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 March 30, 2003
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 March 30, 2003
- --------------------------------------- ------------------
COMMON STOCK, par value $0.01 per share 21,626,301 Shares
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
INDEX
Page No.
--------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets -
March 30, 2003 and June 30, 2002 3
Consolidated Condensed Statements of Income -
Three Months and Nine Months ended March 30, 2003
and March 31, 2002 5
Consolidated Condensed Statements of Cash Flows -
Nine Months ended March 30, 2003 and March 31, 2002 6
Notes to Consolidated Condensed Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 18
Item 3. Quantitative and Qualitative Disclosures about
Market Risk 21
Item 4. Controls and Procedures 21
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 21
2
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)
ASSETS
March 30, June 30,
2003 2002
---------- ----------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 104,942 $ 215,945
Accounts receivable, net 389,005 201,910
Inventories -
Finished products and parts 131,675 126,152
Work in process 82,441 61,748
Raw materials 3,811 3,059
---------- ----------
Total inventories 217,927 190,959
Future income tax benefits 46,292 41,383
Prepaid expenses and other current assets 17,140 19,747
---------- ----------
Total current assets 775,306 669,944
---------- ----------
OTHER ASSETS:
Goodwill 161,030 161,030
Investments 43,637 46,889
Prepaid pension 71,581 60,343
Deferred loan costs, net 8,040 9,304
Other long-term assets, net 6,821 6,308
---------- ----------
Total other assets 291,109 283,874
---------- ----------
PLANT AND EQUIPMENT:
Cost 890,355 879,635
Less, accumulated depreciation 514,369 484,420
---------- ----------
Total plant and equipment, net 375,986 395,215
---------- ----------
$1,442,401 $1,349,033
========== ==========
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
March 30, June 30,
2003 2002
----------- -----------
(Unaudited)
CURRENT LIABILITIES:
Accounts payable $ 111,976 $ 103,648
Domestic notes payable 2,075 2,625
Foreign loans 14,948 15,270
Accrued liabilities 185,719 144,480
----------- -----------
Total current liabilities 314,718 266,023
----------- -----------
OTHER LIABILITIES:
Deferred revenue on sale of plant and equipment 15,215 15,364
Deferred income tax liability 39,759 27,405
Accrued pension liability 17,193 15,750
Accrued employee benefits liability 13,352 13,070
Accrued postretirement health care obligation 57,417 62,753
Long-term debt 500,907 499,022
----------- -----------
Total other liabilities 643,843 633,364
----------- -----------
SHAREHOLDERS' INVESTMENT:
Common stock -
Authorized 60,000 shares, $.01 par value, issued
28,927 shares 289 289
Additional paid-in capital 35,351 35,459
Retained earnings 796,062 769,131
Accumulated other comprehensive income (loss) 473 (6,626)
Unearned compensation on restricted stock (325) (199)
Treasury stock at cost, 7,280 and 7,288 shares, respectively (348,010) (348,408)
----------- -----------
Total shareholders' investment 483,840 449,646
----------- -----------
$ 1,442,401 $ 1,349,033
=========== ===========
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 Nine Months Ended
-------------------------- --------------------------
March 30, March 31, March 30, March 31,
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 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
=========== =========== =========== ===========
EARNINGS PER SHARE DATA -
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
=========== =========== =========== ===========
CASH DIVIDENDS PER SHARE $ 0.32 $ 0.32 $ 0.96 $ 0.94
=========== =========== =========== ===========
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)
Nine Months Ended
----------------------
March 30, March 31,
2003 2002
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 47,692 $ 22,569
Adjustments to reconcile net income to net cash used in
operating activities -
Depreciation and amortization 46,546 42,417
Equity earnings of unconsolidated affiliates (3,380) (2,435)
Loss on disposition of plant and equipment, net 2,889 1,903
Provision for deferred income taxes 6,864 8,773
Change in operating assets and liabilities -
(Increase) in accounts receivable (185,978) (257,137)
(Increase) decrease in inventories (26,001) 88,210
Decrease (increase) in prepaid expenses and other
current assets 2,774 (90)
Increase in accounts payable and accrued liabilities 42,054 29,359
(Increase) in prepaid pension, net (9,833) (17,684)
Other, net (7,131) (6,118)
--------- ---------
Net cash (used in) operating activities (83,504) (90,233)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to plant and equipment (28,816) (34,565)
Proceeds received on disposition of plant and equipment 3,298 620
Other, net 9,861 4,412
--------- ---------
Net cash (used in) investing activities (15,657) (29,533)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayments) borrowings on loans and notes payable (872) 108,817
Issuance cost 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 FOREIGN CURRENCY EXCHANGE RATE
CHANGES ON CASH AND CASH EQUIVALENTS 2,890 427
--------- ---------
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
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 34,959 $ 36,203
========= =========
Income taxes paid $ 6,414 $ 1,312
========= =========
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 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.
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 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):
Three Months Ended Nine Months Ended
--------------------- ---------------------
March 30, March 31, March 30, March 31,
2003 2002 2003 2002
--------- --------- --------- ---------
Net income $ 42,975 $ 37,614 $ 47,692 $ 22,569
Adjustments to net income to add after tax interest
expense on convertible notes 1,190 1,138 3,570 --
--------- --------- --------- ---------
Adjusted net income used in diluted earnings
per share $ 44,165 $ 38,752 $ 51,262 $ 22,569
========= ========= ========= =========
Average shares of common stock outstanding 21,626 21,620 21,626 21,608
Incremental common shares applicable to common
stock options based on the common stock average
market price during the period -- 5 -- 7
Incremental common shares applicable to restricted
common stock based on the common stock average
market price during the period 12 5 13 5
Incremental common shares applicable to convertible
notes based on the conversion provisions of the
convertible notes 2,826 2,826 2,826 --
--------- --------- --------- ---------
Diluted average common shares outstanding 24,464 24,456 24,465 21,620
========= ========= ========= =========
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 is as follows (in thousands):
Three Months Ended Nine Months Ended
---------------------- ----------------------
March 30, March 31, March 30, March 31,
2003 2002 2003 2002
--------- --------- --------- ---------
Net income $ 42,975 $ 37,614 $ 47,692 $ 22,569
--------- --------- --------- ---------
Unrealized gain (loss) on marketable securities:
Unrealized holding gain (loss) during period (133) 52 (185) (123)
Reclassification adjustment for losses realized
in net income 1,086 -- 1,086 --
--------- --------- --------- ---------
Net realized/unrealized gain (loss) 953 52 901 (123)
--------- --------- --------- ---------
Foreign currency translation adjustments 1,388 (178) 3,067 461
Unrealized gain (loss) on derivative instruments 1,094 283 3,131 (1,204)
--------- --------- --------- ---------
Total comprehensive income $ 46,410 $ 37,771 $ 54,791 $ 21,703
========= ========= ========= =========
The components of Accumulated Other Comprehensive Income (Loss) as reported on
the accompanying Consolidated Condensed Balance Sheets are as follows (in
thousands):
March 30, June 30,
2003 2002
--------- ---------
Unrealized loss on marketable securities $ -- $ (901)
Foreign currency translation adjustments 429 (2,638)
Unrealized gain (loss) on derivative instruments 44 (3,087)
--------- ---------
Accumulated other comprehensive income (loss) $ 473 $ (6,626)
========= =========
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 Consolidated Condensed Statements
of Income. 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):
Three Months Ended Nine Months Ended
-------------------------- --------------------------
March 30, March 31, March 30, March 31,
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)
Engines $ 135,076 $ 130,507 $ 286,940 $ 266,133
Power Products 4,504 1,925 12,018 7,252
----------- ----------- ----------- -----------
Total $ 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
=========== =========== =========== ===========
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):
Beginning Balance as of June 30, 2002 $ 46,346
Deduct: Payments (23,404)
Add: Provision* 24,066
----------
Ending Balance March 30, 2003 $ 47,008
==========
*Approximately $19 million of the provision noted above relates to
warranties accrued on current period sales.
9
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Stock Options
Briggs & Stratton has a Stock Incentive Plan, which is accounted for under
Accounting Principles Board Opinion No. 25 "Accounting for Stock Issued to
Employees", and no compensation cost has been recognized. Had compensation cost
for these plans been determined consistent with Statement of Financial
Accounting Standard No. 123, "Accounting for Stock-Based Compensation", the
Company's net income and earnings per share would have been reduced to the
following pro forma amounts:
Three Months Ended Nine Months Ended
----------------------- -----------------------
March 30, March 31, March 30, March 31,
2003 2002 2003 2002
---------- ---------- ---------- ----------
Net Income (as reported): $ 42,975 $ 37,614 $ 47,692 $ 22,569
Deduct employee compensation expense
determined under a fair value based
method, net of related tax effects 794 874 2,173 2,559
---------- ---------- ---------- ----------
Pro Forma Net Income $ 42,181 $ 36,740 $ 45,519 $ 20,010
========== ========== ========== ==========
Earnings Per Share:
As Reported $ 1.99 $ 1.74 $ 2.21 $ 1.04
Pro Forma $ 1.95 $ 1.70 $ 2.11 $ 0.93
Diluted Earnings Per Share:
As Reported $ 1.81 $ 1.58 $ 2.10 $ 1.04
Pro Forma $ 1.77 $ 1.55 $ 2.01 $ 0.93
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 condensed financial statements.
New Accounting Pronouncements
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 adopted this statement in the current
quarter. The adoption of this statement did not have a material impact on its
consolidated financial position, results of operations or cash flows.
10
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
In November 2002, the Financial Accounting Standards Board 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 after December 15, 2002. Briggs
& Stratton adopted the disclosure requirements of this interpretation in the
current year. The adoption did not have a material impact on its consolidated
financial position, results of operations or cash flows.
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 adopted this statement in
the current quarter. The adoption of this statement did not 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.
The most significant accounting estimates inherent in the preparation of
our consolidated 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.
11
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Financial Information of Subsidiary Guarantor of Indebtedness
In June of 1997, Briggs & Stratton issued $100 million of 7.25% senior
notes to finance the purchase of outstanding 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 its 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, Briggs & Stratton 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, 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 were to fail to make a payment of interest or principal on its due
date. Briggs & Stratton had the following outstanding amounts related to the
guaranteed debt (in thousands):
March 30, 2003
Carrying Maximum
Amount Guarantee
----------------- -----------------
8.875% Senior Notes, due March 15, 2011 $ 271,737 $ 275,000
5.00% Convertible Senior Notes, due May 15, 2006 $ 140,000 $ 140,000
7.25% Senior Notes, due September 15, 2007 $ 89,170 $ 90,000
Revolving Credit Facility, expiring September 2004 $ -- $ 300,000
12
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
The following condensed supplemental consolidating financial information
reflects the operations of BSPP, the Guarantor Subsidiary (in thousands):
BALANCE SHEET
As of March 30, 2003
Briggs & Stratton Guarantor Non-Guarantor
Corporation Subsidiary Subsidiaries Eliminations Consolidated
----------------- ------------ ------------ ------------ ------------
Current Assets $ 589,480 $ 140,260 $ 100,366 $ (54,800) $ 775,306
Investment in Subsidiaries 339,045 -- -- (339,045) --
Non-Current Assets 482,729 181,204 3,162 -- 667,095
------------ ------------ ------------ ------------ ------------
$ 1,411,254 $ 321,464 $ 103,528 $ (393,845) $ 1,442,401
============ ============ ============ ============ ============
Current Liabilities $ 271,896 $ 43,905 $ 45,800 $ (46,883) $ 314,718
Long-Term Debt 500,907 -- -- -- 500,907
Other Long-Term Obligations 139,273 3,625 38 -- 142,936
Shareholders' Investment 499,178 273,934 57,690 (346,962) 483,840
------------ ------------ ------------ ------------ ------------
$ 1,411,254 $ 321,464 $ 103,528 $ (393,845) $ 1,442,401
============ ============ ============ ============ ============
BALANCE SHEET
As of June 30, 2002
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
================= ============ ============= ============ ============
13
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
STATEMENT OF INCOME
For the Three Months Ended March 30, 2003
Briggs & Stratton Guarantor Non-Guarantor
Corporation Subsidiary Subsidiaries Eliminations Consolidated
----------------- ------------ ------------- ------------ ------------
Net Sales $ 477,855 $ 91,173 $ 34,602 $ (43,199) $ 560,431
Cost of Goods Sold 379,561 79,119 27,041 (41,927) 443,794
----------------- ------------ ------------- ------------ ------------
Gross Profit 98,294 12,054 7,561 (1,272) 116,637
Engineering, Selling, General and
Administrative Expenses 35,260 5,955 5,010 -- 46,225
----------------- ------------ ------------- ------------ ------------
Income from Operations 63,034 6,099 2,551 (1,272) 70,412
Interest Expense (9,868) (1) (167) (81) (10,117)
Other Income, Net 4,159 78 3,265 (4,802) 2,700
----------------- ------------ ------------- ------------ ------------
Income Before Income Taxes 57,325 6,176 5,649 (6,155) 62,995
Provision for Income Taxes 14,350 5,098 572 -- 20,020
----------------- ------------ ------------- ------------ ------------
Net Income $ 42,975 $ 1,078 $ 5,077 $ (6,155) $ 42,975
================= ============ ============= ============ ============
STATEMENT OF INCOME
For the Nine Months Ended March 30, 2003
Briggs & Stratton Guarantor Non-Guarantor
Corporation Subsidiary Subsidiaries Eliminations Consolidated
----------------- ------------ ------------- ------------ ------------
Net Sales $ 958,807 $ 203,051 $ 82,996 $ (95,365) $ 1,149,489
Cost of Goods Sold 778,458 179,648 62,980 (93,018) 928,068
----------------- ------------ ------------- ------------ ------------
Gross Profit 180,349 23,403 20,016 (2,347) 221,421
Engineering, Selling, General and
Administrative Expenses 98,884 14,653 12,255 -- 125,792
----------------- ------------ ------------- ------------ ------------
Income from Operations 81,465 8,750 7,761 (2,347) 95,629
Interest Expense (29,783) (7) (507) (81) (30,378)
Other Income, Net 10,747 1,144 3,474 (10,474) 4,891
----------------- ------------ ------------- ------------ ------------
Income Before Income Taxes 62,429 9,887 10,728 (12,902) 70,142
Provision for Income Taxes 14,737 6,418 1,295 -- 22,450
----------------- ------------ ------------- ------------ ------------
Net Income $ 47,692 $ 3,469 $ 9,433 $ (12,902) $ 47,692
================= ============ ============= ============ ============
14
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
STATEMENT OF INCOME
For the Three Months Ended March 31, 2002
Briggs & Stratton Guarantor Non-Guarantor
Corporation Subsidiary Subsidiaries Eliminations Consolidated
----------------- ------------ ------------- ------------ ------------
Net Sales $ 462,028 $ 58,525 $ 23,500 $ (26,760) $ 517,293
Cost of Goods Sold 370,550 53,309 18,143 (27,739) 414,263
----------------- ------------ ------------- ------------ ------------
Gross Profit 91,478 5,216 5,357 979 103,030
Engineering, Selling, General and
Administrative Expenses 27,625 4,656 3,148 -- 35,429
----------------- ------------ ------------- ------------ ------------
Income from Operations 63,853 560 2,209 979 67,601
Interest Expense (11,570) (10) (820) -- (12,400)
Other Income, Net 3,650 77 12,611 (14,185) 2,153
----------------- ------------ ------------- ------------ ------------
Income Before Income Taxes 55,933 627 14,000 (13,206) 57,354
Provision for Income Taxes 18,999 241 500 -- 19,740
----------------- ------------ ------------- ------------ ------------
Net Income $ 36,934 $ 386 $ 13,500 $ (13,206) $ 37,614
================= ============ ============= ============ ============
STATEMENT OF INCOME
For the Nine Months Ended March 31, 2002
Briggs & Stratton Guarantor Non-Guarantor
Corporation Subsidiary Subsidiaries Eliminations Consolidated
----------------- ------------ ------------- ------------ ------------
Net Sales $ 932,172 $ 151,134 $ 59,605 $ (73,273) $ 1,069,638
Cost of Goods Sold 781,695 137,198 46,426 (72,553) 892,766
----------------- ------------ ------------- ------------ ------------
Gross profit 150,477 13,936 13,179 (720) 176,872
Engineering, Selling, General and
Administrative Expenses 89,181 13,682 9,750 -- 112,613
----------------- ------------ ------------- ------------ ------------
Income from Operations 61,296 254 3,429 (720) 64,259
Interest Expense (32,712) (49) (1,246) 84 (33,923)
Other Income, Net 3,714 160 13,076 (13,081) 3,869
----------------- ------------ ------------- ------------ ------------
Income Before Income Taxes 32,298 365 15,259 (13,717) 34,205
Provision for Income Taxes 10,409 157 1,070 -- 11,636
----------------- ------------ ------------- ------------ ------------
Net Income $ 21,889 $ 208 $ 14,189 $ (13,717) $ 22,569
================= ============ ============= ============ ============
15
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
STATEMENT OF CASH FLOWS
For the Nine Months Ended March 30, 2003
Briggs & Stratton Guarantor Non-Guarantor
Corporation Subsidiary Subsidiaries Eliminations Consolidated
----------------- ------------ ------------- ------------ ------------
Net Cash (Used in) Operating Activities $ (80,752) $ (1,234) $ (1,518) $ -- $ (83,504)
----------------- ------------ ------------- ------------ ------------
Cash Flows from Investing Activities:
Additions to Plant and Equipment (25,903) (2,514) (399) -- (28,816)
Proceeds Received on Disposition
of Plant and Equipment 141 3,114 43 -- 3,298
Other, net 3,310 -- 6,551 -- 9,861
----------------- ------------ ------------- ------------ ------------
Net Cash (Used in) Provided by
Investing Activities (22,452) 600 6,195 -- (15,657)
----------------- ------------ ------------- ------------ ------------
Cash Flows from Financing Activities:
Net Borrowings (Repayments) on
Loans and Notes Payable 543 (1,093) (322) -- (872)
Dividends (13,860) -- -- -- (13,860)
----------------- ------------ ------------- ------------ ------------
Net Cash (Used in) Financing
Activities (13,317) (1,093) (322) -- (14,732)
----------------- ------------ ------------- ------------ ------------
Effect of Exchange Rate Changes -- 483 2,407 -- 2,890
----------------- ------------ ------------- ------------ ------------
Net (Decrease) Increase in Cash and
Cash Equivalents (116,521) (1,244) 6,762 -- (111,003)
Cash and Cash Equivalents, Beginning 211,610 953 3,382 -- 215,945
----------------- ------------ ------------- ------------ ------------
Cash and Cash Equivalents, Ending $ 95,089 $ (291) $ 10,144 $ -- $ 104,942
================= ============ ============= ============ ============
16
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
STATEMENT OF CASH FLOWS
For the Nine Months Ended March 31, 2002
Briggs & Stratton Guarantor Non-Guarantor
Corporation Subsidiary Subsidiaries Eliminations Consolidated
----------------- ------------ ------------- ------------ ------------
Net Cash (Used in) Provided by
Operating Activities $ (92,156) $ 1,467 $ 2,544 $ (2,088) $ (90,233)
----------------- ------------ ------------- ------------ ------------
Cash Flows from Investing Activities:
Additions to Plant and Equipment (32,745) (1,409) (411) -- (34,565)
Proceeds Received on Disposition
of Plant and Equipment 581 19 20 -- 620
Other, net 3,706 -- 706 -- 4,412
----------------- ------------ ------------- ------------ ------------
Net Cash (Used in) Provided by
Investing Activities (28,458) (1,390) 315 -- (29,533)
----------------- ------------ ------------- ------------ ------------
Cash Flows from Financing Activities:
Net Borrowings (Repayments) on
Loans and Notes Payable 108,657 821 (661) -- 108,817
Issuance Cost of Long-Term Debt (346) -- -- -- (346)
Dividends (13,384) -- (2,088) 2,088 (13,384)
Proceeds from Exercise of
Stock Options 943 -- -- -- 943
----------------- ------------ ------------- ------------ ------------
Net Cash (Used in) Provided by
Financing Activities 95,870 821 (2,749) 2,088 96,030
----------------- ------------ ------------- ------------ ------------
Effect of Exchange Rate Changes -- 146 281 -- 427
----------------- ------------ ------------- ------------ ------------
Net (Decrease) Increase in Cash and
Cash Equivalents (24,744) 1,044 391 -- (23,309)
Cash and Cash Equivalents, Beginning 85,282 683 2,778 -- 88,743
----------------- ------------ ------------- ------------ ------------
Cash and Cash Equivalents, Ending $ 60,538 $ 1,727 $ 3,169 $ -- $ 65,434
================= ============ ============= ============ ============
17
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 third quarter of fiscal 2003 totaled $560 million, an
increase of $43 million or 8% when compared to fiscal 2002. The increase was the
result of a $33 million and $10 million increase in Power Products and Engine
sales, respectively.
Third quarter net sales for the Engine Segment were $499 million in fiscal
2003 and $469 million in fiscal 2002. Approximately half of the $30 million
increase is related to volume increases that occurred about equally in both
engine components and engine product categories. Engine sales increases were
primarily the result of increased international shipments and increased
shipments for generators and pressure washers offset by lower shipments for lawn
and garden applications. The strengthened Euro was primarily responsible for
about a third of the revenue improvement and the remainder of the increase was
due to a sales mix that favored higher value engines.
Third quarter net sales for the Power Products Segment were $92 million
versus $59 million in the same period a year ago. The 55% increase in net sales
was driven by an 80% increase in generator sales volume and a 66% increase in
pressure washer sales volume offset by a sales mix that favored lower priced
units. 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 strong marketing programs and
increased penetration at several retailers.
Net sales for the nine months ended March 30, 2003 totaled $1.2 billion,
an increase of $80 million or 7% compared to the first nine months of the prior
year. The increase was the result of a $53 million and $27 million increase in
Power Products and Engine sales, respectively.
Nine-month sales for the Engine Segment were $1.0 billion in fiscal 2003
versus $952 million in the prior year. Improved product shipment mix to higher
priced units accounted for approximately 40% of the sales increase. Another 40%
of the increase was the result of increased volume for engines and components.
Increased international revenues resulting from the stronger Euro was the final
major factor accounting for the sales improvement.
Nine-month sales for the Power Products Segment were $206 million compared
to $153 million in the prior year. The increase is attributable to increased
generator sales driven by increased ice storm and hurricane activity in the
current year and pressure washer sales driven by strong marketing efforts and
enhanced retail presence.
GROSS PROFIT MARGIN
The gross profit margin increased to 21% from 20% in the preceding year's
third quarter. The gross profit margin in the Engine Segment was 21% in the
third quarter of fiscal 2003 and 2002. The gross profit margin for Power
Products improved to 13% in the third quarter of fiscal 2003 from 10% in fiscal
2002.
Engine Segment gross profit margin percentages remained flat as the
favorable impact of a strengthening Euro, manufacturing cost reduction efforts
and price increases were offset by increased employee benefit costs including
profit sharing, group insurance, and reduced pension income.
18
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
The improvement in Power Products gross profit margins reflects the
benefit of increased manufacturing volume, productivity improvement and a
favorable mix of higher value products in the current year. These gains were
partially offset by the negative impact of the Euro on certain purchased
components.
The gross profit margin for the nine-month period increased to 19% from
17% in the preceding year.
The Engine Segment had a gross profit margin of 20% for the nine-month
period in fiscal 2003, versus 17% in fiscal 2002. The increase is attributable
to the 56% increase in production experienced in the first quarter, the
elimination of the $5 million charge for an early retirement incentive plan in
fiscal 2002, and the impact of a strengthening Euro.
The Power Products Segment gross profit margin increased to 12% for the
nine-month period in fiscal 2003 from 10% in fiscal 2002. This increase is
essentially attributable to increased production volume as discussed above for
the third quarter.
ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Engineering, selling, general and administrative expenses were $46 million
in the third quarter of fiscal 2003 and $35 million in fiscal 2002. This is
reflective of a $5 million increase in employee benefit costs, including profit
sharing, group insurance and reduced pension income. Selling costs also
increased approximately $3 million reflecting increased variable selling
expenses due to volume improvements and the impact of a strengthening Euro.
This category increased $13 million in the comparative nine-month periods.
The increase is attributable to increases in employee benefit costs of $11
million, and variable selling costs of $4 million, offset by the elimination of
the early retirement charge of $3 million taken in the second quarter last year.
INTEREST EXPENSE
Interest expense decreased $2 million in the third quarter and $4 million
in the nine-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 third quarter and nine-month
periods for the current year was 32%. Last year's rate was 34% for the third
quarter and nine-month periods. The reduction in the rate reflects anticipated
tax credits related to increased foreign sourced income.
LIQUIDITY AND CAPITAL RESOURCES
Cash used in operating activities for the nine-month period of fiscal 2003
was $84 million, a decrease of $7 million from fiscal 2002. This reflects an
increase in net income of $25 million offset by increased working capital
requirements. The increase in working capital requirements was driven primarily
by inventory increases in the current period offset by changes in receivable
balances between years.
In the nine-month period of fiscal 2003, we used $16 million in investing
activities, compared to $30 million in fiscal 2002. Additions to plant and
equipment comprise the majority of all investing activity in both years. Lower
spending in current year is attributable to the timing of capital projects.
Net cash used in financing activities was $15 million in fiscal 2003
versus net cash provided by financing activities of $96 million in fiscal 2002.
The decrease is attributable entirely to a reduction in short-term working
capital borrowings versus the prior year.
19
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
FUTURE LIQUIDITY AND CAPITAL RESOURCES
We have remaining authorization to buy up to 1.8 million shares of our
common stock in open market or private transactions under the June 2000 Board of
Directors' authorization to repurchase up to 2.0 million shares. We do not
anticipate repurchasing any shares in fiscal 2003.
Management expects cash outflows for capital expenditures to total
approximately $45-$50 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 $275 million 8.875% senior notes 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 March 30, 2003 was 5.45%.
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.
20
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
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
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We maintain a system of disclosure controls and procedures (as defined in
Rules 13d-14(c) and 15d-14(c) under the Securities Exchange Act of 1934)
designed to provide reasonable assurance that material information about the
Company is made known to the officers certifying this report, and accordingly is
reflected in our SEC reports, including 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 are effective.
CHANGE IN INTERNAL CONTROLS
There have been no significant changes in our internal controls (which are
designed to provide reasonable assurance as to the reliability of our published
financial statements) or in other factors that could significantly affect these
controls subsequent to the date of their evaluation.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
Exhibit
Number Description
------ -----------
10.0 Amendment to Deferred Compensation Plan for Directors*
10.1 Amendment to Key Employee Savings and Investment Plan*
10.2 Amendment to Stock Incentive Plan*
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*
*Filed herewith
(b) Reports on Form 8-K.
On April 17, 2003, Briggs & Stratton Corporation filed a report on Form
8-K dated April 17, 2003, to furnish as an exhibit the press release reporting
its fiscal 2003 third quarter financial results.
21
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: May 12, 2003 /s/ James E. Brenn
------------------------------------
James E. Brenn
Senior Vice President and Chief Financial Officer and
Duly Authorized Officer
22
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.
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: May 12, 2003 /s/ John S. Shiely
-----------------------------------------------
John S. Shiely, Chairman, President and Chief
Executive Officer - Principal Executive Officer
24
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.
25
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: May 12, 2003 /s/ James E. Brenn
------------------------------------------------------
James E. Brenn, Senior Vice President and Chief
Financial Officer - Principal Financial Officer and
Chief Accounting Officer
26
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
10.0 Amendment to Deferred Compensation Plan for Directors
10.1 Amendment to Key Employee Savings and Investment Plan
10.2 Amendment to Stock Incentive Plan
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
27