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EXHIBIT 99.3
Unaudited Pro Forma Combined Condensed Financial Data
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BRIGGS & STRATTON CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA
We present below our historical and pro forma combined condensed
financial data as of and for each of the periods indicated. The unaudited pro
forma combined condensed financial data give effect to:
- our issuance and sale on May 14, 2001 of $275.0 million principal
amount of 8.875% senior notes due March 15, 2011 and our
concurrent issuance and sale of $140.0 million principal amount of
5.00% convertible senior notes due May 15, 2006 and the
application of the estimated net proceeds from these offerings to
fund our acquisition of Generac Portable Products, Inc. and to
repay a portion of the outstanding balance of our unrated
commercial paper and short-term borrowings under our credit
facilities; and
- our acquisition of all of the stock of Generac for a cash purchase
price of approximately $48.5 million (including $3.5 million of
Generac's transaction expenses paid by us), replacing Generac's
indebtedness and retiring the common stock warrants for a total of
$215.7 million, and paying approximately $4.0 million of
transaction expenses.
For purposes of the pro forma financial data, we have assumed that there will be
no earnout payment with respect to the Generac acquisition. The convertible
senior notes are convertible into our common stock at the conversion rate of
20.1846 shares for each $1,000 principal amount of convertible notes, subject to
adjustment in certain circumstances.
The unaudited pro forma combined condensed financial data are based on
the estimates and assumptions included in the notes to the unaudited pro forma
combined condensed financial statements. The unaudited pro forma combined
condensed financial data have been prepared using the purchase method of
accounting in which the total cost of the Generac acquisition is allocated to
the tangible and intangible assets acquired and liabilities assumed based on
their respective fair market values at the effective date of the acquisition,
assumed for purposes of the pro forma information to be approximated by
historical values. Such allocations ultimately will be based on further
management studies and due diligence and consequently are preliminary and
subject to revision. We do not expect the final allocation of purchase price to
differ materially from that presented in the pro forma data.
We combined our consolidated statements of income for the nine months
ended April 1, 2001 (unaudited) and for the year ended July 2, 2000 with
Generac's consolidated statements of income for the nine months ended March 31,
2001 (unaudited) and for the year ended June 30, 2000 (unaudited). Our 2000
fiscal year ended on July 2, 2000, while Generac's 2000 fiscal year ended on
December 31, 2000. In order to present Generac's historical consolidated
statements of income in accordance with our fiscal year, we combined financial
data for the appropriate periods derived from the financial results reported by
Generac. We also combined our April 1, 2001 unaudited consolidated balance sheet
with Generac's March 31, 2001 unaudited consolidated balance sheet.
The unaudited pro forma combined condensed statements of income assume
that our acquisition of Generac and the issuance of the $275 million principal
amount of senior notes and the $140 million principal amount of convertible
senior notes occurred on June 28, 1999, the beginning of our 2000 fiscal year.
The unaudited pro forma combined condensed balance sheet assumes that the
acquisition and these issuances occurred on April 1, 2001.
The unaudited pro forma combined condensed financial data have been
adjusted to eliminate intercompany accounts between Briggs & Stratton and
Generac. No pro forma effect has been given to any operational or other
synergies that may be realized from the acquisition.
The unaudited pro forma combined condensed financial data are presented
for illustrative purposes only and are not necessarily indicative of the
operating results or financial position that might have been achieved had the
transactions occurred as of an earlier date, and they are not necessarily
indicative of
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future operating results or financial position. These pro forma amounts do not,
therefore, project our financial position or results of operations for any
future date or period. You should read the unaudited pro forma combined
condensed financial data with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and our historical consolidated financial
statements and related notes included in our annual report on Form 10-K for the
fiscal year ended July 2, 2000 and our quarterly report on Form 10-Q for the
quarter ended April 1, 2001.
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UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
April 1, 2001
(In millions)
Pro Forma
Combined
Pro Forma Statement after
Briggs & Adjustments Statement after Adjustments for Offerings and
Stratton for Offerings Offerings Generac Acquisition Acquisition
------------- ------------- --------------- ---------- --------------- ---------------
Current assets
Cash and cash equivalents $ 30.1 $ 268.2 (a) $ 298.3 $ 0.9 $ (268.2) (b) $ 31.0
Accounts receivable, net 386.6 -- 386.6 33.6 (0.6) (c) 419.6
Inventories 294.9 -- 294.9 64.7 -- 359.6
Other 61.3 -- 61.3 6.6 -- 67.9
------------ ------------- -------------- ---------- --------------- --------------
Total current assets 772.9 268.2 1,041.1 105.8 (268.8) 878.1
Other assets, net 83.5 9.5 (a) 93.0 206.5 (46.9) (d) 252.6
Plant and equipment, net 399.5 -- 399.5 26.9 -- 426.4
------------ ------------- -------------- ---------- --------------- --------------
Total assets $ 1,255.9 $ 277.7 $ 1,533.6 $ 339.2 $ (315.7) $ 1,557.1
============ ============= ============== ========== =============== ==============
Current liabilities
Accounts payable $ 106.0 $ -- $ 106.0 $ 10.7 $ (0.6) (c) $ 116.1
Short-term debt and current
maturities of long-term debt 350.7 (131.8) (a) 218.9 92.7 (92.7) (b) 218.9
Accrued liabilities 156.0 -- 156.0 9.8 -- 165.8
------------ ------------- -------------- ---------- --------------- --------------
Total current liabilities 612.7 (131.8) 480.9 113.2 (93.3) 500.8
Deferred revenue on sale of plant
and equipment 15.6 -- 15.6 -- -- 15.6
Deferred income tax liability 12.2 -- 12.2 1.2 -- 13.4
Other long-term obligations 91.3 -- 91.3 1.2 -- 92.5
Long-term debt 98.7 409.5 (a) 508.2 122.1 (120.9) (b) 509.4
------------ ------------- -------------- ---------- --------------- --------------
Total liabilities 830.5 277.7 1,108.2 237.7 (214.2) 1,131.7
Generac common stock warrants -- -- -- 2.1 (2.1) (b) --
Shareholders' investment
Common stock and additional
paid-in capital 36.3 -- 36.3 112.5 (112.5) (d) 36.3
Retained earnings 745.4 -- 745.4 1.3 (1.3) (d) 745.4
Accumulated other comprehensive
loss (5.7) -- (5.7) (2.7) 2.7 (d) (5.7)
Unearned compensation on
restricted stock (0.3) -- (0.3) -- -- (0.3)
Treasury stock at cost, 7,328
shares (350.3) -- (350.3) -- -- (350.3)
Excess of purchase price over
book value of net assets
acquired from
entities partially under
common control -- -- -- (11.7) 11.7 (d) --
------------ ------------- -------------- ---------- --------------- --------------
Total shareholders'
investment 425.4 -- 425.4 99.4 (99.4) 425.4
------------ ------------- -------------- ---------- --------------- --------------
Total liabilities and
shareholders' investment $ 1,255.9 $ 277.7 $ 1,533.6 $ 339.2 $ (315.7) $ 1,557.1
============ ============= ============== ========== =============== ==============
(a) Reflects the portion of the $415.0 million debt offerings (net of $5.5
million discount) to be used to (i) replace $131.8 million of short-term
debt; (ii) fund $268.2 million of cash for payment of the Generac
acquisition; and (iii) pay the estimated $9.5 million of offering issuance
costs (including underwriting discount), which are reflected as deferred
financing costs in other assets.
(b) Reflects the use of cash to (i) purchase the Generac common stock for $48.5
million; (ii) pay the estimated $4.0 million of transaction fees; and (iii)
repay Generac debt and retire the common stock warrants for a total of
$215.7 million.
(c) Reflects the elimination of intercompany accounts from sales to Generac.
(d) Represents the purchase price allocation for the Generac acquisition and
the elimination of the related investment. The adjustment to Generac's
historical goodwill to reflect the purchase price allocation is as follows:
Net assets acquired $ 99.4
Consideration paid plus related transaction fees 52.5
-------------------
Goodwill adjustment $ 46.9
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UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
NINE MONTHS ENDED APRIL 1, 2001
(IN MILLIONS, EXCEPT PER SHARE INFORMATION)
Combined
Pro Forma Statements After
Briggs & Adjustments Statement after Adjustments for Offerings and
Stratton for Offerings Offerings Generac Acquisition Acquisition
-------- ------------- --------------- ------- --------------- ----------------
Net sales $ 978.9 $ - $ 978.9 $ 143.9 $ (17.6) (c) $ 1,105.2
Cost of goods sold 797.1 - 797.1 116.5 (17.7) (c) 895.9
-------- ------------- --------------- ------- --------------- ----------------
Gross profit on sales 181.8 - 181.8 27.4 0.1 209.3
Engineering, selling, general
and administrative expenses 100.0 - 100.0 31.4 1.7 (d) 133.1
-------- ------------- --------------- ------- --------------- ----------------
Income (loss) from
operations 81.8 - 81.8 (4.0) (1.6) 76.2
Interest expense (21.7) (18.2) (a) (39.9) (16.5) 16.5 (e) (39.9)
Other income/(expense) (f) 9.0 - 9.0 (0.8) - 8.2
-------- ------------- --------------- ------- --------------- ----------------
Income (loss) before income
taxes 69.1 (18.2) 50.9 (21.3) 14.9 44.5
Income tax provision (benefit) 25.6 (6.7) (b) 18.9 (7.5) 5.5 (b) 16.9
-------- ------------- --------------- ------- --------------- ----------------
Net income (loss) $ 43.5 $ (11.5) $ 32.0 $ (13.8) $ 9.4 $ 27.6
======== ============= =============== ======= =============== ================
Earnings per share:
Basic $ 2.01 $ 1.48 (g) $ 1.28
Diluted $ 2.01 $ 1.45 $ 1.27 (g)
Weighted average shares
outstanding:
Basic 21.6 21.6 (g) 21.6
Diluted 21.6 24.3 24.3 (g)
(a) Reflects the interest expense on the proceeds of the offerings used to fund
the Generac acquisition and the incremental interest expense related to the
portion of the offering proceeds used to replace short-term debt. The
interest rate is 8.875% on the $275 million of long term debt and 5.0%
interest on the $140.0 million of long term convertible debt, and includes
amortization of debt issuance costs and discounts.
(b) Reflects the related tax impact of the pro forma adjustments assuming a 37%
effective tax rate.
(c) Reflects the elimination of intercompany sales and intercompany profit on
sales to Generac. Intercompany profit was determined based on the overall
gross profit percentage of Briggs & Stratton.
(d) Reflects incremental amortization of goodwill as adjusted for the
acquisition over a 20 year life.
(e) Reflects the elimination of Generac's historical interest expense assuming
the repayment of historical Generac debt.
(f) Additional interest income of $0.3 million for the nine months ended April
1, 2001 would have resulted from the investment of excess funds during
non-peak borrowing periods during the nine month period assuming a 5%
interest rate on invested funds. This income is not reflected in the pro
forma combined condensed statement of income.
(g) Reflects the dilution of earnings per share assuming conversion of $140
million of the convertible notes.
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UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
YEAR ENDED JULY 2, 2000
(IN MILLIONS, EXCEPT PER SHARE INFORMATION)
Pro Forma Combined
Pro Forma Statements After
Briggs & Adjustments for Statement After Adjustments for Offerings and
Stratton Offerings Offerings Generac Acquisition Acquisition
--------- --------------- --------------- ----------- --------------- ------------------
Net sales $ 1,590.6 $ - $ 1,590.6 $ 352.2 $ (31.6) (c) $ 1,911.2
Cost of goods sold 1,251.1 - 1,251.1 265.2 (30.7) (c) 1,485.6
---------- ------------- ------------- ----------- ------------ ----------
Gross profit on sales 339.5 - 339.5 87.0 (0.9) 425.6
Engineering, selling, general
and administrative expenses 134.2 - 134.2 58.0 2.3 (d) 194.5
---------- ------------- ------------- ----------- ------------ ----------
Income from operations 205.3 - 205.3 29.0 (3.2) 231.1
Interest expense (21.3) (26.4) (a) (47.7) (20.9) 20.9 (e) (47.7)
Other income/(expense) (f) 32.7 - 32.7 (1.5) - 31.2
---------- ------------- ------------- ----------- ------------ ----------
Income before income taxes 216.7 (26.4) 190.3 6.6 17.7 214.6
Income tax provision 80.2 (9.8) (b) 70.4 2.4 6.5 (b) 79.3
---------- ------------- ------------- ----------- ------------ ----------
Net income $ 136.5 $ (16.6) $ 119.9 $ 4.2 $ 11.2 $ 135.3
========== ============= ============= =========== ============ ==========
Earnings per share:
Basic $ 5.99 $ 5.26 $ 5.93
Diluted $ 5.97 $ 4.87 (g) $ 5.48 (g)
Weighted average shares outstanding:
Basic 22.8 22.8 22.8
Diluted 22.8 25.5 (g) 25.5 (g)
(a) Reflects the interest expense on the proceeds of the offerings used to fund
the Generac acquisition and the incremental interest expense related to the
portion of the offering proceeds used to replace short-term debt. The
interest rate is 8.875% on the $275 million of long term debt and 5.0%
interest on the $140.0 million of long term convertible debt, and includes
amortization of debt issuance costs and discounts.
(b) Reflects the related tax impact of the pro forma adjustments assuming a 37%
effective tax rate.
(c) Reflects the elimination of intercompany sales and intercompany profit on
sales to Generac. Intercompany profit was determined based on the overall
gross profit percentage of Briggs & Stratton.
(d) Reflects incremental amortization of goodwill as adjusted for the
acquisition over a 20 year life.
(e) Reflects the elimination of Generac's historical interest expense assuming
the repayment of historical Generac debt.
(f) Additional interest income of $2.2 million for the year ended July 2, 2000
would have resulted from the investment of excess funds during non-peak
borrowing periods during the fiscal year assuming a 5% interest rate on
invested funds. This income is not reflected in the pro forma combined
condensed statement of income.
(g) Reflects the dilution of earnings per share assuming conversion of $140.0
million of the convertible notes.
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