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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 September 28, 2014March 29, 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
¨  (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 October 31, 2014May 1, 2015
COMMON STOCK, par value $0.01 per share 45,365,46544,599,944 Shares


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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
INDEX
 
  Page No.
  
PART I – FINANCIAL INFORMATION 
   
Item 1. 
   
 
   
 
Condensed Consolidated Statements of Operations – Three and Nine Months Ended September 28,March 29, 2015 and March 30, 2014 and September 29, 2013
   
 
   
 
Condensed Consolidated Statements of Cash Flows – ThreeNine Months Ended September 28,March 29, 2015 and March 30, 2014 and September 29, 2013
   
 
   
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
 
        
 September 28,
2014
 June 29,
2014
 March 29,
2015
 June 29,
2014
CURRENT ASSETS:        
Cash and Cash Equivalents $61,898
 $194,668
 $49,694
 $194,668
Accounts Receivable, Net 166,313
 220,590
 315,725
 220,590
Inventories -        
Finished Products and Parts 370,028
 268,116
 323,059
 268,116
Work in Process 127,076
 102,431
 115,145
 102,431
Raw Materials 9,784
 5,556
 8,692
 5,556
Total Inventories 506,888
 376,103
 446,896
 376,103
Deferred Income Tax Asset 47,904
 48,958
 48,958
 48,958
Prepaid Expenses and Other Current Assets 39,799
 30,016
 35,463
 30,016
Total Current Assets 822,802
 870,335
 896,736
 870,335
OTHER ASSETS:        
Goodwill 160,976
 144,522
 156,278
 144,522
Investments 27,056
 27,137
 29,354
 27,137
Debt Issuance Costs 4,428
 4,671
 3,950
 4,671
Other Intangible Assets, Net 101,594
 80,317
 95,405
 80,317
Long-Term Deferred Income Tax Asset 291
 15,178
 129
 15,178
Other Long-Term Assets, Net 11,458
 10,539
 12,445
 10,539
Total Other Assets 305,803
 282,364
 297,561
 282,364
PLANT AND EQUIPMENT:        
Cost 1,040,081
 1,035,848
 1,028,368
 1,035,848
Less - Accumulated Depreciation 743,160
 738,841
 728,136
 738,841
Total Plant and Equipment, Net 296,921
 297,007
 300,232
 297,007
TOTAL ASSETS $1,425,526
 $1,449,706
 $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
 
        
 September 28,
2014
 June 29,
2014
 March 29,
2015
 June 29,
2014
CURRENT LIABILITIES:        
Accounts Payable $187,214
 $169,271
 $197,476
 $169,271
Short-Term Debt 60,100
 
Accrued Liabilities 140,888
 133,916
 158,644
 133,916
Total Current Liabilities 328,102
 303,187
 416,220
 303,187
OTHER LIABILITIES:        
Accrued Pension Cost 120,569
 126,529
 107,992
 126,529
Accrued Employee Benefits 24,538
 24,491
 24,487
 24,491
Accrued Postretirement Health Care Obligation 56,122
 59,290
 51,750
 59,290
Deferred Income Tax Liability 3,906
 
 3,414
 
Other Long-Term Liabilities 35,256
 38,775
 40,822
 38,775
Long-Term Debt 225,000
 225,000
 225,000
 225,000
Total Other Liabilities 465,391
 474,085
 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 73,100
 78,466
 76,332
 78,466
Retained Earnings 1,027,469
 1,048,466
 1,056,981
 1,048,466
Accumulated Other Comprehensive Loss (199,142) (195,257) (218,840) (195,257)
Treasury Stock at cost, 12,111 and 11,536 shares, respectively (269,973) (259,820)
Treasury Stock at cost, 13,174 and 11,536 shares, respectively (290,208) (259,820)
Total Shareholders’ Investment 632,033
 672,434
 624,844
 672,434
TOTAL LIABILITIES AND SHAREHOLDERS’ INVESTMENT $1,425,526
 $1,449,706
 $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 Three Months Ended Nine Months Ended
 September 28,
2014
 September 29,
2013
 March 29,
2015
 March 30,
2014
 March 29,
2015
 March 30,
2014
NET SALES $292,629
 $317,304
 $619,015
 $628,403
 $1,355,931
 $1,362,299
COST OF GOODS SOLD 238,462
 269,888
 492,847
 498,927
 1,080,883
 1,106,148
RESTRUCTURING CHARGES 6,846
 3,585
 7,088
 (774) 20,780
 4,704
Gross Profit 47,321
 43,831
 119,080
 130,250
 254,268
 251,447
ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 70,084
 68,762
 72,714
 74,863
 216,767
 215,402
RESTRUCTURING CHARGES 955
 
 943
 
 2,481
 425
Loss from Operations (23,718) (24,931)
Income from Operations 45,423
 55,387
 35,020
 35,620
INTEREST EXPENSE (4,518) (4,510) (5,233) (4,720) (14,641) (13,823)
OTHER INCOME, Net 2,373
 2,093
 2,323
 2,295
 6,749
 6,138
Loss Before Income Taxes (25,863) (27,348)
CREDIT FOR INCOME TAXES (10,584) (7,999)
NET LOSS $(15,279) $(19,349)
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
            
EARNINGS (LOSS) PER SHARE    
EARNINGS PER SHARE        
Basic $(0.34) $(0.41) $0.75
 $0.82
 $0.56
 $0.43
Diluted (0.34) (0.41) 0.75
 0.82
 0.56
 0.43
            
WEIGHTED AVERAGE SHARES OUTSTANDING            
Basic 45,113
 46,997
 44,160
 46,129
 44,605
 46,549
Diluted 45,113
 46,997
 44,241
 46,245
 44,656
 46,615
            
DIVIDENDS PER SHARE $0.125
 $0.12
 $0.125
 $0.12
 $0.375
 $0.36


The accompanying notes are an integral part of these statements.
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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSSINCOME (LOSS)
(In thousands)
(Unaudited)


 
 Three Months Ended Three Months Ended Nine Months Ended
 September 28,
2014
 September 29,
2013
 March 29,
2015
 March 30,
2014
 March 29,
2015
 March 30,
2014
Net Loss $(15,279) $(19,349)
Net Income $33,921
 $39,153
 $25,586
 $20,506
Other Comprehensive Income (Loss):            
Cumulative Translation Adjustments (9,907) 253
 (12,925) 2,212
 (34,045) (1,160)
Unrealized Gain (Loss) on Derivative Instruments, Net of Tax 3,667
 (281) (173) 1,381
 3,333
 2,568
Unrecognized Pension & Postretirement Obligation, Net of Tax 2,355
 4,350
 2,377
 4,381
 7,129
 13,168
Other Comprehensive Income (Loss) (3,885) 4,322
 (10,721) 7,974
 (23,583) 14,576
Total Comprehensive Loss $(19,164) $(15,027)
Total Comprehensive Income $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)
 
 Three Months Ended Nine Months Ended
 September 28,
2014
 September 29,
2013
 March 29,
2015
 March 30,
2014
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net Loss $(15,279) $(19,349)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:    
Net Income $25,586
 $20,506
Adjustments to Reconcile Net Income to Net Cash Used in Operating Activities:    
Depreciation and Amortization 12,939
 13,874
 39,302
 38,333
Stock Compensation Expense 1,605
 3,040
 4,840
 5,822
Loss on Disposition of Plant and Equipment 75
 157
 300
 462
Provision (Credit) for Deferred Income Taxes 4,558
 (1,418) 914
 (8,705)
Equity in Earnings of Unconsolidated Affiliates (1,887) (1,529) (5,005) (4,277)
Dividends Received from Unconsolidated Affiliates 1,750
 1,500
 4,381
 4,069
Non-Cash Restructuring Charges 5,165
 1,726
 12,445
 3,386
Change in Operating Assets and Liabilities:        
Accounts Receivable 70,347
 20,110
 (88,898) (147,738)
Inventories (117,735) (61,310) (58,715) 11,713
Other Current Assets 8,628
 (9,983) 5,917
 (9,083)
Accounts Payable, Accrued Liabilities and Income Taxes (13,596) 4,515
 18,844
 76,335
Other, Net (5,448) (4,194) (12,046) (4,856)
Net Cash Used in Operating Activities (48,878) (52,861) (52,135) (14,033)
CASH FLOWS FROM INVESTING ACTIVITIES:        
Additions to Plant and Equipment (7,390) (11,650) (44,157) (29,471)
Proceeds Received on Disposition of Plant and Equipment 172
 28
 318
 109
Cash Paid for Acquisition, Net of Cash Acquired (62,056) 
 (59,855) 
Other, Net (250) 
Net Cash Used in Investing Activities (69,274) (11,622) (103,944) (29,362)
CASH FLOWS FROM FINANCING ACTIVITIES:        
Repayments on Short-Term Debt 
 (300) 
 (300)
Net Borrowings on Revolver 
 
 60,100
 
Debt Issuance Costs 
 (949)
Treasury Stock Purchases (17,761) (9,696) (39,560) (30,066)
Stock Option Exercise Proceeds and Tax Benefits 3,151
 994
 3,921
 4,361
Net Cash Used in Financing Activities (14,610) (9,002)
Cash Dividends Paid (11,374) (11,387)
Net Cash Provided by (Used in) Financing Activities 13,087
 (38,341)
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (8) 216
 (1,982) 529
NET DECREASE IN CASH AND CASH EQUIVALENTS (132,770) (73,269) (144,974) (81,207)
CASH AND CASH EQUIVALENTS, Beginning 194,668
 188,445
 194,668
 188,445
CASH AND CASH EQUIVALENTS, Ending $61,898
 $115,176
 $49,694
 $107,238


The accompanying notes are an integral part of these statements.
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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 May 2014, the Financial Accounting Standard Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers (Topic 606)." The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, under either full or modified retrospective adoption. Early application is not permitted. Management is currently assessing the potential impact of this new accounting pronouncement on the Company's results of operations, financial position, and 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 September 28, 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 $13,053
 $(1,084) $(207,226) $(195,257) $(8,067) $2,422
 $(202,474) $(208,119)
Other Comprehensive Income (Loss) Before Reclassification (9,907) 5,818
 
 (4,089) (12,925) 3,824
 
 (9,101)
Income Tax Benefit (Expense) 
 (2,211) 
 (2,211) 
 (1,453) 
 (1,453)
Net Other Comprehensive Income (Loss) Before Reclassifications (9,907) 3,607
 
 (6,300) (12,925) 2,371
 
 (10,554)
Reclassifications:       

       

Realized (Gains) Losses - Foreign Currency Contracts (1) 
 (393) 
 (393) 
 (4,728) 
 (4,728)
Realized (Gains) Losses - Commodity Contracts (1) 
 179
 
 179
 
 319
 
 319
Realized (Gains) Losses - Interest Rate Swaps (1) 
 311
 
 311
 
 306
 
 306
Amortization of Prior Service Costs (Credits) (2) 
 
 (645) (645) 
 
 (644) (644)
Amortization of Actuarial Losses (2) 
 
 4,444
 4,444
 
 
 4,477
 4,477
Total Reclassifications Before Tax 
 97
 3,799
 3,896
 
 (4,103) 3,833
 (270)
Income Tax Expense (Benefit) 
 (37) (1,444) (1,481) 
 1,559
 (1,456) 103
Net Reclassifications 
 60
 2,355
 2,415
 
 (2,544) 2,377
 (167)
Other Comprehensive Income (Loss) (9,907) 3,667
 2,355
 (3,885) (12,925) (173) 2,377
 (10,721)
Ending Balance $3,146
 $2,583
 $(204,871) $(199,142) $(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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 Three Months Ended September 29, 2013 Nine 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) $13,053
 $(1,084) $(207,226) $(195,257)
Other Comprehensive Income (Loss) Before Reclassification 253
 (2,710) 
 (2,457) (34,045) 10,629
 
 (23,416)
Income Tax Benefit (Expense) 
 1,038
 
 1,038
 
 (4,039) 
 (4,039)
Net Other Comprehensive Income (Loss) Before Reclassifications 253
 (1,672) 
 (1,419) (34,045) 6,590
 
 (27,455)
Reclassifications:       

       

Realized (Gains) Losses - Foreign Currency Contracts (1) 
 462
 
 462
 
 (7,025) 
 (7,025)
Realized (Gains) Losses - Commodity Contracts (1) 
 1,498
 
 1,498
 
 841
 
 841
Realized (Gains) Losses - Interest Rate Swaps (1) 
 295
 
 295
 
 931
 
 931
Amortization of Prior Service Costs (Credits) (2) 
 
 (679) (679) 
 
 (1,933) (1,933)
Amortization of Actuarial Losses (2) 
 
 7,729
 7,729
 
 
 13,432
 13,432
Total Reclassifications Before Tax 
 2,255
 7,050
 9,305
 
 (5,253) 11,499
 6,246
Income Tax Expense (Benefit) 
 (864) (2,700) (3,564) 
 1,996
 (4,370) (2,374)
Net Reclassifications 
 1,391
 4,350
 5,741
 
 (3,257) 7,129
 3,872
Other Comprehensive Income (Loss) 253
 (281) 4,350
 4,322
 (34,045) 3,333
 7,129
 (23,583)
Ending Balance $12,139
 $(3,954) $(228,791) $(220,606) $(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 August 29, 2014, the Company acquired all of the outstanding shares of Allmand Bros., Inc. ("Allmand") of Holdrege, Nebraska for total cash consideration of $62.1$59.9 million, net of cash acquired. The 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 designer and manufacturer of high quality towable light towers, industrial heaters, and solar LED arrow boards. Its products are used in a variety of industries, including construction, roadway, oil and gas, mining, and sporting and special events. Allmand's products are generally powered by diesel engines, and distributed through national and regional equipment rental companies, equipment dealers and distributors. Allmand currently sells its products and service parts in approximately 40 countries. During the first quarterAs of fiscalMarch 29, 2015, the Company recorded a preliminary purchase price allocation based on its initial estimates of fair value. The preliminary purchase price allocation resulted in the recognition of $17.7$15.5 million of goodwill, which was allocated to the Products Segment, and $24.1 million of intangible assets, including $15.7 million of customer relationships, $8.1 million of tradenames, and $0.3 million of other intangible assets.

The results of operations of Allmand have been included in the Condensed Consolidated Statements of Operations since the date of acquisition, which was approximately one month of the first fiscal quarter.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
The restructuring actions announced in 2012 were concluded as planned during the fourth quarter of fiscal 2014.
During the first quarter of fiscal 2015, the Company announced and began implementing 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 will closeclosed its McDonough, Georgia plant in the second halffourth quarter of fiscal 2015 and consolidateis 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 discussed above resulted in pre-tax charges of $7.8$8.0 million ($5.15.2 million after tax or $0.11 per diluted share) and $23.3 million ($15.1 million after tax or $0.33 per diluted share) recorded within the Products Segment for the third quarter and first quarternine months of fiscal 2015.2015, respectively. Total estimated pre-tax restructuring cost estimates for the restructuring actions remain unchanged at $30 million to $37 million, including non-cash write-downs of $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 Products Segment restructuring activities for the threenine month period ended September 28, 2014March 29, 2015 (in thousands):
 Termination Benefits Other Costs Total Termination Benefits Other Costs Total
Reserve Balance at June 29, 2014 $
 $105
 $105
 $
 $105
 $105
Provisions 2,391
 5,410
 7,801
 5,326
 17,935
 23,261
Cash Expenditures (224) (351) (575) (650) (5,595) (6,245)
Other Adjustments (1)
 
 (5,164) (5,164) 
 (12,445) (12,445)
Reserve Balance at September 28, 2014 $2,167
 $
 $2,167
Reserve Balance at March 29, 2015 $4,676
 $
 $4,676
(1) Other adjustments includes $1.2 million of asset impairments and $4.0$11.2 million of accelerated depreciation.
6. Earnings (Loss) Per Share
    
The Company computes earnings (loss) per share using the two-class method, an earnings allocation formula that determines earnings (loss) 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 (loss) per share.

Information on earnings (loss) per share is as follows (in thousands, except per share data):
  Three Months Ended
  September 28,
2014
 September 29,
2013
Net Loss $(15,279) $(19,349)
Less: Allocation to Participating Securities (132) (151)
Net Loss Available to Common Shareholders $(15,411) $(19,500)
Average Shares of Common Stock Outstanding 45,113
 46,997
Diluted Average Shares Outstanding 45,113
 46,997
Basic Earnings (Loss) Per Share $(0.34) $(0.41)
Diluted Earnings (Loss) Per Share $(0.34) $(0.41)
  Three Months Ended Nine Months Ended
  March 29,
2015
 March 30,
2014
 March 29,
2015
 March 30,
2014
Net Income $33,921
 $39,153
 $25,586
 $20,506
Less: Allocation to Participating Securities (893) (1,150) (626) (552)
Net Income Available to Common Shareholders $33,028
 $38,003
 $24,960
 $19,954
Average Shares of Common Stock Outstanding 44,160
 46,129
 44,605
 46,549
Diluted Average Shares Outstanding 44,241
 46,245
 44,656
 46,615
Basic Earnings Per Share $0.75
 $0.82
 $0.56
 $0.43
Diluted Earnings Per Share $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 (loss) per share as the exercise prices were greater than the average market price of the common shares:
  Three Months Ended
  September 28,
2014
 September 29,
2013
Options to Purchase Shares of Common Stock (in thousands) 876
 1,348
Weighted Average Exercise Price of Options Excluded $20.31
 $31.88

As a result of the Company incurring a net loss for the three months ended September 28, 2014 and September 29, 2013, potential incremental common shares of 928,601 and 975,316, respectively, were excluded from the calculation of diluted earnings (loss) per share because the effect would have been anti-dilutive.
  Three Months Ended Nine Months Ended
  March 29,
2015
 March 30,
2014
 March 29,
2015
 March 30,
2014
Options to Purchase Shares of Common Stock (in thousands) 845
 508
 845
 916
Weighted Average Exercise Price of Options Excluded $20.33
 $36.68
 $20.33
 $29.62

On January 22, 2014, the Board of Directors of the Company authorized up to $50 million in funds for use in the Company’s common share repurchase program. On August 13, 2014, the Board of Directors of the Company authorized up to an additional $50 million in funds associated with the common share repurchase program. As of September 28, 2014,March 29, 2015, the total remaining authorization was approximately $69.5$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 threenine months ended September 28, 2014March 29, 2015, the Company repurchased 905,1642,039,399 shares on the open market at an average price of $19.6219.40 per share, as compared to 482,9261,479,626 shares purchased on the open market at an average price of $20.0820.32 per share during the threenine months ended September 29, 2013March 30, 2014.

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. DuringIn the first quarter of fiscal 2015, a second independent distributor joined the venture. Asventure and, as a result, of the transaction, 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 uses the equity method to account for this investment. Subsequent toinvestment, and the first quarterearnings of fiscalthe unconsolidated affiliate are recorded within the Products Segment. As of March 29, 2015, the Company's total investment in the venture acquired a third independent distributor.was $10.1 million, and its ownership percentage was 11.9%.

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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
 September 28,
2014
 September 29,
2013
 September 28,
2014
 September 29,
2013
 March 29,
2015
 March 30,
2014
 March 29,
2015
 March 30,
2014
Components of Net Periodic Expense (Income):                
Service Cost $830
 $1,938
 $85
 $89
 $858
 $1,911
 $74
 $83
Interest Cost on Projected Benefit Obligation 12,461
 13,452
 897
 1,149
 12,445
 13,436
 902
 1,150
Expected Return on Plan Assets (18,687) (18,566) 
 
 (18,659) (18,538) 
 
Amortization of:                
Prior Service Cost (Credit) 45
 45
 (690) (724) 45
 45
 (689) (724)
Actuarial Loss 3,297
 6,270
 1,147
 1,459
 3,315
 6,276
 1,162
 1,504
Net Periodic Expense (Income) $(2,054) $3,139
 $1,439
 $1,973
 $(1,996) $3,130
 $1,449
 $2,013

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  Pension Benefits Other Postretirement Benefits
  Nine Months Ended Nine Months Ended
  March 29,
2015
 March 30,
2014
 March 29,
2015
 March 30,
2014
Components of Net Periodic Expense (Income):        
Service Cost $2,574
 $5,735
 $222
 $250
Interest Cost on Projected Benefit Obligation 37,336
 40,307
 2,706
 3,450
Expected Return on Plan Assets (55,978) (55,614) 
 
Amortization of:        
Prior Service Cost (Credit) 135
 135
 (2,068) (2,172)
Actuarial Loss 9,946
 18,821
 3,486
 4,512
Net Periodic Expense (Income) $(5,987) $9,384
 $4,346
 $6,040

On January 1, 2014, an amendment to the Company's defined benefit retirement plans became effective that froze accruals for all U.S. non-bargaining employees. Also, on January 1, 2014, amendments became effective that increased benefits under the defined contribution plans.

The Company expects to make benefit payments of $3.2 million attributable to its non-qualified pension plans during fiscal 2015. During the first threenine months of fiscal 2015, the Company made payments of approximately $0.52.3 million for its non-qualified pension plans. The Company anticipates making benefit payments of approximately $13.912.7 million for its other postretirement benefit plans during fiscal 2015. During the first threenine months of fiscal 2015, the Company made payments of $4.5$11.7 million for its other postretirement benefit plans.
 
During the first threenine months of fiscal 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 2015. In addition, the Company expects it will not be required to make minimum contributions to the qualified pension plan in 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 $1.6$1.5 million and $4.8 million for the three and nine months ended September 28, 2014March 29, 2015., respectively. For the three and nine months ended September 29, 2013March 30, 2014, stock based compensation expense was $3.0 million.$1.3 million and $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 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. 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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As of September 28, 2014March 29, 2015 and June 29, 2014, the Company had the following outstanding derivative contracts (in thousands):
ContractContract Notional AmountContract Notional Amount
   September 28,
2014
 June 29,
2014
   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 19,582
 19,904
 Sell 13,801
 19,904
Brazilian Real Sell 31,621
 
 Sell 11,608
 
Canadian Dollar Sell 5,500
 3,100
 Sell 6,700
 3,100
Chinese Renminbi Buy 157,175
 
 Buy 223,575
 
Euro Sell 52,650
 49,300
 Sell 46,590
 49,300
Euro Buy 6,000
 
Japanese Yen Buy 694,000
 530,000
 Buy 1,014,000
 530,000
Mexican Peso Sell 9,345
 3,000
 Sell 
 3,000
Commodity:        
Natural Gas (Therms) Buy 8,735
 5,686
 Buy 10,304
 5,686

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
 September 28,
2014
 June 29,
2014
 March 29,
2015
 June 29,
2014
Interest rate contracts        
Other Long-Term Assets $185
 $43
 $
 $43
Other Long-Term Liabilities (780) (1,209) (1,354) (1,209)
Foreign currency contracts        
Other Current Assets 6,224
 337
 9,740
 337
Other Long-Term Assets 441
 12
 31
 12
Accrued Liabilities (374) (665) (1,235) (665)
Other Long-Term Liabilities 
 (9) (47) (9)
Commodity contracts        
Other Current Assets 3
 39
 
 39
Accrued Liabilities (118) (35) (598) (35)
Other Long-Term Liabilities (24) (14) (221) (14)
 $5,557
 $(1,501) $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 September 28, 2014 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)
 
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 $351
 Net Sales $(311) $
 $(381) Net Sales $(306) $
Foreign currency contracts - sell 3,445
 Net Sales 464
 
 (120) Net Sales 5,146
 
Foreign currency contracts - buy (157) Cost of Goods Sold (71) 
 357
 Cost of Goods Sold (418) 
Commodity contracts 28
 Cost of Goods Sold (179) 
 (29) Cost of Goods Sold (319) 
 $3,667
 $(97) $
 $(173) $4,103
 $

 Three months ended September 29, 2013 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)
 
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 $(250) Net Sales $(295) $
 $15
 Net Sales $(302) $
Foreign currency contracts - sell (948) Net Sales 5
 
 348
 Net Sales (138) 
Foreign currency contracts - buy 39
 Cost of Goods Sold (467) 
 170
 Cost of Goods Sold (310) 
Commodity contracts 878
 Cost of Goods Sold (1,498) 
 848
 Cost of Goods Sold (1,165) 
 $(281) $(2,255) $
 $1,381
 $(1,915) $
  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)
Interest rate contracts $(120) Net Sales $(931) $
Foreign currency contracts - sell 3,720
 Net Sales 7,689
 
Foreign currency contracts - buy (51) Cost of Goods Sold (664) 
Commodity contracts (216) Cost of Goods Sold (841) 
  $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) $


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During the next twelve months, the estimated net amount of income on cash flow hedges as of September 28, 2014March 29, 2015 expected to be reclassified out of AOCI into earnings is $4.24.8 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.

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The following table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis as of September 28, 2014March 29, 2015 and June 29, 2014 (in thousands):
   Fair Value Measurements Using   Fair Value Measurements Using
 September 28,
2014
 Level 1 Level 2 Level 3 March 29,
2015
 Level 1 Level 2 Level 3
Assets:                
Derivatives $6,853
 $
 $6,853
 $
 $9,771
 $
 $9,771
 $
Liabilities:                
Derivatives $1,296
 $
 $1,296
 $
 $3,455
 $
 $3,455
 $
 June 29,
2014
 Level 1 Level 2 Level 3 June 29,
2014
 Level 1 Level 2 Level 3
Assets:                
Derivatives $431
 $
 $431
 $
 $431
 $
 $431
 $
Liabilities:                
Derivatives $1,932
 $
 $1,932
 $
 $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 September 28, 2014March 29, 2015 and June 29, 2014 was $252.0248.6 million and $251.4 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) 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 September 28, 2014March 29, 2015 and June 29, 2014 due to the short-term nature of these instruments.

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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):
 Three Months Ended Nine Months Ended
 September 28,
2014
 September 29,
2013
 March 29,
2015
 March 30,
2014
Beginning Balance $44,744
 $45,037
 $44,744
 $45,037
Payments (8,178) (8,330) (20,106) (20,336)
Provision for Current Year Warranties 6,251
 5,381
 22,493
 20,889
Changes in Estimates (14) 42
 (46) (616)
Ending Balance $42,803
 $42,130
 $47,085
 $44,974


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13. Income Taxes

The effective tax rates for the third quarter and first nine months of fiscal 2015 were 20.2% and 5.7%, compared to 26.1% and 26.6% for the respective periods last year. The tax rates for the third quarter and first nine months of fiscal 2015 were primarily impacted by incremental federal research & development (R&D) tax credits related to prior 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 quarternine months of fiscal 2015 was 40.9%, compared to 29.3% for the same respective period of fiscal 2014. The higher tax rate for the first quarter of fiscal 2015 was primarily drivenimpacted by the reversal of previously recorded reserves as a result of the effective settlement of the Company’s IRS auditaudit. The tax rates for its 2009-2010 consolidated incomethe third quarter and the first nine months of fiscal 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 returns.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 September 28, 2014,March 29, 2015, the Company's unrecognized tax benefits decreasedincreased by $2.2$4.2 million, and $2.1 million, respectively, all of which impacted the current effective tax rate. This amount substantially consists of the aforementioned reversal of reserves.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. The Company is no longer subject to U.S. federal income tax examinations before fiscal 2012 and is currently under audit by various other jurisdictions. With respect to the Company's major foreign jurisdictions, they are no longer subject to tax examinations before fiscal 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 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, 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), 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 been concluded. Each party filed aBoth parties moved for summary judgment, motionwhich was fully

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briefed on September 22,December 23, 2014. Replies toSummary judgment is currently pending before the motions are due on November 26, 2014.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.

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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 Three Months Ended Nine Months Ended
 September 28,
2014
 September 29,
2013
 March 29,
2015
 March 30,
2014
 March 29,
2015
 March 30,
2014
NET SALES:            
Engines $153,116
 $183,787
 $432,248
 $452,359
 $857,067
 $901,858
Products 166,128
 153,037
 211,135
 205,160
 576,313
 529,724
Inter-Segment Eliminations (26,615) (19,520) (24,368) (29,116) (77,449) (69,283)
Total $292,629
 $317,304
 $619,015
 $628,403
 $1,355,931
 $1,362,299
GROSS PROFIT:            
Engines $27,800
 $25,236
 $98,885
 $107,930
 $189,580
 $187,423
Products 19,384
 17,825
 19,908
 22,365
 64,505
 62,149
Inter-Segment Eliminations 137
 770
 287
 (45) 183
 1,875
Total $47,321
 $43,831
 $119,080
 $130,250
 $254,268
 $251,447
SEGMENT INCOME (LOSS):            
Engines $(13,677) $(16,557) $54,928
 $62,071
 $59,967
 $54,805
Products (8,291) (7,615) (8,128) (4,913) (20,125) (16,783)
Inter-Segment Eliminations 137
 770
 287
 (45) 183
 1,875
Total $(21,831) $(23,402) $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


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Pre-tax restructuring charges and acquisition relatedacquisition-related charges included in gross profit were as follows (in thousands):
 Three Months Ended Three Months Ended Nine Months Ended
 September 28,
2014
 September 29,
2013
 March 29,
2015
 March 30,
2014
 March 29,
2015
 March 30,
2014
PRE-TAX RESTRUCTURING CHARGES AND ACQUISITION RELATED CHARGES INCLUDED IN GROSS PROFIT:    
PRE-TAX RESTRUCTURING CHARGES AND ACQUISITION-RELATED CHARGES INCLUDED IN GROSS PROFIT:        
Engines $
 $1,765
 $
 $(774) $
 $2,622
Products 8,018
 1,820
 7,088
 
 21,952
 2,082
Total $8,018
 $3,585
 $7,088
 $(774) $21,952
 $4,704
    
Pre-tax restructuring charges and acquisition relatedacquisition-related charges included in segment income (loss) were as follows (in thousands):
 Three Months Ended Three Months Ended Nine Months Ended
 September 28,
2014
 September 29,
2013
 March 29,
2015
 March 30,
2014
 March 29,
2015
 March 30,
2014
PRE-TAX RESTRUCTURING CHARGES AND ACQUISITION RELATED CHARGES INCLUDED IN SEGMENT INCOME (LOSS):    
PRE-TAX RESTRUCTURING CHARGES AND ACQUISITION-RELATED CHARGES INCLUDED IN SEGMENT INCOME (LOSS):        
Engines $
 $1,765
 $
 $(774) $
 $3,047
Products 9,151
 1,820
 8,141
 
 24,902
 2,082
Total $9,151
 $3,585
 $8,141
 $(774) $24,902
 $5,129

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16. Debt

The following is a summary of the Company’s long-term indebtedness (in thousands):
 September 28,
2014
 June 29,
2014
 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 21, 2013, the Company entered into an amendment to 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. 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. In connection with the amendment to the Revolver in the second quarter of fiscal 2014, the Company incurred approximately $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 September 28, 2014, there were no borrowingsMarch 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.

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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):
 September 28, 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

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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 September 28, 2014March 29, 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 $5,286
 $1,325
 $55,287
 $
 $61,898
 $5,946
 $455
 $43,293
 $
 $49,694
Accounts Receivable, Net 39,949
 65,113
 61,251
 
 166,313
 164,675
 95,655
 55,395
 
 315,725
Intercompany Accounts Receivable 23,193
 7,916
 40,156
 (71,265) 
 19,650
 6,690
 38,401
 (64,741) 
Inventories, Net 263,039
 162,690
 81,159
 
 506,888
 209,572
 160,022
 77,302
 
 446,896
Deferred Income Tax Asset 31,715
 14,315
 1,874
 
 47,904
 31,697
 15,414
 1,847
 
 48,958
Prepaid Expenses and Other Current Assets 31,432
 1,983
 6,384
 
 39,799
 26,630
 1,768
 7,065
 
 35,463
Total Current Assets $394,614
 $253,342
 $246,111
 $(71,265) $822,802
 $458,170
 $280,004
 $223,303
 $(64,741) $896,736
OTHER ASSETS:                    
Goodwill $128,300
 $
 $32,676
 $
 $160,976
 $128,300
 $
 $27,978
 $
 $156,278
Investments 27,056
 
 
 
 27,056
 29,354
 
 
 
 29,354
Investments in Subsidiaries 515,452
 
 
 (515,452) 
 504,606
 
 
 (504,606) 
Intercompany Note Receivable 50,984
 95,772
 17,258
 (164,014) 
 37,667
 72,354
 22,918
 (132,939) 
Debt Issuance Costs 4,428
 
 
 
 4,428
 3,950
 
 
 
 3,950
Other Intangible Assets, Net 
 55,609
 45,985
 
 101,594
 
 55,007
 40,398
 
 95,405
Long-Term Deferred Income Tax Asset 27,417
 
 291
 (27,417) 291
 23,271
 
 129
 (23,271) 129
Other Long-Term Assets, Net 7,867
 2,134
 1,457
 
 11,458
 7,783
 3,262
 1,400
 
 12,445
Total Other Assets $761,504
 $153,515
 $97,667
 $(706,883) $305,803
 $734,931
 $130,623
 $92,823
 $(660,816) $297,561
PLANT AND EQUIPMENT, NET 236,240
 35,162
 25,519
 
 296,921
 246,041
 27,931
 26,260
 
 300,232
TOTAL ASSETS $1,392,358
 $442,019
 $369,297
 $(778,148) $1,425,526
 $1,439,142
 $438,558
 $342,386
 $(725,557) $1,494,529
                    
CURRENT LIABILITIES:                    
Accounts Payable $103,196
 $47,320
 $36,698
 $
 $187,214
 $115,794
 $55,909
 $25,773
 $
 $197,476
Intercompany Accounts Payable 30,047
 6,124
 35,094
 (71,265) 
 30,074
 7,511
 27,156
 (64,741) 
Short-Term Debt 60,100
 
 
 
 60,100
Accrued Liabilities 84,062
 36,985
 19,841
 
 140,888
 96,202
 42,053
 20,389
 
 158,644
Total Current Liabilities $217,305
 $90,429
 $91,633
 $(71,265) $328,102
 $302,170
 $105,473
 $73,318
 $(64,741) $416,220
OTHER LIABILITIES:                    
Accrued Pension Cost $119,578
 $408
 $583
 $
 $120,569
 $107,115
 $381
 $496
 $
 $107,992
Accrued Employee Benefits 24,538
 
 
 
 24,538
 24,487
 
 
 
 24,487
Accrued Postretirement Health Care Obligation 41,770
 14,352
 
 
 56,122
 37,529
 14,221
 
 
 51,750
Intercompany Note Payable 105,355
 
 58,659
 (164,014) 
 86,864
 
 46,075
 (132,939) 
Deferred Income Tax Liabilities 
 20,874
 10,449
 (27,417) 3,906
 
 15,781
 10,904
 (23,271) 3,414
Other Long-Term Liabilities 26,779
 7,532
 945
 
 35,256
 31,133
 8,824
 865
 
 40,822
Long-Term Debt 225,000
 
 
 
 225,000
 225,000
 
 
 
 225,000
Total Other Liabilities $543,020
 $43,166
 $70,636
 $(191,431) $465,391
 $512,128
 $39,207
 $58,340
 $(156,210) $453,465
TOTAL SHAREHOLDERS’ INVESTMENT: 632,033
 308,424
 207,028
 (515,452) 632,033
TOTAL SHAREHOLDERS’ INVESTMENT 624,844
 293,878
 210,728
 (504,606) 624,844
TOTAL LIABILITIES AND SHAREHOLDERS’ INVESTMENT $1,392,358
 $442,019
 $369,297
 $(778,148) $1,425,526
 $1,439,142
 $438,558
 $342,386
 $(725,557) $1,494,529




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CONSOLIDATING BALANCE SHEET
As of June 29, 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 $138,926
 $2,680
 $53,062
 $
 $194,668
 $138,926
 $2,680
 $53,062
 $
 $194,668
Accounts Receivable, Net 86,099
 100,062
 34,429
 
 220,590
 86,099
 100,062
 34,429
 
 220,590
Intercompany Accounts Receivable 15,987
 3,492
 32,826
 (52,305) 
 15,987
 3,492
 32,826
 (52,305) 
Inventories, Net 165,159
 146,749
 64,195
 
 376,103
 165,159
 146,749
 64,195
 
 376,103
Deferred Income Tax Asset 33,343
 13,904
 1,711
 
 48,958
 33,343
 13,904
 1,711
 
 48,958
Prepaid Expenses and Other Current Assets 17,436
 3,508
 9,072
 
 30,016
 17,436
 3,508
 9,072
 
 30,016
Total Current Assets $456,950
 $270,395
 $195,295
 $(52,305) $870,335
 $456,950
 $270,395
 $195,295
 $(52,305) $870,335
OTHER ASSETS:                    
Goodwill $128,300
 $
 $16,222
 $
 $144,522
 $128,300
 $
 $16,222
 $
 $144,522
Investments 27,137
 
 
 
 27,137
 27,137
 
 
 
 27,137
Investments in Subsidiaries 470,391
 
 
 (470,391) 
 470,391
 
 
 (470,391) 
Intercompany Note Receivable 49,293
 84,567
 13,876
 (147,736) 
 49,293
 84,567
 13,876
 (147,736) 
Debt Issuance Costs 4,671
 
 
 
 4,671
 4,671
 
 
 
 4,671
Other Intangible Assets, Net 
 55,909
 24,408
 
 80,317
 
 55,909
 24,408
 
 80,317
Long-Term Deferred Income Tax Asset 32,507
 
 677
 (18,006) 15,178
 32,507
 
 677
 (18,006) 15,178
Other Long-Term Assets, Net 7,120
 2,088
 1,331
 
 10,539
 7,120
 2,088
 1,331
 
 10,539
Total Other Assets $719,419
 $142,564
 $56,514
 $(636,133) $282,364
 $719,419
 $142,564
 $56,514
 $(636,133) $282,364
PLANT AND EQUIPMENT, NET 241,166
 39,863
 15,978
 
 297,007
 241,166
 39,863
 15,978
 
 297,007
TOTAL ASSETS $1,417,535
 $452,822
 $267,787
 $(688,438) $1,449,706
 $1,417,535
 $452,822
 $267,787
 $(688,438) $1,449,706
                    
CURRENT LIABILITIES:                    
Accounts Payable $105,532
 $45,171
 $18,568
 $
 $169,271
 $105,532
 $45,171
 $18,568
 $
 $169,271
Intercompany Accounts Payable 21,859
 6,002
 24,444
 (52,305) 
 21,859
 6,002
 24,444
 (52,305) 
Accrued Liabilities 85,735
 31,863
 16,318
 
 133,916
 85,735
 31,863
 16,318
 
 133,916
Total Current Liabilities $213,126
 $83,036
 $59,330
 $(52,305) $303,187
 $213,126
 $83,036
 $59,330
 $(52,305) $303,187
OTHER LIABILITIES:                    
Accrued Pension Cost $125,481
 $421
 $627
 $
 $126,529
 $125,481
 $421
 $627
 $
 $126,529
Accrued Employee Benefits 24,491
 
 
 
 24,491
 24,491
 
 
 
 24,491
Accrued Postretirement Health Care Obligation 44,928
 14,362
 
 
 59,290
 44,928
 14,362
 
 
 59,290
Intercompany Note Payable 85,343
 
 62,393
 (147,736) 
 85,343
 
 62,393
 (147,736) 
Deferred Income Tax Liabilities 

 18,006
 
 (18,006) 
 
 18,006
 
 (18,006) 
Other Long-Term Liabilities 26,732
 11,037
 1,006
 
 38,775
 26,732
 11,037
 1,006
 
 38,775
Long-Term Debt 225,000
 
 
 
 225,000
 225,000
 
 
 
 225,000
Total Other Liabilities $531,975
 $43,826
 $64,026
 $(165,742) $474,085
 $531,975
 $43,826
 $64,026
 $(165,742) $474,085
TOTAL SHAREHOLDERS’ INVESTMENT: 672,434
 325,960
 144,431
 (470,391) 672,434
TOTAL SHAREHOLDERS’ INVESTMENT 672,434
 325,960
 144,431
 (470,391) 672,434
TOTAL LIABILITIES AND SHAREHOLDERS’ INVESTMENT $1,417,535
 $452,822
 $267,787
 $(688,438) $1,449,706
 $1,417,535
 $452,822
 $267,787
 $(688,438) $1,449,706

 






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CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the Three Months Ended September 28, 2014March 29, 2015
(Unaudited)
 
 
Briggs & Stratton
Corporation
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 Eliminations Consolidated 
Briggs & Stratton
Corporation
 
Guarantor
Subsidiary
 
Non-Guarantor
Subsidiaries
 Eliminations Consolidated
Net Sales $145,579
 $116,938
 $90,816
 $(60,704) $292,629
 $408,530
 $165,804
 $95,155
 $(50,474) $619,015
Cost of Goods Sold 123,956
 104,031
 71,179
 (60,704) 238,462
 321,429
 150,392
 71,500
 (50,474) 492,847
Restructuring Charges 
 6,846
 
 
 6,846
 
 7,088
 
 
 7,088
Gross Profit 21,623
 6,061
 19,637
 
 47,321
 87,101
 8,324
 23,655
 
 119,080
Engineering, Selling, General and Administrative Expenses 36,868
 17,657
 15,559
 
 70,084
 43,252
 19,504
 9,958
 
 72,714
Restructuring Charges 
 955
 
 
 955
 
 943
 
 
 943
Equity in Loss from Subsidiaries 4,721
 
 
 (4,721) 
Equity in Earnings from Subsidiaries (5,072) 
 
 5,072
 
Income (Loss) from Operations (19,966) (12,551) 4,078
 4,721
 (23,718) 48,921
 (12,123) 13,697
 (5,072) 45,423
Interest Expense (4,447) (71) 
 
 (4,518) (5,159) (72) (2) 
 (5,233)
Other Income, Net 1,926
 460
 (13) 
 2,373
 1,375
 293
 655
 
 2,323
Income (Loss) before Income Taxes (22,487) (12,162) 4,065
 4,721
 (25,863) 45,137
 (11,902) 14,350
 (5,072) 42,513
Provision (Credit) for Income Taxes (7,208) (4,481) 1,105
 
 (10,584) 11,216
 (4,448) 1,824
 
 8,592
Net Income (Loss) $(15,279) $(7,681) $2,960
 $4,721
 $(15,279) $33,921
 $(7,454) $12,526
 $(5,072) $33,921
Comprehensive Income (Loss) $(19,164) $(7,407) $(2,500) $9,907
 $(19,164) $23,200
 $(8,010) $4,740
 $3,270
 $23,200
CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the Three Months Ended September 29, 2013March 30, 2014
(Unaudited)
 
 
Briggs & Stratton
Corporation
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 Eliminations Consolidated 
Briggs & Stratton
Corporation
 
Guarantor
Subsidiary
 
Non-Guarantor
Subsidiaries
 Eliminations Consolidated
Net Sales $174,789
 $117,765
 $70,409
 $(45,659) $317,304
 $429,788
 $172,493
 $78,767
 $(52,645) $628,403
Cost of Goods Sold 153,466
 106,804
 55,277
 (45,659) 269,888
 334,097
 158,623
 58,852
 (52,645) 498,927
Restructuring Charges 1,870
 228
 1,487
 
 3,585
 (774) 
 
 
 (774)
Gross Profit 19,453
 10,733
 13,645
 
 43,831
 96,465
 13,870
 19,915
 
 130,250
Engineering, Selling, General and Administrative Expenses 37,508
 17,598
 13,656
 
 68,762
 43,267
 20,938
 10,658
 
 74,863
Equity in Loss from Subsidiaries 5,553
 
 
 (5,553) 
Equity in Earnings from Subsidiaries (3,658) 
 
 3,658
 
Income (Loss) from Operations (23,608) (6,865) (11) 5,553
 (24,931) 56,856
 (7,068) 9,257
 (3,658) 55,387
Interest Expense (4,494) 
 (16) 
 (4,510) (4,720) 
 
 
 (4,720)
Other Income, Net 2,192
 90
 (189) 
 2,093
 2,078
 15
 202
 
 2,295
Income (Loss) before Income Taxes (25,910) (6,775) (216) 5,553
 (27,348) 54,214
 (7,053) 9,459
 (3,658) 52,962
Provision (Credit) for Income Taxes (6,561) (2,504) 1,066
 
 (7,999) 15,061
 (2,598) 1,346
 
 13,809
Net Income (Loss) $(19,349) $(4,271) $(1,282) $5,553
 $(19,349) $39,153
 $(4,455) $8,113
 $(3,658) $39,153
Comprehensive Income (Loss) $(15,027) $(7,119) $177
 $6,942
 $(15,027) $47,127
 $(4,542) $9,276
 $(4,734) $47,127







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CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the Nine Months Ended March 29, 2015
(Unaudited)

  
Briggs & Stratton
Corporation
 
Guarantor
Subsidiary
 
Non-Guarantor
Subsidiaries
 Eliminations Consolidated
Net Sales $816,386
 $413,772
 $295,066
 $(169,293) $1,355,931
Cost of Goods Sold 650,398
 372,129
 227,649
 (169,293) 1,080,883
Restructuring Charges 
 20,780
 
 
 20,780
Gross Profit 165,988
 20,863
 67,417
 
 254,268
Engineering, Selling, General and Administrative Expenses 120,553
 55,248
 40,966
 
 216,767
Restructuring Charges 
 2,481
 
 
 2,481
Equity in Loss from Subsidiaries 930
 
 
 (930) 
Income (Loss) from Operations 44,505
 (36,866) 26,451
 930
 35,020
Interest Expense (14,460) (178) (3) 
 (14,641)
Other Income, Net 4,690
 1,069
 990
 
 6,749
Income (Loss) before Income Taxes 34,735
 (35,975) 27,438
 930
 27,128
Provision (Credit) for Income Taxes 9,149
 (13,426) 5,819
 
 1,542
Net Income (Loss) $25,586
 $(22,549) $21,619
 $930
 $25,586
Comprehensive Income (Loss) $2,003
 $(23,041) $2,677
 $20,364
 $2,003
CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the Nine Months Ended March 30, 2014
(Unaudited)

  
Briggs & Stratton
Corporation
 
Guarantor
Subsidiary
 
Non-Guarantor
Subsidiaries
 Eliminations Consolidated
Net Sales $855,142
 $425,041
 $229,465
 $(147,349) $1,362,299
Cost of Goods Sold 688,280
 388,123
 177,094
 (147,349) 1,106,148
Restructuring Charges 2,693
 228
 1,783
 
 4,704
Gross Profit 164,169
 36,690
 50,588
 
 251,447
Engineering, Selling, General and Administrative Expenses 123,019
 56,628
 35,755
 
 215,402
Restructuring Charges 77
 
 348
 
 425
Equity in Loss from Subsidiaries 1,459
 
 
 (1,459) 
Income (Loss) from Operations 39,614
 (19,938) 14,485
 1,459
 35,620
Interest Expense (13,796) 
 (27) 
 (13,823)
Other Income, Net 5,882
 199
 57
 
 6,138
Income (Loss) before Income Taxes 31,700
 (19,739) 14,515
 1,459
 27,935
Provision (Credit) for Income Taxes 11,194
 (7,275) 3,510
 
 7,429
Net Income (Loss) $20,506
 $(12,464) $11,005
 $1,459
 $20,506
Comprehensive Income (Loss) $35,082
 $(12,747) $11,785
 $962
 $35,082






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CONSOLIDATING STATEMENT OF CASH FLOWS
For the ThreeNine Months Ended September 28, 2014March 29, 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 $(62,214) $11,158
 $2,660
 $(482) $(48,878) $(44,164) $(9,889) $3,398
 $(1,480) $(52,135)
Cash Flows from Investing Activities:                    
Additions to Plant and Equipment (4,623) (1,358) (1,409) 
 (7,390) (34,008) (4,680) (5,469) 
 (44,157)
Proceeds Received on Disposition of Plant and Equipment 84
 57
 31
 
 172
 90
 156
 72
 
 318
Cash Investment in Subsidiary (4,650) 
 
 4,650
 
 (6,880) 
 
 6,880
 
Cash Paid for Acquisition, Net of Cash Acquired (62,056) 
 
 
 (62,056) (59,855) 
 
 
 (59,855)
Net Borrowings (Repayments) on Loans, Notes Payable and Long-Term Debt 14,429
 
 
 (14,429) 
 (1,000) 
 
 1,000
 
Other, Net (250) 
 
 
 (250)
Net Cash Provided by (Used in) Investing Activities (56,816) (1,301) (1,378) (9,779) (69,274) (101,903) (4,524) (5,397) 7,880
 (103,944)
Cash Flows from Financing Activities:                    
Net Borrowings (Repayments) on Loans, Notes Payable and Long-Term Debt 
 (11,212) (3,217) 14,429
 
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 (17,761) 
 
 
 (17,761) (39,560) 
 
 
 (39,560)
Stock Option Exercise Proceeds and Tax Benefits 3,151
 
 
 
 3,151
 3,921
 
 
 
 3,921
Cash Dividends Paid (11,374) 
 
 
 (11,374)
Cash Investment in Subsidiary 
 
 4,168
 (4,168) 
 
 
 5,400
 (5,400) 
Net Cash Provided by (Used in) Financing Activities (14,610) (11,212) 951
 10,261
 (14,610) 13,087
 12,188
 (5,788) (6,400) 13,087
Effect of Foreign Currency Exchange Rate Changes on Cash and Cash Equivalents 
 
 (8) 
 (8) 
 
 (1,982) 
 (1,982)
Net Increase (Decrease) in Cash and Cash Equivalents (133,640) (1,355) 2,225
 
 (132,770) (132,980) (2,225) (9,769) 
 (144,974)
Cash and Cash Equivalents, Beginning 138,926
 2,680
 53,062
 
 194,668
 138,926
 2,680
 53,062
 
 194,668
Cash and Cash Equivalents, Ending $5,286
 $1,325
 $55,287
 $
 $61,898
 $5,946
 $455
 $43,293
 $
 $49,694

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CONSOLIDATING STATEMENT OF CASH FLOWS
For the ThreeNine Months Ended September 29, 2013March 30, 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 $(58,591) $(8,847) $14,577
 $
 $(52,861) $(48,051) $1,925
 $32,093
 $
 $(14,033)
Cash Flows from Investing Activities:                    
Additions to Plant and Equipment (10,498) (694) (458) 
 (11,650) (26,474) (1,932) (1,065) 
 (29,471)
Proceeds Received on Disposition of Plant and Equipment 26
 2
 
 
 28
 57
 33
 19
 
 109
Cash Investment in Subsidiary 1,570
 
 (1,570) 
 
 8,107
 
 (8,107) 
 
Net Cash Provided by (Used in) Investing Activities (8,902) (692) (2,028) 
 (11,622) (18,310) (1,899) (9,153) 
 (29,362)
Cash Flows from Financing Activities:                    
Repayments on Short-Term Debt 
 
 (300) 
 (300) 
 
 (300) 
 (300)
Net Borrowings (Repayments) on Loans, Notes Payable and Long-Term Debt (9,818) 9,818
 
 
 
 (668) 668
 
 
 
Debt Issuance Costs (949) 
 
 
 (949)
Treasury Stock Purchases (9,696) 
 
 
 (9,696) (30,066) 
 
 
 (30,066)
Stock Option Exercise Proceeds and Tax Benefits 994
 
 
 
 994
 4,361
 
 
 
 4,361
Cash Dividends Paid (11,387) 
 
 
 (11,387)
Net Cash Provided by (Used in) Financing Activities (18,520)
9,818
 (300) 
 (9,002) (38,709)
668
 (300) 
 (38,341)
Effect of Foreign Currency Exchange Rate Changes on Cash and Cash Equivalents 
 
 216
 
 216
 
 
 529
 
 529
Net Increase (Decrease) in Cash and Cash Equivalents (86,013) 279
 12,465
 
 (73,269) (105,070) 694
 23,169
 
 (81,207)
Cash and Cash Equivalents, Beginning 162,628
 1,275
 24,542
 
 188,445
 162,628
 1,275
 24,542
 
 188,445
Cash and Cash Equivalents, Ending $76,615
 $1,554
 $37,007
 $
 $115,176
 $57,558
 $1,969
 $47,711
 $
 $107,238
 











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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 relatedacquisition-related charges, for the three months ended fiscal March 2015 and 2014 (in thousands, except per share data):
 Three Months Ended Fiscal September Three Months Ended Fiscal March
 2015 Reported 
Adjustments(1)
 
2015 Adjusted (2)
 2014 Reported 
Adjustments(1)
 
2014 Adjusted(2)
 2015 Reported 
Adjustments(1)
 
2015 Adjusted (2)
 2014 Reported 
Adjustments(1)
 
2014 Adjusted(2)
NET SALES:                        
Engines $153,116
 $
 $153,116
 $183,787
 $
 $183,787
 $432,248
 $
 $432,248
 $452,359
 $
 $452,359
Products 166,128
 
 166,128
 153,037
 
 153,037
 211,135
 
 211,135
 205,160
 
 205,160
Inter-Segment Eliminations (26,615) 
 (26,615) (19,520) 
 (19,520) (24,368) 
 (24,368) (29,116) 
 (29,116)
Total $292,629
 $
 $292,629
 $317,304
 $
 $317,304
 $619,015
 $
 $619,015
 $628,403
 $
 $628,403
            
GROSS PROFIT:                        
Engines $27,800
 $
 $27,800
 $25,236
 $1,765
 $27,001
 $98,885
 $
 $98,885
 $107,930
 $(774) $107,156
Products 19,384
 8,018
 27,402
 17,825
 1,820
 19,645
 19,908
 7,088
 26,996
 22,365
 
 22,365
Inter-Segment Eliminations 137
 
 137
 770
 
 770
 287
 
 287
 (45) 
 (45)
Total $47,321
 $8,018
 $55,339
 $43,831
 $3,585
 $47,416
 $119,080
 $7,088
 $126,168
 $130,250
 $(774) $129,476
            
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 $(13,677) $
 $(13,677) $(16,557) $1,765
 $(14,792) $54,928
 $
 $54,928
 $62,071
 $(774) $61,297
Products (8,291) 9,151
 860
 (7,615) 1,820
 (5,795) (8,128) 8,141
 13
 (4,913) 
 (4,913)
Inter-Segment Eliminations 137
 
 137
 770
 
 770
 287
 
 287
 (45) 
 (45)
Total $(21,831) $9,151
 $(12,680) $(23,402) $3,585
 $(19,817) $47,087
 $8,141
 $55,228
 $57,113
 $(774) $56,339
            
Reconciliation from Segment Income (Loss) to Income (Loss) from Operations:            
Equity in Earnings from Unconsolidated Affiliates 1,887
 
 1,887
 1,529
 
 1,529
Income (Loss) from Operations $(23,718) $9,151
 $(14,567) $(24,931) $3,585
 $(21,346)
            
INTEREST EXPENSE (4,518) 
 (4,518) (4,510) 
 (4,510)
OTHER INCOME, Net 2,373
 
 2,373
 2,093
 
 2,093
Income (Loss) Before Income Taxes (25,863) 9,151
 (16,712) (27,348) 3,585
 (23,763)
PROVISION FOR INCOME TAXES (10,584) 3,203
 (7,381) (7,999) 734
 (7,265)
Net income $(15,279) $5,948
 $(9,331) $(19,349) $2,851
 $(16,498)
            
EARNINGS PER SHARE            
Basic $(0.34) $0.13
 $(0.21) $(0.41) $0.06
 $(0.35)
Diluted (0.34) 0.13
 (0.21) (0.41) 0.06
 (0.35)

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  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 firstthird quarter of fiscal 2015, includes restructuring charges of $7,801$8,031 net of $2,730$2,811 of taxes and acquisition relatedacquisition-related charges of $1,350$110 net of $473$38 of taxes. For the firstthird quarter of fiscal 2014, includes restructuring chargesincome of $3,585$774 net of $734$271 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 2015 were $619.0 million, a decrease of $9.4 million or 1.5% from the third quarter of fiscal 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 higher 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 $6.7 million. In addition, net sales were unfavorably impacted by reduced generator sales and unfavorable mix of engines shipped. Net sales benefited 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 sold. 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 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 net sales. Partially offsetting the increase was an unfavorable foreign exchange impact of $2.4 million, primarily related

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to the weakening of the Australian dollar and Brazilian real. In addition, generator sales decreased due to fewer major power outages.

GROSS PROFIT

The consolidated gross profit percentage was 19.2% in the third quarter of fiscal 2015, a decrease from 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 22.9% in the third quarter of fiscal 2015, a decrease of 80 basis points from the prior year adjusted gross profit percentage. Manufacturing throughput decreased by 6% during the quarter, which reduced adjusted gross profit margins by approximately 140 basis points. The decrease was largely timing related as we 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 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 9.4% for the third quarter of fiscal 2015, down from 10.9% in the third quarter of fiscal 2014. The adjusted 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 of approximately 80 basis points primarily due to the weakening of the Australian dollar and Brazilian real.

ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Engineering, selling, general and administrative expenses were $72.7 million in the third quarter of fiscal 2015, a decrease of $2.1 million or 2.9% from the third quarter of fiscal 2014.

The Engines Segment engineering, selling, general and administrative expenses were $45.3 million in the third quarter of fiscal 2015, a decrease of $2.2 million from the third quarter of fiscal 2014. The decrease was primarily due to the retirement plan changes. Higher compensation expense in fiscal 2015 was offset by the benefit of the movement in foreign exchange rates.

The Products Segment fiscal 2015 third quarter engineering, selling, general and administrative expenses were $27.4 million, an increase of $0.1 million from the third quarter of fiscal 2014. Higher spend due to the Allmand acquisition and increased compensation expense was offset by $2.3 million in savings related to the restructuring actions announced in July 2014.


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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
  2015 Reported 
Adjustments(1)
 
2015 Adjusted (2)
 2014 Reported 
Adjustments(1)
 
2014 Adjusted(2)
NET SALES:            
Engines $857,067
 $
 $857,067
 $901,858
 $
 $901,858
Products 576,313
 
 576,313
 529,724
 
 529,724
Inter-Segment Eliminations (77,449) 
 (77,449) (69,283) 
 (69,283)
Total $1,355,931
 $
 $1,355,931
 $1,362,299
 $
 $1,362,299
             
GROSS PROFIT:            
Engines $189,580
 $
 $189,580
 $187,423
 $2,622
 $190,045
Products 64,505
 21,952
 86,457
 62,149
 2,082
 64,231
Inter-Segment Eliminations 183
 
 183
 1,875
 
 1,875
Total $254,268
 $21,952
 $276,220
 $251,447
 $4,704
 $256,151
             
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 $59,967
 $
 $59,967
 $54,805
 $3,047
 $57,852
Products (20,125) 24,902
 4,777
 (16,783) 2,082
 (14,701)
Inter-Segment Eliminations 183
 
 183
 1,875
 
 1,875
Total $40,025
 $24,902
 $64,927
 $39,897
 $5,129
 $45,026



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  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.
(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 its 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 fromof unconsolidated affiliates.

NET SALES

Consolidated net sales for the first nine months of fiscal 2015 were $1.36 billion, a decrease of $6.4 million or 0.5% from 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 was 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 the 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 an unfavorable foreign exchange impact of $7.6 million, primarily related to the weakening of the Australian dollar and 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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NET SALES

Consolidated net sales for the first quarter of fiscal 2015 were $292.6 million, a decrease of $24.7 million or 7.8% from the first quarter of fiscal 2014. The decrease primarily relates to lower sales of engines resulting from higher channel inventories in North America and lower sales of engines for snow thrower OEM customers in Europe due to adequate inventories following last season. The decrease in net sales was partially offset by higher sales of pressure washers, snow throwers, lawn and garden equipment and the Allmand acquisition.

Engines Segment net sales of $153.1 million in the first quarter of fiscal 2015 decreased $30.7 million or 16.7% from the prior year. Total engine volumes shipped in the quarter decreased by 18.7% or approximately 200,000 engines. Net sales decreased as anticipated due to higher channel inventories in North America at the end of the current lawn and garden season and lower shipments into the European market for snow throwers.

Products Segment net sales of $166.1 million in the first quarter of fiscal 2015 increased by $13.1 million or 9% from the prior year. This increase was due to higher sales of pressure washers, commercial lawn and garden equipment and snow throwers in the North America market and one month of the Allmand acquisition. Partially offsetting the increase were lower sales of snow throwers in Europe following last year’s mild winter and lower generator sales due to adequate channel inventories and no major storm activity.

GROSS PROFIT

The consolidated gross profit percentage was 16.2%18.8% in the first quarter nine months of fiscal 2015, an increase from 13.8%18.5% in the same period last year.

The Engines Segment gross profit percentage, including restructuring and acquisition related charges, was 18.2%22.1% in the first quarter nine months of fiscal 2015, higher than the 13.7%20.8% in the first quarter nine months of fiscal 2014. The Engines Segment adjusted gross profit percentage for the first quarternine months of 2015 was 18.2%22.1%, which was higher thanan increase of 100 basis points from the 14.7%adjusted gross profit percentage of 21.1% earned in the first quarternine months of fiscal 2014. Engines Segment adjusted gross profit margins improved 350 basis points year over year on higher manufacturing volume,due to an improved efficiencyproduct sales mix of large engines and lower retirement plan expense. Engines produced were higher by 12% in the quarter benefittingFavorable sales mix of large engines improved adjusted gross profit margins by approximately 230 basis points. Engine production was increased to support higher demand for large engines for riding equipment to support pre-building of products related to the closure of the McDonough, Georgia facility. In addition, plant efficiency improvements, cost reductions and a favorable mix of engines produced benefitted adjusted gross margins by approximately 13050 basis points. The previously announced retirement plan changes, which were implemented in January of calendar 2014, improved fiscal 2015 adjusted gross profit margins by $2.2$8.0 million or 15090 basis points. Partially offsetting this improvementthe improved gross profit margins was the impact of unfavorable sales mix thatforeign exchange, primarily related to the Euro, which reduced adjusted gross profit margins by 160$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 quarter nine months of fiscal 2015, slightly updown from 11.6%11.7% in the first quarter nine months of fiscal 2014. The Products Segment adjusted gross profit percentage for the first quarternine months of 2015 was 16.5%15.0%, which was 3.7% higher thanan improvement of 290 basis points from the adjusted gross profit percentage for12.1% earned in the first quarternine months of fiscal 2014. Products Segment adjusted gross profit margins increased by 370 basis points year over year due to improved sales mix and higher manufacturing throughput. Favorable sales mix improved adjusted gross margins by 220290 basis points due to a focus on selling higher margin lawn and garden equipment and the benefit of one month of the Allmand acquisition. In addition, manufacturing throughput increased year over year by 55% benefitting22%, benefiting adjusted gross margins by approximately 190150 basis points. Throughput is increased due to higher snow thrower production for channel refill in the North America market and higher production of pressure washers and riding mowers to facilitate the previously announced upcoming closure of the McDonough Georgia plant. Offsetting the increase in adjusted gross profit margins was an unfavorable foreign exchange impact of approximately 40$7.2 million or 110 basis points primarily due to the devaluation of the Australian dollar.dollar and Brazilian Real, and an unfavorable impact of 40 basis points due to slightly higher material costs.

ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Engineering, selling, general and administrative expenses were $70.1$216.8 million in the first quarter nine months of fiscal 2015, an increase of $1.3$1.4 million or 1.9%0.6% from the first quarter nine months of fiscal 2014.

The Engines Segment engineering, selling, general and administrative expenses were $42.9$136.5 million in the first quarternine months of fiscal 2015, a decrease of $0.4$2.9 million from the first quarternine months of fiscal 2014. The decrease was primarily

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due to the previously announced retirement plan changes.

The Products Segment fiscal 2015 first quarterchanges, which reduced engineering, selling, general and administrative expenses by $6.0 million. Higher compensation expense in fiscal 2015 was partially offset by the benefit of the changes in foreign exchange rates.

The Products Segment engineering, selling, general and administrative expenses for the first nine months of fiscal 2015 were $28.1$83.2 million, an increase of $2.7$4.2 million from the first quarternine months of fiscal 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 due to $1.5$5.5 million related to the Allmand acquisition and increased compensation expense, partially offset by $1.2$5.1 million in savings related to the restructuring initiativeactions announced in July 2014.

ACQUISITION

The Company announced onOn August 29, 2014, that it hadthe Company completed the acquisition of Allmand Bros., Inc. for approximately $62$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 ourits 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 quarternine months of fiscal 2015 was comparablehigher by $0.5 million and $0.8 million, respectively, compared to the same periodperiods 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 quarternine months of fiscal 2015 was 40.9%were 20.2% and 5.7%, compared to 29.3%26.1% and 26.6% for the same respective periodperiods last year. The highertax rates for the third quarter and first nine months of fiscal 2015 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 net tax benefit of $4.7 million and $5.0 million, respectively. In addition, the tax rate for the first quarternine months of fiscal 2015 was primarily drivenimpacted by the reversal of previously recorded reserves as a result of the effective settlement of the Company’s IRS auditaudit. The tax rates for its 2009-2010 consolidated incomethe third quarter and the first nine months of fiscal 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 returns.benefit of $2.9 million for the permanent exclusion of qualified export activity from prior years’ taxable income.

RESTRUCTURING ACTIONS

The restructuring actions announced in 2012 were concluded as planned during the fourth quarter of fiscal 2014. During the firstthird quarter of fiscal 2015, the Company continued progress on implementing the previously announced and began implementing restructuring actions to narrow its assortment of lower-priced Snapper consumer lawn and garden equipment and consolidate its Products segmentSegment manufacturing facilities in order to reduce costs. The Company will closebegan production of pressure washers at its Milwaukee plant during the third quarter and ceased production at the McDonough, Georgia plant inshortly after the second halfend of fiscal 2015 and consolidate production into existing facilities in Wisconsin and New York.the third quarter. Pre-tax restructuring costs for the third quarter and first quarternine months of fiscal 2015 were $7.8$8.0 million and $23.3 million, respectively, and pre-tax savings were $1.2 million.$2.3 million and $5.1 million, respectively. Pre-tax restructuring cost estimates for fiscal 2015 remain unchanged at $30 million to $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 threenine months of fiscal 2015 were $48.9$52.1 million compared to $52.9$14.0 million in the first threenine months of fiscal 2014. The slight improvementincrease in operating cash flows used was primarily related to an improved net loss and a decrease in accounts receivable due to lower sales, partially offset by 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 $69.3$103.9 million and $11.6$29.4 million during the first threenine months of fiscal 2015 and fiscal 2014, respectively. The $57.7$74.5 million increase in cash used in investing activities was primarily related to $62.1$59.9 million of cash paid for the Allmand acquisition during the first quarter of fiscal 2015. Theand a $14.7 million increase was partially offset by $4.3 million of lowerin additions to plant and equipment during the first nine months of fiscal 2015 compared to fiscal 2014.the same period last year.

Cash flows used inprovided by financing activities were $14.6$13.1 million during the first threenine months of fiscal 2015 as compared to $9.0$38.3 million of cash flows used in financing activities during the first threenine months of fiscal 2014. The $5.6$51.4 million increase in cash used inprovided by financing activities was primarily attributable to $8.1$60.1 million of higherborrowings on the Revolver in fiscal 2015 compared to no such borrowings in fiscal 2014, partially offset by a $9.5 million increase in treasury stock purchases in fiscal 2015 compared to fiscal 2014, partially offset by $2.2 million of higher stock option exercise proceeds in fiscal 2015 compared to fiscal 2014.


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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 21, 2013, the Company entered into an amendment to its $500$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

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under the revolving credit facility by up to $250$250 million if certain conditions are satisfied. As of September 28, 2014, there were no borrowingsMarch 29, 2015, $60.1 million was outstanding under the Revolver.

On January 22, 2014 the Board of Directors of the Company authorized up to $50 million in funds associated with the common share repurchase program. On 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. As of September 28, 2014,March 29, 2015, the total remaining authorization was approximately $69.5$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 threenine months ended September 28, 2014,March 29, 2015, the Company repurchased 905,1642,039,399 shares on the open market at an average price of $19.62$19.40 per share.

The Company expects capital expenditures to be approximately $60 million to $65 million in fiscal 2015. These anticipated expenditures reflect ourits plans to continue to reinvest in efficient equipment and innovative new products.

During the first threenine months of fiscal 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 2015. In addition, the Company expects it will not be required to make minimum contributions to the qualified pension plan in 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.

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 September 28, 2014,March 29, 2015, the Company was in compliance with these covenants, and expects to be in compliance with all covenants during the remainder of fiscal 2015.

OFF-BALANCE SHEET ARRANGEMENTS

There have been no material changes since the August 26, 2014 filing of the Company’s Annual Report on Form 10-K.

CONTRACTUAL OBLIGATIONS

There have been no material changes since the August 26, 2014 filing of the Company’s Annual Report on Form 10-K.10-K, except that the Company expects it will be required to make no minimum contributions to the qualified pension plan in fiscal 2016 through fiscal 2019.

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CRITICAL ACCOUNTING POLICIES

There have been no material changes in the Company’s critical accounting policies since the August 26, 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.

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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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 Accounting Pronouncements" and is incorporated herein by reference.

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 26, 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 firstthird 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 and Contingencies" and is incorporated herein by reference.
ITEM 1A. RISK FACTORS
There have been no material changes since the August 26, 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 September 28, 2014March 29, 2015.
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)
June 30, 2014 to July 27, 2014 348,869
 $19.80
 348,869
 $30,394,716
July 28, 2014 to August 24, 2014 397,108
 19.15
 397,108
 72,790,098
August 25, 2014 to September 28, 2014 159,187
 20.42
 159,187
 69,539,499
Total FIrst Quarter 905,164
 $19.62
 905,164
 $69,539,499
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 January 22, 2014, the Board of Directors of the Company authorized up to $50 million in funds associated with the common share repurchase program. On 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 expiration date of June 30, 2016.

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ITEM 6. EXHIBITS
 
Exhibit
Number
 Description
10.1Stock Option and Stock Award Program, as amended through October 15, 2014 (Filed herewith)
10.2Form of 2014 Omnibus Incentive Plan Stock Option Agreement (Filed herewith)
10.3Form of 2014 Omnibus Incentive Plan Restricted Stock Award Agreement (Filed herewith)
10.4Form of 2014 Omnibus Incentive Plan Restricted Stock Unit Award Agreement (Filed herewith)
10.5Form of 2014 Omnibus Incentive Plan Performance Share Unit Award Agreement (Filed herewith)
   
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 September 28, 2014March 29, 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 Loss,Income (Loss), (iv) the Condensed Consolidated Statements of Cash Flows, and (v) related Notes to Condensed Consolidated Financial Statements

 

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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

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:NovemberMay 5, 20142015 /s/ David J. Rodgers 
   David J. Rodgers 
   
Senior Vice President and Chief Financial Officer and
Duly Authorized Officer
 
 

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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

EXHIBIT INDEX
 
Exhibit
Number
 Description
10.1Stock Option and Stock Award Program, as amended through October 15, 2014 (Filed herewith)
10.2Form of 2014 Omnibus Incentive Plan Stock Option Agreement (Filed herewith)
10.3Form of 2014 Omnibus Incentive Plan Restricted Stock Award Agreement (Filed herewith)
10.4Form of 2014 Omnibus Incentive Plan Restricted Stock Unit Award Agreement (Filed herewith)
10.5Form of 2014 Omnibus Incentive Plan Performance Share Unit Award Agreement (Filed herewith)
   
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 September 28, 2014March 29, 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 Loss,Income (Loss), (iv) the Condensed Consolidated Statements of Cash Flows, and (v) related Notes to Condensed Consolidated Financial Statements

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