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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________ 
FORM 10-Q
_____________________________________ 
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 30, 201429, 2015
OR 
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 1-1370

BRIGGS & STRATTON CORPORATION
(Exact name of registrant as specified in its charter)
_____________________________________ 
Wisconsin 39-0182330
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
12301 West Wirth Street, Wauwatosa, Wisconsin 53222
(Address of Principal Executive Offices) (Zip Code)
(414) 259-5333
(Registrant’s telephone number, including area code)
____________________________________________ 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.        Yes  x    No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerxAccelerated filer¨
Non-accelerated filer
o¨  (Do not check if a smaller reporting company)
Smaller reporting company¨
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes  ¨    No x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Class Outstanding at May 2, 20141, 2015
COMMON STOCK, par value $0.01 per share 46,724,22144,599,944 Shares


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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
INDEX
 
  Page No.
  
PART I – FINANCIAL INFORMATION 
   
Item 1. 
   
 
Condensed Consolidated Balance Sheets – March 30, 201429, 2015 and June 30, 201329, 2014
   
 
Condensed Consolidated Statements of Operations – Three and Nine Months Ended March 30, 201429, 2015 and March 31, 201330, 2014
   
 
   
 
Condensed Consolidated Statements of Cash Flows – Nine Months Ended March 30, 201429, 2015 and March 31, 201330, 2014
   
 
   
Item 2.
   
Item 3.
   
Item 4.
  
PART II – OTHER INFORMATION 
   
Item 1.
   
Item 1A.
   
Item 2.
   
Item 6.
  
  

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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)


ASSETS
 
        
 March 30,
2014
 June 30,
2013
 March 29,
2015
 June 29,
2014
CURRENT ASSETS:        
Cash and Cash Equivalents $107,238
 $188,445
 $49,694
 $194,668
Accounts Receivable, Net 338,834
 190,800
 315,725
 220,590
Inventories -        
Finished Products and Parts 279,901
 306,104
 323,059
 268,116
Work in Process 109,372
 96,751
 115,145
 102,431
Raw Materials 6,031
 5,240
 8,692
 5,556
Total Inventories 395,304
 408,095
 446,896
 376,103
Deferred Income Tax Asset 46,697
 47,534
 48,958
 48,958
Prepaid Expenses and Other Current Assets 24,579
 24,107
 35,463
 30,016
Total Current Assets 912,652
 858,981
 896,736
 870,335
OTHER ASSETS:        
Goodwill 147,055
 147,352
 156,278
 144,522
Investments 25,382
 19,764
 29,354
 27,137
Debt Issuance Costs 4,916
 4,710
 3,950
 4,671
Other Intangible Assets, Net 85,728
 87,980
 95,405
 80,317
Long-Term Deferred Income Tax Asset 27,432
 27,544
 129
 15,178
Other Long-Term Assets, Net 14,141
 14,025
 12,445
 10,539
Total Other Assets 304,654
 301,375
 297,561
 282,364
PLANT AND EQUIPMENT:        
Cost 1,018,796
 1,019,355
 1,028,368
 1,035,848
Less - Accumulated Depreciation 740,708
 732,160
 728,136
 738,841
Total Plant and Equipment, Net 278,088
 287,195
 300,232
 297,007
TOTAL ASSETS $1,495,394
 $1,447,551
 $1,494,529
 $1,449,706


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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
(In thousands, except per share data)
(Unaudited)
 

LIABILITIES & SHAREHOLDERS’ INVESTMENT
 
        
 March 30,
2014
 June 30,
2013
 March 29,
2015
 June 29,
2014
CURRENT LIABILITIES:        
Accounts Payable $186,652
 $143,189
 $197,476
 $169,271
Short-Term Debt 
 300
 60,100
 
Accrued Liabilities 153,284
 131,266
 158,644
 133,916
Total Current Liabilities 339,936
 274,755
 416,220
 303,187
OTHER LIABILITIES:        
Accrued Pension Cost 138,242
 150,131
 107,992
 126,529
Accrued Employee Benefits 23,616
 23,458
 24,487
 24,491
Accrued Postretirement Health Care Obligation 64,546
 72,695
 51,750
 59,290
Deferred Income Tax Liability 3,414
 
Other Long-Term Liabilities 38,385
 33,574
 40,822
 38,775
Long-Term Debt 225,000
 225,000
 225,000
 225,000
Total Other Liabilities 489,789
 504,858
 453,465
 474,085
SHAREHOLDERS’ INVESTMENT:        
Common Stock - Authorized 120,000 shares, $.01 par value, issued 57,854 shares 579
 579
 579
 579
Additional Paid-In Capital 77,234
 77,004
 76,332
 78,466
Retained Earnings 1,046,307
 1,042,917
 1,056,981
 1,048,466
Accumulated Other Comprehensive Loss (210,352) (224,928) (218,840) (195,257)
Treasury Stock at cost, 10,969 and 9,901 shares, respectively (248,099) (227,634)
Treasury Stock at cost, 13,174 and 11,536 shares, respectively (290,208) (259,820)
Total Shareholders’ Investment 665,669
 667,938
 624,844
 672,434
TOTAL LIABILITIES AND SHAREHOLDERS’ INVESTMENT $1,495,394
 $1,447,551
 $1,494,529
 $1,449,706


The accompanying notes are an integral part of these statements.
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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 
 Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended
 March 30,
2014
 March 31,
2013
 March 30,
2014
 March 31,
2013
 March 29,
2015
 March 30,
2014
 March 29,
2015
 March 30,
2014
NET SALES $628,403
 $637,259
 $1,362,299
 $1,385,345
 $619,015
 $628,403
 $1,355,931
 $1,362,299
COST OF GOODS SOLD 498,927
 503,826
 1,106,148
 1,122,804
 492,847
 498,927
 1,080,883
 1,106,148
RESTRUCTURING CHARGES (774) 6,645
 4,704
 14,970
 7,088
 (774) 20,780
 4,704
Gross Profit 130,250
 126,788
 251,447
 247,571
 119,080
 130,250
 254,268
 251,447
ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 74,863
 70,668
 215,402
 205,556
 72,714
 74,863
 216,767
 215,402
RESTRUCTURING CHARGES 
 
 425
 3,435
 943
 
 2,481
 425
Income from Operations 55,387
 56,120
 35,620
 38,580
 45,423
 55,387
 35,020
 35,620
INTEREST EXPENSE (4,720) (4,717) (13,823) (13,802) (5,233) (4,720) (14,641) (13,823)
OTHER INCOME, Net 2,295
 1,806
 6,138
 4,660
 2,323
 2,295
 6,749
 6,138
Income Before Income Taxes 52,962
 53,209
 27,935
 29,438
 42,513
 52,962
 27,128
 27,935
PROVISION FOR INCOME TAXES 13,809
 14,693
 7,429
 8,084
 8,592
 13,809
 1,542
 7,429
NET INCOME $39,153
 $38,516
 $20,506
 $21,354
 $33,921
 $39,153
 $25,586
 $20,506
                
EARNINGS PER SHARE                
Basic $0.82
 $0.79
 $0.43
 $0.44
 $0.75
 $0.82
 $0.56
 $0.43
Diluted 0.82
 0.78
 0.43
 0.44
 0.75
 0.82
 0.56
 0.43
                
WEIGHTED AVERAGE SHARES OUTSTANDING                
Basic 46,129
 47,336
 46,549
 47,126
 44,160
 46,129
 44,605
 46,549
Diluted 46,245
 47,709
 46,615
 47,291
 44,241
 46,245
 44,656
 46,615
                
DIVIDENDS PER SHARE $0.12
 $0.12
 $0.36
 $0.36
 $0.125
 $0.12
 $0.375
 $0.36


The accompanying notes are an integral part of these statements.
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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)


 
 Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended
 March 30,
2014
 March 31,
2013
 March 30,
2014
 March 31,
2013
 March 29,
2015
 March 30,
2014
 March 29,
2015
 March 30,
2014
Net Income $39,153
 $38,516
 $20,506
 $21,354
 $33,921
 $39,153
 $25,586
 $20,506
Other Comprehensive Income:        
Other Comprehensive Income (Loss):        
Cumulative Translation Adjustments 2,212
 3,022
 (1,160) 9,830
 (12,925) 2,212
 (34,045) (1,160)
Unrealized Gain on Derivative Instruments, Net of Tax 1,381
 1,611
 2,568
 970
Unrealized Gain (Loss) on Derivative Instruments, Net of Tax (173) 1,381
 3,333
 2,568
Unrecognized Pension & Postretirement Obligation, Net of Tax 4,381
 5,967
 13,168
 32,823
 2,377
 4,381
 7,129
 13,168
Other Comprehensive Income 7,974
 10,600
 14,576
 43,623
Other Comprehensive Income (Loss) (10,721) 7,974
 (23,583) 14,576
Total Comprehensive Income $47,127
 $49,116
 $35,082
 $64,977
 $23,200
 $47,127
 $2,003
 $35,082



The accompanying notes are an integral part of these statements.
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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
 Nine Months Ended Nine Months Ended
 March 30,
2014
 March 31,
2013
 March 29,
2015
 March 30,
2014
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net Income $20,506
 $21,354
 $25,586
 $20,506
Adjustments to Reconcile Net Income to Net Cash Used in Operating Activities:        
Depreciation and Amortization 38,333
 41,234
 39,302
 38,333
Stock Compensation Expense 5,822
 5,244
 4,840
 5,822
Loss on Disposition of Plant and Equipment 462
 293
 300
 462
Credit for Deferred Income Taxes (8,705) (16,866)
Earnings of Unconsolidated Affiliates (4,277) (3,011)
Provision (Credit) for Deferred Income Taxes 914
 (8,705)
Equity in Earnings of Unconsolidated Affiliates (5,005) (4,277)
Dividends Received from Unconsolidated Affiliates 4,069
 4,636
 4,381
 4,069
Cash Contributions to Qualified Pension Plans 
 (29,363)
Non-Cash Restructuring Charges 3,386
 11,930
 12,445
 3,386
Change in Operating Assets and Liabilities:        
Accounts Receivable (147,738) (167,435) (88,898) (147,738)
Inventories 11,713
 (19,873) (58,715) 11,713
Other Current Assets (9,083) 10,571
 5,917
 (9,083)
Accounts Payable, Accrued Liabilities and Income Taxes 76,335
 70,273
 18,844
 76,335
Other, Net (4,856) (2,766) (12,046) (4,856)
Net Cash Used in Operating Activities (14,033) (73,779) (52,135) (14,033)
CASH FLOWS FROM INVESTING ACTIVITIES:        
Additions to Plant and Equipment (29,471) (26,301) (44,157) (29,471)
Proceeds Received on Disposition of Plant and Equipment 109
 6,705
 318
 109
Cash Paid for Acquisition, Net of Cash Acquired 
 (59,627) (59,855) 
Other, Net (250) 
Net Cash Used in Investing Activities (29,362) (79,223) (103,944) (29,362)
CASH FLOWS FROM FINANCING ACTIVITIES:        
Repayments on Short-Term Debt (300) (900) 
 (300)
Net Borrowings on Revolver 
 35,350
 60,100
 
Debt Issuance Costs (949) 
 
 (949)
Treasury Stock Purchases (30,066) (23,057) (39,560) (30,066)
Stock Option Exercise Proceeds and Tax Benefits 4,361
 19,613
 3,921
 4,361
Cash Dividends Paid (11,387) (11,499) (11,374) (11,387)
Net Cash Provided by (Used in) Financing Activities (38,341) 19,507
 13,087
 (38,341)
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 529
 (12) (1,982) 529
NET DECREASE IN CASH AND CASH EQUIVALENTS (81,207) (133,507) (144,974) (81,207)
CASH AND CASH EQUIVALENTS, Beginning 188,445
 156,075
 194,668
 188,445
CASH AND CASH EQUIVALENTS, Ending $107,238
 $22,568
 $49,694
 $107,238


The accompanying notes are an integral part of these statements.
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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. General Information
 
The accompanying unaudited condensed consolidated 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 statement of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but also does not include all disclosures required by accounting principles generally accepted in the United States. However, in the opinion of Briggs & Stratton Corporation (the Company), adequate disclosures have been presented to prevent the information from being misleading, and all adjustments necessary to fairly present the results of operations and financial position have been included. All of these adjustments are of a normal recurring nature, except as otherwise noted.

Interim results are not necessarily indicative of results for a full year. The information included in these condensed consolidated financial statements should be read in conjunction with the financial statements and the notes thereto that were included in the Company's latest Annual Report on Form 10-K.
2. New Accounting Pronouncements

In February 2013,May 2014, the Financial Accounting StandardsStandard Board (“FASB”("FASB") issued Accounting Standards Update (“ASU”("ASU") No. 2013-02, "Comprehensive Income2014-09, "Revenue from Contracts with Customers (Topic 220): Reporting606)." The core principle of Amounts Reclassified Out of Accumulated Other Comprehensive Income," which requiresthe guidance is that an entity should recognize revenue to present significant reclassifications outdepict the transfer of accumulated other comprehensive income bypromised goods or services to customers in an amount that reflects the respective line items of net income ifconsideration to which the amount being reclassified is required under U.S. GAAPentity expects to be reclassifiedentitled in its entirety to net income. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety from accumulated other comprehensive income to net income in the same reporting period, an entity is required to cross-reference other disclosures required under U.S. GAAP that provide additional detail aboutexchange for those amounts.goods or services. This updateguidance is effective for fiscal years, and interimannual reporting periods within those fiscal years, beginning after December 15, 2012 with earlier adoption2016, including interim periods within that reporting period, under either full or modified retrospective adoption. Early application is not permitted. The amendments inManagement is currently assessing the ASU should be applied prospectively. The Company adopted ASU No. 2013-02 at the beginning of fiscal 2014, and the required new disclosures are presented in Note 3. The adoptionpotential impact of this ASU did not have any impactnew accounting pronouncement on the Company's results of operations, financial position, orand cash flow, as the ASU solely relates to disclosures.

In July 2012, the FASB issued ASU No. 2012-02, "Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment,"which permits an entity to first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired before performing quantitative impairment testing. The amendments do not change the measurement of impairment losses. This update is effective for fiscal years beginning after September 15, 2012, with early adoption permitted. The Company adopted ASU No. 2012-02 at the beginning of fiscal 2014. The adoption of this ASU did not have any impact on the Company’s results of operations, financial position or cash flow.

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3. Accumulated Other Comprehensive Income (Loss)
The following tables set forth the changes in accumulated other comprehensive income (loss) (in thousands):
  Three Months Ended March 30, 2014
  Cumulative Translation Adjustments Derivative Financial Instruments Pension and Postretirement Benefit Plans Total
Beginning Balance $8,514
 $(2,486) $(224,354) $(218,326)
Other Comprehensive Income (Loss) Before Reclassification 2,212
 323
 
 2,535
Income Tax Benefit (Expense) 
 (124) 
 (124)
Net Other Comprehensive Income (Loss) Before Reclassifications 2,212
 199
 
 2,411
Reclassifications:       

Realized (Gains) Losses - Foreign Currency Contracts (1) 
 448
 
 448
Realized (Gains) Losses - Commodity Contracts (1) 
 1,165
 
 1,165
Realized (Gains) Losses - Interest Rate Swaps (1) 
 302
 
 302
Amortization of Prior Service Costs (Credits) (2) 
 
 (679) (679)
Amortization of Actuarial Losses (2) 
 
 7,780
 7,780
Total Reclassifications Before Tax 
 1,915
 7,101
 9,016
Income Tax Expense (Benefit) 
 (733) (2,720) (3,453)
Net Reclassifications 
 1,182
 4,381
 5,563
Other Comprehensive Income (Loss) 2,212
 1,381
 4,381
 7,974
Ending Balance $10,726
 $(1,105) $(219,973) $(210,352)













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 Nine Months Ended March 30, 2014 Three Months Ended March 29, 2015
 Cumulative Translation Adjustments Derivative Financial Instruments Pension and Postretirement Benefit Plans Total Cumulative Translation Adjustments Derivative Financial Instruments Pension and Postretirement Benefit Plans Total
Beginning Balance $11,886
 $(3,673) $(233,141) $(224,928) $(8,067) $2,422
 $(202,474) $(208,119)
Other Comprehensive Income (Loss) Before Reclassification (1,160) (2,757) 
 (3,917) (12,925) 3,824
 
 (9,101)
Income Tax Benefit (Expense) 
 1,056
 
 1,056
 
 (1,453) 
 (1,453)
Net Other Comprehensive Income (Loss) Before Reclassifications (1,160) (1,701) 
 (2,861) (12,925) 2,371
 
 (10,554)
Reclassifications:               

Realized (Gains) Losses - Foreign Currency Contracts (1) 
 1,197
 
 1,197
 
 (4,728) 
 (4,728)
Realized (Gains) Losses - Commodity Contracts (1) 
 4,823
 
 4,823
 
 319
 
 319
Realized (Gains) Losses - Interest Rate Swaps (1) 
 899
 
 899
 
 306
 
 306
Amortization of Prior Service Costs (Credits) (2) 
 
 (2,037) (2,037) 
 
 (644) (644)
Amortization of Actuarial Losses (2) 
 
 23,333
 23,333
 
 
 4,477
 4,477
Total Reclassifications Before Tax 
 6,919
 21,296
 28,215
 
 (4,103) 3,833
 (270)
Income Tax Expense (Benefit) 
 (2,650) (8,128) (10,778) 
 1,559
 (1,456) 103
Net Reclassifications 
 4,269
 13,168
 17,437
 
 (2,544) 2,377
 (167)
Other Comprehensive Income (Loss) (1,160) 2,568
 13,168
 14,576
 (12,925) (173) 2,377
 (10,721)
Ending Balance $10,726
 $(1,105) $(219,973) $(210,352) $(20,992) $2,249
 $(200,097) $(218,840)
(1) Amounts reclassified to net income (loss) are included in net sales or cost of goods sold. See Note 10 for information related to derivative financial instruments.
(2) Amounts reclassified to net income (loss) are included in the computation of net periodic expense, which is presented in cost of goods sold or engineering, selling, general and administrative expenses. See Note 8 for information related to pension and postretirement benefit plans.

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  Three Months Ended March 30, 2014
  Cumulative Translation Adjustments Derivative Financial Instruments Pension and Postretirement Benefit Plans Total
Beginning Balance $8,514
 $(2,486) $(224,354) $(218,326)
Other Comprehensive Income (Loss) Before Reclassification 2,212
 323
 
 2,535
Income Tax Benefit (Expense) 
 (124) 
 (124)
Net Other Comprehensive Income (Loss) Before Reclassifications 2,212
 199
 
 2,411
Reclassifications:        
Realized (Gains) Losses - Foreign Currency Contracts (1) 
 448
 
 448
Realized (Gains) Losses - Commodity Contracts (1) 
 1,165
 
 1,165
Realized (Gains) Losses - Interest Rate Swaps (1) 
 302
 
 302
Amortization of Prior Service Costs (Credits) (2) 
 
 (679) (679)
Amortization of Actuarial Losses (2) 
 
 7,780
 7,780
Total Reclassifications Before Tax 
 1,915
 7,101
 9,016
Income Tax Expense (Benefit) 
 (733) (2,720) (3,453)
Net Reclassifications 
 1,182
 4,381
 5,563
Other Comprehensive Income (Loss) 2,212
 1,381
 4,381
 7,974
Ending Balance $10,726
 $(1,105) $(219,973) $(210,352)
(1) Amounts reclassified to net income (loss) are included in net sales or cost of goods sold. See Note 10 for information related to derivative financial instruments.
(2) Amounts reclassified to net income (loss) are included in the computation of net periodic expense, which is presented in cost of goods sold or engineering, selling, general and administrative expenses. See Note 8 for information related to pension and postretirement benefit plans.



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  Nine Months Ended March 29, 2015
  Cumulative Translation Adjustments Derivative Financial Instruments Pension and Postretirement Benefit Plans Total
Beginning Balance $13,053
 $(1,084) $(207,226) $(195,257)
Other Comprehensive Income (Loss) Before Reclassification (34,045) 10,629
 
 (23,416)
Income Tax Benefit (Expense) 
 (4,039) 
 (4,039)
Net Other Comprehensive Income (Loss) Before Reclassifications (34,045) 6,590
 
 (27,455)
Reclassifications:       

Realized (Gains) Losses - Foreign Currency Contracts (1) 
 (7,025) 
 (7,025)
Realized (Gains) Losses - Commodity Contracts (1) 
 841
 
 841
Realized (Gains) Losses - Interest Rate Swaps (1) 
 931
 
 931
Amortization of Prior Service Costs (Credits) (2) 
 
 (1,933) (1,933)
Amortization of Actuarial Losses (2) 
 
 13,432
 13,432
Total Reclassifications Before Tax 
 (5,253) 11,499
 6,246
Income Tax Expense (Benefit) 
 1,996
 (4,370) (2,374)
Net Reclassifications 
 (3,257) 7,129
 3,872
Other Comprehensive Income (Loss) (34,045) 3,333
 7,129
 (23,583)
Ending Balance $(20,992) $2,249
 $(200,097) $(218,840)
(1) Amounts reclassified to net income (loss) are included in net sales or cost of goods sold. See Note 10 for information related to derivative financial instruments.
(2) Amounts reclassified to net income (loss) are included in the computation of net periodic expense, which is presented in cost of goods sold or engineering, selling, general and administrative expenses. See Note 8 for information related to pension and postretirement benefit plans.

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  Nine Months Ended March 30, 2014
  Cumulative Translation Adjustments Derivative Financial Instruments Pension and Postretirement Benefit Plans Total
Beginning Balance $11,886
 $(3,673) $(233,141) $(224,928)
Other Comprehensive Income (Loss) Before Reclassification (1,160) (2,757) 
 (3,917)
Income Tax Benefit (Expense) 
 1,056
 
 1,056
Net Other Comprehensive Income (Loss) Before Reclassifications (1,160) (1,701) 
 (2,861)
Reclassifications:        
Realized (Gains) Losses - Foreign Currency Contracts (1) 
 1,197
 
 1,197
Realized (Gains) Losses - Commodity Contracts (1) 
 4,823
 
 4,823
Realized (Gains) Losses - Interest Rate Swaps (1) 
 899
 
 899
Amortization of Prior Service Costs (Credits) (2) 
 
 (2,037) (2,037)
Amortization of Actuarial Losses (2) 
 
 23,333
 23,333
Total Reclassifications Before Tax 
 6,919
 21,296
 28,215
Income Tax Expense (Benefit) 
 (2,650) (8,128) (10,778)
Net Reclassifications 
 4,269
 13,168
 17,437
Other Comprehensive Income (Loss) (1,160) 2,568
 13,168
 14,576
Ending Balance $10,726
 $(1,105) $(219,973) $(210,352)
(1) Amounts reclassified to net income (loss) are included in net sales or cost of goods sold. See Note 10 for information related to derivative financial instruments.
(2) Amounts reclassified to net income (loss) are included in the computation of net periodic expense, which is presented in cost of goods sold or engineering, selling, general and administrative expenses. See Note 8 for information related to pension and postretirement benefit plans.

4. Acquisitions

On December 7, 2012, Briggs & Stratton Representação de Motores e Produtos de Força do Brasil Ltda., a wholly-owned subsidiary ofAugust 29, 2014, the Company acquired all of the common stockoutstanding shares of Companhia Caetano Branco (“Branco”Allmand Bros., Inc. ("Allmand") of Sao Jose dos Pinhais, BrazilHoldrege, Nebraska for total cash consideration of $59.6$59.9 million,, net of cash acquired. BrancoThe total cash consideration, net of cash acquired, decreased by $2.2 million during the third quarter of fiscal 2015 due to finalization of the working capital adjustment. Allmand is a leading brand in the Braziliandesigner and manufacturer of high quality towable light power equipment market with a broad range of outdoor power equipment used primarily in light commercial applications.towers, industrial heaters, and solar LED arrow boards. Its products are used in a variety of industries, including generators, water pumps, light construction, equipmentroadway, oil and gas, mining, and sporting and special events. Allmand's products are generally powered by diesel engines, are soldand distributed through national and regional equipment rental companies, equipment dealers and distributors. Allmand sells its independent networkproducts and service parts in approximately 40 countries. As of over 1,200 dealers throughout Brazil. TheMarch 29, 2015, the Company recorded a preliminary purchase price allocation during fiscal 2013 based on aits initial estimates of fair value appraisal by a third party valuation firm.value. The preliminary purchase price allocation resulted in the recognition of $15.3$15.5 million of goodwill, of which $4.6 million and $10.7 million werewas allocated to the EnginesProducts Segment, and Products Segment, respectively, and $24.0$24.1 million of intangible assets, including $14.6$15.7 million of customer relationships, $8.1 million of tradenames, and $9.4$0.3 million of tradenames.other intangible assets.

The results of operations of BrancoAllmand have been included in the Condensed Consolidated Statements of Operations since the date of acquisition. Pro forma financial information and allocation of the preliminary purchase price are not presented as the effects of the acquisition are not material to the Company's consolidated results of operations or financial position.

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5. Restructuring Actions
In fiscal 2012, the Company announced plans to reduce manufacturing capacity through closure of its Newbern, Tennessee and Ostrava, Czech Republic plants, as well as the consolidation of its plants in Poplar Bluff, Missouri and Auburn, Alabama. During fiscal 2012, the Company ceased manufacturing operations at its Newbern, Tennessee and Ostrava, Czech Republic plants, and carried out the consolidation of the Poplar Bluff, Missouri plant. Production of horizontal shaft engines was concluded at the Auburn, Alabama plant during the second quarter of fiscal 2014. The Company also announced in fiscal 2012 the reduction of approximately 10% of the Company's salaried headcount. In fiscal 2012 and fiscal 2013, the Company implemented the salaried headcount reductions. Additionally, beginning in fiscal 2013, the Company exited the placement of lawn and garden products at national mass retailers. The Engines Segment continues to support lawn and garden equipment OEMs who provide lawn and garden equipment to these retailers. Workforce reductions associated with the Company's restructuring initiatives impacted approximately 1,250 regular and temporary employees globally.

In October 2012, the Board of Directors of the Company authorized an amendment to the Company's defined benefit retirement plans for U.S., non-bargaining employees. The amendment freezes accruals for all non-bargaining employees effective January 1, 2014. The Company recorded a pre-tax curtailment charge of $1.9 million in the second quarter of fiscal 2013 related to the defined benefit plan change.

In the first quarter of fiscal 2013,2015, the Company completed the saleannounced and began implementing restructuring actions to narrow its assortment of lower-priced Snapper consumer lawn and garden equipment and consolidate its dormantProducts Segment manufacturing facilityfacilities in Jefferson, Wisconsin and a land parcel adjacentorder to reduce costs. The Company closed its Ostrava, Czech Republic plant. InMcDonough, Georgia plant in the fourth quarter of fiscal 2013, the Company completed the sale of the Ostrava, Czech Republic facility.2015 and is consolidating production into existing facilities in Wisconsin and New York. 

The Company reports restructuring charges associated with manufacturing and related initiatives as costs of goods sold within the Condensed Consolidated Statements of Operations. Restructuring charges reflected as costs of goods sold include, but are not limited to, termination and related costs associated with manufacturing employees, asset impairments and accelerated depreciation relating to manufacturing initiatives, and other costs directly related to the restructuring initiatives implemented. The Company reports all other non-manufacturing related restructuring charges as engineering, selling, general and administrative expenses on the Condensed Consolidated Statements of Operations.

The restructuring actions for the third quarter of fiscal 2014discussed above resulted in pre-tax income of $0.8 million ($0.5 million after tax or $0.01 per diluted share) related to the reduction of an estimated reserve related to plant closure costs. The Company recorded pre-tax charges of $5.1$8.0 million ($3.95.2 million after tax or $0.08$0.11 per diluted share) duringand $23.3 million ($15.1 million after tax or $0.33 per diluted share) recorded within the nine months ended March 30, 2014 related toProducts Segment for the restructuring actions discussed above. The Engines Segment recorded pre-tax income of $0.8 million and pre-tax charges of $3.0 million during the third quarter and first nine months of fiscal 2014,2015, respectively. The Products Segment recorded noTotal estimated pre-tax restructuring charges duringcost estimates for the third quarter and $2.1restructuring actions remain unchanged at $30 million to $37 million, including non-cash write-downs of pre-tax restructuring charges during the first nine months of fiscal 2014.$15 million to $20 million.

The following is a rollforward of the restructuring reserve (included in Accrued Liabilities within the Condensed Consolidated Balance Sheets) attributable to all Engines Segment restructuring activities for the nine month period ended March 30, 2014 (in thousands):
  Termination Benefits Other Costs Total
Reserve Balance at June 30, 2013 $99
 $2,575
 $2,674
Provisions 348
 2,699
 3,047
Cash Expenditures (447) (3,233) (3,680)
Other Adjustments (1)
 
 (2,041) (2,041)
Reserve Balance at March 30, 2014 $
 $
 $
(1)Other adjustments includes $0.5 million of accelerated depreciation and $1.5 million of asset impairments.


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The following is a rollforward of the restructuring reserve (included in Accrued Liabilities within the Condensed Consolidated Balance Sheets) attributable to all Products Segment restructuring activities for the nine month period ended March 30, 201429, 2015 (in thousands):
 Termination Benefits Other Costs Total Termination Benefits Other Costs Total
Reserve Balance at June 30, 2013 $94
 $45
 $139
Reserve Balance at June 29, 2014 $
 $105
 $105
Provisions 256
 1,826
 2,082
 5,326
 17,935
 23,261
Cash Expenditures (229) (325) (554) (650) (5,595) (6,245)
Other Adjustments (2)(1)
 
 (1,546) (1,546) 
 (12,445) (12,445)
Reserve Balance at March 30, 2014 $121
 $
 $121
Reserve Balance at March 29, 2015 $4,676
 $
 $4,676
(2)(1) Other adjustments includes $1.5$1.2 million of asset impairments.impairments and $11.2 million of accelerated depreciation.
6. Earnings Per Share
    
The Company computes earnings per share using the two-class method, an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. The Company’s unvested grants of restricted stock and deferred stock awards contain non-forfeitable rights to dividends (whether paid or unpaid), which are required to be treated as participating securities and included in the computation of basic earnings per share.

Information on earnings per share is as follows (in thousands, except per share data):
 Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended
 March 30,
2014
 March 31,
2013
 March 30,
2014
 March 31,
2013
 March 29,
2015
 March 30,
2014
 March 29,
2015
 March 30,
2014
Net Income $39,153
 $38,516
 $20,506
 $21,354
 $33,921
 $39,153
 $25,586
 $20,506
Less: Earnings Allocated to Participating Securities (1,150) (1,117) (552) (562)
Less: Allocation to Participating Securities (893) (1,150) (626) (552)
Net Income Available to Common Shareholders $38,003
 $37,399
 $19,954
 $20,792
 $33,028
 $38,003
 $24,960
 $19,954
Average Shares of Common Stock Outstanding 46,129
 47,336
 46,549
 47,126
 44,160
 46,129
 44,605
 46,549
Diluted Average Shares Outstanding 46,245
 47,709
 46,615
 47,291
 44,241
 46,245
 44,656
 46,615
Basic Earnings Per Share $0.82
 $0.79
 $0.43
 $0.44
 $0.75
 $0.82
 $0.56
 $0.43
Diluted Earnings Per Share $0.82
 $0.78
 $0.43
 $0.44
 $0.75
 $0.82
 $0.56
 $0.43


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The dilutive effect of the potential exercise of outstanding stock-based awards to acquire common shares is calculated using the treasury stock method. The following options to purchase shares of common stock were excluded from the calculation of diluted earnings per share as the exercise prices were greater than the average market price of the common shares:
 Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended
 March 30,
2014
 March 31,
2013
 March 30,
2014
 March 31,
2013
 March 29,
2015
 March 30,
2014
 March 29,
2015
 March 30,
2014
Options to Purchase Shares of Common Stock (in thousands) 508
 1,590
 916
 1,590
 845
 508
 845
 916
Weighted Average Exercise Price of Options Excluded $36.68
 $34.13
 $29.62
 $34.13
 $20.33
 $36.68
 $20.33
 $29.62

On August 8, 2012,January 22, 2014, the Board of Directors of the Company authorized up to $50 million in funds associated withfor use in the Company’s common share repurchase program with an expiration date of June 30, 2014.program. On January 22,August 13, 2014, the Board of Directors of the Company authorized up to an additional $50$50 million in funds for use inassociated with the Company’s common share repurchase program with an extension of the expiration date to June 30, 2016.program. As of March 30, 2014,29, 2015, the total remaining authorization was approximately $50.3 million.$47.7 million with an expiration date of June 30, 2016. The common share repurchase program authorizes the purchase of shares of the Company's common stock on the open market or in private transactions from time to time, depending on market conditions and certain governing loan covenants. During the nine months ended March 30, 201429, 2015, the Company repurchased 2,039,399 shares on the open market at an average price of $19.40 per share, as compared to 1,479,626 shares purchased on the open market at an average price of $20.32 per share as compared to 1,216,325 shares purchased on the open market at an average price of $18.96 per share during the nine months ended March 31, 201330, 2014.


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7. Investments

This caption represents the Company’s investments in unconsolidated affiliated companies.

During the third quarter of fiscal 2014, the Company joined with one of its independent distributors to form a venture to distribute service parts. The Company contributed non-cash assets in exchange for receiving an ownership interest in the venture. As a result of the transaction, the Company recorded an investment of $6.5 million. In the first quarter of fiscal 2015, a second independent distributor joined the venture and, as a result, the Company recorded an additional investment of $2.8 million. During the second quarter of fiscal 2015, the venture acquired a third independent distributor. The Company will useuses the equity method to account for this investment.investment, and the earnings of the unconsolidated affiliate are recorded within the Products Segment. As of March 29, 2015, the Company's total investment in the venture was $10.1 million, and its ownership percentage was 11.9%.
8. Pension and Postretirement Benefits

The Company has noncontributory defined benefit retirement plans and postretirement plans covering certain employees. The following tables summarize the plans’ income and expense for the periods indicated (in thousands):
 Pension Benefits Other Postretirement Benefits Pension Benefits Other Postretirement Benefits
 Three Months Ended Three Months Ended Three Months Ended Three Months Ended
 March 30,
2014
 March 31,
2013
 March 30,
2014
 March 31,
2013
 March 29,
2015
 March 30,
2014
 March 29,
2015
 March 30,
2014
Components of Net Periodic Expense:        
Components of Net Periodic Expense (Income):        
Service Cost $1,911
 $3,166
 $83
 $89
 $858
 $1,911
 $74
 $83
Interest Cost on Projected Benefit Obligation 13,436
 12,276
 1,150
 1,199
 12,445
 13,436
 902
 1,150
Expected Return on Plan Assets (18,538) (18,873) 
 
 (18,659) (18,538) 
 
Amortization of:                
Transition Obligation 
 2
 
 
Prior Service Cost (Credit) 45
 47
 (724) (897) 45
 45
 (689) (724)
Actuarial Loss 6,276
 8,666
 1,504
 1,881
 3,315
 6,276
 1,162
 1,504
Net Periodic Expense $3,130
 $5,284
 $2,013
 $2,272
Net Periodic Expense (Income) $(1,996) $3,130
 $1,449
 $2,013

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 Pension Benefits Other Postretirement Benefits Pension Benefits Other Postretirement Benefits
 Nine Months Ended Nine Months Ended Nine Months Ended Nine Months Ended
 March 30,
2014
 March 31,
2013
 March 30,
2014
 March 31,
2013
 March 29,
2015
 March 30,
2014
 March 29,
2015
 March 30,
2014
Components of Net Periodic Expense:        
Components of Net Periodic Expense (Income):        
Service Cost $5,735
 $10,138
 $250
 $268
 $2,574
 $5,735
 $222
 $250
Interest Cost on Projected Benefit Obligation 40,307
 37,878
 3,450
 3,596
 37,336
 40,307
 2,706
 3,450
Expected Return on Plan Assets (55,614) (56,958) 
 
 (55,978) (55,614) 
 
Amortization of:                
Transition Obligation 
 6
 
 
Prior Service Cost (Credit) 135
 319
 (2,172) (2,692) 135
 135
 (2,068) (2,172)
Actuarial Loss 18,821
 26,155
 4,512
 5,644
 9,946
 18,821
 3,486
 4,512
Net Curtailment Loss 
 1,914
 
 
Net Periodic Expense $9,384
 $19,452
 $6,040
 $6,816
Net Periodic Expense (Income) $(5,987) $9,384
 $4,346
 $6,040

In October 2012, the Board of Directors of the Company authorizedOn January 1, 2014, an amendment to the Company's defined benefit retirement plans for U.S., non-bargaining employees. The amendment freezesbecame effective that froze accruals for all U.S. non-bargaining employees effectiveemployees. Also, on January 1, 2014. The Company recorded a pre-tax curtailment charge of $1.9 million in the second quarter of fiscal 2013 related to2014, amendments became effective that increased benefits under the defined benefit plan change.contribution plans.

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The Company expects to make benefit payments of $3.13.2 million attributable to its non-qualified pension plans during fiscal 2014.2015. During the first nine months of fiscal 2014,2015, the Company made payments of approximately $2.22.3 million for its non-qualified pension plans. The Company anticipates making benefit payments of approximately $15.912.7 million for its other postretirement benefit plans during fiscal 2014.2015. During the first nine months of fiscal 2014,2015, the Company made payments of $13.0$11.7 million for its other postretirement benefit plans.
 
On July 6, 2012, the Moving Ahead for Progress in the 21st Century Act (MAP-21 Act) was signed into law. The MAP-21 Act included certain pension-related provisions, which included changes to the methodology used to determine discount rates for ERISA funding purposes for qualified defined benefit pension plans. Based on historical interest rates, the MAP-21 Act allows plan sponsors to utilize a higher discount rate to value pension liabilities, which results in lower required pension plan contributions under ERISA. During the first nine months of fiscal 2014,2015, the Company made no cash contributions to the qualified pension plan. Based upon current regulations and actuarial studies, the Company is not required to makeno minimum contributions to the qualified pension plan during the remainder of fiscal 2014 or2015. In addition, the Company expects it will not be required to make minimum contributions to the qualified pension plan in 2015.fiscal 2016 through fiscal 2019. The Company may be required to make further contributions in future years depending upon the actual return on plan assets and the funded status of the plan in future periods.
9. Stock Incentives
 
Stock based compensation expense is calculated by estimating the fair value of incentive stock awards granted and amortizing the estimated value over the awards' vesting period. Stock based compensation expense was $1.5 million and $4.8 million for the $1.3 millionthree and nine and $5.8 million formonths ended March 29, 2015, respectively. For the three and nine months ended March 30, 2014, respectively. For the three and nine months ended March 31, 2013, stock based compensation expense was $1.4$1.3 million and $5.2$5.8 million,, respectively.

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10. Derivative Instruments & Hedging Activities

The Company enters into derivative contracts designated as cash flow hedges to manage certain interest rate, foreign currency and commodity exposures. Company policy allows derivatives to be used only for identifiable exposures and, therefore, the Company does not enter into hedges for trading purposes where the sole objective is to generate profits.
    
The Company formally designates the financial instrument as a hedge of a specific underlying exposure and documents both the risk management objectives and strategies for undertaking the hedge. The Company formally assesses, both at the inception and at least quarterly thereafter, whether the financial instruments that are used in hedging transactions are effective at offsetting changes in the forecasted cash flows of the related underlying exposure. Because of the high degree of effectiveness between the hedging instrument and the underlying exposure being hedged, fluctuations in the value of the derivative instruments are generally offset by changes in the forecasted cash flows of the underlying exposures being hedged. Derivative financial instruments are recorded on the Condensed Consolidated Balance Sheets as assets or liabilities, measured at fair value. The effective portion of gains or losses on the derivativederivatives designated as cash flow hedges are reported as a component of Accumulated Other Comprehensive Income (Loss) (AOCI) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Any ineffective portion of a financial instrument's change in fair value is immediately recognized in earnings.

The Company discontinues hedge accounting prospectively when it determines that the derivative is no longer effective in offsetting cash flows attributable to the hedged risk, the derivative expires or is sold, terminated, or exercised, the cash flow hedge is dedesignated because a forecasted transaction is not probable of occurring, or management determines to remove the designation of the cash flow hedge.

In all situations in which hedge accounting is discontinued and the derivative remains outstanding, the Company continues to carry the derivative at its fair value on the balance sheet and recognizes any subsequent changes in its fair value in earnings. When it is probable that a forecasted transaction will not occur, the Company discontinues hedge accounting and recognizes immediately in earnings gains and losses that were accumulated in other comprehensive income related to the hedging relationship.
    
The Company enters into interest rate swaps to manage a portion of its interest rate risk from financing certain dealer and distributor inventories through a third party financing source. The swaps are designated as cash flow hedges and are used to effectively fix the interest payments to a third party financing source, exclusive of lender

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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

spreads, ranging from 1.17% to 1.60% for a notional principal amount of $95 million with expiration dates ranging from July 2017 through May 2019.

The Company enters into forward foreign currency contracts to hedge the risk from forecasted third party and intercompany sales or payments denominated in foreign currencies. These obligations generally require the Company to exchange foreign currencies for U.S. Dollars, Australian Dollars, Brazilian Real, Canadian Dollars, Chinese Renminbi, Euros, Japanese Yen or Mexican Pesos. These contracts generally do not have a maturity of more than twenty-four months.
    
The Company uses raw materials that are subject to price volatility. The Company hedges a portion of its exposure to the variability of cash flows associated with commodities used in the manufacturing process by entering into forward purchase contracts or commodity swaps. Derivative contracts designated as cash flow hedges are used by the Company to reduce exposure to variability in cash flows associated with future purchases of natural gas and aluminum.gas. These contracts generally do not have a maturity of more than twenty-four months.
    
The Company has considered the counterparty credit risk related to all of its interest rate, foreign currency and commodity derivative contracts and deems any risk of counterparty default to be minimal.
    

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The notional amount of derivative contracts outstanding at the end of the period is indicative of the level of the Company’s derivative activity during the period. As of March 30, 201429, 2015 and June 30, 201329, 2014, the Company had the following outstanding derivative contracts (in thousands):
ContractContract Notional AmountContract Notional Amount
   March 30,
2014
 June 30,
2013
   March 29,
2015
 June 29,
2014
Interest Rate:        
LIBOR Interest Rate (U.S. Dollars) Fixed 95,000
 95,000
 Fixed 95,000
 95,000
Foreign Currency:        
Australian Dollar Sell 13,722
 6,392
 Sell 13,801
 19,904
Brazilian Real Sell 11,608
 
Canadian Dollar Sell 2,250
 
 Sell 6,700
 3,100
Chinese Renminbi Buy 223,575
 
Euro Sell 46,590
 49,300
Euro Sell 34,700
 31,000
 Buy 6,000
 
Japanese Yen Buy 620,000
 905,000
 Buy 1,014,000
 530,000
Mexican Peso Sell 5,000
 3,345
 Sell 
 3,000
Commodity:        
Aluminum (Metric Tons) Buy 4
 18
Natural Gas (Therms) Buy 2,183
 5,423
 Buy 10,304
 5,686

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The location and fair value of derivative instruments reported in the Condensed Consolidated Balance Sheets are as follows (in thousands):
Balance Sheet Location Asset (Liability) Fair Value Asset (Liability) Fair Value
 March 30,
2014
 June 30,
2013
 March 29,
2015
 June 29,
2014
Interest rate contracts        
Other Long-Term Assets $242
 $257
 $
 $43
Other Long-Term Liabilities (965) (1,020) (1,354) (1,209)
Foreign currency contracts        
Other Current Assets 337
 1,752
 9,740
 337
Other Long-Term Assets 41
 
 31
 12
Accrued Liabilities (1,629) (1,138) (1,235) (665)
Other Long-Term Liabilities (47) (9)
Commodity contracts        
Other Current Assets 129
 
 
 39
Accrued Liabilities (505) (3,250) (598) (35)
Other Long-Term Liabilities 
 (5) (221) (14)
 $(2,350) $(3,404) $6,316
 $(1,501)

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The effect of derivative instruments on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) is as follows (in thousands):
  Three months ended March 29, 2015
  
Amount of Gain (Loss)
Recognized in Other
Comprehensive Income
(Loss) on Derivatives, Net of
Taxes (Effective
Portion)
 
Classification of
Gain (Loss)
 
Amount of Gain (Loss)
Reclassified from
AOCI into Income
(Effective Portion)
 
Recognized in
Earnings
(Ineffective Portion)
Interest rate contracts $(381) Net Sales $(306) $
Foreign currency contracts - sell (120) Net Sales 5,146
 
Foreign currency contracts - buy 357
 Cost of Goods Sold (418) 
Commodity contracts (29) Cost of Goods Sold (319) 
  $(173)   $4,103
 $

  Three months ended March 30, 2014
  
Amount of Gain (Loss)
Recognized in Other
Comprehensive Income
(Loss) on Derivatives, Net of
Taxes (Effective
Portion)
 
Classification of
Gain (Loss)
 
Amount of Gain (Loss)
Reclassified from
AOCI into Income
(Effective Portion)
 
Recognized in
Earnings
(Ineffective Portion)
Interest rate contracts $15
 Net Sales $(302) $
Foreign currency contracts - sell 348
 Net Sales (138) 
Foreign currency contracts - buy 170
 Cost of Goods Sold (310) 
Commodity contracts 848
 Cost of Goods Sold (1,165) 
  $1,381
   $(1,915) $
 Three months ended March 31, 2013 Nine months ended March 29, 2015
 
Amount of Gain (Loss)
Recognized in Other
Comprehensive Income
(Loss) on Derivatives, Net of
Taxes (Effective
Portion)
 
Classification of
Gain (Loss)
 
Amount of Gain (Loss)
Reclassified from
AOCI into Income
(Effective Portion)
 
Recognized in
Earnings
(Ineffective Portion)
 
Amount of Gain (Loss)
Recognized in Other
Comprehensive Income
(Loss) on Derivatives, Net of
Taxes (Effective
Portion)
 
Classification of
Gain (Loss)
 
Amount of Gain (Loss)
Reclassified from
AOCI into Income
(Effective Portion)
 
Recognized in
Earnings
(Ineffective Portion)
Interest rate contracts $203
 Net Sales $
 $
 $(120) Net Sales $(931) $
Foreign currency contracts - sell 1,952
 Net Sales (12) 
 3,720
 Net Sales 7,689
 
Foreign currency contracts - buy (16) Cost of Goods Sold (786) 
 (51) Cost of Goods Sold (664) 
Commodity contracts (528) Cost of Goods Sold (3,207) 
 (216) Cost of Goods Sold (841) 
 $1,611
 $(4,005) $
 $3,333
 $5,253
 $

  Nine months ended March 30, 2014
  
Amount of Gain (Loss)
Recognized in Other
Comprehensive Income
(Loss) on Derivatives, Net of
Taxes (Effective
Portion)
 
Classification of
Gain (Loss)
 
Amount of Gain (Loss)
Reclassified from
AOCI into Income
(Effective Portion)
 
Recognized in
Earnings
(Ineffective Portion)
Interest rate contracts $20
 Net Sales $(899) $
Foreign currency contracts - sell (751) Net Sales (248) 
Foreign currency contracts - buy 142
 Cost of Goods Sold (949) 
Commodity contracts 3,157
 Cost of Goods Sold (4,823) 
  $2,568
   $(6,919) $


1618


BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

  Nine months ended March 30, 2014
  
Amount of Gain (Loss)
Recognized in Other
Comprehensive Income
(Loss) on Derivatives, Net of
Taxes (Effective
Portion)
 
Classification of
Gain (Loss)
 
Amount of Gain (Loss)
Reclassified from
AOCI into Income
(Effective Portion)
 
Recognized in
Earnings
(Ineffective Portion)
Interest rate contracts $20
 Net Sales $(899) $
Foreign currency contracts - sell (751) Net Sales (248) 
Foreign currency contracts - buy 142
 Cost of Goods Sold (949) 
Commodity contracts 3,157
 Cost of Goods Sold (4,823) 
  $2,568
   $(6,919) $

  Nine months ended March 31, 2013
  
Amount of Gain (Loss)
Recognized in Other
Comprehensive Income
(Loss) on Derivatives, Net of
Taxes (Effective
Portion)
 
Classification of
Gain (Loss)
 
Amount of Gain (Loss)
Reclassified from
AOCI into Income
(Effective Portion)
 
Recognized in
Earnings
(Ineffective Portion)
Interest rate contracts $(137) Net Sales $
 $
Foreign currency contracts - sell 118
 Net Sales 77
 
Foreign currency contracts - buy (278) Cost of Goods Sold (859) 
Commodity contracts 1,267
 Cost of Goods Sold (7,591) 
  $970
   $(8,373) $

During the next twelve months, the estimated net amount of lossesincome on cash flow hedges as of March 30, 201429, 2015 expected to be reclassified out of AOCI into earnings is $1.14.8 million.
11. Fair Value Measurements

The following guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels:

Level 1: Quoted prices for identical instruments in active markets.

Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-driven valuations whose inputs are observable or whose significant value drivers are observable.

Level 3: Significant inputs to the valuation model are unobservable.

17


BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

The following table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis as of March 30, 201429, 2015 and June 30, 201329, 2014 (in thousands):
   Fair Value Measurements Using   Fair Value Measurements Using
 March 30,
2014
 Level 1 Level 2 Level 3 March 29,
2015
 Level 1 Level 2 Level 3
Assets:                
Derivatives $749
 $
 $749
 $
 $9,771
 $
 $9,771
 $
Liabilities:                
Derivatives $3,099
 $
 $3,099
 $
 $3,455
 $
 $3,455
 $
 June 30,
2013
 Level 1 Level 2 Level 3 June 29,
2014
 Level 1 Level 2 Level 3
Assets:                
Derivatives $2,009
 $
 $2,009
 $
 $431
 $
 $431
 $
Liabilities:                
Derivatives $5,413
 $
 $5,413
 $
 $1,932
 $
 $1,932
 $

The fair value for Level 2 measurements are based upon the respective quoted market prices for comparable instruments in active markets, which include current market pricing for forward purchases of commodities, foreign currency forwards, and current interest rates.

The Company has currently chosen not to elect the fair value option for any items that are not already required to be measured at fair value in accordance with accounting principles generally accepted in the United States.

The estimated fair value of the Company's Senior Notes (as defined in Note 16) at March 30, 201429, 2015 and June 30, 201329, 2014 was $251.5248.6 million and $250.9251.4 million, respectively, compared to the carrying value of $225.0 million on each date. The estimated fair value of the Senior Notes is based on quoted market prices for similar instruments and is, therefore, classified as Level 2 within the valuation hierarchy. The carrying value of the Revolver (as defined in Note 16) and short-term debt approximates fair value since the underlying rate of interest is variable based upon LIBOR rates.  

The Company believes that the carrying values of cash and cash equivalents, trade receivables, and accounts payable are reasonable estimates of their fair values at March 30, 201429, 2015 and June 30, 201329, 2014 due to the short-term nature of these instruments.

19


12. Warranty

The Company recognizes the cost associated with its standard warranty on Engines and Products at the time of sale. The general warranty period begins at the time of sale and typically covers two years, but may vary due to product type and geographic location. The amount recognized is based on historical failure rates and current claim cost experience. The following is a reconciliation of the changes in accrued warranty costs for the reporting period (in thousands):
 Nine Months Ended Nine Months Ended
 March 30,
2014
 March 31,
2013
 March 29,
2015
 March 30,
2014
Beginning Balance $45,037
 $46,013
 $44,744
 $45,037
Payments (20,336) (20,455) (20,106) (20,336)
Provision for Current Year Warranties 20,889
 21,209
 22,493
 20,889
Changes in Estimates (616) (472) (46) (616)
Ending Balance $44,974
 $46,295
 $47,085
 $44,974


18


BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

13. Income Taxes

The effective tax rate for the third quarter of fiscal 2014 was 26.1%, compared to 27.6% for the same respective period of fiscal 2013. The tax raterates for the third quarter and first nine months of fiscal 2014 included a taxpayer election which provided2015 were 20.2% and 5.7%, compared to 26.1% and 26.6% for the Company a $2.9 million tax benefit that was previously unavailable as well as a benefit of $0.7 million from income related to foreign operations subject to different statutory tax rates.respective periods last year. The tax raterates for the third quarter and first nine months of fiscal 2013 included benefits for the reenactment of the U.S.2015 were primarily impacted by incremental federal research and& development and other credits in the amount of $1.0 million, foreign(R&D) tax credits in the amount of $0.5 million, and $1.7 million from income related to foreign operations subject to different statutory rates. The effectiveprior years, offset by reserves for unrecognized tax positions for a net tax benefit of $4.7 million and $5.0 million, respectively. In addition, the tax rate for the first nine months of fiscal 20142015 was 26.6%, compared to 27.5%impacted by the reversal of previously recorded reserves as a result of the effective settlement of the Company’s IRS audit. The tax rates for the same respective periodthird quarter and the first nine months of fiscal 2013.2014 included a taxpayer election filed pursuant to the outcome of a U.S. court case that provided the Company precedent to record a tax benefit of $2.9 million for the permanent exclusion of qualified export activity from prior years’ taxable income.

For the three and nine months ended March 30, 2014,29, 2015, the Company's unrecognized tax benefits increased by $0.3$4.2 million, and $2.1 million, respectively, all of which $0.3 million impacted the current effective tax rate. This amount substantially consists of the reversal of previously recorded reserves as a result of the effective settlement of the Company’s IRS audit, offset by the recording of additional reserves associated with incremental R&D credit claimed.

Income tax returns are filed in the U.S., state, and foreign jurisdictions and related audits occur on a regular basis. In the U.S., theThe Company is no longer subject to U.S. federal income tax examinations before fiscal 20102012 and is currently under audit by U.S. federal and various stateother jurisdictions. With respect to the Company's major foreign jurisdictions, they are no longer subject to income tax examinations before fiscal 2003.2004.

14. Commitments and Contingencies
Briggs & Stratton is subject to various unresolved legal actions that arise in the normal course of its business. These actions typically relate to product liability (including asbestos-related liability), patent and trademark matters, and disputes with customers, suppliers, distributors and dealers, competitors and employees.
On March 19, 2010, plaintiffs filed a complaint in the Ontario Superior Court of Justice in Canada (Robert Foster et al. v. Sears Canada, Inc. et al., Court File No. 766-2010) against the Company and other engine and lawnmower manufacturers alleging that the horsepower labels on the products they purchased were inaccurate and that the Company conspired with other engine and lawnmower manufacturers to conceal the true horsepower of these engines. On May 3, 2010, other plaintiffs filed a similar complaint in the Montreal Superior Court in Canada (Eric Liverman, et al. v. Deere & Company, et al., Court File No. 500-06-000507-109). Both proceedings were based on various theories of Canadian law and sought unspecified damages.
On June 27, 2013, the Company entered into a Canadian Lawnmower Class Action National Settlement Agreement (“Settlement”) that resolved all horsepower claims brought by all persons in Canada who purchased lawn mowers in Canada during the class period (defined as January 1, 1994 through December 31, 2012), except certain specified persons. The Settlement was approved by the Ontario Court and the Quebec Court in September 2013, and all payments required by the Company have been made. As a result of the Settlement, the Company recorded a total charge of US $1.9 million as a Litigation Settlement expense on the Statement of Operations in the fourth quarter of fiscal year 2013.
On May 14, 2010, the Company notified retirees and certain retirement eligible employees of various amendments to the Company-sponsored retiree medical plans intended to better align the plans offered to both hourly and salaried retirees. On August 16, 2010, a putative class of retirees who retired prior to August 1, 2006 and the United Steel Workers filed a complaint in the U.S. District Court for the Eastern District of Wisconsin (Merrill,(Merrill, Weber, Carpenter, et al.; United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO/CLC v. Briggs & Stratton Corporation; Group Insurance Plan of Briggs & Stratton Corporation; and Does 1 through 20, Docket No. 10-C-0700)10-C-0700), contesting the Company's right to make these changes. The complaint seeks an injunction preventing the alleged unilateral termination or reduction in insurance coverage to the class of retirees, a permanent injunction preventing defendants from ever making changes to the retirees' insurance coverage, restitution with interest (if applicable) and attorneys' fees and costs. A class has been certified, and discovery has concluded. Both parties moved for summary judgment, which was fully

20


BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

briefed on December 23, 2014. Summary judgment is underway incurrently pending before the case.court, and no hearing date or trial date has been set.
Although it is not possible to predict with certainty the outcome of these unresolved legal actions or the range of possible loss, the Company believes the unresolved legal actions will not have a material adverse effect on its results of operations, financial position or cash flows.

19


BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

15. Segment Information

The Company operatesmaintains two reportable business segments that are managed separately based on fundamental differences in their operations. Beginning in fiscal 2015, the Company is using “segment income (loss)” as the primary measure to evaluate operating performance and allocate capital resources for the Engines and Products Segments. Previously, the Company used income (loss) from operations. Segment income (loss) is defined as income (loss) from operations plus equity in earnings of unconsolidated affiliates. The Company has recast prior year amounts for comparability. Summarized segment data is as follows (in thousands):
 Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended
 March 30,
2014
 March 31,
2013
 March 30,
2014
 March 31,
2013
 March 29,
2015
 March 30,
2014
 March 29,
2015
 March 30,
2014
NET SALES:                
Engines $452,359
 $451,921
 $901,858
 $890,631
 $432,248
 $452,359
 $857,067
 $901,858
Products 205,160
 231,532
 529,724
 602,323
 211,135
 205,160
 576,313
 529,724
Inter-Segment Eliminations (29,116) (46,194) (69,283) (107,609) (24,368) (29,116) (77,449) (69,283)
Total * $628,403
 $637,259
 $1,362,299
 $1,385,345
* International sales included in net sales based on product shipment destination $159,989
 $166,722
 $451,985
 $453,335
Total $619,015
 $628,403
 $1,355,931
 $1,362,299
GROSS PROFIT:                
Engines $107,930
 $100,981
 $187,423
 $181,980
 $98,885
 $107,930
 $189,580
 $187,423
Products 22,365
 26,546
 62,149
 63,798
 19,908
 22,365
 64,505
 62,149
Inter-Segment Eliminations (45) (739) 1,875
 1,793
 287
 (45) 183
 1,875
Total $130,250
 $126,788
 $251,447
 $247,571
 $119,080
 $130,250
 $254,268
 $251,447
INCOME (LOSS) FROM OPERATIONS:        
SEGMENT INCOME (LOSS):        
Engines $60,345
 $57,058
 $50,528
 $48,574
 $54,928
 $62,071
 $59,967
 $54,805
Products (4,913) (199) (16,783) (11,787) (8,128) (4,913) (20,125) (16,783)
Inter-Segment Eliminations (45) (739) 1,875
 1,793
 287
 (45) 183
 1,875
Total $55,387
 $56,120
 $35,620
 $38,580
 $47,087
 $57,113
 $40,025
 $39,897
        
Reconciliation from Segment Income (Loss) to Income Before Income Taxes:        
Equity in Earnings of Unconsolidated Affiliates 1,664
 1,726
 5,005
 4,277
Income from Operations $45,423
 $55,387
 $35,020
 $35,620
INTEREST EXPENSE (5,233) (4,720) (14,641) (13,823)
OTHER INCOME, Net 2,323
 2,295
 6,749
 6,138
Income Before Income Taxes 42,513
 52,962
 27,128
 27,935
PROVISION FOR INCOME TAXES 8,592
 13,809
 1,542
 7,429
Net Income $33,921
 $39,153
 $25,586
 $20,506


21


BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

Pre-tax restructuring charges (income)and acquisition-related charges included in gross profit were as follows (in thousands):
 Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended
 March 30,
2014
 March 31,
2013
 March 30,
2014
 March 31,
2013
 March 29,
2015
 March 30,
2014
 March 29,
2015
 March 30,
2014
PRE-TAX RESTRUCTURING CHARGES (INCOME) INCLUDED IN GROSS PROFIT:        
PRE-TAX RESTRUCTURING CHARGES AND ACQUISITION-RELATED CHARGES INCLUDED IN GROSS PROFIT:        
Engines $(774) $5,409
 $2,622
 $7,346
 $
 $(774) $
 $2,622
Products 
 1,236
 2,082
 7,624
 7,088
 
 21,952
 2,082
Total $(774) $6,645
 $4,704
 $14,970
 $7,088
 $(774) $21,952
 $4,704
    
Pre-tax restructuring charges (income)and acquisition-related charges included in segment income (loss) from operations were as follows (in thousands):
 Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended
 March 30,
2014
 March 31,
2013
 March 30,
2014
 March 31,
2013
 March 29,
2015
 March 30,
2014
 March 29,
2015
 March 30,
2014
PRE-TAX RESTRUCTURING CHARGES (INCOME) INCLUDED IN INCOME (LOSS) FROM OPERATIONS:        
PRE-TAX RESTRUCTURING CHARGES AND ACQUISITION-RELATED CHARGES INCLUDED IN SEGMENT INCOME (LOSS):        
Engines $(774) $5,409
 $3,047
 $10,781
 $
 $(774) $
 $3,047
Products 
 1,236
 2,082
 7,624
 8,141
 
 24,902
 2,082
Total $(774) $6,645
 $5,129
 $18,405
 $8,141
 $(774) $24,902
 $5,129

20


BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

16. Debt

The following is a summary of the Company’s long-term indebtedness (in thousands):
 March 30,
2014
 June 30,
2013
 March 29,
2015
 June 29,
2014
Senior Notes $225,000
 $225,000
 $225,000
 $225,000
Multicurrency Credit Agreement 
 
 60,100
 
 $225,000
 $225,000
 $285,100
 $225,000
 
On December 15,20, 2010, the Company issued $225 million of 6.875% Senior Notes ("Senior Notes") due December 15, 2020.  

On October 13, 2011,21, 2013, the Company entered into aan amendment to its $500 million multicurrency credit agreement (the “Revolver”). On October 21, 2013, the Company entered into an amendment to the Revolver,, which, among other things, extended the maturity of the Revolver from October 13, 2016 to October 21, 2018. The initial maximum availability under the revolving credit facility is $500 million. Availability under the revolving credit facility is reduced by outstanding letters of credit. The Company may from time to time increase the maximum availability under the revolving credit facility by up to $250 million if certain conditions are satisfied. As of March 30, 2014, there were no borrowings under the Revolver. In connection with the amendment to the Revolver in the second quarter of fiscal 2014, the Company incurred approximately $0.9$0.9 million in new debt issuance costs, which are being amortized over the life of the Revolver using the straight-line method. As of March 29, 2015, $60.1 million was outstanding under the Revolver.

The Senior Notes and Revolver contain restrictive covenants. These covenants include restrictions on the Company’s ability to: pay dividends; repurchase shares; incur indebtedness; create liens; enter into sale and leaseback transactions; consolidate or merge with other entities; sell or lease all or substantially all of its assets; and dispose of assets or use proceeds from sales of its assets. The Revolver contains financial covenants that require the Company to maintain a minimum interest coverage ratio and impose a maximum average leverage ratio.

22


BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES


17. Separate Financial Information of Subsidiary Guarantor of Indebtedness

Under the terms of the Company’s Senior Notes and the Revolver (collectively, the “Domestic Indebtedness”), Briggs & Stratton Power Products Group, LLC, a 100% owned subsidiary of the Company, iswas the sole joint and several guarantor of the Domestic Indebtedness (the “Guarantor”). as of March 29, 2015 and June 29, 2014. The guarantees areGuarantor provides a full and unconditional guarantees,guarantee of the Domestic Indebtedness, except for certain customary limitations. These customary limitations, which are described in detail in the First Supplemental Indenture (Indenture) dated December 20, 2010, include (i) the sale of the guarantor or substantially all of the guarantor’s assets, (ii) the designation of the guarantor as an unrestricted subsidiary for covenant purposes, (iii) the guarantor ceasing to guarantee certain other indebtedness, if the guarantor is also not a significant subsidiary within the meaning of Article 1, Rule 1-02 of Regulation S-X, and (iv) achieving the Indenture’s requirements for legal defeasance, covenant defeasance or discharge. Additionally, if at any time a domestic subsidiary of the Company constitutes a significant domestic subsidiary, then such domestic subsidiary will also become a guarantor of the Domestic Indebtedness. Currently, all of the Domestic Indebtedness is unsecured. If the Company were to fail to make a payment of interest or principal on its due date, the Guarantor is obligated to pay the outstanding Domestic Indebtedness. The Company had the following outstanding amounts related to the guaranteed debt (in thousands):
 March 30, 2014 Carrying Amount 
Maximum
Guarantee
 March 29, 2015 Carrying Amount 
Maximum
Guarantee
Senior Notes $225,000
 $225,000
 $225,000
 $225,000
Multicurrency Credit Agreement $
 $500,000
 $60,100
 $500,000

2123


BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

The following condensed supplemental consolidating financial information reflects the summarized financial information of Briggs & Stratton, its GuarantorsGuarantor Subsidiary and its Non-Guarantor Subsidiaries (in thousands):

CONSOLIDATING BALANCE SHEET
As of March 30, 201429, 2015
(Unaudited)
 
Briggs & Stratton
Corporation
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 Eliminations Consolidated 
Briggs & Stratton
Corporation
 
Guarantor
Subsidiary
 
Non-Guarantor
Subsidiaries
 Eliminations Consolidated
CURRENT ASSETS:                    
Cash and Cash Equivalents $57,558
 $1,969
 $47,711
 $
 $107,238
 $5,946
 $455
 $43,293
 $
 $49,694
Accounts Receivable, Net 184,125
 113,595
 41,114
 
 338,834
 164,675
 95,655
 55,395
 
 315,725
Intercompany Accounts Receivable 17,870
 2,772
 31,439
 (52,081) 
 19,650
 6,690
 38,401
 (64,741) 
Inventories, Net 170,082
 160,119
 65,103
 
 395,304
 209,572
 160,022
 77,302
 
 446,896
Deferred Income Tax Asset 30,179
 14,983
 1,535
 
 46,697
 31,697
 15,414
 1,847
 
 48,958
Prepaid Expenses and Other Current Assets 11,711
 2,593
 10,275
 
 24,579
 26,630
 1,768
 7,065
 
 35,463
Total Current Assets $471,525
 $296,031
 $197,177
 $(52,081) $912,652
 $458,170
 $280,004
 $223,303
 $(64,741) $896,736
OTHER ASSETS:                    
Goodwill $128,300
 $
 $18,755
 $
 $147,055
 $128,300
 $
 $27,978
 $
 $156,278
Investments 25,382
 
 
 
 25,382
 29,354
 
 
 
 29,354
Investments in Subsidiaries 480,241
 
 
 (480,241) 
 504,606
 
 
 (504,606) 
Intercompany Note Receivable 56,058
 81,167
 18,927
 (156,152) 
 37,667
 72,354
 22,918
 (132,939) 
Debt Issuance Costs 4,916
 
 
 
 4,916
 3,950
 
 
 
 3,950
Other Intangible Assets, Net 
 61,710
 24,018
 
 85,728
 
 55,007
 40,398
 
 95,405
Long-Term Deferred Income Tax Asset 48,407
 
 313
 (21,288) 27,432
 23,271
 
 129
 (23,271) 129
Other Long-Term Assets, Net 10,152
 2,629
 1,360
 
 14,141
 7,783
 3,262
 1,400
 
 12,445
Total Other Assets $753,456
 $145,506
 $63,373
 $(657,681) $304,654
 $734,931
 $130,623
 $92,823
 $(660,816) $297,561
PLANT AND EQUIPMENT, NET 220,902
 41,005
 16,181
 
 278,088
 246,041
 27,931
 26,260
 
 300,232
TOTAL ASSETS $1,445,883
 $482,542
 $276,731
 $(709,762) $1,495,394
 $1,439,142
 $438,558
 $342,386
 $(725,557) $1,494,529
                    
CURRENT LIABILITIES:                    
Accounts Payable $110,243
 $54,006
 $22,403
 $
 $186,652
 $115,794
 $55,909
 $25,773
 $
 $197,476
Intercompany Accounts Payable 19,835
 15,949
 16,297
 (52,081) 
 30,074
 7,511
 27,156
 (64,741) 
Short-Term Debt 60,100
 
 
 
 60,100
Accrued Liabilities 102,751
 35,110
 15,423
 
 153,284
 96,202
 42,053
 20,389
 
 158,644
Total Current Liabilities $232,829
 $105,065
 $54,123
 $(52,081) $339,936
 $302,170
 $105,473
 $73,318
 $(64,741) $416,220
OTHER LIABILITIES:                    
Accrued Pension Cost $137,829
 $413
 $
 $
 $138,242
 $107,115
 $381
 $496
 $
 $107,992
Accrued Employee Benefits 23,616
 
 
 
 23,616
 24,487
 
 
 
 24,487
Accrued Postretirement Health Care Obligation 49,657
 14,889
 
 
 64,546
 37,529
 14,221
 
 
 51,750
Intercompany Note Payable 84,940
 
 71,212
 (156,152) 
 86,864
 
 46,075
 (132,939) 
Deferred Income Tax Liabilities 
 20,780
 508
 (21,288) 
 
 15,781
 10,904
 (23,271) 3,414
Other Long-Term Liabilities 26,343
 11,064
 978
 
 38,385
 31,133
 8,824
 865
 
 40,822
Long-Term Debt 225,000
 
 
 
 225,000
 225,000
 
 
 
 225,000
Total Other Liabilities $547,385
 $47,146
 $72,698
 $(177,440) $489,789
 $512,128
 $39,207
 $58,340
 $(156,210) $453,465
TOTAL SHAREHOLDERS’ INVESTMENT: 665,669
 330,331
 149,910
 (480,241) 665,669
TOTAL SHAREHOLDERS’ INVESTMENT 624,844
 293,878
 210,728
 (504,606) 624,844
TOTAL LIABILITIES AND SHAREHOLDERS’ INVESTMENT $1,445,883
 $482,542
 $276,731
 $(709,762) $1,495,394
 $1,439,142
 $438,558
 $342,386
 $(725,557) $1,494,529




2224


BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES


CONSOLIDATING BALANCE SHEET
As of June 30, 201329, 2014
 
Briggs & Stratton
Corporation
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 Eliminations Consolidated 
Briggs & Stratton
Corporation
 
Guarantor
Subsidiary
 
Non-Guarantor
Subsidiaries
 Eliminations Consolidated
CURRENT ASSETS:                    
Cash and Cash Equivalents $162,628
 $1,275
 $24,542
 $
 $188,445
 $138,926
 $2,680
 $53,062
 $
 $194,668
Accounts Receivable, Net 80,017
 80,531
 30,252
 
 190,800
 86,099
 100,062
 34,429
 
 220,590
Intercompany Accounts Receivable 11,987
 5,971
 46,366
 (64,324) 
 15,987
 3,492
 32,826
 (52,305) 
Inventories, Net 165,600
 175,523
 66,972
 
 408,095
 165,159
 146,749
 64,195
 
 376,103
Deferred Income Tax Asset 32,543
 13,923
 1,068
 
 47,534
 33,343
 13,904
 1,711
 
 48,958
Prepaid Expenses and Other Current Assets 15,194
 1,967
 6,946
 
 24,107
 17,436
 3,508
 9,072
 
 30,016
Total Current Assets $467,969
 $279,190
 $176,146
 $(64,324) $858,981
 $456,950
 $270,395
 $195,295
 $(52,305) $870,335
OTHER ASSETS:                    
Goodwill $128,300
 $
 $19,052
 $
 $147,352
 $128,300
 $
 $16,222
 $
 $144,522
Investments 19,764
 
 
 
 19,764
 27,137
 
 
 
 27,137
Investments in Subsidiaries 520,604
 
 
 (520,604) 
 470,391
 
 
 (470,391) 
Intercompany Note Receivable 45,747
 81,844
 14,486
 (142,077) 
 49,293
 84,567
 13,876
 (147,736) 
Debt Issuance Costs 4,710
 
 
 
 4,710
 4,671
 
 
 
 4,671
Other Intangible Assets, Net 
 62,612
 25,368
 
 87,980
 
 55,909
 24,408
 
 80,317
Long-Term Deferred Income Tax Asset 48,694
 
 83
 (21,233) 27,544
 32,507
 
 677
 (18,006) 15,178
Other Long-Term Assets, Net 9,810
 2,957
 1,258
 
 14,025
 7,120
 2,088
 1,331
 
 10,539
Total Other Assets $777,629
 $147,413
 $60,247
 $(683,914) $301,375
 $719,419
 $142,564
 $56,514
 $(636,133) $282,364
PLANT AND EQUIPMENT, NET 224,002
 45,475
 17,718
 
 287,195
 241,166
 39,863
 15,978
 
 297,007
TOTAL ASSETS $1,469,600
 $472,078
 $254,111
 $(748,238) $1,447,551
 $1,417,535
 $452,822
 $267,787
 $(688,438) $1,449,706
                    
CURRENT LIABILITIES:                    
Accounts Payable $91,965
 $37,112
 $14,112
 $
 $143,189
 $105,532
 $45,171
 $18,568
 $
 $169,271
Intercompany Accounts Payable 38,078
 5,197
 21,049
 (64,324) 
 21,859
 6,002
 24,444
 (52,305) 
Short-Term Debt 
 
 300
 
 300
Accrued Liabilities 111,146
 7,452
 12,668
 
 131,266
 85,735
 31,863
 16,318
 
 133,916
Total Current Liabilities $241,189
 $49,761
 $48,129
 $(64,324) $274,755
 $213,126
 $83,036
 $59,330
 $(52,305) $303,187
OTHER LIABILITIES:                    
Accrued Pension Cost $149,614
 $472
 $45
 $
 $150,131
 $125,481
 $421
 $627
 $
 $126,529
Accrued Employee Benefits 23,458
 
 
 
 23,458
 24,491
 
 
 
 24,491
Accrued Postretirement Health Care Obligation 57,298
 15,397
 
 
 72,695
 44,928
 14,362
 
 
 59,290
Intercompany Note Payable 85,095
 
 56,982
 (142,077) 
 85,343
 
 62,393
 (147,736) 
Deferred Income Tax Liabilities 
 21,233
 
 (21,233) 
 
 18,006
 
 (18,006) 
Other Long-Term Liabilities 20,008
 12,541
 1,025
 
 33,574
 26,732
 11,037
 1,006
 
 38,775
Long-Term Debt 225,000
 
 
 
 225,000
 225,000
 
 
 
 225,000
Total Other Liabilities $560,473
 $49,643
 $58,052
 $(163,310) $504,858
 $531,975
 $43,826
 $64,026
 $(165,742) $474,085
TOTAL SHAREHOLDERS’ INVESTMENT: 667,938
 372,674
 147,930
 (520,604) 667,938
TOTAL SHAREHOLDERS’ INVESTMENT 672,434
 325,960
 144,431
 (470,391) 672,434
TOTAL LIABILITIES AND SHAREHOLDERS’ INVESTMENT $1,469,600
 $472,078
 $254,111
 $(748,238) $1,447,551
 $1,417,535
 $452,822
 $267,787
 $(688,438) $1,449,706

 






2325


BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the Three Months EndedMarch 30, 201429, 2015
(Unaudited)
 
 
Briggs & Stratton
Corporation
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 Eliminations Consolidated 
Briggs & Stratton
Corporation
 
Guarantor
Subsidiary
 
Non-Guarantor
Subsidiaries
 Eliminations Consolidated
Net Sales $429,788
 $172,493
 $78,767
 $(52,645) $628,403
 $408,530
 $165,804
 $95,155
 $(50,474) $619,015
Cost of Goods Sold 334,097
 158,623
 58,852
 (52,645) 498,927
 321,429
 150,392
 71,500
 (50,474) 492,847
Restructuring Charges (774) 
 
 
 (774) 
 7,088
 
 
 7,088
Gross Profit 96,465
 13,870
 19,915
 
 130,250
 87,101
 8,324
 23,655
 
 119,080
Engineering, Selling, General and Administrative Expenses 43,267
 20,938
 10,658
 
 74,863
 43,252
 19,504
 9,958
 
 72,714
Equity in Income from Subsidiaries (3,658) 
 
 3,658
 
Restructuring Charges 
 943
 
 
 943
Equity in Earnings from Subsidiaries (5,072) 
 
 5,072
 
Income (Loss) from Operations 56,856
 (7,068) 9,257
 (3,658) 55,387
 48,921
 (12,123) 13,697
 (5,072) 45,423
Interest Expense (4,720) 

 
 
 (4,720) (5,159) (72) (2) 
 (5,233)
Other Income, Net 2,078
 15
 202
 
 2,295
 1,375
 293
 655
 
 2,323
Income (Loss) before Income Taxes 54,214
 (7,053) 9,459
 (3,658) 52,962
 45,137
 (11,902) 14,350
 (5,072) 42,513
Provision (Credit) for Income Taxes 15,061
 (2,598) 1,346
 
 13,809
 11,216
 (4,448) 1,824
 
 8,592
Net Income (Loss) $39,153
 $(4,455) $8,113
 $(3,658) $39,153
 $33,921
 $(7,454) $12,526
 $(5,072) $33,921
Comprehensive Income (Loss) $47,127
 $(4,542) $9,276
 $(4,734) $47,127
 $23,200
 $(8,010) $4,740
 $3,270
 $23,200
CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the Three Months EndedMarch 31, 201330, 2014
(Unaudited)
 
 
Briggs & Stratton
Corporation
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 Eliminations Consolidated 
Briggs & Stratton
Corporation
 
Guarantor
Subsidiary
 
Non-Guarantor
Subsidiaries
 Eliminations Consolidated
Net Sales $429,762
 $199,734
 $77,891
 $(70,128) $637,259
 $429,788
 $172,493
 $78,767
 $(52,645) $628,403
Cost of Goods Sold 335,570
 180,847
 57,537
 (70,128) 503,826
 334,097
 158,623
 58,852
 (52,645) 498,927
Restructuring Charges 5,354
 997
 294
 
 6,645
 (774) 
 
 
 (774)
Gross Profit 88,838
 17,890
 20,060
 
 126,788
 96,465
 13,870
 19,915
 
 130,250
Engineering, Selling, General and Administrative Expenses 41,603
 18,642
 10,423
 
 70,668
 43,267
 20,938
 10,658
 
 74,863
Equity in Income from Subsidiaries (8,274) 
 
 8,274
 
Equity in Earnings from Subsidiaries (3,658) 
 
 3,658
 
Income (Loss) from Operations 55,509
 (752) 9,637
 (8,274) 56,120
 56,856
 (7,068) 9,257
 (3,658) 55,387
Interest Expense (4,679) 
 (38) 
 (4,717) (4,720) 
 
 
 (4,720)
Other Income (Expense), Net 2,036
 24
 (254) 
 1,806
Other Income, Net 2,078
 15
 202
 
 2,295
Income (Loss) before Income Taxes 52,866
 (728) 9,345
 (8,274) 53,209
 54,214
 (7,053) 9,459
 (3,658) 52,962
Provision (Credit) for Income Taxes 14,350
 (332) 675
 
 14,693
 15,061
 (2,598) 1,346
 
 13,809
Net Income (Loss) $38,516
 $(396) $8,670
 $(8,274) $38,516
 $39,153
 $(4,455) $8,113
 $(3,658) $39,153
Comprehensive Income (Loss) $49,116
 $(272) $8,585
 $(8,313) $49,116
 $47,127
 $(4,542) $9,276
 $(4,734) $47,127







2426


BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the Nine Months Ended March 30, 201429, 2015
(Unaudited)

 
Briggs & Stratton
Corporation
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 Eliminations Consolidated 
Briggs & Stratton
Corporation
 
Guarantor
Subsidiary
 
Non-Guarantor
Subsidiaries
 Eliminations Consolidated
Net Sales $855,142
 $425,041
 $229,465
 $(147,349) $1,362,299
 $816,386
 $413,772
 $295,066
 $(169,293) $1,355,931
Cost of Goods Sold 688,280
 388,123
 177,094
 (147,349) 1,106,148
 650,398
 372,129
 227,649
 (169,293) 1,080,883
Restructuring Charges 2,693
 228
 1,783
 
 4,704
 
 20,780
 
 
 20,780
Gross Profit 164,169
 36,690
 50,588
 
 251,447
 165,988
 20,863
 67,417
 
 254,268
Engineering, Selling, General and Administrative Expenses 123,019
 56,628
 35,755
 
 215,402
 120,553
 55,248
 40,966
 
 216,767
Restructuring Charges 77
 
 348
 
 425
 
 2,481
 
 
 2,481
Equity in Income from Subsidiaries 1,459
 
 
 (1,459) 
Equity in Loss from Subsidiaries 930
 
 
 (930) 
Income (Loss) from Operations 39,614
 (19,938) 14,485
 1,459
 35,620
 44,505
 (36,866) 26,451
 930
 35,020
Interest Expense (13,796) 
 (27) 
 (13,823) (14,460) (178) (3) 
 (14,641)
Other Income, Net 5,882
 199
 57
 
 6,138
 4,690
 1,069
 990
 
 6,749
Income (Loss) before Income Taxes 31,700
 (19,739) 14,515
 1,459
 27,935
 34,735
 (35,975) 27,438
 930
 27,128
Provision (Credit) for Income Taxes 11,194
 (7,275) 3,510
 
 7,429
 9,149
 (13,426) 5,819
 
 1,542
Net Income (Loss) $20,506
 $(12,464) $11,005
 $1,459
 $20,506
 $25,586
 $(22,549) $21,619
 $930
 $25,586
Comprehensive Income (Loss) $35,082
 $(12,747) $11,785
 $962
 $35,082
 $2,003
 $(23,041) $2,677
 $20,364
 $2,003
CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the Nine Months Ended March 31, 201330, 2014
(Unaudited)

 
Briggs & Stratton
Corporation
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 Eliminations Consolidated 
Briggs & Stratton
Corporation
 
Guarantor
Subsidiary
 
Non-Guarantor
Subsidiaries
 Eliminations Consolidated
Net Sales $843,473
 $516,262
 $212,207
 $(186,597) $1,385,345
 $855,142
 $425,041
 $229,465
 $(147,349) $1,362,299
Cost of Goods Sold 677,715
 467,866
 163,820
 (186,597) 1,122,804
 688,280
 388,123
 177,094
 (147,349) 1,106,148
Restructuring Charges 7,074
 7,387
 509
 
 14,970
 2,693
 228
 1,783
 
 4,704
Gross Profit 158,684
 41,009
 47,878
 
 247,571
 164,169
 36,690
 50,588
 
 251,447
Engineering, Selling, General and Administrative Expenses 122,362
 53,265
 29,929
 
 205,556
 123,019
 56,628
 35,755
 
 215,402
Restructuring Charges 3,435
 
 
 
 3,435
 77
 
 348
 
 425
Equity in Income from Subsidiaries (8,596) 
 
 8,596
 
Equity in Loss from Subsidiaries 1,459
 
 
 (1,459) 
Income (Loss) from Operations 41,483
 (12,256) 17,949
 (8,596) 38,580
 39,614
 (19,938) 14,485
 1,459
 35,620
Interest Expense (13,677) (3) (122) 
 (13,802) (13,796) 
 (27) 
 (13,823)
Other Income, Net 4,251
 178
 231
 
 4,660
 5,882
 199
 57
 
 6,138
Income (Loss) before Income Taxes 32,057
 (12,081) 18,058
 (8,596) 29,438
 31,700
 (19,739) 14,515
 1,459
 27,935
Provision (Credit) for Income Taxes 10,703
 (4,487) 1,868
 
 8,084
 11,194
 (7,275) 3,510
 
 7,429
Net Income (Loss) $21,354
 $(7,594) $16,190
 $(8,596) $21,354
 $20,506
 $(12,464) $11,005
 $1,459
 $20,506
Comprehensive Income (Loss) $64,977
 $(7,972) $20,105
 $(12,133) $64,977
 $35,082
 $(12,747) $11,785
 $962
 $35,082






2527


BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES


CONSOLIDATING STATEMENT OF CASH FLOWS
For the Nine Months EndedMarch 30, 201429, 2015
(Unaudited)
 
 
Briggs & Stratton
Corporation
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 Eliminations Consolidated 
Briggs & Stratton
Corporation
 
Guarantor
Subsidiary
 
Non-Guarantor
Subsidiaries
 Eliminations Consolidated
Net Cash Provided by (Used in) Operating Activities $(48,051) $1,925
 $32,093
 $
 $(14,033) $(44,164) $(9,889) $3,398
 $(1,480) $(52,135)
Cash Flows from Investing Activities:                    
Additions to Plant and Equipment (26,474) (1,932) (1,065) 
 (29,471) (34,008) (4,680) (5,469) 
 (44,157)
Proceeds Received on Disposition of Plant and Equipment 57
 33
 19
 
 109
 90
 156
 72
 
 318
Cash Investment in Subsidiary 8,107
 
 (8,107) 
 
 (6,880) 
 
 6,880
 
Net Cash Used in Investing Activities (18,310) (1,899) (9,153) 
 (29,362)
Cash Paid for Acquisition, Net of Cash Acquired (59,855) 
 
 
 (59,855)
Net Borrowings (Repayments) on Loans, Notes Payable and Long-Term Debt (1,000) 
 
 1,000
 
Other, Net (250) 
 
 
 (250)
Net Cash Provided by (Used in) Investing Activities (101,903) (4,524) (5,397) 7,880
 (103,944)
Cash Flows from Financing Activities:                    
Repayments on Short-Term Debt 
 
 (300) 
 (300)
Net Borrowings (Repayments) on Loans, Notes Payable and Long-Term Debt (668) 668
 
 
 
Debt Issuance Costs (949) 
 
 
 (949)
Net Borrowings (Repayments) on Loans, Revolver, Notes Payable and Long-Term Debt 60,100
 12,188
 (11,188) (1,000) 60,100
Treasury Stock Purchases (30,066) 
 
 
 (30,066) (39,560) 
 
 
 (39,560)
Stock Option Exercise Proceeds and Tax Benefits 4,361
 
 
 
 4,361
 3,921
 
 
 
 3,921
Cash Dividends Paid (11,387) 
 
 
 (11,387) (11,374) 
 
 
 (11,374)
Cash Investment in Subsidiary 
 
 5,400
 (5,400) 
Net Cash Provided by (Used in) Financing Activities (38,709) 668
 (300) 
 (38,341) 13,087
 12,188
 (5,788) (6,400) 13,087
Effect of Foreign Currency Exchange Rate Changes on Cash and Cash Equivalents 
 
 529
 
 529
 
 
 (1,982) 
 (1,982)
Net Increase (Decrease) in Cash and Cash Equivalents (105,070) 694
 23,169
 
 (81,207) (132,980) (2,225) (9,769) 
 (144,974)
Cash and Cash Equivalents, Beginning 162,628
 1,275
 24,542
 
 188,445
 138,926
 2,680
 53,062
 
 194,668
Cash and Cash Equivalents, Ending $57,558
 $1,969
 $47,711
 $
 $107,238
 $5,946
 $455
 $43,293
 $
 $49,694

2628


BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

CONSOLIDATING STATEMENT OF CASH FLOWS
For the Nine Months Ended March 31, 201330, 2014
(Unaudited)
 
 
Briggs & Stratton
Corporation
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 Eliminations Consolidated 
Briggs & Stratton
Corporation
 
Guarantor
Subsidiary
 
Non-Guarantor
Subsidiaries
 Eliminations Consolidated
Net Cash Provided by (Used in) Operating Activities $(135,858) $17,333
 $44,746
 $
 $(73,779) $(48,051) $1,925
 $32,093
 $
 $(14,033)
Cash Flows from Investing Activities:                    
Additions to Plant and Equipment (19,924) (4,861) (1,516) 
 (26,301) (26,474) (1,932) (1,065) 
 (29,471)
Proceeds Received on Disposition of Plant and Equipment 44
 5,664
 997
 
 6,705
 57
 33
 19
 
 109
Cash Investment in Subsidiary (18,195) 
 18,195
 
 
 8,107
 
 (8,107) 
 
Cash Paid for Acquisition, Net of Cash Acquired 
 
 (59,627) 
 (59,627)
Net Cash Provided by (Used in) Investing Activities (38,075) 803
 (41,951) 
 (79,223) (18,310) (1,899) (9,153) 
 (29,362)
Cash Flows from Financing Activities:                    
Repayments on Short-Term Debt 
 
 (900) 
 (900) 
 
 (300) 
 (300)
Net Borrowings (Repayments) on Loans, Notes Payable and Long-Term Debt 57,954
 (22,604) 
 
 35,350
 (668) 668
 
 
 
Debt Issuance Costs (949) 
 
 
 (949)
Treasury Stock Purchases (23,057) 
 
 
 (23,057) (30,066) 
 
 
 (30,066)
Stock Option Exercise Proceeds and Tax Benefits 19,613
 
 
 
 19,613
 4,361
 
 
 
 4,361
Cash Dividends Paid (11,499) 
 
 
 (11,499) (11,387) 
 
 
 (11,387)
Net Cash Provided by (Used in) Financing Activities 43,011

(22,604) (900) 
 19,507
 (38,709)
668
 (300) 
 (38,341)
Effect of Foreign Currency Exchange Rate Changes on Cash and Cash Equivalents 
 
 (12) 
 (12) 
 
 529
 
 529
Net Increase (Decrease) in Cash and Cash Equivalents (130,922) (4,468) 1,883
 
 (133,507) (105,070) 694
 23,169
 
 (81,207)
Cash and Cash Equivalents, Beginning 133,108
 5,375
 17,592
 
 156,075
 162,628
 1,275
 24,542
 
 188,445
Cash and Cash Equivalents, Ending $2,186
 $907
 $19,475
 $
 $22,568
 $57,558
 $1,969
 $47,711
 $
 $107,238
 











2729


BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

The following table is a reconciliation of financial results by segment, as reported, to adjusted financial results by segment, excluding restructuring actions and acquisition-related charges, for the three months ended fiscal March 2015 and 2014 (in thousands, except per share data):
 Three Months Ended Fiscal March Three Months Ended Fiscal March
 2014 Reported 
Adjustments(1)
 
2014 Adjusted(2)
 2013 Reported 
Adjustments(1)
 
2013 Adjusted(2)
 2015 Reported 
Adjustments(1)
 
2015 Adjusted (2)
 2014 Reported 
Adjustments(1)
 
2014 Adjusted(2)
NET SALES:                        
Engines $452,359
 $
 $452,359
 $451,921
 $
 $451,921
 $432,248
 $
 $432,248
 $452,359
 $
 $452,359
Products 205,160
 
 205,160
 231,532
 
 231,532
 211,135
 
 211,135
 205,160
 
 205,160
Inter-Segment Eliminations (29,116) 
 (29,116) (46,194) 
 (46,194) (24,368) 
 (24,368) (29,116) 
 (29,116)
Total $628,403
 $
 $628,403
 $637,259
 $
 $637,259
 $619,015
 $
 $619,015
 $628,403
 $
 $628,403
            
GROSS PROFIT:                        
Engines $107,930
 $(774) $107,156
 $100,981
 $5,409
 $106,390
 $98,885
 $
 $98,885
 $107,930
 $(774) $107,156
Products 22,365
 
 22,365
 26,546
 1,236
 27,782
 19,908
 7,088
 26,996
 22,365
 
 22,365
Inter-Segment Eliminations (45) 
 (45) (739) 
 (739) 287
 
 287
 (45) 
 (45)
Total $130,250
 $(774) $129,476
 $126,788
 $6,645
 $133,433
 $119,080
 $7,088
 $126,168
 $130,250
 $(774) $129,476
INCOME (LOSS) FROM OPERATIONS:            
            
ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES            
Engines $45,345
 $
 $45,345
 $47,585
 $
 $47,585
Products 27,369
 110
 27,259
 27,278
 
 27,278
Total $72,714
 $110
 $72,604
 $74,863
 $
 $74,863
            
RESTRUCTURING CHARGES:            
Engines $
 $
 $
 $
 $
 $
Products 943
 943
 
 
 
 
Total $943
 $943
 $
 $
 $
 $
            
EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES            
Engines $1,388
 $
 $1,388
 $1,726
 $
 $1,726
Products 276
 
 276
 
 
 
Total $1,664
 $
 $1,664
 $1,726
 $
 $1,726
            
SEGMENT INCOME (LOSS) (3):            
Engines $60,345
 $(774) $59,571
 $57,058
 $5,409
 $62,467
 $54,928
 $
 $54,928
 $62,071
 $(774) $61,297
Products (4,913) 
 (4,913) (199) 1,236
 1,037
 (8,128) 8,141
 13
 (4,913) 
 (4,913)
Inter-Segment Eliminations (45) 
 (45) (739) 
 (739) 287
 
 287
 (45) 
 (45)
Total $55,387
 $(774) $54,613
 $56,120
 $6,645
 $62,765
 $47,087
 $8,141
 $55,228
 $57,113
 $(774) $56,339
INTEREST EXPENSE (4,720) 
 (4,720) (4,717) 
 (4,717)
OTHER INCOME, Net 2,295
 
 2,295
 1,806
 
 1,806
Income (Loss) Before Income Taxes 52,962
 (774) 52,188
 53,209
 6,645
 59,854
PROVISION FOR INCOME TAXES 13,809
 (271) 13,538
 14,693
 1,276
 15,969
Net income $39,153
 $(503) $38,650
 $38,516
 $5,369
 $43,885
            
EARNINGS PER SHARE            
Basic $0.82
 $(0.01) $0.81
 $0.79
 $0.11
 $0.90
Diluted 0.82
 (0.01) 0.81
 0.78
 0.11
 0.89

30


BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

  Three Months Ended Fiscal March
  2015 Reported 
Adjustments(1)
 
2015 Adjusted (2)
 2014 Reported 
Adjustments(1)
 
2014 Adjusted(2)
SEGMENT INCOME (LOSS) (3): 47,087
 8,141
 55,228
 57,113
 (774) 56,339
Reconciliation from Segment Income (Loss) to Income Before Income Taxes:            
Equity in Earnings of Unconsolidated Affiliates 1,664
 
 1,664
 1,726
 
 1,726
Income from Operations $45,423
 $8,141
 $53,564
 $55,387
 $(774) $54,613
             
INTEREST EXPENSE (5,233) 
 (5,233) (4,720) 
 (4,720)
OTHER INCOME, Net 2,323
 
 2,323
 2,295
 
 2,295
Income Before Income Taxes 42,513
 8,141
 50,654
 52,962
 (774) 52,188
PROVISION FOR INCOME TAXES 8,592
 2,849
 11,441
 13,809
 (271) 13,538
Net Income $33,921
 $5,292
 $39,213
 $39,153
 $(503) $38,650
             
EARNINGS PER SHARE            
Basic $0.75
 $0.11
 $0.86
 $0.82
 $(0.01) $0.81
Diluted 0.75
 0.11
 0.86
 0.82
 (0.01) 0.81

(1) For the third quarter of fiscal 2015, includes restructuring charges of $8,031 net of $2,811 of taxes and acquisition-related charges of $110 net of $38 of taxes. For the third quarter of fiscal 2014, includes restructuring income of $774 net of $271 of taxes. For the third quarter of fiscal 2013, includes restructuring charges of $6,645 net of $1,276 of taxes.
(2) Adjusted financial results are non-GAAP financial measures. The Company believes this information is meaningful to investors as it isolates the impact that restructuring charges and acquisition related charges have on reported financial results and facilitates comparisons between peer companies. The Company may utilize non-GAAP financial measures as a guide in the forecasting, budgeting, and long-term planning process. While the Company believes that adjusted financial results are useful supplemental information, such adjusted financial results are not intended to replace ourits GAAP financial results and should be read in conjunction with those GAAP results.
(3) The Company defines segment income (loss) as income from operations plus equity in earnings of unconsolidated affiliates.

NET SALES

Consolidated net sales for the third quarter of fiscal 20142015 were $628.4$619.0 million, a decrease of $8.9$9.4 million or 1.4%1.5% from the third quarter of fiscal 2013,2014. Engines shipped to third party OEM customers increased slightly in the quarter; however, shipments to its Products Segment were down in the quarter due to lowerhigher shipments earlier in the year to enable production in advance of the McDonough plant closure. The strengthening of the US dollar, predominantly against the Australian dollar, Brazilian real and Euro, led to an unfavorable foreign exchange impact on sales of generators$6.7 million. In addition, net sales were unfavorably impacted by reduced generator sales and theunfavorable mix of engines that power them. The quarterly impact of lower replenishment following fewer weather related events creating demand for generators and the related engines was an estimatedshipped. Net sales decrease of $25 million. This decrease was partially offsetbenefited by higher sales in international markets, particularly Australia and Europe, and the results of the Allmand acquisition, which closed in August of this fiscal year.

Engine Segment net sales were $432.2 million in the third quarter of fiscal 2015, a decrease of $20.1 million or 4.5% from the prior year. Total engine volumes shipped in the quarter decreased by 1.6% or approximately 50,000 engines. Engines shipped to third party OEM customers increased slightly in the quarter; however, shipments to its Products Segment were down in the quarter due to higher shipments earlier in the year to enable production in advance of the McDonough plant closure. Net sales also decreased due to an unfavorable sales mix of engines usedsold. Despite an unfavorable foreign exchange impact of $4.3 million, largely due to the weakening of the Euro, sales into the European market increased on U.S.improved placement of its engines and an anticipated improved lawn and garden season.

Products Segment net sales were $211.1 million in the third quarter of fiscal 2015, which was an increase of $6.0 million or 2.9% from the prior year. This increase was due to higher sales in international markets, increased commercial lawn and garden equipment sales in the North American market and the results of the Allmand acquisition. Grass growing conditions in the Australian market improved in fiscal 2015, which led to increased snow thrower sales due to higher snowfall amounts in North America this winter.net sales. Partially offsetting the increase was an unfavorable foreign exchange impact of $2.4 million, primarily related

2831


BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

Engines Segment fiscal 2014 third quarter net sales were $452.4 million, which was $0.4 million or 0.1% higher than the third quarter of fiscal 2013. Total engine volumes shipped in the quarter were also approximately the same between years at 3.2 million units. Net sales increased on higher sales of engines used on lawn and garden equipment for the North American market, partially offset by lower sales of engines used in generators and for products in Latin America and Australia.

Products Segment fiscal 2014 third quarter net sales were $205.2 million, a decrease of $26.4 million or 11.4% from the third quarter of fiscal 2013. This decrease was due to lower sales of generators as a result of fewer weather related events during fiscal 2014, decreased sales of lawn and garden equipment due to exiting sales of lawn and garden equipment to mass retailers and a delay in the selling season, and unfavorable foreign exchange due to the devaluationweakening of the Australian Dollardollar and Brazilian Real. Partially offsetting these decreases were higher netreal. In addition, generator sales of snow throwers and related service partsdecreased due to higher snowfall amounts in North America this winter.fewer major power outages.

GROSS PROFIT

The consolidated gross profit percentage was 20.7%19.2% in the third quarter of fiscal 2014, an increase2015, a decrease from 19.9%20.7% in the same period last year.

The Engines Segment gross profit percentage, including restructuring and acquisition related charges, was 22.9% in the third quarter of fiscal 2015, lower than the 23.9% in the third quarter of fiscal 2014. The Engines Segment gross profit percentage was 23.9%22.9% in the third quarter of fiscal 2014, higher than the 22.3% in the third quarter of fiscal 2013. The Engines Segment adjusted gross profit percentage for the third quarter of 2014 was 23.7%, which was slightly higher compared to the third quarter of fiscal 2013. The increase was primarily due to 4% higher production2015, a decrease of 80 basis points from the prior year adjusted gross profit percentage. Manufacturing throughput decreased by 6% during the third quarter, which improvedreduced adjusted gross profit percentagemargins by 0.3%,approximately 140 basis points. The decrease was largely timing related as well aswe accelerated production to earlier quarters in fiscal 2015 in order to accommodate the footprint restructuring of its Products Segment and to build engine inventories in advance of beginning production of the EXi engine platform in the second quarter of fiscal 2015. In addition, unfavorable foreign exchange, primarily related to the Euro, reduced adjusted gross profit margins by 70 basis points. Partially offsetting the lower adjusted gross profit margins were the previously announced retirement plan changes, which improved product sales mix of larger engines.fiscal 2015 adjusted gross profit margins by $3.2 million, or 70 basis points. Manufacturing efficiency improvements in fiscal 2015 also helped offset the decrease in adjusted gross profit margins.

The Products Segment gross profit percentage, including restructuring and acquisition related charges, was 10.9% for the third quarter of fiscal 2014, down from 11.5% in the third quarter of fiscal 2013. The Products Segment adjusted gross profit percentage for the third quarter of 2014 was 10.9%, which was 1.1% lower than the adjusted gross profit percentage9.4% for the third quarter of fiscal 2013.2015, down from 10.9% in the third quarter of fiscal 2014. The decrease wasadjusted gross profit percentage of 12.8% increased by 190 basis points year over year. Manufacturing throughput for the first three quarters of fiscal 2015 increased by over 20%. This favorable absorption of fixed costs led to an improvement of approximately 190 basis points in the third quarter. In addition, favorable sales mix improved adjusted gross margins due to a focus on selling higher margin lawn and garden equipment and the benefit of the Allmand acquisition. Partially offsetting the increase in adjusted gross profit margins was an unfavorable foreign exchange impact on gross profit percentage of approximately 1.3% and a 6.5% reduction in manufacturing throughput that led to an unfavorable absorption impact on gross profit percentage of approximately 0.7%. Partially offsetting this reduction were increases to gross profit percentage of 0.5%80 basis points primarily due to improved manufacturing efficiencies, including incremental restructuring savingsthe weakening of the Australian dollar and improved product sales mix through the U.S. dealer channel.Brazilian real.

ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Engineering, selling, general and administrative expenses were $74.9$72.7 million in the third quarter of fiscal 2014, an increase2015, a decrease of $4.2$2.1 million or 5.9%2.9% from the third quarter of fiscal 2013.2014.

The Engines Segment engineering, selling, general and administrative expenses were $47.6$45.3 million in the third quarter of fiscal 2014, an increase2015, a decrease of $3.7$2.2 million from the third quarter of fiscal 2013.2014. The increasedecrease was primarily due to increasedthe retirement plan changes. Higher compensation expense and higher sales and marketing expense in our international regions.fiscal 2015 was offset by the benefit of the movement in foreign exchange rates.

The Products Segment fiscal 20142015 third quarter engineering, selling, general and administrative expenses were $27.3$27.4 million, an increase of $0.6$0.1 million from the third quarter of fiscal 2013. The increase was mainly2014. Higher spend due to the Allmand acquisition and increased compensation expense and higher advertisingwas offset by $2.3 million in savings related to new product launches.









the restructuring actions announced in July 2014.


2932


BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

The following table is a reconciliation of financial results by segment, as reported, to adjusted financial results by segment, excluding restructuring actions and acquisition-related charges, for the nine months ended fiscal March 2015 and 2014 (in thousands, except per share data):

 Nine Months Ended Fiscal March Nine Months Ended Fiscal March
 2014 Reported 
Adjustments(1)
 
2014 Adjusted(2)
 2013 Reported 
Adjustments(1)
 
2013 Adjusted(2)
 2015 Reported 
Adjustments(1)
 
2015 Adjusted (2)
 2014 Reported 
Adjustments(1)
 
2014 Adjusted(2)
NET SALES:                        
Engines $901,858
 $
 $901,858
 $890,631
 $
 $890,631
 $857,067
 $
 $857,067
 $901,858
 $
 $901,858
Products 529,724
 
 529,724
 602,323
 
 602,323
 576,313
 
 576,313
 529,724
 
 529,724
Inter-Segment Eliminations (69,283) 
 (69,283) (107,609) 
 (107,609) (77,449) 
 (77,449) (69,283) 
 (69,283)
Total $1,362,299
 $
 $1,362,299
 $1,385,345
 $
 $1,385,345
 $1,355,931
 $
 $1,355,931
 $1,362,299
 $
 $1,362,299
            
GROSS PROFIT:                        
Engines $187,423
 $2,622
 $190,045
 $181,980
 $7,346
 $189,326
 $189,580
 $
 $189,580
 $187,423
 $2,622
 $190,045
Products 62,149
 2,082
 64,231
 63,798
 7,624
 71,422
 64,505
 21,952
 86,457
 62,149
 2,082
 64,231
Inter-Segment Eliminations 1,875
 
 1,875
 1,793
 
 1,793
 183
 
 183
 1,875
 
 1,875
Total $251,447
 $4,704
 $256,151
 $247,571
 $14,970
 $262,541
 $254,268
 $21,952
 $276,220
 $251,447
 $4,704
 $256,151
INCOME (LOSS) FROM OPERATIONS:            
            
ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES            
Engines $133,612
 $
 $133,612
 $136,470
 $
 $136,470
Products 83,155
 469
 82,686
 78,932
 
 78,932
Total $216,767
 $469
 $216,298
 $215,402
 $
 $215,402
            
RESTRUCTURING CHARGES:            
Engines $
 $
 $
 $425
 $425
 $
Products 2,481
 2,481
 
 
 
 
Total $2,481
 $2,481
 $
 $425
 $425
 $
            
EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES            
Engines $3,999
 $
 $3,999
 $4,277
 $
 $4,277
Products 1,006
 
 1,006
 
 
 
Total $5,005
 $
 $5,005
 $4,277
 $
 $4,277
            
SEGMENT INCOME (LOSS) (3):            
Engines $50,528
 $3,047
 $53,575
 $48,574
 $10,781
 $59,355
 $59,967
 $
 $59,967
 $54,805
 $3,047
 $57,852
Products (16,783) 2,082
 (14,701) (11,787) 7,624
 (4,163) (20,125) 24,902
 4,777
 (16,783) 2,082
 (14,701)
Inter-Segment Eliminations 1,875
 
 1,875
 1,793
 
 1,793
 183
 
 183
 1,875
 
 1,875
Total $35,620
 $5,129
 $40,749
 $38,580
 $18,405
 $56,985
 $40,025
 $24,902
 $64,927
 $39,897
 $5,129
 $45,026
INTEREST EXPENSE (13,823) 
 (13,823) (13,802) 
 (13,802)
OTHER INCOME, Net 6,138
 
 6,138
 4,660
 
 4,660
Income Before Income Taxes 27,935
 5,129
 33,064
 29,438
 18,405
 47,843
PROVISION FOR INCOME TAXES 7,429
 1,186
 8,615
 8,084
 5,392
 13,476
Net income $20,506
 $3,943
 $24,449
 $21,354
 $13,013
 $34,367
            
EARNINGS PER SHARE            
Basic $0.43
 $0.08
 $0.51
 $0.44
 $0.28
 $0.72
Diluted 0.43
 0.08
 0.51
 0.44
 0.27
 0.71



33


BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

  Nine Months Ended Fiscal March
  2015 Reported 
Adjustments(1)
 
2015 Adjusted (2)
 2014 Reported 
Adjustments(1)
 
2014 Adjusted(2)
SEGMENT INCOME (LOSS) (3): 40,025
 24,902
 64,927
 39,897
 5,129
 45,026
Reconciliation from Segment Income (Loss) to Income Before Income Taxes:            
Equity in Earnings of Unconsolidated Affiliates 5,005
 
 5,005
 4,277
 
 4,277
Income from Operations $35,020
 $24,902
 $59,922
 $35,620
 $5,129
 $40,749
             
INTEREST EXPENSE (14,641) 
 (14,641) (13,823) 
 (13,823)
OTHER INCOME, Net 6,749
 
 6,749
 6,138
 
 6,138
Income Before Income Taxes 27,128
 24,902
 52,030
 27,935
 5,129
 33,064
PROVISION FOR INCOME TAXES 1,542
 8,716
 10,258
 7,429
 1,186
 8,615
Net Income $25,586
 $16,186
 $41,772
 $20,506
 $3,943
 $24,449
             
EARNINGS PER SHARE            
Basic $0.56
 $0.35
 $0.91
 $0.43
 $0.08
 $0.51
Diluted 0.56
 0.35
 0.91
 0.43
 0.08
 0.51

(1) For the first nine months of fiscal 2015, includes restructuring charges of $23,261 net of $8,141 of taxes and acquisition-related charges of $1,641 net of $575 of taxes. For the first nine months of fiscal 2014, includes restructuring charges of $5,129 net of $1,186 of taxes. For the first nine months of fiscal 2013, includes restructuring charges of $18,405 net of $5,392 of taxes.
(2) Adjusted financial results are non-GAAP financial measures. The Company believes this information is meaningful to investors as it isolates the impact that restructuring charges and acquisition related charges have on reported financial results and facilitates comparisons between peer companies. The Company may utilize non-GAAP financial measures as a guide in the forecasting, budgeting, and long-term planning process. While the Company believes that adjusted financial results are useful supplemental information, such adjusted financial results are not intended to replace ourits GAAP financial results and should be read in conjunction with those GAAP results.
(3) The Company defines segment income (loss) as income (loss) from operations plus equity in earnings of unconsolidated affiliates.

NET SALES

For the first nine months of fiscal 2014, consolidated net sales were $1.36 billion, a decrease of $23.0 million or 1.7% when compared to the same period a year ago.

Engines SegmentConsolidated net sales for the first nine months of fiscal 20142015 were $901.9 million, which was $11.2$1.36 billion, a decrease of $6.4 million or 1.3% higher than the same period a year ago. The increase was primarily due to higher North American sales of engines used on lawn and garden equipment and related service parts due to strong demand stemming0.5% from late season growing conditions as well as the anticipated increased retail demand for the upcoming lawn and garden season. The increase was partially offset by lower sales of engines used in generators due to the lack of storm activity during the first nine months of fiscal 2014. The decrease is due to reduced shipment volumes of engines to OEM customers in North America, lower generator sales, and an unfavorable foreign exchange impact of approximately $14.0 million, predominantly due to the weakening of the Euro, Australian dollar, and Brazilian real compared with the US dollar. The decrease in net sales was partially offset by higher sales in Europe and Australia, higher sales of commercial lawn and garden equipment and pressure washers in North America, and the results of the Allmand acquisition.

Engines Segment net sales of $857.1 million in the first nine months of fiscal 2015 decreased $44.8 million or 5.0% from the prior year. Total engine volumes shipped in the first nine months of fiscal 2015 decreased by 4.8% or approximately 290,000 engines compared to the same period last year. The decrease in unit shipments was due to reduced shipments of small engines used on walk mowers in North America resulting from slightly elevated channel inventories following this past lawn and garden season. Net sales were also lower due to an unfavorable foreign exchange impact of $6.5 million, largely due to the weakening of the Euro and Australian dollar compared with the US dollar. Partially offsetting the decrease in net sales impactwas an improved sales mix of large engines used on lawn and garden equipment for the North American and European markets.

Products Segment net sales of $576.3 million in the first nine months of fiscal 2015 increased by $46.6 million or 8.8% from the prior year. This increase was due to fewer stormsthe results of the Allmand acquisition, higher sales in international markets, and higher sales of pressure washers and commercial lawn and garden equipment in North America. Grass growing conditions in the Australian market improved in fiscal 2015, which led to increased net sales. Partially offsetting the increase was approximately $90 million. Hurricanes Isaacan unfavorable foreign exchange impact of $7.6 million, primarily related to the weakening of the Australian dollar and Sandy occurred during fiscal 2013.
Brazilian real compared with the US dollar. In addition, generators sales decreased due to adequate channel inventories and no major storm activity.

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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

Products Segment net sales for the first nine months of fiscal 2014 were $529.7 million, a decrease of $72.6 million or 12.1% from the same period a year ago. The decrease in net sales was due to lower sales of standby and portable generators due to no landed hurricanes during fiscal 2014 and unfavorable foreign exchange predominantly due to the Australian Dollar and the Brazilian Real. This decrease was partially offset by higher net sales from the Branco acquisition.

GROSS PROFIT

The consolidated gross profit percentage was 18.5% for18.8% in the first nine months of fiscal 2014,2015, an increase from 17.9%18.5% in the same period last year.

The Engines Segment gross profit percentage, including restructuring and acquisition related charges, was 20.8% for22.1% in the first nine months of fiscal 2014, up from 20.4% for2015, higher than the 20.8% in the first nine months of fiscal 2013.2014. The Engines Segment adjusted gross profit percentage for the first nine months of 20142015 was 21.1%22.1%, which was 0.2% lower compared toan increase of 100 basis points from the adjusted gross profit percentage of 21.1% earned in the first nine months of fiscal 2013. The decrease was primarily2014. Engines Segment adjusted gross profit margins improved due to a 6% reduction in manufacturing throughput; however, production mix was favorable as proportionately more large engines were built. The decrease in gross profit percentage was partially offset by a favorablean improved product sales mix of higher margin large engines and lower retirement plan expense. Favorable sales mix of large engines improved adjusted gross profit margins by 50 basis points. The previously announced retirement plan changes, which were implemented in January of calendar 2014, improved fiscal 2015 adjusted gross profit margins by $8.0 million or 90 basis points. Partially offsetting the margin contributedimproved gross profit margins was the impact of unfavorable foreign exchange, primarily related to the Euro, which reduced adjusted gross profit margins by Branco.$4.3 million or 30 basis points.

The Products Segment gross profit percentage, including restructuring and acquisition related charges, was 11.7%11.2% for the first nine months of fiscal 2014, up2015, down from 10.6% for11.7% in the first nine months of fiscal 2013.2014. The Products Segment adjusted gross profit percentage for the first nine months of 20142015 was 12.1%15.0%, which was 0.2% higher compared toan improvement of 290 basis points from the 12.1% earned in the first nine months of fiscal 2013. The increase was primarily related to a 0.7% benefit from improved manufacturing efficiencies and incremental footprint restructuring savings of $1.3 million. The2014. Products Segment adjusted gross profit percentage also benefited frommargins increased due to improved sales mix and higher manufacturing throughput. Favorable sales mix improved adjusted gross margins by 290 basis points due to a focus on selling higher margin lawn and garden equipment and the additional margin from Branco. Partially offsettingbenefit of the Allmand acquisition. In addition, manufacturing throughput increased year over year by 22%, benefiting adjusted gross margins by approximately 150 basis points. Throughput is increased due to higher production of pressure washers and riding mowers to facilitate the previously announced upcoming closure of the McDonough plant. Offsetting the increase in adjusted gross profit margins was a 0.5%an unfavorable foreign exchange impact of approximately $7.2 million or 110 basis points primarily due to the devaluation of the Australian dollar and Brazilian Real, and an unfavorable impact from foreign exchange.of 40 basis points due to slightly higher material costs.

ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Engineering, selling, general and administrative expenses were $215.4$216.8 million forin the first nine months of fiscal 2014,2015, an increase of $9.8$1.4 million or 4.8%0.6% from the first nine months of fiscal 2013.2014.

The Engines Segment engineering, selling, general and administrative expenses were $136.5 million in the first nine months of fiscal 2014, an increase2015, a decrease of $6.5 million.$2.9 million from the first nine months of fiscal 2014. The increasedecrease was primarily due to increasedthe previously announced retirement plan changes, which reduced engineering, selling, general and administrative expenses by $6.0 million. Higher compensation costs, higher advertising costs to support new product launches, and the added expenses related to Branco,expense in fiscal 2015 was partially offset by lower retirement plan expensesthe benefit of $2.6 million.the changes in foreign exchange rates.

The Products Segment engineering, selling, general and administrative expenses were $78.9 million infor the first nine months of fiscal 2014,2015 were $83.2 million, an increase of $3.3$4.2 million from the first nine months of fiscal 2013.2014. The Products Segment adjusted engineering, selling, general and administrative expenses for the first nine months of fiscal 2015 were $82.7 million, an increase of $3.8 million from the first nine months of fiscal 2014. The increase was mainly attributabledue to additional expenses from Branco,$5.5 million related to the Allmand acquisition and increased compensation expense, and higher advertising costs related to new product launches, partially offset by favorable foreign exchange.$5.1 million in savings related to the restructuring actions announced in July 2014.

ACQUISITION

On August 29, 2014, the Company completed the acquisition of Allmand Bros., Inc. for approximately $60 million in cash, net of cash acquired. Allmand is a leading designer and manufacturer of high quality towable light towers, industrial heaters, and solar LED arrow boards. Allmand, which is included within its Products Segment, has historical annual net sales of approximately $80 million.


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INTEREST EXPENSE

Interest expense for the third quarter and first nine months of fiscal 20142015 was comparablehigher by $0.5 million and $0.8 million, respectively, compared to the same periods a year ago.ago due to higher average borrowings primarily during the third quarter of fiscal 2015.

PROVISION FOR INCOME TAXES

The effective tax raterates for the third quarter and first nine months of fiscal 2014 was 26.1%2015 were 20.2% and 5.7%, compared to 27.6%26.1% and 26.6% for the same respective period of fiscal 2013.periods last year. The tax raterates for the third quarter and first nine months of fiscal 2014 included2015 were lower than the statutory rates due to the impact of incremental federal research & development (R&D) tax credits related to prior years, offset by reserves for unrecognized tax positions for a taxpayer election which provided the Company a $2.9 millionnet tax benefit that was previously unavailable as well as a benefit of $0.7 million from income related to foreign operations subject to different statutory tax rates.  The tax rate for the third quarter of fiscal 2013 included benefits for the reenactment of the U.S. federal research and development and other credits in the amount of $1.0 million, foreign tax credits in the amount of $0.5$4.7 million and $1.7$5.0 million, from income related to foreign operations subject to different statutory rates. The effectiverespectively. In addition, the tax rate for the first nine months of fiscal 20142015 was 26.6%, compared to 27.5% forimpacted by the same respective periodreversal of fiscal 2013.




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RESTRUCTURING ACTIONS

In fiscal 2012, the Company announced plans to reduce manufacturing capacity through closure of its Newbern, Tennessee and Ostrava, Czech Republic plants,previously recorded reserves as well as the consolidation of its plants in Poplar Bluff, Missouri and Auburn, Alabama. During fiscal 2012, the Company ceased manufacturing operations at its Newbern, Tennessee and Ostrava, Czech Republic plants, and carried out the consolidationa result of the Poplar Bluff, Missouri plant. Production of horizontal shaft engines was concluded at the Auburn, Alabama plant during the second quarter of fiscal 2014. The Company also announced in fiscal 2012 the reduction of approximately 10%effective settlement of the Company's salaried headcount. In fiscal 2012 and fiscal 2013, the Company implemented the salaried headcount reductions. Additionally, beginning in fiscal 2013, the Company exited the placement of lawn and garden products at national mass retailers.Company’s IRS audit. The Engines Segment continues to support lawn and garden equipment OEMs who provide lawn and garden equipment to these retailers.

In October 2012, the Board of Directors of the Company authorized an amendment to the Company's defined benefit retirement plans for U.S., non-bargaining employees. The amendment freezes accruals for all non-bargaining employees effective January 1, 2014. The Company recorded a pre-tax curtailment charge of $1.9 million in the second quarter of fiscal 2013 related to the defined benefit plan change.
The previously announced restructuring actions are nearing their conclusion as planned. The restructuring actionstax rates for the third quarter resulted in pre-tax income of $0.8 million related to the reduction of an estimated reserve related to plant closure costs. Net pre-tax restructuring costs forand the first nine months of fiscal 2014 were $5.1 million;included a taxpayer election filed pursuant to the cost estimatesoutcome of a U.S. court case that provided the Company precedent to record a tax benefit of $2.9 million for the permanent exclusion of qualified export activity from prior years’ taxable income.

RESTRUCTURING ACTIONS

During the third quarter of fiscal 2014 remain unchanged2015, the Company continued progress on implementing the previously announced restructuring actions to narrow its assortment of lower-priced Snapper consumer lawn and garden equipment and consolidate its Products Segment manufacturing facilities in order to reduce costs. The Company began production of pressure washers at $6 million to $8 million. Incremental pre-taxits Milwaukee plant during the third quarter and ceased production at the McDonough, Georgia plant shortly after the end of the third quarter. Pre-tax restructuring savingscosts for the third quarter and first nine months of fiscal 20142015 were $1.8 million; the incremental$8.0 million and $23.3 million, respectively, and pre-tax savings estimatewere $2.3 million and $5.1 million, respectively. Pre-tax restructuring cost estimates for fiscal 2014 also remains2015 remain unchanged at $2$30 million to $4$37 million. Total annual cost savings as a result of these actions are anticipated to be approximately $15 million to $20 million with approximately $5 million to $7 million expected to be realized in fiscal 2015 and the remainder realized in fiscal 2016.

LIQUIDITY AND CAPITAL RESOURCES
    
Cash flows used in operating activities for the first nine months of fiscal 20142015 were $14.0$52.1 million compared to $73.8 million in the first nine months of fiscal 2013. The improvement in operating cash flows was primarily related to changes in working capital needs in fiscal 2014 associated with improvements in managing outstanding accounts receivable and reducing required inventory levels. In addition, no contributions to the pension plan were made in fiscal 2014 compared to $29.4$14.0 million in the first nine months of fiscal 2013.2014. The increase in operating cash flows used was primarily related to higher inventory levels to facilitate the upcoming closure of the McDonough plant and the introduction of a new engine line in fiscal 2015 as well as lower accounts payable.

Cash flows used in investing activities were $29.4$103.9 million and $79.2$29.4 million during the first nine months of fiscal 20142015 and fiscal 2013,2014, respectively. The $49.8$74.5 million decreaseincrease in cash used in investing activities was primarily related to $59.6$59.9 million of cash paid for the BrancoAllmand acquisition during the second quarter of fiscal 2013. The decrease was partially offset by $6.6and a $14.7 million of lower proceeds received on dispositions ofincrease in additions to plant and equipment during the first nine months of fiscal 20142015 compared to fiscal 2013 when the Company sold the dormant manufacturing facility in Jefferson, Wisconsin and a land parcel adjacent to the Ostrava, Czech Republic plant.same period last year.

Cash flows used inprovided by financing activities were $38.3$13.1 million during the first nine months of fiscal 20142015 as compared to $19.5$38.3 million of cash flows provided byused in financing activities during the first nine months of fiscal 2013.2014. The $57.8$51.4 million increase in cash used inprovided by financing activities was primarily attributable to $15.2$60.1 million of lower stock option exercise proceedsborrowings on the Revolver in fiscal 2015 compared to no such borrowings in fiscal 2014, compared to fiscal 2013, $35.4partially offset by a $9.5 million of lower net borrowings on the revolverincrease in fiscal 2014 compared to the same period a year ago, and $7 million of higher treasury stock purchases in fiscal 20142015 compared to fiscal 2013.2014.

FUTURE LIQUIDITY AND CAPITAL RESOURCES

On December 15,20, 2010, the Company issued $225$225 million of 6.875% Senior Notes ("Senior Notes") due December 15, 2020.  2020.  

On October 13, 2011, the Company entered into a $500 million multicurrency credit agreement (the “Revolver”). On October 21, 2013, the Company entered into an amendment to the Revolver,its $500 million multicurrency credit agreement (the “Revolver”), which, among other things, extended the maturity of the Revolver from October 13, 2016 to October 21, 2018.2018. The initial maximum availability under the revolving credit facility is $500 million.$500 million. Availability under the revolving credit facility is reduced by outstanding letters of credit. The Company may from time to time increase the maximum availability under the revolving credit facility

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under the revolving credit facility by up to $250$250 million if certain conditions are satisfied. As of March 30, 2014, there were no borrowings29, 2015, $60.1 million was outstanding under the Revolver.

On August 8, 2012January 22, 2014 the Board of Directors of the Company authorized up to $50 million in funds associated with the common share repurchase program with an expiration date of June 30, 2014.program. On January 22,August 13, 2014, the Board of Directors of the Company authorized up to an additional $50$50 million in funds for use in the Company’s common share repurchase program with an extension of the expiration date to June 30, 2016.program. As of March 30, 2014,29, 2015, the total remaining authorization was approximately $50.3 million.$47.7 million with an expiration date of June 30, 2016. The common share repurchase program authorizes the purchase of shares of the Company's common stock on the open market or in private transactions from time to time, depending on market conditions and certain governing loan covenants. During the nine months ended March 30, 2014,29, 2015, the Company repurchased 1,479,6262,039,399 shares on the open market at an average price of $20.32$19.40 per share.

The Company expects capital expenditures to be approximately $45$60 million to $50$65 million in fiscal 2014.2015. These anticipated expenditures reflect ourits plans to continue to reinvest in efficient equipment and innovative new products.

During the first nine months of fiscal 2014,2015, the Company made no cash contributions to the qualified pension plan. Based upon current regulations and actuarial studies, the Company estimates that it will not be required to makeno required minimum contributions to the qualified pension plan during the remainder of fiscal 2014 or2015. In addition, the Company expects it will not be required to make minimum contributions to the qualified pension plan in fiscal 2015.2016 through fiscal 2019. The Company may be required to make further contributions in future years depending upon the actual return on plan assets and the funded status of the plan in future periods.

Management believes that available cash, cash generated from operations, existing lines of credit and access to debt markets will be adequate to fund the Company’s capital requirements and operational needs for the foreseeable future.

The Revolver and the Senior Notes contain restrictive covenants. These covenants include restrictions on the Company’s ability to: pay dividends; repurchase shares; incur indebtedness; create liens; enter into sale and leaseback transactions; consolidate or merge with other entities; sell or lease all or substantially all of its assets; and dispose of assets or use proceeds from sales of its assets. The Revolver contains financial covenants that require the Company to maintain a minimum interest coverage ratio and impose a maximum leverage ratio. As of March 30, 2014,29, 2015, the Company was in compliance with these covenants, and expects to be in compliance with all covenants during the remainder of fiscal 2014.2015.

OFF-BALANCE SHEET ARRANGEMENTS

There have been no material changes since the August 27, 201326, 2014 filing of the Company’s Annual Report on Form 10-K.

CONTRACTUAL OBLIGATIONS

There have been no material changes since the August 27, 201326, 2014 filing of the Company’s Annual Report on Form 10-K, except that subsequentthe Company expects it will be required to make no minimum contributions to the filing of the Company's Annual Report on Form 10-K, on October 21, 2013, the Company entered into an amendment to the Revolver, which, among other things, extended the maturity of the Revolver from October 13,qualified pension plan in fiscal 2016 to October 21, 2018.through fiscal 2019.

CRITICAL ACCOUNTING POLICIES

There have been no material changes in the Company’s critical accounting policies since the August 27, 201326, 2014 filing of its Annual Report on Form 10-K. As discussed in ourits annual report, the preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements.


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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

The most significant accounting estimates inherent in the preparation of ourits financial statements include a goodwill assessment, estimates as to the realizability of accounts receivable and inventory assets, as well as estimates used in the determination of liabilities related to customer rebates, pension obligations, postretirement benefits, warranty,

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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

product liability, group health insurance, litigation 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. The Company re-evaluates these significant factors as facts and circumstances change.
NEW ACCOUNTING PRONOUNCEMENTS

A discussion of new accounting pronouncements is included in the Notes to Condensed Consolidated Financial Statements of this Form 10-Q under the heading New"New Accounting PronouncementsPronouncements" and is incorporated herein by reference.

OTHER MATTERS

The Labor Agreement with United Steelworkers Local 2-232 expired on July 31, 2013. The agreement covered 395 hourly employees in our Wauwatosa and Menomonee Falls, Wisconsin facilities. Membership of the union ratified a new Labor Agreement on October 30, 2013. The new Agreement took effect on October 30, 2013 and expires on July 31, 2017.

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 “believe”, “estimate”, “expect”, “forecast”, “intend”, “plan”, “project”, and similar expressions are intended to identify forward-looking statements. The forward-looking statements are based on the Company’s current views and assumptions and involve risks and uncertainties that include, among other things, the ability to successfully forecast demand for ourits products; changes in interest rates and foreign exchange 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; changes in laws and regulations; changes in customer and OEM demand; changes in prices of raw materials and parts that we purchase; changes in domestic and foreign economic conditions; the ability to bring new productive capacity on line efficiently and with good quality; outcomes of legal proceedings and claims; and other factors disclosed from time to time in ourits SEC filings or otherwise, including the factors discussed in Item 1A, Risk Factors, of the Company’s Annual Report on Form 10-K and in its periodic reports on Form 10-Q. We are not undertaking any obligation to update any forward-looking statements or other statements we may make even though these statements may be affected by events or circumstances occurring after the forward-looking statements or other statements were made.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes since the August 27, 201326, 2014 filing of the Company’s Annual Report on Form 10-K.
ITEM 4. CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act.
INTERNAL CONTROL OVER FINANCIAL REPORTING
There has not been any change in the Company’s internal control over financial reporting during the third fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
A discussion of legal proceedings is included in the Notes to Condensed Consolidated Financial Statements of this Form 10-Q under the heading Commitments"Commitments and ContingenciesContingencies" and is incorporated herein by reference.
ITEM 1A. RISK FACTORS
There have been no material changes since the August 27, 201326, 2014 filing of the Company’s Annual Report on Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
The table below sets forth the information with respect to purchases made by or on behalf of the Company of its common stock during the quarterly period ended March 30, 201429, 2015.
2014 Fiscal Month Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of a Publicly Announced Program (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under  the Program (1)
December 30, 2013 to January 26, 2014 105,838
 $21.58
 105,838
 $56,981,409
January 27, 2014 to February 23, 2014 150,641
 21.20
 150,641
 53,787,820
February 24, 2014 to March 30, 2014 156,700
 22.35
 156,700
 50,285,575
Total Third Quarter 413,179
 $21.73
 413,179
 $50,285,575
2015 Fiscal Month Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of a Publicly Announced Program (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under  the Program (1)
December 29, 2014 to January 25, 2015 215,982
 $19.55
 215,982
 $55,470,492
January 26, 2015 to February 22, 2015 210,000
 19.14
 210,000
 51,451,092
February 23, 2015 to March 29, 2015 184,829
 20.06
 184,829
 47,743,422
Total Third Quarter 610,811
 $19.56
 610,811
 $47,743,422
(1)
On August 8, 2012January 22, 2014, the Board of Directors of the Company authorized up to $50 million in funds associated with the common share repurchase program with an expiration date of June 30, 2014.program. On January 22,August 13, 2014, the Board of Directors of the Company authorized up to an additional $50 million in funds for use in the Company’s common share repurchase program with an extension of the expiration date toof June 30, 2016.

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ITEM 6. EXHIBITS
 
Exhibit
Number
 Description
   
31.1 Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Filed herewith)
   
31.2 Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Filed herewith)
   
32.1 Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Furnished herewith)
   
   
32.2 Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Furnished herewith)
   
101 The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 30, 201429, 2015 formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Income (Loss), (iv) the Condensed Consolidated Statements of Cash Flows, and (v) related Notes to Condensed Consolidated Financial Statements

 

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
   BRIGGS & STRATTON CORPORATION 
   (Registrant) 
     
Date:May 6, 20145, 2015 /s/ David J. Rodgers 
   David J. Rodgers 
   
Senior Vice President and Chief Financial Officer and
Duly Authorized Officer
 
 

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EXHIBIT INDEX
 
Exhibit
Number
 Description
   
31.1 Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Filed herewith)
   
31.2 Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Filed herewith)
   
32.1 Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Furnished herewith)
   
32.2 Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Furnished herewith)
   
101 The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 30, 201429, 2015 formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Income (Loss), (iv) the Condensed Consolidated Statements of Cash Flows, and (v) related Notes to Condensed Consolidated Financial Statements

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