BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 29, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from_______________ to _______________
Commission file number 1-1370
------
BRIGGS & STRATTON CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Wisconsin 39-0182330
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12301 West Wirth Street, Wauwatosa, Wisconsin 53222
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
414/259-5333
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
Indicate by check mark whether the Registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act).
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Outstanding at
Class December 29, 2002
- --------------------------------------------------------------------------------
COMMON STOCK, par value $0.01 per share 21,646,984 Shares
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
INDEX
<Table>
<Caption>
Page No.
--------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statement
Consolidated Condensed Balance Sheets -
December 29, 2002 and June 30, 2002 3
Consolidated Condensed Statements of Income -
Three Months and Six Months ended December 29, 2002
and December 30, 2001 5
Consolidated Condensed Statements of Cash Flows -
Six Months ended December 29, 2002 and December 30, 2001 6
Notes to Consolidated Condensed Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 17
Item 3. Quantitative and Qualitative Disclosures about
Market Risk 19
Item 4. Controls and Procedures 19
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 20
</Table>
2
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)
ASSETS
<Table>
<Caption>
December 29, June 30,
2002 2002
--------------- ---------------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 22,222 $ 215,945
Accounts receivable, net 321,174 201,910
Inventories -
Finished products and parts 201,375 126,152
Work in process 78,202 61,748
Raw materials 4,188 3,059
--------------- ---------------
Total inventories 283,765 190,959
Future income tax benefits 44,210 41,383
Prepaid expenses and other current assets 16,394 19,747
--------------- ---------------
Total current assets 687,765 669,944
--------------- ---------------
OTHER ASSETS:
Goodwill 161,030 161,030
Investments 42,660 46,889
Prepaid pension 67,501 60,343
Deferred loan costs, net 8,427 9,304
Other long-term assets, net 7,542 6,308
--------------- ---------------
Total other assets 287,160 283,874
--------------- ---------------
PLANT AND EQUIPMENT:
Cost 881,313 879,635
Less, accumulated depreciation 500,014 484,420
--------------- ---------------
Total plant and equipment, net 381,299 395,215
--------------- ---------------
$ 1,356,224 $ 1,349,033
=============== ===============
</Table>
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
<Table>
<Caption>
December 29, June 30,
2002 2002
-------------- --------------
(Unaudited)
CURRENT LIABILITIES:
Accounts payable $ 73,026 $ 103,648
Domestic notes payable 31,435 2,625
Foreign loans 10,383 15,270
Accrued liabilities 155,911 144,480
-------------- --------------
Total current liabilities 270,755 266,023
-------------- --------------
OTHER LIABILITIES:
Deferred revenue on sale of plant and equipment 15,267 15,364
Deferred income tax liability 35,373 27,405
Accrued pension liability 16,610 15,750
Accrued employee benefits liability 13,211 13,070
Accrued postretirement health care obligation 59,488 62,753
Long-term debt 501,261 499,022
-------------- --------------
Total other liabilities 641,210 633,364
-------------- --------------
SHAREHOLDERS' INVESTMENT:
Common stock -
Authorized 60,000 shares, $.01 par value,
issued 28,927 shares 289 289
Additional paid-in capital 35,361 35,459
Retained earnings 760,008 769,131
Accumulated other comprehensive loss (2,962) (6,626)
Unearned compensation on restricted stock (364) (199)
Treasury stock at cost, 7,280 and 7,288 shares,
respectively (348,073) (348,408)
-------------- --------------
Total shareholders' investment 444,259 449,646
-------------- --------------
$ 1,356,224 $ 1,349,033
============== ==============
</Table>
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)
<Table>
<Caption>
Three Months Ended Six Months Ended
------------------------------ -------------------------------
December 29, December 30, December 29, December 30,
2002 2001 2002 2001
------------ ------------ ------------ ------------
NET SALES $ 352,562 $ 333,554 $ 589,058 $ 552,345
COST OF GOODS SOLD 285,470 278,695 484,274 478,502
------------ ------------ ------------ ------------
Gross profit on sales 67,092 54,859 104,784 73,843
ENGINEERING, SELLING, GENERAL
AND ADMINISTRATIVE EXPENSES 41,191 40,660 79,567 77,184
------------ ------------ ------------ ------------
Income (Loss) from operations 25,901 14,199 25,217 (3,341)
INTEREST EXPENSE (10,171) (11,101) (20,260) (21,523)
OTHER INCOME, net 2,064 562 2,190 1,715
------------ ------------ ------------ ------------
Income (Loss) before income taxes 17,794 3,660 7,147 (23,149)
PROVISION (CREDIT) FOR INCOME TAXES 6,050 1,281 2,430 (8,104)
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ 11,744 $ 2,379 $ 4,717 $ (15,045)
============ ============ ============ ============
EARNINGS PER SHARE DATA -
Average shares outstanding 21,647 21,603 21,645 21,602
============ ============ ============ ============
Basic earnings (loss) per share $ 0.54 $ 0.11 $ 0.22 $ (0.70)
============ ============ ============ ============
Diluted average shares outstanding 24,482 21,616 21,654 21,602
============ ============ ============ ============
Diluted earnings (loss) per share $ 0.53 $ 0.11 $ 0.22 $ (0.70)
============ ============ ============ ============
CASH DIVIDENDS PER SHARE $ 0.32 $ 0.31 $ 0.32 $ 0.31
============ ============ ============ ============
</Table>
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)
<Table>
<Caption>
Six Months Ended
--------------------------------------
December 29, December 30,
2002 2001
---------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 4,717 $ (15,045)
Adjustments to reconcile net income (loss) to net cash used in
operating activities -
Depreciation and amortization 31,189 30,245
Equity earnings of unconsolidated affiliates (2,185) (1,543)
Loss on disposition of plant and equipment, net 1,912 1,141
Provision for deferred income taxes 5,174 1,529
Change in operating assets and liabilities -
Increase in accounts receivable (119,264) (182,211)
Increase in inventories (92,806) (22,745)
Decrease (increase) in prepaid expenses and other current assets 3,353 (2,233)
(Decrease) increase in accounts payable and accrued liabilities (24,067) 9,041
Increase in prepaid pension, net (6,298) (9,697)
Other, net (3,672) 1,310
---------------- ----------------
Net cash used in operating activities (201,947) (190,208)
---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to plant and equipment (19,908) (26,657)
Proceeds received on disposition of plant and equipment 3,232 547
Dividends received on equity investments 6,330 2,426
---------------- ----------------
Net cash used in investing activities (10,346) (23,684)
---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on loans and notes payable 23,923 148,126
Issuance cost of long-term debt -- (327)
Dividends (6,927) (6,696)
Proceeds from exercise of stock options -- 95
---------------- ----------------
Net cash provided by financing activities 16,996 141,198
---------------- ----------------
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE
CHANGES ON CASH AND CASH EQUIVALENTS 1,574 569
---------------- ----------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (193,723) (72,125)
CASH AND CASH EQUIVALENTS, beginning 215,945 88,743
---------------- ----------------
CASH AND CASH EQUIVALENTS, ending $ 22,222 $ 16,618
================ ================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 19,312 $ 17,896
================ ================
Income taxes paid $ 5,460 $ 642
================ ================
</Table>
The accompanying notes are an integral part of these statements.
6
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
General Information
The accompanying unaudited consolidated condensed financial statements
have been prepared in accordance with the rules and regulations of the
Securities and Exchange Commission and therefore do not include all information
and footnotes necessary for a fair presentation of financial position, results
of operations and cash flows in conformity with accounting principles generally
accepted in the U.S. However, in the opinion of Briggs & Stratton Corporation,
adequate disclosures have been presented to make the information not misleading,
and all adjustments necessary to present fair statements of the results of
operations and financial position have been included. All of these adjustments
are of a normal recurring nature. These condensed financial statements should be
read in conjunction with the financial statements and the notes thereto which
were included in our latest Annual Report on Form 10-K.
Earnings Per Share
Basic earnings (loss) per share, for each period presented, is computed
by dividing net income by the weighted average number of shares of common stock
outstanding during the period. Diluted earnings per share is computed reflecting
the potential dilution that would occur if options or other contracts to issue
common stock were exercised or converted into common stock at the beginning of
the period.
Information on earnings per share is as follows (in thousands, except per share
data):
<Table>
<Caption>
Three Months Ended Six Months Ended
--------------------------------- ---------------------------------
December 29, December 30, December 29, December 30,
2002 2001 2002 2001
-------------- -------------- -------------- --------------
Net income (loss) $ 11,744 $ 2,379 $ 4,717 $ (15,045)
Adjustments to net income to add after tax interest
expense on convertible notes 1,155 -- -- --
-------------- -------------- -------------- --------------
Adjusted net income (loss) used in diluted earnings
per share $ 12,899 $ 2,379 $ 4,717 $ (15,045)
============== ============== ============== ==============
Average shares of common stock outstanding 21,647 21,603 21,645 21,602
Incremental common shares applicable to common
stock options based on the common stock average
market price during the period -- 8 -- --
Incremental common shares applicable to restricted
common stock based on the common stock average
market price during the period 9 5 9 --
Incremental common shares applicable to convertible
notes based on the conversion provisions of the
convertible notes 2,826 -- -- --
-------------- -------------- -------------- --------------
Diluted average common shares outstanding 24,482 21,616 21,654 21,602
============== ============== ============== ==============
</Table>
7
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Comprehensive Income
Comprehensive income is a more inclusive financial reporting method
that includes disclosure of certain financial information that historically has
not been recognized in the calculation of net income. Comprehensive income is
defined as net income and other changes in shareholders' investment from
transactions and other events other than with shareholders. Total comprehensive
income (loss) is as follows (in thousands):
<Table>
<Caption>
Three Months Ended Six Months Ended
---------------------------------- ----------------------------------
December 29, December 30, December 29, December 30,
2002 2001 2002 2001
-------------- -------------- -------------- --------------
Net income (loss) $ 11,744 $ 2,379 $ 4,717 $ (15,045)
Unrealized gain (loss) on marketable securities (10) 15 (52) (175)
Foreign currency translation adjustments 1,728 (875) 1,679 639
Unrealized gain (loss) on derivative instruments 484 (22) 2,037 (1,487)
-------------- -------------- -------------- --------------
Total comprehensive income (loss) $ 13,946 $ 1,497 $ 8,381 $ (16,068)
============== ============== ============== ==============
</Table>
The components of Accumulated Other Comprehensive Loss as reported on the
accompany Balance Sheets are as follows (in thousands):
<Table>
<Caption>
December 29, June 30,
2002 2002
-------------- --------------
Unrealized loss on marketable securities $ (953) $ (901)
Foreign currency translation adjustments (959) (2,638)
Unrealized loss on derivative instruments (1,050) (3,087)
-------------- --------------
Accumulated other comprehensive loss $ (2,962) $ (6,626)
============== ==============
</Table>
Derivatives
Derivatives are recorded on the balance sheet as assets or liabilities,
measured at fair value. Briggs & Stratton enters into derivative contracts
designated as cash flow hedges to manage its foreign currency exposures. These
instruments generally do not have a maturity of more than twelve months. Briggs
& Stratton uses interest rate swaps designated as fair value hedges to manage
its debt portfolio. These instruments generally have maturities and terms
consistent with the underlying debt instrument.
Changes in the fair value of cash flow hedges are recorded on the
income statement or as a component of accumulated other comprehensive income
(loss). The amounts included in accumulated other comprehensive income (loss)
will be reclassified into income when the forecasted transactions occur,
generally within the next twelve months. These forecasted transactions represent
the exporting of products for which Briggs & Stratton will receive foreign
currency and the importing of products for which it will be required to pay in a
foreign currency. Changes in the fair value of fair value hedges related to
interest rate swaps are recorded as an increase/decrease to long-term debt.
Changes in the fair value of all derivatives deemed to be ineffective are
recorded as either income or expense in the accompanying income statement.
During the quarter there were no material ineffective hedges.
8
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Segment and Geographic Information
Briggs & Stratton operates in two reportable business segments, Engines
and Power Products, which are managed separately based on fundamental
differences in their operations. Summarized segment data is as follows (in
thousands):
<Table>
<Caption>
Three Months Ended Six Month Ended
---------------------------------- ----------------------------------
December 29, December 30, December 29, December 30,
2002 2001 2002 2001
-------------- -------------- -------------- --------------
NET SALES:
Engines $ 306,163 $ 305,741 $ 501,487 $ 482,954
Power Products 59,906 39,500 113,148 93,237
Inter-Segment Eliminations (13,507) (11,687) (25,577) (23,846)
-------------- -------------- -------------- --------------
Total* $ 352,562 $ 333,554 $ 589,058 $ 552,345
============== ============== ============== ==============
*International Sales (included in the above)
Engines $ 96,289 $ 84,604 $ 151,864 $ 135,626
Power Products 3,518 2,737 7,514 5,327
-------------- -------------- -------------- --------------
Total $ 99,807 $ 87,341 $ 159,378 $ 140,953
============== ============== ============== ==============
GROSS PROFIT ON SALES:
Engines $ 60,446 $ 52,729 $ 92,129 $ 65,570
Power Products 5,719 2,595 12,016 9,254
Inter-Segment Eliminations 927 (465) 639 (981)
-------------- -------------- -------------- --------------
Total $ 67,092 $ 54,859 $ 104,784 $ 73,843
============== ============== ============== ==============
INCOME (LOSS) FROM OPERATIONS:
Engines $ 23,489 $ 16,178 $ 21,260 $ (2,587)
Power Products 1,485 (1,514) 3,318 227
Inter-Segment Eliminations 927 (465) 639 (981)
-------------- -------------- -------------- --------------
Total $ 25,901 $ 14,199 $ 25,217 $ (3,341)
============== ============== ============== ==============
</Table>
Long-Lived Assets
On July 1, 2002, Briggs & Stratton adopted Financial Accounting
Standard No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets." The adoption of Financial Accounting Standard No. 144 did not have any
material impact on Briggs & Stratton's consolidated financial statements.
Accrued Warranty Costs
Briggs & Stratton recognizes the cost associated with its standard
warranty on engines and power products at the time of sale. The amount
recognized is based on historical failure rates and current claim cost
experience. The following is a reconciliation of the changes in accrued warranty
costs for the reporting period (in thousands):
<Table>
Beginning Balance as of June 30, 2002 $ 46,346
Deduct: Payments (16,697)
Add: Provision* 14,437
--------------
Ending Balance December 29, 2002 $ 44,086
==============
</Table>
*Approximately $13 million of the provision noted above relates to
warranties accrued on current period sales.
9
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
New Accounting Pronouncement
In November 2002, the FASB issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" ("FIN 45"). FIN 45 requires that the
guarantor recognize, at the inception of certain guarantees, a liability for the
fair value of the obligation undertaken in issuing such guarantee. FIN 45 also
requires additional disclosure requirements about the guarantor's obligations
under certain guarantees that it has issued. The initial recognition and
measurement provisions of this interpretation are applicable on a prospective
basis to guarantees issued or modified after December 31, 2002. The disclosure
requirements of this interpretation are effective for financial statement
periods ending December 15, 2002. Briggs & Stratton adopted the disclosure
requirements of this interpretation in the current quarter. The adoption of this
interpretation did not have a material impact on its consolidated financial
position, results of operations or cash flows.
Future Accounting Pronouncement
In June 2002, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard ("SFAS") No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities". SFAS No. 146 nullifies Emerging
Issues Task Force Issue No. 94-03, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (Including Certain
Costs Incurred in a Restructuring)" and requires that a liability for a cost
associated with an exit or disposal activity be recognized when the liability is
incurred. SFAS No. 146 is effective for exit or disposal activities that are
initiated after December 31, 2002. Briggs & Stratton does not expect that the
adoption of this statement will have a material impact on its results of
operations or financial position.
In December 2002, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard ("SFAS") No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure". SFAS No. 148 provides
alternative methods of transition for a voluntary change to the fair value
method of accounting for stock-based employee compensation as originally
provided by SFAS No. 123, "Accounting for Stock-Based Compensation".
Additionally, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to
require prominent disclosure in both the annual and interim financial statements
about the method of accounting for stock-based compensation and the effect of
the method used on reported results. The transitional requirements of SFAS No.
148 are effective for all financial statements for fiscal years ending after
December 15, 2002. The disclosure requirements are effective for interim periods
beginning after December 31, 2002. Briggs & Stratton does not expect the
adoption of SFAS No. 148 will have a material impact on its consolidated
financial position, results of operations or cash flows.
Critical Accounting Policies
There have been no material changes in Briggs & Stratton's critical
accounting policies since the September 17, 2002 filing of its Annual Report on
Form 10-K. As discussed in our annual report, the preparation of financial
statements in conformity with accounting principles generally accepted in the
U.S. requires management to make estimates and assumptions about future events
that affect the amounts reported in the financial statements and accompanying
notes. Future events and their effects cannot be determined with absolute
certainty. Therefore, the determination of estimates requires the exercise of
judgment. Actual results inevitably will differ from those estimates, and such
differences may be material to the financial statements.
10
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
The most significant accounting estimates inherent in the preparation
of our financial statements include estimates as to the recovery of accounts
receivable, as well as those estimates used in the determination of liabilities
related to customer rebates, pension obligations, warranty, product liability,
group health insurance and taxation. Various assumptions and other factors
underlie the determination of these significant estimates. The process of
determining significant estimates is fact specific and takes into account
factors such as historical experience, current and expected economic conditions,
product mix, and in some instances actuarial techniques. Briggs & Stratton
reevaluates these significant factors as facts and circumstances change.
Historically, actual results have not differed significantly from our estimates.
Financial Information of Subsidiary Guarantor of Indebtedness
In June of 1997, Briggs & Stratton Corporation issued $100 million of
7.25% senior notes to finance the purchase of treasury shares. In May 2001, the
Company issued $275 million of 8.875% senior notes to fund the acquisition of
Generac Portable Products, LLC (effective January 1, 2003, Generac Portable
Products, LLC changed their name to Briggs & Stratton Power Products Group, LLC
("BSPP")) and $140 million of 5% convertible senior notes to replace an existing
revolving line of credit. In addition, the Company has a $300 million revolving
credit facility that expires in September 2004 used to finance seasonal working
capital needs.
Under the terms of Briggs & Stratton's 8.875% senior notes, 5.00%
convertible senior notes and 7.25% senior notes and our revolving credit
agreement, (collectively, the Domestic Indebtedness), BSPP became a joint and
several guarantor of the Domestic Indebtedness (the "Guarantor"). Additionally,
if at any time a domestic subsidiary of Briggs & Stratton constitutes a
significant domestic subsidiary, then such domestic subsidiary will also become
a guarantor of the Domestic Indebtedness. Currently all of the Domestic
Indebtedness is unsecured. In the event that the ratings of certain of our debt
are reduced, our Domestic Indebtedness, excluding the convertible notes, will be
entitled to participate in a pledge of substantially all of our assets. The
Guarantor, at that time, is obligated to pay the outstanding Domestic
Indebtedness if Briggs & Stratton Corporation were to fail to make a payment of
interest or principal on its due date. As of December 29, 2002, the Company had
the following outstanding amounts related to the guaranteed debt (in thousands):
<Table>
<Caption>
Current
Carrying Maximum
Amount Guarantee
--------- ---------
8.875% Senior Notes, due March 15, 2011.....................................$272,137 $275,000
5.00% Convertible Senior Notes, due May 15, 2006............................$140,000 $140,000
7.25% Senior Notes, due September 15, 2007..................................$ 89,124 $ 90,000
Revolving Credit Facility, expiring September 2004..........................$ 27,360 $300,000
</Table>
11
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
The following condensed supplemental consolidating financial
information reflects the operations of BSPP, the Guarantor (in thousands):
BALANCE SHEET
As of December 29, 2002
<Table>
<Caption>
Briggs & Stratton Guarantor Non-Guarantor
Corporation Subsidiary Subsidiaries Eliminations Consolidated
----------------- -------------- -------------- -------------- --------------
Current Assets $ 552,801 $ 97,900 $ 80,893 $ (43,829) $ 687,765
Investment in Subsidiaries 322,299 -- -- (322,299) --
Non-Current Assets 485,594 180,760 2,105 -- 668,459
-------------- -------------- -------------- -------------- --------------
$ 1,360,694 $ 278,660 $ 82,998 $ (366,128) $ 1,356,224
============== ============== ============== ============== ==============
Current Liabilities $ 270,228 $ 3,666 $ 34,583 $ (37,722) $ 270,755
Long-Term Debt 501,261 -- -- -- 501,261
Other Long-Term Obligations 137,738 2,211 -- -- 139,949
Shareholders' Investment 451,467 272,783 48,415 (328,406) 444,259
-------------- -------------- -------------- -------------- --------------
$ 1,360,694 $ 278,660 $ 82,998 $ (366,128) $ 1,356,224
============== ============== ============== ============== ==============
</Table>
BALANCE SHEET
As of June 30, 2002
<Table>
<Caption>
Briggs & Stratton Guarantor Non-Guarantor
Corporation Subsidiary Subsidiaries Eliminations Consolidated
----------------- -------------- -------------- -------------- --------------
Current Assets $ 527,111 $ 96,534 $ 70,387 $ (24,088) $ 669,944
Investment in Subsidiaries 312,679 -- -- (312,679) --
Non-Current Assets 494,052 182,665 2,372 -- 679,089
-------------- -------------- -------------- -------------- --------------
$ 1,333,842 $ 279,199 $ 72,759 $ (336,767) $ 1,349,033
============== ============== ============== ============== ==============
Current Liabilities $ 244,497 $ 10,133 $ 30,327 $ (18,934) $ 266,023
Long-Term Debt 499,022 -- -- -- 499,022
Other Long-Term Obligations 135,192 (850) -- -- 134,342
Shareholders' Investment 455,131 269,916 42,432 (317,833) 449,646
-------------- -------------- -------------- -------------- --------------
$ 1,333,842 $ 279,199 $ 72,759 $ (336,767) $ 1,349,033
============== ============== ============== ============== ==============
</Table>
12
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
STATEMENT OF INCOME
For the Three Months Ended December 29, 2002
<Table>
<Caption>
Briggs & Stratton Guarantor Non-Guarantor
Corporation Subsidiary Subsidiaries Eliminations Consolidated
----------------- -------------- -------------- -------------- --------------
Net Sales $ 295,114 $ 59,222 $ 24,718 $ (26,492) $ 352,562
Cost of Goods Sold 239,349 53,858 18,430 (26,167) 285,470
-------------- -------------- -------------- -------------- --------------
Gross Profit 55,765 5,364 6,288 (325) 67,092
Engineering, Selling, General and
Administrative Expenses 33,452 4,234 3,505 -- 41,191
-------------- -------------- -------------- -------------- --------------
Income from Operations 22,313 1,130 2,783 (325) 25,901
Interest Expense (10,032) (2) (137) -- (10,171)
Other Income, Net 4,436 1,008 116 (3,496) 2,064
-------------- -------------- -------------- -------------- --------------
Income Before Income Taxes 16,717 2,136 2,762 (3,821) 17,794
Provision for Income Taxes 4,973 765 312 -- 6,050
-------------- -------------- -------------- -------------- --------------
Net Income $ 11,744 $ 1,371 $ 2,450 $ (3,821) $ 11,744
============== ============== ============== ============== ==============
</Table>
STATEMENT OF INCOME
For the Six Months Ended December 29, 2002
<Table>
<Caption>
Briggs & Stratton Guarantor Non-Guarantor
Corporation Subsidiary Subsidiaries Eliminations Consolidated
----------------- -------------- -------------- -------------- --------------
Net Sales $ 480,952 $ 111,878 $ 48,394 $ (52,166) $ 589,058
Cost of Goods Sold 398,897 100,529 35,939 (51,091) 484,274
-------------- -------------- -------------- -------------- --------------
Gross Profit 82,055 11,349 12,455 (1,075) 104,784
Engineering, Selling, General and
Administrative Expenses 63,624 8,698 7,245 -- 79,567
-------------- -------------- -------------- -------------- --------------
Income from Operations 18,431 2,651 5,210 (1,075) 25,217
Interest Expense (19,914) (6) (340) -- (20,260)
Other Income, Net 6,587 1,066 209 (5,672) 2,190
-------------- -------------- -------------- -------------- --------------
Income Before Income Taxes 5,104 3,711 5,079 (6,747) 7,147
Provision for Income Taxes 387 1,320 723 -- 2,430
-------------- -------------- -------------- -------------- --------------
Net Income $ 4,717 $ 2,391 $ 4,356 $ (6,747) $ 4,717
============== ============== ============== ============== ==============
</Table>
13
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
STATEMENT OF INCOME
For the Three Months Ended December 30, 2001
<Table>
<Caption>
Briggs & Stratton Guarantor Non-Guarantor
Corporation Subsidiary Subsidiaries Eliminations Consolidated
----------------- -------------- -------------- -------------- --------------
Net Sales $ 300,687 $ 38,638 $ 17,529 $ (23,300) $ 333,554
Cost of Goods Sold 250,885 36,421 13,646 (22,257) 278,695
-------------- -------------- -------------- -------------- --------------
Gross Profit 49,802 2,217 3,883 (1,043) 54,859
Engineering, Selling, General and
Administrative Expenses 33,120 4,108 3,432 -- 40,660
-------------- -------------- -------------- -------------- --------------
Income (Loss) from Operations 16,682 (1,891) 451 (1,043) 14,199
Interest Expense (10,934) (15) (186) 34 (11,101)
Other (Expense) Income, Net (1,714) 38 157 2,081 562
-------------- -------------- -------------- -------------- --------------
Income (Loss) Before Provision
(Credit) for Income Taxes 4,034 (1,868) 422 1,072 3,660
Provision (Credit) for Income
Taxes 1,655 (641) 267 -- 1,281
-------------- -------------- -------------- -------------- --------------
Net Income (Loss) $ 2,379 $ (1,227) $ 155 $ 1,072 $ 2,379
============== ============== ============== ============== ==============
</Table>
STATEMENT OF INCOME
For the Six Months Ended December 30, 2001
<Table>
<Caption>
Briggs & Stratton Guarantor Non-Guarantor
Corporation Subsidiary Subsidiaries Eliminations Consolidated
----------------- -------------- -------------- -------------- --------------
Net Sales $ 470,145 $ 92,608 $ 36,105 $ (46,513) $ 552,345
Cost of Goods Sold 411,145 83,889 28,283 (44,815) 478,502
-------------- -------------- -------------- -------------- --------------
Gross profit 59,000 8,719 7,822 (1,698) 73,843
Engineering, Selling, General and
Administrative Expenses 61,556 9,026 6,602 -- 77,184
-------------- -------------- -------------- -------------- --------------
Income (Loss) from Operations (2,556) (307) 1,220 (1,698) (3,341)
Interest Expense (21,142) (39) (426) 84 (21,523)
Other Income, Net 63 83 465 1,104 1,715
-------------- -------------- -------------- -------------- --------------
Income (Loss) Before Provision
(Credit) for Income Taxes (23,635) (263) 1,259 (510) (23,149)
Provision (Credit) for Income
Taxes (8,590) (84) 570 -- (8,104)
-------------- -------------- -------------- -------------- --------------
Net Income (Loss) $ (15,045) $ (179) $ 689 $ (510) $ (15,045)
============== ============== ============== ============== ==============
</Table>
14
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
STATEMENT OF CASH FLOWS
For the Six Months Ended December 29, 2002
<Table>
<Caption>
Briggs & Stratton Guarantor Non-Guarantor
Corporation Subsidiary Subsidiaries Eliminations Consolidated
----------------- -------------- -------------- -------------- --------------
Net Cash (Used in) Provided by
Operating Activities $ (218,265) $ 11,127 $ 5,191 $ -- $ (201,947)
-------------- -------------- -------------- -------------- --------------
Cash Flows from Investing Activities:
Additions to Plant and Equipment (18,334) (1,368) (206) -- (19,908)
Proceeds Received on Disposition
of Plant and Equipment 104 3,086 42 -- 3,232
Other, Net 5,655 -- 675 -- 6,330
-------------- -------------- -------------- -------------- --------------
Net Cash (Used in) Provided by
Investing Activities (12,575) 1,718 511 -- (10,346)
-------------- -------------- -------------- -------------- --------------
Cash Flows from Financing Activities:
Net Borrowings (Repayments) on
Loans and Notes Payable 40,339 (11,529) (4,887) -- 23,923
Dividends (6,927) -- -- -- (6,927)
-------------- -------------- -------------- -------------- --------------
Net Cash (Used in) Provided by
Financing Activities 33,412 (11,529) (4,887) -- 16,996
-------------- -------------- -------------- -------------- --------------
Effect of Exchange Rate Changes -- 430 1,144 -- 1,574
-------------- -------------- -------------- -------------- --------------
Net (Decrease) Increase in Cash and
Cash Equivalents (197,428) 1,746 1,959 -- (193,723)
Cash and Cash Equivalents, Beginning 211,610 953 3,382 -- 215,945
-------------- -------------- -------------- -------------- --------------
Cash and Cash Equivalents, Ending $ 14,182 $ 2,699 $ 5,341 $ -- $ 22,222
============== ============== ============== ============== ==============
</Table>
15
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
STATEMENT OF CASH FLOWS
For the Six Months Ended December 30, 2001
<Table>
<Caption>
Briggs & Stratton Guarantor Non-Guarantor
Corporation Subsidiary Subsidiaries Eliminations Consolidated
---------------- -------------- -------------- -------------- --------------
Net Cash (Used in) Provided by
Operating Activities $ (191,883) $ 3,747 $ (94) $ (1,978) $ (190,208)
-------------- -------------- -------------- -------------- --------------
Cash Flows from Investing Activities:
Additions to Plant and Equipment (24,850) (1,484) (323) -- (26,657)
Proceeds Received on Disposition
of Plant and Equipment 536 -- 11 -- 547
Other, Net 1,862 -- 564 -- 2,426
-------------- -------------- -------------- -------------- --------------
Net Cash (Used in) Provided by
Investing Activities (22,452) (1,484) 252 -- (23,684)
-------------- -------------- -------------- -------------- --------------
Cash Flows from Financing Activities:
Net Borrowings (Repayments) on
Loans and Notes Payable 146,773 (513) 1,866 -- 148,126
Issuance Cost of Long-Term Debt (327) -- -- -- (327)
Dividends (6,696) -- (1,978) 1,978 (6,696)
Proceeds from Exercise of
Stock Options 95 -- -- -- 95
-------------- -------------- -------------- -------------- --------------
Net Cash (Used in) Provided by
Financing Activities 139,845 (513) (112) 1,978 141,198
-------------- -------------- -------------- -------------- --------------
Effect of Exchange Rate Changes -- 277 292 -- 569
-------------- -------------- -------------- -------------- --------------
Net (Decrease) Increase in Cash and
Cash Equivalents (74,490) 2,027 338 -- (72,125)
Cash and Cash Equivalents, Beginning 85,282 683 2,778 -- 88,743
-------------- -------------- -------------- -------------- --------------
Cash and Cash Equivalents, Ending $ 10,792 $ 2,710 $ 3,116 $ -- $ 16,618
============== ============== ============== ============== ==============
</Table>
16
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following is management's discussion and analysis of Briggs &
Stratton's financial condition and results of operations for the periods
included in the accompanying consolidated condensed financial statements:
RESULTS OF OPERATIONS
SALES
Net sales for the second quarter of fiscal 2003 totaled $353 million,
an increase of $19 million or 6% when compared to fiscal 2002. The increase was
the result of a $20 million increase in Power Products sales between years.
Second quarter net sales for the Engine Segment were $306 million in
fiscal 2003 and 2002; reflecting flat engine unit shipments between years.
Service component sales were down approximately $7 million due to a change in
preseason sales programs, which will result in sales later this year as compared
to last year. The strengthening of the Euro and price increases experienced
during the quarter offset lower service sales.
Second quarter net sales of Power Products were $60 million versus $40
million in the same period a year ago. This increase was driven by generator
sales volume associated with hurricane and ice storm activity in the second
quarter. Pressure washer unit sales were essentially flat between years.
Net sales for the six months ended December 29, 2002 totaled $589
million, an increase of $37 million or 7% compared to the first six months of
the prior year. This increase was the result of the $20 million in increased
generator sales, an increase in engine unit shipments, a strengthening Euro and
price increases, offset by lower service component sales of $8 million.
Six-month sales for the Engine Segment were $502 million in fiscal 2003
versus $483 million in the prior year. The increase in sales is attributable to
an 8% increase in engine unit sales experienced in the first quarter.
Power Products' net sales for the first six months were $113 million
compared to $93 million in the prior year. The increase is attributable entirely
to the increased generator sales in the second quarter.
GROSS PROFIT MARGIN
The gross profit margin increased to 19% from 16% in the preceding
year's second quarter. This resulted in a higher gross profit of approximately
$12 million. This increase is due to $9 million of higher gross margins in the
Engine Segment and $3 million of improved gross margin for Power Products.
Gross margins in the second quarter for the Engine Segment were
adversely affected in the prior year by a $5 million expense charge for an early
retirement incentive plan. In addition to the elimination of this charge in
fiscal 2003, the second quarter margins improved due to price increases and the
impact of the strengthening Euro on international sales.
Power Products' gross margin increased to 10% in the current quarter
from 7% in the second quarter of fiscal 2002. The increased margin is
attributable to a 79% increase in generator production volume in the second
quarter due to hurricane and ice storm activity offset by an unfavorable mix of
generators sold.
The gross profit margin for the six-month period increased to 18% from
13% in the preceding year, resulting in a $31 million higher gross margin. The
Engine Segment had a higher gross margin of $28 million and the Power Products
Segment had a $3 million increase.
17
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
The six-month increase in the Engine Segment margin is attributable to
the 56% increase in production experienced in the first quarter, the elimination
of the $5 million charge for the early retirement incentive program in the
second quarter, and a strengthening Euro.
The increased margin in the Power Products Segment is essentially
attributable to increased production volume as discussed above for the second
quarter.
ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Engineering, selling, general and administrative expenses were $41
million in the second fiscal quarter of 2003 and 2002. This is reflective of a
$2 million reduction in pension income and $1 million increase in advertising
expense, offset by the elimination of a $3 million charge for an early
retirement incentive program taken in the prior year.
This category increased $2 million in the comparative six-month
periods. The increase is attributable to a reduction in pension income of $3
million and increased advertising and employee benefit costs of $2 million,
offset by the elimination of the early retirement charge of $3 million taken in
the second quarter of last year.
INTEREST EXPENSE
Interest expense decreased $1 million in the second quarter and
six-month comparisons. The decrease reflects reduced borrowings and the impact
of a fixed to variable interest rate swap on $50 million of our 8.875% senior
notes due March 15, 2011.
PROVISION FOR INCOME TAXES
The effective tax rate used in both the second quarter and six-month
periods for the current year was 34%. This is management's estimate of what the
rate will be for the entire 2003 fiscal year. Last year's rate was 35% for the
second quarter and six-month periods.
LIQUIDITY AND CAPITAL RESOURCES
Cash used in operating activities for the six-month period of fiscal
2003 was $202 million, an increase of $12 million from fiscal 2002. This
reflects an increase in net income of $20 million offset by increased working
capital requirements. The increase in working capital requirements was driven by
increased inventory levels and a reduction in accounts payable and accrued
liabilities. The increase was partially offset by changes in receivable balances
between fiscal years, attributable to timing.
In the six-month period of fiscal 2003, we used $10 million in
investing activities, compared to $24 million in fiscal 2002. Additions to plant
and equipment comprise substantially all of the investing activity in both
years. Lower spending in the first half of the current year is attributable to
the timing of capital projects.
Net cash provided by financing activities was $17 million in fiscal
2003 and $141 million in fiscal 2002. The decrease is attributable entirely to a
reduction in short-term working capital borrowings versus the prior year.
FUTURE LIQUIDITY AND CAPITAL RESOURCES
We have remaining authorization to buy up to 1.8 million shares of our
stock in open market or private transactions under the June 2000 Board of
Directors' authorization to repurchase up to 2.0 million shares. We did not
purchase any shares in the first two quarters of fiscal 2003 and do not
anticipate repurchasing any shares in fiscal 2003.
18
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Management expects cash outflows for capital expenditures to total
approximately $50-$55 million in fiscal 2003. These anticipated expenditures
provide for continued investments in equipment and new products. These
expenditures will be funded using available cash and short-term borrowings.
In October 2002, we began managing our debt portfolio using interest
rate swaps to achieve a desired mix of fixed and floating rates. We currently
have interest rate swaps relating to our 8.875% senior notes (approximately $270
million) due in 2011. The swaps convert $50 million of notional amounts from a
fixed rate to a floating rate, (libor-set-in-arrears) and mature in 2011. The
floating rate on the interest rate swap at December 29, 2002 was 5.75%.
Management believes that available cash, cash generated from
operations, existing lines of credit and access to debt markets will be adequate
to fund our capital requirements for the foreseeable future.
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements that involve
risks and uncertainties that could cause actual results to differ materially
from those projected in the forward-looking statements. The words "anticipate",
"believe", "estimate", "expect", "intend", "may", "objective", "plan", "seek",
"think", "will", and similar expressions are intended to identify
forward-looking statements. The forward-looking statements are based on the
Company's current views and assumptions and involve risks and uncertainties that
include, among other things, our ability to successfully forecast demand for our
products and appropriately adjust our manufacturing and inventory levels;
changes in our operating expenses; changes in interest rates; the effects of
weather on the purchasing patterns of consumers and original equipment
manufacturers (OEMs); actions of engine manufacturers and OEMs with whom we
compete; the seasonal nature of our business; changes in laws and regulations,
including environmental and accounting standards; work stoppages or other
consequences of any deterioration in our employee relations; work stoppages by
other unions that affect the ability of suppliers or customers to manufacture;
acts of war or terrorism that may disrupt our business operations or those of
our customers and suppliers; changes in customer and OEM demand; changes in
prices of purchased raw materials and parts that we purchase; changes in
domestic economic conditions, including housing starts and changes in consumer
attitudes and disposable income; changes in foreign economic conditions,
including currency rate fluctuations; new facts that come to light in the future
course of litigation proceedings which could affect our assessment of those
matters; and other factors that may be disclosed from time to time in our SEC
filings or otherwise. Some or all of the factors may be beyond our control. We
caution you that any forward-looking statement reflects only our belief at the
time the statement is made. We undertake no obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which the statement is made.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes since the September 17, 2002,
filing of the Company's Annual Report on Form 10-K.
ITEM 4. CONTROLS AND PROCEDURES
We maintain a system of internal controls and procedures designed to
provide reasonable assurance as to the reliability of our published financial
statements and other disclosures included in this report. Based on their
evaluation, as of a date within 90 days of the filing date of this Form 10-Q,
our Chief Executive Officer and Chief Financial Officer have concluded that our
disclosure controls and procedures (as defined in Rule 13a-14(c) and 15d-14(c)
under the Securities Exchange Act of 1934, as amended) are effective. There have
been no significant changes in internal controls or in other factors that could
significantly affect these controls subsequent to the date of their evaluation.
19
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
<Table>
<Caption>
Exhibit
Number Description
- ------- -----------
4 First Amendment To Rights Agreement*
99.1 Certification of Principal Executive Officer Pursuant to Section
906 of Sarbanes-Oxley Act of 2002*
99.2 Certification of Principal Financial Officer Pursuant to Section
906 of Sarbanes-Oxley Act of 2002*
</Table>
*Filed herewith
(b) Reports on Form 8-K.
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BRIGGS & STRATTON CORPORATION
-----------------------------
(Registrant)
Date: February 12, 2003. /s/ James E. Brenn
-------------------
James E. Brenn
Senior Vice President and Chief Financial Officer
and Duly Authorized Officer
20
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
CEO/CFO CERTIFICATIONS PURSUANT TO
SECTION 302 OF SARBANES-OXLEY ACT OF 2002
Certification of Principal Executive Officer
I, John S. Shiely, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Briggs & Stratton
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
(c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date.
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of its board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls.
21
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: February 12, 2003 /s/ John S. Shiely
------------------
John S. Shiely, Chairman, President and Chief
Executive Officer - Principal Executive Officer
22
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
CEO/CFO CERTIFICATIONS PURSUANT TO
SECTION 302 OF SARBANES-OXLEY ACT OF 2002
Certification of Principal Financial Officer
I, James E. Brenn, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Briggs & Stratton
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
(c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date.
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
its board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls.
23
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: February 12, 2003 /s/ James E. Brenn
------------------
James E. Brenn, Senior Vice President and Chief
Financial Officer - Principal Financial Officer
and Chief Accounting Officer
24
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
EXHIBIT INDEX
<Table>
<Caption>
Exhibit
Number Description
- ------ -----------
4 First Amendment To Rights Agreement
99.1 Certification of Principal Executive Officer Pursuant to Section 906 of
Sarbanes-Oxley Act of 2002
99.2 Certification of Principal Financial Officer Pursuant to Section 906 of
Sarbanes-Oxley Act of 2002
</Table>