EXHIBIT 99.1
BRIGGS & STRATTON CORPORATION REPORTS
THIRD QUARTER RESULTS FOR FISCAL 2003
MILWAUKEE, April 17, 2003/PR Newswire/-Briggs &
Stratton Corporation (NYSE:BGG)
Briggs & Stratton today announced fiscal 2003 third quarter net income of $43.0
million or $1.81 per diluted share. The net income for the third quarter of
fiscal 2002 was $37.6 million or $1.58 per diluted share. The improvement in net
income between quarters was primarily the result of significantly greater Power
Products Segment sales volume, increased margins from export sales due to a
stronger Euro, better utilization of production facilities, a lower effective
tax rate and lower interest expense. These improvements were offset by increased
employee benefit costs, certain production costs and variable selling costs
related to the Power Products Segment.
For the first nine months of fiscal 2003, the Company had net income of $47.7
million or $2.10 per diluted share. For the same period in fiscal 2002, net
income was $22.6 million or $1.04 per diluted share. Significantly higher
earnings for the first nine months were primarily the result of increased
utilization of the Engine Segment's production facilities in the first quarter,
the stronger Euro, a favorable sales mix of engine product, lower interest
expense and a lower effective tax rate. As in the third quarter, the nine months
experienced a planned increase in engineering, selling, general and
administrative expenses, primarily related to employee benefit costs and greater
variable selling expenses.
ENGINES:
Third quarter sales were $499.0 million versus $468.6 million in the prior year.
Approximately half of the 7% increase in sales was the result of volume
increases, primarily in the parts and components categories. The remainder of
the sales increase resulted from the favorable impact of a strong Euro and a
sales mix of product that favored higher value engines. Nine month's sales for
fiscal 2003 were $1.0 billion versus $951.6 million in the prior year. This 5%
increase in sales dollars was primarily the result of revenue increases driven
by the stronger Euro, favorable product mix and a slight engine unit volume
increase.
Income from operations for the third quarter was $65.3 million, essentially flat
with the prior year. There was a $9.2 million improvement in gross profit. The
majority of the improvement resulted from increased utilization of certain
manufacturing facilities, higher prices, primarily resulting from the stronger
Euro, implementation of planned cost reduction projects and a favorable mix of
product shipments. The improvements in gross profit were partially offset by
planned increases in certain manufacturing related costs. The improvement in
gross profit was also offset by planned increases in engineering, selling,
general and administrative costs, primarily in the areas of employee benefits
and increased international selling expenses.
Income from operations for the first nine months of fiscal 2003 was $86.6
million versus $63.0 million a year ago. The reasons for the improvement were
better utilization of all plants through higher production, higher planned
prices and the strengthening of the Euro, and the benefit of manufacturing cost
reduction programs that partially offset increases in certain cost categories.
POWER PRODUCTS:
Net sales in the third quarter of fiscal 2003 were $92.4 million, up $33.0
million or 55% over the same period a year ago. Increased sales were driven by
significantly improved generator and pressure washer volume. Generator sales
increases resulted from late winter ice storm activity, new product offerings
and increased market presence at a major retailer. Pressure washer sales
increases were driven by consumer demand created through strong marketing
programs and increased penetration with several retailers. Sales for the first
nine months were $205.5 million versus $152.7 million a year ago. Generator
sales were up 50% primarily due to power outages resulting from the hurricane
season and late winter ice storm activity, in addition to market share gains at
selected retailers. Pressure washer sales are up 16% due to the same factors
cited for the third quarter.
Income from operations was $6.5 million in the third quarter of fiscal 2003, an
increase of $5.5 million over the same period a year ago. Increased sales and
production volumes and heightened productivity levels were the primary drivers
of the improvement. The nine month's income from operations was $9.8 million
versus $1.2 million for the same period a year ago. Sales volume increases
accounted for approximately half of the improvement. The remainder of the change
resulted from better utilization of the manufacturing facility because of
increased demand for both generators and pressure washers and productivity gains
from ongoing cost reduction projects.
GENERAL:
The effective tax rate for the third quarter of fiscal 2003 was 31.8% and
brought the year to date effective rate to 32.0%. Greater than anticipated
foreign source income and the resulting tax credits have allowed the Company to
lower its projected tax liability for the year.
In February 2003, the Company initiated a restructuring and expansion of PUYI -
Briggs & Stratton Engine Corporation (PUYI), its joint venture with the Puling
and Yimin companies in China. PUYI has been manufacturing in China since 1986,
producing a cast iron block engine primarily for consumption in the Southeast
Asian market.
Under the restructured joint venture, the partners remain the same, but Briggs &
Stratton's ownership increased from 52% to 90%. In addition, the manufacturing
activities will be expanded to include the production of an aluminum block,
overhead valve horizontal shaft (OHV) engine. This product will be made
initially for consumption in the Southeast Asian market and sold through our
existing sales and distribution system in Asia.
The decision reflects the excellent working relationship that has developed with
PUYI over the last 15 years and our opinion that there is tremendous growth
potential in China and throughout Asia for locally produced engines that address
the need for lightweight, portable power sources for agriculture, irrigation and
power generator uses.
The OHV engine is also one of the models currently produced by the Company's
Rolla, Missouri facility. Production of the engine will continue in Rolla for
worldwide demand outside of Asia.
OUTLOOK:
We are now in the spring selling season and preliminary indications are that
engine powered outdoor equipment is experiencing the demand that was originally
projected at retail. Rainfall has been plentiful across all major market areas,
so at this time we believe consumer demand for lawn and garden equipment will
continue as anticipated throughout the spring.
In previous quarters we had projected $72 million of net income for fiscal 2003.
Because we expect the effective tax rate to be 32.0% for the year, we now
believe that net income for the year will be in the $74-$76 million range. For
the year, we anticipate that consolidated sales will be 4% higher than the prior
fiscal year and gross profit margins will be close to 19.6%. Engineering,
selling, general and administrative expenses are forecasted to be approximately
$167 million, and interest expense is estimated to be at the $40 million level.
Full year depreciation is projected to be $60 million and we are estimating
capital expenditures to be in the $45-$50 million range.
The Company will host a conference call today at 10:00 AM (EDT) to review this
information. A live web cast of the conference call will be available on its
corporate website: http://www.briggsandstratton.com/shareholders . Also
available is a dial-in number to access the call real-time at (800) 960-1013. A
replay will be offered beginning approximately two hours after the call ends and
will be available for one week. Dial (888) 852-5733 to access the replay. The
pass code will be 99393.
THIS RELEASE 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; 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; 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 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.
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS FOR THE FISCAL PERIODS ENDED
MARCH 2003 AND 2002
(IN THOUSANDS)
<Table>
<Caption>
THIRD QUARTER NINE MONTHS
-------------------------- --------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
NET SALES $ 560,431 $ 517,293 $ 1,149,489 $ 1,069,638
COST OF GOODS SOLD 443,794 414,263 928,068 892,766
----------- ----------- ----------- -----------
Gross Profit on Sales 116,637 103,030 221,421 176,872
ENGINEERING, SELLING, GENERAL
AND ADMINISTRATIVE EXPENSES 46,225 35,429 125,792 112,613
----------- ----------- ----------- -----------
Income from Operations 70,412 67,601 95,629 64,259
INTEREST EXPENSE (10,117) (12,400) (30,378) (33,923)
OTHER INCOME, Net 2,700 2,153 4,891 3,869
----------- ----------- ----------- -----------
Income Before Provision for Income Taxes 62,995 57,354 70,142 34,205
PROVISION FOR INCOME TAXES 20,020 19,740 22,450 11,636
----------- ----------- ----------- -----------
Net Income $ 42,975 $ 37,614 $ 47,692 $ 22,569
=========== =========== =========== ===========
Average Shares Outstanding 21,626 21,620 21,626 21,608
=========== =========== =========== ===========
BASIC EARNINGS PER SHARE $ 1.99 $ 1.74 $ 2.21 $ 1.04
=========== =========== =========== ===========
Diluted Average Shares Outstanding 24,464 24,456 24,465 21,620
=========== =========== =========== ===========
DILUTED EARNINGS PER SHARE $ 1.81 $ 1.58 $ 2.10 $ 1.04
=========== =========== =========== ===========
</Table>
SEGMENT INFORMATION
(IN THOUSANDS)
<Table>
<Caption>
THIRD QUARTER NINE MONTHS
-------------------------- --------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
NET SALES:
Engines $ 499,009 $ 468,613 $ 1,000,496 $ 951,567
Power Products 92,384 59,430 205,532 152,667
Inter-Segment Eliminations (30,962) (10,750) (56,539) (34,596)
----------- ----------- ----------- -----------
Total* $ 560,431 $ 517,293 $ 1,149,489 $ 1,069,638
=========== =========== =========== ===========
*International Sales (included in the above) $ 139,580 $ 132,432 $ 298,958 $ 273,385
=========== =========== =========== ===========
GROSS PROFIT ON SALES:
Engines $ 105,578 $ 96,331 $ 197,707 $ 161,901
Power Products 12,413 5,661 24,429 14,915
Inter-Segment Eliminations (1,354) 1,038 (715) 56
----------- ----------- ----------- -----------
Total $ 116,637 $ 103,030 $ 221,421 $ 176,872
=========== =========== =========== ===========
INCOME FROM OPERATIONS:
Engines $ 65,308 $ 65,558 $ 86,568 $ 62,971
Power Products 6,458 1,005 9,776 1,232
Inter-Segment Eliminations (1,354) 1,038 (715) 56
----------- ----------- ----------- -----------
Total $ 70,412 $ 67,601 $ 95,629 $ 64,259
=========== =========== =========== ===========
</Table>
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AS OF THE END OF FISCAL MARCH 2003 AND 2002
-----------------------------------------------------------------------
(IN THOUSANDS)
<Table>
<Caption>
CURRENT ASSETS: 2003 2002 CURRENT LIABILITIES: 2003 2002
----------- ----------- ----------- -----------
Cash and Cash Equivalents $ 104,942 $ 65,434 Accounts Payable $ 111,976 $ 101,785
Accounts Receivable, Net 389,005 402,493 Domestic Notes Payable 2,075 112,778
Inventories 217,927 233,490 Foreign Loans 14,948 15,630
Other 63,432 64,249 Accrued Liabilities 185,719 149,481
----------- ----------- ----------- -----------
Total Current Assets 775,306 765,666 Total Current Liabilities 314,718 379,674
----------- ----------- ----------- -----------
OTHER LIABILITIES:
Deferred Revenue on Sale of
OTHER ASSETS: Plant & Equipment 15,215 15,409
Goodwill 161,030 155,330 Deferred Income Tax Liability 39,759 20,795
Investments 43,637 43,674 Accrued Pension Liability 17,193 15,920
Prepaid Pension 71,581 55,385 Accrued Employee Benefits 13,352 13,281
Deferred Loan Costs, Net 8,040 9,881 Accrued Postretirement Health
Capitalized Software, Net 5,337 6,383 Care Obligation 57,417 63,300
Other Long-Term Assets 1,484 301 Long-Term Debt 500,907 508,572
----------- ----------- ----------- -----------
Total Other Assets 291,109 270,954 Total Other Liabilities 643,843 637,277
----------- ----------- ----------- -----------
SHAREHOLDERS' INVESTMENT:
Common Stock and Additional
Paid-in Capital 35,640 35,884
Retained Earnings 796,062 745,500
PLANT AND EQUIPMENT: Accumulated Other
At Cost 890,355 891,319 Comprehensive Loss 473 (7,048)
Less - Accumulated Unearned Compensation on
Depreciation 514,369 485,606 Restricted Stock (325) (225)
----------- -----------
Plant and Equipment, Net 375,986 405,713 Treasury Stock, at Cost (348,010) (348,729)
----------- ----------- ----------- -----------
Total Shareholders'
Investment 483,840 425,382
----------- -----------
$ 1,442,401 $ 1,442,333 $ 1,442,401 $ 1,442,333
=========== =========== =========== ===========
</Table>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<Table>
<Caption>
NINE MONTHS ENDED FISCAL MARCH
----------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES: 2003 2002
--------------- ---------------
Net Income $ 47,692 $ 22,569
Depreciation and Amortization 46,546 42,417
Loss on Disposition of Plant and Equipment, Net 2,889 1,903
Provision for Deferred Income Taxes 6,864 8,773
Increase in Accounts Receivable (185,200) (257,137)
(Increase) Decrease in Inventories (26,012) 88,210
(Increase) Decrease in Other Current Assets 2,765 (90)
Increase in Accounts Payable and Accrued Liabilities 45,201 29,359
Increase in Prepaid Pension, Net (9,833) (17,684)
Other, Net (9,718) (8,553)
--------------- ---------------
Net Cash Used in Operating Activities (78,806) (90,233)
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Plant and Equipment (29,667) (34,565)
Proceeds Received on Disposition of Plant and Equipment 3,298 620
Other, Net 5,988 4,412
--------------- ---------------
Net Cash Used in Investing Activities (20,381) (29,533)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Borrowings on Loans and Notes Payable (872) 108,817
Issuance Costs of Long-Term Debt -- (346)
Dividends (13,860) (13,384)
Proceeds from Exercise of Stock Options -- 943
--------------- ---------------
Net Cash (Used in) Provided by Financing Activities (14,732) 96,030
--------------- ---------------
EFFECT OF EXCHANGE RATE CHANGES 2,916 427
--------------- ---------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (111,003) (23,309)
CASH AND CASH EQUIVALENTS, Beginning 215,945 88,743
--------------- ---------------
CASH AND CASH EQUIVALENTS, Ending $ 104,942 $ 65,434
=============== ===============
</Table>