-----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, SjOjX0QsEiv1AIFnteZcmfrTeaQ3l6GxVMZaMHUP68G5fARis6oAqunX6CZhQJ+D Fcl3ANbn2mjD55Mj+/W9gw== 0000950134-03-002155.txt : 20030212 0000950134-03-002155.hdr.sgml : 20030212 20030212082752 ACCESSION NUMBER: 0000950134-03-002155 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20021229 FILED AS OF DATE: 20030212 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: 03551702 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 c74606e10vq.txt FORM 10-Q BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES 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 December 29, 2002 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 by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). 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 December 29, 2002 - -------------------------------------------------------------------------------- COMMON STOCK, par value $0.01 per share 21,646,984 Shares BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES INDEX
Page No. -------- PART I - FINANCIAL INFORMATION Item 1. Financial Statement Consolidated Condensed Balance Sheets - December 29, 2002 and June 30, 2002 3 Consolidated Condensed Statements of Income - Three Months and Six Months ended December 29, 2002 and December 30, 2001 5 Consolidated Condensed Statements of Cash Flows - Six Months ended December 29, 2002 and December 30, 2001 6 Notes to Consolidated Condensed Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 17 Item 3. Quantitative and Qualitative Disclosures about Market Risk 19 Item 4. Controls and Procedures 19 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 20
2 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands) ASSETS
December 29, June 30, 2002 2002 --------------- --------------- (Unaudited) CURRENT ASSETS: Cash and cash equivalents $ 22,222 $ 215,945 Accounts receivable, net 321,174 201,910 Inventories - Finished products and parts 201,375 126,152 Work in process 78,202 61,748 Raw materials 4,188 3,059 --------------- --------------- Total inventories 283,765 190,959 Future income tax benefits 44,210 41,383 Prepaid expenses and other current assets 16,394 19,747 --------------- --------------- Total current assets 687,765 669,944 --------------- --------------- OTHER ASSETS: Goodwill 161,030 161,030 Investments 42,660 46,889 Prepaid pension 67,501 60,343 Deferred loan costs, net 8,427 9,304 Other long-term assets, net 7,542 6,308 --------------- --------------- Total other assets 287,160 283,874 --------------- --------------- PLANT AND EQUIPMENT: Cost 881,313 879,635 Less, accumulated depreciation 500,014 484,420 --------------- --------------- Total plant and equipment, net 381,299 395,215 --------------- --------------- $ 1,356,224 $ 1,349,033 =============== ===============
The accompanying notes are an integral part of these statements. 3 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Continued) (In thousands, except per share data) LIABILITIES & SHAREHOLDERS' INVESTMENT
December 29, June 30, 2002 2002 -------------- -------------- (Unaudited) CURRENT LIABILITIES: Accounts payable $ 73,026 $ 103,648 Domestic notes payable 31,435 2,625 Foreign loans 10,383 15,270 Accrued liabilities 155,911 144,480 -------------- -------------- Total current liabilities 270,755 266,023 -------------- -------------- OTHER LIABILITIES: Deferred revenue on sale of plant and equipment 15,267 15,364 Deferred income tax liability 35,373 27,405 Accrued pension liability 16,610 15,750 Accrued employee benefits liability 13,211 13,070 Accrued postretirement health care obligation 59,488 62,753 Long-term debt 501,261 499,022 -------------- -------------- Total other liabilities 641,210 633,364 -------------- -------------- SHAREHOLDERS' INVESTMENT: Common stock - Authorized 60,000 shares, $.01 par value, issued 28,927 shares 289 289 Additional paid-in capital 35,361 35,459 Retained earnings 760,008 769,131 Accumulated other comprehensive loss (2,962) (6,626) Unearned compensation on restricted stock (364) (199) Treasury stock at cost, 7,280 and 7,288 shares, respectively (348,073) (348,408) -------------- -------------- Total shareholders' investment 444,259 449,646 -------------- -------------- $ 1,356,224 $ 1,349,033 ============== ==============
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 Six Months Ended ------------------------------ ------------------------------- December 29, December 30, December 29, December 30, 2002 2001 2002 2001 ------------ ------------ ------------ ------------ NET SALES $ 352,562 $ 333,554 $ 589,058 $ 552,345 COST OF GOODS SOLD 285,470 278,695 484,274 478,502 ------------ ------------ ------------ ------------ Gross profit on sales 67,092 54,859 104,784 73,843 ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 41,191 40,660 79,567 77,184 ------------ ------------ ------------ ------------ Income (Loss) from operations 25,901 14,199 25,217 (3,341) INTEREST EXPENSE (10,171) (11,101) (20,260) (21,523) OTHER INCOME, net 2,064 562 2,190 1,715 ------------ ------------ ------------ ------------ Income (Loss) before income taxes 17,794 3,660 7,147 (23,149) PROVISION (CREDIT) FOR INCOME TAXES 6,050 1,281 2,430 (8,104) ------------ ------------ ------------ ------------ NET INCOME (LOSS) $ 11,744 $ 2,379 $ 4,717 $ (15,045) ============ ============ ============ ============ EARNINGS PER SHARE DATA - Average shares outstanding 21,647 21,603 21,645 21,602 ============ ============ ============ ============ Basic earnings (loss) per share $ 0.54 $ 0.11 $ 0.22 $ (0.70) ============ ============ ============ ============ Diluted average shares outstanding 24,482 21,616 21,654 21,602 ============ ============ ============ ============ Diluted earnings (loss) per share $ 0.53 $ 0.11 $ 0.22 $ (0.70) ============ ============ ============ ============ CASH DIVIDENDS PER SHARE $ 0.32 $ 0.31 $ 0.32 $ 0.31 ============ ============ ============ ============
The accompanying notes are an integral part of these statements. 5 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
Six Months Ended -------------------------------------- December 29, December 30, 2002 2001 ---------------- ---------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 4,717 $ (15,045) Adjustments to reconcile net income (loss) to net cash used in operating activities - Depreciation and amortization 31,189 30,245 Equity earnings of unconsolidated affiliates (2,185) (1,543) Loss on disposition of plant and equipment, net 1,912 1,141 Provision for deferred income taxes 5,174 1,529 Change in operating assets and liabilities - Increase in accounts receivable (119,264) (182,211) Increase in inventories (92,806) (22,745) Decrease (increase) in prepaid expenses and other current assets 3,353 (2,233) (Decrease) increase in accounts payable and accrued liabilities (24,067) 9,041 Increase in prepaid pension, net (6,298) (9,697) Other, net (3,672) 1,310 ---------------- ---------------- Net cash used in operating activities (201,947) (190,208) ---------------- ---------------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to plant and equipment (19,908) (26,657) Proceeds received on disposition of plant and equipment 3,232 547 Dividends received on equity investments 6,330 2,426 ---------------- ---------------- Net cash used in investing activities (10,346) (23,684) ---------------- ---------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings on loans and notes payable 23,923 148,126 Issuance cost of long-term debt -- (327) Dividends (6,927) (6,696) Proceeds from exercise of stock options -- 95 ---------------- ---------------- Net cash provided by financing activities 16,996 141,198 ---------------- ---------------- EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 1,574 569 ---------------- ---------------- NET DECREASE IN CASH AND CASH EQUIVALENTS (193,723) (72,125) CASH AND CASH EQUIVALENTS, beginning 215,945 88,743 ---------------- ---------------- CASH AND CASH EQUIVALENTS, ending $ 22,222 $ 16,618 ================ ================ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest paid $ 19,312 $ 17,896 ================ ================ Income taxes paid $ 5,460 $ 642 ================ ================
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 accounting principles generally accepted in the U.S. 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. Earnings Per Share Basic earnings (loss) per share, for each period presented, is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed reflecting the potential dilution that would occur if options or other contracts to issue common stock were exercised or converted into common stock at the beginning of the period. Information on earnings per share is as follows (in thousands, except per share data):
Three Months Ended Six Months Ended --------------------------------- --------------------------------- December 29, December 30, December 29, December 30, 2002 2001 2002 2001 -------------- -------------- -------------- -------------- Net income (loss) $ 11,744 $ 2,379 $ 4,717 $ (15,045) Adjustments to net income to add after tax interest expense on convertible notes 1,155 -- -- -- -------------- -------------- -------------- -------------- Adjusted net income (loss) used in diluted earnings per share $ 12,899 $ 2,379 $ 4,717 $ (15,045) ============== ============== ============== ============== Average shares of common stock outstanding 21,647 21,603 21,645 21,602 Incremental common shares applicable to common stock options based on the common stock average market price during the period -- 8 -- -- Incremental common shares applicable to restricted common stock based on the common stock average market price during the period 9 5 9 -- Incremental common shares applicable to convertible notes based on the conversion provisions of the convertible notes 2,826 -- -- -- -------------- -------------- -------------- -------------- Diluted average common shares outstanding 24,482 21,616 21,654 21,602 ============== ============== ============== ==============
7 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES Comprehensive Income Comprehensive income is a more inclusive financial reporting method that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income. Comprehensive income is defined as net income and other changes in shareholders' investment from transactions and other events other than with shareholders. Total comprehensive income (loss) is as follows (in thousands):
Three Months Ended Six Months Ended ---------------------------------- ---------------------------------- December 29, December 30, December 29, December 30, 2002 2001 2002 2001 -------------- -------------- -------------- -------------- Net income (loss) $ 11,744 $ 2,379 $ 4,717 $ (15,045) Unrealized gain (loss) on marketable securities (10) 15 (52) (175) Foreign currency translation adjustments 1,728 (875) 1,679 639 Unrealized gain (loss) on derivative instruments 484 (22) 2,037 (1,487) -------------- -------------- -------------- -------------- Total comprehensive income (loss) $ 13,946 $ 1,497 $ 8,381 $ (16,068) ============== ============== ============== ==============
The components of Accumulated Other Comprehensive Loss as reported on the accompany Balance Sheets are as follows (in thousands):
December 29, June 30, 2002 2002 -------------- -------------- Unrealized loss on marketable securities $ (953) $ (901) Foreign currency translation adjustments (959) (2,638) Unrealized loss on derivative instruments (1,050) (3,087) -------------- -------------- Accumulated other comprehensive loss $ (2,962) $ (6,626) ============== ==============
Derivatives Derivatives are recorded on the balance sheet as assets or liabilities, measured at fair value. Briggs & Stratton enters into derivative contracts designated as cash flow hedges to manage its foreign currency exposures. These instruments generally do not have a maturity of more than twelve months. Briggs & Stratton uses interest rate swaps designated as fair value hedges to manage its debt portfolio. These instruments generally have maturities and terms consistent with the underlying debt instrument. Changes in the fair value of cash flow hedges are recorded on the income statement or as a component of accumulated other comprehensive income (loss). The amounts included in accumulated other comprehensive income (loss) will be reclassified into income when the forecasted transactions occur, 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. Changes in the fair value of fair value hedges related to interest rate swaps are recorded as an increase/decrease to long-term debt. Changes in the fair value of all derivatives deemed to be ineffective are recorded as either income or expense in the accompanying income statement. During the quarter there were no material ineffective hedges. 8 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES Segment and Geographic Information Briggs & Stratton operates in two reportable business segments, Engines and Power Products, which are managed separately based on fundamental differences in their operations. Summarized segment data is as follows (in thousands):
Three Months Ended Six Month Ended ---------------------------------- ---------------------------------- December 29, December 30, December 29, December 30, 2002 2001 2002 2001 -------------- -------------- -------------- -------------- NET SALES: Engines $ 306,163 $ 305,741 $ 501,487 $ 482,954 Power Products 59,906 39,500 113,148 93,237 Inter-Segment Eliminations (13,507) (11,687) (25,577) (23,846) -------------- -------------- -------------- -------------- Total* $ 352,562 $ 333,554 $ 589,058 $ 552,345 ============== ============== ============== ============== *International Sales (included in the above) Engines $ 96,289 $ 84,604 $ 151,864 $ 135,626 Power Products 3,518 2,737 7,514 5,327 -------------- -------------- -------------- -------------- Total $ 99,807 $ 87,341 $ 159,378 $ 140,953 ============== ============== ============== ============== GROSS PROFIT ON SALES: Engines $ 60,446 $ 52,729 $ 92,129 $ 65,570 Power Products 5,719 2,595 12,016 9,254 Inter-Segment Eliminations 927 (465) 639 (981) -------------- -------------- -------------- -------------- Total $ 67,092 $ 54,859 $ 104,784 $ 73,843 ============== ============== ============== ============== INCOME (LOSS) FROM OPERATIONS: Engines $ 23,489 $ 16,178 $ 21,260 $ (2,587) Power Products 1,485 (1,514) 3,318 227 Inter-Segment Eliminations 927 (465) 639 (981) -------------- -------------- -------------- -------------- Total $ 25,901 $ 14,199 $ 25,217 $ (3,341) ============== ============== ============== ==============
Long-Lived Assets On July 1, 2002, Briggs & Stratton adopted Financial Accounting Standard No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." The adoption of Financial Accounting Standard No. 144 did not have any material impact on Briggs & Stratton's consolidated financial statements. Accrued Warranty Costs Briggs & Stratton recognizes the cost associated with its standard warranty on engines and power products at the time of sale. The amount recognized is based on historical failure rates and current claim cost experience. The following is a reconciliation of the changes in accrued warranty costs for the reporting period (in thousands): Beginning Balance as of June 30, 2002 $ 46,346 Deduct: Payments (16,697) Add: Provision* 14,437 -------------- Ending Balance December 29, 2002 $ 44,086 ==============
*Approximately $13 million of the provision noted above relates to warranties accrued on current period sales. 9 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES New Accounting Pronouncement In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN 45"). FIN 45 requires that the guarantor recognize, at the inception of certain guarantees, a liability for the fair value of the obligation undertaken in issuing such guarantee. FIN 45 also requires additional disclosure requirements about the guarantor's obligations under certain guarantees that it has issued. The initial recognition and measurement provisions of this interpretation are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. The disclosure requirements of this interpretation are effective for financial statement periods ending December 15, 2002. Briggs & Stratton adopted the disclosure requirements of this interpretation in the current quarter. The adoption of this interpretation did not have a material impact on its consolidated financial position, results of operations or cash flows. Future Accounting Pronouncement In June 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard ("SFAS") No. 146, "Accounting for Costs Associated with Exit or Disposal Activities". SFAS No. 146 nullifies Emerging Issues Task Force Issue No. 94-03, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (Including Certain Costs Incurred in a Restructuring)" and requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. SFAS No. 146 is effective for exit or disposal activities that are initiated after December 31, 2002. Briggs & Stratton does not expect that the adoption of this statement will have a material impact on its results of operations or financial position. In December 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard ("SFAS") No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure". SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value method of accounting for stock-based employee compensation as originally provided by SFAS No. 123, "Accounting for Stock-Based Compensation". Additionally, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosure in both the annual and interim financial statements about the method of accounting for stock-based compensation and the effect of the method used on reported results. The transitional requirements of SFAS No. 148 are effective for all financial statements for fiscal years ending after December 15, 2002. The disclosure requirements are effective for interim periods beginning after December 31, 2002. Briggs & Stratton does not expect the adoption of SFAS No. 148 will have a material impact on its consolidated financial position, results of operations or cash flows. Critical Accounting Policies There have been no material changes in Briggs & Stratton's critical accounting policies since the September 17, 2002 filing of its Annual Report on Form 10-K. As discussed in our annual report, the preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements. 10 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES The most significant accounting estimates inherent in the preparation of our financial statements include estimates as to the recovery of accounts receivable, as well as those estimates used in the determination of liabilities related to customer rebates, pension obligations, warranty, product liability, group health insurance and taxation. Various assumptions and other factors underlie the determination of these significant estimates. The process of determining significant estimates is fact specific and takes into account factors such as historical experience, current and expected economic conditions, product mix, and in some instances actuarial techniques. Briggs & Stratton reevaluates these significant factors as facts and circumstances change. Historically, actual results have not differed significantly from our estimates. Financial Information of Subsidiary Guarantor of Indebtedness In June of 1997, Briggs & Stratton Corporation issued $100 million of 7.25% senior notes to finance the purchase of treasury shares. In May 2001, the Company issued $275 million of 8.875% senior notes to fund the acquisition of Generac Portable Products, LLC (effective January 1, 2003, Generac Portable Products, LLC changed their name to Briggs & Stratton Power Products Group, LLC ("BSPP")) and $140 million of 5% convertible senior notes to replace an existing revolving line of credit. In addition, the Company has a $300 million revolving credit facility that expires in September 2004 used to finance seasonal working capital needs. Under the terms of Briggs & Stratton's 8.875% senior notes, 5.00% convertible senior notes and 7.25% senior notes and our revolving credit agreement, (collectively, the Domestic Indebtedness), BSPP became a joint and several guarantor of the Domestic Indebtedness (the "Guarantor"). Additionally, if at any time a domestic subsidiary of Briggs & Stratton constitutes a significant domestic subsidiary, then such domestic subsidiary will also become a guarantor of the Domestic Indebtedness. Currently all of the Domestic Indebtedness is unsecured. In the event that the ratings of certain of our debt are reduced, our Domestic Indebtedness, excluding the convertible notes, will be entitled to participate in a pledge of substantially all of our assets. The Guarantor, at that time, is obligated to pay the outstanding Domestic Indebtedness if Briggs & Stratton Corporation were to fail to make a payment of interest or principal on its due date. As of December 29, 2002, the Company had the following outstanding amounts related to the guaranteed debt (in thousands):
Current Carrying Maximum Amount Guarantee --------- --------- 8.875% Senior Notes, due March 15, 2011.....................................$272,137 $275,000 5.00% Convertible Senior Notes, due May 15, 2006............................$140,000 $140,000 7.25% Senior Notes, due September 15, 2007..................................$ 89,124 $ 90,000 Revolving Credit Facility, expiring September 2004..........................$ 27,360 $300,000
11 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES The following condensed supplemental consolidating financial information reflects the operations of BSPP, the Guarantor (in thousands): BALANCE SHEET As of December 29, 2002
Briggs & Stratton Guarantor Non-Guarantor Corporation Subsidiary Subsidiaries Eliminations Consolidated ----------------- -------------- -------------- -------------- -------------- Current Assets $ 552,801 $ 97,900 $ 80,893 $ (43,829) $ 687,765 Investment in Subsidiaries 322,299 -- -- (322,299) -- Non-Current Assets 485,594 180,760 2,105 -- 668,459 -------------- -------------- -------------- -------------- -------------- $ 1,360,694 $ 278,660 $ 82,998 $ (366,128) $ 1,356,224 ============== ============== ============== ============== ============== Current Liabilities $ 270,228 $ 3,666 $ 34,583 $ (37,722) $ 270,755 Long-Term Debt 501,261 -- -- -- 501,261 Other Long-Term Obligations 137,738 2,211 -- -- 139,949 Shareholders' Investment 451,467 272,783 48,415 (328,406) 444,259 -------------- -------------- -------------- -------------- -------------- $ 1,360,694 $ 278,660 $ 82,998 $ (366,128) $ 1,356,224 ============== ============== ============== ============== ==============
BALANCE SHEET As of June 30, 2002
Briggs & Stratton Guarantor Non-Guarantor Corporation Subsidiary Subsidiaries Eliminations Consolidated ----------------- -------------- -------------- -------------- -------------- Current Assets $ 527,111 $ 96,534 $ 70,387 $ (24,088) $ 669,944 Investment in Subsidiaries 312,679 -- -- (312,679) -- Non-Current Assets 494,052 182,665 2,372 -- 679,089 -------------- -------------- -------------- -------------- -------------- $ 1,333,842 $ 279,199 $ 72,759 $ (336,767) $ 1,349,033 ============== ============== ============== ============== ============== Current Liabilities $ 244,497 $ 10,133 $ 30,327 $ (18,934) $ 266,023 Long-Term Debt 499,022 -- -- -- 499,022 Other Long-Term Obligations 135,192 (850) -- -- 134,342 Shareholders' Investment 455,131 269,916 42,432 (317,833) 449,646 -------------- -------------- -------------- -------------- -------------- $ 1,333,842 $ 279,199 $ 72,759 $ (336,767) $ 1,349,033 ============== ============== ============== ============== ==============
12 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES STATEMENT OF INCOME For the Three Months Ended December 29, 2002
Briggs & Stratton Guarantor Non-Guarantor Corporation Subsidiary Subsidiaries Eliminations Consolidated ----------------- -------------- -------------- -------------- -------------- Net Sales $ 295,114 $ 59,222 $ 24,718 $ (26,492) $ 352,562 Cost of Goods Sold 239,349 53,858 18,430 (26,167) 285,470 -------------- -------------- -------------- -------------- -------------- Gross Profit 55,765 5,364 6,288 (325) 67,092 Engineering, Selling, General and Administrative Expenses 33,452 4,234 3,505 -- 41,191 -------------- -------------- -------------- -------------- -------------- Income from Operations 22,313 1,130 2,783 (325) 25,901 Interest Expense (10,032) (2) (137) -- (10,171) Other Income, Net 4,436 1,008 116 (3,496) 2,064 -------------- -------------- -------------- -------------- -------------- Income Before Income Taxes 16,717 2,136 2,762 (3,821) 17,794 Provision for Income Taxes 4,973 765 312 -- 6,050 -------------- -------------- -------------- -------------- -------------- Net Income $ 11,744 $ 1,371 $ 2,450 $ (3,821) $ 11,744 ============== ============== ============== ============== ==============
STATEMENT OF INCOME For the Six Months Ended December 29, 2002
Briggs & Stratton Guarantor Non-Guarantor Corporation Subsidiary Subsidiaries Eliminations Consolidated ----------------- -------------- -------------- -------------- -------------- Net Sales $ 480,952 $ 111,878 $ 48,394 $ (52,166) $ 589,058 Cost of Goods Sold 398,897 100,529 35,939 (51,091) 484,274 -------------- -------------- -------------- -------------- -------------- Gross Profit 82,055 11,349 12,455 (1,075) 104,784 Engineering, Selling, General and Administrative Expenses 63,624 8,698 7,245 -- 79,567 -------------- -------------- -------------- -------------- -------------- Income from Operations 18,431 2,651 5,210 (1,075) 25,217 Interest Expense (19,914) (6) (340) -- (20,260) Other Income, Net 6,587 1,066 209 (5,672) 2,190 -------------- -------------- -------------- -------------- -------------- Income Before Income Taxes 5,104 3,711 5,079 (6,747) 7,147 Provision for Income Taxes 387 1,320 723 -- 2,430 -------------- -------------- -------------- -------------- -------------- Net Income $ 4,717 $ 2,391 $ 4,356 $ (6,747) $ 4,717 ============== ============== ============== ============== ==============
13 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES STATEMENT OF INCOME For the Three Months Ended December 30, 2001
Briggs & Stratton Guarantor Non-Guarantor Corporation Subsidiary Subsidiaries Eliminations Consolidated ----------------- -------------- -------------- -------------- -------------- Net Sales $ 300,687 $ 38,638 $ 17,529 $ (23,300) $ 333,554 Cost of Goods Sold 250,885 36,421 13,646 (22,257) 278,695 -------------- -------------- -------------- -------------- -------------- Gross Profit 49,802 2,217 3,883 (1,043) 54,859 Engineering, Selling, General and Administrative Expenses 33,120 4,108 3,432 -- 40,660 -------------- -------------- -------------- -------------- -------------- Income (Loss) from Operations 16,682 (1,891) 451 (1,043) 14,199 Interest Expense (10,934) (15) (186) 34 (11,101) Other (Expense) Income, Net (1,714) 38 157 2,081 562 -------------- -------------- -------------- -------------- -------------- Income (Loss) Before Provision (Credit) for Income Taxes 4,034 (1,868) 422 1,072 3,660 Provision (Credit) for Income Taxes 1,655 (641) 267 -- 1,281 -------------- -------------- -------------- -------------- -------------- Net Income (Loss) $ 2,379 $ (1,227) $ 155 $ 1,072 $ 2,379 ============== ============== ============== ============== ==============
STATEMENT OF INCOME For the Six Months Ended December 30, 2001
Briggs & Stratton Guarantor Non-Guarantor Corporation Subsidiary Subsidiaries Eliminations Consolidated ----------------- -------------- -------------- -------------- -------------- Net Sales $ 470,145 $ 92,608 $ 36,105 $ (46,513) $ 552,345 Cost of Goods Sold 411,145 83,889 28,283 (44,815) 478,502 -------------- -------------- -------------- -------------- -------------- Gross profit 59,000 8,719 7,822 (1,698) 73,843 Engineering, Selling, General and Administrative Expenses 61,556 9,026 6,602 -- 77,184 -------------- -------------- -------------- -------------- -------------- Income (Loss) from Operations (2,556) (307) 1,220 (1,698) (3,341) Interest Expense (21,142) (39) (426) 84 (21,523) Other Income, Net 63 83 465 1,104 1,715 -------------- -------------- -------------- -------------- -------------- Income (Loss) Before Provision (Credit) for Income Taxes (23,635) (263) 1,259 (510) (23,149) Provision (Credit) for Income Taxes (8,590) (84) 570 -- (8,104) -------------- -------------- -------------- -------------- -------------- Net Income (Loss) $ (15,045) $ (179) $ 689 $ (510) $ (15,045) ============== ============== ============== ============== ==============
14 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES STATEMENT OF CASH FLOWS For the Six Months Ended December 29, 2002
Briggs & Stratton Guarantor Non-Guarantor Corporation Subsidiary Subsidiaries Eliminations Consolidated ----------------- -------------- -------------- -------------- -------------- Net Cash (Used in) Provided by Operating Activities $ (218,265) $ 11,127 $ 5,191 $ -- $ (201,947) -------------- -------------- -------------- -------------- -------------- Cash Flows from Investing Activities: Additions to Plant and Equipment (18,334) (1,368) (206) -- (19,908) Proceeds Received on Disposition of Plant and Equipment 104 3,086 42 -- 3,232 Other, Net 5,655 -- 675 -- 6,330 -------------- -------------- -------------- -------------- -------------- Net Cash (Used in) Provided by Investing Activities (12,575) 1,718 511 -- (10,346) -------------- -------------- -------------- -------------- -------------- Cash Flows from Financing Activities: Net Borrowings (Repayments) on Loans and Notes Payable 40,339 (11,529) (4,887) -- 23,923 Dividends (6,927) -- -- -- (6,927) -------------- -------------- -------------- -------------- -------------- Net Cash (Used in) Provided by Financing Activities 33,412 (11,529) (4,887) -- 16,996 -------------- -------------- -------------- -------------- -------------- Effect of Exchange Rate Changes -- 430 1,144 -- 1,574 -------------- -------------- -------------- -------------- -------------- Net (Decrease) Increase in Cash and Cash Equivalents (197,428) 1,746 1,959 -- (193,723) Cash and Cash Equivalents, Beginning 211,610 953 3,382 -- 215,945 -------------- -------------- -------------- -------------- -------------- Cash and Cash Equivalents, Ending $ 14,182 $ 2,699 $ 5,341 $ -- $ 22,222 ============== ============== ============== ============== ==============
15 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES STATEMENT OF CASH FLOWS For the Six Months Ended December 30, 2001
Briggs & Stratton Guarantor Non-Guarantor Corporation Subsidiary Subsidiaries Eliminations Consolidated ---------------- -------------- -------------- -------------- -------------- Net Cash (Used in) Provided by Operating Activities $ (191,883) $ 3,747 $ (94) $ (1,978) $ (190,208) -------------- -------------- -------------- -------------- -------------- Cash Flows from Investing Activities: Additions to Plant and Equipment (24,850) (1,484) (323) -- (26,657) Proceeds Received on Disposition of Plant and Equipment 536 -- 11 -- 547 Other, Net 1,862 -- 564 -- 2,426 -------------- -------------- -------------- -------------- -------------- Net Cash (Used in) Provided by Investing Activities (22,452) (1,484) 252 -- (23,684) -------------- -------------- -------------- -------------- -------------- Cash Flows from Financing Activities: Net Borrowings (Repayments) on Loans and Notes Payable 146,773 (513) 1,866 -- 148,126 Issuance Cost of Long-Term Debt (327) -- -- -- (327) Dividends (6,696) -- (1,978) 1,978 (6,696) Proceeds from Exercise of Stock Options 95 -- -- -- 95 -------------- -------------- -------------- -------------- -------------- Net Cash (Used in) Provided by Financing Activities 139,845 (513) (112) 1,978 141,198 -------------- -------------- -------------- -------------- -------------- Effect of Exchange Rate Changes -- 277 292 -- 569 -------------- -------------- -------------- -------------- -------------- Net (Decrease) Increase in Cash and Cash Equivalents (74,490) 2,027 338 -- (72,125) Cash and Cash Equivalents, Beginning 85,282 683 2,778 -- 88,743 -------------- -------------- -------------- -------------- -------------- Cash and Cash Equivalents, Ending $ 10,792 $ 2,710 $ 3,116 $ -- $ 16,618 ============== ============== ============== ============== ==============
16 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 SALES Net sales for the second quarter of fiscal 2003 totaled $353 million, an increase of $19 million or 6% when compared to fiscal 2002. The increase was the result of a $20 million increase in Power Products sales between years. Second quarter net sales for the Engine Segment were $306 million in fiscal 2003 and 2002; reflecting flat engine unit shipments between years. Service component sales were down approximately $7 million due to a change in preseason sales programs, which will result in sales later this year as compared to last year. The strengthening of the Euro and price increases experienced during the quarter offset lower service sales. Second quarter net sales of Power Products were $60 million versus $40 million in the same period a year ago. This increase was driven by generator sales volume associated with hurricane and ice storm activity in the second quarter. Pressure washer unit sales were essentially flat between years. Net sales for the six months ended December 29, 2002 totaled $589 million, an increase of $37 million or 7% compared to the first six months of the prior year. This increase was the result of the $20 million in increased generator sales, an increase in engine unit shipments, a strengthening Euro and price increases, offset by lower service component sales of $8 million. Six-month sales for the Engine Segment were $502 million in fiscal 2003 versus $483 million in the prior year. The increase in sales is attributable to an 8% increase in engine unit sales experienced in the first quarter. Power Products' net sales for the first six months were $113 million compared to $93 million in the prior year. The increase is attributable entirely to the increased generator sales in the second quarter. GROSS PROFIT MARGIN The gross profit margin increased to 19% from 16% in the preceding year's second quarter. This resulted in a higher gross profit of approximately $12 million. This increase is due to $9 million of higher gross margins in the Engine Segment and $3 million of improved gross margin for Power Products. Gross margins in the second quarter for the Engine Segment were adversely affected in the prior year by a $5 million expense charge for an early retirement incentive plan. In addition to the elimination of this charge in fiscal 2003, the second quarter margins improved due to price increases and the impact of the strengthening Euro on international sales. Power Products' gross margin increased to 10% in the current quarter from 7% in the second quarter of fiscal 2002. The increased margin is attributable to a 79% increase in generator production volume in the second quarter due to hurricane and ice storm activity offset by an unfavorable mix of generators sold. The gross profit margin for the six-month period increased to 18% from 13% in the preceding year, resulting in a $31 million higher gross margin. The Engine Segment had a higher gross margin of $28 million and the Power Products Segment had a $3 million increase. 17 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES The six-month increase in the Engine Segment margin is attributable to the 56% increase in production experienced in the first quarter, the elimination of the $5 million charge for the early retirement incentive program in the second quarter, and a strengthening Euro. The increased margin in the Power Products Segment is essentially attributable to increased production volume as discussed above for the second quarter. ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Engineering, selling, general and administrative expenses were $41 million in the second fiscal quarter of 2003 and 2002. This is reflective of a $2 million reduction in pension income and $1 million increase in advertising expense, offset by the elimination of a $3 million charge for an early retirement incentive program taken in the prior year. This category increased $2 million in the comparative six-month periods. The increase is attributable to a reduction in pension income of $3 million and increased advertising and employee benefit costs of $2 million, offset by the elimination of the early retirement charge of $3 million taken in the second quarter of last year. INTEREST EXPENSE Interest expense decreased $1 million in the second quarter and six-month comparisons. The decrease reflects reduced borrowings and the impact of a fixed to variable interest rate swap on $50 million of our 8.875% senior notes due March 15, 2011. PROVISION FOR INCOME TAXES The effective tax rate used in both the second quarter and six-month periods for the current year was 34%. This is management's estimate of what the rate will be for the entire 2003 fiscal year. Last year's rate was 35% for the second quarter and six-month periods. LIQUIDITY AND CAPITAL RESOURCES Cash used in operating activities for the six-month period of fiscal 2003 was $202 million, an increase of $12 million from fiscal 2002. This reflects an increase in net income of $20 million offset by increased working capital requirements. The increase in working capital requirements was driven by increased inventory levels and a reduction in accounts payable and accrued liabilities. The increase was partially offset by changes in receivable balances between fiscal years, attributable to timing. In the six-month period of fiscal 2003, we used $10 million in investing activities, compared to $24 million in fiscal 2002. Additions to plant and equipment comprise substantially all of the investing activity in both years. Lower spending in the first half of the current year is attributable to the timing of capital projects. Net cash provided by financing activities was $17 million in fiscal 2003 and $141 million in fiscal 2002. The decrease is attributable entirely to a reduction in short-term working capital borrowings versus the prior year. FUTURE LIQUIDITY AND CAPITAL RESOURCES We have remaining authorization to buy up to 1.8 million shares of our 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 two quarters of fiscal 2003 and do not anticipate repurchasing any shares in fiscal 2003. 18 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES Management expects cash outflows for capital expenditures to total approximately $50-$55 million in fiscal 2003. These anticipated expenditures provide for continued investments in equipment and new products. These expenditures will be funded using available cash and short-term borrowings. In October 2002, we began managing our debt portfolio using interest rate swaps to achieve a desired mix of fixed and floating rates. We currently have interest rate swaps relating to our 8.875% senior notes (approximately $270 million) due in 2011. The swaps convert $50 million of notional amounts from a fixed rate to a floating rate, (libor-set-in-arrears) and mature in 2011. The floating rate on the interest rate swap at December 29, 2002 was 5.75%. Management believes that available cash, cash generated from operations, existing lines of credit and access to debt markets will be adequate to fund our capital requirements for the foreseeable future. CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS This report contains certain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. The words "anticipate", "believe", "estimate", "expect", "intend", "may", "objective", "plan", "seek", "think", "will", and similar expressions are intended to identify forward-looking statements. The forward-looking statements are based on the Company's current views and assumptions and involve risks and uncertainties that include, among other things, our ability to successfully forecast demand for our products and appropriately adjust our manufacturing and inventory levels; changes in our operating expenses; changes in interest rates; the effects of weather on the purchasing patterns of consumers and original equipment manufacturers (OEMs); actions of engine manufacturers and OEMs with whom we compete; the seasonal nature of our business; changes in laws and regulations, including environmental and accounting standards; work stoppages or other consequences of any deterioration in our employee relations; work stoppages by other unions that affect the ability of suppliers or customers to manufacture; acts of war or terrorism that may disrupt our business operations or those of our customers and suppliers; changes in customer and OEM demand; changes in prices of purchased raw materials and parts that we purchase; changes in domestic economic conditions, including housing starts and changes in consumer attitudes and disposable income; changes in foreign economic conditions, including currency rate fluctuations; new facts that come to light in the future course of litigation proceedings which could affect our assessment of those matters; and other factors that may be disclosed from time to time in our SEC filings or otherwise. Some or all of the factors may be beyond our control. We caution you that any forward-looking statement reflects only our belief at the time the statement is made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There have been no material changes since the September 17, 2002, filing of the Company's Annual Report on Form 10-K. ITEM 4. CONTROLS AND PROCEDURES We maintain a system of internal controls and procedures designed to provide reasonable assurance as to the reliability of our published financial statements and other disclosures included in this report. Based on their evaluation, as of a date within 90 days of the filing date of this Form 10-Q, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rule 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended) are effective. There have been no significant changes in internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation. 19 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits.
Exhibit Number Description - ------- ----------- 4 First Amendment To Rights Agreement* 99.1 Certification of Principal Executive Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002* 99.2 Certification of Principal Financial Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002*
*Filed herewith (b) Reports on Form 8-K. None. 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: February 12, 2003. /s/ James E. Brenn ------------------- James E. Brenn Senior Vice President and Chief Financial Officer and Duly Authorized Officer 20 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER CEO/CFO CERTIFICATIONS PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002 Certification of Principal Executive Officer I, John S. Shiely, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Briggs & Stratton Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: (a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and (c) Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date. 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of its board of directors (or persons performing the equivalent functions): (a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls. 21 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES 6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: February 12, 2003 /s/ John S. Shiely ------------------ John S. Shiely, Chairman, President and Chief Executive Officer - Principal Executive Officer 22 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER CEO/CFO CERTIFICATIONS PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002 Certification of Principal Financial Officer I, James E. Brenn, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Briggs & Stratton Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: (a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and (c) Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date. 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of its board of directors (or persons performing the equivalent functions): (a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls. 23 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES 6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: February 12, 2003 /s/ James E. Brenn ------------------ James E. Brenn, Senior Vice President and Chief Financial Officer - Principal Financial Officer and Chief Accounting Officer 24 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES EXHIBIT INDEX
Exhibit Number Description - ------ ----------- 4 First Amendment To Rights Agreement 99.1 Certification of Principal Executive Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002 99.2 Certification of Principal Financial Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002
EX-4 3 c74606exv4.txt FIRST AMENDMENT TO RIGHTS AGREEMENT EXHIBIT 4 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES FIRST AMENDMENT TO RIGHTS AGREEMENT This First Amendment to Rights Agreement (this "Amendment"), dated and effective as of November 25, 2002, is made and entered into by and among U.S. Bank National Association, a national banking association ("U.S. Bank"), Briggs & Stratton Corporation, a Wisconsin corporation (the "Company"), and National City Bank, a national banking association ("National City"). RECITALS: WHEREAS, the Company and U.S. Bank (as successor to Firstar Trust Company) are parties to that certain Rights Agreement, dated as of August 7, 1996 (the "Rights Agreement"), pursuant to which U.S. Bank undertook the duties and obligations of the Rights Agent (as defined in the Rights Agreement) under the terms and conditions of the Rights Agreement; WHEREAS, the Company desires to discharge U.S. Bank from its duties as Rights Agent under the Rights Agreement and to appoint National City as a successor Rights Agent under the Rights Agreement, and National City desires to undertake and perform the duties and obligations of the Rights Agent under the terms and conditions of the Rights Agreement; WHEREAS, in connection with the discharge of U.S. Bank as Rights Agent and the appointment of National City as successor Rights Agent, the Company, U.S. Bank and National City desire to amend Section 21 of the Rights Agreement in certain respects. AGREEMENT: NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows: 1. Amendment of Rights Agreement. The Rights Agreement shall be amended as follows: a. Substitution of National City Bank. "National City Bank" shall be substituted throughout the Rights Agreement and Exhibits to the Rights Agreement for "Firstar Trust Company," including all abbreviations of "Firstar Trust Company." Further, from and after November 25, 2002, each and every reference in the Rights Agreement to "Rights Agent" shall be deemed a reference to National City. b. Section 1(d). Section 1(d) is hereby amended by deleting the definition of "Business Day" in its entirety and substituting the following definition: "(d) "Business Day" shall mean any day other than a Saturday, a Sunday, or a day on which the New York Stock Exchange or banking institutions in Wisconsin are generally authorized or obligated by law or executive order to close." c. Section 21. Section 21 of the Rights Agreement is amended and restated in its entirety to read as follows: 1 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES "Section 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Agreement upon 30 days' notice in writing mailed to the Company and to each transfer agent of the Common Shares by registered or certified mail and, if separate Right Certificates have been issued as of the date of such notice as contemplated by Section 3 hereof, to the holders of the Right Certificates by first-class mail. The Company may remove the Rights Agent or any successor Rights Agent upon 30 days' notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Common Shares by registered or certified mail, and, if separate Right Certificates have been issued as of the date of such notice as contemplated by Section 3 hereof, to the holders of the Right Certificates by first-class mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to make such appointment within a period of 30 days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Right Certificate (who shall, with such notice, submit his Right Certificate for inspection by the Company), then the registered holder of any Right Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall be (a) a corporation organized and doing business under the laws of the United States or under the laws of any state of the United States so long as such corporation is authorized to do business in the State of New York or the State of Wisconsin, in good standing, which is authorized under such laws to exercise corporate trust or stock transfer powers and is subject to supervision or examination by federal or state authority and which has at the time of its appointment as Rights Agent a combined capital and surplus of at least $50 million, or (b) an Affiliate of a corporation described in clause (a) of this sentence. After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment the Company shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Common Shares, and, if separate Right Certificates have been issued as of such effective date as contemplated by Section 3 hereof, mail a notice thereof in writing to the registered holders of the Right Certificates. Failure to give any notice provided for in this Section 21, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be." d. Amendment of Section 26 of Rights Agreement. Section 26 of the Rights Agreement is amended and restated in its entirety to read as follows: "Section 26. Notices. Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by the holder of any Right Certificate to or on the Company shall be sufficiently given or made if sent by 2 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES first-class mail, postage prepaid, addressed (until another address is filed in writing with the Rights Agent) as follows: Briggs & Stratton Corporation 12301 West Wirth Street Wauwatosa, Wisconsin 53222 Attn: Corporate Secretary Subject to the provisions of Section 21 hereof, any notice or demand authorized by this Agreement to be given or made by the Company or by the holder of any Right Certificate to or on the Rights Agent shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Company) as follows: National City Bank 1900 East 9th Street Cleveland, Ohio 44114 Attn: Corporate Trust Department Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the holder of any Right Certificate shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books of the Company." 2. Appointment. The Company appoints National City as a successor Rights Agent under the Rights Agreement, as amended pursuant to Section 1 above (as so amended, the "Amended Rights Agreement"). 3. Assumption. National City accepts the appointment as agent for the Company and the holders of Rights (as defined in the Amended Rights Agreement) under the Amended Rights Agreement, and National City assumes and agrees to perform all of the duties and obligations of the Rights Agent under the terms and conditions of the Amended Rights Agreement. 4. Section 21 Notice. The Company, U.S. Bank and National City each waive any requirements of prior written notice of a change of the Rights Agent under the Rights Agreement. This Amendment constitutes notice to U.S. Bank, as the Company's transfer agent, pursuant to Section 21 of the Rights Agreement that the Company has appointed National City as the successor Rights Agent to U.S. Bank and that U.S. Bank is discharged as such Rights Agent. 5. No Further Amendment. Except as specifically supplemented and amended, changed or modified in Section 1 above, the Rights Agreement shall be unaffected by this Amendment and shall remain in full force and effect. 6. Governing Law. This Amendment shall be deemed to be a contract made under the laws of the State of Wisconsin and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts to be made and performed entirely within such State. 3 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES 7. Counterparts. This Amendment may be executed in any number of counterparts, and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. 8. Descriptive Headings. Descriptive headings of the Sections of this Amendment are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions of this Amendment. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and attested, all as of the day and year first above written. BRIGGS & STRATTON CORPORATION U.S. BANK NATIONAL ASSOCIATION By: /s/ Robert F. Heath By: /s/ Robert Dechant -------------------------------- -------------------------------- Name: Robert F. Heath Name: Robert Dechant ------------------------- ---------------------- Vice President, General Title: Counsel and Secretary Title: Vice President ------------------------- ---------------------- NATIONAL CITY BANK By: /s/ Victor W. LaTessa ---------------------- Name: Victor W. LaTessa ------------------------- Title: Vice President ------------------------- 4 EX-99.1 4 c74606exv99w1.txt CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER EXHIBIT 99.1 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Briggs & Stratton Corporation (the "Company") on Form 10-Q for the quarter ended December 29, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John S. Shiely, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ John S. Shiely - ------------------------------------ John S. Shiely Chief Executive Officer February 12, 2003 This certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. EX-99.2 5 c74606exv99w2.txt CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER EXHIBIT 99.2 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Briggs & Stratton Corporation (the "Company") on Form 10-Q for the quarter ended December 29, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, James E. Brenn, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ James E. Brenn - ------------------------------------ James E. Brenn Chief Financial Officer February 12, 2003 This certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. -----END PRIVACY-ENHANCED MESSAGE-----