-----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, AfKSMtDuCzbFyy9yKUw+fNUFlGze+wiXKh8PUYmMIHerDQD/3T31DDJnx9zSMcA7 ofRI37wCBDO+mZhv7Qcm2A== 0000950124-01-504024.txt : 20020410 0000950124-01-504024.hdr.sgml : 20020410 ACCESSION NUMBER: 0000950124-01-504024 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011114 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: 0627 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-01370 FILM NUMBER: 1787922 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 c66071e10-q.txt FORM 10-Q FOR PERIOD ENDING SEPTEMBER 30, 2001 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 September 30, 2001 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 November 8, 2001 - -------------------------------------------------------------------------------- COMMON STOCK, par value $0.01 per share 21,604,183 Shares 1 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES INDEX Page No. PART I - FINANCIAL INFORMATION Item 1. Financial Statements: Consolidated Condensed Balance Sheets - September 30, 2001 and July 1, 2001 3 Consolidated Condensed Statements of Income - Three Months ended September 30, 2001 and October 1, 2000 5 Consolidated Condensed Statements of Cash Flow - Three Months ended September 30, 2001 and October 1, 2000 6 Notes to Consolidated Condensed Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12 Item 3. Quantitative and Qualitative Disclosures About Market Risk 14 PART II - OTHER INFORMATION Item 4. Submissions of Matters to a Vote of Security Holders 14 Item 6. Exhibits and Reports on Form 8-K 15 Signatures 15 2 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands) ASSETS
September 30, July 1, 2001 2001 ---- ---- (Unaudited) CURRENT ASSETS: Cash and cash equivalents $ 24,600 $ 88,743 Accounts receivable, net 156,315 145,138 Inventories - Finished products and parts 204,228 218,671 Work in process 137,838 99,247 Raw materials 3,839 3,782 ---------- ---------- Total inventories 345,905 321,700 Future income tax benefits 38,550 38,434 Prepaid expenses and other current assets 18,683 19,415 ---------- ---------- Total current assets 584,053 613,430 ---------- ---------- OTHER ASSETS: Investments 46,330 46,071 Prepaid pension 43,835 36,275 Deferred loan costs 10,371 10,429 Capitalized software 6,246 6,552 Goodwill 152,062 166,659 Other 402 418 ---------- ---------- Total other assets 259,246 266,404 ---------- ---------- PLANT AND EQUIPMENT: Cost 903,899 890,191 Less accumulated depreciation 484,283 473,830 ---------- ---------- Total plant and equipment, net 419,616 416,361 ---------- ---------- $1,262,915 $1,296,195 ========== ==========
The accompanying notes are an integral part of these statements. 3 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Continued) (In thousands) LIABILITIES & SHAREHOLDERS' INVESTMENT
September 30, July 1, 2001 2001 ---- ---- (Unaudited) CURRENT LIABILITIES: Accounts payable $ 104,282 $ 102,559 Domestic notes payable 3,300 3,300 Foreign loans 16,427 16,291 Accrued liabilities 116,959 115,725 Dividends payable 6,696 -- Federal and state income taxes (4,300) 4,307 ---------- ---------- Total current liabilities 243,364 242,182 ---------- ---------- OTHER LIABILITIES: Deferred revenue on sale of plant and equipment 15,498 15,536 Deferred income tax liability 7,794 18,351 Accrued pension cost 15,067 14,494 Accrued employee benefits 13,001 12,979 Accrued postretirement health care obligation 61,328 61,767 Long-term debt 508,280 508,134 ---------- ---------- Total other liabilities 620,968 631,261 ---------- ---------- SHAREHOLDERS' INVESTMENT: Common stock - Authorized 60,000 shares, $.01 par value, issued 28,927 shares 289 289 Additional paid-in capital 35,988 36,043 Retained earnings 719,115 743,230 Accumulated other comprehensive loss (6,323) (6,182) Unearned compensation on restricted stock (278) (305) Treasury stock at cost, 7,326 and 7,330 shares, respectively (350,208) (350,323) ---------- ---------- Total shareholders' investment 398,583 422,752 ---------- ---------- $1,262,915 $1,296,195 ========== ==========
The accompanying notes are an integral part of these statements. 4 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (In thousands, except per share data) (Unaudited)
Three Months Ended ------------------ September 30, October 1, 2001 2000 ---- ---- NET SALES $221,329 $181,251 COST OF GOODS SOLD 199,807 155,453 -------- -------- Gross profit on sales 21,522 25,798 ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 38,224 33,612 -------- -------- Loss from operations (16,702) (7,814) INTEREST EXPENSE (10,422) (4,568) OTHER INCOME, net 315 2,373 -------- -------- Loss before credit for income taxes (26,809) (10,009) CREDIT FOR INCOME TAXES (9,385) (3,705) -------- -------- NET LOSS $(17,424) $ (6,304) ======== ======== LOSS PER SHARE DATA - Average shares outstanding 21,600 21,612 ======== ======== Basic loss per share $ (0.81) $ (0.29) ======== ======== Diluted average shares outstanding 21,613 21,629 ======== ======== Diluted loss per share $ (0.81) $ (0.29) ======== ======== CASH DIVIDENDS PER SHARE $ 0.31 $ 0.31 ======== ========
The accompanying notes are an integral part of these statements. 5 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW (In thousands) (Unaudited)
Three Months Ended ------------------ Sept. 30, 2001 Oct. 1, 2000 -------------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (17,424) $ (6,304) Adjustments to reconcile net loss to net cash used in operating activities - Depreciation and amortization 15,023 13,787 Equity in earnings of unconsolidated affiliates (645) (1,636) Loss on disposition of plant and equipment 702 54 Pension income, net (6,964) (2,366) Provision (credit) for deferred income taxes 3,534 (3) Change in operating assets and liabilities - Increase in accounts receivable (11,101) (137) Increase in inventories (24,205) (99,100) (Increase) decrease in prepaid expenses and other current assets (734) 959 Decrease (increase) in accounts payable and accrued liabilities 1,564 (32,731) Other, net (659) (1,091) --------- --------- Net cash used in operating activities (40,909) (128,568) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to plant and equipment (18,155) (15,326) Proceeds received on disposition of plant and equipment 287 844 --------- --------- Net cash used in investing activities (17,868) (14,482) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings on loans and notes payable 136 151,976 Issuance cost of long-term debt (240) -- Dividends (6,691) (6,689) Purchase of common stock for treasury -- (6,118) Proceeds from exercise of stock options 52 253 --------- --------- Net cash (used in) provided by financing activities (6,743) 139,422 --------- --------- EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 1,377 (1,422) --------- --------- NET DECREASE IN CASH AND CASH EQUIVALENTS (64,143) (5,050) CASH AND CASH EQUIVALENTS, beginning 88,743 16,989 --------- --------- CASH AND CASH EQUIVALENTS, ending $ 24,600 $ 11,939 ========= ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest paid $ 12,443 $ 5,788 ========= ========= Income taxes paid $ 186 $ 1,637 ========= =========
The accompanying notes are an integral part of these statements. 6 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 generally accepted accounting principles. However, in the opinion of Briggs & Stratton Corporation, 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 our latest Annual Report on Form 10-K. Comprehensive Income Financial Accounting Standard No. 130, "Reporting Comprehensive Income", requires the reporting of comprehensive income in addition to net income from operations. 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. Total comprehensive loss is as follows (in thousands):
Three Months Ended ------------------ September 30, October 1, 2001 2000 ---- ---- Net Loss $(17,424) $(6,304) Unrealized loss on marketable securities (190) (256) Foreign currency translation adjustments 1,514 (1,509) Gain (loss) on derivative instruments (1,465) 12 -------- ------- Total comprehensive loss $(17,565) $(8,057) ======== =======
The components of Accumulated Other Comprehensive Loss are as follows (in thousands):
September 30, July 1, 2001 2001 ---- ---- Unrealized loss on marketable securities $ (943) $ (753) Cumulative translation adjustments (5,141) (6,655) Gain (loss) on derivative instruments (239) 1,226 ------- ------- Accumulated other comprehensive loss $(6,323) $(6,182) ======= =======
Derivatives On July 2, 2000, Briggs & Stratton adopted Financial Accounting Standard No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS 133). This statement requires companies to record derivatives on the balance sheet as assets or liabilities, measured at fair value. Any changes in fair value of these instruments are recorded in the income statement or other comprehensive income. During the first quarter of fiscals 2002 and 2001, we reclassified immaterial derivative losses to the income statement. 7 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES Briggs & Stratton enters into derivative contracts designated as cash flow hedges to manage its foreign currency exposures. These instruments generally do not have a maturity of more than twelve months. During the quarter, there were no derivative instruments that were deemed to be ineffective. The amounts included in Accumulated Other Comprehensive Loss will be reclassified into income when the forecasted transaction occurs, generally within the next twelve months. 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. Acquisition On May 15, 2001, Briggs & Stratton acquired Generac Portable Products (GPP), a designer, manufacturer and marketer of portable generators, pressure washers and related accessories. The aggregate purchase price of $288 million included $268 million of cash and $20 million of liabilities assumed. The cash paid included $4.5 million of direct acquisition costs. The provisions of the acquisition include a contingent purchase price based on the operating results of GPP. We do not expect to pay any additional purchase price pursuant to these provisions. The acquisition has been accounted for using the purchase method of accounting and accordingly, the purchase price was allocated on a preliminary basis to identifiable assets acquired and liabilities assumed based upon the estimated fair values, with the excess purchase price recorded as goodwill. Final adjustments to the purchase price allocation are not expected to be material to the consolidated financial statements. A reclassification of approximately $15 million was made in the first quarter of fiscal 2002 reducing goodwill and increasing deferred income taxes to record differences in financial reporting versus tax reporting. Goodwill of approximately $167 million recorded as a result of the acquisition and was amortized on a straight-line basis over twenty years, until July 2, 2001, at which time Briggs & Stratton adopted the provisions of SFAS No. 142. Under the provisions of SFAS No. 142, goodwill is no longer amortizable, but is subject to annual impairment tests. The following table sets forth the unaudited pro forma information for Briggs & Stratton as if the acquisition of GPP had occurred on July 2, 2000 (in millions, except per share data):
Three Months Ended ------------------ September 30, October 1, 2001 2000 ---- ---- Net Sales $ 221 $ 224 Net Loss $ (17) $ (12) Basic Loss Per Share $(.81) $(.54) Diluted Loss Per Share $(.81) $(.54)
8 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES Segment and Geographic Information In accordance with SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information" and subsequent to the May 15, 2001 acquisition of Generac Portable Products, Inc., Briggs & Stratton has concluded that it operates two reportable business segments which are managed separately based on fundamental differences in their operations. Summarized segment data is as follows (in thousands):
Three Months Ended ------------------ September 30, October 1, 2001 2000 ---- ---- NET SALES: Engines $179,487 $181,251 Generac Portable Products 55,128 -- Eliminations (13,286) -- -------- -------- Total * $221,329 $181,251 ======== ======== * Includes sales to international customers $ 56,709 $ 49,711 ======== ======== INCOME (LOSS) FROM OPERATIONS: Engines $(17,620) $ (7,814) Generac Portable Products 1,643 -- Eliminations (725) -- -------- -------- Total $(16,702) $ (7,814) ======== ========
Sales Incentives The Emerging Issues Task Force (EITF) issued EITF Abstract No. 00-25, "Vendor Income Statements Characterization of Consideration Paid to a Re-Seller of a Vendor's Products". Briggs & Stratton plans on adopting EITF No. 00-25 in the second quarter of fiscal 2002. We will be required to reclassify co-op advertising expense from selling expense to sales as a reduction of gross sales. The reclassification will not have a material adverse effect on our results of operations. Business Combinations In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 141, "Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets" having a required effective date for fiscal years beginning after December 31, 2001. Under certain circumstances companies are permitted to adopt these statements before the required date. Under the new rules, goodwill and other intangible assets deemed to have indefinite lives will no longer be amortized but will be subject to annual impairment tests in accordance with the Statements. Other intangible assets will continue to be amortized over their useful lives. Briggs & Stratton adopted the new rules on accounting for goodwill and other intangible assets in the first quarter of fiscal 2002. Application of the nonamortization provisions of the SFAS No. 142 is expected to result in an increase in net income of approximately $.7 million in fiscal 2002. We will perform the first of the required impairment tests of goodwill and indefinite lived intangible assets during the second quarter of fiscal 2002. There was no proforma impact of adopting SFAS No. 142. No amortization of goodwill was recorded in the first quarter of fiscals 2002 or 2001, because the acquisition of GPP did not occur until May 15, 2001. 9 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES Long Lived Assets In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", which supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of". SFAS No. 144 also supersedes the accounting and reporting provisions of APB Opinion No. 31, related to the disposal of a segment of a business. SFAS No. 144 will be adopted on July 1, 2002. Management does not expect SFAS No. 144 to have a material impact on the consolidated financial statements. Financial Information of Subsidiary Guarantors of Indebtedness Under the terms of Briggs & Stratton's 7.25% senior notes, 8.875% senior notes and 5.00% convertible senior notes and our revolving credit agreement, (collectively, the Domestic Indebtedness), GPP and its subsidiaries became joint and several guarantors of the Domestic Indebtedness. 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. Each guarantee of the Domestic Indebtedness is the obligation of the guarantor and ranks equally and ratably with the existing and future senior unsecured obligations of that guarantor; accordingly, GPP has provided a full and unconditional guarantee of the Domestic Indebtedness. The following condensed supplemental consolidating financial information reflects the operations of GPP for the three months ended September 30, 2001 (in thousands of dollars):
BALANCE SHEET: Briggs & Stratton Guarantor Non-Guarantor As of September 30, 2001 Corporation Subsidiaries Subsidiaries Eliminations Consolidated - ------------------------ ----------- ------------ ------------ ------------ ------------ Current Assets $ 451,276 $ 99,934 $54,500 $ (21,657) $ 584,053 Investment in Subsidaries 296,196 -- -- (296,196) -- Noncurrent Assets 502,489 173,813 2,560 -- 678,862 ---------- -------- ------- --------- ---------- $1,249,961 $273,747 $57,060 $(317,853) $1,262,915 ========== ======== ======= ========= ========== Current Liabilities $ 211,327 $ 16,918 $30,311 $ (15,192) $ 243,364 Long-Term Debt 508,280 -- -- -- 508,280 Other Long-Term Obligations 124,976 (12,288) -- -- 112,688 Stockholders' Equity 405,378 269,117 26,749 (302,661) 398,583 ---------- -------- ------- --------- ---------- $1,249,961 $273,747 $57,060 $(317,853) $1,262,915 ========== ======== ======= ========= ========== STATEMENT OF EARNINGS: For the Three Months Ended September 30, 2001 - --------------------------------------------- Net Sales $ 170,838 $ 55,128 $18,576 $ (23,213) $ 221,329 Cost of Goods Sold 160,260 47,468 14,637 (22,558) 199,807 ---------- -------- ------- --------- ---------- Gross Profit 10,578 7,660 3,939 (655) 21,522 Engineering, Selling, General and Administrative Expenses 29,036 6,018 3,170 -- 38,224 ---------- -------- ------- --------- ---------- Income (Loss) from Operations (18,458) 1,642 769 (655) (16,702) Interest Expense (10,208) (24) (240) 50 (10,422) Other (Expense) Income, Net 997 (13) 308 (977) 315 ---------- -------- ------- --------- ---------- Income (Loss) Before Provision (Credit) for Income Taxes (27,669) 1,605 837 (1,582) (26,809) Provision (Credit) for Income Taxes (10,245) 557 303 -- (9,385) ---------- -------- ------- --------- ---------- Net Income (Loss) $ (17,424) $ 1,048 $ 534 $ (1,582) $ (17,424) ========== ======== ======= ========= ==========
10 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
STATEMENT OF CASH FLOWS: For the Three Months Ended - -------------------------- Briggs & Stratton Guarantor Non-Guarantor September 30, 2001 Corporation Subsidiaries Subsidiaries Eliminations Consolidated - ------------------ ----------- ------------ ------------ ------------ ------------ Cash Flows from Operating Activities: Net Income (Loss) $(18,352) $ 1,048 $ 534 $ (654) $(17,424) Adjustments to Reconcile Net Income (Loss) to Net Cash Used in Operating Activities- Depreciation and Amortization 14,251 610 162 -- 15,023 Equity (Earnings) Loss of Affiliates and Subsidiaries (945) -- 300 -- (645) (Gain) Loss on Disposition of Plant and Equipment 709 -- (7) -- 702 Pension Income, Net (6,964) -- -- -- (6,964) Provision for Deferred Taxes 2,734 800 -- -- 3,534 Change in Operating Assets and Liabilities- (Increase) Decrease in Receivables (13,174) 2,231 (1,539) 1,381 (11,101) (Increase) Decrease in Inventories (22,430) (2,182) (435) 842 (24,205) (Increase) Decrease in Other Current Assets 408 (742) (400) -- (734) Increase (Decrease) in Accounts Payable and Accrued Liabilities 5,750 (3,060) 443 (1,569) 1,564 Other, Net (832) 173 -- -- (659) -------- ------- ------- ------- -------- Net Cash Used in Operating Activities $(38,845) $(1,122) $ (942) $ -- $(40,909) -------- ------- ------- ------- -------- Cash Flows from Investing Activities: Additions to Plant and Equipment $(17,615) $ (396) $ (144) $ -- $(18,155) Proceeds Received on Disposition of Plant and Equipment 279 -- 8 -- 287 -------- ------- ------- ------- -------- Net Cash Used in Investing Activities $(17,336) $ (396) $ (136) $ -- $(17,868) -------- ------- ------- ------- -------- Cash Flows from Financing Activities: Net Borrowings (Repayments) on Loans and Notes Payable $ (1,751) $ 1,751 $ 136 $ -- $ 136 Issuance Costs of Long-Term Debt (240) -- -- -- (240) Dividends (6,691) -- -- -- (6,691) Proceeds from Exercise of Stock Options 52 -- -- -- 52 -------- ------- ------- ------- -------- Net Cash (Used in) Provided by Financing Activities $ (8,630) $ 1,751 $ 136 $ -- $ (6,743) -------- ------- ------- ------- -------- Effect of Exchange Rate Changes $ -- $ 492 $ 885 $ -- $ 1,377 -------- ------- ------- ------- -------- Net (Decrease) Increase in Cash and Cash Equivalents $(64,811) $ 725 $ (57) $ -- $(64,143) Cash and Cash Equivalents, Beginning 85,282 683 2,778 -- 88,743 -------- ------- ------- ------- -------- Cash and Cash Equivalents, Ending $ 20,471 $ 1,408 $ 2,721 $ -- $ 24,600 ======== ======= ======= ======= ========
11 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES 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 ACQUISITION On May 15, 2001, Briggs & Stratton acquired Generac Portable Products (GPP) for net cash of $267 million. The results of GPP's operations are included in fiscal 2002's first quarter. The first quarter of fiscal 2001 did not include results of GPP. SALES Net sales for the first quarter of fiscal 2002 totaled $221 million, an increase of $40 million or 22% when compared to the same period of the preceding year. This increase was solely due to the inclusion of GPP's sales in the results for the first quarter of fiscal 2002. Net sales for the engine segment of the business were down slightly between comparable periods because the volume increase in engine shipments was offset by the negative impact of a sales mix, which tended towards lower priced engines. Net sales for GPP totaled $55 million, an increase of $10 million over their performance a year ago when Briggs & Stratton did not own it. While this improvement was accomplished by double-digit gains in generator units, GPP did not experience the type of generator demand that could have resulted from a normal hurricane season. GROSS PROFIT MARGIN The gross profit rate decreased to 10% in the current year from 14% in the preceding year. This decline was due entirely to results in the engine segment of the business where the gross profit rate was 8% in fiscal 2002 compared to 14% in fiscal 2001. The major reason for the decrease was less absorbed fixed costs related to a 37% decrease in engine production between the years. Gross profits for GPP were $8 million or 14% of sales. This gross profit margin was slightly better than a year ago, reflecting better plant utilization. ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES This category increased $5 million or 14% between years. This increase is primarily due to expenses incurred at GPP. GPP's expenses were $6 million, which were similar to its expenses last year. INTEREST EXPENSE Interest expense increased $6 million or 128% between years. This was the result of the $271 million of debt incurred for the acquisition of GPP. 12 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES PROVISION FOR INCOME TAXES The effective tax rate used in the current fiscal quarter was 35.0%. This is management's estimate of what the rate will be for the entire 2002 fiscal year. The rate for the first quarter of fiscal 2001 was 37.0%. LIQUIDITY AND CAPITAL RESOURCES Cash flow used in operating activities for the first quarter of fiscal 2002 was $41 million and $129 million in the first quarter of fiscal 2001, an $88 million decrease in requirements between years. This reflects decreased net income of $11 million, offset by reduced working capital requirements of $97 million. The primary decrease in working capital requirements was due to a reduction in engine inventories. The change in accounts payable and accrued liabilities was attributable to GPP being included in the three months ended September 30, 2001 and $16 million of lower payments of profit sharing accruals as compared to the same period in 2000. In the first quarter of fiscal 2002, $18 million of cash was used in investing activities compared to $14 million in the first quarter of fiscal 2001. Additions to plant and equipment were the major use of cash. Net cash provided by financing activities decreased $146 million between years. The significant decrease was due to the level of short-term domestic borrowings used to fund working capital needs. FUTURE LIQUIDITY AND CAPITAL RESOURCES Briggs & Stratton has remaining authorization to buy up to 1.8 million shares of its stock in open market or private transactions under the June 2000 Board of Directors' authorization to repurchase up to 2.0 million shares. We did not purchase any shares in the first quarter of fiscal 2002 and do not anticipate repurchasing additional shares for the remainder of fiscal 2002. As of November 8, 2001, we replaced our $250 million revolving credit facility that would have expired in April 2002, with a three-year $300 million revolving credit facility. Management expects cash flows for capital expenditures to total approximately $60 million in fiscal 2002. These anticipated expenditures provide for continued investments in equipment and new products. These expenditures will be funded using available cash and short-term borrowings. Briggs & Stratton currently intends to increase future cash dividends per share at a rate approximating the inflation rate, subject to the discretion of its Board of Directors and the requirements of applicable law and debt covenants. 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 its capital requirements for the foreseeable future. OUTLOOK Projected results for the second quarter of fiscal 2002 are not as strong as originally anticipated, but when combined with the improved first quarter results, we currently expect to meet our six-month projections. We anticipate slower sales, as the original equipment manufacturers build closer to the retail spring season, and lower production levels will cause the first half of the year to yield significantly lower results than the same period a year ago. 13 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES Sales for the entire fiscal year are now anticipated to be approximately $1.64 billion, about 25% higher than last year but lower than earlier forecasts. Weakened generator sales account for the reduction. The gross profit percentage is projected to be approximately 17.8% for the year. The improvement from earlier projections comes from planned expense controls. Engineering, selling and administrative expenses, originally projected to increase from $140 to $165 million, are now anticipated to only increase to $159 million. The majority of the reduction is associated with GPP's costs that are variable depending on sales levels. Interest expense is anticipated to be $45 million, depreciation $60 million and the effective tax rate is planned to be 35%. These estimates are expected to result in net income between $58 and $62 million. CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS Certain statements in Management's Discussion and Analysis of Financial Condition and Results of Operations may contain 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", "intend", "may", "objective", "plan", "seek", "think", "will" and similar expressions are intended to identify forward-looking statements. The forward-looking statements are based on Briggs & Stratton's current views and assumptions and involve risks and uncertainties that include, among other things: our ability to successfully forecast demand for our products and appropriately adjust our manufacturing and inventory levels; changes in our operating expenses; our ability to successfully integrate the acquisition of GPP into our operations; changes in interest rates; the effects of weather on the purchasing patterns of consumers and original equipment manufacturers; actions of engine manufacturers and OEMs with whom we compete; the seasonal nature of our business; changes in laws and regulations, including environmental and accounting standards; work stoppages or other consequences of any deterioration in our employee relations; changes in customer and OEM demand; changes in prices of purchased 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; and other factors that may be disclosed from time to time in our SEC filings or otherwise. Some or all of the factors may be beyond our control. We caution you that any forward-looking statement reflects only our belief at the time the statement is made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There have been no material changes since the September 12, 2001, filing of the Company's Annual Report on Form 10-K. PART II - OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the Annual Meeting of Shareholders on October 17, 2001, director nominees named below were elected to a three-year term expiring in 2004 by the indicated votes cast for and withheld with respect to each nominee.
Name of Nominee For Withheld --------------- --- -------- David L. Burner 20,188,302 121,797 Eunice M. Filter 20,175,925 134,174 Frederick P. Stratton, Jr. 20,178,341 131,758
14 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES Directors whose terms of office continue past the Annual Meeting of Shareholders are: Jay H. Baker; Michael E. Batten; Peter A. Georgescu; Robert J. O'Toole; John S. Shiely and Charles I. Story. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. Exhibit Number Description 10 Amended and Restated Briggs & Stratton Corporation Economic Value Added Incentive Compensation Plan* 11 Computation of Earnings Per Share of Common Stock* 12 Computation of Ratio of Earnings to Fixed Charges* *Filed herewith (b) Reports on Form 8-K. There were no reports on Form 8-K for the first quarter ended September 30, 2001, however, a Form 8-K was filed on October 18, 2001. 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: November 13, 2001 /s/ James E. Brenn ------------------ James E. Brenn Senior Vice President and Chief Financial Officer and Duly Authorized Officer 15 EX-10 3 c66071ex10.txt AMENDED & RESTATED ECONOMIC VALUE ADDED INCENTIVE BRIGGS & STRATTON CORPORATION FORM 10-Q for Quarterly Period Ended September 30, 2001 Exhibit No. 10 ECONOMIC VALUE ADDED INCENTIVE COMPENSATION PLAN AS AMENDED AND RESTATED Effective July 1, 2001 As Amended and Restated Effective 7-1-01 BRIGGS & STRATTON CORPORATION ECONOMIC VALUE ADDED INCENTIVE COMPENSATION PLAN As adopted by the Board of Directors on November 12, 1990, and amended and restated by resolution of the Board of Directors effective as of April 18, 1995, further amended by resolutions effective October 17, 1995 and April 16, 1997; further amended and restated by resolution of the Board of Directors on April 21, 1999, further amended by resolutions of the Board of Directors on October 17, 2000 and October 17, 2001, effective July 1, 2001. BRIGGS & STRATTON CORPORATION ECONOMIC VALUE ADDED INCENTIVE COMPENSATION PLAN As adopted by the Board of Directors on November 12, 1990, and amended and restated by resolution of the Board of Directors effective as of April 18, 1995, further amended by resolutions effective October 17, 1995 and April 16, 1997 and further amended and restated by the Board of Directors on April 21, 1999, further amended by resolutions of the Board of Directors on October 17, 2000 and October 17, 2001 effective July 1, 2001. I. Plan Objectives A. To promote the maximization of shareholder value over the long term by providing incentive compensation to key employees of Briggs & Stratton Corporation (the "Company") in a form which is designed to financially reward participants for an increase in the value of the Company to its shareholders. B. To provide competitive levels of compensation to enable the Company to attract and retain employees who are able to exert a significant impact on the value of the Company to its shareholders. C. To encourage teamwork and cooperation in the achievement of Company goals. D. To recognize differences in the performance of individual participants. II. Plan Administration The Compensation Committee of the Board of Directors (the "Committee") shall be responsible for the design, administration, and interpretation of the Plan. III. Definitions A. "Accrued Bonus" means the bonus, which may be negative or positive, which is calculated in the manner set forth in Section V.A. B. "Actual EVA" means the EVA as calculated for the relevant Plan Year. C. "Base Salary" means the amount of a Participant's base compensation earned during the Plan Year without adjustment for bonuses, salary deferrals, value of benefits, imputed income, special payments, amounts contributed to a savings plan or similar items. D. "Capital" means the Company's weighted average monthly operating capital for the Plan Year, calculated as follows: Current Assets - Non-operating Investments + Bad Debt Reserve + LIFO Reserve - Future Income Tax Benefits - Current Noninterest-Bearing Liabilities + Warranty Reserve + Environmental Reserve + Property, Plant, Equipment, Net - Construction in Progress + Other Assets (not including prepaid Pension Costs) (+/-) Unusual Capital Items 2 E. "Capital Charge" means the deemed opportunity cost of employing Capital in the Company's businesses, determined as follows: Capital Charge = Capital X Cost of Capital F. "Cost of Capital" means the weighted average of the cost of equity and the after tax cost of debt for the relevant Plan Year on a market value basis. The Cost of Capital will be determined (to the nearest tenth of a percent) by the Committee prior to each Plan Year, consistent with the following methodology: a) Cost of Equity = Risk Free Rate + (Business Risk Index X Average Equity Risk Premium) b) Debt Cost of Capital = Debt Yield X (1 - Tax Rate) c) The weighted average of the Cost of Equity and the Debt Cost of Capital is determined by reference to the actual debt-to-capital ratio where the Risk Free Rate is the average daily closing yield rate on 30 year U.S. Treasury Bonds for the month of March immediately preceding the relevant Plan Year, the Business Risk Index is determined by using an average of the Beta available in the four (4) most recent Value Line reports on the Company. The Average Equity Risk Premium is 6%, the Debt Yield is the weighted average yield of all borrowing included in the Company's permanent capital, and the tax rate is the combination of the relevant federal and state income tax rates. G. "Designated Key Contributor" means those Participants named by the Chief Executive Officer as a Designated Key Contributor under the Plan. H. "Divisional EVA Performance Factor" means an Individual Performance Factor calculated in the same manner as the Company Performance Factor as set forth in Section VI.A., except that EVA, Actual EVA, Target EVA, EVA Leverage Factor, NOPAT, Capital, Capital Charge, Cost of Capital and other relevant terms shall be defined by reference to the particular division, not by reference to the entire Company. I. "Economic Value Added" or "EVA" means the NOPAT that remains after subtracting Capital Charge, expressed as follows: NOPAT Less: Capital Charge -------------- Equals: EVA EVA may be positive or negative. J. "EVA Leverage Factor" means the expected deviation in EVA from the average EVA, generally reflected as a percentage of capital employed. For purposes of this Plan, the Company's EVA Leverage Factor is determined to be $34 million. K. "NOPAT" means cash adjusted net operating profits after taxes for the Plan Year, calculated as follows: Net Sales - Cost of Goods Sold (+/-) Change in LIFO Reserve - Engineering/Selling & Administration - Normal Pension Costs (+/-) Change in Bad Debt Reserve (+/-) Change in the Prepaid Pension Asset or Liability (+/-) Change in Warranty Reserve (+/-) Change in Environmental Reserve (+/-) Other Income & Expense on Non-Operating Investments (+/-) Other Unusual Income or Expense Items (+/-) Amortization of Unusual Income or Expense Items - Cash Taxes on the Above (+/- change in deferred tax liability) 3 L. "Plan Year" means the one year period coincident with the Company's fiscal year. M. "Senior Executives" means those Participants designated as Senior Executives by the Committee with respect to any Plan Year. N. "Target EVA" means the target level of EVA for the Plan Year, determined as follows: a) For Plan Year ending July 3, 1994 The Actual EVA for 1993 plus Expected Improvement. b) For subsequent Plan Years: Prior Year Prior Year Current Plan = Target EVA + Actual EVA + Expected --------------------------- Year Target EVA 2 Improvement For Plan Years through 1999, Expected Improvement will be $4 million, except that it shall not be added to the current Plan Year Target EVA to the extent it would make such Target EVA exceed $25 million. For Plan Years after 1999, Expected Improvement will be $2 million, except that it shall not be added to the current Plan Year Target EVA to the extent it would make such Target EVA exceed $32 million. For the Plan Year 2002 the computed Target EVA shall be reduced by $7 million and for the Plan Year 2003 the computed Target EVA shall be reduced by $3 million to adjust for the Generac Portable Products, Inc. acquisition. IV. Eligibility A. Eligible Positions. In general, all Company Officers, Division General Managers, and members of the corporate operations group, and certain direct reports of such individuals may be eligible for participation in the Plan. However, actual participation will depend upon the contribution and impact each eligible employee may have on the Company's value to its shareholders, as determined by the Chief Executive Officer of the Company, and approved by the Committee. B. Nomination and Approval. Each Plan year, the Chief Executive Officer of the Company will nominate eligible employees to participate in the Plan for the next Plan Year. The Committee will have the final authority to select Plan participants (the "Participants") among the eligible employees nominated by the Chief Executive Officer of the Company. Continued participation in the Plan is contingent on approval of the Committee. Selection normally will take place, and will be communicated to each Participant, prior to the beginning of the pertinent Plan Year. V. Individual Participation Levels A. Calculation of Accrued Bonus. Each Participant's Accrued Bonus will be determined as a function of the Participant's Base Salary, the Participant's Target Incentive Award (provided in paragraph V.B., below), Company Performance Factor (provided in Section VI.A.) and the Individual Performance Factor (provided in Section VI.B.) for the Plan Year. Each Participant's Accrued Bonus will be calculated as follows:
Target Company Target Individual Participant's x Incentive x Performance Participant's x Incentive x Performance Base Salary Award Factor + Base Salary Award Factor ---------------------------------------------------- ------------------------------------------------------ 2 2
4 B. Target Incentive Awards. The Target Incentive Awards will be determined according to the following schedule:
Target Incentive Award Executive Position (% of Base Salary) ------------------ ------------------ Chairman 100% Chief Executive Officer 100% Executive Vice President & Senior Vice President 60% Other Elected Officers 40% Division General Manager 40% Designated Key Contributors 25% All Others 20%
VI. Performance Factors A. Company Performance Factor Calculation. For any Plan Year, the Company Performance Factor will be calculated as follows: Company Performance Factor = 1.00 + Actual EVA - Target EVA ------------------------- EVA Leverage Factor B. Individual Performance Factor Calculation. Determination of the Individual Performance Factor will be the responsibility of the individual to whom the participant reports. This determination will be subject to approval by the Committee and should be in conformance with the process set forth below: (1) Quantifiable Supporting Performance Factors. The Individual Performance Factor of the Accrued Bonus calculation will be based on the accomplishment of individual, financial and/or other goals ("Supporting Performance Factors"). Whenever possible, individual performance will be evaluated according to quantifiable benchmarks of success. These Supporting Performance Factors will represent an achievement percentage continuum that ranges from 50% to 150% of the individual target award opportunity, and will be enumerated from .5 to 1.5 based on such continuum except in the case of the quantifiable benchmark of Aggregate Gross Margin where the achievement percentage continuum could be 50% to 200% and be enumerated by a .5 to 2.0 continuum. Provided, however, that if the quantifiable Supporting Performance Factor is based on divisional EVA and is calculated in the same manner as the Company Performance Factor as set forth in Section VI.A. with respect to such division (such Supporting Performance Factor referred to herein as a Divisional EVA Performance Factor), then the Supporting Performance Factor may be unlimited, if so approved by the Committee. A quantifiable Supporting Performance Factor may also be unlimited if the quantifiable Supporting Performance Factor as approved by the Committee for such individual is the same as the Company Performance Factor determined in accordance with Section VI.A. (2) Non-Quantifiable Supporting Performance Factors. When performance cannot be measured according to a quantifiable monitoring system, an assessment of the Participant's overall performance may be made based on a non-quantifiable Supporting Performance Factor (or Factors). The person to whom the Participant reports will evaluate the Participant's performance, and this evaluation will determine the Participant's Supporting Performance Factor (or Factors) according to the following schedule: Individual Supporting Performance Rating Performance Factor Outstanding 1.3 - 1.5 Excellent 1.1 - 1.3 Good .9 - 1.1 Satisfactory .5 - .9 Unsatisfactory 0 5 (3) Aggregate Individual Performance Factor. The Individual Performance Factor to be used in the calculation of the Accrued Bonus shall be equal to the sum of the quantifiable and/or non-quantifiable Supporting Performance Factor(s), divided by the number of Supporting Performance Factors. To illustrate, assume a Participant with two Supporting Performance Factors: Quantifiable Non-Quantifiable Supporting + Supporting Individual Performance Performance Performance = Factor A Factor B ------------------------------------------ Factor 2 Notwithstanding the foregoing and subject to the approval of the Committee, the individual to whom the Participant reports shall have the authority to weight the Supporting Performance Factors, according to relative importance. The weighting of each Supporting Performance Factor shall be expressed as a percentage, and the sum of the percentages applied to all of the Supporting Performance Factors shall be 100%. The Individual Performance Factor, if weighted factors are used, will then be equal to the weighted average of such Supporting Performance Factors. VII. Change in Status During the Plan Year A. New Hire, Transfer, Promotion, Demotion A newly hired employee or an employee transferred, promoted, or demoted during the Plan Year to a position qualifying for participation (or leaving the participating class) may accrue (subject to discretion of the Committee) a pro rata Accrued Bonus based on the percentage of the Plan Year (actual weeks/full year times a full year award amount for that position) the employee is in each participating position. B. Discharge An employee discharged during the Plan Year shall not be eligible for an Accrued Bonus, even though his or her service arrangement or contract extends past year-end, unless the Committee determines that the conditions of the termination indicate that a prorated Accrued Bonus is appropriate. The Committee shall have full and final authority in making such a determination. C. Resignation An employee who resigns during the Plan Year to accept employment elsewhere (including self-employment) will not be eligible for an Accrued Bonus. D. Death, Disability, Retirement If a Participant's employment is terminated during a Plan Year by reason of death, disability, or normal or early retirement under the Company's retirement plan, a tentative Accrued Bonus will be calculated as if the Participant had remained employed as of the end of the Plan Year. The final Accrued Bonus will be calculated by multiplying the tentative Accrued Bonus by a proration factor. The proration factor will be equal to the number of full weeks of employment during the Plan Year divided by fifty-two. For purposes of this section, the date a participant is deemed to be terminated pursuant to disability shall be the date the employee begins receiving a monthly Long Term Disability Benefit under the Company's Group Insurance Plan. Each employee may name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under this Plan is to be paid in case of the employee's death. 6 Each such designation shall revoke all prior designations by the employee, shall be in the form prescribed by the Committee, and shall be effective only when filed by the employee in writing with the Committee during his or her lifetime. In the absence of any such designation, benefits remaining unpaid at the employee's death shall be paid to the employee's estate. E. Leave of Absence An employee whose status as an active employee is changed during a Plan Year as a result of a leave of absence may, at the discretion of the Committee, be eligible for a pro rata Accrued Bonus determined in the same way as in paragraph D. of this Section. VIII. Bonus Paid and Bonus Bank All or a portion of the Accrued Bonus will be either paid to the Participant or credited to or charged against the Bonus Bank as provided in this Article. A. Participants Who Are Not Senior Executives. All positive Accrued Bonuses of Participants who are not Senior Executives for the Plan Year shall be paid in cash, less amounts required by law to be withheld for income and employment tax purposes, on or before the end of the second month following the end of the Plan Year in which the Accrued Bonus was earned. Participants who are not Senior Executives shall not be charged or otherwise assessed for negative Accrued Bonuses nor shall such Participants have any portion of their Accrued Bonuses banked. B. Participants Who Are Senior Executives. The Total Bonus Payout to Participants who are Senior Executives for the Plan Year shall be as follows: Accrued Bonus Less: Extraordinary Bonus Accrual Plus: Bank Payout ----------- Equals: Total Bonus Payout The Total Bonus Payout for each Plan Year, less amounts required by law to be withheld for income tax and employment tax purposes, shall be paid on or before the end of the second month following the end of the Plan Year in which it was earned. C. Establishment of a Bonus Bank. To encourage a long term commitment to the enhancement of shareholder value by Senior Executives, "Extraordinary Bonus Accruals" shall be credited to an "at risk" deferred account ("Bonus Bank") for each such Participant, and all negative Accrued Bonuses shall be charged against the Bonus Bank, as determined in accordance with the following: 1. "Bonus Bank" means, with respect to each Senior Executive, a bookkeeping record of an account to which Extraordinary Bonus Accruals are credited, and negative Accrued Bonuses debited as the case may be, for each Plan Year, and from which bonus payments to such Senior Executive are debited. 2. "Bank Balance" means, with respect to each Senior Executive, a bookkeeping record of the net balance of the amounts credited to and debited against such Senior Executive's Bonus Bank. The Bank Balance shall initially be equal to zero. 3. "Extraordinary Bonus Accrual" shall mean the amount of the Accrued Bonus for any year that exceeds 1.25 times the portion of the Senior Executive's Base Salary which is represented by the Target Incentive Award in the event that the beginning Bank Balance is positive or zero, and .75 times the portion of the Senior Executive's Base Salary which is represented by the Target Incentive Award in the event that the beginning Bank Balance is negative. 7 4. Annual Allocation. Each Senior Executive's Extraordinary Bonus Accrual or negative Accrued Bonus is credited or debited to the Bonus Bank maintained for that Senior Executive. Such Annual Allocation will occur as soon as possible after the conclusion of each Plan Year. Although a Bonus Bank may, as a result of negative Accrual Bonuses have a deficit, no Senior Executive shall be required, at any time, to reimburse his/her Bonus Bank. 5. "Available Balance" means that the Bank Balance at the point in time immediately after the Annual Allocation has been made. 6. "Payout Percentage" means the percentage of the Available Balance that may be paid out in cash to the Participant. The Payout Percentage will equal 33%. 7. "Bank Payout" means the amount of the Available Balance that may be paid out in cash to the Senior Executive for each Plan Year. The Bank Payout is calculated as follows: Bank Payout = Available Balance X Payout Percentage The Bank Payout is subtracted from the Bank Balance. 8. Treatment of Available Balance Upon Termination a) Resignation or Termination With Cause. Senior Executives leaving voluntarily to accept employment elsewhere (including self-employment) or who are terminated with cause will forfeit their Available Balance. b) Retirement, Death, Disability or Termination Without Cause. In the event of a Senior Executive's normal or early retirement under the Company's retirement plan, death, disability, or termination without cause, the Available Balance, less amounts required by law to be withheld for income tax and employment tax purposes, shall be paid to the Senior Executive on or before the end of the second month following the end of the Plan Year in which the termination for one of such events occurred. c) For purposes of this Plan "cause" shall mean: (i) any act or acts of the Participant constituting a felony under the laws of the United States, any state thereof or any foreign jurisdiction; (ii) any material breach by the Participant of any employment agreement with the Company or the policies of the Company or the willful and persistent (after written notice to the Participant) failure or refusal of the Participant to comply with any lawful directives of the Board; (iii) a course of conduct amounting to gross neglect, willful misconduct or dishonesty; or (iv) any misappropriation of material property of the Company by the Participant or any misappropriation of a corporate or business opportunity of the Company by the Participant. IX. Administrative Provisions A. Amendments. The Board of Directors of the Company shall have the right to modify or amend this Plan from time to time, or suspend it or terminate it entirely; provided that no such modification, amendment, suspension, or termination may, without the consent of any affected participants (or beneficiaries of such participants in the event of death), reduce the rights of any such participants (or beneficiaries, as applicable) to a payment or distribution already earned under Plan terms in effect prior to such change. B. Interpretation of Plan. Any decision of the Committee with respect to any issues concerning individual selected for awards, the amount, terms, form and time of payment of awards, and interpretation of any Plan guideline, definition, or requirement shall be final and binding. 8 C. Effect of Award on Other Employee Benefits. By acceptance of a bonus award, each recipient agrees that such award is special additional compensation and that it will not affect any employee benefit, e.g., life insurance, etc., in which the recipient participates, except as provided in paragraph D. below. D. Retirement Programs. Awards made under this Plan shall be included in the employee's compensation for purposes of the Company Retirement Plans and Savings Plan. E. Right to Continued Employment; Additional Awards. The receipt of a bonus award shall not give the recipient any right to continued employment, and the right and power to dismiss any employee is specifically reserved to the Company. In addition, the receipt of a bonus award with respect to any Plan Year shall not entitle the recipient to an award with respect to any subsequent Plan Year. F. Adjustments to Performance Goals. When a performance goal is based on Economic Value Added or other quantifiable financial or accounting measure, it may be necessary to exclude significant nonbudgeted or noncontrollable gains or losses from actual financial results in order to properly measure performance. The Committee will decide those items that shall be considered in adjusting actual results. For example, some types of items that may be considered for exclusion are: (1) Any gains or losses which will be treated as extraordinary in the Company's financial statements. (2) Profits or losses of any entities acquired by the Company during the Plan Year, assuming they were not included in the budget and/or the goal. (3) Material gains or losses not in the budget and/or the goal which are of a nonrecurring nature and are not considered to be in the ordinary course of business. Some of these would be as follows: (a) Gains or losses from the sale or disposal of real estate or property. (b) Gains resulting from insurance recoveries when such gains relate to claims filed in prior years. (c) Losses resulting from natural catastrophes, when the cause of the catastrophe is beyond the control of the Company and did not result from any failure or negligence on the Company's part. G. Vesting. All amounts due but unpaid to any Participant under this plan shall vest, subject to the terms of this EVA Plan, upon actual termination of employment of the Participant. X. Miscellaneous A. Indemnification. Each person who is or who shall have been a member of the Committee or of the Board, or who is or shall have been an employee of the Company, shall not be liable for, and shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with any claim, action, suit, or proceeding to which he or she may be a party by reason of any action taken or failure to act under this Plan. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. B. Expenses of the Plan. The expenses of administering this Plan shall be borne by the Company. C. Withholding Taxes. The Company shall have the right to deduct from all payments under this Plan any Federal or state taxes required by law to be withheld with respect to such payments. D. Governing Law. This Plan shall be construed in accordance with and governed by the laws of the State of Wisconsin. 9 EX-11 4 c66071ex11.txt COMPUTATION OF EARNINGS PER SHARE OF COMMON STOCK EXHIBIT 11 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE OF COMMON STOCK (In thousands except per share data)
Quarter Ended ------------- September 30, October 1, 2001 2000 ---- ---- COMPUTATIONS FOR STATEMENTS OF INCOME Basic earnings per share of common stock: Net loss $(17,424) $ (6,304) ======== ======== Average shares of common stock outstanding 21,600 21,612 ======== ======== Basic earnings per share of common stock $ (0.81) $ (0.29) ======== ======== Diluted earnings per share of common stock: Net loss $(17,424) $ (6,304) Adjustment to net loss to add after-tax interest expense on convertible notes 1,138 -- -------- -------- Adjusted net loss $(16,286) $ (6,304) ======== ======== Average shares of common stock outstanding 21,600 21,612 Incremental common shares applicable to common stock options based on the common stock average market price during the period 9 13 Incremental common shares applicable to restricted common stock based on the common stock average market price during the period 4 4 Incremental common shares applicable to convertible notes based on the conversion provisions of the convertible notes* -- -- -------- -------- Average common shares assuming dilution 21,613 21,629 ======== ======== Fully diluted earnings per average share of common stock, assuming conversion of all applicable securities $ (0.81) $ (0.29) ======== ========
*Antidilutive for the quarter EX-12 5 c66071ex12.txt COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Dollars in thousands)
Three Months Ended ------------------ September 30, October 1, 2001 2000 ---- ---- Net loss $(17,424) $ (6,304) Add: Interest 10,422 4,568 Income tax benefit and other taxes on income (9,385) (3,705) Fixed charges of unconsolidated subsidiaries -- -- -------- -------- Loss as defined $(16,387) $ (5,441) ======== ======== Interest $ 10,422 $ 4,568 Fixed charges of unconsolidated subsidiaries -- -- -------- -------- Fixed charges as defined $ 10,422 $ 4,568 ======== ======== Ratio of earnings to fixed charges* -- x -- x ======== ========
* Earnings were inadequate to cover fixed charges by $ 26,809,000 and $10,009,000 for the quarter ended September 30, 2001 and October 1, 2000, respectively. -----END PRIVACY-ENHANCED MESSAGE-----