1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 27,October 2, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from_______________ to _______________
Commission file number 1-1370
BRIGGS & STRATTON CORPORATION
(Exact name of registrant as specified in its charter)
A Wisconsin Corporation 39-0182330
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12301 West Wirth Street, Wauwatosa, Wisconsin 53222
(Address of Principal Executive Offices) (Zip Code)
414/259-5333
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X_X_ No_____.
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding at
Class May 4,
Outstanding at
Class November 10, 1994
- - ---------------------------------------------------------------------------------
COMMON STOCK, par value $0.01 per share 14,463,500 Shares*
*Number does not give effect to two-for-one stock split payable November 14,
1994, --------- ------------------
COMMON STOCK, par value $0.01 per share 14,463,500 Sharesto shareholders of record on October 31, 1994.
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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
INDEX
Page No.
--------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Condensed Balance Sheets -
March 27,October 2, 1994, June 27, 1993July 3, 1994 and
March 28,September 26, 1993 3
Consolidated Condensed Statements of Income -
Three Months and Nine Months Ended March 27,October 2, 1994 and
March 28,September 26, 1993 4
Consolidated Condensed Statements of Cash Flows -
NineThree Months Ended March 27,October 2, 1994 and
March 28,September 26, 1993 5
Notes to Consolidated Condensed Financial
Statements 6
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition 87
PART II - OTHER INFORMATION
12Item 4. Submission of Matters to a Vote of Security Holders 9
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 11
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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands of dollars)
ASSETS
--------
March 27 June 27 March 28Oct. 2 July 3 Sept. 26
1994 1994 1993
1993------ ------ -------- ------- ---------
CURRENT ASSETS: (Unaudited) (Unaudited)
Cash and cash equivalents $133,680 $221,101 $ 92,576 $ 39,501 $ 7,28321,378
Short-term investments 15,002 70,422 20,021- - 45,837
Receivables, net 237,359 124,981 229,326143,847 122,597 128,411
Inventories -
Finished products and parts 50,168 46,061 47,090102,958 55,847 67,606
Work in process 19,705 25,320 19,96729,823 27,078 23,029
Raw materials 3,636 2,684 1,7884,791 2,745 4,378
----------------------------------
Total inventories $137,572 $ 73,50985,670 $ 74,065 $ 68,84595,013
Future income tax benefits 29,590 27,457 24,95832,497 32,868 28,252
Prepaid expenses 15,219 16,537 16,99818,692 20,548 16,346
----------------------------------
Total current assets $463,255 $352,963 $367,431$466,288 $482,784 $335,237
----------------------------------
PREPAID PENSION COST $ 8,3168,123 $ 7,6028,681 $ 7,4467,749
----------------------------------
PLANT AND EQUIPMENT, at cost: $667,961 $658,120 $662,211$679,786 $669,593 $662,001
Less - Accumulated depreciation and
unamortized investment tax credit 379,366 362,578 358,706387,099 383,703 367,846
----------------------------------
Total plant and equipment, net $288,595 $295,542 $303,505$292,687 $285,890 $294,155
----------------------------------
$760,166 $656,107 $678,382
----------------------------------
----------------------------------$767,098 $777,355 $637,141
==================================
LIABILITIES & SHAREHOLDERS' INVESTMENT
--------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 49,71760,799 $ 39,35756,364 $ 37,41030,439
Domestic notes payable 1,750 - -
1,000
Foreign loans 23,706 15,927 29,47221,364 21,323 14,889
Accrued liabilities 123,142 92,068 105,72194,145 119,954 86,262
Dividends payable 6,653 - 6,0756,364
Federal and state income taxes 11,285 10,592 11,7927,687 9,103 3,581
----------------------------------
Total current liabilities $214,503 $157,944 $191,470$192,398 $206,744 $141,535
----------------------------------
DEFERRED INCOME TAXES $ 13,96711,038 $ 49,90012,317 $ 53,24115,595
----------------------------------
ACCRUED EMPLOYEE BENEFITS $ 14,76015,644 $ 13,30515,423 $ 13,44114,490
----------------------------------
ACCRUED POSTRETIREMENT HEALTH CARE OBLIGATION $ 63,43464,467 $ -64,079 $ -61,931
----------------------------------
LONG-TERM DEBT $ 75,000 $ 75,000 $ 75,000
----------------------------------
SHAREHOLDERS' INVESTMENT:
Common stock-
Authorized 30,000,000 shares, $.01 par value
Issued and outstanding 14,463,500 shares $ 145 $ 145 $ 145
Additional paid-in capital 42,404 42,88342,334 42,358 42,883
Retained earnings 337,075 318,247 306,514366,907 362,136 285,746
Cumulative translation adjustments (1,122) (1,317) (4,312)(835) (847) (184)
----------------------------------
Total shareholders' investment $378,502 $359,958 $345,230$408,551 $403,792 $328,590
----------------------------------
$760,166 $656,107 $678,382
----------------------------------
----------------------------------$767,098 $777,355 $637,141
==================================
The accompanying notes are an integral part of these statements.
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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In thousands of dollars except amounts per share)
(Unaudited)
Three MonthsFirst Quarter Ended
Nine Months Ended
------------------- ------------------
March 27 March 28 March 27 March 28
1994 1993--------------------
Oct. 2 Sept. 26
1994 1993
------ ------ ------ --------------
NET SALES $386,196 $360,899 $913,705 $837,846$227,845 $198,572
COST OF GOODS SOLD 303,223 285,878 730,155 683,768
-------- --------188,046 170,376
-------- --------
Gross profit on sales $ 82,97339,799 $ 75,021 $183,550 $154,07828,196
ENGINEERING, SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 24,169 22,141 67,808 62,066
-------- --------22,276 19,847
-------- --------
Income from operations $ 58,80417,523 $ 52,880 $115,742 $ 92,0128,349
INTEREST EXPENSE (2,148) (2,994) (6,335) (8,565)(2,091) (2,026)
OTHER INCOME(EXPENSE),INCOME, net 1,863 (159) 6,600 301
-------- --------3,302 4,198
-------- --------
Income before provision
for income taxes $ 58,51918,734 $ 49,727 $116,007 $ 83,74810,521
PROVISION FOR INCOME TAXES 22,810 18,910 45,240 31,500
-------- --------7,310 4,100
-------- --------
Net income before cumulative
effect of accounting changes $ 35,70911,424 $ 30,817 $ 70,767 $ 52,248
-------- --------6,421
-------- --------
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING CHANGES FOR:
Postretirement health care, net of
income taxes $ - $ - $(40,232) $ -
Postemployment benefits, net of
income taxes - - (672) -
Deferred income taxes - - 8,346
-
-------- -------- ----------------- --------
$ - $ - $(32,558) $ -
-------- --------
--------- --------
Net incomeincome(loss) $ 35,709 $ 30,817 $ 38,209 $ 52,248
-------- -------- -------- --------
-------- -------- -------- --------11,424 $(26,137)
======== ========
PER SHARE DATA* -
Net income before cumulative
effect of accounting changes $ 2.47.79 $ 2.13 $ 4.89 $ 3.61.44
Cumulative effect of accounting changes - - (2.25) -
------ ------
------ ------
Net incomeincome(loss) $ 2.47 $ 2.13 $ 2.64 $ 3.61
------ ------ ------ ------
------ ------ ------ ------.79 $(1.81)
====== ======
Cash dividends $ .46 $ .42 $ 1.34 $ 1.26
------ ------ ------ ------
------ ------ ------ ------.44
====== ======
*Based on 14,463,500 shares outstanding.
The accompanying notes are an integral part of these statements.
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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Increase(Decrease) in Cash and Cash Equivalents
(In thousands of dollars)
(Unaudited)
NineThree Months Ended
------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES: March 27,Oct. 2, 1994 March 28,Sept. 26, 1993
-------------------------- --------------
Net incomeincome(loss) $ 38,209 $ 52,24811,424 $(26,137)
Adjustments to reconcile net income to net
cash provided by operating activities -
Cumulative effect of accounting changes,
net of taxes - 32,558
-
Depreciation 31,489 31,075
(Gain)Loss11,397 9,988
Gain on disposition of plant and
equipment (2,208) 2,352(697) (3,237)
(Increase)decrease in operating assets -
Accounts receivable (112,378) (125,711)(21,250) (3,430)
Inventories 556 3,644(51,902) (20,948)
Other current assets (1,986) 1452,227 (1,775)
Other assets (714) (438)
Increase558 (147)
Increase(decrease) in liabilities -
Accounts payable and accrued
liabilities 43,508 32,712(16,137) (20,643)
Other liabilities 2,841 372(670) 2,696
-------- --------
Net cash provided(used)used by
operating activities $ 31,875 $ (3,601)$(65,050) $(31,075)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase(sale)Sale of short-term investments $ 55,420 $(20,021)- $ 24,585
Additions to plant and equipment (29,821) (27,739)(19,282) (11,399)
Proceeds received on sale of plant and equipment 7,115 2231,847 6,093
-------- --------
Net cash provided(used) inprovided by (used in)
investing activities $(17,435) $ 32,714 $(47,537)19,279
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings(repayments) on domestic
and foreign loans $ 7,7791,791 $ (1,381)(1,038)
Dividends (19,381) (18,224)(6,653) (6,364)
Purchase of common stock for treasury (717) (735)(38) -
Proceeds received on exercise of stock option 238 37214 -
-------- --------
Net cash used in financing activities $(12,081) $(19,968)$ (4,886) $ (7,402)
-------- --------
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE
CHANGES ON CASH AND CASH EQUIVALENTS $ 567(50) $ (553)1,075
-------- ---------------
NET INCREASE(DECREASE)DECREASE IN CASH AND CASH EQUIVALENTS $ 53,075 $(71,659)$(87,421) $(18,123)
CASH AND CASH EQUIVALENTS, beginning 221,101 39,501 78,942
-------- --------
CASH AND CASH EQUIVALENTS, ending $133,680 $ 92,576 $ 7,283
-------- --------21,378
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 6,3352,082 $ 8,564
-------- --------2,026
======== ========
Income taxes paid $ 48,1699,834 $ 34,661
-------- --------11,806
======== ========
The accompanying notes are an integral part of these statements.
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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
The accompanying unaudited consolidated condensed financial statements
have been prepared in accordance with the rules and regulations of the
Securities and Exchange Commission and therefore do not include all information
and footnotes necessary for a fair presentation of financial position, results
of operations and cash flows in conformity with generally accepted accounting
principles. However, in the opinion of the Company, adequate disclosures have
been presented to make the information not misleading, and all adjustments
necessary to present fair statements of the results of operations and financial
position have been included. All of these adjustments are of a normal
recurring nature. It is suggested that these condensed financial statements be
read in conjunction with the financial statements and the notes thereto
included in the Company's latest annual report on Form 10-K.
AtOn October 19, 1994, shareholders approved a doubling of the beginning of fiscal year 1994,authorized
common stock shares to 60,000,000. This allows the Company adopted three
Statementsto effect a 2-for-1
stock split previously authorized by the Board of Financial Accounting Standards (FAS) as follows:
FAS 106 - Postretirement Benefits Other Than Pensions -
This new standard requires that the CompanyDirectors. It is payable on
November 14, 1994, to holders of record the expected
cost of health care and life insurance benefits during the years that the
employees render service--a significant change from the preceding method
which recognized health care benefits on a cash basis. Postretirement
life insurance benefits were previously being accounted for in a manner
substantially emulating the new standards, so no adjustment was
necessary. The cumulative effect of this change in accounting for
postretirement health care benefits was a charge totaling $65,954,000 on
a before tax basis or $40,232,000 on an after tax basis ($2.78 per
share). The additional annual cost of accruing this cost over the former
method will be approximately $2,000,000.
For measurement purposes, a 10.5% annual rate of increase in the per
capita cost of covered health care claims was assumed for the years 1995
through 1997, decreasing gradually to 6% for the year 2007. The health
care cost trend rate assumption has a significant effect on the amounts
reported. The rates, if increased by 1%, would add $6,806,000 to the
accumulated post retirement benefit at the beginning of the 1994 fiscal
year. The discount rate used in determining the accumulated
postretirement benefit obligation is 7.75% compounded annually. Both the
health care and life insurance plans are unfunded.
The components of the postretirement health care benefit obligation at
the beginning of the 1994 fiscal year are:
Retirees $21,778,000
Fully Eligible Plan Participants 34,742,000
Other Active Participants 9,434,000
-----------
$65,954,000
-----------
-----------October 31, 1994.
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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSEDPART I - FINANCIAL STATEMENTS
(Unaudited - Continued)
The actual health insurance benefit payments which are expected to be
paid within the next twelve months are included in the caption Accrued
Liabilities in the accompanying balance sheet. All amounts expected to be
paid beyond one year are included in the caption Accrued Postretirement
Health Care Obligation.
FAS 112 - Postemployment Benefits -
This new standard requires that the Company record the expected cost of
postemployment benefits (not to be confused with the postretirement benefits
described in the preceding paragraphs), also over the years that employees
render service. These benefits are substantially smaller amounts because
they apply only to employees who permanently terminate employment prior to
retirement. The cumulative effect of this change was a charge totaling
$1,102,000 or $672,000 after taxes ($.05 per share). There will be no
significant increase in the annual costs of these plans.
The items included in this amount are disability payments, life
insurance and medical benefits. These amounts are also discounted using a
7.75% interest rate.
FAS 109 - Accounting for Income Taxes -
The implementation of this standard results in the change in the
recording of deferred income taxes from the former method which emphasized
the provisions made in the income statement to a method which emphasizes the
amounts to be paid out being recorded on the balance sheet. The adoption of
this standard resulted in a cumulative adjustment which was recorded as
income totaling $8,346,000 or $.58 per share.
The components of deferred tax assets (future income tax benefits) and
liabilities (deferred income taxes) at the date of adoption at the beginning
of the first quarter of fiscal 1994 were:
Future Income Tax Benefits:
Inventory $ 2,425,000
Prepaid Expenses 2,032,000
Payroll Related Accruals 4,685,000
Warranty Reserves 10,761,000
Other Accrued Liabilities 4,291,000
Miscellaneous 2,092,000
-----------
$26,286,000
-----------
-----------
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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited - Continued)
Deferred Income Taxes:
Difference between book
and tax methods applied
to maintenance and supply
inventories $(3,220,000)
Prepaid Pension Cost 2,901,000
Accumulated Depreciation 44,931,000
Accrued Employee Benefits (3,704,000)
Miscellaneous (1,275,000)
-----------
$39,633,000
-----------
-----------
The above amounts do not include the income tax effects arising
from the adoption of FAS 106 and FAS 112 described in the
preceding paragraphs.INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The following is Management's discussion and analysis of certain
significant factors which have affected the Company's results of operations and
financial condition during the periods included in the accompanying
consolidated condensed financial statements.
RESULTS OF OPERATIONS
SALES
Net sales forSales increased $29,273,000 or 15% in the thirdcurrent quarter of fiscal 1994 increased 7% or
$25,297,000 overcompared to
the same quarter in the preceding year. This occurred even
thoughThe major factor affecting this
improvement was a 12% increase in engine unit shipments between years due to
continued high demand resulting from favorable weather and a strong economic
climate. An overall sales model mix to lower horsepower, lower selling price
engines largely offset modest selling price increases and some step-up sales
within the number of engines shipped showed no changesame horsepower category.
Sales were also favorably impacted by a 22% increase in these same time
periods. Thelock unit
shipments and an increase in service sales between quarters.
GROSS PROFIT
Gross profit increased 41% due to the increase in sales is dueand an
improvement in the gross profit rate (as a percentage of sales) from 14% in the
preceding year to 17% in the current year. This improvement was primarily to a
shift to higher
horsepower, higher selling priceresult of spreading fixed overhead over a larger number of engine units. This
was partially offset by an 11% increase in aluminum cost, the major raw
material in engines, and the realizationother increases in manufacturing operating costs. The
Company expects to experience similar increases in comparative aluminum costs
in future quarters of small price
increases between years. Engine service sales were up 9%this fiscal year.
ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Expenses increased $2,429,000 or 12% between years for the
third quarter,in this category.
This increase is primarily due to earlier recognition of profit sharing expense
in fiscal 1995 than in fiscal 1994 because of improved profits on which makes up for the second quarter 8% decrease. There wasthey
are based. The Company also had an increase in export sales. Lock unit shipments showed a 3% increasepension expense and small
increases in most other operating expenses.
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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION (Continued)
OTHER INCOME
This category decreased $896,000 between years. SalesThe previous year
contained a $2,800,000 gain on the sale of a facility in Germany and the
current year had no similar item. The current year included a $1,200,000
increase in interest income due to a larger amount of investable funds.
PROVISION FOR INCOME TAXES
This category reflects an effective tax rate of 39% in each year.
Management estimates this rate will be in effect for the nine months ended March 1994 increased 9% to
$913,705,000. Engine unit shipments increased 3%, lock unit shipmentsentire fiscal year.
CUMULATIVE EFFECT OF ACCOUNTING CHANGES
The preceding fiscal year contained a cumulative effect of accounting
changes made at the beginning of the first fiscal quarter. This was the result
of adopting Financial Accounting Standards Numbers 106, 112 and 109, which were
up
11%. The same factorsfully described in the Company's 1994 fiscal year annual report and previous
year forms 10-Q. These changes totaled $32,558,000 for the year and will not
be repeated in the current or subsequent fiscal years.
FINANCIAL CONDITION
The following comments apply to the change in financial condition of
the Company since the preceding paragraph affectedfiscal year end in June 1994.
Combined cash, cash equivalents and short-term investments decreased
$87,421,000 since the nine-month figures.end of the previous fiscal year for three major reasons:
(1) a $51,902,000 increase in inventories (primarily finished goods)
representing goods manufactured ahead of time in anticipation of shipments
during the Company's busy season in the second and third fiscal quarters; (2) a
$21,250,000 increase in accounts receivable due to extended payment terms and
increased sales late in the quarter; and (3) a reduction of $16,137,000 in
accounts payable and accrued liabilities due to payment of the accrued profit
sharing liability on the fiscal year-end balance sheet.
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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
PART I - ITEM 2FINANCIAL INFORMATION (Continued)
Demand for engines was strong throughout the third quarter as lawn and
garden equipment manufacturers struggled to build inventory in expectation of
good retail sales in the spring while trying to meet the current needs of
retailers. The Company was unable to deliver all the engines its customers
needed at the time they needed them. In this situation few customers were
willing to admit that they didn't urgently need engines. Thus it was hard to
judge the true strength of demand. However, rainfall has been adequate, and
retail sales of lawn and garden equipment are reported to be strong. So
Company management believes that if weather patterns continue to be favorable,
sales in the fourth quarter will exceed those of last year's fourth quarter.
GROSS PROFIT
Gross profit (as a percent of net sales) increased from 20.8% in the
previous year's third quarter to 21.5% in the current year's third quarter.
This is a result of the change in sales mix to higher selling price engines,
which have higher margins, and also small selling price increases.
The gross profit increase in the nine month amounts is due to the same
factors described above and the change in year-to-date volume which spread
fixed overhead over a larger number of engine units.
ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
This category of expenses showed a 9% increase between years--both in
the three-month comparison and the nine-month comparison. The same factors
affected all periods, namely increased manpower costs, provisions to the
Company's projected Profit Sharing Plan and increases in professional services.
INTEREST EXPENSE
This category decreased in both the March quarter comparison and the
year-to-date comparison. Both were due to the use of less debt by the Company
to finance its working capital needs in the third quarter of the current fiscal
year versus that used in the same period the previous fiscal year.
Company management expects the conditions described above will
continue to exist in the fourth quarter.
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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
PART I - ITEM 2 (Continued)
OTHER INCOME(EXPENSE)
This category had a substantial change between years--both in the
three-month comparison and the nine-month comparison. The three-month
comparison reflected an improvement in investment income in the current fiscal
year due to having more funds available for short-term investment. Also
favorably effecting this comparison was an increase in the dividend received
from the Company's joint venture in China and a decrease in the loss on
disposition of plant and equipment between years. The nine-month comparison
had this same benefit plus a $2,800,000 gain on the sale of the Company's
German subsidiary facility in the first quarter of the year. Management
believes investment income will continue at a higher level through the end of
the current fiscal year.
PROVISION FOR INCOME TAXES
The effective tax rate of 39% is management's estimate of what this
rate will be for the full fiscal year and includes a 1% increase in the federal
statutory rate resulting from the Revenue Reconciliation Act of 1993.
CUMULATIVE EFFECT OF ACCOUNTING CHANGES
At the beginning of this first quarter of the fiscal year, the Company
adopted the provisions of three accounting standards as prescribed by the
Financial Accounting Standards Board. When adopting these standards, a
cumulative catch-up adjustment must be made and must be reflected on the
statement of income in the period of change. These provisions are referred to
as Financial Accounting Standards (FAS) and are as follows:
FAS 106 - Employers' Accounting For Postretirement Benefits Other Than
Pensions and
FAS 112 - Employers' Accounting For Postemployment Benefits:
The amounts recorded and a description of these items is in the
accompanying notes. See that section.
FAS 109 - Accounting For Income Taxes:
The amount recorded and a description of this item is in the
accompanying notes. This new method will have no significant effect on
the Company's ongoing annual income tax provision unless there are
changes in the statutory tax rates.
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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
PART I - ITEM 2 (Continued)
FINANCIAL CONDITION
The following comments apply to the change in the financial condition
of the Company since the preceding fiscal year-end in June 1993.
Total cash, cash equivalents and short-term investments were
$2,345,000 lower at the end of March 1994 than at the end of the preceding
fiscal year in June 1993. The Company uses its cash items for normal working
capital needs at this time of the year, but this reduction at the end of March
1994 is an abnormally small amount because of the retention of cash generated
by profitable operations since the end of June 1993. This reflected itself in
reduced interest expense and increased interest income in the current fiscal
year.
The Company's investment in accounts receivable increased
$112,378,000. This is a normal seasonal change in this asset. However, this
increase is smaller than that of the preceding year because of increased sales
volume late in the previous year's fourth quarter which resulted in an increase
in the accounts receivable balance at the end of the 1993 fiscal year.
Inventories reflected no substantial change from the fiscal year-end
balances. The current inventory levels are expected to remain the same until
the end of the current fiscal year.
Current liabilities, excluding loans and notes payable, increased
$43,508,000 since the end of the fiscal year. This also is a seasonal increase
due to increased production activity since the end of the previous fiscal year,
a dividend payable of $6,653,000 on the March 1994 balance sheet, but not on
the fiscal year-end balance sheet, and an increase in unpaid profit sharing
liabilities.
Additions to plant and equipment are slightly higher$7.9 million larger in the
current fiscal year than the preceding year,fiscal year. This is the beginning of
previously announced major capital projects which include new engine plants,
plant expansions, and fourth quarter 1994 activity shoulda new foundry. The engine plants will be greater than the
prior year.located in
Auburn, Alabama; Statesboro, Georgia; and Rolla, Missouri. It is estimated
that capital expenditures for these engine plants and plant expansions will
total $112,000,000 over a three-year period. The deferred income taxes are substantially reduced duenew foundry will be located
in Ravenna, Michigan and will total $20,000,000 over a two-year period.
Company management intends to the income
tax effectsfinance these expenditures from operating cash
flow and available lines of the cumulative changes in accounting madecredit.
As reported in the first quarterAnnual Report, the Company plans to spin off the
lock business to its shareholders in early calendar 1995 as a tax-free
dividend.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of Shareholders on October 19, 1994, the current fiscal year.items
of business included a Board of Director proposal to amend the Articles of
Incorporation, five shareholder proposals and the election of directors.
(a) Election of three directors:
The quarterly dividend rate was increased from $.44 per sharefollowing schedule indicates the votes cast for and
withheld with respect to $.46
per shareeach nominee for director.
Name of Nominee For Withheld
--------------- --- --------
John L. Murray* 7,696,764 170,741
John S. Shiely* 7,707,403 160,125
Charles I. Story* 7,704,310 163,218
William P. Dixon 163,938 175,059
*Nominees who were elected to a three-year term expiring in 1997.
Directors whose term of office continues past the quarter ended in March 1994.
A comparisonAnnual Meeting of
the financial condition at the end of March 1994 to
the same period in 1993 shows a large increase in the cash, cash equivalentsShareholders include: Michael E. Batten, Robert H. Eldridge, Peter A.
Georgescu, Clarence B. Rogers, Frederick P. Stratton, Jr. and short-term investments. This is due to the retention of cash generated by
profitable operations since that date.
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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION (Continued)
(b) Proposal to approve an amendment to the Articles of Incorporation to
increase the authorized common stock of the Corporation from
30,000,000 to 60,000,000:
Out of a total of 11,529,145 votes represented on the proposal,
votes were cast as follows: 11,125,456 - For; 365,749 - Against; and
37,940 - Abstain. There were 7,100 broker non-votes.
(c) Shareholder Proposals:
(c)(1) Proposal urging declassification of Board of Directors.
Out of a total of 11,333,084 votes represented on the proposal,
votes were cast as follows: 4,838,339 - For; 6,316,818 - Against;
and 177,927 - Abstain. There were 203,162 broker non-votes.
(c)(2) Proposal to separate positions of chairperson and chief executive
officer and require chairperson to be outside director.
Out of a total of 11,333,985 votes represented on the proposal,
votes were cast as follows: 563,396 - For; 10,392,939 - Against; and
377,650 - Abstain. There were 202,259 broker non-votes.
(c)(3) Proposal to eliminate change in control agreements.
Out of a total of 11,333,987 votes represented on the proposal,
votes were cast as follows: 1,625,141 - For; 9,341,201 - Against;
and 367,645 - Abstain. There were 202,259 broker non-votes.
(c)(4) Proposal to redeem shareholder rights issued under Rights Agreement.
Out of a total of 11,333,987 votes represented on the proposal,
votes were cast as follows: 4,614,260 - For; 6,626,422 - Against; and
93,305 - Abstain. There were 202,259 broker non-votes.
(c)(5) Proposal to establish committee of shareholder representatives.
Out of a total of 11,333,886 votes represented on the proposal,
votes were cast as follows: 461,097 - For; 10,810,554 - Against; and
62,235 - Abstain. There were 202,359 broker non-votes.
ITEM 5. OTHER INFORMATION
On August 16, 1994, the Board of Directors approved a two-for-one
stock split, contingent upon approval by shareholders of an amendment to the
Articles of Incorporation to increase the authorized shares of common stock
from 30,000,000 to 60,000,000. The proposal to amend the Article III of the
Articles of Incorporation to increase the authorized shares was approved by
shareholders at the Annual Meeting of Shareholders held on October 19, and the
Amendment to the Articles of Incorporation was filed with the Secretary of
State of the state of Wisconsin, effective October 31, 1994. The split is
payable November 14, 1994 to shareholders of record October 31, 1994.
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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION (Continued)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit
Number Description
3.1 Amendment to Article III of Articles of
Incorporation, effective October 31, 1994
3.2 Articles of Incorporation, as amended through October
31, 1994
27 Financial Data Schedule
(b) Reports on Form 8-K.
There were no reports on Form 8-K for the thirdfirst quarter ended
March 27,October 2, 1994.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BRIGGS & STRATTON CORPORATIONCORPORATIO
(Registrant)
Date: May 4,November 10, 1994 /s/ R. H. Eldridge
------------------------------
R. H. Eldridge
Secretary-Treasurer
Date: May 4,November 10, 1994 /s/ J. E. Brenn
------------------------------
J. E. Brenn
Vice President and Controller
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BRIGGS & STRATTON CORPORATION
EXHIBIT INDEX
Exhibit
Number Description
3.1 Amendment to Article III of Articles of Incorporation,
effective October 31, 1994
(Filed herewith)
3.2 Articles of Incorporation, as amended through October
31, 1994
(Filed herewith)
27 Financial Data Schedule
(Filed herewith)
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