Briggs & Stratton (BGG) 10-Q 2006 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 1, 2006

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  X     No        

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer           X                           Accelerated filer                                   Non-accelerated filer                 

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.

	Outstanding at
Class	January 27, 2006
COMMON STOCK, par value $0.01 per share	51,804,698 Shares

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

INDEX

			Page No.
PART I — FINANCIAL INFORMATION
Item 1.		Financial Statements
		Consolidated Condensed Balance Sheets – January 1, 2006 and July 3, 2005	3
		Consolidated Condensed Statements of Income – Three Months and Six Months Ended January 1, 2006 and December 26, 2004	5
		Consolidated Condensed Statements of Cash Flows – Six Months Ended January 1, 2006 and December 26, 2004	6
		Notes to Consolidated Condensed Financial Statements	7
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.		Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.		Controls and Procedures	25
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings		26
Item 4.	Submission of Matters to a Vote of Security Holders		26
Item 6.	Exhibits		26
Signatures			27
Exhibit Index			28

2

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)

ASSETS

	January 1,		July 3,
	2006		2005
	(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents	$	39,759	$	161,573
Accounts receivable, net	467,248		360,786
Inventories -
Finished products and parts	400,441		283,405
Work in process	232,155		174,648
Raw materials	12,244		11,612
Total inventories	644,840		469,665
Deferred income tax asset	94,719		92,251
Prepaid expenses and other current assets	29,029		34,930
Total current assets	1,275,595		1,119,205
OTHER ASSETS:
Goodwill	253,663		253,663
Investments	47,879		49,783
Deferred loan costs, net	5,223		6,016
Other intangible assets, net	95,520		96,445
Other long-term assets, net	27,046		26,601
Total other assets	429,331		432,508
PLANT AND EQUIPMENT:
Cost	1,018,825		1,005,644
Less - accumulated depreciation	578,477		558,389
Total plant and equipment, net	440,348		447,255
	$	2,145,274	$	1,998,968

The accompanying notes are an integral part of these statements.

3

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS (Continued)

(In thousands, except per share data)

LIABILITIES & SHAREHOLDERS’ INVESTMENT

	January 1,			July 3,
	2006			2005
	(Unaudited)
CURRENT LIABILITIES:
Accounts payable	$	149,278		$	155,973
Accrued liabilities	189,926			196,252
Dividends payable	11,409			-
Current maturity on long-term debt	40,000			-
Short-term debt	138,060			443
Total current liabilities	528,673			352,668
OTHER LIABILITIES:
Long-term debt	441,754			486,321
Deferred income tax liability	106,900			113,794
Accrued pension cost	53,304			47,944
Accrued employee benefits	15,687			15,125
Accrued postretirement health care obligation	80,811			77,607
Other long-term liabilities	15,778			16,323
Total other liabilities	714,234			757,114
SHAREHOLDERS' INVESTMENT:
Common stock -
Authorized 120,000 shares, $.01 par value, issued 57,854 shares	579			579
Additional paid-in capital	60,739			55,793
Retained earnings	1,033,114			1,029,329
Accumulated other comprehensive loss	(45,836		)	(48,331		)
Unearned compensation on restricted stock	(2,942		)	(1,985		)
Treasury stock at cost, 5,993 and 6,114 shares, respectively	(143,287		)	(146,199		)
Total shareholders' investment	902,367			889,186
	$	2,145,274		$	1,998,968

The accompanying notes are an integral part of these statements.

4

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

	Three Months Ended						Six Months Ended
	January 1,			December 26,			January 1,			December 26,
	2006			2004			2006			2004
NET SALES	$	574,313		$	503,700		$	1,086,022		$	942,695
COST OF GOODS SOLD	456,961			397,558			887,362			765,735
Gross profit on sales	117,352			106,142			198,660			176,960
ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	78,722			92,658			148,999			160,618
Income from operations	38,630			13,484			49,661			16,342
INTEREST EXPENSE	(11,305		)	(8,795		)	(21,333		)	(16,914		)
OTHER INCOME, net	6,223			6,081			12,487			9,014
Income before provision for income taxes	33,548			10,770			40,815			8,442
PROVISION FOR INCOME TAXES	11,730			3,710			14,270			2,870
NET INCOME	$	21,818		$	7,060		$	26,545		$	5,572
EARNINGS PER SHARE DATA -
Average shares outstanding	51,695			51,193			51,714			51,361
Basic earnings per share	$	0.42		$	0.14		$	0.51		$	0.11
Diluted average shares outstanding	52,066			51,751			52,093			51,905
Diluted earnings per share	$	0.42		$	0.14		$	0.51		$	0.11
CASH DIVIDENDS PER SHARE	$	0.22		$	0.17		$	0.44		$	0.34

The accompanying notes are an integral part of these statements.

5

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)
(Unaudited)

	Six Months Ended
	January 1,			December 26,
	2006			2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	26,545		$	5,572
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization	38,373			35,600
Earnings of unconsolidated affiliates, net of dividends	1,948			3,517
(Gain) Loss on disposition of plant and equipment	(5,402		)	1,279
Provision for deferred income taxes	(9,362		)	(29,392		)
Change in bad debt allowance	(658		)	40,123
Stock compensation expense	4,385			237
Change in operating assets and liabilities:
Increase in receivables	(105,804		)	(116,144		)
Increase in inventories	(175,175		)	(165,404		)
(Increase) Decrease in prepaid expenses and other current assets	(1,254		)	994
Decrease in accounts payable, accrued liabilities, and income taxes	(3,426		)	(11,920		)
Increase (Decrease) in accrued/prepaid pension	5,360			(475		)
Other, net	(3,407		)	2,044
Net cash used in operating activities	(227,877		)	(233,969		)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to plant and equipment	(34,354		)	(39,382		)
Proceeds received on sale of plant and equipment	10,696			332
Investment in joint venture	(900		)	-
Proceeds received on sale of certain assets of a subsidiary	-			4,050
Cash paid for acquisition, net of cash acquired	-			(223,113		)
Refund of cash paid for acquisition	6,347			-
Net cash used in investing activities	(18,211		)	(258,113		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on loans and notes payable	132,617			160,950
Dividends	(11,379		)	(8,694		)
Proceeds from exercise of stock options	2,367			17,648
Net cash provided by financing activities	123,605			169,904
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	669			3,862
NET DECREASE IN CASH AND CASH EQUIVALENTS	(121,814		)	(318,316		)
CASH AND CASH EQUIVALENTS, beginning	161,573			342,394
CASH AND CASH EQUIVALENTS, ending	$	39,759		$	24,078
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid	$	20,130		$	16,078
Income taxes paid	$	21,347		$	9,710

The accompanying notes are an integral part of these statements.

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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)

General Information

The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the U.S.  However, in the opinion of Briggs & Stratton Corporation, adequate disclosures have been presented to make the information not misleading, and all adjustments necessary to present fair statements of the results of operations and financial position have been included.  All of these adjustments are of a normal recurring nature.  These consolidated condensed financial statements should be read in conjunction with the financial statements and the notes thereto which were included in our latest Annual Report on Form 10-K.

Common Stock

On August 4, 2004, Briggs & Stratton’s board approved a two-for-one stock split of its common stock, which became effective on October 29, 2004 upon shareholder approval of the amendment to the Briggs & Stratton Corporation Articles of Incorporation.  The stock split was payable on November 9, 2004 to shareholders of record as of October 29, 2004.  The split was in the form of a stock dividend, with shareholders receiving an additional share for each existing share held.  All references in the Consolidated Condensed Financial Statements to the number of common shares and related per share amounts reflect the effect of the stock split.

Accounts Receivable

During the first quarter of fiscal 2005, accounts receivable included $39 million from Murray, Inc., a major original equipment manufacturer.  Based on information available at that time, the company assessed the account was not fully collectible and believed a $10 million reserve was sufficient to cover the estimated loss.  Accordingly, an additional allowance for doubtful accounts of $10 million was recorded in the first quarter of fiscal 2005.  Subsequent to the first quarter of fiscal 2005, Murray Inc. filed for bankruptcy protection resulting in the write-off of the remaining $29 million in the second quarter of fiscal 2005.

Earnings Per Share

Basic earnings per share, for each period presented, is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period.  Diluted earnings per share, for each period presented, is computed reflecting the potential dilution that would occur if options or other contracts to issue common stock were exercised or converted into common stock at the beginning of the period.

Shares outstanding used to compute diluted earnings per share for the quarter and six month period ended January 1, 2006 excluded weighted average outstanding options to purchase approximately 1,504,000 and 1,422,000 shares of common stock, respectively.  The impact of such common stock equivalents was excluded from the calculation of net income per share on a diluted basis as their effect is anti-dilutive.  In the prior fiscal year, no shares were excluded from the computation of diluted earnings per share for the second quarter and six month periods.

7

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

Information on earnings per share is as follows (in thousands):

	Three Months Ended				Six Months Ended
	January 1,		December 26,		January 1,		December 26,
	2006		2004		2006		2004
Net income	$	21,818	$	7,060	$	26,545	$	5,572
Average shares of common stock outstanding	51,695		51,193		51,714		51,361
Incremental common shares applicable to common stock options based on the common stock average market price during the period	307		526		314		510
Incremental common shares applicable to restricted and deferred common stock based on the common stock average market price during the period	64		32		65		34
Diluted average shares of common stock outstanding	52,066		51,751		52,093		51,905

Comprehensive Income

Comprehensive income is a more inclusive financial reporting method that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income.  Comprehensive income is defined as net income and other changes in shareholders’ investment from transactions and events other than with shareholders.  Total comprehensive income (loss) is as follows (in thousands):

	Three Months Ended						Six Months Ended
	January 1,			December 26,			January 1,		December 26,
	2006			2004			2006		2004
Net income	$	21,818		$	7,060		$	26,545	$	5,572
Cumulative translation adjustments	(735		)	3,105			85		3,519
Unrealized (loss) gain on derivative instruments	(3,417		)	(853		)	2,410		(1,258		)
Total comprehensive income	$	17,666		$	9,312		$	29,040	$	7,833

The components of Accumulated Other Comprehensive Income (Loss) are as follows (in thousands):

	January 1,			July 3,
	2006			2005
Cumulative translation adjustments	$	5,824		$	5,739
Unrealized gain on derivative instruments	3,329			919
Minimum pension liability adjustment	(54,989		)	(54,989			)
Accumulated other comprehensive loss	$	(45,836	)	$		(48,331	)

8

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

Derivatives

Derivatives are recorded on the balance sheet as assets or liabilities, measured at fair value.  Briggs & Stratton enters into derivative contracts designated as cash flow hedges to manage its foreign currency exposures.  These instruments generally do not have a maturity of more than twelve months.

Changes in the fair value of cash flow hedges are recorded on the Consolidated Condensed Statements of Income or as a component of Accumulated Other Comprehensive Income (Loss).  The amounts included in Accumulated Other Comprehensive Income (Loss) will be reclassified into income when the forecasted transactions occur, generally within the next twelve months.  These forecasted transactions represent the exporting of products for which Briggs & Stratton will receive foreign currency and the importing of products for which it will be required to pay in a foreign currency.  Changes in the fair value of all derivatives deemed to be ineffective are recorded as either income or expense in the accompanying Consolidated Condensed Statements of Income.

Briggs & Stratton manages its exposure to fluctuation in the cost of natural gas used by its operating facilities through participation in a third party managed dollar cost averaging program linked to NYMEX futures.  As a participant in the program, Briggs & Stratton hedges a minimum of 50% of its anticipated monthly natural gas usage along with a pool of other companies.  Briggs & Stratton does not hold any actual futures contracts and actual delivery of natural gas is not required of the participants in the program.  Cash settlements occur on a monthly basis based on the difference between the average dollar price of the underlying NYMEX futures held by the third party and the actual price of natural gas paid by Briggs & Stratton in the period. The fair value of the underlying NYMEX futures is reflected as an asset or liability on the accompanying Consolidated Condensed Balance Sheets.  Changes in fair value are reflected as a Component of Accumulated Other Comprehensive Income (Loss), which are reclassified into the income statement as the monthly cash settlements occur and actual natural gas is consumed.

9

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

Segment and Geographic Information

Briggs & Stratton operates two reportable business segments that are managed separately based on fundamental differences in their operations.  Summarized segment data is as follows (in thousands):

	Three Months Ended						Six Months Ended
	January 1,			December 26,			January 1,			December 26,
	2006			2004			2006			2004
NET SALES:
Engines	$	380,901		$	374,874		$	666,330		$	628,986
Power Products	256,609			169,108			557,216			391,262
Inter-Segment Eliminations	(63,197		)	(40,282		)	(137,524		)	(77,553		)
Total*	$	574,313		$	503,700		$	1,086,022		$	942,695
* International Sales (included in above)
Engines	$	121,398		$	102,718		$	214,699		$	156,804
Power Products	28,153			7,997			50,389			15,159
Total	$	149,551		$	110,715		$	265,088		$	171,963
GROSS PROFIT ON SALES:
Engines	$	93,503		$	88,681		$	153,187		$	132,926
Power Products	26,472			17,849			45,976			42,047
Inter-Segment Eliminations	(2,623		)	(388		)	(503		)	1,987
Total	$	117,352		$	106,142		$	198,660		$	176,960
INCOME (LOSS) FROM OPERATIONS:
Engines	$	35,699		$	14,528		$	44,466		$	9,852
Power Products	5,554			(656		)	5,698			4,503
Inter-Segment Eliminations	(2,623		)	(388		)	(503		)	1,987
Total	$	38,630		$	13,484		$	49,661		$	16,342

Warranty

Briggs & Stratton recognizes the cost associated with its standard warranty on Engines and Power Products at the time of sale.  The amount recognized is based on historical failure rates and current claim cost experience.  The following is a reconciliation of the changes in accrued warranty costs for the reporting period (in thousands):

	Six Months Ended
	January 1,			December 26,
	2006			2004
Beginning balance	$	59,625		$	43,148
Balance related to acquisition	-			8,773
Payments	(21,680		)	(18,603		)
Provision for current year warranties	18,302			19,125
Adjustments to prior years’ warranties	(5,087		)	(1,784		)
Ending balance	$	51,160		$	50,659

10

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

Stock Incentives

The Company had a Stock Incentive Plan under which 5,361,935 shares of common stock were reserved for issuance.  Effective October 20, 2004, the Company adopted an Incentive Compensation Plan under which 4,000,000 shares of common stock (8,000,000 shares as a result of the 2-for-1 stock split) were reserved for future issuance.  The adoption of this Plan reduced the number of shares available for future issuance under the Stock Incentive Plan to zero.  However, as of January 1, 2006, and July 3, 2005, there were 3,002,788 and 3,092,168 outstanding option and restricted stock awards granted under the Stock Incentive Plan, respectively, that are or may become exercisable in the future.  In accordance with both plans, the Company can issue eligible employees stock options, stock appreciation rights, restricted stock, deferred stock and cash bonus awards subject to certain annual limitations.  The plans also allow the Company to issue directors non-qualified stock options and directors’ fees in stock.

Effective July 4, 2005, Briggs & Stratton’s Incentive Compensation Plan is accounted for under Statement of Financial Accounting Standards (“SFAS”) No. 123R, “Share Based Payment”.  During the quarter ended January 1, 2006, the Company recognized approximately $1.9 million in stock option compensation expense, and approximately $3.8 million during the six months ended January 1, 2006.  Prior to July 4, 2005, the plan was accounted for according to Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”.  Thus, no compensation cost was recognized prior to fiscal year 2006.  Had compensation cost for this plan been determined consistent with SFAS No. 123R, the Company’s net income and earnings per share would have been reduced to the following pro forma amounts (in thousands, except per share data):

	Three Months Ended			Six Months Ended
	December 26,			December 26,
	2004			2004
Net income as reported:	$	7,060		$	5,572
Deduct employee compensation expense
determined under a fair value based
method, net of related tax effects	(1,471		)	(2,461		)
Pro forma net income	$	5,589		$	3,111
Basic earnings per share:
As reported	$	0.14		$	0.11
Pro forma	$	0.11		$	0.06
Diluted earnings per share:
As reported	$	0.14		$	0.11
Pro forma	$	0.11		$	0.06

11

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

The exercise price of each stock option issued is in excess of the market value of the stock on the date of grant.  The fair value of each option is estimated using the Black-Scholes option pricing model.  The grant-date fair market value of the options and assumptions used to determine such value are:

Options Granted During	2006			2005
Grant Date Fair Value*	$	7.37		$	12.12
Assumptions:
Risk-free Interest Rate	4.3		%	4.2		%
Expected Volatility	25.1		%	28.4		%
Expected Dividend Yield	1.9		%	1.9		%
Expected Term (In Years)	5.0			10.0

* Share data adjusted for effect of 2-for-1 stock split effective October 29, 2004.

Information on the options outstanding is as follows:

			Wtd. Avg.
	Shares*		Ex. Price
Balance, June 27, 2004	2,498,290		$	28.27
Granted During the Year	1,149,340		36.68
Exercised During the Year	(622,262	)	32.67
Expired During the Year	(18,200	)	37.27
Balance, July 3, 2005	3,007,168		$	30.52
Granted During the First Six Months	355,123		38.83
Exercised During the First Six Months	(80,380	)	29.44
Expired During the First Six Months	-		-
Balance, January 1, 2006	3,281,911		$	31.46

Grant Summary*
Fiscal	Grant	Date	Expiration	Exercise		Options
Year	Date	Exercisable	Date	Price		Outstanding
2001	8-3-00	8-3-03	8-3-07	$	23.11	319,348
2002	8-7-01	8-7-04	8-7-08	24.60		397,200
2003	8-13-02	8-13-05	8-13-09	23.35		302,580
2004	8-15-03	8-15-06	8-15-13	30.44		758,320
2005	8-13-04	8-13-07	8-13-14	36.68		1,149,340
2006	8-16-05	8-16-08	8-16-10	38.83		355,123

* Share data adjusted for effect of 2-for-1 stock split effective October 29, 2004.

Under the plans, the Company has issued restricted stock to certain employees.  During the six months ended January 1, 2006, the Company issued 38,574 shares.  During fiscal year 2005, the Company issued 26,000 shares.  The restricted stock vests on the fifth anniversary date of issue provided that the recipient is still employed by the Company.  The aggregate market value on the date of issue of $1.3 million during the six months ended January 1, 2006 and $1.0 million in fiscal 2005 has been recorded as unearned compensation, a separate component of the Shareholders’ Investment section of the Consolidated Balance Sheets, and is being amortized over the five-year vesting period.

Under the plans, the Company may also issue stock to its directors in lieu of directors’ fees.  The Company has issued 2,800 and 3,463 shares during the six months ended January 1, 2006 and the twelve months ended July 3, 2005, respectively.

Under the Incentive Compensation Plan, the Company may also issue deferred stock to its officers and key employees.  Under this provision, the Company issued 24,905 and 1,000 shares during the six months ended January 1, 2006 and the twelve months ended July 3, 2005, respectively.  The aggregate market value on the date of issue was $871,000 and $34,000 for the six months ended January 1, 2006 and the twelve months ended July 3, 2005, respectively.  Expense is recognized ratably over the five-year vesting period.

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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

Pension and Postretirement Benefits

Briggs & Stratton 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
	Three Months Ended						Three Months Ended
	January 1,			December 26,			January 1,			December 26,
	2006			2004			2006			2004
Components of net periodic expense:
Service cost-benefits earned	$	3,693		$	3,017		$	639		$	609
Interest cost on projected benefit obligation	13,202			13,502			3,686			4,172
Expected return on plan assets	(17,294		)	(17,339		)	-			-
Amortization of:
Transition obligation	2			-			12			12
Prior service cost	872			785			(323		)	7
Actuarial loss	2,426			245			3,862			3,766
Net periodic expense	$	2,901		$	210		$	7,876		$	8,566

	Pension Benefits						Other Postretirement Benefits
	Six Months Ended						Six Months Ended
	January 1,			December 26,			January 1,			December 26,
	2006			2004			2006			2004
Components of net periodic expense:
Service cost-benefits earned	$	7,715		$	6,487		$	1,515		$	1,372
Interest cost on projected benefit obligation	26,298			27,222			7,513			8,351
Expected return on plan assets	(34,499		)	(35,400		)	-			-
Amortization of:
Transition obligation	4			-			23			23
Prior service cost	1,646			1,570			(315		)	15
Actuarial loss	5,127			388			7,897			7,156
Net periodic expense	$	6,291		$	267		$	16,633		$	16,917

Employer Contributions:

There were no contributions made to the plan for the quarters ended January 1, 2006 and December 26, 2004.  Briggs & Stratton is not required to make any contributions to the pension plans in fiscal 2006.

Estimated Benefit Payments:

Briggs & Stratton expects to make benefit payments of approximately $1.6 million for its non-qualified pension plan during fiscal 2006.  As of January 1, 2006, Briggs & Stratton had made payments of approximately $0.9 million.  Briggs & Stratton anticipates benefit payments of approximately $27.3 million for its other postretirement benefit plans during fiscal 2006.  As of January 1, 2006, Briggs & Stratton had made payments of approximately $14.4 million.

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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

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 January 14, 2005, the Company filed a lawsuit against Kohler Co. (Briggs & Stratton Corporation v. Kohler Co., No 05-C-0025-C (U.S. District Court, Western District of Wisconsin)) alleging Kohler’s single-cylinder Courage engine infringes two of the Company’s U.S. patents.  Kohler filed counterclaims against the Company on April 15, 2005, alleging that the Company’s pricing and contracting practices violate federal antitrust laws and related state laws.  The Company’s infringement claims are scheduled for trial in February 2006, and Kohler’s counterclaims are scheduled for trial in September 2006.

On June 3, 2004, eight individuals who claim to have purchased lawnmowers in Illinois and Minnesota filed a lawsuit (Ronnie Phillips et al. v. Sears Roebuck Corporation et al., No. 04-L-334 (20th Judicial Circuit, St. Clair County, IL)) against the Company and other defendants alleging that the horsepower labels on the products they purchased were inaccurate.  The plaintiffs seek certification of a class of all persons in the United States who, beginning January 1, 1995 through the present, purchased a lawnmower containing a two stroke or four stroke gas combustion engine up to 20 horsepower that was manufactured by the defendants.  The complaint seeks an injunction, compensatory and punitive damages, and attorneys’ fees.  On April 20, 2005, the court issued a stay with respect to this case pending settlement negotiations.

Although it is not possible to predict with certainty the outcome of these unresolved legal actions or the range of possible loss, Briggs & Stratton believes these unresolved legal actions will not have a material effect on its financial position. Briggs & Stratton currently does not have enough information to estimate the impact that these matters may have on its future results of operations.

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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

Financial Information of Subsidiary Guarantor of Indebtedness

In June 1997, Briggs & Stratton issued $100 million of 7.25% senior notes; in May 2001, the Company issued $275 million of 8.875% senior notes; and in February 2005, the Company issued $125 million of variable rate term notes.  In addition, Briggs & Stratton has a $350 million revolving credit facility that expires in May 2009 that is used to finance seasonal working capital needs.

Under the terms of Briggs & Stratton’s 8.875% senior notes, 7.25% senior notes, variable rate term notes, and the revolving credit agreement (collectively, the “Domestic Indebtedness”), Briggs & Stratton Power Products Group, LLC and its wholly owned subsidiary, Simplicity Manufacturing, Inc., are joint and several guarantors of the Domestic Indebtedness (the “Guarantor”).  The guarantees are full and unconditional guarantees.  Additionally, if at any time a domestic subsidiary of Briggs & Stratton constitutes a significant domestic subsidiary, then such domestic subsidiary will also become a guarantor of the Domestic Indebtedness.  Currently, all of the Domestic Indebtedness is unsecured.  If Briggs & Stratton 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.  Briggs & Stratton had the following outstanding amounts related to the guaranteed debt (in thousands):

	January 1, 2006		Maximum
	Carrying Amount		Guarantee
8.875% Senior Notes, due March 15, 2011	$	267,072	$	270,000
7.25% Senior Notes, due September 15, 2007	$	89,682	$	90,000
Variable Rate Term Notes, due February 11, 2008	$	125,000	$	125,000
Revolving Credit Facility, expiring May 2009	$	134,865	$	350,000

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

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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

BALANCE SHEET

As of January 1, 2006

	Briggs & Stratton		Guarantor		Non-Guarantor
	Corporation		Subsidiary		Subsidiaries		Eliminations			Consolidated
Current assets	$	935,347	$	513,875	$	179,722	$	(353,349	)	$	1,275,595
Investment in subsidiaries	776,105		-		-		(776,105		)	-
Non-current assets	404,264		448,505		16,910		-			869,679
	$	2,115,716	$	962,380	$	196,632	$	(1,129,454	)	$	2,145,274
Current liabilities	$	584,461	$	156,402	$	128,012	$	(340,202	)	$	528,673
Long-term debt	441,754		-		-		-			441,754
Other long-term obligations	173,987		98,216		277		-			272,480
Shareholders' investment	915,514		707,762		68,343		(789,252		)	902,367
	$	2,115,716	$	962,380	$	196,632	$	(1,129,454	)	$	2,145,274

BALANCE SHEET

As of July 3, 2005

	Briggs & Stratton		Guarantor		Non-Guarantor
	Corporation		Subsidiary		Subsidiaries		Eliminations			Consolidated
Current assets	$	702,178	$	424,473	$	185,436	$	(192,882	)	$	1,119,205
Investment in subsidiaries	770,539		-		-		(770,539		)	-
Non-current assets	416,503		447,986		15,274		-			879,763
	$	1,889,220	$	872,459	$	200,710	$	(963,421	)	$	1,998,968
Current liabilities	$	328,914	$	74,890	$	130,483	$	(181,619	)	$	352,668
Long-term debt	486,321		-		-		-			486,321
Other long-term obligations	173,536		96,974		283		-			270,793
Shareholders' investment	900,449		700,595		69,944		(781,802		)	889,186
	$	1,889,220	$	872,459	$	200,710	$	(963,421	)	$	1,998,968

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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

STATEMENT OF INCOME

For the Three Months Ended January 1, 2006

	Briggs & Stratton			Guarantor			Non-Guarantor
	Corporation			Subsidiary			Subsidiaries			Eliminations			Consolidated
Net sales	$	372,267		$	254,327		$	48,315		$	(100,596	)	$	574,313
Cost of goods sold	283,960			227,466			40,457			(94,922		)	456,961
Gross profit	88,307			26,861			7,858			(5,674		)	117,352
Engineering, selling, general and administrative expenses	50,335			20,139			8,248			-			78,722
Income (Loss) from operations	37,972			6,722			(390		)	(5,674		)	38,630
Interest expense	(13,380		)	(17		)	(89		)	2,181			(11,305		)
Other income (expense), net	7,097			2,411			(247		)	(3,038		)	6,223
Income (Loss) before income taxes	31,689			9,116			(726		)	(6,531		)	33,548
Provision (Credit) for income taxes	11,091			2,503			(644		)	(1,220		)	11,730
Net income (loss)	$	20,598		$	6,613		$	(82	)	$	(5,311	)	$	21,818

STATEMENT OF INCOME

For the Six Months Ended January 1, 2006

	Briggs & Stratton			Guarantor			Non-Guarantor
	Corporation			Subsidiary			Subsidiaries			Eliminations			Consolidated
Net sales	$	639,308		$	552,186		$	98,620		$	(204,092	)	$	1,086,022
Cost of goods sold	498,489			507,929			81,997			(201,053		)	887,362
Gross profit	140,819			44,257			16,623			(3,039		)	198,660
Engineering, selling, general and administrative expenses	93,258			38,428			17,313			-			148,999
Income (Loss) from operations	47,561			5,829			(690		)	(3,039		)	49,661
Interest expense	(24,751		)	(31		)	(142		)	3,591			(21,333		)
Other income (expense), net	14,808			4,187			(1,235		)	(5,273		)	12,487
Income (Loss) before income taxes	37,618			9,985			(2,067		)	(4,721		)	40,815
Provision (Credit) for income taxes	13,166			3,201			(4		)	(2,093		)	14,270
Net income (loss)	$	24,452		$	6,784		$	(2,063	)	$	(2,628	)	$	26,545

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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

STATEMENT OF INCOME

For the Three Months Ended December 26, 2004

	Briggs & Stratton			Guarantor			Non-Guarantor
	Corporation			Subsidiary			Subsidiaries			Eliminations			Consolidated
Net sales	$	362,167		$	187,561		$	39,773		$	(85,801	)	$	503,700
Cost of goods sold	282,443			169,537			28,483			(82,905		)	397,558
Gross profit	79,724			18,024			11,290			(2,896		)	106,142
Engineering, selling, general and administrative expenses	67,060			18,320			7,278			-			92,658
Income (Loss) from operations	12,664			(296		)	4,012			(2,896		)	13,484
Interest (income) expense	(8,690		)	4			(31		)	(78		)	(8,795		)
Other income (expense), net	6,205			344			93			(561		)	6,081
Income (Loss) before income taxes	10,179			52			4,074			(3,535		)	10,770
Provision (Credit) for income taxes	3,551			67			524			(432		)	3,710
Net income (loss)	$	6,628		$	(15	)	$	3,550		$	(3,103	)	$	7,060

STATEMENT OF INCOME

For The Six Months Ended December 26, 2004

	Briggs & Stratton			Guarantor			Non-Guarantor
	Corporation			Subsidiary			Subsidiaries			Eliminations			Consolidated
Net sales	$	604,332		$	422,736		$	77,232		$	(161,605	)	$	942,695
Cost of goods sold	487,661			380,469			57,547			(159,942		)	765,735
Gross profit	116,671			42,267			19,685			(1,663		)	176,960
Engineering, selling, general and administrative expenses	109,244			37,210			14,164			-			160,618
Income (Loss) from operations	7,427			5,057			5,521			(1,663		)	16,342
Interest (income) expense	(16,265		)	(24		)	(72		)	(553		)	(16,914		)
Other income (expense), net	14,508			(44		)	11			(5,461		)	9,014
Income (Loss) before income taxes	5,670			4,989			5,460			(7,677		)	8,442
Provision (Credit) for income taxes	1,928			1,973			799			(1,830		)	2,870
Net income (loss)	$	3,742		$	3,016		$	4,661		$	(5,847	)	$	5,572

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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

STATEMENT OF CASH FLOWS

For the Six Months Ended January 1, 2006

	Briggs & Stratton			Guarantor			Non-Guarantor
	Corporation			Subsidiary			Subsidiaries			Eliminations			Consolidated
Net Cash (Used in) Provided by Operating Activities	$	(316,478	)	$	81,152		$	(3,264	)	$	10,713		$	(227,877	)
Cash Flows from Investing Activities:
Additions to plant and equipment	(23,427		)	(8,532		)	(2,395		)	-			(34,354		)
Proceeds received on sale of plant and equipment	10,641			46			9			-			10,696
Cash investment in subsidiary	(382		)	-			-			382			-
Investment in joint venture	(900		)	-			-			-			(900		)
Refund of cash paid for acquisition	-			6,347			-			-			6,347
Net Cash (Used in) Provided by Investing Activities	(14,068		)	(2,139		)	(2,386		)	382			(18,211		)
Cash Flows from Financing Activities:
Net borrowings (repayments) on loans and notes payable	211,655			(81,771		)	13,445			(10,712		)	132,617
Dividends	(11,379		)	-			-			-			(11,379		)
Proceeds from exercise of stock options	2,367			-			-			-			2,367
Capital contributions received	-			383			-			(383		)	-
Net Cash Provided by (Used in) Financing Activities	202,643			(81,388		)	13,445			(11,095		)	123,605
Effect of Foreign Currency Exchange Rate Changes on Cash and Cash Equivalents	-			-			669			-			669
Net (Decrease) Increase in Cash and Cash Equivalents	(127,903		)	(2,375		)	8,464			-			(121,814		)
Cash and Cash Equivalents, Beginning	143,034			6,376			12,163			-			161,573
Cash and Cash Equivalents, Ending	$	15,131		$	4,001		$	20,627		$	-		$	39,759

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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

STATEMENT OF CASH FLOWS

For the Six Months Ended December 26, 2004

	Briggs & Stratton			Guarantor			Non-Guarantor
	Corporation			Subsidiary			Subsidiaries			Eliminations			Consolidated
Net Cash (Used in) Provided by Operating Activities	$	(280,652	)	$	55,133		$	(5,640	)	$	(2,810	)	$	(233,969	)
Cash Flows from Investing Activities:
Additions to plant and equipment	(28,503		)	(5,659		)	(5,220		)	-			(39,382		)
Proceeds received on sale of plant and equipment	325			4			3			-			332
Proceeds received on sale of
certain assets of a subsidiary	-			-			4,050			-			4,050
Capital contributions to subsidiary	(244,561		)	-			(1		)	244,562			-
Cash paid for acquisition, net of cash acquired	(719		)	(222,394		)	-			-			(223,113		)
Net Cash (Used in) Provided by Investing Activities	(273,458		)	(228,049		)	(1,168		)	244,562			(258,113		)
Cash Flows from Financing Activities:
Net borrowings (repayments) on loans and notes payable	229,772			(67,673		)	1,030			(2,179		)	160,950
Dividends	(8,694		)	-			(4,989		)	4,989			(8,694		)
Proceeds from exercise of stock options	17,648			-			-			-			17,648
Capital contributions received	-			239,277			5,285			(244,562		)	-
Net Cash Provided by (Used in) Financing Activities	238,726			171,604			1,326			(241,752		)	169,904
Effect of  Foreign Currency Exchange Rate Changes on Cash and Cash Equivalents	(1		)	-			3,863			-			3,862
Net Decrease in Cash and Cash Equivalents	(315,385		)	(1,312		)	(1,619		)	-			(318,316		)
Cash and Cash Equivalents, Beginning	326,809			4,007			11,578			-			342,394
Cash and Cash Equivalents, Ending	$	11,424		$	2,695		$	9,959		$	-		$	24,078

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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

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

The following is management’s discussion and analysis of Briggs & Stratton’s financial condition and results of operations for the periods included in the accompanying consolidated condensed financial statements:

RESULTS OF OPERATIONS

SALES

Consolidated net sales for the second quarter of fiscal 2006 totaled $574 million, an increase of $70 million or 14% when compared to fiscal 2005.  The increase is driven by improved sales performance of the Power Products Segment, including the inclusion of $63 million of sales of end product associated with our acquisition of certain assets of Murray, Inc. (“Murray”), which was completed in February of 2005.

Second quarter net sales for the Engines Segment were $381 million versus $375 million in fiscal 2005, an increase of $6 million or 2%.  The increase resulted from an increase in engine unit shipments between quarters resulting in a $13 million increase in net sales.  The increased volume is attributable to strong demand for generator engines.  This improvement was offset by the impact of an unfavorable Euro exchange rate and a mix of shipments that favored lower priced engines.

Second quarter Power Products Segment net sales were $257 million versus $169 million in fiscal 2005.  The $88 million increase was driven primarily by the inclusion of $63 million of sales of Murray end product in the current quarter.  The remainder of the improvement was driven by increased generator and pressure washer unit volume between years.  The generator volume increase reflects continued replenishment of retail inventories that were depleted by the hurricane season.  Pressure washer unit shipments increased between years due to improved retail sell through.  Sales of premium lawn and garden equipment were flat between years.

Consolidated net sales for the first six months of fiscal 2006 totaled $1.086 billion, an increase of $143 million or 15%, compared to the first six months of the prior year.  The entire increase is attributable to the inclusion of sales from the Murray acquisition in the current year.

Six month net sales for the Engines Segment were $666 million in fiscal 2006 versus $629 million in the prior year, a $37 million or 6% improvement.  Engine unit shipments increased 9% between years on the strength of generator demand, resulting in increased sales of $59 million.  Consistent with the second quarter discussion, partially offsetting the volume gains were the impact of an unfavorable Euro exchange rate and a negative mix of engines.

Power Products Segment net sales for the first six months were $557 million versus $391 million in the prior year, an increase of $166 million or 42%.  The inclusion of $143 million of sales from the Murray acquisition was the major driver of the increase.  The remaining increase was driven by increased generator shipments offset by lower pressure washer and premium lawn and garden equipment sales as retailers and dealers lowered inventory levels.

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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

GROSS PROFIT MARGIN

The consolidated gross profit margin in the second quarter decreased from 21% to 20%.  Engines Segment margins increased from 24% to 25%. Cost reduction efforts and lower manufacturing spending between years were partially offset by the $3 million impact of an unfavorable Euro exchange rate and a mix that favored lower margined engines.  The Power Products Segment margin was 10% for the second quarter of fiscal 2006 down from 11% in fiscal 2005.  Losses on the sale of Murray product reduced the Segment margin by 1% due to expenses associated with winding down operations at the Murray facilities.

The consolidated gross profit margin for the six-month period decreased from 19% in fiscal 2005 to 18% in fiscal 2006.  Engines Segment margins for the six-month period increased from 21% in fiscal 2005 to 23% in fiscal 2006.  The increase is attributable primarily to a $6 million gain on the sale of an operating asset in the first quarter of fiscal 2006.  Power Products Segment margins for the six-month period decreased from 11% in fiscal 2005 to 8% in fiscal 2006.  Losses on the sale of Murray product reduced overall segment margins by 2%.  Lower margins on the sale of premium lawn and garden equipment reduced the Segment margin by 1%, as the impact of higher interest rates on dealer financing and lower production levels, more than offset the elimination of purchase accounting in the current year.

ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Engineering, selling, general and administrative expenses were $79 million in the second quarter of fiscal 2006, versus $93 million in fiscal 2005.  Excluding the impact of $30 million in bad debt expense associated with Murray in the prior year, the category increased $16 million between years. The increase is driven primarily by increased salaries and fringe benefits of $6 million, legal fees of $4 million, and information technology consulting fees of $2 million.  Salaries and fringe benefits reflect increased pension costs and the recognition of expense for the first time in the current year for stock options.

The category increased $27 million, excluding the impact of $39 million in bad debts associated with Murray in the prior year, for the six-month comparative periods.  The increase is primarily attributable to the same factors identified for the second quarter including salaries and fringe benefits of $12 million, legal fees of $5 million, and information technology consulting of $3 million.

INTEREST EXPENSE

Interest expense increased $3 million in the second quarter of fiscal 2006 versus the second quarter of fiscal 2005.  The increase reflects higher borrowings between years associated with the $125 million Term Notes used to finance the acquisition of certain assets of Murray, Inc. in the third quarter of fiscal 2005.  Interest expense increased $4 million for the six-month comparative periods for the same reason.

PROVISION FOR INCOME TAXES

The effective tax rate used in both the second quarter and six-month period for the current fiscal year was 35%.  This rate is management’s estimate of what the rate will be for the entire 2006 fiscal year based on today’s facts.  Last year’s rate was 34% for the second quarter and the six-month period.  The fiscal 2005 rate was ultimately decreased to 33% for the entire fiscal year.  The increase in the effective tax rate in the current year is attributable to increased earnings expectations, lower dividend income expected in the current year and any related foreign tax credit implications.  The audit for tax years 2000-2002 has progressed to the final level of review by the IRS and the Company anticipates that it will be favorably settled during the current fiscal year upon approval by the Joint Committee of Taxation.

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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

LIQUIDITY AND CAPITAL RESOURCES

Cash used in operating activities for the six-month period of fiscal 2006 was $228 million, a decrease of $6 million.  Lower working capital requirements is the primary driver for the decrease in cash used from operations.  A reduction in receivables due to the elimination of sales to Murray in the current year and lower bonus and other accrual payouts offset the impact of increased inventory attributable primarily to the Engines Segment.

In the six-month period of fiscal 2006, we used $18 million for investing activities compared to $258 million in fiscal 2005.  The $240 million decrease in use of cash for investing activities is attributable to the $223 million acquisition of Simplicity Manufacturing, Inc. in fiscal 2005, and lower net asset additions in the current year.

Net cash provided by financing activities was $124 million in fiscal 2006 versus $170 million in fiscal 2005, a decrease of $46 million.  The decrease is attributable to lower seasonal working capital borrowings in the current year and lower stock option activity.

FUTURE LIQUIDITY AND CAPITAL RESOURCES

Briggs & Stratton has a $350 million revolving credit facility that expires in May 2009. The credit facility is used to fund seasonal working capital requirements and other financing needs.

Management has authorization to buy up to 1.8 million shares of Briggs & Stratton common stock in open market or private transactions under a June 2000 Board of Directors’ authorization. The Company did not purchase any shares in the first half of fiscal 2006.  On February 2, 2006, the Company announced its intent to initiate repurchases of up to one million shares of its common stock through open market transactions to be completed by June 2006.  The timing and amount of purchases will be dependent upon the market price of the stock and certain governing loan covenants.

Management expects cash outflows for capital expenditures to be approximately $80 million in fiscal 2006. These anticipated expenditures provide for continued investment in equipment and new products. These expenditures will be funded using available cash.

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

OFF-BALANCE SHEET ARRANGEMENTS

There have been no material changes since the September 16, 2005, filing of the Company’s Annual Report on Form 10-K.

OTHER MATTERS

During the first quarter of fiscal 2006, Briggs & Stratton extended the term of its collective bargaining agreement governing certain Milwaukee area employees through July 31, 2010.  Other agreements expire at various times ranging from 2006 through 2008.

The Company intends to reduce salaried headcount by a range of 6% to 8% by February 15, 2006.  The goal is to streamline operations to reflect organizational and workflow changes that have occurred over the last several years.  The Company believes the reduction will result in approximately $10 to $15 million of annual, pretax savings beginning in fiscal 2007.

CONTRACTUAL OBLIGATIONS

There have been no material changes since the September 16, 2005, filing of the Company’s Annual Report on Form 10-K.

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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

CRITICAL ACCOUNTING POLICIES

There have been no material changes in Briggs & Stratton’s critical accounting policies since the September 16, 2005 filing of its Annual Report on Form 10-K.  As discussed in our annual report, the preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes.  Future events and their effects cannot be determined with absolute certainty.  Therefore, the determination of estimates requires the exercise of judgment.  Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements.

The most significant accounting estimates inherent in the preparation of our financial statements include estimates as to the recovery of accounts receivable and inventory reserves, as well as those used in the determination of liabilities related to customer rebates, pension obligations, post-retirement benefits, warranty, product liability, group health insurance and taxation.  Various assumptions and other factors underlie the determination of these significant estimates.  The process of determining significant estimates is fact specific and takes into account factors such as historical experience, current and expected economic conditions, product mix, and, in some instances, actuarial techniques.  Briggs & Stratton re-evaluates these significant factors as facts and circumstances change.

CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS

This report contains certain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. The words “anticipate”, “believe”, “estimate”, “expect”, “forecast”, “intend”, “may”, “objective”, “plan”, “project”, “seek”, “think”, “will”, and similar expressions are intended to identify forward-looking statements. The forward-looking statements are based on the Company’s current views and assumptions and involve risks and uncertainties that include, among other things, the ability to successfully forecast demand for our products and appropriately adjust our manufacturing and inventory levels; changes in our operating expenses; changes in interest rates; the effects of weather on the purchasing patterns of consumers and original equipment manufacturers (OEMs); actions of engine manufacturers and OEMs with whom we compete; the seasonal nature of our business; changes in laws and regulations, including environmental, tax, pension funding and accounting standards; work stoppages or other consequences of any deterioration in our employee relations; work stoppages by other unions that affect the ability of suppliers or customers to manufacture; acts of war or terrorism that may disrupt our business operations or those of our customers and suppliers; changes in customer and OEM demand; changes in prices of raw materials and parts that we purchase; changes in domestic economic conditions, including housing starts and changes in consumer disposable income; changes in foreign economic conditions, including currency rate fluctuations; our customers’ ability to successfully obtain financing; the actions of customers of our OEM customers; actions by potential acquirers of certain OEMs; the ability to successfully realize the maximum market value of acquired assets; new facts that come to light in the future course of litigation proceedings which could affect our assessment of those matters; and other factors that may be disclosed from time to time in our SEC filings or otherwise. Some or all of the factors may be beyond our control. We caution you that any forward-looking statement reflects only our belief at the time the statement is made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made.

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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes since the September 16, 2005, 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 second fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

A discussion of legal proceedings is included in the Notes to Consolidated Condensed Financial Statements of this Form 10Q under the heading Commitments and Contingencies and incorporated herein by reference.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company held its Annual Meeting of Shareholders on October 19, 2005.  Information on the matters voted upon and the votes cast with respect to each matter was previously reported in the Company’s Quarterly Report on Form 10-Q for the quarter ended October 2, 2005.

ITEM 6.  EXHIBITS

Exhibit
Number	Description
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	(Filed herewith)
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	(Filed herewith)
32.1	Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	(Furnished herewith)
32.2	Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	(Furnished herewith)

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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: February 7, 2006	/s/ James E. Brenn
	James E. Brenn
	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
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)

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