UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended DecemberMarch 30, 20072008

OR

For the transition period from            to            

Commission file number 1-1370

BRIGGS & STRATTON CORPORATION

(Exact name of registrant as specified in its charter)

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, a non-accelerated filer, or a non-accelerated filer.smaller reporting company. See definitionthe definitions of “accelerated filer and large“large accelerated filer”, “accelerated filer” and “smaller reporting company” 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.

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

INDEX

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

PART I—I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands)

(Unaudited)

ASSETS

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)

(Unaudited)

LIABILITIES & SHAREHOLDERS’ INVESTMENT

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)

The accompanying notes are an integral part of these statements.

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

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.nature, except for the adjustments made in connection with the change in accounting principle and correction of errors detailed below. 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 and Correction of Errors

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 (MRVA) is used to calculate the expected return on plan assets. Previously, the Company computed the market-related value of plan assets by adding actual dividends and interest to the MRVA balance and amortizing unrealized and realized gains and losses on assets on a straight line basis over five years. Under the new method, the expected return on plan assets will be added to the MRVA balance and any differences between the expected and actual returns on plan assets will be deferred and amortized on a straight line basis over five years. The Company believes that the former and new methods of computing the market-related value of plan assets both recognize changes in fair value in a systematic and rational manner. However, the Company believes that the new method is preferable because the new method has the effect of deferring less investment gains and losses during periods of volatile investment markets and therefore more closely approximates the fair market value of the plan assets. The Company recorded pre-tax pension income of $1.8$1.2 million (pre-tax) and $2.5$3.7 million (pre-tax) in the three and sixnine months ended DecemberMarch 30, 2007,2008, respectively. 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 adjustedrestated three and sixnine months ended December 31, 2006April 1, 2007 now reflect pre-tax pension income of $0.7 million (pre-tax) and $1.3$2.0 million, (pre-tax), respectively.

During the quarter ended March 30, 2008, the Company identified errors in its previously filed financial statements on Form 10-K for the fiscal years ended July 1, 2007, July 2, 2006 and July 3, 2005 and on Form 10-Q for the periods ending September 30, 2007 and December 30, 2007 related to three separate items. First, the Company did not properly expense rebates to certain customers in each year. Second, the Company identified that certain inter-company receivable and payable accounts were out of balance, primarily related to transactions in fiscal 2004. Third, the Company has historically incorrectly capitalized warranty costs into inventory. The followingimpact to the Company’s previously reported net income and earnings per diluted share is an increase of $0.2 million ($.00 per diluted share) for fiscal 2007, a reduction of $2.3 million ($.04 per diluted share) for fiscal 2006 and a reduction of $1.8 million ($.04 per diluted share) for fiscal 2005. The impact on the Company’s previously reported net income and earnings per diluted share is a decrease of $1.1 million ($.02 per diluted share) for the three month period ended October 1, 2006 and a decrease of $0.1 million ($.00 per diluted share) for the three month period ended December 31, 2006. Certain of the misstatements occurred in years prior to fiscal 2005. The cumulative effect of correcting these errors for periods prior to fiscal 2005 reduces retained earnings by $2.7 million. During the third quarter of fiscal 2008, the Company recorded an adjustment of $1.7 million to net income ($.03 per diluted share) to correct the errors included in the first and second quarters of fiscal 2008. The impact on the Company’s previously reported net income and earnings per diluted share will be a decrease of $0.3 million ($.01 per diluted share) and $1.4 million ($.03 per diluted share) for the first and second quarters of fiscal 2008, respectively, and the third quarter of fiscal 2008 will reflect an increase of $1.7 million ($.03 per diluted share). The Company will restate all prior year financial statements, including the first three quarters of fiscal 2008, prospectively, within the fiscal 2008 Form 10-K. We do not believe that the adjustments necessary to correct the errors described above are material, individually or in the aggregate, to the Company’s results of operations, financial position or cash flows for any of the Company’s previously filed annual or quarterly financial statements.

Fiscal 2007 financial statement items for fiscal 2007 were affected by thisthe change in accounting principle:

Consolidated Condensed Balance Sheet:

Consolidated Condensed Statementsprinciple and correction of Income:errors as shown in the following tables (in thousands):

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

Consolidated Condensed Balance Sheet (in thousands):

Consolidated Condensed Statements of Income (in thousands, except per share data):

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

Consolidated Condensed Statement of Cash Flows:Flows (in thousands):

All adjustments are in cash flows from operating activities and consequently the total cash flows from operating activities remains unchanged.

Common Stock

The Company did not repurchase any common shares during the first or secondthree quarters of fiscal 2008. The Company repurchased 1,733,200 common shares at a total cost of $48.2 million during the first quarter of fiscal 2007, and did not repurchase any common shares during the second quarteror third quarters of fiscal 2007.

Income Taxes

The third quarter and year to date fiscal 2008 effective tax rates are at 16.9% and 2.2%, respectively, versus the 40.2% and 24.4% used in the same respective periods last year. The effective tax rate for the full year is projected to be in the range of 23.0% to 25.0%. The variation reflected between years is primarily due to the required recognition of the tax effects related to MTI preferred stock dividends and other tax reserve adjustments related to the expiration of foreign and domestic statutes required to be treated as discrete items in the quarter they occur rather than in the overall expected annual tax rate. These discrete items lowered the tax provision for the quarter and nine month period by $6.0 million. In addition, the impact of expected tax credits as a percentage of annual earnings for fiscal 2008 results in lowering the projected effective tax rate in fiscal 2008.

The Company adopted the provisions of FIN 48 on July 2, 2007. 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. See “New Accounting Pronouncements” in the Notes to Consolidated Condensed Financial Statements for more information on FIN 48.

As of July 2, 2007, the Company had $23 million of gross unrecognized tax benefits. Of this amount, $15 million represents the portion that, if recognized, would impact the effective tax rate. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. As of July 2, 2007, the Company had $6 million accrued for interest and penalties. We do not anticipate that there will be a significant change in the amount of unrecognized tax benefits in the next twelve months.

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

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 2004 and is currently under examination by the IRS for taxable years ending in 2004 and 2005. With respect to the Company’s major foreign jurisdictions, it is no longer subject to tax examinations by tax authorities before 1997.

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 three months ended DecemberMarch 30, 20072008 excluded outstanding options to purchase approximately 3,885,000 of common stock because the options’ exercise price was greater than the average market price of the common shares. Shares outstanding used to compute diluted earnings per share for the six months ended December 30, 2007 excluded approximately 180,000 shares for restricted and deferred stock and outstanding options to purchase

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

approximately 567,000 shares of common stock as their inclusion would have been anti-dilutive. Additionally, outstanding options to purchase approximately 3,179,0003,514,000 shares of common stock were excluded from the diluted earnings per share for the sixnine months ended DecemberMarch 30, 20072008 because the options’ exercise price was greater than the average market price of the common shares.

Shares outstanding used to compute diluted earnings per share for the three months ended December 31, 2006April 1, 2007 excluded approximately 147,000 shares for restricted and deferred stock and outstanding options to purchase approximately 721,000 shares of common stock as their inclusion would have been anti-dilutive. Additionally, outstanding options to purchase approximately 2,722,000 shares of common stock were excluded from the diluted earnings per share for the three months ended December 31, 2006 because the options’ exercise price was greater than the average market price of the common shares. SharesAdditionally, shares outstanding used to compute diluted earnings per share for the sixnine months ended December 31, 2006April 1, 2007 excluded approximately 144,00081,000 shares for restricted and deferred stock and outstanding options to purchase approximately 721,0003,290,000 shares of common stock as their inclusion would have been anti-dilutive. Additionally, outstanding options to purchase approximately 2,596,000 shares of common stock were excluded from the diluted earnings per share for the six months ended December 31, 2006 because the options’ exercise price was greater than the average market price of the common shares.

Information on earnings per share is as follows (in thousands):

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) is as follows (in thousands):

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

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

Derivatives

Derivatives are recorded on the balance sheet as assets or liabilities, measured at fair value. The Company 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 Loss. The amounts included in Accumulated Other Comprehensive Loss will beare reclassified into incomethe Consolidated Condensed Statements of Income when the forecasted transactions occur. These forecasted transactions represent the exporting of products for which the Company 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.

The Company 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, the Company hedges approximately 50-80% of its anticipated monthly natural gas usage along with a pool of other companies. The Company 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 the Company 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 Loss, which are reclassified into the Consolidated Condensed Statements of Income as the monthly cash settlements occur and actual natural gas is consumed.

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

The Company 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. The Company 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 Loss

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

if the forward purchase contracts are deemed to be effective and are reclassified into the Consolidated Condensed Statements of Income when sales of inventory are made. Changes in the fair value of any derivative deemed to be ineffective would be immediately recorded as either income or expense in the accompanying Consolidated Condensed Statements of Income.

Segment Information

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

Warranty

The Company recognizes the cost associated with its standard warranty on Engines and Power Products at the time of sale. The amount recognized is based on historical failure rates and current claim cost experience. In the second quarter of fiscalnine months ended March 30, 2008, the Company incurred $17.7$19.8 million of expenses to accrue for current and future warranty claims related to a snow thrower engine recall. The snow thrower engines were recalled due to a potential risk of fire. The amounts accrued were to repair the units to reduce or eliminate the potential fire hazard. As of DecemberMarch 30, 2007,2008, the balance sheet includes $7.7$4.4 million of reserves for this specific engine warranty matter. Product liability reserves totaling less than $50,000 have been reservedaccrued for product liability matters related to this recall as the Company has had minimal product liability claims asserted for nominal amounts related to the snow engine recall. The following is a reconciliation of the changes in accrued warranty costs for the reporting period (in thousands):

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

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 $0.6 million and $3.3$3.9 million for the quarter and sixnine months ended DecemberMarch 30, 2007.2008, respectively. For the quarter and sixnine months ended December 31, 2006,April 1, 2007, stock based compensation expense was $2.1$1.8 million and $4.9$6.7 million, respectively.

Pension and Postretirement Benefits

The Company 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

The Company is not required to, nor has or 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, but did contribute $8.0 million during the sixnine months ended December 31, 2006.April 1, 2007.

The Company expects to make benefit payments of approximately $1.8 million attributable to its non-qualified pension plans during fiscal 2008. During the sixnine months ended DecemberMarch 30, 2007,2008, the Company made payments of approximately $0.7$1.2 million for its non-qualified pension plans. The Company anticipates making benefit payments of approximately $30.6$29.9 million for its other postretirement benefit plans during fiscal 2008. During the sixnine months ended DecemberMarch 30, 2007,2008, the Company had made payments of approximately $15.5$22.7 million for its other postretirement benefit plans.

New Accounting Pronouncements

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141R, “Business Combinations” (SFAS 141R). SFAS 141R states that all business combinations (whether full, partial or step acquisitions) will result in all assets and liabilities of an acquired business being recorded at their fair values. Certain forms of contingent consideration and certain acquired contingencies will be recorded at fair value at the acquisition date. SFAS 141R also states acquisition costs will generally be expensed as incurred and restructuring costs will be expensed in periods after the acquisition date. This statement is effective for financial statements issued for fiscal years beginning after December 15, 2008. The Company is currently assessing the impact of SFAS 141R on its consolidated financial position.

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

In December 2007, the FASB issued SFAS 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51” (SFAS 160). SFAS 160 will change the accounting and reporting for minority interests, which will be recharacterized as noncontrolling interests (NCI) and classified as a component of equity. This new consolidation method will significantly change the accounting for transactions with minority interest holders. SFAS 160 is effective for fiscal years beginning after December 15, 2008. The Company is currently assessing the impact of SFAS 160 on its consolidated financial position.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—Liabilities – Including an Amendment of FASB Statement No. 115,” (SFAS 159). This 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 fair value option has been elected in earnings after adoption. Statement 159 is effective for fiscal years beginning after November 15, 2007. At this time,The Company is currently assessing the impact of adoption of SFAS 159 on ourits consolidated financial position is being assessed.position.

In September 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 157 is effective for fiscal years beginning after November 15, 2007. At this time,The Company is currently assessing the impact of adoption of SFAS 157 on ourits consolidated financial position is being assessed.position.

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans -– an amendment of FASB Statements No. 87, 88, 106, and 132(R),” (SFAS 158). SFAS 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. The Company adopted the SFAS 158 in the fourth quarter of fiscal 2007.

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 $23 million of gross unrecognized tax benefits. Of this amount, $15 million represents the portion that, if recognized, would impact the effective tax rate. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. As of July 2, 2007, the Company had $6 million accrued for interest and penalties. We do not anticipate that there will be a significant changeFor more information, see “Income Taxes” in the amount of 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 subjectNotes to U.S. federal income tax examinations by tax authorities before 2004 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.Consolidated Condensed Financial Statements.

Commitments and Contingencies

The Company is subject to various unresolved legal actions that arise in the normal course of its business. These actions typically relate to product liability (including asbestos-related liability), patent and trademark matters, and disputes with customers, suppliers, distributors and dealers, competitors and employees.

On June 3, 2004, eight individuals who claim to have purchased lawnmowers in Illinois and Minnesota filed a lawsuit (Ronnie Phillips et al. v. Sears Roebuck Corporation et al., No. 04-L-334 (20th Judicial Circuit, St. Clair County, IL)) against the Company and other defendants alleging that the horsepower labels on the products they purchased were inaccurate. The plaintiffs amended their complaint several times and were seeking an injunction, compensatory and punitive damages, and attorneys’ fees under various federal and state laws including the Racketeer Influenced and Corrupt Organization Act (RICO) 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,

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

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 re-file a complaint after amending several claims. An opinion ofOn May 8, 2008 the Court providing more detail concerning its order is expectedissued an opinion that (i) dismisses the RICO claims in their entirety with prejudice; (ii) dismisses the claims of all 93 non-Illinois plaintiffs without prejudice but has not yet been filed.with instructions that their amended claims must be filed in local courts; and (iii) orders that any amended complaint for the three Illinois plaintiffs must be refiled by May 30, 2008. 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,class. The Court’s May 8, 2008 Opinion rejects the MTD settlement, but neither defendant’s agreement has yet been approved bydoes not address the Court.putative Honda settlement.

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

Impairment and Disposal Charges

During fiscal 2007, impairmentImpairment charges were recognized in the Consolidated StatementsCondensed Statement of EarningsIncome for $43.1$35.2 million pretax ($26.221.4 million after tax) during the third quarter of fiscal 2007,2007. The $35.2 million pretax write-down of which, $33.9 and $9.2 million wereassets was recognized in the Engines and Power Products Segments for $33.9 million and $1.3 million, respectively. During the fourth quarter of fiscal 2007, an additional impairment charge of $7.9 million was recognized in the Power Products Segment. The Engines Segment $33.9 million charge was primarily for the write-down of assets of the Rolla, Missouri

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

MO (Rolla) engine manufacturing facility that closed in the second quarter of fiscal 2008. A decision was made to close the Rolla facility as a result of ourthe Company’s analysis to reduce ourits fixed manufacturing costs by consolidating production into ourits other existing engine plants in Poplar Bluff, MO and Chongqing, China. The related impaired machinery and equipment no longer used in production was sold in an auction or scrapped during the second quarter of fiscal 2008. The $9.2 million recognized in the Power Products Segment primarily relates to the closure of the Port Washington, WI production facility expected to be completed in the second quarter of fiscal 2009. Management of the Company conducted an analysis of ourthe Company’s manufacturing facilities that had been acquired through acquisitions over the past several years. Management concluded to consolidate the lawn and garden manufacturing facilities into three focused factories. A new factory in Newbern, TN, located near ourthe Company’s high volume lawnmower engine plants, will build walk behind lawnmowers for the consumer market. An existing factory in McDonough, GA will build riding lawnmowers for the consumer market. A third factory in Munnsville, NY will build commercial riding lawnmowers and zero turn lawnmowers. The production from Port Washington, WI will primarily move to the McDonough, GA facility. For each segment, it was determined that the carrying value of the assets exceeded the undiscounted future cash flows. The impairment was computed as the difference between the estimated fair value and the carrying value of the assets. Fair value was determined based on market prices for comparable assets. The Rolla facility ceased manufacturing operations during the second quarter of fiscal 2008 and the impaired machinery and equipment no longer used in production was sold in an auction or scrapped in December 2007.

Additionally, a liabilityan expense was recorded within costscost of goods sold to accrue for severance payments to be paid to the employees of the Rolla facility upon its close.facility. 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 $1.4 million was accrued in the first sixnine months of fiscal 2008 and approximately $1.8$2.5 million was paid in the first sixnine months of fiscal 2008, resulting in a total accrual2008.

An expense was also recorded within cost of goods sold to accrue for severance payments to be paid to employees of the Port Washington facility upon its close. Approximately $1.0 million of severance expense is expected to be incurred related to the closure of this facility and of this $1.0 million, approximately $0.7$0.5 million at Decemberhas been incurred as of March 30, 2007.2008. Severance payments are contingent upon an employee working through the scheduled end dates.dates, and will continue to accrue until the plant closes.

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

Sale of Investment

During the second quarter of fiscal 2008, the Company and Metal Technologies Holding Company, Inc. (MTHC) entered into a Class B Preferred Share Redemption Agreement that provided for MTHC to pay all dividends in arrears on the 45,000 MTHC Class B preferred shares held by the Company and redeem the shares in exchange for a payment to the Company. The shares were received as part of the payment from MTHC when it acquired certain foundry operations of the Company in 1999. The Company received $66.0 million, resulting in a $37.0 million gain ($25.029.0 million after tax) on this sale of preferred stock and final dividend payment.

Financial Information of Subsidiary Guarantor of Indebtedness

In June 1997, the Company issued $100 million of 7.25% senior notes, in May 2001, the Company issued $275 million of 8.875% senior notes and in February 2005, the Company issued $125 million of variable rate term notes. In addition, the Company had a $350 million revolving credit facility used to finance seasonal working capital 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 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.

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

Under the terms of the Company’s 8.875% senior notes and the Revolver (collectively, the “Domestic Indebtedness”), Briggs & Stratton Power Products Group, LLC and its wholly owned subsidiary, Simplicity Manufacturing, Inc., areis the joint and several guarantorsguarantor of the Domestic Indebtedness (the “Guarantor”). The guarantees are full and unconditional guarantees. Additionally, if at any time a domestic subsidiary of the Company constitutes a significant domestic subsidiary, then such domestic subsidiary will also become a guarantor of the Domestic Indebtedness. Currently, all of the Domestic Indebtedness is unsecured. If the Company were to fail to make a payment of interest or principal on its due date, the Guarantor is obligated to pay the outstanding Domestic Indebtedness. The Company had the following outstanding amounts related to the guaranteed debt (in thousands):

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

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

BALANCE SHEET

As of DecemberMarch 30, 20072008