-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, T25mPb05zPgFojFkO+uyjE9qAUKMPKUyElydROBn44SkVizB9w0a4f3zPIXzwlBm 0UoEfIu03J5lj/8d/w9d3A== 0000950124-98-002730.txt : 19980513 0000950124-98-002730.hdr.sgml : 19980513 ACCESSION NUMBER: 0000950124-98-002730 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19980329 FILED AS OF DATE: 19980512 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRIGGS & STRATTON CORP CENTRAL INDEX KEY: 0000014195 STANDARD INDUSTRIAL CLASSIFICATION: ENGINES & TURBINES [3510] IRS NUMBER: 390182330 STATE OF INCORPORATION: WI FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-01370 FILM NUMBER: 98616431 BUSINESS ADDRESS: STREET 1: 12301 W WIRTH ST CITY: WAUWATOSA STATE: WI ZIP: 53222 BUSINESS PHONE: 4142595333 MAIL ADDRESS: STREET 1: P O BOX 702 CITY: MILWAUKEE STATE: WI ZIP: 53201 10-Q 1 FORM 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 29, 1998 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 (I.R.S. Employer incorporation or organization) Identification No.) 12301 West Wirth Street, Wauwatosa, Wisconsin 53222 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) 414/259-5333 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ---- ---- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Outstanding at Class May 7, 1998 - -------------------------------------------------------------------------------- COMMON STOCK, par value $0.01 per share 24,113,545 Shares -1- 2 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES INDEX Page No. -------- PART I - FINANCIAL INFORMATION Item 1. Financial Statements: Consolidated Condensed Balance Sheets - March 29, 1998 and June 29, 1997 3 Consolidated Condensed Statements of Income - Three Months and Nine Months ended March 29, 1998 and March 30, 1997 5 Consolidated Condensed Statements of Cash Flow - Nine Months ended March 29, 1998 and March 30, 1997 6 Notes to Consolidated Condensed Financial Statements 7 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 8 Item 3. Quantitative and Qualitative Disclosures About Market Risk 10 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 11 Signatures 11 -2- 3 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands)
ASSETS ------ March 29 June 29 1998 1997 ----------- --------- (Unaudited) CURRENT ASSETS: Cash and cash equivalents $ 22,616 $ 112,859 Receivables, net 302,033 129,877 Inventories - Finished products and parts 94,093 83,361 Work in process 36,934 37,922 Raw materials 3,564 4,674 ---------- --------- Total inventories 134,591 125,957 Future income tax benefits 34,087 31,602 Prepaid expenses 16,892 18,121 ---------- --------- Total current assets 510,219 418,416 ---------- --------- OTHER ASSETS: Deferred income tax assets 14,017 16,975 Capitalized software 10,604 10,532 ---------- --------- Total other assets 24,621 27,507 ---------- --------- PLANT AND EQUIPMENT - Cost 816,610 796,714 Less - Accumulated depreciation 423,189 400,448 ---------- --------- Total plant and equipment, net 393,421 396,266 ---------- --------- $ 928,261 $ 842,189 ========== =========
The accompanying notes are an integral part of these statements. -3- 4 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Continued) (In thousands) LIABILITIES & SHAREHOLDERS' INVESTMENT
March 29 June 29 1998 1997 -------- ------- (Unaudited) CURRENT LIABILITIES: Accounts payable $ 78,999 $ 82,166 Domestic notes payable 82,942 5,000 Foreign loans 18,637 13,359 Current maturities of long-term debt 15,000 15,000 Accrued liabilities 108,290 87,553 Dividends payable 6,839 - Federal and state income taxes 27,211 10,916 -------- -------- Total current liabilities 337,918 213,994 -------- -------- OTHER LIABILITIES: Deferred revenue on sale of plant and equipment 15,913 15,966 Accrued pension cost 27,642 31,891 Accrued employee benefits 12,862 12,324 Accrued postretirement health care obligation 75,225 74,020 Long-term debt 143,051 142,897 -------- -------- Total other liabilities 274,693 277,098 -------- -------- SHAREHOLDERS' INVESTMENT: Common stock- Authorized 60,000 shares, $.01 par value, Issued 28,927 shares 289 289 Additional paid-in capital 38,010 40,533 Retained earnings 513,320 490,682 Cumulative translation adjustments (1,712) (1,033) Treasury stock at cost, 4,661 and 3,513 shares, respectively (234,257) (179,374) -------- -------- Total shareholders' investment 315,650 351,097 -------- -------- $928,261 $842,189 ======== ========
The accompanying notes are an integral part of these statements. -4- 5 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (In thousands except per share data) (Unaudited)
Three Months Ended Nine Months Ended ------------------ ----------------- March 29 March 30 March 29 March 30 1998 1997 1998 1997 -------- -------- -------- -------- NET SALES $469,055 $475,955 $948,093 $937,350 COST OF GOODS SOLD 374,282 368,836 776,012 755,405 -------- -------- -------- -------- Gross profit on sales 94,773 107,119 172,081 181,945 ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 33,103 30,847 92,342 84,979 -------- -------- -------- -------- Income from operations 61,670 76,272 79,739 96,966 INTEREST EXPENSE (5,870) (2,691) (14,912) (7,051) OTHER INCOME, net 1,908 1,453 5,243 3,551 -------- -------- -------- -------- Income before provision for income taxes 57,708 75,034 70,070 93,466 PROVISION FOR INCOME TAXES 21,930 28,520 26,630 35,520 -------- -------- -------- -------- Net income $ 35,778 $ 46,514 $ 43,440 $ 57,946 ======== ======== ======== ======== EARNINGS PER SHARE DATA - Average shares outstanding 24,514 28,927 24,861 28,927 ======== ======== ======== ======== Basic earnings per share $ 1.46 $ 1.60 $ 1.75 $ 2.00 ======== ======== ======== ======== Diluted average shares outstanding 24,600 29,055 25,008 29,050 ======== ======== ======== ======== Diluted earnings per share $ 1.45 $ 1.60 $ 1.74 $ 1.99 ======== ======== ======== ======== CASH DIVIDENDS PER SHARE $ .28 $ .27 $ .84 $ .81 ======== ======== ======== ========
The accompanying notes are an integral part of these statements. -5- 6 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW (In thousands) (Unaudited)
Nine Months Ended -------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: March 29, 1998 March 30, 1997 -------------- -------------- Net income $ 43,440 $ 57,946 Adjustments to reconcile net income to net cash provided by operating activities - Depreciation 35,523 32,278 Amortization of discount on long-term debt 154 - Loss on disposition of plant and equipment 984 2,201 (Increase)decrease in operating assets - Accounts receivable (172,156) (158,268) Inventories (8,634) (19,992) Other current assets (1,256) (1,864) Other assets 2,886 (12,841) Increase(decrease) in liabilities - Accounts payable and accrued liabilities 40,704 68,208 Other liabilities (2,506) 2,355 ---------- --------- Net cash used in operating activities (60,861) (29,977) ---------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to plant and equipment (34,192) (52,423) Proceeds received on sale of plant and equipment 360 163 Proceeds received on sale of Menomonee Falls, Wisconsin facility - 15,981 ---------- --------- Net cash used in investing activities (33,832) (36,279) ---------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings on domestic and foreign loans 83,220 2,611 Dividends (20,802) (23,431) Purchase of common stock for treasury (66,433) (550) Proceeds from exercise of stock options 9,027 185 ---------- --------- Net cash provided(used) in financing activities 5,012 (21,185) ---------- --------- EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (562) (327) ---------- --------- NET DECREASE IN CASH AND CASH EQUIVALENTS (90,243) (87,768) CASH AND CASH EQUIVALENTS, beginning 112,859 150,639 ---------- --------- CASH AND CASH EQUIVALENTS, ending $ 22,616 $ 62,871 ========== ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest paid $ 14,809 $ 7,051 ========== ========= Income taxes paid $ 9,144 $ 17,766 ========== =========
The accompanying notes are an integral part of these statements. -6- 7 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. However, in the opinion of the Company, adequate disclosures have been presented to make the information not misleading, and all adjustments necessary to present fair statements of the results of operations and financial position have been included. All of these adjustments are of a normal recurring nature. These condensed financial statements should be read in conjunction with the financial statements and the notes thereto which were included in the Company's latest annual report on Form 10-K. The Company adopted Financial Accounting Standard No. 128, effective for periods ending after December 15, 1997, during the second quarter of the current fiscal year. The Company's earnings per share were 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, were computed on the assumption that stock options were exercised at the beginning of the periods reported. -7- 8 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The following is management's discussion and analysis of the Company's results of operations and financial condition for the periods included in the accompanying consolidated condensed financial statements. RESULTS OF OPERATIONS SALES Net sales for the third fiscal quarter decreased $7 million or 1% compared to the same period of the previous year. This decrease resulted primarily from two factors: an $8 million reduction in sales dollars was due to a 1% decrease in engine unit shipments and a $4 million reduction in revenue from European customers with whom we share currency risk. These decreases were partially offset by a $5 million increase in sales dollars due to a mix change to higher horsepower, higher priced engines. Net sales for the nine months ended March 1998 increased 1% or $11 million when compared to the first nine months of the prior year. This increase resulted primarily from a $24 million increase in sales dollars due to a 3% increase in engine unit shipments and a $12 million increase in service parts sales due to increased demand. These increases were partially offset by a $17 million decrease in sales dollars due to a mix change to lower horsepower, lower priced engines and an $8 million decrease in revenue from European customers with whom we share currency risk. GROSS PROFIT The gross profit percentage declined from 23% in the preceding year's third quarter to 20% in the current year's quarter. The strong U.S. dollar compared to European currencies caused $6 million of this decline. Reduced volume in service sales was the primary cause of the remaining decline. The gross profit margins for the nine-month period declined from 19% in the preceding year to 18% in the current year. This resulted primarily from the strong U.S. dollar compared to European currencies, which had a $12 million negative impact. A change in mix of engines sold also had a $9 million negative impact. Partially offsetting these was the $11 million favorable gross profit impact resulting from the unit volume increases. ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES This category increased 7% or $2 million between the third fiscal quarters of 1998 and 1997, primarily due to increased costs related to the implementation of a new company-wide information system. The 9% or $7 million increase for the comparative nine-month period was due primarily to the new company-wide information system. -8- 9 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES INTEREST EXPENSE Interest expense increased $3 million in the three-month comparison and $8 million in the nine-month comparison. These increases were the result of the Company's higher level of short-term and long-term borrowings. PROVISION FOR INCOME TAXES The effective tax rate used in both years was 38.0%. This rate is management's estimate of what the rate will be for the entire fiscal year. LIQUIDITY AND CAPITAL RESOURCES Cash used in operating activities for the nine-month period was $61 million in 1998 and $30 million in 1997. These funds were used in 1998 and 1997 for seasonal increases in accounts receivable of $172 million and $158 million, respectively. The use of funds from the increases in accounts receivable, inventories and other current assets was partially offset by funds provided by earnings before depreciation and an increase in accounts payable and accrued liabilities. Cash used in investing activities totaled $34 million in the nine-month period and $36 million in the same period of the preceding year. Additions to plant and equipment totaled $34 million and $52 million in the respective years. Partially offsetting additions to plant and equipment in the prior year was $16 million received in the sale of the Company's Menomonee Falls, Wisconsin facility. Financing activities provided $5 million of cash in 1998 and used $21 million of cash in 1997, resulting in a change of $26 million. Net borrowings increased $80 million dollars between years. This was caused by the Company having less available cash due to its share repurchase program, which commenced in May 1997. The nine-month comparisons also show increases of $66 million for the Company's repurchase program, a $3 million decrease for dividends caused by fewer shares outstanding and a $9 million increase in proceeds from the exercise of stock options. FUTURE LIQUIDITY AND CAPITAL RESOURCES In the previous fiscal year, the Board of Directors authorized the purchase of up to $300 million of common stock of the Company. As of March 29, 1998, the Company has made purchases totaling $245 million. Any future purchases will depend on many factors, including the market price of the shares, the Company's business and financial position, and general economic and market conditions. The Company intends to fund future purchases of its common stock through a combination of available cash, cash generated from operations and additional borrowings. Management expects capital expenditures for reinvestment in equipment and new products to total $44 million in fiscal 1998. The Company is also implementing a new company-wide information system. The project expenditures to date have been $14 million. The future expenditures are expected to total $20 million through fiscal 2002. This system, along with related projects, will address the issues related to the year 2000. These projects include working with the Company's customers and suppliers regarding year 2000 issues to ensure continuity of business. Management does not expect any additional material expenses for the related projects. -9- 10 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES Management believes that available cash, credit facilities, cash generated from operations, and access to public debt markets will be adequate to fund the Company's capital requirements for the foreseeable future. OUTLOOK The Company's business is very strong and it is unable to meet the demand for some popular models. Weather conditions in the United States and in Europe are favorable, and outdoor power equipment is selling well. Unless there is a change in the weather pattern, management believes the Company will have a fourth quarter in line with prior years. The 1998 fiscal year will not contain the $37 million charge related to the early retirement window which was contained in the final quarter of the 1997 fiscal year. Therefore, the gross profit rate is anticipated to increase year to year. Interest expense is expected to continue to increase because of the increases in debt and less available cash. OTHER MATTERS The California Air Resources Board (CARB) staff completed a review of the existing Tier II standards and proposed that alternative standards and implementation dates be adopted by CARB. The alternative Tier II standards adopted by CARB at its March 26, 1998 meeting are not harmonized with EPA Phase II, but rather require the accelerated introduction of overhead value engine technology into California. In addition, individual companies which sell more than a threshold number of Class I engines into California must submit a supplemental compliance plan to CARB to achieve additional reductions in extreme non-attainment areas. While CARB's aggressive program may result in a reduced product offering by the Company in California, it is not anticipated that the California program will have a material effect on the financial position or results of operations of the Company. CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS Certain statements in Management's Discussion and Analysis, pages 8 through 10, may contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. The words "anticipate", "believe", "estimate", "expect", "objective", and "think" or 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 effects of weather on the purchasing patterns of the Company's customers and end use purchasers of the Company's engines; the seasonal nature of the Company's business; actions of competitors; changes in laws and regulations, including accounting standards; employee relations; customer demand; prices of purchased raw materials and parts; domestic economic conditions, including housing starts and changes in consumer disposable income; and foreign economic conditions, including currency rate fluctuations. Some or all of the factors may be beyond the Company's control. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. -10- 11 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. Exhibit Number Description ------- ----------- 10 Form of Officer Employment Agreements* 11 Computation of Earnings Per Share of Common Stock* 12 Computation of Ratio of Earnings to Fixed Charges* 27(a) Financial Data Schedule, 3/29/98* 27(b) Restated Financial Data Schedule, 3/30/97* 27(c) Restated Financial Data Schedule, 12/29/96* *Filed herewith (b) Reports on Form 8-K. There were no reports on Form 8-K for the third quarter ended March 29, 1998. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BRIGGS & STRATTON CORPORATION ----------------------------- (Registrant) Date: May 7, 1998 /s/ R. H. Eldridge --------------------------------------------------- R. H. Eldridge Executive Vice President & Chief Financial Officer, Secretary-Treasurer Date: May 7, 1998 /s/ J. E. Brenn --------------------------------------------------- J. E. Brenn Vice President & Controller -11- 12 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES EXHIBIT INDEX Exhibit Number Description ------- ----------- 10 Form of Officer Employment Agreements* 11 Computation of Earnings Per Share of Common Stock* 12 Computation of Ratio of Earnings to Fixed Charges* 27(a) Financial Data Schedule, 3/29/98* 27(b) Restated Financial Data Schedule, 3/30/97* 27(c) Restated Financial Data Schedule, 12/29/96* *Filed herewith -12- EX-10 2 EX-10 1 BRIGGS & STRATTON CORPORATION Form 10-Q for Quarterly Period Ended March 29, 1998 Exhibit No. 10 FORM OF OFFICER EMPLOYMENT AGREEMENT (Agreement provided to all Executive Officers, except James A. Wier, whose Agreement was previously filed.) 2 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of the _______day of ___________, 19__, by and between _______________________ (the "Employee") and BRIGGS & STRATTON CORPORATION, a Wisconsin corporation with its corporate office in Wauwatosa, Wisconsin (the "Company"). WHEREAS, the Company desires to employ Employee in the business of manufacturing, selling and servicing gasoline powered engines or in such other businesses as the Company may from time to time engage (the "Business"), and Employee desires to be employed by the Company for such purpose; and WHEREAS, Employee shall have access to confidential financial information, trade secrets and other confidential and proprietary information of the Company; NOW, THEREFORE, the parties agree as follows: 1. EMPLOYMENT 1.1 Duties. The Company shall employ Employee upon the terms and conditions set forth in this Agreement. Employee shall have such duties at such work locations as may be assigned to Employee from time to time by the Company. 1.2 Best Efforts. Employee agrees to devote his best efforts and his full time and attention to the performance of his duties under this Agreement, and to perform such duties in an efficient, trustworthy and businesslike manner. 1.3 Duty to Act in the Best Interest of the Company. Employee shall not act in any manner, directly or indirectly, which may damage the business of the Company or which would adversely affect the goodwill, reputation or business relations of the Company with its customers, the public generally or with any of its other employees. 2. TERM OF EMPLOYMENT 2.1 Term. The term of Employee's employment with the Company under this Agreement shall commence as of January 1, 1998 (the "Effective Date"), and shall expire two years from the Effective Date ("Expiration Date"). In the event that neither the Company nor the Employee shall give written notice to the other party at least 30 days prior to any anniversary of the Effective Date that this Agreement shall not be further extended, the Expiration Date shall be automatically extended by one additional year. If such notice is given, this Agreement shall expire on the last determined Expiration Date. Notwithstanding the foregoing, this Agreement and Employee's employment may be terminated at any time as provided for in Sections 2.2, 2.3 or 2.4 of this Agreement. 3 2.2 Termination for Cause. The Company shall have the right to terminate this Agreement and Employee's employment for the following causes (each a "Termination for Cause"): (a) Conviction of Employee for, or entry of a plea of guilty or nolo contendere by Employee with respect to, any felony or any crime involving an act of moral turpitude; (b) Engaging in any act involving fraud or theft; (c) Conduct which is detrimental to the reputation, goodwill or business operations of the Company; (d) Neglect by Employee of his duties or breach by Employee of his duties or intentional misconduct by Employee in discharging such duties; (e) Employee's continued absence from his duties without the consent of the Employee's supervisor after receipt of notification from the Company, other than absence due to bona fide illness or disability as defined herein; (f) Employee's failure or refusal to comply with the directions of his supervisor or with the policies, standards and regulations of the Company, provided that such directions, policies, standards or regulations do not require Employee (i) to take any action which is illegal, immoral or unethical or (ii) to fail to take any action required by applicable law, regulations or licensing standards; or (g) Employee's breach of the restrictive covenants set forth in Section 5 of this Agreement; provided, however, that termination of Employee for an act or omission described in subparagraphs (c) through (g) above shall not constitute a valid Termination for Cause unless Employee shall have received written notice on behalf of the Board of Directors of the Company by its Chairman or designee stating the nature of the conduct forming the basis for termination and affording Employee 10 days to correct the act or omission described. Unless Employee cures such act or omission to the satisfaction of the Company, such Termination for Cause shall be effective immediately upon the expiration of the 10 day period. Upon the effectiveness of any Termination for Cause by the Company, payment of all compensation to Employee under this Agreement shall cease immediately (except for any payment of compensation accrued but unpaid through the date of such Termination for Cause). 2.3 Termination by the Company Without Cause. The Company shall have the right to terminate this Agreement and Employee's employment without cause upon 10 days' written notice to Employee. If the Company terminates this Agreement and Employee's employment without cause pursuant to this Section 2.3, Employee shall receive his Base Compensation, as that term is defined in Section 3.1 of this Agreement, for the remainder of the then current term of this Agreement, and shall be entitled to continue pre-existing coverage for himself and any dependents under any applicable 2 4 medical plans described in Section 3.4 of this Agreement for the remainder of the then current term of this Agreement as long as the Employee continues to make the same monthly payments and copayments which would have been applicable if the Employee's employment had not been terminated. Upon such termination, Employee shall not receive any further compensation pursuant to Sections 3.2, 3.3 or the non-medical benefits described in Section 3.4 of this Agreement except as required by the terms of such benefit plans. In the event of termination without cause, Employee acknowledges that the Company shall have no liability to him whatsoever other than its obligation to pay him his Base Compensation and to provide continuation of coverage under any applicable medical plans for the remainder of the then current term of this Agreement, and subsequently to provide the Employee with medical benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985 as amended ("COBRA") and other benefits to which the Employee may be entitled notwithstanding termination of his employment. 2.4 Termination Due to Disability or Death. If Employee is unable to perform his duties under this Agreement by reason of physical or mental disability, this Agreement shall terminate, and, upon such termination, Employee shall continue to receive the compensation described in Section 3 of this Agreement, reduced by any disability payment to which Employee may be entitled in lieu of such compensation, for a period of 6 months following termination. At the expiration of the 6 month period, payment of all compensation to Employee under this Agreement shall cease immediately (except for any payment of compensation accrued but unpaid through that date, COBRA benefits and other benefits to which the Employee may be entitled notwithstanding termination of his employment). The term "disability" as used herein shall mean a condition which prohibits Employee from performing his duties substantially in the manner he is capable of performing them on the date of this Agreement, which cannot be removed by reasonable accommodations on the part of the Company, for 60 days or more during any one year period. If Employee should die during the term of this Agreement, this Agreement shall terminate and all payments to Employee under this Agreement shall cease immediately (except for any such payments accrued but unpaid through the date of death). 2.5 COBRA Coverage. Any period of continued post-employment medical plan coverage provided in accordance with this Agreement shall count against the minimum period of coverage required by the medical continuation provisions of COBRA and any other applicable legislation. 3. COMPENSATION 3.1 Base Compensation. Subject to Sections 2 and 5.5 of this Agreement, during the term of this Agreement the Company shall pay to Employee an annual salary ("Base Compensation"), which salary shall be reviewed annually by the Nominating and Salaried Personnel Committee of the Board of Directors. Such Base Compensation shall in no event be lower than the salary of the previous year. Employee acknowledges that $2,000 3 5 of each year's Base Compensation is consideration for the covenant made by Employee in Section 5.3 of this Agreement against post-employment competition, and that the amount of such consideration is reasonable and adequate. 3.2 Incentive Compensation. Subject to Sections 2 and 5.5 of this Agreement, in addition to the Base Compensation referred to in Section 3.1 of this Agreement, Employee shall be eligible to participate in any incentive pay plan adopted by the Board of Directors for a group of employees that includes executive officers. 3.3 Reimbursement of Business Expenses. During the term of this Agreement, the Company shall reimburse Employee for all ordinary and necessary business expenses incurred by him in connection with the Business, upon submission by Employee to the Company of vouchers itemizing such expenses in a form satisfactory to the Company, properly identifying the nature and business purpose of any such expenditure. 3.4 Benefits. During the term of this Agreement, Employee shall be entitled to participate in such insurance, medical and retirement plans and to be provided such other fringe benefits as have been accorded other similarly-situated employees of the Company, as determined from time to time by the Company. 4. PROPERTY OF THE COMPANY/ASSIGNMENT Employee agrees that the Business and all businesses developed by him relating to the Business, including without limitation software, contracts, fees, commissions, customer lists and any other incident of any business developed or sought by the Company, or earned or carried on by Employee for the Company, are and shall be the exclusive property of the Company for its sole use. Employee hereby grants and assigns to the Company (without additional compensation) his entire right, title and interest under applicable laws in and to all software products and modifications thereto, inventions, improvements, drawings, designs, prototypes, patents, patent applications, trade secrets, confidential information, cost information, marketing plans, new product plans, proposed product improvements, research information, customer lists and customer contacts, all other technical and research data, and copyrightable material (including derivative works) made, conceived, developed or acquired by him solely or jointly with others during the period of his employment by the Company, but only to the extent the foregoing pertains to the Business. During the term of his employment with the Company and for two years after the termination of his employment with the Company for any reason, Employee shall execute all documents as requested by Company to accomplish such assignment of rights, and shall otherwise cooperate with the Company and its attorneys in the protection and enforcement of the Company's intellectual property rights, at the expense of Company. 4 6 5. COVENANTS OF NON-DISCLOSURE, NON-SOLICITATION AND NON-COMPETITION 5.1 Non-Disclosure. During the term of his employment with the Company and for two years after the termination of his employment with the Company for any reason, Employee shall not, and Employee shall use his best efforts (which best efforts shall include, without limitation, notifying the Board of Directors of the Company of any suspected breach of this Section 5.1) to ensure that any persons or entities over which Employee has control do not, directly or indirectly, use any Company proprietary or other confidential information for any purpose not associated with Company activities, or disseminate or disclose any such information to any person or entity not affiliated with the Company. Such Company proprietary or other confidential information includes without limitation sales methods, prospecting methods, customer lists and customer contacts, computer technology, programs and data, whether on-line or off-loaded on disk format, inventions, improvements, trade secrets, drawings, designs, cost information, prototypes, new product plans, proposed product improvements, methods of presentation and any other plans, programs and materials used in managing, marketing or furthering Company business. Upon termination of Employee's employment relationship with the Company, Employee shall return to the Company all documents, records, notebooks, manuals, computer disks and similar repositories of or containing Company proprietary or other confidential information, including all copies thereof, then in Employee's possession or control, whether prepared by Employee or otherwise. Employee shall undertake all reasonably necessary and appropriate steps to ensure that the confidentiality of Company proprietary or other confidential information shall be maintained. 5.2 Non-Solicitation. For a period of two years after the termination of Employee's employment with the Company for any reason, Employee shall not (i) solicit, service or in any way or to any degree handle any business similar to that performed by Employee for the Company, for any person, firm or entity which is a customer or actively marketed prospect of the Company or which becomes a customer or actively marketed prospect of the Company during the term of Employee's employment, whether or not said customer or prospect shall have been handled, serviced or produced by Employee, (ii) divert or attempt to divert any such customer or prospect, or (iii) publicly announce or advertise his former employment by or connections with the Company. For a period of two years after the termination of Employee's employment with the Company for any reason, Employee shall not solicit, take away, hire, employ or endeavor to employ any of the employees of the Company. 5.3 Non-Competition. Employee acknowledges that the Business is unique and is conducted throughout the United States and abroad, and, therefore, agrees that, during the term of his employment with the Company and for two years after the earlier of the date of termination of his employment with the Company for any reason or the date when the Employee or the Company provides written notice to the other party under Section 2.1 5 7 that this Agreement will not be extended, he shall not, without the prior written consent of the Company, directly or indirectly, own, develop, manage, operate, join, control or participate in the ownership, management, operation or control of, or become an employee or independent contractor of, or consultant to, any business which competes with the Business as conducted by the Company, or any of its subsidiary companies, or any of their respective successors, by selling such products, or providing such services as the Company, or any of its subsidiary companies, or any of their respective successors, sells or provides during the term of such employment or at the time of such termination. This restriction will apply worldwide. The foregoing notwithstanding, nothing herein shall be construed so as to prohibit or restrict Employee from owning less than five percent (5%) of the outstanding common stock of any corporation, the stock of which is publicly traded on a national securities exchange or in the over-the-counter market, that competes with the Company. Employee further agrees that, during his employment with the Company, he shall use his best efforts to preserve the Business and the organization of the Company, to keep available to the Company the services of its employees, and to preserve for the Company its and his favorable business relationships with suppliers, customers and others. 5.4 Applicability. Subject to Sections 2.2 and 2.4 of this Agreement, the provisions of Sections 5.1, 5.2 and 5.3 of this Agreement shall apply to all terminations of Employee's employment with the Company, regardless of the cause or circumstances thereof and whether such termination was voluntary or involuntary, for cause or without cause. Further, Employee's covenants of non-disclosure, non-competition, and non-solicitation, along with the Company's remedies for the breach or threatened breach of those covenants, shall remain in effect following the termination of this Agreement and Employee's employment, regardless of the cause or circumstances thereof and whether such termination was voluntary or involuntary, for cause or without cause. 5.5 Remedies. In view of the services which Employee will perform for the Company, which are special, unique, extraordinary and intellectual in character, which place him in a position of confidence and trust with the customers and employees of the Company, and which provide him with access to confidential financial information, trade secrets, "know-how" and other confidential and proprietary information of the Company, in view of the geographic scope and nature of the business in which the Company is engaged, and recognizing the value of this Agreement to him, Employee expressly acknowledges that the restrictive covenants set forth in this Agreement, including without limitation the geographic scope of such covenants, are necessary in order to protect and maintain the proprietary interests and other legitimate business interests of the Company, and that the enforcement of such restrictive covenants shall not prevent him from earning a livelihood. Employee also acknowledges that the scope of the operations of the Company are such that it is reasonable that the restrictions set forth in this Agreement are not more limited as to geographic area than is set forth herein. Employee further acknowledges that the remedy at law for any breach or threatened breach of this Agreement will be inadequate and, accordingly, that the Company, in addition to all other 6 8 available remedies (including, without limitation, seeking such damages as it has sustained by reason of such breach), shall be entitled to injunctive or any other appropriate form of equitable relief. Notwithstanding anything in this Agreement to the contrary, in the event Employee breaches any of the covenants of non-disclosure, non-solicitation or non-competition set forth in Sections 5.1, 5.2 and 5.3 of this Agreement, he shall not receive any further payments from the Company pursuant to this Agreement. 6. INDEMNIFICATION The Company shall indemnify and hold harmless Employee from and against any claim of liability or loss (including costs and reasonable attorneys' fees) arising as a result of Employee's proper performance of his obligations under this Agreement in accordance with the provisions for indemnification of officers of the Company set forth in the Bylaws of the Company. 7. MISCELLANEOUS PROVISIONS 7.1 Assignment and Successors. The Company may assign its rights and obligations under this Agreement to any corporation or other entity which controls, is controlled by, or is under common control with, the Company, without Employee's consent. Further, if the Company sells all or substantially all of the assets of the Business, the rights and obligations of the Company under this Agreement may be assigned without Employee's consent. In all other circumstances, the rights and obligations of the Company under this Agreement may be assigned with Employee's consent (which shall not be unreasonably withheld) and shall inure to the benefit of and be binding upon the successors and assigns of the Company. Employee's obligation to provide services hereunder may not be assigned to or be assumed by any other person or entity. 7.2 Notices. All notices, requests, demands, or other communications under this Agreement shall be in writing and shall only be deemed to be duly given if to the Company c/o Corporate Secretary, and to Employee at his address as shown in the Company's records. 7.3 Severability. If any provision or portion of this Agreement shall be or become illegal, invalid or unenforceable in whole or in part for any reason, such provision shall be ineffective only to the extent of such illegality, invalidity or unenforceability, without invalidating the remainder of such provision or the remaining provisions of this Agreement. If any court of competent jurisdiction should deem any covenant herein to be invalid, illegal or unenforceable because its scope is considered excessive, such covenant shall be modified so that the scope of the covenant is reduced only to the minimum extent necessary to render the modified covenant valid, legal and enforceable. 7.4 Integration, Amendment and Waiver. This Agreement constitutes the entire agreement between the Company and the Employee, superseding all prior similar 7 9 arrangements and agreements, and may be modified, amended or waived only by a written instrument signed by both of them. This Agreement does not supersede the separate employment agreement between the Employee and the Company relating to a change in control of the Company. 7.5 Governing Law. This Agreement shall be construed in accordance with and governed for all purposes by the laws of the State of Wisconsin applicable to contracts executed and wholly performed within such state. 7.6 Interpretation. The headings contained in this Agreement are for reference purposes only, and shall not affect in any way the meaning or interpretation of this Agreement. The language in all parts of this Agreement shall in all cases be construed according to its fair meaning, and not strictly for or against any party. In this Agreement, unless the context otherwise requires, the masculine, feminine and neuter genders and the singular and the plural include one another. 7.7 Non-Wavier of Rights and Breaches. No failure or delay of any party in the exercise of any right given to such party hereunder shall constitute a waiver unless the time specified for the exercise of such right has expired, nor shall any single or partial exercise of any right preclude other or further exercise thereof or of any other right. The waiver by a party of any default of any other party shall not be deemed to be a waiver of any subsequent default or other default by such party. 7.8 Attorneys' Fees. In the event that the Employee or the Company is required to bring an arbitration proceeding or any legal action to enforce the terms of this Agreement, the prevailing party shall, in addition to any other remedies available to it, be entitled to recover its reasonable attorneys' fees and costs from the losing party. 7.9 Dispute Resolution. (a) (i) Any dispute, controversy or claim arising out of or relating to this Agreement or any term or provision of this Agreement, including without limitation any claims of breach, termination or invalidity thereof, (ii) any matter subject to arbitration under any provision of this Agreement, and (iii) any other matter which the parties agree to submit to arbitration shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. Such arbitration proceedings shall be held in Milwaukee, Wisconsin. (b) Notwithstanding the foregoing, the Company at all times shall have the right to bring an action to enforce the covenants and seek the remedies set forth in Section 5 of this Agreement through the courts as it deems necessary or desirable in order to protect its proprietary and other confidential information or to prevent the occurrence of any event which the Company believes will cause it to suffer immediate and irreparable harm or damage. The parties agree that any such action may be brought in a state or federal 8 10 court located within Milwaukee, Wisconsin. The parties waive any and all objections to jurisdiction or venue. The parties further agree that service of process may be made by registered mail to the addresses referred to in Section 7.2 of this Agreement, and that such service shall be deemed effective service of process. 7.10 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which taken together shall constitute one and the same instrument. IN WITNESS WHEREOF, the Company and Employee have caused this Employment Agreement to be duly executed as of the date first written above. EMPLOYEE BRIGGS & STRATTON CORPORATION - --------------------------- ------------------------------- F. P. Stratton, Jr., Chairman 9 EX-11 3 EX-11 1 EXHIBIT 11 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE OF COMMON STOCK (in thousands except per share data)
Quarter Ended Nine Months Ended ------------------------------------ ------------------------------------ March 29, 1998 March 30, 1997 March 29, 1998 March 30, 1997 ----------------- ------------------ ----------------- ------------------ Computations for Statements of Income Net income $ 35,778 $ 46,514 $ 43,440 $ 57,946 =========== =========== =========== =========== Basic earnings per share of common stock: Average shares of common stock outstanding 24,514 28,927 24,861 28,927 =========== =========== =========== =========== Basic earnings per share of common stock: $ 1.46 $ 1.60 $ 1.75 $ 2.00 =========== =========== =========== =========== Diluted earnings per share of common stock: Average shares of common stock outstanding 24,514 28,927 24,861 28,927 Incremental common shares applicable to common stock options 86 128 147 123 ----------- ----------- ----------- ----------- Average common shares assuming dilution 24,600 29,055 25,008 29,050 =========== =========== =========== =========== Diluted earnings per average share of common stock $ 1.45 $ 1.60 $ 1.74 $ 1.99 =========== =========== =========== ===========
EX-12 4 EX-12 1 EXHIBIT 12 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS TO FIXED CHARGES (in thousands)
Nine Months Ended ----------------------------------- March 29, 1998 March 30, 1997 ---------------- ---------------- Net income $ 43,440 $ 57,946 Add: Interest 14,912 7,051 Income tax expense and other taxes on income 26,630 35,520 Fixed charges of unconsolidated subsidiaries 392 470 ------------- ------------- Income as defined $ 85,374 $ 100,987 ============= ============= Interest $ 14,912 $ 7,051 Fixed charges of unconsolidated subsidiaries 392 470 ------------- ------------- Fixed charges as defined $ 15,304 $ 7,521 ============= ============= Ratio of earnings to fixed charges 5.58 x 13.43 x ============= =============
EX-27.(A) 5 EX-27(A)
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF BRIGGS & STRATTON CORPORATION FOR THE NINE MONTHS ENDED MARCH 29, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS JUN-28-1998 JUN-30-1997 MAR-29-1998 22,616 0 302,033 0 134,591 510,219 816,610 423,189 928,261 337,918 0 0 0 289 315,361 928,261 948,093 948,093 776,012 776,012 87,099 0 14,912 70,070 26,630 43,440 0 0 0 43,440 1.75 1.74
EX-27.(B) 6 EX-27(B)
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF BRIGGS & STRATTON CORPORATION FOR THE QUARTER ENDED MARCH 30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. EARNINGS PER SHARE INFORMATION HAS BEEN RESTATED TO CONFORM WITH THE REQUIREMENTS OF FAS NO. 128, EARNINGS PER SHARE. 1,000 9-MOS JUN-29-1997 JUL-01-1996 MAR-30-1997 62,871 0 276,405 0 157,395 543,849 802,764 410,871 959,833 259,789 0 0 0 289 533,939 959,833 937,350 937,350 755,405 755,405 81,428 0 7,051 93,466 35,520 57,946 0 0 0 57,946 2.00 1.99 REPRESENTS BASIC EARNINGS PER SHARE IN ACCORDANCE WITH FAS NO.128, EARNINGS PER SHARE. REPRESENTS DILUTED EARNINGS PER SHARE IN ACCORDANCE WITH FAS NO. 128, EARNINGS PER SHARE.
EX-27.(C) 7 EX-27(C)
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF BRIGGS & STRATTON CORPORATION FOR THE QUARTER ENDED DECEMBER 29, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. EARNINGS PER SHARE INFORMATION HAS BEEN RESTATED TO CONFORM WITH THE REQUIREMENTS OF FAS NO. 128, EARNINGS PER SHARE. 1,000 6-MOS JUN-29-1997 JUL-01-1996 DEC-29-1996 3,254 0 234,525 0 230,424 515,855 788,453 403,777 922,397 261,709 0 0 0 289 495,904 922,397 461,395 461,395 386,569 386,569 52,034 0 4,360 18,432 7,000 11,432 0 0 0 11,432 .40 .39 REPRESENTS BASIC EARNINGS PER SHARE IN ACCORDANCE WITH FAS NO. 128, EARNINGS PER SHARE. REPRESENTS DILUTED EARNINGS PER SHARE IN ACCORDANCE WITH FAS NO. 128, EARNINGS PER SHARE.
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