Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

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


	December 31, 2006		July 2, 2006		April 1, 2007		July 2, 2006
	(Unaudited)				(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents	$	36,593	$	95,091	$	22,923	$	95,091
Accounts receivable, net		306,473		273,502		373,511		273,502
Inventories -
Finished products and parts		538,148		364,711		434,680		364,711
Work in process		228,122		188,358		212,455		188,358
Raw materials		11,134		8,946		9,536		8,946

Total inventories		777,404		562,015		656,671		562,015
Deferred income tax asset		61,632		58,024		68,613		58,024
Prepaid expenses and other current assets		24,554		43,020		19,071		43,020

Total current assets		1,206,656		1,031,652		1,140,789		1,031,652


OTHER ASSETS:
Goodwill		251,885		251,885		251,885		251,885
Prepaid pension		79,995		75,789		78,098		75,789
Investments		46,781		48,917		46,335		48,917
Deferred loan costs, net		3,722		4,308		3,428		4,308
Other intangible assets, net		93,506		94,596		93,027		94,596
Other long-term assets, net		7,283		6,765		7,393		6,765

Total other assets		483,172		482,260		480,166		482,260


PLANT AND EQUIPMENT:
Cost		1,032,868		1,008,164		1,008,567		1,008,164
Less - accumulated depreciation		605,361		577,876		616,564		577,876

Total plant and equipment, net		427,507		430,288		392,003		430,288

	$	2,117,335	$	1,944,200	$	2,012,958	$	1,944,200


	December 31, 2006			July 2, 2006			April 1, 2007			July 2, 2006
	(Unaudited)						(Unaudited)
CURRENT LIABILITIES:
Accounts payable	$	152,916		$	161,291		$	158,811		$	161,291
Accrued liabilities		168,317			178,381			196,654			178,381
Dividends payable		10,892			—			10,908			—
Current maturity on long-term debt		81,056			—			116,097			—
Short-term debt		273,514			3,474			152,449			3,474

Total current liabilities		686,695			343,146			634,919			343,146


OTHER LIABILITIES:
Long-term debt		302,630			383,324			267,769			383,324
Deferred income tax liability		101,742			102,862			91,309			102,862
Accrued pension cost		26,868			25,587			27,276			25,587
Accrued employee benefits		16,400			16,267			16,510			16,267
Accrued postretirement health care obligation		82,716			84,136			71,384			84,136
Other long-term liabilities		2,895			1,672			2,159			1,672

Total other liabilities		533,251			613,848			476,407			613,848


SHAREHOLDERS’ INVESTMENT:
Common stock -
Authorized 120,000 shares, $.01 par value, issued 57,854 shares		579			579			579			579
Additional paid-in capital		69,784			65,126			71,480			65,126
Retained earnings		1,040,348			1,086,397			1,037,238			1,086,397
Accumulated other comprehensive income		3,702			4,960			7,401			4,960
Treasury stock at cost, 8,346 and 6,654 shares, respectively		(217,024	)		(169,856	)
Treasury stock at cost,
8,270 and 6,654 shares, respectively								(215,066	)		(169,856	)

Total shareholders’ investment		897,389			987,206			901,632			987,206

	$	2,117,335		$	1,944,200		$	2,012,958		$	1,944,200


	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	December 31, 2006			January 1, 2006			December 31, 2006			January 1, 2006			April 1, 2007			April 2, 2006			April 1, 2007			April 2, 2006
NET SALES	$	423,059		$	574,313		$	761,308		$	1,086,022		$	717,053		$	800,194		$	1,478,361		$	1,886,216

COST OF GOODS SOLD		355,695			456,961			649,582			887,362			596,641			619,261			1,246,223			1,506,623

IMPAIRMENT CHARGE														35,200			—			35,200			—

Gross profit on sales		67,364			117,352			111,726			198,660			85,212			180,933			196,938			379,593

ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		64,853			78,722			131,174			148,999			64,289			82,743			195,463			231,742
Income (loss) from operations		2,511			38,630			(19,448	)		49,661

Income from operations														20,923			98,190			1,475			147,851

INTEREST EXPENSE		(11,829	)		(11,305	)		(20,866	)		(21,333	)		(12,688	)		(10,893	)		(33,554	)		(32,226	)

OTHER INCOME, net		921			6,223			4,378			12,487			4,798			1,508			9,176			13,995

Income (loss) before income taxes		(8,397	)		33,548			(35,936	)		40,815			13,033			88,805			(22,903	)		129,620

PROVISION (CREDIT) FOR INCOME TAXES		(2,487	)		11,730			(11,988	)		14,270			5,263			28,797			(6,725	)		43,067

NET INCOME (LOSS)	$	(5,910	)	$	21,818		$	(23,948	)	$	26,545		$	7,770		$	60,008		$	(16,178	)	$	86,553

EARNINGS PER SHARE DATA -

Average shares outstanding		50,583			51,695			49,983			51,714			50,621			51,478			49,795			51,633

Basic earnings (loss) per share	$	(0.12	)	$	0.42		$	(0.48	)	$	0.51		$	0.15		$	1.17		$	(0.32	)	$	1.68

Diluted average shares outstanding		50,583			52,066			49,983			52,093			50,718			51,561			49,795			51,730

Diluted earnings (loss) per share	$	(0.12	)	$	0.42		$	(0.48	)	$	0.51		$	0.15		$	1.16		$	(0.32	)	$	1.67

CASH DIVIDENDS PER SHARE	$	0.22		$	0.22		$	0.44		$	0.44		$	0.22		$	0.22		$	0.66		$	0.66


	Six Months Ended						Nine Months Ended
	December 31, 2006			January 1, 2006			April 1, 2007			April 2, 2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(23,948	)	$	26,545		$	(16,178	)	$	86,553
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		36,410			38,373			54,766			57,389
Earnings of unconsolidated affiliates, net of dividends		2,082			1,948			(2,247	)		811
(Gain) Loss on disposition of plant and equipment		174			(5,402	)
Dividends received investments								4,679			—
Loss (Gain) on disposition of plant and equipment								1,690			(5,267	)
Provision for deferred income taxes		(4,728	)		(9,362	)		(22,142	)		(14,120	)
Stock compensation expense		4,896			4,385			6,688			6,463
Impairment charges								35,200			—
Change in operating assets and liabilities:
Increase in accounts receivable		(32,971	)		(106,462	)		(100,038	)		(74,659	)
Increase in inventories		(215,389	)		(175,175	)		(96,156	)		(124,134	)
(Increase) Decrease in prepaid expenses and other current assets		10,515			(1,254	)
Decrease in accounts payable, accrued liabilities, and income taxes		(13,231	)		(3,477	)
Decrease (Increase) in prepaid expenses and other current assets								16,115			(673	)
Increase in accounts payable, accrued liabilities, and income taxes								9,132			39,906
Increase (Decrease) in accrued/prepaid pension		(2,925	)		5,360			(620	)		8,105
Other, net		(2,078	)		(3,407	)		(169	)		(1,886	)

Net cash used in operating activities		(241,193	)		(227,928	)		(109,280	)		(21,512	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to plant and equipment		(29,866	)		(34,354	)		(45,999	)		(49,409	)
Proceeds received on sale of plant and equipment		442			10,696			583			10,836
Investment in joint venture		—			(900	)		—			(900	)
Refund of cash paid for acquisition		—			6,347			—			6,347
Loan receivable								—			(2,500	)

Net cash used in investing activities		(29,424	)		(18,211	)		(45,416	)		(35,626	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on loans and notes payable		270,040			132,617
Net borrowings (repayments) on loans and notes payable								148,975			(2,411	)
Dividends		(11,267	)		(11,379	)		(22,159	)		(22,760	)
Stock option proceeds and tax benefits		750			2,418			2,591			10,010
Treasury stock purchases		(48,232	)		—			(48,232	)		(26,559	)

Net cash provided by financing activities		211,291			123,656
Net cash provided by (used in) financing activities								81,175			(41,720	)

EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		828			669
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE
CHANGES ON CASH AND CASH EQUIVALENTS								1,353			800

NET DECREASE IN CASH AND CASH EQUIVALENTS		(58,498	)		(121,814	)		(72,168	)		(98,058	)

CASH AND CASH EQUIVALENTS, beginning		95,091			161,573			95,091			161,573

CASH AND CASH EQUIVALENTS, ending	$	36,593		$	39,759		$	22,923		$	63,515

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid	$	18,745		$	20,130		$	40,046		$	38,374

Income taxes paid	$	1,320		$	21,347		$	2,379		$	36,433

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 accounting principles generally accepted in the United States. However, in the opinion of Briggs & Stratton Corporation, adequate disclosures have been presented to ~~make~~prevent the information ~~not~~from being 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. These consolidated condensed financial statements should be read in conjunction with the financial statements and the notes thereto which were included in our latest Annual Report on Form 10-K.

Briggs & Stratton repurchased 1,733,200 common shares at a total cost of $48.2 million during the first quarter of fiscal 2007. No shares were repurchased during the second ~~quarter~~and third quarters of fiscal ~~2007 or~~2007. Briggs & Stratton repurchased 753,500 shares at a total cost of $26.6 million during the ~~first six-months of fiscal~~three months ended April 2, 2006. The timing and amount of future repurchases will depend on the market price of the stock and certain governing loan covenants.

Basic earnings per share, for each period presented, is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share, for each period presented, is computed reflecting the potential dilution that would occur if options or other contracts to issue common stock were exercised or converted into common stock at the beginning of the period.

Shares outstanding used to compute diluted earnings per share for the ~~quarter and six months~~nine-months ended ~~December 31, 2006~~April 1, 2007 excluded ~~approximately 149,000 and 144,000~~152,000 shares ~~respectively,~~ for restricted and deferred stock as their inclusion would have been anti-dilutive. For the quarter and ~~six months~~nine-months ended ~~January 1,~~April 2, 2006, ~~there was~~ no restricted or deferred stock was excluded from the computation of diluted earnings per share. Outstanding options to purchase approximately ~~3,443,000~~3,371,000 and ~~3,317,000~~3,290,000 shares of common stock for the quarter and ~~six months~~nine-months ended ~~December 31, 2006,~~April 1, 2007, respectively, were excluded. For the nine-months ended April 1, 2007 outstanding options to purchase shares were excluded from the computation of diluted earnings per share as their inclusion would have been ~~anti-dilutive.~~anti-dilutive, and for the quarter ended April 1, 2007, shares were excluded from the computation as the options’ exercise price was greater than the average market price of the common shares. In the prior fiscal year for the quarter and ~~six months~~nine-months ended ~~January 1,~~April 2, 2006, outstanding options to purchase approximately ~~1,504,000~~1,434,000 and ~~1,422,000~~1,380,000 shares of common stock, respectively, were excluded from the computation of diluted earnings per share because the options’ exercise price was greater than the average market price of the common shares.


	Three Months Ended					Six Months Ended
	December 31,			January 1,		December 31,			January 1,		Three Months Ended				Nine Months Ended
	2006			2006		2006			2006		April 1, 2007		April 2, 2006		April 1, 2007			April 2, 2006
Net income (loss)	$	(5,910	)	$	21,818	$	(23,948	)	$	26,545	$	7,770	$	60,008	$	(16,178	)	$	86,553

Average shares of common stock outstanding		50,583			51,695		49,983			51,714		50,621		51,478		49,795			51,633

Incremental common shares applicable to common stock options based on the common stock average market price during the period		—			307		—			314		11		34		—			36

Incremental common shares applicable to restricted and deferred common stock based on the common stock average market price during the period		—			64		—			65		86		49		—			61

Diluted average shares of common stock outstanding		50,583			52,066		49,983			52,093		50,718		51,561		49,795			51,730

Comprehensive income is a more inclusive financial reporting method that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income. Comprehensive income is defined as net income and other changes in shareholders’ investment from transactions and events other than with shareholders. Total comprehensive income (loss) is as follows (in thousands):

~~The components of Accumulated Other Comprehensive Income are as follows (in thousands):~~


	December 31,			July 2,				Three Months Ended						Nine Months Ended
	2006			2006				April 1, 2007			April 2, 2006			April 1, 2007			April 2, 2006
Net income (loss)								$	7,770		$	60,008		$	(16,178	)	$	86,553

Cumulative translation adjustments	$	9,042		$	7,524				781			(213	)		2,299			(128	)

Unrealized gain (loss) on derivative instruments									2,918			(3,053	)		142			(643	)

Total comprehensive income (loss)								$	11,469		$	56,742		$	(13,737	)	$	85,782


The components of Accumulated Other Comprehensive Income are as follows (in thousands):							The components of Accumulated Other Comprehensive Income are as follows (in thousands):

								April 1, 2007			July 2, 2006
Cumulative translation adjustments								$	9,823		$	7,524

Unrealized loss on derivative instruments		(3,112	)		(336	)			(194	)		(336	)

Minimum pension liability adjustment		(2,228	)		(2,228	)			(2,228	)		(2,228	)

Accumulated other comprehensive income	$	3,702		$	4,960			$	7,401		$	4,960

Derivatives are recorded on the balance sheet as assets or liabilities, measured at fair value. Briggs & Stratton enters into derivative contracts designated as cash flow hedges to manage ~~its foreign~~ currency and certain material exposures. These instruments generally do not have a maturity of more than twelve months.

Changes in the fair value of cash flow hedges to manage its foreign currency exposure are recorded on the Consolidated Condensed Statements of Income or as a component of Accumulated Other Comprehensive Income. The amounts included in Accumulated Other Comprehensive Income will be reclassified into income when the forecasted transactions ~~occur, generally within the next twelve months.~~occur. These forecasted transactions represent the exporting of products for which Briggs & Stratton will receive foreign currency and the importing of products for which it will be required to pay in a foreign currency. Changes in the fair value of all derivatives deemed to be ineffective ~~are~~would be recorded as either income or expense in the accompanying Consolidated Condensed Statements of Income.

Briggs & Stratton manages its exposure to fluctuation in the cost of natural gas used by its operating facilities through participation in a third party managed dollar cost averaging program linked to NYMEX futures. As a participant in the program, Briggs & Stratton hedges a minimum of 50% of its anticipated monthly natural gas usage along with a pool of other companies. Briggs & Stratton does not hold any actual futures contracts, and actual delivery of natural gas is not required of the participants in the program. Cash settlements occur on a monthly basis based on the difference between the average dollar price of the underlying NYMEX futures held by the third party and the actual price of natural gas paid by Briggs & Stratton in the period. The fair value of the underlying NYMEX futures is reflected as an asset or liability on the accompanying Consolidated Condensed Balance Sheets. Changes in fair value are reflected as a Component of Accumulated Other Comprehensive Income, which are reclassified into the income statement as the monthly cash settlements occur and actual natural gas is consumed.

Briggs & Stratton manages its exposure to fluctuations in the cost of copper to be used in manufacturing by entering into forward purchase contracts designated as cash flow hedges. Briggs & Stratton hedges approximately 35% of its anticipated copper usage, and the fair value of outstanding future contracts is reflected as an asset or liability on the accompanying Consolidated Condensed Balance Sheet based on NYMEX prices. Changes in fair value are reflected as a Component of Accumulated Other Comprehensive Income if the forward purchase contracts are deemed to be effective. Changes in the fair value of all derivatives deemed to be ineffective would be recorded as either income or expense in the accompanying Consolidated Condensed Statements of Income. Unrealized gains or losses associated with the forward purchase contracts are captured in inventory costs and are realized in the income statement when sales of inventory are made.

Briggs & Stratton operates two reportable business segments that are managed separately based on fundamental differences in their operations. Summarized segment data is as follows (in thousands):


	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	December 31, 2006			January 1, 2006			December 31, 2006			January 1, 2006			April 1, 2007			April 2, 2006			April 1, 2007			April 2, 2006
NET SALES:
Engines	$	279,018		$	380,844		$	468,614		$	666,273		$	516,067		$	597,608		$	984,681		$	1,263,938
Power Products		170,406			256,666			357,293			557,273			248,759			287,766			606,052			844,982
Inter-Segment Eliminations		(26,365	)		(63,197	)		(64,599	)		(137,524	)		(47,773	)		(85,180	)		(112,372	)		(222,704	)

Total	$	423,059		$	574,313		$	761,308		$	1,086,022		$	717,053		$	800,194		$	1,478,361		$	1,886,216

GROSS PROFIT ON SALES:
Engines	$	53,428		$	93,505		$	78,127		$	153,189		$	57,109		$	148,598		$	135,236		$	301,785
Power Products		13,477			26,470			33,730			45,974			26,016			37,490			59,746			83,466
Inter-Segment Eliminations		459			(2,623	)		(131	)		(503	)		2,087			(5,155	)		1,956			(5,658	)

Total	$	67,364		$	117,352		$	111,726		$	198,660		$	85,212		$	180,933		$	196,938		$	379,593

INCOME (LOSS) FROM OPERATIONS:
Engines	$	6,030		$	35,701		$	(18,092	)	$	44,468		$	12,891		$	88,794		$	(5,201	)	$	133,260
Power Products		(3,978	)		5,552			(1,225	)		5,696			5,945			14,551			4,720			20,249
Inter-Segment Eliminations		459			(2,623	)		(131	)		(503	)		2,087			(5,155	)		1,956			(5,658	)

Total	$	2,511		$	38,630		$	(19,448	)	$	49,661		$	20,923		$	98,190		$	1,475		$	147,851

Briggs & Stratton 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):


	Six Months Ended						Nine Months Ended
	December 31, 2006			January 1, 2006			April 1, 2007			April 2, 2006
Beginning balance	$	53,233		$	59,625		$	53,233		$	59,625
Payments		(17,518	)		(21,680	)		(26,537	)		(29,371	)
Provision for current year warranties		16,756			18,302			25,218			26,460
Adjustments to prior years’ warranties		(2,900	)		(5,087	)		1,877			(3,587	)

Ending balance	$	49,571		$	51,160		$	53,791		$	53,127

Stock based compensation is calculated by estimating the fair value of incentive stock awards granted and amortizing the estimated value over the awards’ vesting period. Stock based compensation expense was ~~$2.1~~$1.8 million and ~~$4.9~~$6.7 million for the quarter and ~~six months~~nine-months ended ~~December 31, 2006,~~April 1, 2007, respectively. For the quarter and ~~six months~~nine-months ended ~~January 1,~~April 2, 2006, stock based compensation was ~~$2.3~~$2.1 million and ~~$4.4~~$6.5 million, respectively.

Briggs & Stratton has noncontributory, defined benefit retirement plans and postretirement plans covering certain employees. The following tables summarize the plans’ income and expense for the periods indicated (in thousands):


														Pension Benefits						Other Postretirement Benefits
														Three Months Ended						Three Months Ended
														April 1, 2007			April 2, 2006			April 1, 2007			April 2, 2006
Components of net periodic expense:
Service cost-benefits earned														$	3,272		$	3,858		$	444		$	758
Interest cost on projected benefit obligation															14,484			13,149			4,002			3,756
Expected return on plan assets															(17,099	)		(17,250	)		—			—
Amortization of:
Transition obligation															2			2			11			12
Prior service cost															823			823			(212	)		(157	)
Actuarial loss															1,335			2,563			3,334			3,948

Net periodic expense														$	2,817		$	3,145		$	7,579		$	8,317

	Pension Benefits						Other Postretirement Benefits
	Six Months Ended						Six Months Ended							Pension Benefits						Other Postretirement Benefits
	December 31, 2006			January 1, 2006			December 31, 2006				January 1, 2006			Nine Months Ended						Nine Months Ended
	December 31, 2006						December 31, 2006			April 1, 2007					April 2, 2006			April 1, 2007			April 2, 2006
Components of net periodic expense:				January 1, 2006
Service cost-benefits earned	$	6,624		$	7,715		$	1,212			January 1, 2006	$	1,515		$	9,817		$	11,572		$	1,332		$	2,273
Interest cost on projected benefit obligation		28,996			26,298			7,962				7,513			43,453			39,447			12,005			11,269
Expected return on plan assets		(34,109	)		(34,499	)		—				—			(51,296	)		(51,749	)		—			—
Amortization of:
Transition obligation		4			4			24				23			6			6			35			35
Prior service cost		1,645			1,646			(426	)			(315	)		2,468			2,469			(637	)		(472	)
Actuarial loss		2,716			5,127			7,120				7,897			4,004			7,690			10,003			11,845

Net periodic expense	$	5,876		$	6,291		$	15,892			$	16,633		$	8,452		$	9,435		$	22,738		$	24,950

Briggs & Stratton is not required to make any contributions to the pension plans in fiscal 2007 and did not make any contributions in fiscal 2006; however, the Company expects to contribute up to $8 million of the $12 million ~~in fiscal 2007 as approved~~authorized by the Board of ~~Directors.~~Directors in fiscal 2007. During the ~~six months~~nine-months ended ~~December 31, 2006,~~April 1, 2007, the Company contributed $8.0 million to the pension plans.

Briggs & Stratton expects to make benefit payments of approximately ~~$1.7~~$1.5 million for its non-qualified pension plans during fiscal 2007. During the ~~six months~~nine-months ended ~~December 31, 2006,~~April 1, 2007, Briggs & Stratton made payments of approximately ~~$0.7~~$1.3 million for its non-qualified pension plans. Briggs & Stratton anticipates making benefit payments of approximately ~~$35~~$33.3 million for its other postretirement benefit plans during fiscal 2007. During the ~~six months~~nine-months ended ~~December 31, 2006,~~April 1, 2007, Briggs & Stratton had made payments of ~~$17.2~~$25.0 million for its other postretirement benefit plans.

On July 13, 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109”. Interpretation 48 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance with FASB Statement No. 109 and prescribes a standard methodology for financial statement disclosure of tax positions taken or expected to be taken on a tax return. Interpretation 48 is effective for fiscal years beginning after December 15, 2006, with early adoption permitted. At this time, the impact of adoption of Interpretation 48 on our consolidated financial position is being assessed.

On September 15, 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. At this time, the impact of adoption of SFAS No.157 on our consolidated financial position is being assessed.

On September 29, 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans”. Effective for fiscal years ending after December 15, 2006, SFAS No. 158 requires the recognition of a net liability or asset on the balance sheet to reflect the funded status of defined benefit pension and other postretirement benefit plans. Adoption of SFAS No. 158 will be on a prospective basis and is expected to occur during the fourth quarter of the fiscal 2007. Based upon our review, had SFAS No. 158 been adopted as of the end of fiscal 2006, Pension and Other Postretirement liabilities would have increased $205 million with a corresponding decrease in equity of $125 million, net of $80 million of deferred taxes. The adoption of SFAS No. 158 will not have any impact on the company’s Consolidated Condensed Statement of Cash Flows.

Briggs & Stratton 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.

On June 3, 2004, eight individuals who claim to have purchased lawnmowers in Illinois and Minnesota filed a lawsuit (Ronnie Phillips et al. v. Sears Roebuck Corporation et al., No. 04-L-334 (20th Judicial Circuit, St. Clair County, IL)) against Briggs & Stratton and other defendants alleging that the horsepower labels on the products they purchased were inaccurate. The plaintiffs have amended their complaint several times and currently seek an injunction, compensatory and punitive damages, and attorneys’ fees under various ~~Federal~~federal and state laws including the Racketeer Influenced and Corrupt Organization Act on behalf of all persons in the United States who, beginning January 1, 1994 through the present, purchased a lawnmower containing a two-stroke or four-stroke gasoline combustion engine up to 30 horsepower that was manufactured by the defendants. On May 31, 2006, the defendants removed the case to the U.S. District Court for the Southern District of Illinois (No. 06-412-DRH). The defendants subsequently filed cross claims against each other for indemnification and contribution and filed a motion to dismiss the amended complaint. On March 30, 2007, the Court issued an order granting the defendants’ motion to dismiss the amended complaint in its entirety, but the order permits the plaintiffs to refile a complaint after amending several claims. An opinion of the Court providing more detail concerning its order is expected but has not yet been filed. Two defendants, MTD Products, Inc. and American Honda Motor Company, have notified the Court that they have reached a settlement with the putative plaintiff class, but neither defendant’s agreement has yet been approved by the Court.

Although it is not possible to predict with certainty the outcome of these unresolved legal actions or the range of possible loss, Briggs & Stratton believes these unresolved legal actions will not have a material effect on its financial position.

Impairment charges were recognized in the Consolidated Condensed Statement of Income for $35.2 million pretax ($21.4 million after tax) during the third quarter of fiscal 2007. The $35.2 million pretax write-down of assets was recognized in the Engines and Power Products Segments for $33.9 million and $1.3 million, respectively. The Engines Segment’s $33.9 million charge was primarily for the write-down of assets of a major engine manufacturing facility in the United States that will be closing in fiscal 2008. The remaining $1.3 million for the Power Products Segment was for a write-down of assets at an international manufacturing site. For each segment, it was determined that the carrying value of the assets exceeded the undiscounted cash flows. Fair value was determined based on market prices for comparable assets.

In June 1997, Briggs & Stratton issued $100 million of 7.25% senior notes; in May 2001, Briggs & Stratton issued $275 million of 8.875% senior notes; and in February 2005, Briggs & Stratton issued $125 million of variable rate term notes. In addition, Briggs & Stratton has a $350 million revolving credit facility that expires in May 2009 that is used to finance seasonal working capital needs.

Under the terms of Briggs & Stratton’s 8.875% senior notes, 7.25% senior notes, variable rate term notes, and the revolving credit agreement (collectively, the “Domestic Indebtedness”), Briggs & Stratton Power Products Group, LLC and its wholly owned subsidiary, Simplicity Manufacturing, Inc., are joint and several guarantors of the Domestic Indebtedness (the “Guarantor”). The guarantees are full and unconditional guarantees. Additionally, if at any time a domestic subsidiary of Briggs & Stratton 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 Briggs & Stratton 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. Briggs & Stratton had the following outstanding amounts related to the guaranteed debt (in thousands):

The following condensed supplemental consolidating financial information reflects the summarized financial information of Briggs & Stratton, its Guarantor and Non-Guarantor Subsidiaries (in thousands):


	Briggs & Stratton Corporation		Guarantor Subsidiary		Non-Guarantor Subsidiaries		Eliminations			Consolidated		Briggs & Stratton Corporation		Guarantor Subsidiary		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Current assets	$	775,527	$	765,151	$	182,159	$	(516,181	)	$	1,206,656	$	715,429	$	814,903	$	198,119	$	(587,662	)	$	1,140,789
Investment in subsidiaries		794,621		—		—		(794,621	)		—		800,266		—		—		(800,266	)		—
Non-current assets		440,108		440,570		30,001		—			910,679		397,349		443,136		31,684		—			872,169

	$	2,010,256	$	1,205,721	$	212,160	$	(1,310,802	)	$	2,117,335	$	1,913,044	$	1,258,039	$	229,803	$	(1,387,928	)	$	2,012,958

Current liabilities	$	664,330	$	383,258	$	137,703	$	(498,596	)	$	686,695	$	622,381	$	434,835	$	151,479	$	(573,776	)	$	634,919
Long-term debt		302,630		—		—		—			302,630		267,769		—		—		—			267,769
Other long-term obligations		128,322		101,950		349		—			230,621		107,376		100,910		352		—			208,638
Shareholders’ investment		914,974		720,513		74,108		(812,206	)		897,389		915,518		722,294		77,972		(814,152	)		901,632

	$	2,010,256	$	1,205,721	$	212,160	$	(1,310,802	)	$	2,117,335	$	1,913,044	$	1,258,039	$	229,803	$	(1,387,928	)	$	2,012,958


	Briggs & Stratton Corporation			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated			Briggs & Stratton Corporation			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	270,431		$	166,225		$	47,204		$	(60,801	)	$	423,059		$	499,703		$	240,870		$	55,175		$	(78,695	)	$	717,053
Cost of goods sold		223,773			154,134			37,775			(59,987	)		355,695			416,096			217,085			45,321			(81,861	)		596,641
Impairment charge																	33,900			—			1,300			—			35,200

Gross profit		46,658			12,091			9,429			(814	)		67,364			49,707			23,785			8,554			3,166			85,212
Engineering, selling, general and administrative expenses		40,316			16,710			7,827			—			64,853			38,980			19,388			5,921			—			64,289

Income (Loss) from operations		6,342			(4,619	)		1,602			(814	)		2,511
Income from operations																	10,727			4,397			2,633			3,166			20,923
Interest expense		(12,587	)		(32	)		(63	)		853			(11,829	)		(13,121	)		(44	)		(48	)		525			(12,688	)
Other income (expense), net		(1,531	)		1,206			(165	)		1,411			921			12,402			70			709			(8,383	)		4,798

Income (Loss) before income taxes		(7,776	)		(3,445	)		1,374			1,450			(8,397	)		10,008			4,423			3,294			(4,692	)		13,033
Provision (Credit) for income taxes		(2,293	)		(939	)		318			427			(2,487	)		4,361			2,712			313			(2,123	)		5,263

Net income (loss)	$	(5,483	)	$	(2,506	)	$	1,056		$	1,023		$	(5,910	)	$	5,647		$	1,711		$	2,981		$	(2,569	)	$	7,770


	Briggs & Stratton Corporation			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated			Briggs & Stratton Corporation			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	450,616		$	347,712		$	93,189		$	(130,209	)	$	761,308		$	950,319		$	588,582		$	148,364		$	(208,904	)	$	1,478,361
Cost of goods sold		381,957			318,658			76,133			(127,166	)		649,582			798,053			535,743			121,454			(209,027	)		1,246,223
Impairment charge																	33,900			—			1,300			—			35,200

Gross profit		68,659			29,054			17,056			(3,043	)		111,726			118,366			52,839			25,610			123			196,938
Engineering, selling, general and administrative expenses		81,274			33,504			16,396			—			131,174			120,254			52,892			22,317			—			195,463

Income (Loss) from operations		(12,615	)		(4,450	)		660			(3,043	)		(19,448	)		(1,888	)		(53	)		3,293			123			1,475
Interest expense		(22,171	)		(37	)		(133	)		1,475			(20,866	)		(35,292	)		(81	)		(181	)		2,000			(33,554	)
Other income (expense), net		(674	)		2,160			(323	)		3,215			4,378			11,728			2,230			386			(5,168	)		9,176

Income (Loss) before income taxes		(35,460	)		(2,327	)		204			1,647			(35,936	)		(25,452	)		2,096			3,498			(3,045	)		(22,903	)
Provision (Credit) for income taxes		(11,844	)		(935	)		459			332			(11,988	)		(7,483	)		1,777			772			(1,791	)		(6,725	)

Net income (loss)	$	(23,616	)	$	(1,392	)	$	(255	)	$	1,315		$	(23,948	)	$	(17,969	)	$	319		$	2,726		$	(1,254	)	$	(16,178	)


	Briggs & Stratton Corporation			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated			Briggs & Stratton Corporation			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	372,267		$	254,327		$	48,315		$	(100,596	)	$	574,313		$	585,925		$	280,504		$	47,443		$	(113,678	)	$	800,194
Cost of goods sold		283,960			227,466			40,457			(94,922	)		456,961			445,238			245,779			37,187			(108,943	)		619,261

Gross profit		88,307			26,861			7,858			(5,674	)		117,352			140,687			34,725			10,256			(4,735	)		180,933
Engineering, selling, general and administrative expenses		50,335			20,139			8,248			—			78,722			53,126			21,895			7,722			—			82,743

Income (Loss) from operations		37,972			6,722			(390	)		(5,674	)		38,630			87,561			12,830			2,534			(4,735	)		98,190
Interest expense		(13,380	)		(17	)		(89	)		2,181			(11,305	)		(10,764	)		(11	)		(43	)		(75	)		(10,893	)
Other income (expense), net		7,097			2,411			(247	)		(3,038	)		6,223			8,844			295			(150	)		(7,481	)		1,508

Income (Loss) before income taxes		31,689			9,116			(726	)		(6,531	)		33,548			85,641			13,114			2,341			(12,291	)		88,805
Provision (Credit) for income taxes		11,091			2,503			(644	)		(1,220	)		11,730			27,756			3,061			103			(2,123	)		28,797

Net income (loss)	$	20,598		$	6,613		$	(82	)	$	(5,311	)	$	21,818		$	57,885		$	10,053		$	2,238		$	(10,168	)	$	60,008


	Briggs & Stratton Corporation			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated			Briggs & Stratton Corporation			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	639,308		$	552,186		$	98,620		$	(204,092	)	$	1,086,022		$	1,225,233		$	832,690		$	146,063		$	(317,770	)	$	1,886,216
Cost of goods sold		498,489			507,929			81,997			(201,053	)		887,362			943,727			753,708			119,184			(309,996	)		1,506,623

Gross profit		140,819			44,257			16,623			(3,039	)		198,660			281,506			78,982			26,879			(7,774	)		379,593
Engineering, selling, general and administrative expenses		93,258			38,428			17,313			—			148,999			146,384			60,323			25,035			—			231,742

Income (Loss) from operations		47,561			5,829			(690	)		(3,039	)		49,661			135,122			18,659			1,844			(7,774	)		147,851
Interest expense		(24,751	)		(31	)		(142	)		3,591			(21,333	)		(35,515	)		(42	)		(185	)		3,516			(32,226	)
Other income (expense), net		14,808			4,187			(1,235	)		(5,273	)		12,487			23,652			4,482			(1,385	)		(12,754	)		13,995

Income (Loss) before income taxes		37,618			9,985			(2,067	)		(4,721	)		40,815			123,259			23,099			274			(17,012	)		129,620
Provision (Credit) for income taxes		13,166			3,201			(4	)		(2,093	)		14,270			40,922			6,262			99			(4,216	)		43,067

Net income (loss)	$	24,452		$	6,784		$	(2,063	)	$	(2,628	)	$	26,545		$	82,337		$	16,837		$	175		$	(12,796	)	$	86,553


	Briggs & Stratton Corporation			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated			Briggs & Stratton Corporation			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net Cash (Used in) Provided by Operating Activities	$	(284,741	)	$	44,440		$	(13,327	)	$	12,435		$	(241,193	)
Net Cash Provided by (Used in) Operating Activities																$	(156,058	)	$	41,545		$	(6,420	)	$	11,653		$	(109,280	)

Cash Flows from Investing Activities:
Additions to plant and equipment		(13,586	)		(5,237	)		(11,043	)		—			(29,866	)		(18,997	)		(12,902	)		(14,100	)		—			(45,999	)
Proceeds received on sale of plant and equipment		358			32			52			—			442			472			52			59						583
Cash investment in subsidiary		(383	)		—			(148	)		531			—			(381	)		—			(1,319	)		1,700			—

Net Cash (Used in) Provided by Investing Activities		(13,611	)		(5,205	)		(11,139	)		531			(29,424	)
Net Cash Provided by (Used in) Investing Activities																	(18,906	)		(12,850	)		(15,360	)		1,700			(45,416	)

Cash Flows from Financing Activities:
Net borrowings (repayments) on loans and notes payable		311,019			(38,746	)		9,721			(11,954	)		270,040			187,618			(35,554	)		8,564			(11,653	)		148,975
Dividends		(11,267	)		—			481			(481	)		(11,267	)		(22,159	)		—			—			—			(22,159	)
Stock option proceeds and tax benefits		750			—			—			—			750			2,591			—			—			—			2,591
Treasury stock purchases		(48,232	)		—			—			—			(48,232	)		(48,232	)		—			—			—			(48,232	)
Capital contributions received		—			383			148			(531	)		—			—			382			1,318			(1,700	)		—

Net Cash Provided by (Used in) Financing Activities		252,270			(38,363	)		10,350			(12,966	)		211,291			119,818			(35,172	)		9,882			(13,353	)		81,175

Effect of Foreign Currency Exchange Rate Changes on Cash and Cash Equivalents		—			—			828			—			828			(2	)		—			1,355			—			1,353

Net (Decrease) Increase in Cash and Cash Equivalents		(46,082	)		872			(13,288	)		—			(58,498	)
Net Increase (Decrease) in Cash and Cash Equivalents																	(55,148	)		(6,477	)		(10,543	)		—			(72,168	)
Cash and Cash Equivalents, Beginning		57,623			6,812			30,656			—			95,091			57,623			6,812			30,656			—			95,091

Cash and Cash Equivalents, Ending	$	11,541		$	7,684		$	17,368		$	—		$	36,593		$	2,475		$	335		$	20,113		$	—		$	22,923


	Briggs & Stratton Corporation			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated			Briggs & Stratton Corporation			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net Cash (Used in) Provided by Operating Activities	$	(316,529	)	$	81,152		$	(3,264	)	$	10,713		$	(227,928	)
Net Cash Provided by (Used in)
Operating Activities																$	15,351		$	(54,083	)	$	5,363		$	11,857		$	(21,512	)

Cash Flows from Investing Activities:
Additions to plant and equipment		(23,427	)		(8,532	)		(2,395	)		—			(34,354	)		(35,058	)		(11,529	)		(2,822	)		—			(49,409	)
Proceeds received on sale of plant and equipment		10,641			46			9			—			10,696			10,761			46			29			—			10,836
Cash investment in subsidiary		(382	)		—			—			382			—			(391	)		—			9			382			—
Investment in joint venture		(900	)		—			—			—			(900	)		(900	)		—			—			—			(900	)
Refund of cash paid for acquisition		—			6,347			—			—			6,347			—			6,347			—			—			6,347
Loan receivable																	(2,500	)		—			—			—			(2,500	)

Net Cash (Used in) Provided by Investing Activities		(14,068	)		(2,139	)		(2,386	)		382			(18,211	)
Net Cash Provided by (Used in) Investing Activities																	(28,088	)		(5,136	)		(2,784	)		382			(35,626	)

Cash Flows from Financing Activities:
Net borrowings (repayments) on loans and notes payable		211,655			(81,771	)		13,445			(10,712	)		132,617			(62,422	)		57,457			14,410			(11,856	)		(2,411	)
Dividends		(11,379	)		—			—			—			(11,379	)		(22,760	)		—			—			—			(22,760	)
Stock option proceeds and tax benefits		2,418			—			—			—			2,418			10,010			—			—			—			10,010
Treasury stock purchases																	(26,559	)											(26,559	)
Capital contributions received		—			383			—			(383	)		—			—			383			—			(383	)		—

Net Cash Provided by (Used in) Financing Activities		202,694			(81,388	)		13,445			(11,095	)		123,656			(101,731	)		57,840			14,410			(12,239	)		(41,720	)

Effect of Foreign Currency Exchange Rate Changes on Cash and Cash Equivalents		—			—			669			—			669
Effect of Foreign Currency Exchange Rate
Changes on Cash and Cash Equivalents																	—			—			800			—			800

Net (Decrease) Increase in Cash and Cash Equivalents		(127,903	)		(2,375	)		8,464			—			(121,814	)
Net Increase (Decrease) in Cash and Cash Equivalents																	(114,468	)		(1,379	)		17,789			—			(98,058	)
Cash and Cash Equivalents, Beginning		143,034			6,376			12,163			—			161,573			143,034			6,376			12,163			—			161,573

Cash and Cash Equivalents, Ending	$	15,131		$	4,001		$	20,627		$	—		$	39,759		$	28,566		$	4,997		$	29,952		$	—		$	63,515

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is management’s discussion and analysis of Briggs & Stratton’s financial condition and results of operations for the periods included in the accompanying consolidated condensed financial statements:

Consolidated net sales for the ~~second~~third quarter of fiscal 2007 totaled ~~$423~~$717 million, a decrease of ~~$151~~$83 million or ~~26%~~10% when compared to fiscal 2006.

~~Second~~Third quarter net sales for the Engines Segment were ~~$279~~$516 million versus ~~$381~~$598 million in fiscal 2006, a decrease of ~~$102~~$82 million or ~~27%~~14%. The decrease in net sales primarily ~~results~~resulted from a ~~30%~~14% reduction in engine unit shipments in the ~~second~~third quarter of fiscal 2007 as compared to the same period last ~~year.~~year with approximately 60% of this reduction in shipments occurring in the United States. The reduction in engine shipments is attributed to several factors including the portable generator market. In fiscal 2006, portable generator manufacturers were building inventories in advance of the hurricane season; however, in fiscal 2007, the absence of significant landed hurricanes ~~during fiscal 2007~~ resulted in adequate portable generator inventories at both OEMs and retailers. The remainder of the decrease in sales volumes is attributed to lower ~~engine unit shipments to original equipment manufacturers (“OEMs”) for~~market share in the ~~production of generators. In addition, OEMs of lawn and garden equipment adjusted production schedules to manufacture product closer to the spring selling season, and~~European market as ~~a result,~~ some engine ~~shipments~~business has shifted to ~~the second half of fiscal 2007.~~competitors.

~~Second~~Third quarter fiscal 2007 Power Products Segment net sales were ~~$170~~$249 million, a decrease of ~~$86~~$39 million or ~~34%~~14% from fiscal 2006. ~~Generator~~Portable generator unit shipments were lower by ~~over 60%~~approximately 42% during the ~~second~~third quarter of fiscal 2007 ~~due to~~as retailers have adequate inventories for the ~~absence of significant landed hurricane activity during fiscal 2007. The reduction in demand for generators accounts for about 20%~~beginning of the ~~34% reduction in segment net~~upcoming storm season. Partially offsetting the decline from portable generators, pressure washer unit shipments increased 17% as a result of increased retail sell-through at new and existing customers. Lawn and garden equipment sales during the ~~quarter. The remainder~~third quarter of fiscal 2007 were lower primarily as a result of decreased shipments to major retailers due to reduced product placement as compared to fiscal 2006. Lower Murray branded product shipments associated with product placement represent nearly 40% of the ~~decrease~~reduction in net sales for the Power Products Segment ~~is attributed to lawn and garden equipment sold under~~during the ~~Murray brand. During~~third quarter of fiscal ~~2006, the wind-down of Murray operations was completed, and as a result, fiscal 2007 second quarter sales for Murray branded product are lower.~~2007.

Consolidated net sales for the first ~~six-months~~nine-months of fiscal 2007 totaled ~~$761~~$1,478 million, a decrease of ~~$325~~$408 million or ~~30%~~22%, compared to the first ~~six months~~nine-months of last year.

Engines Segment net sales for the first ~~six-months~~nine-months of fiscal 2007 were ~~$469~~$985 million, a decrease of ~~$198~~$279 million or ~~30%~~22% from fiscal 2006. Reduced sales during the first ~~six-months~~nine-months of fiscal 2007 ~~result~~resulted from a decline in engine unit shipments of ~~nearly 33%.~~approximately 23% with approximately 85% of this reduction in shipments occurring in the United States. The reduction in unit shipments was the result of ~~two primary~~several factors, which have led to lower ~~OEM~~original equipment manufacturer (OEM) demand for engines. The first factor was the absence of significant landed hurricanes during fiscal 2007. The absence of significant landed hurricanes in fiscal 2007 limited portable generator demand from OEMs and ~~the~~retailers as inventory levels remain adequate in their respective distribution channels. The second factor was a shift in lawn and garden OEM production schedules ~~closer~~ to later in the ~~spring selling~~ season. ~~Consistent with second quarter fiscal 2007 results, these~~The third factor is the lower market share in Europe as some engine business shifted to competitors. These factors have negatively impacted both unit volumes and segment net ~~sales.~~sales for the nine-months of fiscal 2007 as compared to fiscal 2006.

Power Products Segment net sales for the first ~~six months~~nine-months of fiscal 2007 were ~~$357~~$606 million versus ~~$557~~$845 million in the prior year, a decrease of ~~$200~~$239 million or ~~36%~~28%. Unit shipments of generators declined over ~~50%~~52% during the first ~~six-months~~nine-months of fiscal 2007, and the decline in segment net sales associated with generators ~~was approximately 56%. The remaining decline in net sales resulted primarily from a reduction in sales of $82 million in Murray branded product due to the wind-down of operations.~~

was approximately 59%. The remainder of the decrease primarily resulted from reduced net sales of $97 million for Murray branded product due to reduced product placement.

The consolidated gross profit margin in the ~~second~~third quarter of fiscal 2007 decreased to ~~15.9%~~11.9% from ~~20.4%~~22.6% in the same period last year.

Engines Segment margins decreased to ~~19.1%~~11.1 % in the ~~second~~third quarter of fiscal 2007 from ~~24.6%~~24.9 % in the ~~second~~third quarter of fiscal 2006. Nearly 50% of the decline in gross profit margin during the third quarter of fiscal 2007 is primarily attributed to the $34 million write-down of assets associated with the rationalization of a major operating plant in the United States. The remaining decline in gross profit margins is attributed primarily to the combination of reduced fixed cost absorption associated with lower production levels and higher material costs experienced during the fiscal 2007 third quarter. Decreased engine production was due primarily to diminished engine demand for the production of portable generators and ~~a program to lower~~reduced production in an effort to reduce ~~on hand~~ engine inventories. In addition, the increase in the costs of commodities such as aluminum and zinc and other components used to manufacture engines led to higher material costs.

The Power Products Segment gross profit margin decreased to ~~7.9%~~10.5 % for the ~~second~~third quarter of fiscal 2007 from ~~10.3%~~13.0 % in the ~~second~~third quarter of fiscal 2006. ~~Increases~~For the third quarter, the impact of reduced landed hurricane activity in ~~commodity and component costs~~fiscal 2007 as compared to fiscal 2006 has resulted in adequate inventories in the Power Products segment ~~coupled with reduced~~and in the retail distribution channel. Consequently, production levels of portable generators are lower and fixed cost absorption ~~as a result of lower generator sales are the main causes for the~~remains unfavorable resulting in reduced gross profit ~~margin decline~~margins during the ~~second quarter of fiscal 2007. These negative factors more than offset improved gross profit contributions during the second~~third quarter of fiscal 2007 ~~of $4 million associated with Murray branded product.~~as compared to fiscal 2006.

The consolidated gross profit margin for the ~~six-month~~nine-month period decreased to ~~14.7%~~13.3 % in fiscal 2007 from ~~18.3%~~20.1 % in fiscal 2006.

Engines Segment gross profit margin for the ~~six-month~~nine-month period decreased to ~~16.7%~~13.7 % in fiscal 2007 from ~~23.0%~~23.9 % in fiscal 2006. ~~The absence~~A $34 million write-down of ~~over $5 million in gains recorded on the disposition of operating~~ assets in the third quarter of fiscal ~~2006~~2007 associated with the rationalization of a major operating plant in the United States accounts for ~~a portion~~over one-third of the decline in gross profit ~~margin during the first half of fiscal 2007. The remaining decrease~~margin. Remaining decreases in gross profit margin isare attributed primarily to increased commodity costs and reduced production levels, ~~and~~which resulted in unfavorable fixed cost absorption, ~~resulting from lower~~as demand for engines from ~~OEMs.~~OEMs was lower. Consistent with net sales discussions, lower demand from OEMs is attributed to portable generator demand, delays in lawn and garden OEM production schedules, and reduced share in the European market.

Power Products Segment margins for the ~~six-month~~nine-month period ~~increased to 9.4%~~were 9.9% in fiscal 2007 ~~from 8.2% in~~and fiscal 2006. Negative gross profit in the first ~~six-months~~nine-months of fiscal 2006 associated with the winding down of a transition supply agreement with the estate of Murray, Inc. did not occur in the first ~~six-months~~nine-months of fiscal 2007, resulting in favorable gross profit margin contributions of ~~nearly $16~~approximately $15 million during the first ~~six-months~~nine-months of fiscal 2007 as compared to the prior year. Increases in gross profit margin associated with Murray branded products were ~~partially~~entirely offset by increased commodity and component costs, ~~along with~~unfavorable mix and decreased fixed cost absorption due to decreased portable generator production.

Engineering, selling, general and administrative expenses were ~~$65~~$64 million in the ~~second~~third quarter of fiscal 2007, versus ~~$79~~$83 million in fiscal 2006. The ~~$14~~$19 million decrease is attributable largely to ~~a reduction in~~reduced legal and professional services of $5$6 million, ~~and~~ reduced employee costs associated with salaries and benefits expenses of

approximately $6$4 million, and reduced advertising related amounts of $4 million. Other decreases are associated with planned spending reduction efforts.

For the ~~six-months~~nine-months of fiscal 2007 as compared to fiscal 2006, engineering, selling, general and administrative expenses were ~~$131~~$195 million and ~~$149~~$232 million, respectively. The ~~$18~~$37 million decrease resulted primarily from lower legal and professional services of $7$13 million, ~~and~~ a decline in employee costs associated with salaries and benefits expenses of approximately $7 million, and reduced advertising related amounts of $7 million.

Interest expense was ~~$11.8~~$13 million in the ~~second~~third quarter of fiscal 2007, versus ~~$11.3~~$11 million in fiscal 2006. The increase resulted from higher variable interest rates between years and ~~higher~~increased average ~~borrowings.~~borrowings to fund increased working capital requirements. Interest expense was ~~$20.9~~$34 million in the first ~~six-months~~nine-months of fiscal 2007, versus ~~$21.3~~$32 million in fiscal 2006. The ~~decrease~~increase in interest expense resulted ~~primarily~~ from ~~lower~~higher variable interest rates and increased average borrowings to fund increased working capital requirements during the first ~~six months~~nine-months of fiscal 2007 as compared to fiscal 2006.

The effective tax rate for the ~~second~~third quarter of fiscal 2007 and fiscal 2006 was ~~30%~~40.4 % and ~~35%~~32.4%, respectively. The ~~decrease~~increase in the rate in the ~~second~~third quarter of fiscal 2007 as compared to fiscal 2006 resulted from ~~an adjustment~~changes in the ~~expected annual~~forecasted fiscal 2007 results and other tax considerations. For the first nine-months of fiscal 2007 and fiscal 2006, the effective tax rate ~~recorded in the second quarter of fiscal 2007 due to changes in fiscal 2007 forecasted results.~~was 29.4% and 33.2%, respectively. Management expects that the effective tax rate for the full year will be in the range of ~~32%~~17.0% to ~~34%~~23.0%. ~~For the first six-months of~~Tax rates in fiscal 2007 ~~and fiscal 2006,~~were impacted by the ~~effective~~availability of tax ~~rate was 33.4% and 35.0%, respectively. The estimated rate in the current year is attributable~~credits relative to ~~factors such as forecasted operating earnings by taxing jurisdiction, anticipated dividend~~lower income ~~and foreign tax credit considerations.~~levels.

Cash used in operating activities for the ~~six-month~~nine-month period of fiscal 2007 was ~~$241~~$109 million as compared to ~~$228~~$22 million for fiscal 2006. The lower fiscal 2007 cash flows from operating activities are ~~primarily~~largely the result of reduced operating earnings for both the Engines and Power Products Segments. ~~The~~Unfavorable working capital changes combined with reduced operating earnings were partially offset by ~~favorable changes~~the adjustment in ~~working capital accounts.~~cash flows from operating activities for non-cash impairment charges of $35 million. During the first ~~six-months~~nine-months of fiscal 2007 changes to working capital accounts including inventory, accounts payable, and accounts receivable resulted in a ~~$22~~$28 million ~~increase~~decrease in cash flows from operating activities as compared to the first ~~six-months~~nine-months of fiscal 2006. The changes in inventory accounts and accounts receivable are a result of the timing of production and shipments to OEMs. The change in accounts payable is due to the timing of payments.

In the ~~six-month~~nine-month period of fiscal 2007, there was ~~$29~~$45 million of cash used for investing activities as compared to ~~$18~~$36 million in fiscal 2006. ~~The increase in~~During the ~~use~~first nine months of fiscal 2006 the Company received cash ~~for investing activities is primarily a result of the absence of~~associated with proceeds ~~for~~from a building sale and a refund of acquisition related ~~funds received, both~~funds. The absence of ~~which occurred~~these events in fiscal ~~2006 but did not repeat~~2007 resulted in ~~fiscal 2007.~~the greater use of cash for investing activities.

Net cash provided by financing activities was ~~$211~~$81 million in fiscal 2007 versus ~~$124~~net cash used of $42 million in fiscal 2006, ~~an increase~~a change of ~~$87~~$123 million. The increase in cash provided by financing activities is attributable to increased net borrowings of ~~$137~~$151 million to fund working capital requirements and to repurchase ~~1.7 million~~treasury shares. Repurchases of treasury shares ~~for approximately~~in fiscal 2007 and 2006 were $48 ~~million.~~million and $27 million, respectively. Dividends ~~of $11 million~~paid were ~~paid~~comparable during both the first ~~six-months~~nine-months of fiscal 2006 and fiscal 2007.

Briggs & Stratton has a $350 million revolving credit facility that expires in May 2009. The credit facility is used to fund seasonal working capital requirements and other financing needs. As of the end of the ~~second~~third quarter of fiscal 2007, the unused availability of the revolving credit facility is approximately ~~$80~~$200 million. This credit facility and Briggs and Stratton’s other indebtedness contain restrictive covenants as described in Note 8 of the Notes to the Consolidated Financial Statements of the Company’s Annual Report on Form 10-K. As of the end of the ~~second~~third quarter of fiscal 2007, Briggs & Stratton was in compliance with these covenants.

We are currently in discussions with various lenders to extend the term and the borrowing capacity of our revolving credit facility.

On August 10, 2006, Briggs & Stratton announced its intent to initiate repurchases of up to $120 million of its common stock through open market transactions during fiscal 2007 and fiscal 2008. The timing and amount of actual purchases will depend upon the market price of the stock and certain governing loan covenants. As of ~~January 31,~~April 30, 2007, approximately $48 million of common stock has been repurchased under this plan.

Management expects cash outflows for capital expenditures to be ~~approximately~~between $70 million and $80 million in fiscal 2007. These anticipated expenditures provide for continued investment in equipment and new products. In fiscal 2007 and fiscal 2008, a manufacturing facility in Newbern, Tennessee will be established to produce end products for the Power Products Segment. Equipping the Newbern facility is expected to cost between $18 and $22 million, of which $6 million is expected to be spent in fiscal 2007 with the remainder spent in the subsequent year. These expenditures will be funded using available cash.

Management believes that available cash, the credit facility, cash generated from operations, existing lines of credit and access to debt markets will be adequate to fund capital requirements for the foreseeable future. During the fourth quarter of fiscal 2007 the Company expects to refinance the remaining $81 million of outstanding 7.25% senior notes. In the third quarter of fiscal 2008, the Company expects to repay the remaining $35 million of its unsecured three-year variable term loan.

As disclosed in January of 2007, we continue to evaluate and make changes to our manufacturing footprint. Location, capacity, flexibility, product demand and costs are all factors that are considered to optimize our global manufacturing operations.

As a result of this effort, we decided in the third quarter to discontinue our operations in Rolla, Missouri and have recognized an impairment in the value of the fixed assets that we will not be able to use in our other manufacturing locations. Engine manufacturing performed in Rolla today will move to China and other domestic locations.

In addition, we continue to evaluate the future direction of our facilities that produce lawn and garden equipment. The potential asset write-down associated with a decision to close a facility would be in the range of $8 to $10 million. We believe that we will be in a position to make a decision by the end of the current fiscal year.

There have been no material changes since the September 1, 2006, filing of the Company’s Annual Report on Form 10-K.

There have been no material changes in Briggs & Stratton’s critical accounting policies since the September 1, 2006 filing of its Annual Report on Form 10-K. As discussed in our annual report, the preparation of financial statements in conformity with accounting principles generally accepted in the United States. requires management to make estimates and 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.

The most significant accounting estimates inherent in the preparation of our financial statements include estimates as to the recovery of accounts receivable and inventory reserves, as well as estimates used in the determination of liabilities related to customer rebates, pension obligations, postretirement benefits, warranty, product liability, group health insurance and taxation. Various assumptions and other factors underlie the determination of these significant estimates. The process of determining significant estimates is fact specific and takes into account factors such as historical experience, current and expected economic conditions, product mix, and, in some instances, actuarial techniques. Briggs & Stratton re-evaluates these significant factors as facts and circumstances ~~change.~~change

On September 15, 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS No.157 is effective for fiscal years beginning after November 15, 2007. At this time, the impact of adoption of SFAS No.157 on our consolidated financial position is being assessed.

On September 29, 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans”. Effective for fiscal years ending after December 15, 2006, SFAS No. 158 requires the recognition of a net liability or asset on the balance sheet to reflect the funded status of defined benefit pension and other postretirement benefit plans. Adoption of SFAS No. 158 will be on a prospective basis and is expected to occur during the fourth quarter of the ~~current~~ fiscal ~~year. At this time,~~2007. Based upon our review, had SFAS No. 158 been adopted as of the ~~impact~~end of fiscal 2006, Pension and Other Postretirement liabilities would have increased $205 million with a corresponding decrease in equity of $125 million, net of $80 million of deferred taxes. The adoption of SFAS No. 158 will not have any impact on ~~our consolidated financial position is being assessed.~~the company’s Consolidated Condensed Statement of Cash Flows.

This 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 “anticipate”, “believe”, “estimate”, “expect”, “forecast”, “intend”, “may”, “objective”, “plan”, “project”, “seek”, “think”, “will”, 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 and appropriately adjust our manufacturing and inventory levels; changes in our operating expenses; changes in interest 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; the seasonal nature of our business; changes in laws and regulations, including environmental, tax, pension funding and accounting standards; work stoppages or other consequences of any deterioration in our employee relations; work stoppages by other unions that affect the ability of suppliers or customers to manufacture; acts of war or terrorism that may disrupt our business operations or those of our customers and suppliers; changes in customer and OEM demand; changes in prices of raw materials and parts that we purchase; changes in domestic economic conditions, including housing starts and changes in consumer disposable income; changes in foreign economic conditions, including currency rate fluctuations; the actions of customers of our OEM customers; ~~actions by potential acquirers of certain OEMs;~~ the ability to bring new productive capacity on line efficiently and with good quality; the ability to successfully realize the maximum market value of assets that may require disposal if products orof production methods change; new facts that come to light in the future course of litigation proceedings which could affect our assessment of those matters; and other factors that may be disclosed from time to time in our SEC filings or otherwise. Some or all of the factors may be beyond our control. We caution you that any forward-looking statement reflects only our belief at the time the statement is made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made.

There have been no material changes since the September 1, 2006, filing of the Company’s Annual Report on Form 10-K.

Briggs & Stratton’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of Briggs & Stratton’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, Briggs & Stratton’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 Briggs & Stratton in the reports that it files or submits under the Exchange Act.

There has not been any change in Briggs & Stratton’s internal control over financial reporting during the ~~second~~third fiscal quarter that has materially affected, or is reasonably likely to materially affect, Briggs & Stratton’s internal control over financial reporting.

A discussion of legal proceedings is included in the Notes to Consolidated Condensed Financial Statements of this Form 10-Q under the heading Commitments and Contingencies and incorporated herein by reference.

See “Risk Factors” in Item 1A of the Company’s annual report on Form 10-K for the year ended July 2, 2006.

The Company held its Annual Meeting of Shareholders on October 18, 2006. Information on the matters voted upon and the votes cast with respect to each matter was previously reported in the Company’s Quarterly Report on Form 10-Q for the quarter ended October 1, 2006.

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.


~~12301 West Wirth Street, Wauwatosa, Wisconsin~~		~~53222~~
~~(Address of Principal Executive Offices)~~		~~(Zip Code)~~


Class		Outstanding at ~~January 26,~~April 27, 2007
COMMON STOCK, par value $0.01 per share		~~49,405,278~~49,456,799 Shares


			Page No.
PART I – FINANCIAL INFORMATION

	Item 1.	Financial Statements

		Consolidated Condensed Balance Sheets – ~~December 31, 2006~~April 1, 2007 and July 2, 2006	3

		Consolidated Condensed Statements of Income – Three Months and ~~Six~~Nine Months Ended ~~December 31, 2006~~ April 1, 2007 and ~~January 1,~~April 2, 2006	5

		Consolidated Condensed Statements of Cash Flows – ~~Six~~Nine Months Ended ~~December 31, 2006~~ April 1, 2007 and ~~January 1,~~April 2, 2006	6

		Notes to Consolidated Condensed Financial Statements	7

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1819

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2324

	Item 4.	Controls and Procedures	2324

PART II – OTHER INFORMATION

	Item 1.	Legal Proceedings	2425

	Item 1A.	Risk Factors	2425

	Item 4.	Submission of Matters to a Vote of Security Holders	2425

	Item 6.	Exhibits	25

	~~Signatures~~		26

		~~Exhibit Index~~Signatures		27

Exhibit Index		28


	December 31, 2006 Carrying Amount		Maximum Guarantee
8.875% Senior Notes, due March 15, 2011	$	267,630	$	270,000

Variable Rate Term Notes, due February 11, 2008	$	35,000	$	35,000

7.25% Senior Notes, due September 15, 2007	$	81,056	$	81,175

Revolving Credit Facility, expiring May 2009	$	269,725	$	350,000


	April 1, 2007 Carrying Amount		Maximum Guarantee
8.875% Senior Notes, due March 15, 2011	$	267,769	$	270,000

Variable Rate Term Notes, due February 11, 2008	$	35,000	$	35,000

7.25% Senior Notes, due September 15, 2007	$	81,097	$	81,175

Revolving Credit Facility, expiring May 2009	$	149,449	$	350,000


Exhibit Number		Description
3.2		Bylaws, as amended and restated April 18, 2007.
		(Filed as Exhibit 3.2 to the Company’s Report on Form 8-K dated April 18, 2007 and incorporated by reference herein.)

31.1		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 ~~(Filed~~
		(Filed herewith)

31.2		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 ~~(Filed~~
		(Filed herewith)

32.1		Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ~~(Furnished~~
		(Furnished herewith)

32.2		Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ~~(Furnished~~
		(Furnished herewith)


		BRIGGS & STRATTON CORPORATION
		(Registrant)

Date: ~~February 2,~~May 4, 2007		/s/ James E. Brenn
		James E. Brenn
		Senior Vice President and Chief Financial Officer and Duly Authorized Officer


Exhibit Number		Description
3.2		Bylaws, as amended and restated April 18, 2007.
		(Filed as Exhibit 3.2 to the Company’s Report on Form 8-K dated April 18, 2007 and incorporated by reference herein.)

31.1		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 ~~(Filed~~
		(Filed herewith)

31.2		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 ~~(Filed~~
		(Filed herewith)

32.1		Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ~~(Furnished~~
		(Furnished herewith)

32.2		Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ~~(Furnished~~
		(Furnished herewith)