Refunded) $ (2,388 ) $ 4,340 $ (6 ) The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.AS OF JULY 3, 2011 AND JUNE 27, 2010(in thousands, except per share data)LIABILITIES AND SHAREHOLDERS’ INVESTMENT $ 183,733 $ 171,495 3,000 3,000 - 203,460 54,745 74,837 31,668 29,578 22,576 22,847 48,661 58,294 157,650 185,556 344,383 563,511 191,417 274,737 24,100 23,006 116,092 135,978 14,327 12,367 12,956 29,881 225,000 - 579 579 79,354 80,353 1,092,864 1,090,843 (243,498 ) (318,709 ) (191,356 ) (202,489 ) 737,943 650,577 $ 1,666,218 $ 1,690,057 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.Consolidated Statements of Earnings AND JUNE 28, 2009(in thousands, except per share data) $ 2,109,998 $ 2,027,872 $ 2,092,189 1,711,682 1,647,937 1,753,935 – – 4,575 398,316 379,935 333,679 300,650 280,248 265,338 49,450 – – – 30,600 – 48,216 69,087 68,341 (23,318 ) (26,469 ) (31,147 ) 7,156 6,455 3,215 32,054 49,073 40,409 7,699 12,458 8,437 $ 24,355 $ 36,615 $ 31,972 49,677 49,668 49,572 $ 0.49 $ 0.73 $ 0.64 50,409 50,064 49,725 $ 0.48 $ 0.73 $ 0.64 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.Consolidated Statements of Shareholders’ InvestmentFOR THE FISCAL YEARS ENDED JULY 3, 2011, JUNE 27, 2010 AND JUNE 28, 2009(in thousands, except per share data) Common
Stock Additional
Paid-In
Capital Retained
Earnings Accumulated
Other Com-
prehensive
Income (Loss) Treasury
Stock Comprehensive
Income (Loss)
2008 $ 579 $ 76,667 $ 1,082,553 $ (110,234) $ (212,042) - - 31,972 - - $ 31,972
Adjustments - - - (13,684) - (13,684)
Derivatives, net of tax - - - (7,576) - (7,576)
Postretirement Plans, net of
tax of $75,953 - - - (118,779) - (118,779) - - - - - $ (108,067)
share) - - (38,171) - - - 1,760 - - - - (3,075) - - 2,880
Compensation - 1,097 - - - - 1,142 - - 160 - (69) - - 20 - - (516) - -
2009 $ 579 $ 77,522 $ 1,075,838 $ (250,273) $ (208,982) - - 36,615 - - $ 36,615
Adjustments - - - (4,989) - (4,989)
Derivatives, net of tax - - - 11,626 - 11,626
Postretirement Plans, net of
tax of $41,348 - - - (75,073) - (75,073) - - - - - $ (31,821)
share) - - (22,125) - - - 2,959 - - 1,514 - (5,023) - - 4,928
Compensation - 2,055 - - - - 2,877 - - 31 - (37) - - 20
06-10 - - 516 - - $ 579 $ 80,353 $ 1,090,843 $ (318,709) $ (202,489) - - 24,355 - - $ 24,355
Adjustments - - - 22,017 - 22,017
Derivatives, net of tax - - - (10,742) - (10,742)
Postretirement Plans, net
of tax of $40,878 - - - 63,936 - 63,936 - - - - - $ 99,566
per share) - - (22,334) - - - 725 - - 2,681 - (7,870) - - 6,394
Compensation - 2,602 - - - - 2,686 - - 942 - (157) - - 1,116
Compensation Awards - 1,015 - - - $ 579 $ 79,354 $ 1,092,864 $ (243,498) $ (191,356) The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.Consolidated Statements of Cash FlowsFOR THE FISCAL YEARS ENDED JULY 3, 2011, JUNE 27, 2010 AND JUNE 28, 2009(in thousands) $ 24,355 $ 36,615 $ 31,972 61,828 66,232 67,803 9,595 6,975 3,999 49,450 - 4,575 (5,082 ) (4,071 ) (1,526 ) 6,979 4,005 5,211 1,651 2,125 2,514 - - 1,190 6,117 3,755 7,368 37,775 (24,430 ) 59,809 (20,547 ) 76,389 61,810 1,843 1,032 (13,152 ) (14,081 ) 67,947 (45,318 ) (2,952 ) 7,167 (13,835 ) 156,931 243,741 172,420 (59,919 ) (44,443 ) (43,027 ) - - (24,757 ) 148 276 3,659 - (144 ) (348 ) (59,771 ) (44,311 ) (64,473 ) - (34,000 ) (65,077 ) 225,000 - - (203,698 ) (44,236 ) (20,000 ) (4,994 ) - - (22,334 ) (22,125 ) (38,171 ) 1,532 864 - (4,494 ) (99,497 ) (123,248 ) 419 629 (1,175 ) 93,085 100,562 (16,476 ) 116,554 15,992 32,468 $ 209,639 $ 116,554 $ 15,992 $ 26,691 $ 26,693 $ 31,169 $ 4,340 $ (6 ) $ 4,107 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.Notes to Consolidated Financial StatementsFOR THE FISCAL YEARS ENDED JULY 3, 2011, JUNE 27, 2010 AND JUNE 28, 2009Briggs & Stratton (the “Company”) is a U.S. based producer of air cooled gasoline engines and engine powered outdoor equipment. The Company’s Engines segment sells engines worldwide, primarily to original equipment manufacturers of lawn and garden equipment and other gasoline engine powered equipment. The Company’s Power Products segment designs, manufacturers and markets a wide range of outdoor power equipment and related accessories.(2) Summary of Significant Accounting Policies:Fiscal Year:Year: The Company’s fiscal year consists of 52 or 53 weeks, ending on the Sunday nearest the last day of June in each year. Therefore, the 2012 and 2010 fiscal years were 52 weeks long and the fiscal 2011 fiscal year was 53 weeks long and the 2010 and 2009 fiscal years were 52 weeks long. All references to years relate to fiscal years rather than calendar years.Principles of Consolidation: The consolidated financial statements include the accounts of the Company and its majority owned domestic and foreign subsidiaries after elimination of intercompany accounts and transactions. Investments in companies that are owned 20% to 50% or are less than 20% owned and for which we have significant influence are accounted for by the equity method.Certain amounts in prior year financial statements have been reclassified to conform to current year presentation.Accounting Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.Cash and Cash Equivalents: This caption includes cash, commercial paper and certificates of deposit. The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.Receivables: Receivables are recorded at their original carrying value less reserves for estimated uncollectible accounts.Inventories: Inventories are stated at cost, which does not exceed market. The last-in, first-out (LIFO) method was used for determining the cost of approximately 41% of total inventories at each of July 1, 2012 and July 3, 2011 and June 27, 2010.2011. The cost for the remaining inventories was determined using the first-in, first-out (FIFO) method. If the FIFO inventory valuation method had been used exclusively, inventories would have been $64.5$62.9 million and $57.6$64.5 million higher in fiscal 20112012 and 2010,2011, respectively. The LIFO inventory adjustment was determined on an overall basis, and accordingly, each class of inventory reflects an allocation based on the FIFO amounts. During 20102012 and 2009,2010, liquidation of LIFO layers generated income of $1.7$1.6 million and $9.3$1.7 million, respectively. There were no liquidations of LIFO layers in 2011.Goodwill and Other Intangible Assets: Goodwill reflects the cost of acquisitions in excess of the fair values assigned to identifiable net assets acquired. Goodwill is assigned to reporting units based upon the expected benefit of the synergies of the acquisition. The reporting units are Engines and Power Products. Other Intangible Assets reflect identifiable intangible assets that arose from purchase acquisitions. Other Intangible Assets are comprised of trademarks, patents and customer relationships. Goodwill and trademarks, which are considered to have indefinite lives are not amortized; however, both must be tested for impairment annually. Amortization is recorded on a straight-line basis for other intangible assets with finite lives. Patents have been assigned an estimated weighted average useful life of thirteen13 years. The customer relationships have been assigned an estimated useful life of twenty-five25 years. The Company is subject to financial statement risk in the event that goodwill and intangible assets become impaired.29Notes . . .The Company performed the required impairment tests in fiscal 2012, 2011 2010 and 2009.2010. Refer to Note 5 for discussion of a non-cash goodwill impairment charge recorded in fiscal 2011.Investments: This caption represents the Company’s investments in unconsolidated affiliated companies consisting of its 30% and 50% owned joint ventures. Combined financial information of the unconsolidatedNotes . . .Results of operations of unconsolidated affiliated companies for the fiscal year: 2011 2010 2009 $ 120,614 $ 104,140 $ 110,688 95,048 86,959 93,465 $ 25,566 $ 17,181 $ 17,223 $ 11,412 $ 7,113 $ 5,492 2012 2011 2010 Results of Operations: Sales $ 129,063 $ 120,614 $ 104,140 Cost of Goods Sold 103,254 95,048 86,959 Gross Profit $ 25,809 $ 25,566 $ 17,181 Net Income $ 9,751 $ 11,412 $ 7,113 Balance sheets of unconsolidated affiliated companies as of fiscal year-end: $ 51,838 $ 58,950 18,292 17,573 70,130 76,523 $ 15,809 $ 20,829 5,749 6,925 21,558 27,754 $ 48,572 $ 48,769 2012 2011 Financial Position: Assets: Current Assets $ 52,948 $ 51,838 Noncurrent Assets 16,944 18,292 69,892 70,130 Liabilities: Current Liabilities $ 15,346 $ 15,809 Noncurrent Liabilities 4,016 5,749 19,362 21,558 Equity $ 50,530 $ 48,572 Net sales to equity method investees were approximately $4.7$1.8 million $10.4, $4.7 million and $11.3$10.4 million in 2012, 2011 2010,, and 2009,2010, respectively. Purchases of finished products from equity method investees were approximately $115.7$119.6 million $93.2, $115.7 million and $102.5$93.2 million in 2012, 2011 2010, and 2009,2010, respectively.Debt Issuance Costs: Direct and incremental costs incurred in obtaining loans or in connection with the issuance of long-term debt are capitalized and amortized to interest expense over the terms of the related credit agreements. Debt discounts incurred in connection with the issuance of the 8.875% Senior Notes were capitalized and amortized to interest expense using the effective interest method until the redemption during fiscal 2011. Approximately $1.2$1.2 million $1.5, $1.2 million and $1.6$1.5 million of debt issuance costs and original issue discounts were amortized to interest expense during the fiscal years 2012, 2011 2010 and 2009,2010, respectively.Plant and Equipment and Depreciation: Plant and equipment are stated at costhistorical cost. For financial reporting purposes, plant and depreciation is computed usingequipment are depreciated primarily by the straight-linestraight line method at rates based uponover the estimated useful lives of the assets as follows:which generally range from Useful Life Range (In Years)Software3 - 10Land Improvements20 - 40Buildings20 - 50Machinery & Equipment3 - 2030Notes . . .Depreciation expense was approximately $60.3 million, $59.9 million and $63.0 million during fiscal years 2012, 2011 and 2010, respectively.Impairment of Property, Plant and Equipment: Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the sum of the expected undiscounted cash flows is less than the carrying value of the related asset or group of assets, a loss is recognized for the difference between the fair value and carrying value of the asset or group of. . .assets.to the Consolidated Financial Statements for an impairment associated with restructuring actions in fiscal 2012. There were no adjustments to the carrying value of property, plant and equipment in fiscal 2011 and 2010. Refer to Note 19 of the Notes to Consolidated Financial Statements for an impairment charge recognized in fiscal 2009.Warranty: The Company recognizes the cost associated with its standard warranty on engines and power products at the time of sale. The amount recognized is based on historical failure rates and current claim cost experience. The following is a reconciliation of the changes in accrued warranty costs for the reporting period (in thousands): $ 41,945 $ 42,044 (28,599 ) (31,015 ) 35,273 32,089 (2,624 ) (1,173 ) $ 45,995 $ 41,945 2012 2011 Balance, Beginning of Period $ 45,995 $ 41,945 Payments (26,856 ) (28,599 ) Provision for Current Year Warranties 30,790 35,273 Changes in Estimates (3,917 ) (2,624 ) Balance, End of Period $ 46,012 $ 45,995 Revenue Recognition: Net sales include sales of engines, power products, and related service parts and accessories, net of allowances for cash discounts, customer volume rebates and discounts, floor plan interest and advertising allowances. The Company recognizes revenue when all of the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable, and collectibility is reasonably assured. This is generally upon shipment, except for certain international shipments, where revenue is recognized when the customer receives the product.Included in net sales are costs associated with programs under which the Company shares the expense of financing certain dealer and distributor inventories, referred to as floor plan expense. This represents interest for a pre-established length of time based on a variable rate from a contract with a third party financing source for dealer and distributor inventory purchases. Sharing the cost of these financing arrangements is used by Briggs & Stratton as a marketing incentive for customers to buy inventory. The financing costs included in net sales in fiscal 2012, 2011 2010 and 20092010 were $6.6$5.5 million $6.4, $6.6 million and $6.2$6.4 million, respectively.The Company also offers a variety of customer rebates and sales incentives. The Company records estimates for rebates and incentives at the time of sale, as a reduction in net sales.Income Taxes: The Provision for Income Taxes includes federal, state and foreign income taxes currently payable and those deferred because of temporary differences between the financial statement and tax bases of assets and liabilities. The Deferred Income Tax Asset represents temporary differences relating to current assets and current liabilities, and the Long-Term Deferred Income Tax Asset represents temporary differences related to noncurrent assets and liabilities. A valuation allowance is recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized.Retirement Plans: The Company has noncontributory, defined benefit retirement plans and postretirement benefit plans covering certain employees. Retirement benefits represent a form of deferred compensation, which are subject to change due to changes in assumptions. Management reviews underlying assumptions on an annual basis. Refer to Note 15 of the Notes to Consolidated Financial Statements.Research and Development Costs: Expenditures relating to the development of new products and processes, including significant improvements and refinements to existing products, are expensed as incurred.incurred and31Notes . . .recorded in engineering, selling, general and administrative expenses within the Consolidated Statements of Earnings. The amounts charged against income were $19.5$19.8 million in fiscal 2011, $22.32012, $19.5 million in fiscal 20102011 and $23.0$22.3 million in fiscal 2009.Advertising Costs: Advertising costs, included in Engineering, Selling, General and Administrative Expenses in the accompanying Consolidated Statements of Earnings, are expensed as incurred. These expenses totaled $24.3$22.3 million in fiscal 2011, $25.12012, $24.3 million in fiscal 20102011 and $19.2$25.1 million in fiscal 2009.Notes . . 2010.The Company reports co-op advertising expense as a reduction in net sales. Co-op advertising expense reported as a reduction in net sales totaled $0.2 million in fiscal 2011, $0.3 million in fiscal 2010 and $1.4 million in fiscal 2009.Shipping and Handling Fees: Revenue received from shipping and handling fees is reflected in net sales and related shipping costs are recorded in cost of goods sold. Shipping fee revenue for fiscal 2012, 2011 2010 and 20092010 was $5.3$5.9 million $4.1, $5.3 million and $4.3$4.1 million, respectively.Foreign Currency Translation: Foreign currency balance sheet accounts are translated into dollars at the rates of exchange in effect at fiscal year-end. Income and expenses incurred in a foreign currency are translated at the average rates of exchange in effect during the year. The related translation adjustments are made directly to a separate component of Shareholders’ Investment.Earnings Per Share: The Company computes earnings per share using the two-class method, an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. The Company’s unvested grants of restricted stock and deferred stock awards contain non-forfeitable rights to dividends (whether paid or unpaid), which are required to be treated as participating securities and included in the computation of basic earnings per share.Information on earnings per share is as follows (in thousands except per share data): Fiscal Year Ended July 3, 2011 June 27, 2010 June 28, 2009 $ 24,355 $ 36,615 $ 31,972 (181 ) (296 ) (300 ) $ 24,174 $ 36,319 $ 31,672 49,677 49,668 49,572 - - - 732 396 153 50,409 50,064 49,725 $ 0.49 $ 0.73 $ 0.64 $ 0.48 $ 0.73 $ 0.64 Fiscal Year Ended July 1, 2012 July 3, 2011 June 27, 2010 Net Income $ 29,006 $ 24,355 $ 36,615 Less: Dividends Attributable to Unvested Shares (508 ) (181 ) (296 ) Net Income available to Common Shareholders $ 28,498 $ 24,174 $ 36,319 Average Shares of Common Stock Outstanding 48,965 49,677 49,668 Incremental Common Shares Applicable to Common Stock Options and Performance Shares Based on the Common Stock Average Market Price During the Period — — — Incremental Common Shares Applicable to Deferred and Restricted Common Stock Based on the Common Stock Average Market Price During the Period 944 732 396 Diluted Average Shares of Common Stock Outstanding 49,909 50,409 50,064 Basic Earnings Per Share $ 0.58 $ 0.49 $ 0.73 Diluted Earnings Per Share $ 0.57 $ 0.48 $ 0.73 The dilutive effect of the potential exercise of outstanding stock-based awards to acquire common shares is calculated using the treasury stock method. The following options to purchase shares of common stock were excluded from the calculation of diluted earnings per share as the exercise prices were greater than the average market price of the common shares, and their inclusion in the computation would be antidilutive: Fiscal Year Ended July 3, 2011 June 27, 2010 June 28, 2009 4,049 3,796 4,306 $ 28.17 $ 30.68 $ 29.53 Comprehensive Income (Loss): Comprehensive Income (Loss) is a more inclusive financial reporting method that includes disclosure of financial information that historically has not been recognized in the calculation of net income. The Company has chosen to report Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss) which encompasses net income, cumulative translation adjustments, unrealized gain (loss) on derivatives and unrecognized pension and postretirement obligations in the Fiscal Year Ended July 1, 2012 July 3, 2011 June 27, 2010 Options to Purchase Shares of Common Stock (in thousands) 3,679 4,049 3,796 Weighted Average Exercise Price of Options Excluded $ 27.71 $ 28.17 $ 30.68 32Notes . . .Consolidated Statements of Shareholders’ Investment. Information on Accumulated Other Comprehensive Income (Loss) is as follows (in thousands): Cumulative
Translation
Adjustments Unrealized
Gain (Loss) on
Derivatives Unrecognized
Pension and
Postretirement
Obligation Accumulated
Other
Comprehensive
Income (Loss) $ 22,645 $ 4,449 $ (137,328 ) $ (110,234 ) (13,684 ) (7,576 ) (118,779 ) (140,039 ) 8,961 (3,127 ) (256,107 ) (250,273 ) (4,989 ) 11,626 (75,073 ) (68,436 ) 3,972 8,499 (331,180 ) (318,709 ) 22,017 (10,742 ) 63,936 75,211 $ 25,989 $ (2,243 ) $ (267,244 ) $ (243,498 ) Derivative Instruments & Hedging Activity: The Company enters into derivative contracts designated as cash flow hedges to manage certain foreign currency and commodity exposures. Company policy allows derivatives to be used only for identifiable exposures and, therefore, the Company does not enter into hedges for trading purposes where the sole objective is to generate profits.The Company formally designates the financial instrument as a hedge of a specific underlying exposure and documents both the risk management objectives and strategies for undertaking the hedge. The Company formally assesses, both at the inception and at least quarterly thereafter, whether the financial instruments that are used in hedging transactions are effective at offsetting changes in the forecasted cash flows of the related underlying exposure. Because of the high degree of effectiveness between the hedging instrument and the underlying exposure being hedged, fluctuations in the value of the derivative instruments are generally offset by changes in the forecasted cash flows of the underlying exposures being hedged. Derivative financial instruments are recorded on the Consolidated Balance Sheets as assets or liabilities, measured at fair value. The effective portion of gains or losses on the derivative designated as cash flow hedges are reported as a component of Accumulated Other Comprehensive Loss (AOCI) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Any ineffective portion of a financial instrument’s change in fair value is immediately recognized in earnings.The Company enters into interest rate swaps to manage a portion of its interest rate risk from financing certain dealer and distributor inventories through a third party financing source. The swaps are designated as cash flow hedges and are used to effectively fix the interest payments to a third party financing source, exclusive of lender spreads, ranging from 1.17% to 1.60% for a notional principal amount of $85 million with expiration dates ranging from July 2017 to May 2019.The Company periodically enters into forward foreign currency contracts to hedge the risk from forecasted third party and intercompany sales or payments denominated in foreign currencies. These obligations generally require the Company to exchange foreign currencies for U.S. Dollars, Euros, Australian Dollars, Canadian Dollars or Japanese Yen. These contracts generally do not have a maturity of more than twenty-four months.The Company uses raw materials that are subject to price volatility. The Company hedges a portion of its exposure to the variability of cash flows associated with commodities used in the manufacturing process by entering into forward purchase contracts or commodity swaps. Derivative contracts designated as cash flow hedges are used by the Company to reduce exposure to variability in cash flows associated with future purchases of natural gas, aluminum steel and copper.steel. These contracts generally do not have a maturity of more than twenty-four months.The Company has considered the counterparty credit risk related to all its foreign currency and commodity derivative contracts and does not deem any counterparty credit risk material at this time.33Notes . . .The notional amount of derivative contracts outstanding at the end of the period is indicative of the level of the Company’s derivative activity during the period. As of July 1, 2012 and July 3, 2011 and June 27, 2010,, the Company had the following outstanding derivative contracts (in thousands): Sell 34,295 19,636 Buy - 4,500 Sell 10,700 12,100 Sell 41,500 91,609 Buy - 650,000 Buy - 350 Buy 11,187 16,547 Buy 8 - Buy 1 - Contract Notional Amount July 1, 2012 July 3, 2011 Interest Rate: LIBOR Interest Rate (U.S. Dollars) Fixed 85,000 0 Foreign Currency: Australian Dollar Sell 28,258 34,295 Canadian Dollar Sell 0 10,700 Euro Sell 53,500 41,500 Japanese Yen Buy 695,000 0 Commodity: Natural Gas (Therms) Buy 5,614 11,187 Aluminum (Metric Tons) Buy 24 8 Steel (Metric Tons) Buy 0 1 The location and fair value of derivative instruments reported in the Consolidated Balance Sheets are as follows (in thousands): Asset (Liability) Fair Value July 3, 2011 June 27, 2010 $ 108 $ 16,440 - �� 1,478 (3,550 ) (296 ) (280 ) - 26 34 - - (1,937 ) (1,377 ) (91 ) (728 ) $ (5,724 ) $ 15,551 Balance Sheet Location Asset (Liability) Fair Value July 1, 2012 July 3, 2011 Interest rate contracts: Other Long-Term Liabilities $ (2,341 ) $ — Foreign currency contracts: Other Current Assets 1,888 108 Other Long-Term Assets, Net 24 — Accrued Liabilities (452 ) (3,550 ) Other Long-Term Liabilities — (280 ) Commodity contracts: Other Current Assets 14 26 Accrued Liabilities (8,510 ) (1,937 ) Other Long-Term Liabilities — (91 ) $ (9,377 ) $ (5,724 ) 34Notes . . .The effect of derivatives designated as hedging instruments on the Consolidated Statements of Earnings is as follows: Twelve months ended July 3, 2011 Recognized in Earnings Amount of
Gain (Loss)
Recognized in
Other
Comprehensive
Income on Derivatives,
Net of Taxes
(Effective Portion) Classification
of Gain (Loss) Amount of
Gain (Loss)
Reclassified
from Accumulated
Other
Comprehensive
Loss into Income
(Effective Portion) Recognized in
Earnings
(Ineffective Portion) $ (10,760 ) Net Sales $ 972 $ - (29 ) Cost of Goods Sold (286 ) - 47 Cost of Goods Sold (2,564 ) (2 ) $ (10,742 ) $ (1,878 ) $ (2 ) Twelve months ended July 1, 2012 Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives, Net of Taxes (Effective Portion) Classification of Gain (Loss) Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion) Recognized in Earnings (Ineffective Portion) Interest rate contracts $ (1,428 ) Net Sales $ — $ — Foreign currency contracts – sell 1,553 Net Sales 4,031 — Foreign currency contracts – buy 11 Cost of Goods Sold 132 — Commodity contracts (5,547 ) Cost of Goods Sold (7,292 ) 6 $ (5,411 ) $ (3,129 ) $ 6 Twelve months ended July 3, 2011 Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives, Net of Taxes (Effective Portion) Classification of Gain (Loss) Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion) Recognized in Earnings (Ineffective Portion) Foreign currency contracts – sell (10,760 ) Net Sales 972 — Foreign currency contracts – buy (29 ) Cost of Goods Sold (286 ) — Commodity contracts 47 Cost of Goods Sold (2,564 ) (2 ) $ (10,742 ) $ (1,878 ) $ (2 ) Twelve months ended June 27, 2010 Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives, Net of Taxes (Effective Portion) Classification of Gain (Loss) Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion) Recognized in Earnings (Ineffective Portion) Foreign currency contracts – sell $ 10,873 Net Sales $ (750 ) $ — Foreign currency contracts – buy (120 ) Cost of Goods Sold 187 — Commodity contracts 873 Cost of Goods Sold 2,978 2 $ 11,626 $ 2,415 $ 2 Notes . . . Twelve months ended June 27, 2010 Recognized in Earnings Amount of
Gain (Loss)
Recognized in
Other
Comprehensive
Income on Derivatives,
Net of Taxes
(Effective Portion) Classification
of Gain (Loss) Amount of
Gain (Loss)
Reclassified
from Accumulated
Other
Comprehensive
Loss into Income
(Effective Portion) Recognized in
Earnings
(Ineffective Portion) $ 10,873 Net Sales $ (750 ) $ - (120 ) Cost of Goods Sold 187 - 873 Cost of Goods Sold 2,978 2 $ 11,626 $ 2,415 $ 2 3, 20111, 2012 Accumulated Other Comprehensive Loss balance that is expected to be reclassified into earnings is $2.2 million.(3) New Accounting Pronouncements:In June 2011,July 2012, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2012-02 "Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment,"which permits an entity to first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired before performing quantitative impairment testing. The amendments do not change the measurement of impairment losses. This update is effective for fiscal years beginning after September 15, 2012, with early adoption permitted. Management does not expect adoption of this ASU to have a material impact on the Company’s results of operations, financial position or cash flow.In September 2011, the FASB issued ASU No. 2011-08, “Intangibles - Goodwill and Other (Topic 350): Testing Goodwill for Impairment,” which permits an entity to make a qualitative assessment of whether it is more likely than not that a reporting unit's fair value is less than its carrying value before applying the two-step goodwill impairment model that is currently in place. If it is determined through the qualitative assessment that a reporting unit's fair value is more likely than not greater than its carrying value, the remaining impairment steps would be unnecessary. The qualitative assessment is optional, allowing companies to go directly to the quantitative assessment. This update is effective for annual and interim goodwill impairment tests performed in fiscal years beginning after December 15, 2011 with early adoption permitted. Management does not expect adoption of this ASU to have a material impact on the Company’s results of operations, financial position or cash flow.In June 2011, the FASB issued ASU No. 2011-05, “Comprehensive Income: Presentation of Comprehensive Income,” which amends current comprehensive income guidance. This ASU eliminates the option to present the components of other comprehensive income as part of the statement of shareholders’ equity. Instead, it requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. Under the two-statement approach, the first statement would include components of net income, which is consistent with the income statement format used today, and the second statement would include components of other comprehensive income (“OCI”). The ASU does not change the items that must be reported in OCI. ASU 2011-05 will be effective for public companies for fiscal years, and interim periods within those years, beginning after December 15, 2011 with early adoption permitted. Management does not expect adoption of this ASU to have a material impact on the Company’s results of operations, financial position or cash flow.In May, 2011, the FASB issued ASU 2011-04 “Fair Value Measurement: Amendments to Achieve Common(4) Fair Value MeasurementValue:Assets and Disclosure Requirements in U.S. GAAP and IFRS.” The ASU is the result of joint efforts by the FASB and the International Accounting Standards Board (“IASB”) to develop a single, converged fair value framework. While the ASU is largely consistent with existing fair value measurement principles in U.S. GAAP, it expands existing disclosure requirements for fair value measurements and makes other amendments. Key additional disclosures include quantitative disclosures about unobservable inputs in Level 3 measures, qualitative information about sensitivity of Level 3 measures and valuation process, and classification within the fair value hierarchy for instruments where fair value is only disclosed in the footnotes but carrying amount is on some other basis. For public companies, the ASU is effective for interim and annual periods beginning after December 15, 2011. Management does not expect adoption of this ASU to have a material impact on the Company’s results of operations, financial position or cash flowIn June 2009, the FASB issued new guidance that changes the approach to determining the primary beneficiary of a variable interest entity (VIE) and requires companies to more frequently assess whether they must consolidate VIEs. This standard was effective for the Company’s first quarter of fiscal 2011. As of June 28, 2010 and subsequently, the Company evaluated all entities that fall within the scope of this new guidance, including the Company’s investments in joint ventures, to determine whether consolidation of these entities was required. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.Reclassification: Certain amounts in prior year financial statements have been reclassified to conform to current year presentation.Notes . . .(3) Acquisitions:On June 30, 2008 the Company, through its wholly owned subsidiary Briggs & Stratton Australia, Pty. Limited, acquired Victa Lawncare Pty. Limited (Victa) of Sydney, Australia from GUD Holdings Limited for total consideration of $24.8 million in net cash. Victa is a leading designer, manufacturer and marketer of a broad range of outdoor power equipment used in consumer lawn and garden applications in Australia and New Zealand. Victa’s products are soldLiabilities Measured at large retail stores and independent dealers. The Company financed the transaction from cash on hand and its existing credit facilities. Victa is included in the Power Products segment.The acquisition has been accounted for using the purchase method of accounting. The purchase price was allocated to identifiable assets acquired and liabilities assumed based upon their estimated fair values, with the excess purchase price recorded as goodwill, none of which is tax deductible. This goodwill is recorded within the Engines segment. Fair Value:The following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition (in thousands): $ 14,057 5,357 8,063 4,068 31,545 6,788 6,788 $ 24,757 (4) Fair Value Measurements:FASB Accounting Standards Codification (“ASC”) Topic 820,Fair Value Measurements, defines a framework for measuring fair value and expands the related disclosures. To increase consistency and comparability in fair value measurements and related disclosures, ASC Topic 820 establishedguidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels:Level 1: Quoted prices for identical instruments in active markets.Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-driven valuations whose inputs are observable or whose significant value drivers are observable.Level 3: Significant inputs to the valuation model are unobservable.The following table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis as of July 1, 2012 and July 3, 2011 and June 27, 2010 (in thousands): $ 134 $ 108 $ 26 $ - 5,858 3,830 2,028 - Notes . . . $ 17,952 $ 17,918 $ 34 $ - 2,401 296 2,105 - Fair Value Measurement Using July 1, 2012 Level 1 Level 2 Level 3 Assets: Derivatives $ 1,926 $ — $ 1,926 $ — Liabilities: Derivatives $ 11,303 $ — $ 11,303 $ — Fair Value Measurement Using July 3, 2011 Level 1 Level 2 Level 3 Assets: Derivatives $ 134 $ — $ 134 $ — Liabilities: Derivatives $ 5,858 $ — $ 5,858 $ — The Company has currently chosen not to elect the fair value option for any items that are not already required to be measured at fair value in accordance with accounting principles generally accepted in the United States.Fair Value of Financial Instruments:The carrying values of cash and cash equivalents, trade receivables, accounts payable, foreign lines of credit, accrued liabilities and income taxes payable are reasonable estimates of their fair values at July 1, 2012 and July 3, 2011 due to the short-term nature of these instruments.The fair market value of the Company’s long-term debt is estimated based on market quotations at year-end.The estimated fair market values of the Company’s Long-Term Debt is (in thousands): 2012 2011 CarryingAmount FairValue CarryingAmount FairValueLong-Term Debt 6.875% Senior Notes $ 225,000 $ 241,027 $ 225,000 $ 233,726 Borrowings on Revolver $ — $ — $ — $ — (5) Goodwill and Other Intangible Assets:Goodwill reflects the cost of acquisitions in excess of the fair values assigned to identifiable net assets acquired. Goodwill is assigned to reporting units based upon the expected benefit of the synergies of the acquisition. The reporting units are Engines and Power Products. The Engines reporting unitsegment had goodwill of $138.0$137.4 million and $136.9$138.0 million at July 1, 2012 and July 3, 2011 and June 27, 2010,, respectively. The Power Products reporting unitsegment had goodwill of $64.9$67.4 million and $116.1$64.9 million at July 1, 2012 and July 3, 2011 and June 27, 2010,, respectively.The changes in the carrying amount of goodwill for the fiscal years ended July 1, 2012 and July 3, 2011 and June 27, 2010 are as follows (in thousands): $ 252,975 $ 253,854 (49,450 ) - (1,779 ) (1,779 ) (700 ) - - 263 1,894 637 $ 202,940 $ 252,975 2012 2011 Beginning Goodwill Balance $ 202,940 $ 252,975 Impairment Loss — (49,450 ) Tax Benefit on Amortization — (1,779 ) Reversal of Tax Valuation Allowance — (700 ) Acquisition 2,692 — Effect of Translation (868 ) 1,894 Ending Goodwill Balance $ 204,764 $ 202,940 At July 1, 2012, July 3, 2011 and June 27, 2010, accumulated goodwill impairment losses were $49.5 million, $49.5 million and $0, respectively.The Company evaluates goodwill for impairment at least annually as of the fiscal year-end or more frequently if events or circumstances indicate that the assets may be impaired. The Company recorded a non-cash goodwill impairment charge in fiscal 2011 of $49.5 million, which was determined by comparing the carrying value of the reporting unit’s goodwill with the implied fair value of goodwill for the reporting unit. Based on a combination of factors, including the influence of prolonged macro-economic conditions on the lawn and garden market in the U.S. and the operating results of the Power Products segment during the pastprevious two years which lacked the benefit of certain weather related events that would have been favorable to the business, the Company’s forecasted cash flow estimates used in the goodwill assessment were adversely impacted. As a result, the Company concluded that the carrying value amounts of the Power Products reporting unit exceeded its fair value as of July 3, 2011. The Company recorded a non-cash goodwill impairment charge in the fourth quarter of fiscal 2011 of $49.5 million, which was determined by comparing the carrying value of the reporting unit’s goodwill with the implied fair value of goodwill for the reporting unit. This impairment charge is a non-cash expense that did not adversely affect the Company’s debt position, cash flow, liquidity or compliance with financial covenants under its revolving credit facility. No impairment charges were recorded within the Engines segment. The Company previously evaluated its goodwill at June 27, 2010,July 1, 2012 and determined that there were no further impairments of goodwill.Notes . . . and June 27, 2010 are as follows (in thousands): 2011 2010 Gross
Carrying
Amount Accumulated
Amortization Gross
Carrying
Amount Accumulated
Amortization $ 13,601 $ (8,247 ) $ 5,354 $ 13,601 $ (7,049 ) $ 6,552 17,910 (5,015 ) 12,895 17,910 (4,298 ) 13,612 52 (16 ) 36 22 - 22 31,563 (13,278 ) 18,285 31,533 (11,347 ) 20,186 69,841 - 69,841 69,841 - 69,841 1,149 - 1,149 318 - 318 70,990 - 70,990 70,159 - 70,159 $ 102,553 $ (13,278 ) $ 89,275 $ 101,692 $ (11,347 ) $ 90,345 2012 2011 GrossCarryingAmount AccumulatedAmortization Net GrossCarryingAmount AccumulatedAmortization Net Amortized Intangible Assets: Patents $ 13,601 $ (9,464 ) $ 4,137 $ 13,601 $ (8,247 ) $ 5,354 Customer Relationships 17,910 (5,731 ) 12,179 17,910 (5,015 ) 12,895 Effect of Translation 40 — 40 52 (16 ) 36 Total Amortized Intangible Assets 31,551 (15,195 ) 16,356 31,563 (13,278 ) 18,285 Unamortized Intangible Assets: Trademarks/Brand Names 69,841 — 69,841 69,841 — 69,841 Effect of Translation 870 — 870 1,149 — 1,149 Total Unamortized Intangible Assets 70,711 — 70,711 70,990 — 70,990 Total Intangible Assets $ 102,262 $ (15,195 ) $ 87,067 $ 102,553 $ (13,278 ) $ 89,275 The Company also performs an impairment test of its indefinite-lived intangible assets as of the fiscal year-end. As of July 1, 2012 and July 3, 2011 and June 27, 2010,, the Company concluded that no evidence of impairment of indefinite-lived intangible assets existed.Amortization expense of other intangible assets amounted to approximately $1.9$1.9 million in each of 2012, 2011 2010, and 2009.2010.The estimated amortization expense of other intangible assets for the next five years is (in thousands): 1,911 1,911 1,911 1,860 1,860 $ 9,453 2013 1,911 2014 1,900 2015 1,860 2016 1,860 2017 1,860 $ 9,391 (6) Income Taxes:The provision (credit) for income taxes consists of the following (in thousands): $ (2,908 ) $ 4,740 $ (1,152 ) (177 ) 305 (336 ) 4,667 3,658 2,557 1,582 8,703 1,069 6,117 3,755 7,368 $ 7,699 $ 12,458 $ 8,437 Notes . . . 2012 2011 2010 Current Federal $ (8,711 ) $ (2,908 ) $ 4,740 State 430 (177 ) 305 Foreign 5,222 4,667 3,658 (3,059 ) 1,582 8,703 Deferred 3,926 6,117 3,755 $ 867 $ 7,699 $ 12,458 A reconciliation of the U.S. statutory tax rates to the effective tax rates on income follows: 35.0% 35.0% 35.0% 0.9% 0.9% 0.8% (16.2%) 1.9% (4.3%) (2.7%) (1.6%) (1.5%) 1.5% (10.9%) (7.5%) 5.5% 0.1% (1.6%) 24.0% 25.4% 20.9% 2012 2011 2010 U.S. Statutory Rate 35.0 % 35.0 % 35.0 % State Taxes, Net of Federal Tax Benefit 1.8 % 0.9 % 0.9 % Foreign Taxes 4.2 % (16.2 )% 1.9 % Benefit on Dividends Received (2.2 )% (2.7 )% (1.6 )% Changes to Unrecognized Tax Benefits (16.0 )% 1.5 % (10.9 )% Impact of Restructuring Actions (18.7 )% — % — % *Other (1.2 )% 5.5 % 0.1 % Effective Tax Rate 2.9 % 24.0 % 25.4 % * “Other” in fiscal 2011 includes 11.5% for the impact of goodwill impairment and -6%(6.0)% for the impact of currentfiscal 2011 and prior year R&D tax credits.The components of deferred income taxes were as follows (in thousands):Current Asset (Liability): $ 15,940 $ 13,626 4,798 4,725 11,927 11,464 2,194 2,035 13,150 17,655 927 1,032 (6,773 ) (9,399 ) $ 42,163 $ 41,138 $ 52,404 $ 95,375 (52,749 ) (45,075 ) (63,356 ) (75,090 ) 36,386 33,676 44,408 52,711 5,588 4,823 (7,259 ) (9,130 ) 9,370 10,475 6,209 4,728 $ 31,001 $ 72,493 Current Asset (Liability): 2012 2011 Difference Between Book and Tax Related to: Inventory $ 17,269 $ 15,940 Payroll Related Accruals 5,644 4,798 Warranty Reserves 11,366 11,927 Workers Compensation Accruals 2,141 2,194 Other Accrued Liabilities 12,576 13,150 Pension Cost 1,049 927 Miscellaneous (5,518 ) (6,773 ) Deferred Income Tax Asset (Liability) $ 44,527 $ 42,163 Long-Term Asset (Liability): Difference Between Book and Tax Related to: Pension Cost $ 69,639 $ 52,404 Accumulated Depreciation (54,860 ) (52,749 ) Intangibles (67,452 ) (63,356 ) Accrued Employee Benefits 39,555 36,386 Postretirement Health Care Obligation 48,113 44,408 Warranty 6,402 5,588 Valuation Allowance (12,025 ) (7,259 ) Net Operating Loss/State Credit Carryforwards 30,079 9,370 Miscellaneous 7,500 6,209 Deferred Income Tax Asset (Liability) $ 66,951 $ 31,001 The deferred tax assets that were generated as a result of foreign income tax loss carryforwards and tax incentives in the amount of $4.9$7.3 million are potentially not useable by certain foreign subsidiaries. If not utilized against taxable income, $4.5$6.9 million will expire from 20122013 through 2022.2023. The remaining $0.4$0.4 million has no expiration date. In addition, a deferred tax asset of $4.5$6.9 million was generated as a result of state income tax loss and state incentive tax credit carryforwards. If not utilized against future taxable income, this amount will expire from 20122013 through 2026.2027. Realization of the deferred tax assets are contingent upon generating sufficient taxable income prior to expiration of these carryforwards. Management believes that realization of the foreign deferred tax assets is unlikely,unlikely; therefore, valuation allowances were established in the amount of $4.9 million.$7.3 million. In addition, state tax credits in the amount of $2.4$4.7 million are potentially not useable against future state income taxes.The Company has not recorded deferred income taxes applicable to undistributed earnings of foreign subsidiaries because the Company intends to reinvest such earnings indefinitely outside of the U.S. The undistributed earnings amounted to approximately $49.5$61.0 million at July 3, 2011.1, 2012. If the Company were to distribute these earnings, foreign tax credits may become available under current law to reduce the resultingNotes . . .The change to the gross unrecognized tax benefits of the Company during the fiscal year ended July 3, 20111, 2012 is reconciled as follows:Unrecognized Tax Benefits (in thousands): $ 12,302 193 1,520 (1,072 ) (903 ) $ 12,040 The presentation of Unrecognized Tax Benefits was modified in fiscal 2011 to show the gross impact of uncertain tax positions in the rollforward schedule. Beginning Balance at July 3, 2011 $ 12,040 Changes based on tax positions related to prior year — Additions based on tax positions related to current year 429 Settlements with taxing authorities (516 ) Lapse of statute of limitations (5,236 ) Balance at July 1, 2012 $ 6,717 The net unrecognized tax benefit as of July 1, 2012 and July 3, 2011 is $5.4 million and June 27, 2010 is $9.9$9.9 million and $10.8 million,, respectively.As of July 1, 2012 and July 3, 2011 $9.9 million represents the portion of, gross unrecognized tax benefits that, if recognized, would impact the effective tax rate. As of June 27, 2010, $11.1rate were $5.4 million represents the portion of net unrecognized tax benefits that, if recognized, would impact the effective tax rate. and $9.9 million, respectively.The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. As of July 1, 2012 and July 3, 2011 and June 27, 2010,, the Company had $5.7$0.4 million and $5.9$5.7 million, respectively, accrued for the payment of interest and penalties.There is a reasonable possibility that approximately $4.7$0.2 million of the current remaining unrecognized tax benefits may be recognized by the end of fiscal year 20122013 as a result of a lapse in the statute of limitations in certain foreign jurisdictions.Income tax returns are filed in the U.S., state, and foreign jurisdictions and related audits occur on a regular basis. In the U.S., the Company is no longer subject to U.S. federal income tax examinations before fiscal 2009 and is currently under audit by various state and foreign jurisdictions. With respect to the Company’s major foreign jurisdictions, it is no longer subject to tax examinations before fiscal 2001.(7) Segment and Geographic Information and Significant Customers:The Company has concluded that it operates two reportable business segments that are managed separately based on fundamental differences in their operations. Summarized segment data is as follows (in thousands): 2011 20101 20091 $ 1,399,532 $ 1,360,475 $ 1,370,468 878,998 843,609 920,367 (168,532 ) (176,212 ) (198,646 ) $ 2,109,998 $ 2,027,872 $ 2,092,189 $ 319,584 $ 300,246 $ 262,833 77,406 86,416 69,947 1,326 (6,727 ) 899 $ 398,316 $ 379,935 $ 333,679 Notes . . . 2011 20101 20091 $ 120,402 $ 83,521 $ 87,328 (73,512 ) (7,707 ) (19,886 ) 1,326 (6,727 ) 899 $ 48,216 $ 69,087 $ 68,341 $ 1,196,627 $ 1,161,775 $ 1,099,653 692,971 678,594 700,651 (223,380 ) (150,312 ) (181,281 ) $ 1,666,218 $ 1,690,057 $ 1,619,023 $ 50,050 $ 32,635 $ 32,032 9,869 11,808 10,995 $ 59,919 $ 44,443 $ 43,027 $ 44,060 $ 47,760 $ 49,045 17,768 18,472 18,758 $ 61,828 $ 66,232 $ 67,803 1 Prior year amounts have been reclassified to conform to current year presentation. These adjustments relate to the sale of certain products through our foreign subsidiaries that had been reported within the Engines segment, but are now reported in the Power Products segment. These adjustments align our segment reporting with current management responsibilities. 2012 2011 2010 NET SALES: Engines $ 1,309,942 $ 1,399,532 $ 1,360,475 Products 952,110 878,998 843,609 Eliminations (195,519 ) (168,532 ) (176,212 ) $ 2,066,533 $ 2,109,998 $ 2,027,872 GROSS PROFIT: Engines $ 250,323 $ 319,584 $ 300,246 Products 86,193 77,406 86,416 Eliminations 209 1,326 (6,727 ) $ 336,725 $ 398,316 $ 379,935 INCOME (LOSS) FROM OPERATIONS: Engines $ 66,559 $ 120,402 $ 83,521 Products (25,531 ) (73,512 ) (7,707 ) Eliminations 209 1,326 (6,727 ) $ 41,237 $ 48,216 $ 69,087 ASSETS: Engines $ 1,120,065 $ 1,196,627 $ 1,161,775 Products 629,325 692,971 678,594 Eliminations (141,159 ) (223,380 ) (150,312 ) $ 1,608,231 $ 1,666,218 $ 1,690,057 CAPITAL EXPENDITURES: Engines $ 42,697 $ 50,050 $ 32,635 Products 6,876 9,869 11,808 $ 49,573 $ 59,919 $ 44,443 DEPRECIATION & AMORTIZATION: Engines $ 45,647 $ 44,060 $ 47,760 Products 18,067 17,768 18,472 $ 63,714 $ 61,828 $ 66,232 Pre-tax restructuring charges impact on gross profit is as follows (in thousands): 2012 2011 PRE-TAX RESTRUCTURING CHARGES INCLUDED IN GROSS PROFIT: Engines $ 14,257 $ — Products 30,503 — Total $ 44,760 $ — Pre-tax restructuring charges impact on income (loss) from operations is as follows (in thousands): 2012 2011 PRE-TAX RESTRUCTURING CHARGES INCLUDED IN INCOME (LOSS) FROM OPERATIONS: Engines $ 18,314 $ 559 Products 31,553 2,978 Total $ 49,867 $ 3,537 Information regarding the Company’s geographic sales based on product shipment destination (in thousands): 2011 2010 2009 $ 1,421,994 $ 1,471,708 $ 1,589,223 688,004 556,164 502,966 $ 2,109,998 $ 2,027,872 �� $ 2,092,189 2012 2011 2010 United States $ 1,440,955 $ 1,421,994 $ 1,471,708 All Other Countries 625,578 688,004 556,164 Total $ 2,066,533 $ 2,109,998 $ 2,027,872 Information regarding the Company’s property,net plant and equipment based on geographic location (in thousands): 2011 2010 2009 $ 304,136 $ 303,192 $ 322,381 35,164 34,571 37,794 $ 339,300 $ 337,763 $ 360,175 2012 2011 2010 United States $ 280,954 $ 304,136 $ 303,192 All Other Countries 20,295 25,089 34,571 Total $ 301,249 $ 329,225 $ 337,763 Sales to the following customers in the Company’s Engines segment amount to greater than or equal to 10% of consolidated net sales, respectively: 2011 2010 2009 Net Sales % Net Sales % Net Sales % $ 295,286 14 % $ 296,066 15 % $ 316,021 15 % 273,132 13 % 295,148 14 % 203,254 10 % $ 568,418 27 % $ 591,214 29 % $ 519,275 25 % 2012 2011 2010 Customer: Net Sales % Net Sales % Net Sales % HOP $ 265,752 13 % $ 295,286 14 % $ 296,066 15 % MTD 230,882 11 % 273,132 13 % 295,148 15 % $ 496,634 24 % $ 568,418 27 % $ 591,214 30 % (8) Leases:The Company leases certain facilities, vehicles, and equipment under both capital and operating leases. Assets held under capital leases are included in Plant and Equipment and are charged to depreciation and interest over the life of the lease. Related liabilities are included in Other Accrued Liabilities and OtherNotes . . . 2010 and 20092010 was $24.8$22.4 million $25.2, $24.8 million and $24.7$25.2 million, respectively.Future minimum lease commitments for all non-cancelable operating leases as of July 3, 20111, 2012 are as follows (in thousands): Operating Capital 16,197 474 13,431 133 9,556 - 5,334 - 1,421 - 1,617 - $ 47,556 607 36 $ 571 Fiscal Year Operating 2013 12,874 2014 10,390 2015 8,310 2016 3,870 2017 2,931 Thereafter 4,174 Total future minimum lease commitments $ 42,549 Future minimum lease commitments for all non-cancelable capital leases as of July 1, 2012 are $0.1 million for fiscal 2013, and none thereafter.(9) Indebtedness:Long-Term DebtThe following is a summary of the Company’s long-term indebtedness (in thousands): $ - $ - 225,000 - - 203,460 $ 225,000 $ 203,460 In 2012 2011 Multicurrency Credit Agreement $ — $ — 6.875% Senior Notes 225,000 225,000 Total Long-Term Debt $ 225,000 $ 225,000 On December 15, 2010, the Company issued $225$225 million of 6.875% Senior Notes due December 15, 2020.2020 ("Senior Notes"). The net proceeds of the offering were primarily used to redeem the outstanding principal of the 8.875% Senior Notes due March 15, 2011.2011 ("Old Senior Notes"). In connection with the refinancing and the issuance of the 6.875% Senior Notes, the Company incurred approximately $5.0$5.0 million in new deferred financingdebt issuance costs, which are being amortized over the life of the 6.875% Senior Notes using the effective interest method. In addition, at the time of the refinancing the Company expensed approximately $3.7$3.7 million associated with the make-whole terms of the 8.875%Old Senior Notes, $0.1$0.1 million in remaining deferred financing costs and $0.1$0.1 million of original issue discount. These amounts are included in interest expense in the Consolidated Statements of Earnings. The 8.875% Senior Notes were classified as Current Maturity on Long-Term Debt in the Consolidated Balance Sheet as of the end of fiscal 2010.Additionally, under the terms of the indentures and credit agreements governing the 6.875% Senior Notes, Briggs & Stratton Power Products Group, LLC became a joint and several guarantor of amounts outstanding under the 6.875% Senior Notes. Refer to Note 1819 of the Notes to Consolidated Financial Statements for subsidiary guarantor financial information.Multicurrency Credit AgreementOn July 12, 2007,October 13, 2011, the Company entered into a $500$500 million multicurrency credit agreement (the “Revolver”). The Revolver replaced the Company's previous amended and restated multicurrency credit agreement (“Credit Agreement”)dated as of July 12, 2007. See further discussion in Note 18The Revolver has a term of five years and all outstanding borrowings on the Revolver are due and payable on October 13, 2016. The initial maximum availability under the revolving credit facility is $500 million. Availability under the revolving credit facility is reduced by outstanding letters of credit. The Company may from time to time increase the maximum availability under the revolving credit facility by up to $250 million if certain conditions are satisfied. In connection with the refinancing and the issuance of the Notes toRevolver, the Consolidated Financial Statements.Company incurred approximately $2.0 million in new debt issuance costs, whichare being amortized over the life of the Revolver using the straight-line method. There were no borrowings under the Credit Agreement as of July 1, 2012 and July 3, 2011 and June 27, 2010.The Credit Agreement provides a revolving credit facility for up to $500 million in revolving loans, including up to $25 million in swing-line loans. The Credit Agreement has a term of five years and all outstandingNotes . . .borrowings on the Credit Agreement are due and payable on July 12, 2012. 2011.Borrowings under the Credit AgreementRevolver by the Company bear interest at a rate per annum equal to, at its option, either:(1) a 1, 2, 3 or 6 month LIBOR rate plus a margin varying from 0.50%1.25% to 1.00%2.25%, depending upon the rating of the Company’s long-term debt by Standard & Poor’s Rating group, a division of McGraw-Hill Companies (S&P) and Moody’s Investors Service, Inc. (Moody’s) oron the Company’s average net leverage ratio; or(2) the higher of (a) the federal funds rate plus 0.50% or; (b) the bank’sbank's prime rate.rate; or (c) the Eurocurrency rate for a one-month interest period plus 1.00%. In addition, the Company is subject to a 0.10%0.20% to 0.20%0.40% commitment fee and a 0.50%1.25% to 1.00%2.25% letter of credit fee, depending on the Company’s long-term credit ratings or the Company’s average net leverage ratio.The Credit AgreementRevolver contains covenants that the Company considers usual and customary for an agreement of this type, including a maximum totalaverage leverage ratio and minimum interest coverage ratio. Certain of the Company’s subsidiaries are required to be guarantors of the Company’s obligations under the Credit Agreement.The Credit AgreementRevolver and the 6.875% Senior Notes contain restrictive covenants. These covenants include restrictions on the Company’s ability to: pay dividends; repurchase shares; incur indebtedness; create liens; enter into sale and leaseback transactions; consolidate or merge with other entities; sell or lease all or substantially all of its assets; and dispose of assets or the proceeds of sales of its assets. The Revolver contains financial covenants that require the Company to maintain a minimum interest coverage ratio and impose a maximum average leverage ratio. As of July 3, 2011,1, 2012, the Company was in compliance with these covenants.Foreign Lines of CreditThe lines of credit available to the Company in foreign countries are in connection with short-term borrowings and bank overdrafts used in the normal course of business. These amounts totaled $10.8$3.5 million at July 3, 2011,1, 2012, expire at various times throughout fiscal 20122013 and beyond and are renewable. None of these arrangements had material commitment fees or compensating balance requirements. Borrowings using these lines of credit are included in short-term debt. Outstanding balances are as follows (in thousands): $ 3,000 $ 3,000 3.61 % 3.77 % 2012 2011 Balance at Fiscal Year-End $ 3,000 $ 3,000 Weighted Average Interest Rate at Fiscal Year-End 3.66 % 3.61 % (10) Other Income, Net:The components of Other Income, Net are as follows (in thousands): $ 369 $ 1,172 $1,081 5,082 4,071 1,526 1,705 1,212 608 $ 7,156 $ 6,455 $ 3,215 2012 2011 2010 Interest Income $ 512 $ 369 $ 1,172 Equity in Earnings from Unconsolidated Affiliates 5,100 5,082 4,071 Other Items 1,566 1,705 1,212 Total $ 7,178 $ 7,156 $ 6,455 (11) Commitments and Contingencies:Briggs & StrattonThe Company is subject to various unresolved legal actions that arise in the normal course of its business. These actions typically relate to product liability (including asbestos-related liability), patent and trademark matters, and disputes with customers, suppliers, distributors and dealers, competitors and employees.Starting with the first complaint in June 2004, various plaintiff groups filed complaints in state and federal courts across the country against the Company and other engine and lawnmower manufacturers alleging that the horsepower labels on the products they purchased were inaccurate and that the Company conspired with other engine and lawnmower manufacturers to conceal the true horsepower of these engines (“("Horsepower Class Actions”Actions"). On December 5, 2008, the Multidistrict Litigation Panel coordinated and transferred the cases to Judge Adelman of the U. S. District Court for the Eastern District of Wisconsin (In Re: Lawnmower Engine Horsepower Marketing and Sales Practices Litigation, Case No. 2:08-md-01999).Notes . . .(“Settlement”("Settlement") that resolves all of the Horsepower Class Actions. The Settlement resolvesActions including all horsepower-labeling claims brought by all persons or entities in the United States who, beginning January 1, 1994 through the date notice of the Settlement is first given, purchased, for use and not for resale, a lawn mower containing a gas combustiblevertical shaft internal combustion engine up to 30 horsepower provided that either the lawn mower or the engine of the lawn mower was manufactured or sold by a Defendant. Ondefendant.The Settlement received final court approval on August 16, 2010, Judge Adelman issued a final order approving the Settlement as well as the settlements of all other defendants. In August and September 2010, several class members filed a Notice of Appeal of Judge Adelman’s final approval order to the U. S. Court of Appeals for the Seventh Circuit. All of those appeals were settled as of February 16, 2011 with no additional contribution from Briggs & Stratton.As part of the Settlement, the Company denies any and all liability and seeks resolution to avoid further protracted and expensive litigation.2010. The settling defendants as a group agreed to pay an aggregate amount of $51 million.charge. Under the termscharge beginning March 1, 2011 for most class members. As part of the Settlement, the balance of settlement funds were paid,Company denies any and the one-year warranty extension program beganall liability and seeks resolution to run, on March 1, 2011.avoid further protracted and expensive litigation. As a result of the Settlement, the Company recorded a totalpre-tax charge of $30.6$30.6 million in the third quarter of fiscal year 2010 representing the total of the Company’s monetary portion of the Settlement and the estimated costs of extending the warranty period for one year. 2010.On March 19, 2010, new plaintiffs filed a complaint in the Ontario Superior Court of Justice in Canada (Robert Foster et al. v. Sears Canada, Inc. et al., Docket No. 766-2010). On May 3, 2010, other plaintiffs filed a complaint in the Montreal Superior Court in Canada (Eric Liverman, et al. v. Deere & Company, et al., Docket No. 500-06-000507-109). Both Canadian complaints contain allegations and seek relief under Canadian law that are similar to the Horsepower Class Actions. The Company is evaluating the complaints and has not yet filed an answer or other responsive pleading to either one.On May 14, 2010, the Company notified retirees and certain retirement eligible employees of various changes to the Company-sponsored retiree medical plans. The purpose of the amendments was to better align the plans offered to both hourly and salaried retirees. On August 16, 2010, a putative class of retirees who retired prior to August 1, 2006 and the United Steel Workers filed a complaint in the U.S. District Court for the Eastern District of Wisconsin (Merrill, Weber, Carpenter, et al; United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO/CLC v. Briggs & Stratton Corporation; Group Insurance Plan of Briggs & Stratton Corporation; and Does 1 through 20, Docket No. 10-C-0700), contesting the Company’sCompany's right to make these changes. In addition to a request for class certification, the complaint seeks an injunction preventing the alleged unilateral termination or reduction in insurance coverage to the class of retirees, a permanent injunction preventing defendants from ever making changes to the retirees’retirees' insurance coverage, restitution with interest (if applicable) and attorneys’attorneys' fees and costs. The Company moved to dismiss the complaint and believes the changes are within its rights. On April 21, 2011, the district court issued an order granting the Company’sCompany's motion to dismiss the complaint. The plaintiffs filed a motion with the court to reconsider its order on May 17, 2011. On2011, and on August 24, 2011 the Courtcourt granted the plaintiffs’ motion and vacated the dismissal of the case, and discovery will therefore proceedcase. The Company then filed a motion with the court to appeal its decision directly to the U.S. Court of Appeals for the Seventh Circuit, but the court denied this motion on February 29, 2012. Discovery is now proceeding in the matter.Although it is not possible to predict with certainty the outcome of these unresolved legal actions or the range of possible loss, the Company believes the unresolved legal actions will not have a material adverse effect on its results of operations, financial position or cash flows.35Notes . . .(12) Stock Incentives:Effective July 2, 2007, the Company adopted the Powerful Solution Incentive Compensation Program. The Company previously adopted an Incentive Compensation Plan, effective October 20, 2004, under which 4,000,000 shares of common stock (8,000,000(8,000,000 shares as a result of the 2-for-1fiscal 2005 2-for-1 stock split) were reserved for future issuance. An amendment to the Incentive Compensation Plan approved by shareholders on October 21, 2009, added 2,481,494 shares to the shares available for grant under the plan. Prior to October 20, 2004, the Company had a Stock Incentive Plan under which 5,361,935 shares of common stock were reserved for issuance. The adoption of the Incentive Compensation Plan reduced the number of sharesNotes . . .zero.3, 2011,1, 2012, there were 1,590,120 outstanding option and restricted stock awards granted under the Stock Incentive Plan that are or may become exercisable in the future. No additional shares of common stock were reserved for future issuance under the Powerful Solution Incentive Compensation Program. In accordance with the three plans, the Company can issue eligible employees stock options, stock appreciation rights, restricted stock, deferred stock, performance shares and cash bonus awards subject to certain annual limitations. The plans also allow the Company to issue directors non-qualified stock options and directors’ fees in stock.Stock based compensation expense is calculated by estimating the fair value of incentive stock awards granted and amortizing the estimated value over the awards’ vesting periods. During fiscal 2012, 2011 2010 and 2009,2010, the Company recognized stock based compensation expense of approximately $9.6$5.6 million $7.0, $9.6 million and $4.0$7.0 million, respectively. Included in stock based compensation expense for fiscal 2011 was an expense of $1.3$1.3 million due to the modification of certain vesting conditions for the Company’s stock incentive awards. The modification of the awards was made in connection with the Company’s previously announced organization changes that involved a planned reduction of salaried employees during the second quarter of fiscal 2011. The Company also recorded expenses of approximately $2.2 million for severance and other related employee separation costs associated with the reduction.On the grant date, the exercise price of each stock option issued exceeds the market value of the stock by 10%. The fair value of each option is estimated using the Black-Scholes option pricing model, and the assumptions are based on historical data and standard industry valuation practices and methodology. The assumptions used to determine fair value are as follows:Options Granted During $ 5.24 $ 5.07 $ 1.93 1.5% 2.5% 3.1% 43.2% 40.4% 32.7% 2.4% 2.5% 6.5% 5.0 5.0 5.0 Options Granted During 2012 2011 2010 Grant Date Fair Value $ 3.96 $ 5.24 $ 5.07 (Since options are only granted once per year, the grant date fair value equals the weighted average grant date fair value.) Assumptions: Risk-free Interest Rate 1.0 % 1.5 % 2.5 % Expected Volatility 43.2 % 43.2 % 40.4 % Expected Dividend Yield 3.0 % 2.4 % 2.5 % Expected Term (In Years) 5.0 5.0 5.0 36Notes . . .Information on the options outstanding is as follows:
Ex. Price
Remaining
Contractual
Term
Intrinsic Value
(in thousands) 3,885,321 $ 31.96 729,990 14.83 - - (309,630 ) 25.35 4,305,681 $ 29.53 730,000 19.73 (58,250 ) 14.83 (509,554 ) 27.99 4,467,877 $ 28.29 785,250 19.88 (103,290 ) 14.83 (428,647 ) 37.22 4,721,190 $ 26.38 2.51 $ 4,108 2,637,490 $ 32.64 1.91 $ - Options Wtd. Avg. Exercise Price Wtd. Avg. Remaining Contractual Term Aggregate Intrinsic Value (in thousands) Balance, June 28, 2009 4,305,681 $ 29.53 Granted During the Year 730,000 19.73 Exercised During the Year (58,250 ) 14.83 Expired During the Year (509,554 ) 27.99 Balance, June 27, 2010 4,467,877 $ 28.29 Granted During the Year 785,250 19.88 Exercised During the Year (103,290 ) 14.83 Expired During the Year (428,647 ) 37.22 Balance, July 3, 2011 4,721,190 $ 26.38 Granted During the Year 465,350 16.20 Exercised During the Year (15,870 ) 14.83 Expired During the Year (474,240 ) 29.87 Balance, July 1, 2012 4,696,430 $ 25.06 2.02 $ 2,070 Exercisable, July 1, 2012 2,715,830 $ 29.50 1.27 $ 1,470 Notes . . .20112012 was $0.7 million.less than $0.1 million. The exercise of options resulted in cash receipts of $1.8$0.3 million in fiscal 2011.2012. The total intrinsic value of options exercised during the fiscal year ended 2011 was $0.7 million. The exercise of options resulted in cash receipts of $1.8 million in fiscal 2011. The total intrinsic value of options exercised during the fiscal year ended 2010 was $0.5 million.$0.5 million. The exercise of options resulted in cash receipts of $1.1$1.1 million in fiscal year 2010. No options were exercised in fiscal 2009.
Year
Exercisable
Date
Price
Outstanding 8-15-03 8-15-06 8-15-13 30.44 650,280 8-13-04 8-13-07 8-13-14 36.68 939,840 8-16-05 8-16-08 8-16-10 38.83 - 8-15-06 8-15-09 8-15-11 29.87 474,240 8-14-07 8-14-10 8-31-12 30.81 573,130 8-19-08 8-19-11 8-31-13 14.83 568,450 8-18-09 8-18-12 8-31-14 19.73 730,000 8-17-10 8-17-13 8-31-15 19.88 785,250 Options Outstanding (as of July 1, 2012) FiscalYear GrantDate DateExercisable ExpirationDate ExercisePrice OptionsOutstanding2004 8/15/2003 8/15/2006 8/15/2013 $ 30.44 650,280 2005 8/13/2004 8/13/2007 8/13/2014 $ 36.68 939,840 2006 8/16/2005 8/16/2008 8/16/2010 $ 38.83 — 2007 8/15/2006 8/15/2009 8/15/2011 $ 29.87 — 2008 8/14/2007 8/14/2010 8/31/2012 $ 30.81 573,130 2009 8/19/2008 8/19/2011 8/31/2013 $ 14.83 552,580 2010 8/18/2009 8/18/2012 8/31/2014 $ 19.73 730,000 2011 8/17/2010 8/17/2013 8/31/2015 $ 19.88 785,250 2012 8/16/2011 8/16/2014 8/31/2016 $ 16.20 465,350 37Notes . . .Below is a summary of the status of the Company’s nonvested shares as of July 3, 2011,1, 2012, and changes during the year then ended: Deferred Stock Restricted Stock Stock Options Shares
Wtd. Avg.
Grant Date
Fair Value
Shares
Wtd. Avg.
Grant Date
Fair Value
Shares
Wtd. Avg.
Grant Date
Fair Value
337,581 $ 18.20 400,012 $ 19.80 1,994,330 $ 4.08 184,330 18.19 269,290 18.09 785,250 5.24 - - (4,500 ) 21.44 - - - - - - (103,290 ) 1.93 (33,127 ) 33.78 (40,802 ) 35.00 (592,590 ) 5.31 488,784 $ 17.14 624,000 $ 18.06 2,083,700 $ 4.28 Deferred Stock Restricted Stock Stock Options Performance Shares Shares Wtd. Avg.Grant DateFair Value Shares Wtd. Avg.Grant DateFair Value Shares Wtd. Avg.Grant DateFair Value Shares Wtd. Avg.Grant DateFair ValueNonvested shares,July 3, 2011 488,784 $ 17.14 624,000 $ 18.06 2,083,700 $ 4.28 — $ — Granted 82,377 14.73 111,890 14.77 465,350 3.96 127,940 17.11 Cancelled — — (2,200 ) 16.08 — — — — Exercised — — — — (15,870 ) 1.93 — — Vested (44,997 ) 27.59 (18,425 ) 29.19 (552,580 ) 1.93 — — Nonvested shares,July 1, 2012 526,164 $ 16.95 715,265 $ 17.26 1,980,600 $ 4.88 127,940 $ 17.11 As of July 3, 2011,1, 2012, there was $6.5$7.2 million of total unrecognized compensation cost related to nonvested share-based compensation. That cost is expected to be recognized over a weighted average period of 2.01.8 years. The total fair value of shares vested during fiscal 20112012 and 20102011 was $4.5$1.4 million and $3.2$4.5 million, respectively.Under the plans, the Company has issued restricted stock to certain employees. During fiscal years 2012, 2011 2010 and 2009,2010, the Company has issued 111,890, 269,290 194,480 and 118,975194,480 shares, respectively. The restricted stock vests on the fifth anniversary date of the issue provided the recipient is still employed by the Company. The aggregate market value on the date of issue iswas approximately $4.9$1.7 million $3.5, $4.9 million and $1.6$3.5 million in fiscal 2012, 2011 2010 and 2009,2010, respectively, and has been recorded within the Shareholders’ Investment section of the Consolidated Balance Sheets, and is being amortized over the five-year vesting period.Under the plans, the Company may also issue deferred stock to its directors in lieu of directors fees. The Company has issued 44,127, 28,727 31,026 and 47,74431,026 shares in fiscal 2012, 2011 2010 and 2009,2010, respectively, under this provision of the plans.Under the plans, the Company may also issue deferred stock to its officers and key employees. The Company has issued 38,250, 155,603 149,650 and 77,135149,650 shares in fiscal 2012, 2011 2010 and 2009,2010, respectively, under this provision. The aggregate market value on the date of issue was approximately $2.8$0.6 million $2.7, $2.8 million and $1.0$2.7 million, respectively. Expense is recognized ratably over the five-year vesting period.Beginning in fiscal 2012, under the plans, the Company issued performance shares to its officers and key employees. The Company issued 127,940 performance shares in fiscal 2012 under this provision. The aggregate market value on the date of issue was approximately $2.2 million using the Monte Carlo simulation methodology of valuation. The Monte-Carlo valuation model simulates a range of possible future stock prices for the Company and the components of a peer group to estimate the probability that a vesting condition will be achieved. Assumptions used in the Monte Carlo valuation model in fiscal 2012 include a risk-free rate of return of 0.31%, an expected term of 2.87 years, reinvested dividends, and volatility of 46.04%. In determining these assumptions for the Monte Carlo valuation model, we consider historic and observable market data. Expense is recognized ratably over the three-year vesting period.38Notes . . .The following table summarizes the components of the Company’s stock-based compensation programs recorded as expense: $ 3,397 $ 4,028 $ 1,760 (1,325 ) (1,571 ) (686 ) $ 2,072 $ 2,457 $ 1,074 $ 3,512 $ 1,754 $ 1,097 (1,370 ) (684 ) (428 ) $ 2,142 $ 1,070 $ 669 $ 2,686 $ 1,193 $ 1,142 (1,048 ) (465 ) (445 ) $ 1,638 $ 728 $ 697 $ 9,595 $ 6,975 $ 3,999 (3,743 ) (2,720 ) (1,559 ) $ 5,852 $ 4,255 $ 2,440 2012 2011 2010 Stock Options: Pretax compensation expense $ 1,760 $ 3,397 $ 4,028 Tax benefit (686 ) (1,325 ) (1,571 ) Stock option expense, net of tax $ 1,074 $ 2,072 $ 2,457 Restricted Stock: Pretax compensation expense $ 2,102 $ 3,512 $ 1,754 Tax benefit (820 ) (1,370 ) (684 ) Restricted stock expense, net of tax $ 1,282 $ 2,142 $ 1,070 Deferred Stock: Pretax compensation expense $ 534 $ 2,686 $ 1,193 Tax benefit (208 ) (1,048 ) (465 ) Deferred stock expense, net of tax $ 326 $ 1,638 $ 728 Performance Shares: Pretax compensation expense $ 1,159 $ — $ — Tax benefit (452 ) — — Performance Share expense, net of tax $ 707 $ — $ — Total Stock-Based Compensation: Pretax compensation expense $ 5,555 $ 9,595 $ 6,975 Tax benefit (2,166 ) (3,743 ) (2,720 ) Total stock-based compensation, net of tax $ 3,389 $ 5,852 $ 4,255 (13) Shareholder Rights Agreement:On August 6, 1996, the Board of Directors declared a dividend distribution of one common stock purchase right (a right) for each share of the Company’s common stock outstanding on August 19, 1996. Each right would entitle shareowners to buy one-half of one share of the Company’s common stock at an exercise price of $160.00$160.00 per full common share ($($80.00 per full common share after taking into consideration the effect of a 2-for-1 stock split effective October 29, 2004), subject to adjustment. The agreement relating to the rights was amended by the Board of Directors on August 9, 2006 to extend the term of the rights by three years to October 18, 2009, to increase from 15 percent to 20 percent or more the percentage of outstanding shares that a person or group must acquire or attempt to acquire in order for the rights to become exercisable, and to add a qualifying offer clause that permits shareholders to vote to redeem the rights in certain circumstances. Shareholders ratified the amended rights agreement at their annual meeting on October 18, 2006. On August 12, 2009, the Board of Directors amended the rights agreement to: (i) modify the definition of “Beneficial Owner” and “beneficial ownership” of common shares of the Company to include, among other things, certain derivative security interests in common shares of the Company; (ii) reduce the redemption price for the rights to $.001$0.001 per right; and (iii) extend the term of the rights agreement by changing the scheduled expiration date from October 18, 2009 to October 17, 2012.2012. Shareholders ratified the rights agreement at the annual meeting on October 21, 2009.(14) Foreign Exchange Risk Management:The Company enters into forward exchange contracts to hedge purchases and sales that are denominated in foreign currencies. The terms of these currency derivatives do not exceed twenty-four months, and the purpose is to protect the Company from the risk that the eventual dollars being transferred will be adversely affected by changes in exchange rates.The Company has forward foreign exchange contracts to sell foreign currency, with the Euro as the most significant. These contracts are used to hedge foreign currency collections on sales of inventory. The Company also has forward contracts to purchase foreign currencies. The Company’s foreign currency forward contracts are carried at fair value based on current exchange rates.Notes . . .2011: Contract Fair Market (Gain) Loss Conversion Latest Contract Sell 34.3 33.6 35.9 2.3 U.S. June 2012 Sell 10.7 10.8 11.1 0.3 U.S. February 2012 Sell 41.5 58.7 60.1 1.3 U.S. April 2012 In Millions Hedge NotionalValue ContractValue Fair MarketValue (Gain) Lossat Fair Value ConversionCurrency LatestExpiration DateCurrency Contract Australian Dollar Sell 28.3 28.4 28.5 0.1 U.S. August 2013 Euro Sell 53.5 69.5 67.9 (1.5 ) U.S. June 2013 Japanese Yen Buy 695.0 8.7 8.7 — U.S. December 2012 The Company had the following forward currency contracts outstanding at the end of fiscal 2010: Contract Fair Market (Gain) Loss Conversion Latest Contract Sell 15.1 12.9 12.9 .1 U.S. March 2011 Sell 12.1 11.7 11.7 - U.S. February 2011 Sell 91.6 131.0 113.5 (17.5) U.S. June 2011 Buy 650.0 7.2 7.3 (.1) U.S. November 2010 In Millions Hedge NotionalValue ContractValue Fair MarketValue (Gain) Lossat Fair Value ConversionCurrency LatestExpiration DateCurrency Contract Australian Dollar Sell 34.3 33.6 35.9 2.3 U.S. June 2012 Canadian Dollar Sell 10.7 10.8 11.1 0.3 U.S. February 2012 Euro Sell 41.5 58.7 60.1 1.3 U.S. April 2012 The Company continuously evaluates the effectiveness of its hedging program by evaluating its foreign exchange contracts compared to the anticipated underlying transactions. The Company did not have any ineffective currency hedges in fiscal 2012, 2011 2010,, or 2009.Notes . . 2010.(15) Employee Benefit Costs:Retirement Plan and Other Postretirement BenefitsThe Company has noncontributory, defined benefit retirement plans and other postretirement benefit plans covering certain employees. The Company uses a June 30 measurement date for all of its plans. The following provides a reconciliation of obligations, plan assets and funded status of the plans for the two years indicated (in thousands): Pension Benefits Other Postretirement
Benefits 2011 2010 2011 2010 5.35% 5.30% 4.45% 4.60% 3.0- 4.0% 3.0-4.0% n/a n/a 8.50% 8.50% n/a n/a $ 1,108,427 $ 938,269 $ 180,609 $ 200,114 13,475 11,197 486 604 56,696 60,705 7,088 10,942 212 - (8,750) (13,514) - - 1,234 1,357 6,747 170,148 5,329 4,781 (75,258) (71,892) (24,200) (23,675) $ 1,110,299 $ 1,108,427 $ 161,796 $ 180,609 $ 831,490 $ 797,258 $ - $ - 157,420 104,171 - - - - 1,234 1,357 2,558 1,953 22,966 22,318 (75,258) (71,892) (24,200) (23,675) $ 916,210 $ 831,490 $ - $ - $ (194,089) $ (276,937) $ (161,796) $ (180,609) $ (191,417) $ (274,737) $ - $ - (2,672) (2,200) - - - - (116,092) (135,978) - - (22,576) (22,847) - - (23,128) (21,784) $ (194,089) $ (276,937) $ (161,796) $ (180,609) $ (10) $ (15) $ - $ - (219,637) (275,437) (56,708) (59,830) (4,022) (5,758) 13,132 9,858 $ (223,669) $ (281,210) $ (43,576) $ (49,972) Pension Benefits Other PostretirementBenefitsActuarial Assumptions: 2012 2011 2012 2011 Discounted Rate Used to Determine Present Value of Projected Benefit Obligation 4.45 % 5.35 % 3.75 % 4.45 % Expected Rate of Future Compensation Level Increases 3.0-4.0% 3.0-4.0% n/a n/a Expected Long-Term Rate of Return on Plan Assets 8.50 % 8.50 % n/a n/a Change in Benefit Obligations: Projected Benefit Obligation at Beginning of Year $ 1,110,299 $ 1,108,427 $ 161,796 $ 180,609 Service Cost 13,764 13,475 407 486 Interest Cost 56,762 56,696 6,468 7,088 Plan Amendments — 212 — (8,750 ) Plan Curtailments (327 ) — 1,357 — Plan Participant Contributions — — 1,181 1,234 Actuarial (Gain) Loss 130,173 6,747 (15,984 ) 5,329 Benefits Paid (73,924 ) (75,258 ) (18,371 ) (24,200 ) Projected Benefit Obligation at End of Year $ 1,236,747 $ 1,110,299 $ 136,854 $ 161,796 Change in Plan Assets: Fair Value of Plan Assets at Beginning of Year $ 916,210 $ 831,490 $ — $ — Actual Return on Plan Assets 63,822 157,420 — — Plan Participant Contributions — — 1,181 1,234 Employer Contributions 31,637 2,558 17,190 22,966 Benefits Paid (73,924 ) (75,258 ) (18,371 ) (24,200 ) Fair Value of Plan Assets at End of Year $ 937,745 $ 916,210 $ — $ — Funded Status: Plan Assets (Less Than) in Excess of Projected Benefit Obligation $ (299,002 ) $ (194,089 ) $ (136,854 ) $ (161,796 ) Amounts Recognized on the Balance Sheets: Accrued Pension Cost $ (296,394 ) $ (191,417 ) $ — $ — Accrued Wages and Salaries (2,608 ) (2,672 ) — — Accrued Postretirement Health Care Obligation — — (89,842 ) (116,092 ) Accrued Liabilities — — (22,827 ) (22,576 ) Accrued Employee Benefits — — (24,185 ) (23,128 ) Net Amount Recognized at End of Year $ (299,002 ) $ (194,089 ) $ (136,854 ) $ (161,796 ) Amounts Recognized in Accumulated Other Comprehensive Income (Loss): Transition Assets (Obligation) $ (5 ) $ (10 ) $ — $ — Net Actuarial Loss (294,258 ) (219,637 ) (41,437 ) (56,708 ) Prior Service Credit (Cost) (2,051 ) (4,022 ) 10,198 13,132 Net Amount Recognized at End of Year $ (296,314 ) $ (223,669 ) $ (31,239 ) $ (43,576 ) Notes . . .$1,062$1,186 million and $1,055$1,062 million at July 1, 2012 and July 3, 2011 and June 27, 2010,, respectively.The following table summarizes the plans’ income and expense for the three years indicated (in thousands): Pension Benefits Other Postretirement Benefits $ 13,475 $ 11,197 $ 11,507 $ 486 $ 604 $ 721 56,696 60,705 61,210 7,088 10,942 12,487 (76,975) (81,021) (83,331) - - - 8 8 8 - - - 3,059 3,068 3,348 (3,485) (1,140) (876) 17,771 3,171 558 10,268 10,418 9,840 $ 14,034 $ (2,872) $ (6,700) $ 14,357 $ 20,824 $ 22,172 Pension Benefits Other Postretirement Benefits 2012 2011 2010 2012 2011 2010 Components of Net Periodic (Income) Expense: Service Cost-Benefits Earned During the Year $ 13,764 $ 13,475 $ 11,197 $ 407 $ 486 $ 604 Interest Cost on Projected Benefit Obligation 56,762 56,696 60,705 6,468 7,088 10,942 Expected Return on Plan Assets (76,445 ) (76,975 ) (81,021 ) — — — Amortization of: Transition Obligation 8 8 8 — — — Prior Service Cost (Credit) 2,856 3,059 3,068 (3,800 ) (3,485 ) (1,140 ) Actuarial Loss 20,230 17,771 3,171 8,942 10,268 10,418 Net Periodic (Income) Expense $ 17,175 $ 14,034 $ (2,872 ) $ 12,017 $ 14,357 $ 20,824 Significant assumptions used in determining net periodic (income) expense for the fiscal years indicated are as follows: Pension Benefits Other Postretirement Benefits 5.30% 6.75% 7.0% 4.60% 6.00% 6.40% 8.50% 8.75% 8.75% n/a n/a n/a 3.0-4.0% 3.0-4.0% 3.0-4.0% n/a n/a n/a Pension Benefits Other Postretirement Benefits 2012 2011 2010 2012 2011 2010 Discount Rate 5.35% 5.30% 6.75% 4.45% 4.60% 6.00% Expected Return on Plan Assets 8.50% 8.50% 8.75% n/a n/a n/a Compensation Increase Rate 3.0-4.0% 3.0-4.0% 3.0-4.0% n/a n/a n/a The amounts in Accumulated Other Comprehensive Income that are expected to be recognized as components of net periodic (income) expense during the next fiscal year are as follows (in thousands):
Plans
Postretirement
Plans $ 8 $ - 2,899 (3,835 ) 18,706 8,947 PensionPlans OtherPostretirementPlansTransition Obligation $ 7 $ — Prior Service Cost (Credit) 902 (3,589 ) Net Actuarial Loss 35,288 7,555 The “Other Postretirement Benefit” plans are unfunded.On May 14, 2010, the Company notified retirees and certain retirement eligible employees of various changes to the Company-sponsored retiree medical plans. The purpose of the amendments was to better align the plans offered to both hourly and salaried retirees. On August 16, 2010, a putative class of retirees who retired prior to August 1, 2006 and the United Steel Workers filed a complaint in the U.S. District Court for the Eastern District of Wisconsin (Merrill, Weber, Carpenter, et al; United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO/CLC v. Briggs & Stratton Corporation; Group Insurance Plan of Briggs & Stratton Corporation; and Does 1 through 20, Docket No. 10-C-0700), contesting the Company’sCompany's right to make these changes. In addition to a request for class certification, the complaint seeks an injunction preventing the alleged unilateral termination or reduction in insurance coverage to the class of retirees, a permanent injunction preventing defendants from ever making changes to the retirees’retirees' insurance coverage, restitution with interest (if applicable) and attorneys’attorneys' fees and costs. The Company moved to dismiss the complaint and believes the changes are within its rights. On April 21, 2011, the district court issued an order granting the Company’sCompany's motion to dismiss the complaint. The plaintiffs filed a motion with the court to reconsider its order on May 17, 2011. On2011, and on August 24, 2011 the Courtcourt granted the plaintiffs’ motion and vacated the dismissal of the case, and discovery will therefore proceedcase. The Company then filed a motion with the court to appeal its decision directly to the U.S. Court of Appeals for the Seventh Circuit, but the court denied this motion on February 29, 2012. Discovery is now proceeding in the matter.Notes . . .8.7%8.4% annual rate of increase in the per capita cost of covered health care claims was assumed for the Company for the fiscal year 20112012 decreasing gradually to 4.5% for the fiscal year 2028.2028. The health care cost trend rate assumptions have a significant effect on the amounts reported. An increase of one percentage point, would increase the accumulated postretirement benefit by $3.0$2.5 million and would increase the service and interest cost by $0.1$0.1 million for fiscal 2011.2012. A corresponding decrease of one percentage point, would decrease the accumulated postretirement benefit by $3.5$2.8 million and decrease the service and interest cost by $0.1$0.1 million for the fiscal year 2011.As discussed in Note 19 in the Notes to the Consolidated Financial Statements,16, the Company closedreduced its Jefferson and Watertown, WI production facilities duringsalaried headcount by approximately 10% in fiscal 2010.2012. The closure of these facilities resulted in the termination of certainthe employees associated with this restructuring action, and the related impact on unrecognized prior service costs, unrecognized losses and the projected benefit obligation resulted in a net curtailment loss of $1.2$0.7 million in fiscal 2009.2012.In fiscal 2012, as a result of the non-discrimination testing results of the qualified pension plan, approximately 90 employees were moved to the non-qualified pension plan. Benefits accruing prior to July 1, 2012 were unaffected; only benefits accruing for those affected employees after July 1, 2012 will be covered by the non-qualified plan.Plan AssetsA Board of Directors appointed Investment Committee (“Committee”) manages the investment of the pension plan assets. The Committee has established and operates under an Investment Policy. It determines the asset allocation and target ranges based upon periodic asset/liability studies and capital market projections. The Committee retains external investment managers to invest the assets. The Investment Policy prohibits certain investment transactions, such as lettered stock, commodity contracts, margin transactions and short selling, unless the Committee gives prior approval. The Company’s pension plan’s asset allocations at July 1, 2012 and July 3, 2011 and June 27, 2010,, by asset category are as follows: Asset Category 17%-23% 19% 20% 2%-6% 4% 4% 25%-35% 35% 31% 0%-5% 0% 4% 0% 0% 3% 2%-5% 3% 3% 37%-43% 36% 31% 1% 3% 4% 100% 100% Plan Assets at Year-end Asset Category Target % 2012 2011 Domestic Equities 17%-23% 20% 19% International Equities 3%-7% 4% 4% Alternative & Absolute Return 25%-35% 29% 35% Emerging Markets Global Balanced 2%-5% 2% 3% Fixed Income 37%-43% 44% 36% Cash Equivalents 1% 1% 3% 100% 100% The plan’s investment strategy is based on an expectation that, over time, equity securities will provide higher total returns than debt securities. The plan primarily minimizes the risk of large losses through diversification of investments by asset class, by investing in different types of styles within the classes and by using a number of different managers. The Committee monitors the asset allocation and investment performance monthly, with a more comprehensive quarterly review with its consultant.The plan’s expected return on assets is based on management’s and the Committee’s expectations of long-term average rates of return to be achieved by the plan’s investments. These expectations are based on the plan’s historical returns and expected returns for the asset classes in which the plan is invested.The Company has adopted the fair value provisions for the plan assets of its pension plans. The Company categorizes plan assets within a three level fair value hierarchy, as described in Note 4.Investments stated at fair value as determined by quoted market prices (Level 1) include:Short-Term Investments: Short-Term Investments include money market mutual funds that invest in short-term securities and are valued based on cost, which approximates fair value;Equity Securities: U.S. Common Stocks and International Mutual Funds are valued at the last reported sales price on the last business day of the fiscal year.Investments stated at estimated fair value using significant observable inputs (Level 2) include:Fixed Income Securities: Fixed Income Securities include investments in domestic bond collective trusts that are not traded publicly, but the underlying assets held in these funds are traded on active markets and the prices are readily observable. The investment in the trusts is valued at the last quoted price on the last business day of the fiscal year. Fixed Income Securities also include corporate and government bonds that are valued using a bid evaluation process with data provided by independent pricing sources.Investments stated at estimated fair value using significant unobservable inputs (Level 3) include:Other Investments: Other Investments include investments in limited partnerships and are valued at their estimated fair value based on audited financial statements of the partnerships.The fair value of the major categories of the pension plans’ investments are presented below (in thousands). The inputs and valuation techniques used to measure the fair value of the assets are consistently applied and described in Note 4.Notes . . . July 3, 2011 Category $ 30,103 $ 30,103 $ - $ - 330,283 - 330,283 - 176,370 176,370 - - 38,155 38,155 - - (A ) 189,353 - - 189,353 (B ) 44,373 - - 44,373 (C ) 17,242 - - 17,242 (D ) 64,215 - - 64,215 (E ) 26,662 - - 26,662 $ 916,756 $ 244,628 $ 330,283 $ 341,845 (F ) (546 ) - (546 ) - $ 916,210 $ 244,628 $ 329,737 $ 341,845 June 27, 2010 Category $ 41,951 $ 41,951 $ - $ - 259,375 - 259,375 - 161,125 161,125 - - 31,130 31,130 - - (A ) 136,179 - - 136,179 (B ) 47,110 - - 47,110 (C ) 40,041 - - 40,041 (D ) 58,610 - - 58,610 (E ) 22,805 - - 22,805 (G ) 35,026 - - 35,026 $ 833,352 $ 234,206 $ 259,375 $ 339,771 (F ) (2,966 ) - (2,966 ) - 1,104 1,104 - - $ 831,490 $ 235,310 $ 256,409 $ 339,771 July 1, 2012 Category Total Level 1 Level 2 Level 3 Short-Term Investments: $ 7,337 $ 7,337 $ — $ — Fixed Income Securities: 408,790 — 408,790 — Equity Securities: U.S. common stocks 188,997 188,997 — — International mutual funds 36,066 36,066 — — Other Investments: Venture capital funds (A) 152,093 — — 152,093 Debt funds (B) 36,211 — — 36,211 Real estate funds (C) 13,888 — — 13,888 Private equity funds (D) 71,185 — — 71,185 Global balanced funds (E) 23,178 — — 23,178 Fair Value of Plan Assets at End of Year $ 937,745 $ 232,400 $ 408,790 $ 296,555 July 3, 2011 Category Total Level 1 Level 2 Level 3 Short-Term Investments: $ 30,103 $ 30,103 $ — $ — Fixed Income Securities: 330,283 — 330,283 — Equity Securities: U.S. common stocks 176,370 176,370 — — International mutual funds 38,155 38,155 — — Other Investments: Venture capital funds (A) 189,353 — — 189,353 Debt funds (B) 44,373 — — 44,373 Real estate funds (C) 17,242 — — 17,242 Private equity funds (D) 64,215 — — 64,215 Global balanced funds (E) 26,662 — — 26,662 Total Investments $ 916,756 $ 244,628 $ 330,283 $ 341,845 Securities lending collateral pools, net (F) (546 ) — (546 ) — Fair Value of Plan Assets at End of Year $ 916,210 $ 244,628 $ 329,737 $ 341,845 (A) This category invests in a combination of public and private securities of companies in financial distress, spin-offs, or new projects focused on technology and manufacturing. (B) This fund primarily invests in the debt of various entities including corporations and governments in emerging markets, mezzanine financing, or entities that are undergoing, are considered likely to undergo or have undergone a reorganization. (C) This category invests primarily in real estate related investments, including real estate properties, securities of real estate companies and other companies with significant real estate assets as well as real estate related debt and equity securities. (D) Primarily represents investments in all sizes of mostly privately held operating companies in the following core industry sectors: healthcare, energy, financial services, technology-media-telecommunications and industrial and consumer. Notes . . .(E) Primarily represents investments in emerging market debt and equity. (F) This category comprises pools of cash like debt securities and floating rate notes having a maturity or average life of three years or less, with a final payment of principal occurring in five years or less. Some of the investments are collateralized mortgage-backed securities whose maturities have been extended. This category’s fair value is determined based on the net book value of the plan’s pro-rated share of the collateral pool. (G)This category invests in multi-strategy hedge fund-of-funds and funds that use leverage and derivatives to invest long and short in global currency markets, bond markets, equity markets, industry sectors and commodities.The following tables present the changes in Level 3 investments for the pension plan (in thousands).Changes to Level 3 investments for the year ended July 3, 2011:1, 2012 Category
Sales,
Issuances,
and
Settlements
and
Unrealized
Gain
(Loss)
Fair Value (a) $ 136,179 $ (10,290 ) $ 63,464 $ 189,353 47,110 (7,667 ) 4,930 44,373 40,041 (2,709 ) (20,090 ) 17,242 58,610 (3,465 ) 9,070 64,215 22,805 - 3,857 26,662 35,026 (36,533 ) 1,507 - $ 339,771 $ (60,664 ) $ 62,738 $ 341,845 Category July 3, 2011Fair Value Purchases,Sales,Issuances,andSettlements RealizedandUnrealizedGain(Loss) July 1, 2012Fair Value (a)Venture capital funds $ 189,353 $ (6,413 ) $ (30,847 ) $ 152,093 Debt funds 44,373 (9,451 ) 1,289 36,211 Real estate funds 17,242 (1,314 ) (2,040 ) 13,888 Private equity funds 64,215 6,433 537 71,185 Global balanced funds 26,662 — (3,484 ) 23,178 $ 341,845 $ (10,745 ) $ (34,545 ) $ 296,555 Changes to Level 3 investments for the year ended June 27, 2010: Category
Fair Value
Sales,
Issuances,
and
Settlements
and
Unrealized
Gain
Fair Value (a) $ 133,556 $ (10,535 ) $ 13,158 $ 136,179 39,227 (1,005 ) 8,888 47,110 38,044 1,413 584 40,041 55,517 (61 ) 3,154 58,610 13,360 5,000 4,445 22,805 33,606 - 1,420 35,026 $ 313,310 $ (5,188 ) $ 31,649 $ 339,771 Category June 27, 2010Fair Value Purchases,Sales,Issuances,andSettlements RealizedandUnrealizedGain(Loss) July 3, 2011Fair Value (a)Venture capital funds $ 136,179 $ (10,290 ) $ 63,464 $ 189,353 Debt funds 47,110 (7,667 ) 4,930 44,373 Real estate funds 40,041 (2,709 ) (20,090 ) 17,242 Private equity funds 58,610 (3,465 ) 9,070 64,215 Global balanced funds 22,805 — 3,857 26,662 Hedge funds 35,026 (36,533 ) 1,507 — $ 339,771 $ (60,664 ) $ 62,738 $ 341,845 (a) There were no transfers in or out of Level 3 during the years ended July 1, 2012 or July 3, 2011 or June 27, 2010..ContributionsOn July 6, 2012, the Moving Ahead for Progress in the 21st Century Act (MAP-21 Act) was signed into law. The MAP-21 Act included certain pension-related provisions which included changes to the methodology used to determine discount rates for ERISA funding purposes for qualified defined benefit pension plans. Based on historical interest rates, the MAP-21 Act allows plan sponsors to utilize a higher discount rate to value pension liabilities, which results in lower required pension plan contributions under ERISA. Based upon current regulations and actuarial studies the Company is required to make minimum contributions to the qualified pension plan of $30.2$44.7 million in fiscal 2012.2013. The Company may be required to make further contributions in future years depending on the actual return on plan assets and the funded status of the plan in future periods.Notes . . .Estimated Future Benefit PaymentsProjected benefit payments from the plans as of July 3, 20111, 2012 are estimated as follows (in thousands): Pension Benefits Other Postretirement Benefits
Medical $ 70,625 $ 2,734 $ 22,748 $ 1,268 $ 110 70,795 2,731 21,872 1,292 116 70,915 2,736 20,618 1,315 93 71,207 2,735 17,784 1,336 94 71,243 2,724 15,961 1,355 95 356,793 14,980 49,902 6,973 273 Pension Benefits Other Postretirement Benefits Year Ending Qualified Non-Qualified RetireeMedical Retiree Life LTD 2013 $ 73,626 $ 3,023 $ 18,331 $ 1,268 $ 95 2014 73,715 3,119 17,461 1,296 83 2015 74,045 3,202 16,066 1,321 73 2016 74,038 3,300 14,454 1,343 71 2017 74,212 3,466 11,762 1,362 69 2018-2022 372,088 20,755 36,285 6,976 282 Defined Contribution PlansEmployees of the Company may participate in a defined contribution savings plan that allows participants to contribute a portion of their earnings in accordance with plan specifications. A maximum of 1-1/2%1.50% to 3-1/2%3.50% of each participant’s salary, depending upon the participant’s group, is matched by the Company. Some of these Company matching contributions ceased July 1, 2009 and were reinstated effective January 1, 2010. Additionally, certain employees may receive Company nonelective contributions equal to 2%2.0% of the employee’s salary. The Company contributions totaled $8.7$8.3 million in 2011, $7.62012, $8.7 million in 20102011 and $8.1$7.6 million in 2009.2010.Postemployment BenefitsThe Company accrues the expected cost of postemployment benefits over the years that the employees render service. These benefits apply only to employees who become disabled while actively employed, or who terminate with at least thirty years of service and retire prior to age sixty-five. The items include disability payments, life insurance and medical benefits. These amounts are also discounted using a 4.45%3.75% interest rate for fiscal year 20112012 and 4.60%4.45% interest rate for fiscal year 2010.2011. Amounts are included in Accrued Employee Benefits in the Consolidated Balance Sheets.(16) Disclosures About Fair ValueRestructuring Actions:In January 2012, the Company announced plans to reduce manufacturing capacity through closure of Financial Instruments:its Newbern, Tennessee and Ostrava, Czech Republic plants as well as the reconfiguration of its plant in Poplar Bluff, Missouri. In April 2012, the Company announced plans to further reduce manufacturing costs through consolidation of its Auburn, Alabama manufacturing facility as well as the reduction of approximately The Company reports restructuring charges associated with manufacturing and related initiatives as costs of goods sold within the Consolidated Statements of Earnings. Restructuring charges reflected as costs of goods sold include, but are not limited to, termination and related costs associated with manufacturing employees, asset impairments and accelerated depreciation relating to manufacturing initiatives, and other costs directly related to the restructuring initiatives implemented. The Company reports all other non-manufacturing related restructuring charges as selling, general and administrative expenses on the Consolidated Statements of Earnings. The closing of the Company's facility in Newbern, Tennessee affected approximately 240 regular employees and 450 temporary employees. Additionally, the closing of the Ostrava, Czech Republic facility affected approximately 77 regular employees. There were no significant employment changes at the Poplar Bluff, Missouri facility as a result of the idling of certain assets. Approximately 250 regular employees are expected to be affected by the Auburn, Alabama facility consolidation. The 10% reduction of the Company's salaried workforce affected approximately 210 employees globally.Pre-tax costs of all restructuring actions totaled $49.9 million ($28.8 million after tax or $0.58 per diluted share) in fiscal 2012. The Engines Segment and Products Segment recorded $18.3 million and $31.6 million, respectively, of pre-tax restructuring charges during fiscal 2012. The total pre-tax costs associated with these restructuring actions are expected to be $60 million to $70 million.The following methods and assumptions were used to estimateis a rollforward of the fair value of each class of financial instruments for which it is practicable to estimate that value:Cash and Cash Equivalents, Receivables, Accounts Payable, Foreign Loans,restructuring reserve (included in Accrued Liabilities within the Consolidated Condensed Balance Sheets) attributable to all Engines Segment restructuring activities for fiscal 2012 (in thousands): Termination Benefits Other Costs Total Reserve Balance at July 3, 2011 $ — $ — $ — Provisions 4,685 13,629 18,314 Cash Expenditures (2,458 ) (555 ) (3,013 ) Other Adjustments (1) — (9,730 ) (9,730 ) Reserve Balance at July 1, 2012 $ 2,227 $ 3,344 $ 5,571 (1) Other adjustments includes $2.2 million of property, plant and Income Taxes Payable:equipment impairments, $4.7 million of accelerated depreciation, $0.8 million of inventory write-downs, $1.7 million of curtailment associated with pension and other postretirement benefits, and $0.3 million of foreign currency translation.The carrying amounts approximate fair market value becausefollowing is a rollforward of the short maturityrestructuring reserve (included in Accrued Liabilities within the Consolidated Condensed Balance Sheets) attributable to all Products Segment restructuring activities for fiscal 2012 (in thousands): Termination Benefits Other Costs Total Reserve Balance at July 3, 2011 $ — $ — $ — Provisions 2,015 29,538 31,553 Cash Expenditures (1,073 ) (2,607 ) (3,680 ) Other Adjustments (2) — (26,486 ) (26,486 ) Reserve Balance at July 1, 2012 $ 942 $ 445 $ 1,387 (2) Other adjustments includes $13.7 million of accelerated depreciation and $12.6 million of inventory write-downs.In fiscal 2011, the Company made organization changes that involved a reduction of salaried employees during the quarter ended December 26, 2010. In fiscal 2011, these instruments.organization changes resulted in restructuring charges of Long-Term Debt: The fair market value$3.5 million, consisting of$1.3 million due to the modification of certain vesting conditions for the Company’s long-term debt is estimated based on market quotations at year-end.stock incentive awards and approximately The estimated fair market values of$2.2 million for severance and other related employee separation costs associated with the Company’s Long-Term Debt is (in thousands): 2011 2010
Amount
Value
Amount
Value $ 225,000 $ 233,726 $ - $ - $ - $ - $ 203,460 $ 215,733 $ - $ - $ - $ - (17) Assets Held for Sale:At On July 1, 2009 the Company announced a plan to close its Jefferson2012 and Watertown, Wisconsin manufacturing facilities in fiscal 2010. At July 3, 2011 and June 27, 2010,, the Company had $4.0$10.4 million and $14.1 million, respectively, included in Assets Held for Sale in its Consolidated Condensed Balance Sheets, consisting of certain assets related to the Ostrava, Czech Republic and Jefferson, WI production facility.facilities. Prior to the closure of the Ostrava, Czech Republic facility, small engines were manufactured allby the Company within its Engines Segment for the outdoor power equipment industry. Prior to the closure of the Jefferson facility, portable generator and pressure washer products were manufactured, marketed and sold by the Company within its Power Products segment.(18) Equity:Share RepurchasesNotes In fiscal 2012, the Board of Directors of the Company authorized up to $50.0 million in funds for use in a common share repurchase program with an expiration of June 30, 2013. As of the end of the fourth quarter of fiscal 2012, the Company repurchased 2,409,972 shares on the open market at a total cost of $39.3 million, or $16.30 per share. There were no shares repurchased in fiscal 2011.In August 2012, the Board of Directors authorized an additional $50.0 million in funds associated with the common share repurchase program and an extension of the expiration date to June 30, 2014. .Share repurchases, among other things, allow the Company to offset any potentially dilutive impacts of share-based compensation. The common share repurchase program authorizes the purchase of shares of the Company's common stock on the open market or in private transactions from time to time, depending on market conditions and certain governing loan covenants.(18)Comprehensive Income (Loss)Comprehensive Income (Loss) is a more inclusive financial reporting method that includes disclosure of financial information that historically has not been recognized in the calculation of net income. The Company has chosen to report Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss) which encompasses net income, cumulative translation adjustments, unrealized gain (loss) on derivatives and unrecognized pension and postretirement obligations in the Consolidated Statements of Shareholders’ Investment. Information on Accumulated Other Comprehensive Income (Loss) is as follows (in thousands): CumulativeTranslationAdjustments UnrealizedGain (Loss) onDerivatives UnrecognizedPension andPostretirementObligation AccumulatedOtherComprehensiveIncome (Loss)Balance at June 28, 2009 $ 8,961 $ (3,127 ) $ (256,107 ) $ (250,273 ) Fiscal Year Change (4,989 ) 11,626 (75,073 ) (68,436 ) Balance at June 27, 2010 3,972 8,499 (331,180 ) (318,709 ) Fiscal Year Change 22,017 (10,742 ) 63,936 75,211 Balance at July 3, 2011 25,989 (2,243 ) (267,244 ) (243,498 ) Fiscal Year Change (13,487 ) (5,411 ) (60,308 ) (79,206 ) Balance at July 1, 2012 $ 12,502 $ (7,654 ) $ (327,552 ) $ (322,704 ) (19) Separate Financial Information of Subsidiary Guarantors of Indebtedness:On July 12, 2007, the Company entered into a $500 million amended and restated multicurrency credit agreement. The Amended Credit Agreement (“Revolver”) provides a revolving credit facility for up to $500 million in revolving loans, including up to $25 million in swing-line loans. The Revolver has a term of five years and all outstanding borrowings on the Revolver are due and payable on July 12, 2012. The Revolver contains covenants that the Company considers usual and customary for an agreement of this type, including a Maximum Total Leverage Ratio and Minimum Interest Coverage Ratio. Certain of the Company’s subsidiaries are required to be guarantors of the Company’s obligations under the Revolver.Under the terms of the Company’s 6.875% senior notesSenior Notes and the Revolver (collectively, the “Domestic Indebtedness”), Briggs & Stratton Power Products Group, LLC, a 100% owned subsidiary of the Company, is the joint and several guarantor of the Domestic Indebtedness (the “Guarantor”). The guarantees are full and unconditional guarantees. Additionally, if at any time a domestic subsidiary of the Company constitutes a significant domestic subsidiary, then such domestic subsidiary will also become a guarantor of the Domestic Indebtedness. Currently, all of the Domestic Indebtedness is unsecured. If the Company were to fail to make a payment of interest or principal on its due date, the Guarantor is obligated to pay the outstanding Domestic Indebtedness.The Company had the following outstanding amounts related to the guaranteed debt (in thousands): July 3, 2011
Carrying
Amount
Guarantee $ 225,000 $ 225,000 $ 0 $ 500,000 July 1, 2012CarryingAmount MaximumGuarantee6.875% Senior Notes $ 225,000 $ 225,000 Multicurrency Credit Agreement $ — $ 500,000 The following condensed supplemental consolidating financial information reflects the summarized financial information of Briggs & Stratton, its Guarantors and Non-Guarantor Subsidiaries (in thousands): Briggs & Stratton
Corporation
Subsidiaries
Subsidiaries $ 519,783 $ 343,266 $ 244,473 $ (138,858 ) $ 968,664 617,553 - - (617,553 ) - 455,876 229,054 50,692 (38,068 ) 697,554 $ 1,593,212 $ 572,320 $ 295,165 $ (794,479 ) $ 1,666,218 $ 292,908 $ 88,888 $ 95,044 $ (132,457 ) $ 344,383 562,361 20,988 45,012 (44,469 ) 583,892 737,943 462,444 155,109 (617,553 ) 737,943 $ 1,593,212 $ 572,320 $ 295,165 $ (794,479 ) $ 1,666,218 $ 495,890 $ 369,714 $ 210,764 $ (170,726 ) $ 905,642 677,242 - - (677,242 ) - 484,869 284,749 47,399 (32,602 ) 784,415 $ 1,658,001 $ 654,463 $ 258,163 $ (880,570 ) $ 1,690,057 $ 607,295 $ 37,530 $ 89,412 $ (170,726 ) $ 563,511 400,129 74,868 33,573 (32,602 ) 475,969 650,577 542,065 135,177 (677,242 ) 650,577 $ 1,658,001 $ 654,463 $ 258,163 $ (880,570 ) $ 1,690,057 Notes . . . $ 1,327,378 $ 752,970 $ 343,293 $ (313,643) $ 2,109,998 1,047,229 705,410 272,686 (313,643) 1,711,682 280,149 47,560 70,607 - 398,316 179,822 78,293 42,535 - 300,650 - 49,450 - - 49,450 28,636 - - (28,636) - 71,691 (80,183) 28,072 28,636 48,216 (23,084) (66) (168) - (23,318) 4,331 308 2,517 - 7,156 52,938 (79,941) 30,421 28,636 32,054 28,583 (25,552) 4,668 - 7,699 $ 24,355 $ (54,389) $ 25,753 $ 28,636 $ 24,355
June 27, 2010 $ 1,299,283 $ 740,336 $ 279,134 $ (290,882) $ 2,027,872 1,039,021 683,061 216,736 (290,882) 1,647,937 260,262 57,275 62,398 - 379,935 164,358 76,572 39,318 - 280,248 30,600 - - - 30,600 (20,688) - - 20,688 - 85,992 (19,297) 23,080 (20,688) 69,087 (26,218) (96) (155) - (26,469) (7,644) 158 13,942 - 6,455 52,130 (19,235) 36,867 (20,688) 49,073 15,515 (6,962) 3,904 - 12,458 $ 36,615 $ (12,275) $ 32,963 $ (20,688) $ 36,615
June 28, 2009 $ 1,316,402 $ 819,826 $ 299,200 $ (343,239) $ 2,092,189 1,083,065 767,615 246,494 (343,239) 1,753,935 - 4,575 - - 4,575 233,337 47,636 52,706 - 333,679 148,811 75,801 40,726 - 265,338 8,644 - - (8,644) - 75,882 (28,165) 11,980 8,644 68,341 (30,657) (166) (324) - (31,147) 2,947 286 (18) - 3,215 48,172 (28,045) 11,638 8,644 40,409 16,200 (9,939) 2,176 - 8,437 $ 31,972 $ (18,106) $ 9,462 $ 8,644 $ 31,972 Notes . . . $ 24,355 $ (54,389) $ 25,753 $ 28,636 $ 24,355 39,632 17,768 4,428 - 61,828 9,595 - - - 9,595 - 49,450 - - 49,450 1,897 - - - 1,897 28,636 - - (28,636) - 479 920 252 - 1,651 (5,466) - 5,466 - - 41,364 (34,778) (469) - 6,117 35,955 10,878 6,904 (15,962) 37,775 (15,635) 5,439 (10,351) - (20,547) (855) 2,851 (153) - 1,843 (14,013) (11,663) 21,799 (10,204) (14,081) 2,484 91 (5,527) - (2,952) 148,428 (13,433) 48,102 (26,166) 156,931 (47,627) (9,384) (2,908) - (59,919) 73 49 26 - 148 3,908 - 11,905 (15,813) - (43,646) (9,335) 9,023 (15,813) (59,771) (21,194) 20,465 (4,135) 26,166 21,302 (4,994) - - - (4,994) (22,334) - - - (22,334) 1,532 - - - 1,532 - - (15,813) 15,813 - (46,990) 20,465 (19,948) 41,979 (4,494) - - 419 - 419 57,792 (2,303) 37,596 - 93,085 100,880 3,675 11,999 - 116,554 $ 158,672 $ 1,372 $ 49,595 $ - $ 209,639 Notes . . .
For the Fiscal Year Ended June 27, 2010 Briggs & Stratton
Corporation $ 36,615 $ (12,275 ) $ 32,963 $ (20,688 ) $ 36,615 42,358 18,472 5,402 - 66,232 6,975 - - - 6,975 (254 ) - 188 - (66 ) (20,688 ) - - 20,688 - 1,544 489 92 - 2,125 11,782 - (11,782 ) - - 7,033 (2,993 ) (285 ) - 3,755 (9,664 ) 5,393 16,594 (36,753 ) (24,430 ) 59,326 5,705 10,745 613 76,389 (2,302 ) 3,113 221 - 1,032 41,432 12,705 (30,752 ) 39,754 63,139 5,611 4,010 2,354 - 11,975 �� 179,767 34,619 25,740 3,615 243,741 (28,903 ) (11,494 ) (4,046 ) - (44,443 ) 220 40 16 - 276 26,305 - 2,627 (28,932 ) - (144 ) - 612 (612 ) (144 ) (2,522 ) (11,454 ) (791 ) (29,544 ) (44,311 ) (56,647 ) (20,790 ) 2,204 (3,003 ) (78,236 ) (22,125 ) - - - (22,125 ) 864 - - - 864 - - (28,932 ) 28,932 - (77,908 ) (20,790 ) (26,728 ) 25,929 (99,497 ) - - 629 - 629 99,337 2,375 (1,150 ) - 100,562 1,541 1,301 13,150 - 15,992 $ 100,880 $ 3,675 $ 11,999 $ - $ 116,554 Notes . . . $ 31,972 $ (18,106) $ 9,462 $ 8,644 $ 31,972 44,476 18,758 4,569 - 67,803 3,999 - - - 3,999 3,559 - 126 - 3,685 - 4,575 - - 4,575 8,644 - - (8,644) - 1,959 516 39 - 2,514 (44,384) - 44,384 - - 1,190 - - - 1,190 27,624 (20,354) 98 - 7,368 75,859 413,751 1,860 (431,661) 59,809 22,808 35,295 3,339 368 61,810 (15,647) 1,687 808 - (13,152) (54,470) (377,898) (24,771) 411,821 (45,318) (8,465) - 24 - (8,441) 566 (10,530) 4,937 (367) (5,394) 99,690 47,694 44,875 (19,839) 172,420 (27,166) (10,994) (4,867) - (43,027) 1,325 2,316 18 - 3,659 - - (24,757) - (24,757) (5,899) - (200) 6,099 - (348) - - - (348) (32,088) (8,678) (29,806) 6,099 (64,473) (30,447) (38,804) (35,665) 19,839 (85,077) (38,171) - - - (38,171) - - 6,099 (6,099) - (68,618) (38,804) (29,566) 13,740 (123,248) - - (1,175) - (1,175) (1,016) 212 (15,672) - (16,476) 2,557 1,089 28,822 - 32,468 $ 1,541 $ 1,301 $ 13,150 $ - $ 15,992 Notes . . .(19) ImpairmentBALANCE SHEET:As of July 1, 2012 Briggs & StrattonCorporation GuarantorSubsidiaries Non-GuarantorSubsidiaries Eliminations Consolidated CURRENT ASSETS: Cash and Cash Equivalents $ 133,108 $ 5,375 $ 17,592 $ — $ 156,075 Accounts Receivable, Net 102,997 97,009 23,990 — 223,996 Intercompany Accounts Receivable 45,391 7,593 69,096 (122,080 ) — Inventories, Net 149,863 224,642 59,179 — 433,684 Deferred Tax Asset 25,630 17,699 1,198 — 44,527 Assets Held for Sale — 4,000 6,404 — 10,404 Prepaid Expenses and Other 28,660 11,412 2,742 — 42,814 Total Current Assets $ 485,649 $ 367,730 $ 180,201 $ (122,080 ) $ 911,500 OTHER ASSETS: Goodwill $ 128,300 $ 64,544 $ 11,920 $ — $ 204,764 Investments 22,163 — — — 22,163 Investments in Subsidiaries 556,958 — — (556,958 ) — Intercompany Note Receivable 22,666 36,987 11,137 (70,790 ) — Debt Issuance Costs, Net 5,717 — — — 5,717 Other Intangible Assets, Net — 83,242 3,825 — 87,067 Long-Term Deferred Tax Asset 108,003 — 2 (41,054 ) 66,951 Other Long-Term Assets, Net 4,813 2,733 1,274 — 8,820 Total Other Assets $ 848,620 $ 187,506 $ 28,158 $ (668,802 ) $ 395,482 PLANT AND EQUIPMENT, NET 230,253 53,105 17,891 — 301,249 TOTAL ASSETS $ 1,564,522 $ 608,341 $ 226,250 $ (790,882 ) $ 1,608,231 CURRENT LIABILITIES: Accounts Payable 85,839 44,829 20,485 — 151,153 Intercompany Accounts Payable 56,674 26,661 38,761 (122,096 ) — Short-Term Debt — — 3,000 — 3,000 Accrued Liabilities 108,079 28,706 14,971 — 151,756 Total Current Liabilities $ 250,592 $ 100,196 $ 77,217 $ (122,096 ) $ 305,909 OTHER LIABILITIES: — Accrued Pension Cost 295,862 464 68 — 296,394 Accrued Employee Benefits 25,035 — — — 25,035 Accrued Postretirement Health Care Obligation 73,575 16,267 — — 89,842 Accrued Warranty 9,900 6,515 — — 16,415 Intercompany Note Payable 41,147 — 29,627 (70,774 ) — Deferred Tax Liabilities — 41,054 — (41,054 ) — Other Long-Term Liabilities 11,441 4,970 1,255 — 17,666 Long-Term Debt 225,000 — — — 225,000 Total Other Liabilities $ 681,960 $ 69,270 $ 30,950 $ (111,828 ) $ 670,352 TOTAL SHAREHOLDERS’ INVESTMENT: 631,970 438,875 118,083 (556,958 ) 631,970 TOTAL LIABILITIES AND SHAREHOLDERS’ INVESTMENT $ 1,564,522 $ 608,341 $ 226,250 $ (790,882 ) $ 1,608,231 BALANCE SHEET:As of July 3, 2011 Briggs & StrattonCorporation GuarantorSubsidiaries Non-GuarantorSubsidiaries Eliminations Consolidated CURRENT ASSETS: Cash and Cash Equivalents $ 158,672 $ 1,372 $ 49,595 $ — $ 209,639 Accounts Receivable, Net 126,872 95,645 26,841 — 249,358 Intercompany Accounts Receivable 41,677 3,764 65,311 (110,752 ) — Inventories, Net 141,587 213,084 72,420 — 427,091 Deferred Tax Asset 27,661 13,205 1,297 — 42,163 Assets Held for Sale — 4,000 10,075 — 14,075 Prepaid Expenses and Other 5,470 28,217 2,726 — 36,413 Total Current Assets $ 501,939 $ 359,287 $ 228,265 $ (110,752 ) $ 978,739 OTHER ASSETS: Goodwill $ 128,300 $ 64,544 $ 10,096 $ — $ 202,940 Investments 21,017 — — — 21,017 Investments in Subsidiaries 603,498 — — (603,498 ) — Intercompany Note Receivable 44,263 43,437 6 (87,706 ) — Deferred Loan Costs, Net 4,919 — — — 4,919 Other Intangible Assets, Net — 85,102 4,173 — 89,275 Long-Term Deferred Tax Asset 71,176 — 340 (40,515 ) 31,001 Other Long-Term Assets, Net 4,352 3,493 1,257 — 9,102 Total Other Assets $ 877,525 $ 196,576 $ 15,872 $ (731,719 ) $ 358,254 PLANT AND EQUIPMENT, NET 232,223 71,914 25,088 — 329,225 TOTAL ASSETS $ 1,611,687 $ 627,777 $ 269,225 $ (842,471 ) $ 1,666,218 CURRENT LIABILITIES: Accounts Payable 109,870 48,842 25,021 — 183,733 Intercompany Accounts Payable 46,003 15,401 49,353 (110,757 ) — Short-Term Debt — — 3,000 — 3,000 Accrued Liabilities 115,335 24,645 17,670 — 157,650 Total Current Liabilities $ 271,208 $ 88,888 $ 95,044 $ (110,757 ) $ 344,383 OTHER LIABILITIES: — Accrued Pension Cost 190,855 488 74 — 191,417 Accrued Employee Benefits 24,100 — — — 24,100 Accrued Postretirement Health Care Obligation 98,629 17,463 — — 116,092 Accrued Warranty 8,704 5,623 — — 14,327 Intercompany Note Payable 43,436 — 44,265 (87,701 ) — Deferred Tax Liabilities — 40,515 — (40,515 ) — Other Long-Term Liabilities 11,812 130 1,014 — 12,956 Long-Term Debt 225,000 — — — 225,000 Total Other Liabilities $ 602,536 $ 64,219 $ 45,353 $ (128,216 ) $ 583,892 TOTAL SHAREHOLDERS’ INVESTMENT: 737,943 474,670 128,828 (603,498 ) 737,943 TOTAL LIABILITIES AND SHAREHOLDERS’ INVESTMENT $ 1,611,687 $ 627,777 $ 269,225 $ (842,471 ) $ 1,666,218 STATEMENT OF EARNINGS:For the Fiscal Year Ended July 1, 2012 Briggs & StrattonCorporation GuarantorSubsidiaries Non-GuarantorSubsidiaries Eliminations Consolidated Net Sales $ 1,235,805 $ 835,011 $ 321,216 $ (325,499 ) $ 2,066,533 Cost of Goods Sold 1,007,493 744,103 258,951 (325,499 ) 1,685,048 Restructuring Charges 4,235 28,790 11,735 — 44,760 Gross Profit 224,077 62,118 50,530 — 336,725 Engineering, Selling, General and Administrative Expenses 167,133 80,915 42,333 — 290,381 Restructuring Charges 4,001 1,106 — — 5,107 Equity in Loss from Subsidiaries 5,881 — — (5,881 ) — Income (Loss) from Operations 47,062 (19,903 ) 8,197 5,881 41,237 Interest Expense (18,347 ) (33 ) (162 ) — (18,542 ) Other Income, Net 4,830 207 2,141 — 7,178 Income (Loss) Before Provision for Income Taxes 33,545 (19,729 ) 10,176 5,881 29,873 Provision (Credit) for Income Taxes 4,539 (8,897 ) 5,225 — 867 Net Income (Loss) $ 29,006 $ (10,832 ) $ 4,951 $ 5,881 $ 29,006 For the Fiscal Year Ended July 3, 2011 Net Sales $ 1,327,378 $ 740,336 $ 343,293 $ (313,643 ) $ 2,109,998 Cost of Goods Sold 1,047,229 705,410 272,686 (313,643 ) 1,711,682 Gross Profit 280,149 47,560 70,607 — 398,316 Engineering, Selling, General and Administrative Expenses 179,263 75,315 42,535 — 297,113 Restructuring Charges 559 2,978 — — 3,537 Goodwill Impairment — 49,450 — — 49,450 Equity in Loss from Subsidiaries 28,636 — — (28,636 ) — Income (Loss) from Operations 71,691 (80,183 ) 28,072 28,636 48,216 Interest Expense (23,084 ) (66 ) (168 ) — (23,318 ) Other Income, Net 4,331 308 2,517 — 7,156 Income (Loss) Before Provision for Income Taxes 52,938 (79,941 ) 30,421 28,636 32,054 Provision (Credit) for Income Taxes 28,583 (25,552 ) 4,668 — 7,699 Net Income (Loss) $ 24,355 $ (54,389 ) $ 25,753 $ 28,636 $ 24,355 For the Fiscal Year Ended June 27, 2010 Net Sales $ 1,299,283 $ 740,336 $ 279,134 $ (290,881 ) $ 2,027,872 Cost of Goods Sold 1,039,021 683,061 216,736 (290,881 ) 1,647,937 Gross Profit 260,262 57,275 62,398 — 379,935 Engineering, Selling, General and Administrative Expenses 164,358 76,572 39,318 — 280,248 Litigation Settlement 30,600 — — — 30,600 Equity in Earnings from Subsidiaries (20,688 ) — — 20,688 — Income (Loss) from Operations 85,992 (19,297 ) 23,080 (20,688 ) 69,087 Interest Expense (26,218 ) (96 ) (155 ) — (26,469 ) Other Income (Expense), Net (7,644 ) 157 13,942 — 6,455 Income (Loss) Before Provision for Income Taxes 52,130 (19,236 ) 36,867 (20,688 ) 49,073 Provision (Credit) for Income Taxes 15,515 (6,961 ) 3,904 — 12,458 Net Income (Loss) $ 36,615 $ (12,275 ) $ 32,963 $ (20,688 ) $ 36,615 STATEMENT OF CASH FLOWS:For the Fiscal Year Ended July 1, 2012 Briggs & StrattonCorporation GuarantorSubsidiaries Non-GuarantorSubsidiaries Eliminations Consolidated CASH FLOWS FROM OPERATING ACTIVITIES: Net Cash Provided by (Used in) Operating Activities $ 82,114 $ 2,879 $ (19,032 ) $ — $ 65,961 CASH FLOWS FROM INVESTING ACTIVITIES: Additions to Plant and Equipment (40,456 ) (6,588 ) (2,529 ) — (49,573 ) Cash Paid for Acquisition, Net of Cash Acquired — — (2,673 ) — (2,673 ) Proceeds Received on Disposition of Plant and Equipment 141 1,278 38 — 1,457 Cash Investment in Subsidiary 2,141 — (2,141 ) — — Net Cash Used in Investing Activities (38,174 ) (5,310 ) (7,305 ) — (50,789 ) CASH FLOWS FROM FINANCING ACTIVITIES: Net Borrowings (Repayments) on Loans, Notes Payable and Long-Term Debt (6,434 ) 6,434 — — — Debt Issuance Costs (2,007 ) — — — (2,007 ) Cash Dividends Paid (22,011 ) — — — (22,011 ) Stock Option Exercise Proceeds and Tax Benefits 235 — — — 235 Treasury Stock Repurchases (39,287 ) — — — (39,287 ) Net Cash Provided by (Used in) Financing Activities (69,504 ) 6,434 — — (63,070 ) EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS — — (5,666 ) — (5,666 ) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (25,564 ) 4,003 (32,003 ) — (53,564 ) Cash and Cash Equivalents, Beginning of Year 158,672 1,372 49,595 — 209,639 Cash and Cash Equivalents, End of Year $ 133,108 $ 5,375 $ 17,592 $ — $ 156,075 STATEMENT OF CASH FLOWS:For the Fiscal Year Ended July 3, 2011 Briggs & Stratton Corporation GuarantorSubsidiaries Non-GuarantorSubsidiaries Eliminations Consolidated CASH FLOWS FROM OPERATING ACTIVITIES: Net Cash Provided by (Used in) Operating Activities $ 126,397 $ (13,433 ) $ 43,967 $ — $ 156,931 CASH FLOWS FROM INVESTING ACTIVITIES: Additions to Plant and Equipment (47,627 ) (9,384 ) (2,908 ) — (59,919 ) Proceeds Received on Disposition of Plant and Equipment 73 49 26 — 148 Cash Investment in Subsidiary 3,908 — (3,908 ) — — Net Cash Provided by (Used in) Investing Activities (43,646 ) (9,335 ) (6,790 ) — (59,771 ) CASH FLOWS FROM FINANCING ACTIVITIES: Net Borrowings (Repayments) on Loans, Notes Payable and Long-Term Debt 837 20,465 — — 21,302 Debt Issuance Costs (4,994 ) — — — (4,994 ) Cash Dividends Paid (22,334 ) — — — (22,334 ) Stock Option Exercise Proceeds and Tax Benefits 1,532 — — — 1,532 Net Cash Provided by (Used in) Financing Activities (24,959 ) 20,465 — — (4,494 ) EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS — — 419 — 419 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 57,792 (2,303 ) 37,596 — 93,085 Cash and Cash Equivalents, Beginning of Year 100,880 3,675 11,999 — 116,554 Cash and Cash Equivalents, End of Year $ 158,672 $ 1,372 $ 49,595 $ — $ 209,639 STATEMENT OF CASH FLOWS:For the Fiscal Year Ended June 27, 2010 Briggs & Stratton Corporation GuarantorSubsidiaries Non-GuarantorSubsidiaries Eliminations Consolidated CASH FLOWS FROM OPERATING ACTIVITIES: Net Cash Provided by Operating Activities $ 180,566 $ 34,619 $ 28,556 $ — $ 243,741 CASH FLOWS FROM INVESTING ACTIVITIES: Additions to Plant and Equipment (28,903 ) (11,494 ) (4,046 ) — (44,443 ) Proceeds Received on Disposition of Plant and Equipment 220 40 16 — 276 Cash Investment in Subsidiary 26,305 — (26,305 ) — — Other, Net (144 ) — — — (144 ) Net Cash Used in Investing Activities (2,522 ) (11,454 ) (30,335 ) — (44,311 ) CASH FLOWS FROM FINANCING ACTIVITIES: Net Borrowings (Repayments) on Loans, Notes Payable and Long-Term Debt (57,446 ) (20,790 ) — — (78,236 ) Cash Dividends Paid (22,125 ) — — — (22,125 ) Stock Option Exercise Proceeds and Tax Benefits 864 — — — 864 Net Cash Used in Financing Activities (78,707 ) (20,790 ) — — (99,497 ) EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS — — 629 — 629 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 99,337 2,375 (1,150 ) — 100,562 Cash and Cash Equivalents, Beginning of Year 1,541 1,301 13,150 — 15,992 Cash and Cash Equivalents, End of Year $ 100,880 $ 3,675 $ 11,999 $ — $ 116,554 The Company revised its condensed supplemental consolidating balance sheet as of July 3, 2011 and Disposal Charges:Impairment charges were recognizedcondensed supplemental statements of cash flows for the fiscal years ended July 3, 2011 and June 27, 2010, to correct both the form and content of the condensed presentation in accordance with S-X Rule 3-10 and Rule 10-01. The revision was made to include major balance sheet captions within current assets, non-current assets, current liabilities and other long-term obligations within the condensed supplemental consolidating balance sheet and adjust cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities and cash flows provided by (used in) financing activities within the condensed supplemental consolidating statements of cash flows. The Company identified adjustments to previously reported amounts in the Consolidated Statementscondensed supplemental consolidating balance sheet as of Earnings,July 3, 2011 and the condensed supplemental statements of cash flows for previously reported periods as a result of the change in presentation described above. The following tables reflect the previously reported and as revised and summarized amounts of the Company's condensed supplemental consolidating financial information:BALANCE SHEET:As of July 3, 2011(As Previously Reported) Briggs & Stratton Corporation Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Current Assets $ 519,783 $ 343,266 $ 244,473 $ (138,858 ) $ 968,664 Investment in Subsidiary 617,553 — — (617,553 ) — Noncurrent Assets 455,876 229,054 50,692 (38,068 ) 697,554 $ 1,593,212 $ 572,320 $ 295,165 $ (794,479 ) $ 1,666,218 Current Liabilities $ 292,908 $ 88,888 $ 95,044 $ (132,457 ) $ 344,383 Other Long-Term Obligations 562,361 20,988 45,012 (44,469 ) 583,892 Shareholders' Equity 737,943 462,444 155,109 (617,553 ) 737,943 $ 1,593,212 $ 572,320 $ 295,165 $ (794,479 ) $ 1,666,218 BALANCE SHEET:As of July 3, 2011(As Revised and Summarized) Briggs & Stratton Corporation Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Current Assets $ 501,939 $ 359,287 $ 228,265 $ (110,752 ) $ 978,739 Investment in Subsidiary 603,498 — — (603,498 ) — Noncurrent Assets 506,250 268,490 40,960 (128,221 ) 687,479 $ 1,611,687 $ 627,777 $ 269,225 $ (842,471 ) $ 1,666,218 Current Liabilities $ 271,208 $ 88,888 $ 95,044 $ (110,757 ) $ 344,383 Other Long-Term Obligations 602,536 64,219 45,353 (128,216 ) 583,892 Shareholders' Equity 737,943 474,670 128,828 (603,498 ) 737,943 $ 1,611,687 $ 627,777 $ 269,225 $ (842,471 ) $ 1,666,218 STATEMENT OF CASH FLOWS:For the Fiscal Year Ended July 3, 2011(As Previously Reported) Briggs & Stratton Corporation Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Net Cash Provided by (Used in) Operating Activities $ 148,428 $ (13,433 ) $ 48,102 $ (26,166 ) $ 156,931 Net Cash Provided by (Used in) Investing Activities $ (43,646 ) $ (9,335 ) $ 9,023 $ (15,813 ) $ (59,771 ) Net Cash Provided by (Used in) Financing Activities $ (46,990 ) $ 20,465 $ (19,948 ) $ 41,979 $ (4,494 ) STATEMENT OF CASH FLOWS:For the Fiscal Year Ended July 3, 2011(As Revised and Summarized) Briggs & Stratton Corporation Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Net Cash Provided by (Used in) Operating Activities $ 126,397 $ (13,433 ) $ 43,967 $ — $ 156,931 Net Cash Provided by (Used in) Investing Activities $ (43,646 ) $ (9,335 ) $ (6,790 ) $ — $ (59,771 ) Net Cash Provided by (Used in) Financing Activities $ (24,959 ) $ 20,465 $ — $ — $ (4,494 ) STATEMENT OF CASH FLOWS:For the Fiscal Year Ended June 27, 2010(As Previously Reported) Briggs & Stratton Corporation Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Net Cash Provided by (Used in) Operating Activities $ 179,767 $ 34,619 $ 25,740 $ 3,615 $ 243,741 Net Cash Provided by (Used in) Investing Activities $ (2,522 ) $ (11,454 ) $ (791 ) $ (29,544 ) $ (44,311 ) Net Cash Provided by (Used in) Financing Activities $ (77,908 ) $ (20,790 ) $ (26,728 ) $ 25,929 $ (99,497 ) STATEMENT OF CASH FLOWS:For the Fiscal Year Ended June 27, 2010(As Revised and Summarized) Briggs & Stratton Corporation Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Net Cash Provided by (Used in) Operating Activities $ 180,566 $ 34,619 $ 28,556 $ — $ 243,741 Net Cash Provided by (Used in) Investing Activities $ (2,522 ) $ (11,454 ) $ (30,335 ) $ — $ (44,311 ) Net Cash Provided by (Used in) Financing Activities $ (78,707 ) $ (20,790 ) $ — $ — $ (99,497 ) As other prior period financial information is presented, the Company will similarly revise the condensed supplemental financial information in its future filings. These revisions, which the Company determined are not material individually or in the Power Products segment, for $4.6 million pretax ($2.8 million after tax) during fiscal 2009 related toaggregate, had no impact on the closure of the Jefferson and Watertown, WI manufacturing facilities. Additionally, a $1.2 million pretax ($0.7 million after tax) curtailment loss for employee benefits was recorded in fiscal 2009, as further discussed in Note 15 of the Notes to the Consolidated Financial Statements. Prior to the closure, these facilities manufactured all portable generator, home standby generator and pressure washer products marketed and sold by the Company. This production wasCompany's consolidated into existing United States engine and lawn and garden product facilities to optimize plant utilization and achieve better integration between engine and end product design, manufacturing and distribution.(20) Casualty Event:On December 1, 2008, a fire destroyed inventory and equipment in a leased warehouse facility in Dyersburg, TN. The destroyed facility supported the lawn and garden manufacturing operations in Newbern, TN where production was temporarily suspended as replacement parts and components were expedited. Production at the Newbern plant has since resumed to normal levels.Assets lost in the fire were valued at approximately $24.9 million. Total insurance installment proceeds received were $2.6 million and $22.0 million in fiscal 2010 and 2009, respectively. All property losses incurred were covered under property insurance policies subject to a deductible of $0.3 million.39Report of Independent Registered Public Accounting FirmTo the Board of Directors and Shareholders of Briggs & Stratton Corporation:In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of Briggs & Stratton Corporation and its subsidiaries at July 1, 2012 and July 3, 2011 and June 27, 2010 and the results of their operations and their cash flows for each of the three fiscal years in the period ended July 3, 20111, 2012 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedules listed in the index appearing under Item 15 (a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of July 3, 2011,1, 2012, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements and financial statement schedules, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9 (a). Our responsibility is to express opinions on these financial statements, on the financial statement schedules, and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate./s/PricewaterhouseCoopers LLPMilwaukee, WisconsinAugust 31, 201140Quarterly Financial Data, Dividend and Market Information (Unaudited) In Thousands $ 334,116 $ 61,993 $ (8,114 ) 450,324 78,321 (1,252 ) 720,333 149,549 51,521 605,225 108,453 (17,800 ) $ 2,109,998 $ 398,316 $ 24,355 $ 324,608 $ 52,390 $ (8,687 ) 393,049 70,650 3,025 694,575 140,482 24,073 615,641 116,413 18,203 $ 2,027,872 $ 379,935 $ 36,615 Per Share of Common Stock Market Price Range Net
Income
(Loss) (1) Dividends
Declared High Low $ (0.16 ) $ 0.11 $ 19.85 $ 16.50 (0.03 ) 0.11 20.42 17.10 1.02 0.11 21.85 19.10 (0.36 ) 0.11 24.18 18.69 $ 0.47 $ 0.44 $ (0.18 ) $ 0.11 $ 21.48 $ 12.89 0.06 0.11 23.34 17.92 0.48 0.11 20.38 15.68 0.36 0.11 24.26 18.37 $ 0.73 $ 0.44 In Thousands QuarterEnded NetSales GrossProfit Net Income(Loss)Fiscal 2012 September $ 397,297 $ 66,054 $ (5,220 ) December 447,947 73,880 2,697 March (1) 720,097 127,112 39,937 June (2) 501,192 69,679 (8,408 ) Total $ 2,066,533 $ 336,725 $ 29,006 Fiscal 2011 September $ 334,116 $ 61,993 $ (8,114 ) December (3) 450,324 78,321 (1,252 ) March 720,333 149,549 51,521 June (4) 605,225 108,453 (17,800 ) Total $ 2,109,998 $ 398,316 $ 24,355 Per Share of Common Stock Market Price Range on New York Stock ExchangeQuarterEnded NetIncome(Loss) (5) DividendsDeclared High Low Fiscal 2012 September $ (0.10 ) $ 0.11 $ 20.81 $ 12.42 December 0.05 0.11 17.17 12.36 March (1) 0.80 0.11 18.28 15.12 June (2) (0.18 ) 0.11 18.60 16.32 Total $ 0.57 $ 0.44 Fiscal 2011 September $ (0.16 ) $ 0.11 $ 19.85 $ 16.50 December (3) (0.03 ) 0.11 20.42 17.10 March 1.02 0.11 21.85 19.10 June (4) (0.36 ) 0.11 24.18 18.69 Total $ 0.47 $ 0.44 The number of record holders of Briggs & Stratton Corporation Common Stock on July 3,1, 2012 was 3,184.(1) As disclosed in Note 16, the third quarter of fiscal 2012 included restructuring charges of $19.8 million ($9.6 million after tax or $0.19 per diluted share).(2) As disclosed in Note 16, the fourth quarter of fiscal 2012 included restructuring charges of $30.1 million ($19.3 million after tax or $0.40 per diluted share).(3) As disclosed in Notes 16 and 9, the second quarter of fiscal 2011 was 3,289.(4) As disclosed in Note 5, the fourth quarter of fiscal 2011 included pre-tax non-cash goodwill impairment charges of $49.5 million ($34.3 million after tax or $0.68 per diluted share).(5) Net Income (Loss) per share of Common Stock represents Diluted Earnings (Loss) per Share.(1) Refer to Note 2 of the Notes to Consolidated Financial Statements, for information about Diluted Earnings per Share. Amounts may not total because of differing numbers of shares outstanding at the end of each quarter.(2) As disclosed in Note 5, the fourth quarter of fiscal 2011 included pretax noncash goodwill impairment charges of $49.5 million ($34.3 million after tax or $0.68 per diluted share).(3) As disclosed in Note 11, the third quarter of fiscal 2010 included a $30.6 million pretax charge ($18.7 million after tax or $0.37 per diluted share) for a litigation settlement.41None.Disclosure Controls and ProceduresThe Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“the Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective in recording, processing, summarizing, and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act.Management’s Report on Internal Control Over Financial ReportingThe Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s internal control over financial reporting based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, the Company’s management has concluded that, as of the end of the period covered by this report, the Company’s internal controls over financial reporting were effective.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of the effectiveness to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited the Company’s consolidated financial statements and the effectiveness of internal controls over financial reporting as of July 3, 2011,1, 2012, as stated in their report which is included herein.Changes in Internal Control Over Financial ReportingThere has not been any change in the Company’s internal control over financial reporting during the fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.None.PART III(a) Executive Officers. Reference is made to “Executive Officers of Registrant” in Part I after Item 4. (b) Directors. The information required by this Item is in Briggs & Stratton’s definitive Proxy Statement, prepared for the 20112012 Annual Meeting of Shareholders, under the caption “Election“Item 1: Election of Directors” and “Incumbent“General Information About Incumbent Directors”, and is incorporated herein by reference.42(c) Section 16 Compliance. The information required by this Item is in Briggs & Stratton’s definitive Proxy Statement, prepared for the 20112012 Annual Meeting of Shareholders, under the caption “Section 16(a) Beneficial Ownership Reporting Compliance”, and is incorporated herein by reference.(d) Audit Committee Financial Expert. The information required by this Item is in Briggs & Stratton’s definitive Proxy Statement, prepared for the 2011 Annual Meeting of Shareholders,
| (e) | Identification of Audit Committee. The information required by this Item is in Briggs & Stratton’s definitive Proxy Statement, prepared for the 2012 Annual Meeting of Shareholders, under the caption “Other Corporate Governance Matters – Board Committees – Audit Committee”, and is incorporated herein by reference. |
| (f) | Code of Ethics. Briggs & Stratton has adopted a written code of ethics, referred to as the Briggs & Stratton Business Integrity Manual applicable to all directors, officers and employees, which includes provisions related to accounting and financial matters applicable to the Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer and Controller. The Briggs & Stratton Business Integrity Manual is available on the Company’s corporate website atwww.briggsandstratton.com. If the Company makes any substantive amendment to, or grants any waiver of, the code of ethics for any director or officer, Briggs & Stratton will disclose the nature of such amendment or waiver on its corporate website or in a Current Report on Form 8-K. |
| ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
| 1. | Financial Statements |
| 2. | Financial Statement Schedules |
| 3. | Exhibits |
Reserve for Doubtful Accounts Receivable | Balance Beginning of Year | Additions Charged to Earnings | Charges to Reserve, Net | Balance End of Year | ||||
2011 | $11,317,000 | 1,916,000 | (8,262,000) | $4,971,000 | ||||
2010 | $7,360,000 | 7,399,000 | (3,442,000) | $11,317,000 | ||||
2009 | $5,607,000 | 3,558,000 | (1,805,000) | $7,360,000 | ||||
Deferred Tax Assets Valuation Allowance | Balance Beginning of Year | Allowance Established for Net Operating and Other Loss Carryforwards | Allowance Reversed for Loss Carryforwards Utilized and Other Adjustments | Balance End of Year | ||||
2011 | $9,130,000 | 774,000 | (2,645,000) | $7,259,000 | ||||
2010 | $6,712,000 | 2,418,000 | - | $9,130,000 | ||||
2009 | $3,788,000 | 2,924,000 | - | $6,712,000 | ||||
Reserve for Doubtful Accounts Receivable | Balance Beginning of Year | Additions Charged to Earnings | Charges to Reserve, Net | Balance End of Year | ||||
| 2012 | $4,971,000 | 3,608,000 | (2,799,000) | $5,780,000 | ||||
| 2011 | $11,317,000 | 1,916,000 | (8,262,000) | $4,971,000 | ||||
| 2010 | $7,360,000 | 7,399,000 | (3,442,000) | $11,317,000 | ||||
Deferred Tax Assets Valuation Allowance | Balance Beginning of Year | Allowance Established for Net Operating and Other Loss Carryforwards | Allowance Reversed for Loss Carryforwards Utilized and Other Adjustments | Balance End of Year | ||||
| 2012 | $7,259,000 | 5,430,000 | (664,000) | $12,025,000 | ||||
| 2011 | $9,130,000 | 774,000 | (2,645,000) | $7,259,000 | ||||
| 2010 | $6,712,000 | 2,418,000 | — | $9,130,000 | ||||
| BRIGGS & STRATTON CORPORATION | ||||
| ||||
By | /s/ David J. Rodgers | |||
| David J. Rodgers | ||||
| Senior Vice President and | |||
| Chief Financial Officer | ||||
| /s/ Todd J. Teske | /s/ Patricia L. Kampling | |||
Todd J. Teske | Patricia L. Kampling | |||
Chairman, President and Chief Executive | Director | |||
Officer and Director (Principal Executive Officer) | ||||
/s/ David J. Rodgers | /s/ Keith R. McLoughlin | |||
David J. Rodgers | Keith R. McLoughlin | |||
Senior Vice President and Chief Financial | Director | |||
Officer (Principal Financial Officer and | ||||
Principal Accounting Officer) | ||||
/s/ William F. Achtmeyer | /s/ Robert J. O’Toole | |||
William F. Achtmeyer | Robert J. O’Toole | |||
Director | Director | |||
/s/ Michael E. Batten | /s/ Charles I. Story | |||
Michael E. Batten | Charles I. Story | |||
Director | Director | |||
/s/ James E. Humphrey | /s/ Brian C. Walker | |||
James E. Humphrey | Brian C. Walker | |||
Director | Director | |||
| *Each signature affixed as of | ||||
2011 ANNUAL REPORT ON FORM 10-K
| Document Description | ||
| 3.1 | Articles of Incorporation. | ||
(Filed as Exhibit 3.2 to the Company’s Report on Form 10-Q for the quarter | |||
ended October 2, 1994 and incorporated by reference herein.) | |||
| 3.1 (a) | Amendment to Articles of Incorporation. | ||
(Filed as Exhibit 3.1 to the Company’s Report on Form 10-Q for the quarter | |||
ended September 26, 2004 and incorporated by reference herein.) | |||
| 3.2 | Bylaws, as amended and restated as adopted April 15, 2009. | ||
(Filed as Exhibit 3.2 to the Company’s Report on Form 10-Q for the quarter | |||
ended March 29, 2009 and incorporated by reference herein.) | |||
| 3.2(a) | Amendments to Bylaws as adopted August 8, 2012. | ||
| (Filed as Exhibit 3.1 to the Company’s Report on Form 8-K dated August 8, 2012 and incorporated by reference herein.) | |||
| 4.0 | Rights Agreement dated as of August 7, 1996, as amended through August | ||
| includes the form of Right Certificate as Exhibit A and the Summary of Rights to | |||
| Purchase Common Shares as Exhibit B. | |||
(Filed as Exhibit 4.1 to the Company’s Registration Statement on Form 8-A/A | |||
dated as of August | |||
| 4.1 | |||
| |||
| |||
| |||
| |||
| |||
| Indenture, dated December 10, 2010, among Briggs & Stratton Corporation, Briggs | |||
| & Stratton Power Products Group, LLC and Wells Fargo Bank, National | |||
| Association, as Trustee. | |||
(Filed as Exhibit 4.1 to the Company’s Report on Form 10-Q for the quarter | |||
ended December 26, 2010 and incorporated by reference herein.) | |||
| First Supplemental Indenture, dated December 20, 2010, among Briggs & Stratton | |||
| Corporation, Briggs & Stratton Power Products Group, LLC and Wells Fargo Bank, | |||
| National Association, as Trustee. | |||
(Filed as Exhibit 4.2 to the Company’s Report on Form 10-Q for the quarter | |||
ended December 26, 2010 and incorporated by reference herein.) | |||
| |||
| |||
| 10.1* | Amended and Restated Supplemental Executive Retirement Plan. | ||
(Filed as Exhibit 10.2 to the Company’s Report on Form 10-Q for the quarter | |||
ended | |||
| 10.2* | Amended and Restated Economic Value Added Incentive Compensation Plan. | ||
(Filed | |||
| 10.3* | Amended and Restated Form of Change of Control Employment Agreement. | ||
(Filed as Exhibit 10.3 to the Company’s Report on Form 10-K for fiscal year | |||
ended June 28, 2009 and incorporated herein by reference.) | |||
|
| |
| 10.3 (a)* | Amended and Restated Form of Change of Control Employment Agreement for | |
| new officers of the Company. | ||
(Filed as Exhibit 10.1 to the Company’s Report on Form 8-K dated October | ||
14, 2009 and incorporated by reference herein.) | ||
| 10.4* | Trust Agreement with an independent trustee to provide payments under various | |
| compensation agreements with Company employees upon the occurrence of a | ||
| change in control. | ||
(Filed as Exhibit 10.5 (a) to the Company’s Annual Report on Form 10-K for | ||
fiscal year ended July 2, 1995 and incorporated by reference herein.) | ||
| No. | Document Description | |
| 10.4 (a)* | Amendment to Trust Agreement with an independent trustee to provide | |
| payments under various compensation agreements with Company employees. | ||
(Filed as Exhibit 10.5 (b) to the Company’s Annual Report on Form 10-K for | ||
fiscal year ended July 2, 1995 and incorporated by reference herein.) | ||
| 10.4 (b)* | Amendment to Trust Agreement with an independent trustee to provide payments | |
| under various compensation agreements with Company employees. | ||
(Filed | ||
| 10.5* | 1999 Amended and Restated Stock Incentive Plan. | |
(Filed as Exhibit A to the Company’s 1999 Annual Meeting Proxy Statement | ||
and incorporated by reference herein.) | ||
| 10.5 (a)* | Amendment to Stock Incentive Plan. | |
(Filed as Exhibit 10.2 to the Company’s Report on Form 10-Q for the quarter | ||
ended March 30, 2003 and incorporated by reference herein.) | ||
| 10.5 (b)* | Amendment to Stock Incentive Plan. | |
(Filed as Exhibit 10.5 (c) to the Company’s Report on Form 10-K for fiscal | ||
year ended June 27, 2004 and incorporated by reference herein.) | ||
| 10.5 (c)* | Amended and Restated Briggs & Stratton Corporation Incentive Compensation Plan. | |
(Filed as Exhibit 10.5 (c) to the Company’s Report on Form 10-K for fiscal | ||
year ended June 27, 2010 and incorporated by reference herein.) | ||
| 10.6* | Amended and Restated Briggs & Stratton Premium Option and Stock Award | |
| Program, | ||
(Filed as Exhibit 10.6 to the Company’s Report on Form 10-K for fiscal year | ||
ended June 27, 2010 and incorporated by reference herein.) | ||
| 10.6 (a)* | Amended Form of Stock Option Agreement under the Premium Option and Stock | |
| Award Program. | ||
(Filed as Exhibit 10.6 (d) to the Company’s Report on Form 10-K for year | ||
ended June 28, 2009 and incorporated herein by reference.) | ||
| 10.6 (b)* | Amended Form of Restricted Stock Award Agreement | |
| and Stock Award Program. | ||
(Filed as Exhibit 10.6 (b) to the Company’s Report on Form 10-K for fiscal | ||
year ended June 27, 2010 and incorporated by reference herein.) | ||
| 10.6 (c)* | Amended Form of Deferred Stock Award Agreement | |
| and Stock Award Program. | ||
(Filed as Exhibit 10.6 (c) to the Company’s Report on Form 10-K for fiscal | ||
year ended June 27, 2010 and incorporated by reference herein.) | ||
| 10.7* | Amended and Restated | |
(Filed as Exhibit | ||
| ||
|
| |
| 10.8* | Amended and Restated Supplemental Employee Retirement Plan. | |
(Filed as Exhibit | ||
ended | ||
| Briggs & Stratton Corporation Incentive Compensation Plan Performance Share | ||
| Award Agreement. | ||
(Filed as Exhibit 10.9 to the Company’s Report on Form 10-K for fiscal year | ||
ended June 27, 2010 and incorporated by reference herein.) | ||
| 10.11* | Amended and Restated Deferred Compensation Plan for Directors. | |
(Filed | ||
| No. | Document Description | |
| 10.12* | Amended and Restated Director’s Premium Option and Stock Grant Program. | |
(Filed as Exhibit 10.12 to the Company’s Report on Form 10-K for fiscal year | ||
ended July 3, 2005 and incorporated by reference herein.) | ||
| 10.12 (a)* | Form of Director’s Stock Option Agreement under the Director’s Premium Option | |
| and Stock Grant Program. | ||
(Filed as Exhibit 10.12 (a) to the Company’s Report on Form 10-Q for quarter | ||
ended April 2, 2006 and incorporated by reference herein.) | ||
| 10.13* | Summary of Director Compensation. | |
(Filed | ||
| 10.14* | Executive Life Insurance Plan. | |
(Filed as Exhibit 10.17 to the Company’s Annual Report on Form 10-K for | ||
fiscal year ended June 27, 1999 and incorporated by reference herein.) | ||
| 10.14 (a)* | Amendment to Executive Life Insurance Program. | |
(Filed as Exhibit 10.14 (a) to the Company’s Report on Form 10-K for fiscal | ||
year ended June 29, 2003 and incorporated by reference herein.) | ||
| 10.14 (b)* | Amendment to Executive Life Insurance Plan. | |
(Filed as Exhibit 10.14 (b) to the Company’s Report on Form 10-K for fiscal | ||
year ended June 27, 2004 and incorporated by reference herein.) | ||
| 10.15* | Amended & Restated Key Employee Savings and Investment Plan. | |
(Filed as Exhibit 10.15 to the Company’s Report on Form 10-Q for the quarter | ||
ended March 27, 2011 and incorporated by reference herein.) | ||
| 10.16* | Consultant Reimbursement Arrangement. | |
(Filed as Exhibit 10.19 to the Company’s Annual Report on Form 10-K for | ||
fiscal year ended June 27, 1999 and incorporated by reference herein.) | ||
| 10.17* | Briggs & Stratton Product Program. | |
(Filed as Exhibit 10.18 to the Company’s Annual Report on Form 10-K for | ||
fiscal year ended June 30, 2002 and incorporated by reference herein.) | ||
| Amendment to the Briggs & Stratton Product Program. | ||
(Filed as Exhibit 10.17 (a) to the Company’s Report on Form 10-K for fiscal | ||
year ended June 27, 2010 and incorporated by reference herein.) | ||
| Early Retirement Agreement between Briggs & Stratton Corporation and John S. Shiely. | ||
(Filed as Exhibit 10.1 to the Company’s Report on Form 8-K dated August 21, | ||
2009 and incorporated by reference herein.) | ||
| 10.20 | Asset Purchase Agreement, dated January 25, 2005, by and among Briggs & | |
| Stratton Power Products Group, LLC, Briggs & Stratton Canada Inc., Murray, Inc. | ||
| and Murray Canada Co. | ||
(Filed as Exhibit 10.1 to the Company’s Report on Form 8-K dated | ||
January 25, 2005 and incorporated by reference herein.) | ||
|
| |
| 10.21 | Transition Supply Agreement, dated February 11, 2005, between Briggs & Stratton | |
| Power Products Group, LLC and Murray, Inc. | ||
(Form of Transition Supply Agreement filed as Exhibit 10.2 to the Company’s | ||
Report on Form 8-K dated January 25, 2005 and incorporated by reference herein.) | ||
|
| 10.22 | Multicurrency Credit Agreement, dated | |
| October 13, 2011, among Briggs & Stratton Corporation, | ||
| U.S. Bank | ||
(Filed as Exhibit 4.1 to the Company’s Report on Form 8-K dated | ||
| ||
| Class B Preferred Share Redemption Agreement. | ||
(Filed as Exhibit 10.4 to the Company’s Report on Form 10-Q for the quarter | ||
ended December 30, 2007 and incorporated by reference herein.) | ||
| Victa Agreement. | ||
(Filed as Exhibit 10.25 to the Company’s Report on Form 10-K for fiscal year | ||
ended June 29, 2008 and incorporated by reference herein.) | ||
| Stipulation of Settlement, dated February 24, 2010. | ||
(Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated | ||
February 24, 2010 and incorporated herein by reference.) | ||
| 12 | Computation of Ratio of Earnings to Fixed Charges. | |
(Filed herewith.) | ||
| 21 | Subsidiaries of the Registrant. | |
(Filed herewith.) | ||
| 23.1 | Consent of PricewaterhouseCoopers LLP, an Independent Registered Public | |
| Accounting Firm. | ||
(Filed herewith.) | ||
| 31.1 | Certification of Principal Executive Officer pursuant to Section 302 of the | |
| Sarbanes-Oxley Act of 2002. | ||
(Filed herewith.) | ||
| 31.2 | Certification of Principal Financial Officer pursuant to Section 302 of the | |
| Sarbanes-Oxley Act of 2002. | ||
(Filed herewith.) | ||
| 32.1 | Certification of the Chief Executive Officer pursuant to Section 906 of the | |
| Sarbanes-Oxley Act of 2002. | ||
(Furnished herewith.) | ||
| 32.2 | Certification of the Chief Financial Officer pursuant to Section 906 of the | |
| Sarbanes-Oxley Act of 2002. | ||
(Furnished herewith.) | ||
| 101 | The following financial information from the Company’s Annual Report on Form 10-K for the fiscal year ended July 1, 2012, formatted in extensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets at July 1, 2012 and July 3, 2011; (ii) Consolidated Statements of Earnings for the Fiscal Years Ended July 1, 2012, July 3, 2011 and June 27, 2010; (iii) Consolidated Statements of Shareholders’ Investment for the Fiscal Years Ended July 1, 2012, July 3, 2011 and June 27, 2010; (iv) Consolidated Statements of Cash Flows for the Fiscal Years Ended July 1, 2012, July 3, 2011 and June 27, 2010; (v) Notes to Consolidated Financial Statements; and (vi) Schedule II—Valuation and Qualifying Accounts. (1) | |
| * | Management contracts and executive compensation plans and arrangements required to be filed as exhibits pursuant to Item 15(a)(3) of Form 10-K. |
(1) | Furnished herewith. Pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections. |
WILLIAM F. ACHTMEYER(2)(5) | Chairman, Managing Partner and Chief Executive Officer of The Parthenon Group LLC, a leading strategic advisory and principal investment firm | |
MICHAEL E. BATTEN(3)(5) | Chairman and Chief Executive Officer, Twin Disc, Incorporated, a manufacturer of power transmission equipment | |
JAMES E. HUMPHREY(2)(5) | Chairman and retired Chief Executive Officer of Andersen Corporation, a window and door manufacturer | |
PATRICIA L. KAMPLING(1)(4) | Chairman, President and Chief Operating Officer of Alliant Energy Corporation, a regulated investor-owned public utility holding company | |
KEITH R. McLOUGHLIN(5) | President and Chief Executive Officer of AB Electrolux, a manufacturer of major home appliances | |
ROBERT J. O’TOOLE(1)(3)(4) | Retired Chairman of the Board and Chief Executive Officer, A.O. Smith Corporation, a diversified manufacturer whose major products include | |
CHARLES I. STORY(3)(4) | President of ECS Group, Inc., an executive development company | |
TODD J. TESKE(3) | Chairman, President and Chief Executive Officer of Briggs & Stratton Corporation | |
BRIAN C. WALKER(1)(2)(3) | President and Chief Executive Officer, Herman Miller, Inc., a global provider of office furniture and services | |
TODD J. TESKE | Chairman, President & Chief Executive Officer | |
HAROLD L. REDMAN | Senior Vice President & President – Products Group | |
WILLIAM H. REITMAN | Senior Vice President – Business Development & Customer Support | |
DAVID J. RODGERS | Senior Vice President & Chief Financial Officer | |
THOMAS R. SAVAGE | Senior Vice President – Corporate Development | |
JOSEPH C. WRIGHT | Senior Vice President & President – Engines Group | |
RANDALL R. CARPENTER | Vice President – Marketing | |
DAVID G. DEBAETS | Vice President – North America Operations (Engines Group) | |
ANDREA L. GOLVACH | Vice President & Treasurer | |
| ROBERT F. HEATH | Vice President, General Counsel & Secretary | |
EDWARD J. WAJDA | Vice President & General Manager – International | |
Corporate | ||
JAMES H. DENEFFE | Senior Vice President – Research & Development | |
| Vice President – | |
| ||
JEFFREY G. MAHLOCH | Vice President – Human Resources | |
DON S. SCHOONENBERG | Vice President – Business | |
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| ||
PHILIP J. CAPPITELLI | Vice President & General Manager – International Business Development | |
ROGER A. JANN | Managing Director – Europe | |
MARTIN L. LEVY | Managing Director – Latin America | |
JAMES T. MARCEAU | Vice President & General Manager – International Operations | |
MARK S. PLUM | Managing Director – Briggs & Stratton Asia | |
THOMAS H. RUGG | Managing Director – Australia | |
Engines Group | ||
RANDALL E. BALLARD | Vice President – North American Engine Sales | |
| EDWARD D. BEDNAR | Vice President – Procurement & Logistics | |
JOHN R. GUY III | Vice President & General Manager – Service | |
PETER HOTZ | Vice President – | |
MARVIN B. KLOWAK | Vice President – Research & Development & Quality | |
MICHAEL M. MILLER | Vice President – | |
PAUL R. PESCI | Vice President – Small Commercial Engines | |
MARTIN C. STRAUBE | Vice President – Supply Chain | |
RICHARD R. ZECKMEISTER | Vice President – North American Consumer Marketing & Planning | |
Appointed Vice Presidents & Subsidiary/Group Officers
Products Group | ||
| Vice President – | |
JEFF COAD | Vice President – Products Marketing | |
| RICHARD E. FELDER | Vice President – Dealer Recruitment | |
DONALD W. KLENK | Vice President – Operations | |
ERIK P. MEMMO | Vice President – | |
| ||
SCOTT L. MURRAY | Vice President – Parts & Service | |
ROBERT PJEVACH | Vice President – Consumer Products | |
WILLIAM L. SHEA | Vice President – Sales & Marketing | |
PHILIP H. WENZEL | Vice President – Commercial Products | |
THOMAS E. WISER | Vice President – Standby Power Sales | |
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Briggs & Stratton Corporation common stock is | ||
listed on the New York Stock Exchange (symbol BGG) | FISCAL 2012 AUDITORS PricewaterhouseCoopers LLP 100 East Wisconsin Avenue Milwaukee, Wisconsin 53202 | |
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DISBURSER |
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Inquiries concerning transfer requirements, lost certificates, dividend payments, change of address and account status should be directed to Wells Fargo Shareowner Services, at 1-800-468-9716. |
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