UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended April 1,September 30, 2007
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)
Wisconsin | 39-0182330 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer 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 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):
Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨
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.
Class | Outstanding at | |
COMMON STOCK, par value $0.01 per share |
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Page No. | ||||
Item 1. | ||||
Consolidated Condensed Balance Sheets – | 3 | |||
5 | ||||
6 | ||||
7 | ||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |||
Item 3. | ||||
Item 4. | ||||
Item 1. | ||||
Item | ||||
Item 6. | ||||
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
ITEM 1. | FINANCIAL STATEMENTS |
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)
ASSETS
April 1, 2007 | July 2, 2006 | September 30, 2007 | As Adjusted 2007 | |||||||||
(Unaudited) | (Unaudited) | |||||||||||
CURRENT ASSETS: | ||||||||||||
Cash and cash equivalents | $ | 22,923 | $ | 95,091 | $ | 36,950 | $ | 29,469 | ||||
Accounts receivable, net | 373,511 | 273,502 | 233,535 | 327,475 | ||||||||
Inventories - | ||||||||||||
Finished products and parts | 434,680 | 364,711 | 429,456 | 345,763 | ||||||||
Work in process | 212,455 | 188,358 | 191,466 | 199,215 | ||||||||
Raw materials | 9,536 | 8,946 | 7,999 | 7,804 | ||||||||
Total inventories | 656,671 | 562,015 | 628,921 | 552,782 | ||||||||
Deferred income tax asset | 68,613 | 58,024 | 55,550 | 55,520 | ||||||||
Prepaid expenses and other current assets | 19,071 | 43,020 | 38,389 | 30,547 | ||||||||
Total current assets | 1,140,789 | 1,031,652 | 993,345 | 995,793 | ||||||||
OTHER ASSETS: | ||||||||||||
Goodwill | 251,885 | 251,885 | 250,107 | 250,107 | ||||||||
Prepaid pension | 78,098 | 75,789 | 103,593 | 103,247 | ||||||||
Investments | 46,335 | 48,917 | 45,906 | 47,326 | ||||||||
Deferred loan costs, net | 3,428 | 4,308 | 4,044 | 3,135 | ||||||||
Other intangible assets, net | 93,027 | 94,596 | 92,089 | 92,556 | ||||||||
Other long-term assets, net | 7,393 | 6,765 | 6,876 | 6,686 | ||||||||
Total other assets | 480,166 | 482,260 | 502,615 | 503,057 | ||||||||
PLANT AND EQUIPMENT: | ||||||||||||
Cost | 1,008,567 | 1,008,164 | 1,023,564 | 1,006,402 | ||||||||
Less - accumulated depreciation | 616,564 | 577,876 | 632,008 | 618,084 | ||||||||
Total plant and equipment, net | 392,003 | 430,288 | 391,556 | 388,318 | ||||||||
TOTAL ASSETS | $ | 1,887,516 | $ | 1,887,168 | ||||||||
$ | 2,012,958 | $ | 1,944,200 | |||||||||
The accompanying notes are an integral part of these statements.
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS (Continued)
(In thousands, except per share data)
LIABILITIES & SHAREHOLDERS’ INVESTMENT
April 1, 2007 | July 2, 2006 | September 30, 2007 | As Adjusted 2007 | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
CURRENT LIABILITIES: | ||||||||||||||||
Accounts payable | $ | 158,811 | $ | 161,291 | $ | 155,565 | $ | 179,476 | ||||||||
Accrued liabilities | 196,654 | 178,381 | 160,572 | 170,555 | ||||||||||||
Dividends payable | 10,908 | — | ||||||||||||||
Current maturity on long-term debt | 116,097 | — | — | 116,139 | ||||||||||||
Short-term debt | 152,449 | 3,474 | 170,179 | 3,000 | ||||||||||||
Total current liabilities | 634,919 | 343,146 | 486,316 | 469,170 | ||||||||||||
OTHER LIABILITIES: | ||||||||||||||||
Long-term debt | 267,769 | 383,324 | 268,048 | 267,909 | ||||||||||||
Deferred income tax liability | 91,309 | 102,862 | 37,460 | 37,300 | ||||||||||||
Accrued pension cost | 27,276 | 25,587 | 39,878 | 39,438 | ||||||||||||
Accrued employee benefits | 16,510 | 16,267 | 20,182 | 20,072 | ||||||||||||
Accrued postretirement health care obligation | 71,384 | 84,136 | 182,979 | 186,868 | ||||||||||||
Other long-term liabilities | 2,159 | 1,672 | 36,422 | 20,357 | ||||||||||||
Total other liabilities | 476,407 | 613,848 | 584,969 | 571,944 | ||||||||||||
SHAREHOLDERS’ INVESTMENT: | ||||||||||||||||
Common stock - | ||||||||||||||||
Authorized 120,000 shares, $.01 par value, issued 57,854 shares | 579 | 579 | 579 | 579 | ||||||||||||
Additional paid-in capital | 71,480 | 65,126 | 74,933 | 73,149 | ||||||||||||
Retained earnings | 1,037,238 | 1,086,397 | 1,079,760 | 1,115,114 | ||||||||||||
Accumulated other comprehensive income | 7,401 | 4,960 | ||||||||||||||
Treasury stock at cost, | ||||||||||||||||
8,270 and 6,654 shares, respectively | (215,066 | ) | (169,856 | ) | ||||||||||||
Accumulated other comprehensive loss | (127,162 | ) | (128,951 | ) | ||||||||||||
Treasury stock at cost, 8,148 and 8,222 shares, respectively | (211,879 | ) | (213,837 | ) | ||||||||||||
Total shareholders’ investment | 901,632 | 987,206 | 816,231 | 846,054 | ||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ INVESTMENT | $ | 1,887,516 | $ | 1,887,168 | ||||||||||||
$ | 2,012,958 | $ | 1,944,200 | |||||||||||||
The accompanying notes are an integral part of these statements.
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended | Nine Months Ended | Three Months Ended | ||||||||||||||||||||||
April 1, 2007 | April 2, 2006 | April 1, 2007 | April 2, 2006 | September 30, 2007 | As Adjusted October 1, 2006 | |||||||||||||||||||
NET SALES | $ | 717,053 | $ | 800,194 | $ | 1,478,361 | $ | 1,886,216 | $ | 366,669 | $ | 338,249 | ||||||||||||
COST OF GOODS SOLD | 596,641 | 619,261 | 1,246,223 | 1,506,623 | 323,225 | 291,971 | ||||||||||||||||||
IMPAIRMENT CHARGE | 35,200 | — | 35,200 | — | ||||||||||||||||||||
Gross profit on sales | 85,212 | 180,933 | 196,938 | 379,593 | 43,444 | 46,278 | ||||||||||||||||||
ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 64,289 | 82,743 | 195,463 | 231,742 | 64,140 | 65,682 | ||||||||||||||||||
Income from operations | 20,923 | 98,190 | 1,475 | 147,851 | ||||||||||||||||||||
Loss from operations | (20,696 | ) | (19,404 | ) | ||||||||||||||||||||
INTEREST EXPENSE | (12,688 | ) | (10,893 | ) | (33,554 | ) | (32,226 | ) | (8,973 | ) | (9,037 | ) | ||||||||||||
OTHER INCOME, net | 4,798 | 1,508 | 9,176 | 13,995 | 22 | 3,457 | ||||||||||||||||||
Income (loss) before income taxes | 13,033 | 88,805 | (22,903 | ) | 129,620 | |||||||||||||||||||
Loss before credit for income taxes | (29,647 | ) | (24,984 | ) | ||||||||||||||||||||
PROVISION (CREDIT) FOR INCOME TAXES | 5,263 | 28,797 | (6,725 | ) | 43,067 | |||||||||||||||||||
CREDIT FOR INCOME TAXES | (9,195 | ) | (8,504 | ) | ||||||||||||||||||||
NET INCOME (LOSS) | $ | 7,770 | $ | 60,008 | $ | (16,178 | ) | $ | 86,553 | |||||||||||||||
NET LOSS | $ | (20,452 | ) | $ | (16,480 | ) | ||||||||||||||||||
EARNINGS PER SHARE DATA - | ||||||||||||||||||||||||
Average shares outstanding | 50,621 | 51,478 | 49,795 | 51,633 | 49,536 | 50,583 | ||||||||||||||||||
Basic earnings (loss) per share | $ | 0.15 | $ | 1.17 | $ | (0.32 | ) | $ | 1.68 | |||||||||||||||
Basic loss per share | $ | (0.41 | ) | $ | (0.33 | ) | ||||||||||||||||||
Diluted average shares outstanding | 50,718 | 51,561 | 49,795 | 51,730 | 49,536 | 50,583 | ||||||||||||||||||
Diluted earnings (loss) per share | $ | 0.15 | $ | 1.16 | $ | (0.32 | ) | $ | 1.67 | |||||||||||||||
Diluted loss per share | $ | (0.41 | ) | $ | (0.33 | ) | ||||||||||||||||||
CASH DIVIDENDS PER SHARE | $ | 0.22 | $ | 0.22 | $ | 0.66 | $ | 0.66 | $ | 0.22 | $ | 0.22 | ||||||||||||
The accompanying notes are an integral part of these statements.
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended | Three Months Ended | |||||||||||||||
April 1, 2007 | April 2, 2006 | September 30, 2007 | As Adjusted October 1, 2006 | |||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||||
Net income (loss) | $ | (16,178 | ) | $ | 86,553 | |||||||||||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||||||||||
Net loss | $ | (20,452 | ) | $ | (16,480 | ) | ||||||||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||||
Depreciation and amortization | 54,766 | 57,389 | 16,612 | 18,154 | ||||||||||||
Stock compensation expense | 2,673 | 2,819 | ||||||||||||||
Earnings of unconsolidated affiliates, net of dividends | (2,247 | ) | 811 | 866 | 2,806 | |||||||||||
Dividends received investments | 4,679 | — | ||||||||||||||
Loss (Gain) on disposition of plant and equipment | 1,690 | (5,267 | ) | |||||||||||||
Loss on disposition of plant and equipment | 467 | 37 | ||||||||||||||
Provision for deferred income taxes | (22,142 | ) | (14,120 | ) | (3,870 | ) | (3,937 | ) | ||||||||
Stock compensation expense | 6,688 | 6,463 | ||||||||||||||
Impairment charges | 35,200 | — | ||||||||||||||
Change in operating assets and liabilities: | ||||||||||||||||
Increase in accounts receivable | (100,038 | ) | (74,659 | ) | ||||||||||||
Decrease in accounts receivable | 93,940 | 45,610 | ||||||||||||||
Increase in inventories | (96,156 | ) | (124,134 | ) | (76,139 | ) | (144,347 | ) | ||||||||
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 | ||||||||||||||
Decrease in prepaid expenses and other current assets | 7,276 | 10,785 | ||||||||||||||
Decrease in accounts payable, accrued liabilities, and income taxes | (45,407 | ) | (20,397 | ) | ||||||||||||
Increase (Decrease) in accrued/prepaid pension | (620 | ) | 8,105 | 53 | (357 | ) | ||||||||||
Other, net | (169 | ) | (1,886 | ) | (2,280 | ) | (2,922 | ) | ||||||||
Net cash used in operating activities | (109,280 | ) | (21,512 | ) | (26,261 | ) | (108,229 | ) | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||
Additions to plant and equipment | (45,999 | ) | (49,409 | ) | (18,246 | ) | (13,844 | ) | ||||||||
Proceeds received on sale of plant and equipment | 583 | 10,836 | 150 | 262 | ||||||||||||
Investment in joint venture | — | (900 | ) | |||||||||||||
Refund of cash paid for acquisition | — | 6,347 | ||||||||||||||
Loan receivable | — | (2,500 | ) | |||||||||||||
Net cash used in investing activities | (45,416 | ) | (35,626 | ) | (18,096 | ) | (13,582 | ) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||
Net borrowings (repayments) on loans and notes payable | 148,975 | (2,411 | ) | |||||||||||||
Dividends | (22,159 | ) | (22,760 | ) | ||||||||||||
Net borrowings on loans and notes payable | 51,041 | 118,378 | ||||||||||||||
Issuance cost of amended revolver | (1,286 | ) | — | |||||||||||||
Stock option proceeds and tax benefits | 2,591 | 10,010 | 991 | 750 | ||||||||||||
Treasury stock purchases | (48,232 | ) | (26,559 | ) | — | (48,232 | ) | |||||||||
Net cash provided by (used in) financing activities | 81,175 | (41,720 | ) | |||||||||||||
Net cash provided by financing activities | 50,746 | 70,896 | ||||||||||||||
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE | ||||||||||||||||
CHANGES ON CASH AND CASH EQUIVALENTS | 1,353 | 800 | ||||||||||||||
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | 1,092 | (6 | ) | |||||||||||||
NET DECREASE IN CASH AND CASH EQUIVALENTS | (72,168 | ) | (98,058 | ) | ||||||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 7,481 | (50,921 | ) | |||||||||||||
CASH AND CASH EQUIVALENTS, beginning | 95,091 | 161,573 | 29,469 | 95,091 | ||||||||||||
CASH AND CASH EQUIVALENTS, ending | $ | 22,923 | $ | 63,515 | $ | 36,950 | $ | 44,170 | ||||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||||||||||
Interest paid | $ | 40,046 | $ | 38,374 | $ | 17,151 | $ | 15,988 | ||||||||
Income taxes paid | $ | 2,379 | $ | 36,433 | $ | 9,357 | $ | 644 | ||||||||
The accompanying notes are an integral part of these statements.
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
General Information
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 (the Company), adequate disclosures have been presented to prevent the information 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.
Change in Accounting Principle
Effective July 2, 2007, the Company has changed the method it uses to compute the market related value of the assets within its qualified defined benefit pension plan. The market related value of pension assets is used to calculate the expected return on plan assets. The Company believes that the new method is preferable as it more closely approximates the fair market value of the plan assets. For the first quarter of fiscal 2008, the Company recorded pension income of $685,000 (pre-tax). Generally accepted accounting principles require that the impact of this change in accounting be applied retrospectively to all periods presented. As a result, all prior period financial statements have been adjusted to give effect to the cumulative impact of this change. The adjusted first quarter of fiscal 2007 now reflects pension income of $658,000 (pre-tax). The following financial statement items for fiscal 2007 were affected by this change in accounting principle:
Consolidated Condensed Balance Sheet:
July 1, 2007 | |||||||||
As Reported | Adjustment | As Adjusted | |||||||
Retained earnings | 1,042,673 | 72,441 | 1,115,114 | ||||||
Accumulated other comprehensive loss | (56,510 | ) | (72,441 | ) | (128,951 | ) |
Consolidated Condensed Statement of Income:
Three months ended October 1, 2006 | |||||||||
As Reported | Adjustment | As Adjusted | |||||||
Cost of goods sold | 293,887 | (1,916 | ) | 291,971 | |||||
Gross profit on sales | 44,362 | 1,916 | 46,278 | ||||||
Engineering, selling, general and administrative expenses | 66,321 | (639 | ) | 65,682 | |||||
Loss from operations | (21,959 | ) | 2,555 | (19,404 | ) | ||||
Loss before credit for income taxes | (27,539 | ) | 2,555 | (24,984 | ) | ||||
Credit for income taxes | (9,501 | ) | 997 | (8,504 | ) | ||||
Net loss | (18,038 | ) | 1,558 | (16,480 | ) | ||||
Basic loss per share | (0.36 | ) | 0.03 | (0.33 | ) | ||||
Diluted loss per share | (0.36 | ) | 0.03 | (0.33 | ) |
Consolidated Condensed Statement of Cash Flows:
Three months ended October 1, 2006 | |||||||||
As Reported | Adjustment | As Adjusted | |||||||
Net loss | (18,038 | ) | 1,558 | (16,480 | ) | ||||
Other, net | (1,364 | ) | (1,558 | ) | (2,922 | ) |
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Common Stock
Briggs & Stratton did not repurchase any common shares during the first quarter of 2008. 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 and third quarters of fiscal 2007. Briggs & Stratton repurchased 753,500 shares at a total cost of $26.6 million during the 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.
Earnings Per Share
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 nine-monthsquarter ended April 1,September 30, 2007 excluded 152,000approximately 171,000 shares for restricted and deferred stock and outstanding options to purchase approximately 3,600,000 shares of common stock as their inclusion would have been anti-dilutive. For the quarter and nine-months ended April 2, 2006, no restricted or deferred stock was excluded from the computation ofShares outstanding used to compute diluted earnings per share. Outstandingshare for the quarter ended October 1, 2006 excluded approximately 157,000 shares for restricted and deferred stock and outstanding options to purchase approximately 3,371,000 and 3,290,0003,467,000 shares of common stock for the quarter and nine-months ended 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, 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 nine-months ended April 2, 2006, outstanding options to purchase approximately 1,434,000 and 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.
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
anti-dilutive.
Information on earnings per share is as follows (in thousands):
Three Months Ended | Nine Months Ended | ||||||||||||
April 1, 2007 | April 2, 2006 | April 1, 2007 | April 2, 2006 | ||||||||||
Net income (loss) | $ | 7,770 | $ | 60,008 | $ | (16,178 | ) | $ | 86,553 | ||||
Average shares of common stock outstanding | 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 | 11 | 34 | — | 36 | |||||||||
Incremental common shares applicable to restricted and deferred common stock based on the common stock average market price during the period | 86 | 49 | — | 61 | |||||||||
Diluted average shares of common stock outstanding | 50,718 | 51,561 | 49,795 | 51,730 | |||||||||
Three Months Ended | ||||||||
September 30, 2007 | As Adjusted October 1, 2006 | |||||||
Net loss | $ | (20,452 | ) | $ | (16,480 | ) | ||
Average shares of common stock outstanding | 49,536 | 50,583 | ||||||
Diluted average shares of common stock outstanding | 49,536 | 50,583 |
Comprehensive Income
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)loss is as follows (in thousands):
Three Months Ended | Nine Months Ended | |||||||||||||||
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 | 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): | ||||||||||||||||
April 1, 2007 | July 2, 2006 | |||||||||||||||
Cumulative translation adjustments | $ | 9,823 | $ | 7,524 | ||||||||||||
Unrealized loss on derivative instruments | (194 | ) | (336 | ) | ||||||||||||
Minimum pension liability adjustment | (2,228 | ) | (2,228 | ) | ||||||||||||
Accumulated other comprehensive income | $ | 7,401 | $ | 4,960 | ||||||||||||
Three Months Ended | ||||||||
September 30, 2007 | As Adjusted October 1, 2006 | |||||||
Net loss | $ | (20,452 | ) | $ | (16,480 | ) | ||
Cumulative translation adjustments | 1,775 | 461 | ||||||
Unrealized loss on derivative instruments | (1,504 | ) | (1,190 | ) | ||||
Unrecognized pension and postretirement obligation | 1,518 | — | ||||||
Total comprehensive loss | $ | (18,663 | ) | $ | (17,209 | ) | ||
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
The components of Accumulated Other Comprehensive Loss are as follows (in thousands):
September 30, 2007 | As Adjusted 2007 | |||||||
Cumulative translation adjustments | $ | 13,574 | $ | 11,799 | ||||
Unrealized loss on derivative instruments | (2,605 | ) | (1,101 | ) | ||||
Unrecognized pension and postretirement obligation | (138,131 | ) | (139,649 | ) | ||||
Accumulated other comprehensive loss | $ | (127,162 | ) | $ | (128,951 | ) | ||
Derivatives
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 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.Loss. The amounts included in Accumulated Other Comprehensive IncomeLoss will be reclassified into income when the forecasted transactions 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 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%approximately 50-80% 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,Loss, 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 IncomeLoss 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 CORPORATION AND SUBSIDIARIES
Segment Information
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):
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Three Months Ended | Nine Months Ended | Three Months Ended | ||||||||||||||||||||||
April 1, 2007 | April 2, 2006 | April 1, 2007 | April 2, 2006 | September 30, 2007 | As Adjusted October 1, 2006 | |||||||||||||||||||
NET SALES: | ||||||||||||||||||||||||
Engines | $ | 516,067 | $ | 597,608 | $ | 984,681 | $ | 1,263,938 | $ | 208,416 | $ | 189,596 | ||||||||||||
Power Products | 248,759 | 287,766 | 606,052 | 844,982 | 186,991 | 186,887 | ||||||||||||||||||
Inter-Segment Eliminations | (47,773 | ) | (85,180 | ) | (112,372 | ) | (222,704 | ) | (28,738 | ) | (38,234 | ) | ||||||||||||
Total | $ | 717,053 | $ | 800,194 | $ | 1,478,361 | $ | 1,886,216 | ||||||||||||||||
Total * | $ | 366,669 | $ | 338,249 | ||||||||||||||||||||
* Includes sales originating in foreign countries of | $ | 45,845 | $ | 45,985 | ||||||||||||||||||||
GROSS PROFIT ON SALES: | ||||||||||||||||||||||||
Engines | $ | 57,109 | $ | 148,598 | $ | 135,236 | $ | 301,785 | $ | 35,254 | $ | 26,615 | ||||||||||||
Power Products | 26,016 | 37,490 | 59,746 | 83,466 | 8,025 | 20,253 | ||||||||||||||||||
Inter-Segment Eliminations | 2,087 | (5,155 | ) | 1,956 | (5,658 | ) | 165 | (590 | ) | |||||||||||||||
Total | $ | 85,212 | $ | 180,933 | $ | 196,938 | $ | 379,593 | $ | 43,444 | $ | 46,278 | ||||||||||||
INCOME (LOSS) FROM OPERATIONS: | ||||||||||||||||||||||||
Engines | $ | 12,891 | $ | 88,794 | $ | (5,201 | ) | $ | 133,260 | $ | (10,228 | ) | $ | (21,567 | ) | |||||||||
Power Products | 5,945 | 14,551 | 4,720 | 20,249 | (10,633 | ) | 2,753 | |||||||||||||||||
Inter-Segment Eliminations | 2,087 | (5,155 | ) | 1,956 | (5,658 | ) | 165 | (590 | ) | |||||||||||||||
Total | $ | 20,923 | $ | 98,190 | $ | 1,475 | $ | 147,851 | $ | (20,696 | ) | $ | (19,404 | ) | ||||||||||
Warranty
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):
Nine Months Ended | Three Months Ended | |||||||||||||||
April 1, 2007 | April 2, 2006 | September 30, 2007 | October 1, 2006 | |||||||||||||
Beginning balance | $ | 53,233 | $ | 59,625 | $ | 54,566 | $ | 53,233 | ||||||||
Payments | (26,537 | ) | (29,371 | ) | (15,935 | ) | (9,437 | ) | ||||||||
Provision for current year warranties | 25,218 | 26,460 | 7,099 | 8,190 | ||||||||||||
Adjustments to prior years’ warranties | 1,877 | (3,587 | ) | |||||||||||||
Adjustment to prior year’s warranties | (900 | ) | (1,600 | ) | ||||||||||||
Ending balance | $ | 53,791 | $ | 53,127 | $ | 44,830 | $ | 50,386 | ||||||||
Stock Incentives
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 $1.8$2.7 million and $6.7$2.8 million for the quarterquarters ended September 30, 2007 and nine-months ended AprilOctober 1, 2007,2006, respectively. For the quarter and nine-months ended April 2, 2006, stock based compensation was $2.1 million and $6.5 million, respectively.
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Pension and Postretirement Benefits
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):
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Pension Benefits | Other Postretirement Benefits | |||||||||||||||||||||||||||||||
Three Months Ended | Three Months Ended | Pension Benefits Three Months Ended | Other Postretirement Benefits Three Months Ended | |||||||||||||||||||||||||||||
April 1, 2007 | April 2, 2006 | April 1, 2007 | April 2, 2006 | September 30, 2007 | As Adjusted October 1, 2006 | September 30, 2007 | October 1, 2006 | |||||||||||||||||||||||||
Components of net periodic expense: | ||||||||||||||||||||||||||||||||
Service cost-benefits earned | $ | 3,272 | $ | 3,858 | $ | 444 | $ | 758 | $ | 3,623 | $ | 3,272 | $ | 471 | $ | 606 | ||||||||||||||||
Interest cost on projected benefit obligation | 14,484 | 13,149 | 4,002 | 3,756 | 15,114 | 14,484 | 3,475 | 3,981 | ||||||||||||||||||||||||
Expected return on plan assets | (17,099 | ) | (17,250 | ) | — | — | (20,379 | ) | (19,562 | ) | — | — | ||||||||||||||||||||
Amortization of: | ||||||||||||||||||||||||||||||||
Transition obligation | 2 | 2 | 11 | 12 | 2 | 2 | 11 | 12 | ||||||||||||||||||||||||
Prior service cost | 823 | 823 | (212 | ) | (157 | ) | 822 | 823 | (213 | ) | (213 | ) | ||||||||||||||||||||
Actuarial loss | 1,335 | 2,563 | 3,334 | 3,948 | 1,141 | 1,243 | 2,682 | 3,560 | ||||||||||||||||||||||||
Net periodic expense | $ | 2,817 | $ | 3,145 | $ | 7,579 | $ | 8,317 | $ | 323 | $ | 262 | $ | 6,426 | $ | 7,946 | ||||||||||||||||
Pension Benefits | Other Postretirement Benefits | |||||||||||||||||||||||||||||||
Nine Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
April 1, 2007 | April 2, 2006 | April 1, 2007 | April 2, 2006 | |||||||||||||||||||||||||||||
Components of net periodic expense: | ||||||||||||||||||||||||||||||||
Service cost-benefits earned | $ | 9,817 | $ | 11,572 | $ | 1,332 | $ | 2,273 | ||||||||||||||||||||||||
Interest cost on projected benefit obligation | 43,453 | 39,447 | 12,005 | 11,269 | ||||||||||||||||||||||||||||
Expected return on plan assets | (51,296 | ) | (51,749 | ) | — | — | ||||||||||||||||||||||||||
Amortization of: | ||||||||||||||||||||||||||||||||
Transition obligation | 6 | 6 | 35 | 35 | ||||||||||||||||||||||||||||
Prior service cost | 2,468 | 2,469 | (637 | ) | (472 | ) | ||||||||||||||||||||||||||
Actuarial loss | 4,004 | 7,690 | 10,003 | 11,845 | ||||||||||||||||||||||||||||
Net periodic expense | $ | 8,452 | $ | 9,435 | $ | 22,738 | $ | 24,950 | ||||||||||||||||||||||||
Briggs & Stratton is not required to, nor intends to, make any contributions to the pension plans in fiscal 2008. The Company was not required to make any contributions to the pension plans in fiscal 2007, andbut did not make any contributions incontribute $3.0 million during the first quarter of fiscal 2006; however, the Company expects to contribute up to $8 million of the $12 million authorized by the Board of Directors in fiscal 2007. During the nine-months ended April 1, 2007, the Company contributed $8.0 million to the pension plans.
Briggs & Stratton expects to make benefit payments of approximately $1.5$1.7 million forattributable to its non-qualified pension plans during fiscal 2007.2008. During the nine-months ended April 1, 2007,first quarter of fiscal 2008, Briggs & Stratton made payments of approximately $1.3$0.3 million for its non-qualified pension plans. Briggs & Stratton anticipates making benefit payments of approximately $33.3$30.6 million for its other postretirement benefit plans during fiscal 2007.2008. During the nine-months ended April 1, 2007,first quarter of fiscal 2008, Briggs & Stratton had made payments of $25.0$7.6 million for its other postretirement benefit plans.
NEW ACCOUNTING PRONOUNCEMENTSNew Accounting Pronouncements
On July 13, 2006,In February 2007, the FASB issued InterpretationSFAS No. 48, “Accounting159, “The Fair Value Option for Uncertainty in Income Taxes –Financial Assets and Financial Liabilities—Including an interpretationAmendment of FASB Statement No. 109”115,” (SFAS 159). Interpretation 48 clarifiesThis standard permits an entity to choose to measure many financial instruments and certain other items at fair value. The fair value option permits a company to choose to measure eligible items at fair value at specified election dates. A company will report unrealized gains and losses on items for which the accounting for uncertaintyfair value option has been elected in income taxes recognized in an entity’s financial statements in accordance with FASBearnings after adoption. 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 48159 is effective for fiscal years beginning after DecemberNovember 15, 2006, with early adoption permitted.2007. At this time, the impact of adoption of Interpretation 48SFAS 159 on our consolidated financial position is being assessed.
OnIn September 15, 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” (SFAS 157), 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.157157 on our consolidated financial position is being assessed.
OnIn September 29, 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans”Plans - an amendment of FASB Statements No. 87, 88, 106, and 132(R),” (SFAS 158). EffectiveSFAS 158 requires recognition of the overfunded or underfunded status of a postretirement benefit plan in the statement of financial position, as well as recognition of changes in that funded status through comprehensive income in the year in which they occur. SFAS 158 also requires a change in the measurement of a plan’s assets and benefit obligations as of the end date of the employer’s fiscal year. SFAS 158 is effective for fiscal years ending after December 15, 2006, except for the measurement date provisions, which are effective for fiscal years ending after December 15, 2008. Briggs & Stratton adopted the 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 duringin the fourth quarter of the fiscal 2007. Based upon our review,
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
The Company adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes - - an Interpretation of FASB Statement No. 109” (FIN 48) on July 2, 2007. FIN 48 clarifies the accounting and reporting for uncertainties in income tax law. This Interpretation prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. The cumulative effect of adopting FIN 48 was an increase of $4 million in tax reserves and a decrease of $4 million to the July 2, 2007 retained earnings balance.
As of July 2, 2007, the Company 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$23 million of deferred taxes.gross unrecognized tax benefits. Of this amount, $15 million represents the portion that, if recognized, would impact the effective tax rate. The adoptionCompany recognizes interest and penalties related to unrecognized tax benefits in income tax expense. As of SFAS No. 158July 2, 2007, the Company had $6 million accrued for interest and penalties. We do not anticipate that there will not have any impact onbe a significant change in the company’s Consolidated Condensed Statementamount of Cash Flows.unrecognized tax benefits in the next twelve months.
The Company files income tax returns in the U.S. federal and various state and foreign jurisdictions. In the U.S., the Company is no longer subject to U.S. federal income tax examinations by tax authorities before 2003 and is currently under examination by the IRS for taxable years ending in 2004 and 2005. With respect to our major foreign jurisdictions, we are no longer subject to tax examinations by tax authorities before 1997.
Commitments and Contingencies
Briggs & StrattonThe Company is subject to various unresolved legal actions that arise in the normal course of its business. These actions typically relate to product liability (including asbestos-related liability), patent and trademark matters, and disputes with customers, suppliers, distributors and dealers, competitors and employees.
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
On June 3, 2004, eight individuals who claim to have purchased lawnmowers in Illinois and Minnesota filed a lawsuit (Ronnie(Ronnie Phillips et al. v. Sears Roebuck Corporation et al., No. 04-L-334 (20th Judicial Circuit, St. Clair County, IL)) against Briggs & Strattonthe Company 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 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 refilere-file 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 & Strattonthe Company believes these unresolved legal actions will not have a material effect on its financial position.
Impairment and Disposal Charges
Impairment charges were recognized in the Consolidated Condensed StatementStatements of Income for $35.2$43.1 million pretax ($21.426.2 million after tax) during the third quarterfiscal 2007, of fiscal 2007. The $35.2which $33.9 and $9.2 million pretax write-down of assets waswere recognized in the Engines and Power Products Segments, forrespectively. The entire $33.9 million was recognized in the third
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
quarter of fiscal 2007 and $1.3 million and $7.9 million of the $9.2 million were recognized in the third and fourth quarter of fiscal 2007, respectively. The Engines Segment’sSegment $33.9 million charge was primarily for the write-down of assets of a majorthe Rolla, Missouri (Rolla) engine manufacturing facility in the United States that will be closing inclosed during the second quarter of fiscal 2008. The remaining $1.3$9.2 million forrecognized in the Power Products Segment was for a write-downprimarily relates to the closure of assets at an international manufacturing site.the Port Washington, Wisconsin production facility expected to be completed in the second quarter of fiscal 2009. For each segment, it was determined that the carrying value of the assets exceeded the undiscounted cash flows. The impairment was computed as the difference between estimated fair value and the carrying value of the assets. Fair value was determined based on market prices for comparable assets.
Additionally, a liability was recorded within costs of goods sold to accrue for severance payments to be paid to the employees of the Rolla facility upon its close. Accrued severance at July 1, 2007 was approximately $1.1 million, all of which was recorded in the fourth quarter of fiscal 2007. Another approximately $1.3 million was accrued in the first quarter of fiscal 2008, and approximately $0.4 million was paid in the first quarter of fiscal 2008, resulting in a total accrual of approximately $2.0 million at September 30, 2007. Severance payments are contingent upon an employee working through the scheduled end date, and will continue to accrue until the plant closes.
Financial Information of Subsidiary Guarantor of Indebtedness
In June 1997, Briggs & Stratton issued $100 million of 7.25% senior notes;notes, in May 2001, Briggs & Stratton issued $275 million of 8.875% senior notes;notes and in February 2005, Briggs & Stratton issued $125 million of variable rate term notes. In addition, Briggs & Stratton hashad a $350 million revolving credit facility that expires in May 2009 that is used to finance seasonal working capital needs.needs that was to expire in May 2009.
On July 12, 2007, the Company entered into a $500 million amended and restated multicurrency credit agreement. The Amended Credit Agreement (“Revolver”) provides a revolving credit facility for up to $500 million in revolving loans, including up to $25 million in swing-line loans. The Company used the proceeds of the Revolver to, among other things, pay off the remaining amount outstanding under the Company’s variable rate term notes issued in February 2005 with various financial institutions and retire the 7.25% senior notes that were due in September 2007. The Revolver has a term of five years and all outstanding borrowings on the Revolver are due and payable on July 12, 2012. The Revolver contains covenants that the Company considers usual and customary for an agreement of this type, including a Maximum Total Leverage Ratio and Minimum Interest Coverage Ratio. Certain of the Company’s subsidiaries are required to be guarantors of the Company’s obligations under the Revolver.
Under the terms of Briggs & Stratton’s 8.875% senior notes, 7.25% senior notes, variable rate term notes, and the revolving credit agreementRevolver (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
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
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):
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
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 |
September 30, 2007 Carrying Amount | Maximum Guarantee | |||||
8.875% Senior Notes, due March 15, 2011 | $ | 268,048 | $ | 270,000 | ||
Revolving Credit Facility, expiring July 12, 2012 | $ | 121,000 | $ | 500,000 |
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 AND SUBSIDIARIES
BALANCE SHEET
As of April 1,September 30, 2007
Briggs & Stratton Corporation | Guarantor Subsidiary | Non-Guarantor Subsidiaries | Eliminations | Consolidated | Briggs & Stratton Corporation | Guarantor Subsidiary | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||||||
Current assets | $ | 715,429 | $ | 814,903 | $ | 198,119 | $ | (587,662 | ) | $ | 1,140,789 | $ | 603,147 | $ | 815,274 | $ | 181,291 | $ | (606,367 | ) | $ | 993,345 | ||||||||||
Investment in subsidiaries | 800,266 | — | — | (800,266 | ) | — | 787,435 | — | — | (787,435 | ) | — | ||||||||||||||||||||
Non-current assets | 397,349 | 443,136 | 31,684 | — | 872,169 | 413,819 | 444,475 | 35,877 | — | 894,171 | ||||||||||||||||||||||
$ | 1,913,044 | $ | 1,258,039 | $ | 229,803 | $ | (1,387,928 | ) | $ | 2,012,958 | $ | 1,804,401 | $ | 1,259,749 | $ | 217,168 | $ | (1,393,802 | ) | $ | 1,887,516 | |||||||||||
Current liabilities | $ | 622,381 | $ | 434,835 | $ | 151,479 | $ | (573,776 | ) | $ | 634,919 | $ | 488,253 | $ | 445,205 | $ | 143,966 | $ | (591,108 | ) | $ | 486,316 | ||||||||||
Long-term debt | 267,769 | — | — | — | 267,769 | 268,048 | — | — | — | 268,048 | ||||||||||||||||||||||
Other long-term obligations | 107,376 | 100,910 | 352 | — | 208,638 | 216,610 | 99,894 | 417 | — | 316,921 | ||||||||||||||||||||||
Shareholders’ investment | 915,518 | 722,294 | 77,972 | (814,152 | ) | 901,632 | 831,490 | 714,650 | 72,785 | (802,694 | ) | 816,231 | ||||||||||||||||||||
$ | 1,913,044 | $ | 1,258,039 | $ | 229,803 | $ | (1,387,928 | ) | $ | 2,012,958 | $ | 1,804,401 | $ | 1,259,749 | $ | 217,168 | $ | (1,393,802 | ) | $ | 1,887,516 | |||||||||||
BALANCE SHEET
As of July 2, 20061, 2007
Briggs & Stratton Corporation | Guarantor Subsidiary | Non-Guarantor Subsidiaries | Eliminations | Consolidated | Briggs & Stratton Corporation | Guarantor Subsidiary | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||||||
Current assets | $ | 536,849 | $ | 694,535 | $ | 191,913 | $ | (391,645 | ) | $ | 1,031,652 | $ | 566,656 | $ | 833,255 | $ | 176,817 | $ | (580,935 | ) | $ | 995,793 | ||||||||||
Investment in subsidiaries | 794,317 | — | — | (794,317 | ) | — | 793,747 | — | — | (793,747 | ) | — | ||||||||||||||||||||
Non-current assets | 451,150 | 442,853 | 18,545 | — | 912,548 | 418,213 | 438,506 | 34,656 | — | 891,375 | ||||||||||||||||||||||
$ | 1,782,316 | $ | 1,137,388 | $ | 210,458 | $ | (1,185,962 | ) | $ | 1,944,200 | $ | 1,778,616 | $ | 1,271,761 | $ | 211,473 | $ | (1,374,682 | ) | $ | 1,887,168 | |||||||||||
Current liabilities | $ | 265,185 | $ | 317,133 | $ | 137,325 | $ | (376,497 | ) | $ | 343,146 | $ | 443,188 | $ | 449,475 | $ | 140,043 | $ | (563,536 | ) | $ | 469,170 | ||||||||||
Long-term debt | 383,324 | — | — | — | 383,324 | 267,909 | — | — | — | 267,909 | ||||||||||||||||||||||
Other long-term obligations | 131,453 | 98,729 | 342 | — | 230,524 | 204,066 | 99,571 | 398 | — | 304,035 | ||||||||||||||||||||||
Shareholders’ investment | 1,002,354 | 721,526 | 72,791 | (809,465 | ) | 987,206 | 863,453 | 722,715 | 71,032 | (811,146 | ) | 846,054 | ||||||||||||||||||||
$ | 1,782,316 | $ | 1,137,388 | $ | 210,458 | $ | (1,185,962 | ) | $ | 1,944,200 | $ | 1,778,616 | $ | 1,271,761 | $ | 211,473 | $ | (1,374,682 | ) | $ | 1,887,168 | |||||||||||
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
STATEMENT OF INCOME
For the Three Months Ended April 1,September 30, 2007
Briggs & Stratton Corporation | Guarantor Subsidiary | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Net sales | $ | 499,703 | $ | 240,870 | $ | 55,175 | $ | (78,695 | ) | $ | 717,053 | |||||||||
Cost of goods sold | 416,096 | 217,085 | 45,321 | (81,861 | ) | 596,641 | ||||||||||||||
Impairment charge | 33,900 | — | 1,300 | — | 35,200 | |||||||||||||||
Gross profit | 49,707 | 23,785 | 8,554 | 3,166 | 85,212 | |||||||||||||||
Engineering, selling, general and administrative expenses | 38,980 | 19,388 | 5,921 | — | 64,289 | |||||||||||||||
Income from operations | 10,727 | 4,397 | 2,633 | 3,166 | 20,923 | |||||||||||||||
Interest expense | (13,121 | ) | (44 | ) | (48 | ) | 525 | (12,688 | ) | |||||||||||
Other income (expense), net | 12,402 | 70 | 709 | (8,383 | ) | 4,798 | ||||||||||||||
Income (Loss) before income taxes | 10,008 | 4,423 | 3,294 | (4,692 | ) | 13,033 | ||||||||||||||
Provision (Credit) for income taxes | 4,361 | 2,712 | 313 | (2,123 | ) | 5,263 | ||||||||||||||
Net income (loss) | $ | 5,647 | $ | 1,711 | $ | 2,981 | $ | (2,569 | ) | $ | 7,770 | |||||||||
STATEMENT OF INCOME
For the Nine Months Ended April 1, 2007
Briggs & Stratton Corporation | Guarantor Subsidiary | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Net sales | $ | 950,319 | $ | 588,582 | $ | 148,364 | $ | (208,904 | ) | $ | 1,478,361 | |||||||||
Cost of goods sold | 798,053 | 535,743 | 121,454 | (209,027 | ) | 1,246,223 | ||||||||||||||
Impairment charge | 33,900 | — | 1,300 | — | 35,200 | |||||||||||||||
Gross profit | 118,366 | 52,839 | 25,610 | 123 | 196,938 | |||||||||||||||
Engineering, selling, general and administrative expenses | 120,254 | 52,892 | 22,317 | — | 195,463 | |||||||||||||||
Income (Loss) from operations | (1,888 | ) | (53 | ) | 3,293 | 123 | 1,475 | |||||||||||||
Interest expense | (35,292 | ) | (81 | ) | (181 | ) | 2,000 | (33,554 | ) | |||||||||||
Other income (expense), net | 11,728 | 2,230 | 386 | (5,168 | ) | 9,176 | ||||||||||||||
Income (Loss) before income taxes | (25,452 | ) | 2,096 | 3,498 | (3,045 | ) | (22,903 | ) | ||||||||||||
Provision (Credit) for income taxes | (7,483 | ) | 1,777 | 772 | (1,791 | ) | (6,725 | ) | ||||||||||||
Net income (loss) | $ | (17,969 | ) | $ | 319 | $ | 2,726 | $ | (1,254 | ) | $ | (16,178 | ) | |||||||
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Briggs & Stratton Corporation | Guarantor Subsidiary | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Net sales | $ | 196,867 | $ | 177,654 | $ | 45,845 | $ | (53,697 | ) | $ | 366,669 | |||||||||
Cost of goods sold | 169,404 | 172,161 | 36,895 | (55,235 | ) | 323,225 | ||||||||||||||
Gross profit | 27,463 | 5,493 | 8,950 | 1,538 | 43,444 | |||||||||||||||
Engineering, selling, general and administrative expenses | 37,213 | 18,432 | 8,495 | — | 64,140 | |||||||||||||||
Income (loss) from operations | (9,750 | ) | (12,939 | ) | 455 | 1,538 | (20,696 | ) | ||||||||||||
Interest expense | (9,464 | ) | (72 | ) | (58 | ) | 621 | (8,973 | ) | |||||||||||
Other income (expense), net | (6,773 | ) | 905 | (613 | ) | 6,503 | 22 | |||||||||||||
Loss before income taxes | (25,987 | ) | (12,106 | ) | (216 | ) | 8,662 | (29,647 | ) | |||||||||||
Provision (credit) for income taxes | (8,056 | ) | (4,019 | ) | 359 | 2,521 | (9,195 | ) | ||||||||||||
Net loss | $ | (17,931 | ) | $ | (8,087 | ) | $ | (575 | ) | $ | 6,141 | $ | (20,452 | ) | ||||||
STATEMENT OF INCOME
For the Three Months Ended April 2,October 1, 2006
Briggs & Stratton Corporation | Guarantor Subsidiary | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Net sales | $ | 585,925 | $ | 280,504 | $ | 47,443 | $ | (113,678 | ) | $ | 800,194 | |||||||||
Cost of goods sold | 445,238 | 245,779 | 37,187 | (108,943 | ) | 619,261 | ||||||||||||||
Gross profit | 140,687 | 34,725 | 10,256 | (4,735 | ) | 180,933 | ||||||||||||||
Engineering, selling, general and administrative expenses | 53,126 | 21,895 | 7,722 | — | 82,743 | |||||||||||||||
Income (Loss) from operations | 87,561 | 12,830 | 2,534 | (4,735 | ) | 98,190 | ||||||||||||||
Interest expense | (10,764 | ) | (11 | ) | (43 | ) | (75 | ) | (10,893 | ) | ||||||||||
Other income (expense), net | 8,844 | 295 | (150 | ) | (7,481 | ) | 1,508 | |||||||||||||
Income (Loss) before income taxes | 85,641 | 13,114 | 2,341 | (12,291 | ) | 88,805 | ||||||||||||||
Provision (Credit) for income taxes | 27,756 | 3,061 | 103 | (2,123 | ) | 28,797 | ||||||||||||||
Net income (loss) | $ | 57,885 | $ | 10,053 | $ | 2,238 | $ | (10,168 | ) | $ | 60,008 | |||||||||
STATEMENT OF INCOME
For the Nine Months Ended April 2, 2006As Adjusted
Briggs & Stratton Corporation | Guarantor Subsidiary | Non-Guarantor Subsidiaries | Eliminations | Consolidated | Briggs & Stratton Corporation | Guarantor Subsidiary | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||||||||||||||
Net sales | $ | 1,225,233 | $ | 832,690 | $ | 146,063 | $ | (317,770 | ) | $ | 1,886,216 | $ | 180,185 | $ | 181,487 | $ | 45,985 | $ | (69,408 | ) | $ | 338,249 | ||||||||||||||||||
Cost of goods sold | 943,727 | 753,708 | 119,184 | (309,996 | ) | 1,506,623 | 156,268 | 164,524 | 38,358 | (67,179 | ) | 291,971 | ||||||||||||||||||||||||||||
Gross profit | 281,506 | 78,982 | 26,879 | (7,774 | ) | 379,593 | 23,917 | 16,963 | 7,627 | (2,229 | ) | 46,278 | ||||||||||||||||||||||||||||
Engineering, selling, general and administrative expenses | 146,384 | 60,323 | 25,035 | — | 231,742 | 40,319 | 16,794 | 8,569 | — | 65,682 | ||||||||||||||||||||||||||||||
Income (Loss) from operations | 135,122 | 18,659 | 1,844 | (7,774 | ) | 147,851 | (16,402 | ) | 169 | (942 | ) | (2,229 | ) | (19,404 | ) | |||||||||||||||||||||||||
Interest expense | (35,515 | ) | (42 | ) | (185 | ) | 3,516 | (32,226 | ) | (9,584 | ) | (5 | ) | (70 | ) | 622 | (9,037 | ) | ||||||||||||||||||||||
Other income (expense), net | 23,652 | 4,482 | (1,385 | ) | (12,754 | ) | 13,995 | 857 | 954 | (158 | ) | 1,804 | 3,457 | |||||||||||||||||||||||||||
Income (Loss) before income taxes | 123,259 | 23,099 | 274 | (17,012 | ) | 129,620 | (25,129 | ) | 1,118 | (1,170 | ) | 197 | (24,984 | ) | ||||||||||||||||||||||||||
Provision (Credit) for income taxes | 40,922 | 6,262 | 99 | (4,216 | ) | 43,067 | (8,554 | ) | 4 | 141 | (95 | ) | (8,504 | ) | ||||||||||||||||||||||||||
Net income (loss) | $ | 82,337 | $ | 16,837 | $ | 175 | $ | (12,796 | ) | $ | 86,553 | $ | (16,575 | ) | $ | 1,114 | $ | (1,311 | ) | $ | 292 | $ | (16,480 | ) | ||||||||||||||||
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
STATEMENT OF CASH FLOWS
For the NineThree Months Ended April 1,September 30, 2007
Briggs & Stratton Corporation | Guarantor Subsidiary | Non-Guarantor Subsidiaries | Eliminations | Consolidated | Briggs & Stratton Corporation | Guarantor Subsidiary | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||||||||||||||
Net Cash Provided by (Used in) Operating Activities | $ | (156,058 | ) | $ | 41,545 | $ | (6,420 | ) | $ | 11,653 | $ | (109,280 | ) | $ | (44,313 | ) | $ | 11,641 | $ | 5,712 | $ | 699 | $ | (26,261 | ) | |||||||||||||||
Cash Flows from Investing Activities: | ||||||||||||||||||||||||||||||||||||||||
Additions to plant and equipment | (18,997 | ) | (12,902 | ) | (14,100 | ) | — | (45,999 | ) | (6,807 | ) | (10,537 | ) | (902 | ) | — | (18,246 | ) | ||||||||||||||||||||||
Proceeds received on sale of plant and equipment | 472 | 52 | 59 | 583 | 40 | 82 | 28 | — | 150 | |||||||||||||||||||||||||||||||
Cash investment in subsidiary | (381 | ) | — | (1,319 | ) | 1,700 | — | (383 | ) | — | — | 383 | — | |||||||||||||||||||||||||||
Net Cash Provided by (Used in) Investing Activities | (18,906 | ) | (12,850 | ) | (15,360 | ) | 1,700 | (45,416 | ) | |||||||||||||||||||||||||||||||
Net Cash Used in Investing Activities | (7,150 | ) | (10,455 | ) | (874 | ) | 383 | (18,096 | ) | |||||||||||||||||||||||||||||||
Cash Flows from Financing Activities: | ||||||||||||||||||||||||||||||||||||||||
Net borrowings (repayments) on loans and notes payable | 187,618 | (35,554 | ) | 8,564 | (11,653 | ) | 148,975 | |||||||||||||||||||||||||||||||||
Dividends | (22,159 | ) | — | — | — | (22,159 | ) | |||||||||||||||||||||||||||||||||
Net borrowings on loans and notes payable | 47,852 | 2,228 | 1,660 | (699 | ) | 51,041 | ||||||||||||||||||||||||||||||||||
Issuance cost of amended revolver | (1,286 | ) | — | — | — | (1,286 | ) | |||||||||||||||||||||||||||||||||
Stock option proceeds and tax benefits | 2,591 | — | — | — | 2,591 | 991 | — | — | — | 991 | ||||||||||||||||||||||||||||||
Treasury stock purchases | (48,232 | ) | — | — | — | (48,232 | ) | |||||||||||||||||||||||||||||||||
Capital contributions received | — | 382 | 1,318 | (1,700 | ) | — | — | 383 | — | (383 | ) | — | ||||||||||||||||||||||||||||
Net Cash Provided by (Used in) Financing Activities | 119,818 | (35,172 | ) | 9,882 | (13,353 | ) | 81,175 | |||||||||||||||||||||||||||||||||
Net Cash Provided by Financing Activities | 47,557 | 2,611 | 1,660 | (1,082 | ) | 50,746 | ||||||||||||||||||||||||||||||||||
Effect of Foreign Currency Exchange Rate Changes on Cash and Cash Equivalents | (2 | ) | — | 1,355 | — | 1,353 | — | — | 1,092 | — | 1,092 | |||||||||||||||||||||||||||||
Net Increase (Decrease) in Cash and Cash Equivalents | (55,148 | ) | (6,477 | ) | (10,543 | ) | — | (72,168 | ) | (3,906 | ) | 3,797 | 7,590 | — | 7,481 | |||||||||||||||||||||||||
Cash and Cash Equivalents, Beginning | 57,623 | 6,812 | 30,656 | — | 95,091 | 8,785 | (1,402 | ) | 22,086 | — | 29,469 | |||||||||||||||||||||||||||||
Cash and Cash Equivalents, Ending | $ | 2,475 | $ | 335 | $ | 20,113 | $ | — | $ | 22,923 | $ | 4,879 | $ | 2,395 | $ | 29,676 | $ | — | $ | 36,950 | ||||||||||||||||||||
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
STATEMENT OF CASH FLOWS
For the NineThree Months Ended April 2,October 1, 2006
Briggs & Stratton Corporation | Guarantor Subsidiary | Non-Guarantor Subsidiaries | Eliminations | Consolidated | Briggs & Stratton Corporation | Guarantor Subsidiary | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||||||||||||||
Net Cash Provided by (Used in) | ||||||||||||||||||||||||||||||||||||||||
Operating Activities | $ | 15,351 | $ | (54,083 | ) | $ | 5,363 | $ | 11,857 | $ | (21,512 | ) | ||||||||||||||||||||||||||||
Net Cash Provided by (Used in) Operating Activities | $ | (163,547 | ) | $ | 48,656 | $ | (2,251 | ) | $ | 8,913 | $ | (108,229 | ) | |||||||||||||||||||||||||||
Cash Flows from Investing Activities: | ||||||||||||||||||||||||||||||||||||||||
Additions to plant and equipment | (35,058 | ) | (11,529 | ) | (2,822 | ) | — | (49,409 | ) | (7,075 | ) | (2,661 | ) | (4,108 | ) | — | (13,844 | ) | ||||||||||||||||||||||
Proceeds received on sale of plant and equipment | 10,761 | 46 | 29 | — | 10,836 | 223 | 31 | 8 | — | 262 | ||||||||||||||||||||||||||||||
Cash investment in subsidiary | (391 | ) | — | 9 | 382 | — | ||||||||||||||||||||||||||||||||||
Investment in joint venture | (900 | ) | — | — | — | (900 | ) | |||||||||||||||||||||||||||||||||
Refund of cash paid for acquisition | — | 6,347 | — | — | 6,347 | |||||||||||||||||||||||||||||||||||
Loan receivable | (2,500 | ) | — | — | — | (2,500 | ) | |||||||||||||||||||||||||||||||||
Capital contributions to subsidiary | (383 | ) | — | (148 | ) | 531 | — | |||||||||||||||||||||||||||||||||
Net Cash Provided by (Used in) Investing Activities | (28,088 | ) | (5,136 | ) | (2,784 | ) | 382 | (35,626 | ) | |||||||||||||||||||||||||||||||
Net Cash Used in Investing Activities | (7,235 | ) | (2,630 | ) | (4,248 | ) | 531 | (13,582 | ) | |||||||||||||||||||||||||||||||
Cash Flows from Financing Activities: | ||||||||||||||||||||||||||||||||||||||||
Net borrowings (repayments) on loans and notes payable | (62,422 | ) | 57,457 | 14,410 | (11,856 | ) | (2,411 | ) | 169,236 | (48,591 | ) | 6,165 | (8,432 | ) | 118,378 | |||||||||||||||||||||||||
Dividends | (22,760 | ) | — | — | — | (22,760 | ) | — | — | 481 | (481 | ) | — | |||||||||||||||||||||||||||
Stock option proceeds and tax benefits | 10,010 | — | — | — | 10,010 | 750 | — | — | — | 750 | ||||||||||||||||||||||||||||||
Treasury stock purchases | (26,559 | ) | (26,559 | ) | (48,232 | ) | — | — | (48,232 | ) | ||||||||||||||||||||||||||||||
Capital contributions received | — | 383 | — | (383 | ) | — | — | 383 | 148 | (531 | ) | — | ||||||||||||||||||||||||||||
Net Cash Provided by (Used in) Financing Activities | (101,731 | ) | 57,840 | 14,410 | (12,239 | ) | (41,720 | ) | 121,754 | (48,208 | ) | 6,794 | (9,444 | ) | 70,896 | |||||||||||||||||||||||||
Effect of Foreign Currency Exchange Rate | ||||||||||||||||||||||||||||||||||||||||
Changes on Cash and Cash Equivalents | — | — | 800 | — | 800 | |||||||||||||||||||||||||||||||||||
Effect of Foreign Currency Exchange Rate Changes on Cash and Cash Equivalents | — | — | (6 | ) | — | (6 | ) | |||||||||||||||||||||||||||||||||
Net Increase (Decrease) in Cash and Cash Equivalents | (114,468 | ) | (1,379 | ) | 17,789 | — | (98,058 | ) | (49,028 | ) | (2,182 | ) | 289 | — | (50,921 | ) | ||||||||||||||||||||||||
Cash and Cash Equivalents, Beginning | 143,034 | 6,376 | 12,163 | — | 161,573 | 57,623 | 6,812 | 30,656 | — | 95,091 | ||||||||||||||||||||||||||||||
Cash and Cash Equivalents, Ending | $ | 28,566 | $ | 4,997 | $ | 29,952 | $ | — | $ | 63,515 | $ | 8,595 | $ | 4,630 | $ | 30,945 | $ | — | $ | 44,170 | ||||||||||||||||||||
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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:
RESULTS OF OPERATIONS
SALES
Consolidated net sales for the thirdfirst quarter of fiscal 20072008 totaled $717$367 million, a decreasean increase of $83$28 million or 10%8% when compared to fiscal 2006.2007.
ThirdFirst quarter net sales for the Engines Segment were $516$208 million versus $598$190 million in fiscal 2006, a decrease2007, an increase of $82$18 million or 14%10%. The decrease in net sales primarily resulted from a 14% reduction inThis increase reflects 5% greater engine unit shipments in the third quarter of fiscal 2007 as compared to the same period lasta year with approximately 60%ago. The increase in engine unit volume was attributable to good late season sell-through in certain regions 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 buildingsell-through, coupled with lower retail and OEM inventories in advance of the hurricane season; however, in fiscal 2007, the absence of significant landed hurricanesand improved demand, resulted in adequate portable generator inventories at both OEMs and retailers.replenishment orders for engines, a situation that did not exist in the first quarter a year ago. The majority of the remainder of the decrease in sales volumes is attributedimprovement was attributable to lower market share in the European market as some engine business has shifted to competitors.favorable Euro exchange rates.
ThirdFirst quarter fiscal 20072008 Power Products Segment net sales were $249 million, a decrease of $39 million or 14% from fiscal 2006. Portable generator unit shipments were lower by approximately 42% duringsimilar to the thirdfirst quarter of fiscal 2007 as retailers have adequate inventories for the beginningat $187 million. While total segment net sales were consistent between years, shipments of the 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. Lawnlawn and garden equipment sales during the 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 reduction in net sales for the Power Products Segment during the third quarter of fiscal 2007.
Consolidated net sales for the first nine-months of fiscal 2007 totaled $1,478 million, a decrease of $408 million or 22%, compared to the first nine-months of last year.
Engines Segment net sales for the first nine-months of fiscal 2007 were $985 million, a decrease of $279 million or 22% from fiscal 2006. Reduced sales during the first nine-months of fiscal 2007 resulted from a decline in engine unit shipments of approximately 23% with approximately 85% of this reduction in shipments occurring in the United States. The reduction in unit shipments was the result of several factors, which have led to lower 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 retailers as inventory levels remain adequate in their respective distribution channels. The second factor was a shift in lawn and garden OEM production schedules to later in the season. 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 for the nine-months of fiscal 2007 as compared to fiscal 2006.
Power Products Segment net sales for the first nine-months of fiscal 2007 were $606 million versus $845 million in12% greater than the prior year a decrease of $239 million or 28%. Unit shipments of generators declined over 52%due to increased orders from dealers needing to replenish inventories due to demand during the summer months. Sales of portable generators were down approximately 47% from the same period a year ago. Both the current and last year’s first nine-monthsquarters lacked demand created by landed-hurricanes. However, last year’s first quarter did have the benefit of fiscal 2007, andsome generator replenishment demand created by tax holiday sales in Florida, while this year’s demand from the decline in segment net sales associated with generators
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
tax holiday event 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.negligible.
GROSS PROFIT MARGIN
The consolidated gross profit margin in the thirdfirst quarter of fiscal 20072008 decreased to 11.9%11.8% from 22.6%13.7% in the same period last year.
Engines Segment margins decreasedincreased to 11.116.9% in the first quarter of fiscal 2008 from 14.0 % in the thirdfirst quarter of fiscal 2007 from 24.9 %2007. The margin improvement is due to favorable foreign currency exchange rate changes (primarily the Euro) and planned lower spending in manufacturing expense categories, offset by $4.0 million of expenses related to the third quarter of fiscal 2006. Nearly 50%planned closure 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 reduced production in an effort to reduce 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.Rolla facility.
The Power Products Segment gross profit margin decreased to 10.5 %4.3% for the thirdfirst quarter of fiscal 20072008 from 13.010.8 % in the thirdfirst quarter of fiscal 2006. For the third quarter, the impact2007. This margin decline is a result of reduced landed hurricane activity in fiscal 2007 as compared to fiscal 2006 has resulted in adequate inventories in the Power Products segment and in the retail distribution channel. Consequently,lower production levelsvolumes of portable generators, are lowerincreased cost related to components purchased in Euros and fixed cost absorption remains unfavorable resulting in reduced gross profit margins during the third quarter of fiscal 2007 as compared to fiscal 2006.
The consolidated gross profit margin for the nine-month period decreased to 13.3 % in fiscal 2007 from 20.1 % in fiscal 2006.
Engines Segment gross profit margin for the nine-month period decreased to 13.7 % in fiscal 2007 from 23.9 % in fiscal 2006. A $34 million write-down of assets in the third quarter of fiscal 2007planned initial startup costs associated with the rationalization of a major operatingpreviously announced new lawn equipment plant located in the United States accounts for over one-third of the decline in gross profit margin. Remaining decreases in gross profit margin are attributed primarily to increased commodity costs and reduced production levels, which resulted in unfavorable fixed cost absorption, as demand for engines from 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 nine-month period were 9.9% in fiscal 2007 and fiscal 2006. Negative gross profit in the first 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 nine-months of fiscal 2007, resulting in favorable gross profit margin contributions of approximately $15 million during the first nine-months of fiscal 2007 as compared to the prior year. Increases in gross profit margin associated with Murray branded products were entirely offset by increased commodity and component costs, unfavorable mix and decreased fixed cost absorption due to decreased portable generator production.Newbern, Tennessee.
ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Engineering, selling, general and administrative expenses were $64 million in the thirdfirst quarter of fiscal 2007, versus $832008, a decrease of $2 million inor 2% from the first quarter of fiscal 2006. The $19 million2007. This decrease is primarily attributable largely to planned reduced marketing and advertising expenses and legal and professional services of $6 million, reduced employee costs associated with salaries and benefits expenses offees.
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
approximately $4 million, and reduced advertising related amounts of $4 million. Other decreases are associated with planned spending reduction efforts.
For the nine-months of fiscal 2007 as compared to fiscal 2006, engineering, selling, general and administrative expenses were $195 million and $232 million, respectively. The $37 million decrease resulted primarily from lower legal and professional services of $13 million, a decline in employee costs associated with salaries and benefits expenses of approximately $7 million, and reduced advertising related amounts of $7 million. Other decreases are associated with planned spending reduction efforts.
INTEREST EXPENSE
Interest expense was $13 million infor the thirdfirst quarter of fiscal 2007, versus $11 million in fiscal 2006. The increase resulted from higher variable interest rates between years and increased average borrowings to fund increased working capital requirements. Interest expense2008 was $34 million inconsistent with the first nine-monthsquarter of fiscal 2007 versus $32 million in fiscal 2006. The increase in interest expense resulted from higher variable interest rates and increased average borrowings to fund increased working capital requirements during the first nine-months of fiscal 2007 as compared to fiscal 2006.at $9 million.
PROVISION FOR INCOME TAXES
The effective tax rate forrates used in the thirdfirst quarter of fiscal 20072008 and fiscal 2006 was 40.4 %2007 were 31.0% and 32.4%34.5%, respectively. The decrease is due to the impact of the increase inof certain tax credits available to the rate in the third quarter of fiscal 2007 as compared to fiscal 2006 resulted from changes in the forecasted fiscal 2007 results and other tax considerations. For the first nine-months of fiscal 2007 and fiscal 2006, the effective tax rate was 29.4% and 33.2%, respectively. Management expects that theCompany. The effective tax rate for the full year willis projected to be in the range of 17.0%30% to 23.0%32%. Tax rates in fiscal 2007 were impacted by the availability of tax credits relative to lower income levels.
LIQUIDITY AND CAPITAL RESOURCES
Cash used in operating activities for the nine-month periodfirst quarter of fiscal 20072008 was $109$26 million as compared to $22$108 million for fiscal 2006. The lower fiscal 2007, cash flows from operating activities are largely the result of reduced operating earnings for both the Engines and Power Products Segments. Unfavorable working capital changes combined with reduced operating earnings were partially offset by the adjustment in cash flows from operating activities for non-cash impairment charges of $35 million.an $82 million improvement. During the first nine-monthsquarter of fiscal 20072008 changes to working capital accounts including inventory, accounts payable, and accounts receivable, resulted in a $28$91 million decreaseincrease in cash flows from operating activities as compared to the first nine-monthsquarter of fiscal 2006.2007. A focus on lowering inventory levels resulted in less of an inventory build up in the first quarter of fiscal 2008, as compared to the same period a year ago. Additionally, lower production levels resulted in reduced accounts payable. The changeschange in inventory accounts and accounts receivable areis a result of the timing of production and shipments to OEMs. The change in accounts payable is due to the timing of payments.collections.
In the nine-month periodfirst quarter of fiscal 2007, there2008, $18 million was $45 million of cash used for investing activities as compared to $36$14 million in fiscal 2006. During2007. This $4 million increase is a result of increased additions to plant and equipment, primarily related to the first nine monthsnew lawn equipment plant located in Newbern, Tennessee and projects in McDonough, Georgia, both of fiscal 2006which are taking on additional capacity due to the Company received cash associated with proceedsfuture closure of our Port Washington, Wisconsin facility. Additionally, capital projects are occurring in our Poplar Bluff, Missouri facility as it prepares for additional capacity from a building sale and a refundthe future closure of acquisition related funds. The absence of these events in fiscal 2007 resulted in the greater use of cash for investing activities.our Rolla, Missouri facility.
Net cash provided by financing activities was $81$51 million in fiscal 2007 versus net cash used2008, a $20 million decrease from the $71 million provided in the first quarter of $42 million in fiscal 2006, a change of $123 million. The increase in cash provided by financing activities2007. This decrease is attributable to increaseddecreased net borrowings of $151$67 million to fundfor working capital requirements and repurchase treasury shares. Repurchasespurposes, offset by the absence of treasury sharesshare repurchases in fiscal 2007 and 2006 were2008. Treasury share repurchases of 1.7 million shares or $48 million and $27 million, respectively. Dividends paid were comparablemade during both the first nine-monthsquarter of fiscal 2006 and fiscal 2007.
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
2007 whereas no treasury share repurchases were made in the first quarter of 2008.
FUTURE LIQUIDITY AND CAPITAL RESOURCES
Briggs & Stratton hasOn July 12, 2007, the Company entered into a $350$500 million amended and restated multicurrency credit agreement. The Amended Credit Agreement (“Revolver”) provides a revolving credit facility for up to $500 million in revolving loans, including up to $25 million in swing-line loans. The Company used the proceeds of the Revolver to pay off the remaining amounts outstanding under the Company’s variable rate term notes issued in February 2005 with various financial institutions, retire the 7.25% senior notes that expireswere due in May 2009. The credit facility is used toSeptember 2007 and fund seasonal working capital requirements and other financing needs. The Revolver has a term of five years and all outstanding borrowings on the Revolver are due and payable on July 12, 2012. As of the end of the thirdfirst quarter of fiscal 2007,2008, the unused availability of the revolving credit facility is approximately $200$379 million. This credit facility and Briggs and Stratton’s other indebtedness contain restrictive covenants as described in NoteNotes 8 and 19 of the Notes to the Consolidated Financial Statements of the Company’s Annual Report on Form 10-K. As of the end of the thirdfirst quarter of fiscal 2007,2008, 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
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
amount of actual purchases will depend upon the market price of the stock and certain governing loan covenants. As of AprilSeptember 30, 2007, approximately $48 million of common stock has been repurchased under this plan.
Management expects cash outflows for capital expenditures to be between $70 million andapproximately $80 million in fiscal 2007.2008. 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.
OTHER MATTERS
As disclosedA discussion of impairment and disposal charges is included in January of 2007, we continuethe Notes 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 resultConsolidated Condensed Financial Statements of this effort, we decided inForm 10-Q under the third quarter to discontinue our operations in Rolla, Missouriheading Impairment 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 ChinaDisposal Charges 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 decisionincorporated herein by the end of the current fiscal year.reference.
OFF-BALANCE SHEET ARRANGEMENTS
There have been no material changes since the September 1, 2006,17, 2007, filing of the Company’s Annual Report on Form 10-K.
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
10-K/A.
CONTRACTUAL OBLIGATIONS
There have been no material changes since the September 1, 2006,17, 2007, filing of the Company’s Annual Report on Form 10-K.10-K/A.
CRITICAL ACCOUNTING POLICIES
ThereOther than the change in the method the Company uses to compute the market related value of the assets within its qualified defined benefit pension plan discussed in the Notes to Consolidated Condensed Financial Statements of this Form 10-Q under the heading Change in Accounting Principle, there have been no material changes in Briggs & Stratton’s critical accounting policies since the September 1, 200617, 2007 filing of its Annual Report on Form 10-K.10-K/A. As discussed in our annual report, the preparation of financial statements in conformity with accounting principles generally accepted in the United States.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 changechange.
NEW ACCOUNTING PRONOUNCEMENTS
On July 13, 2006,A discussion of new accounting pronouncements is included in 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 expectedNotes 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 StatementFinancial Statements of Cash Flows.this Form 10-Q under the heading New Accounting Pronouncements and incorporated herein by reference.
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS
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
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
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; 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 ofor 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.otherwise, including the factors discussed in Item 1A, Risk Factors, of the Company’s Annual Report on Form 10-K and in its periodic reports on Form 10-Q. 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
There have been no material changes since the September 1, 2006,17, 2007, filing of the Company’s Annual Report on Form 10-K.10-K/A.
ITEM 4. CONTROLSAND PROCEDURES
ITEM 4. | CONTROLS AND PROCEDURES |
DISCLOSURE CONTROLS AND PROCEDURES
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.
INTERNAL CONTROL OVER FINANCIAL REPORTING
There has not been any change in Briggs & Stratton’s internal control over financial reporting during the thirdfirst fiscal quarter that has materially affected, or is reasonably likely to materially affect, Briggs & Stratton’s internal control over financial reporting.
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
ITEM 1. | LEGAL PROCEEDINGS |
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.
ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held itsAt the Annual Meeting of Shareholders on October 18, 2006. Information on17, 2007, director nominees named below were elected to a three-year term expiring in 2010 by the matters voted uponindicated votes cast for and the votes castwithheld with respect to each matternominee.
Name of Nominee | For | Withheld | ||
William F. Achtmeyer | 45,006,065 | 373,384 | ||
David L. Burner | 45,022,719 | 356,730 | ||
Mary K. Bush | 44,339,268 | 1,040,181 |
Directors whose terms of office continue past the Annual Meeting of Shareholders are Michael E. Batten, Keith R. McLoughlin, Robert J. O’Toole, John S. Shiely, Charles I. Story and Brian C. Walker.
Shareholders ratified the selection of PricewaterhouseCoopers LLP as the company’s independent registered public accounting firm. The vote was previously reported in the Company’s Quarterly Report on Form 10-Q45,149,586 for the quarter ended October 1, 2006.
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
ITEM 6. | EXHIBITS |
Exhibit Number | Description | |
Amended and (Filed herewith) | ||
10.1 | Amended and Restated Form of Change of Control Employment Agreement (Filed herewith) | |
10.2 | Amended and Restated Supplemental Executive Retirement Plan (Filed herewith) | |
10.3 | Amended and Restated Supplemental Employee Retirement Plan (Filed herewith) | |
10.4 | Amended and Restated Key Employee Savings and Investment Plan (Filed herewith) | |
10.5 | Summary of Director Compensation (Filed herewith) | |
10.6 | Amended and Restated Deferred Compensation Plan for Directors (Filed herewith) | |
10.7 | Powerful Solution Incentive Compensation Program (Filed herewith) |
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
10.8 | Amendment to the Briggs & Stratton Corporation Economic Value Added Incentive Compensation Plan (Filed herewith) | |
10.9 | Amended and Restated Multicurrency Credit Agreement, dated July 12, 2007, among Briggs & Stratton Corporation, the financial institutions party hereto, and J.P. Morgan Chase Bank, N.A., La Salle Bank National Association, M&I Marshall & Ilsley Bank, U.S. Bank National Association, as co-documentation agents, and Bank of America, N.A., as administrative agent, issuing bank and swing line bank, and Banc of America Securities LLC, lead arranger and book manager. (Filed as | |
18.0 | Letter from PricewaterhouseCoopers LLP re: Change in Accounting Principle (Filed herewith) | |
31.1 | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
(Filed herewith) | ||
31.2 | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
(Filed herewith) | ||
32.1 | Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
( | ||
32.2 | Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
( |
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
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 CORPORATION | ||||
(Registrant) | ||||
Date: | /s/ James E. Brenn | |||
James E. Brenn | ||||
Senior Vice President and Chief Financial Officer and Duly Authorized Officer |
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Exhibit Number | Description | |
10.0 | Amended and (Filed herewith) | |
10.1 | Amended and Restated Form of Change of Control Employment Agreement (Filed herewith) | |
10.2 | Amended and Restated Supplemental Executive Retirement Plan (Filed herewith) | |
10.3 | Amended and Restated Supplemental Employee Retirement Plan (Filed herewith) | |
10.4 | Amended and Restated Key Employee Savings and Investment Plan (Filed herewith) | |
10.5 | Summary of Director Compensation (Filed herewith) | |
10.6 | Amended and Restated Deferred Compensation Plan for Directors (Filed herewith) | |
10.7 | Powerful Solution Incentive Compensation Program (Filed herewith) | |
10.8 | Amendment to the Briggs & Stratton Corporation Economic Value Added Incentive Compensation Plan (Filed herewith) | |
10.9 | Amended and Restated Multicurrency Credit Agreement, dated July 12, 2007, among Briggs & Stratton Corporation, the financial institutions party hereto, and J.P. Morgan Chase Bank, N.A., La Salle Bank National Association, M&I Marshall & Ilsley Bank, U.S. Bank National Association, as co-documentation agents, and Bank of America, N.A., as administrative agent, issuing bank and swing line bank, and Banc of America Securities LLC, lead arranger and book manager. (Filed as | |
18.0 | Letter from PricewaterhouseCoopers LLP re: Change in Accounting Principle (Filed herewith) | |
31.1 | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
(Filed herewith) | ||
31.2 | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
(Filed herewith) | ||
32.1 | Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Filed herewith) |
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
32.2 | Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
( |
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