<PAGE> 1
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 31, 1995
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)
A Wisconsin Corporation 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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding at
Class February 8, 1996
- --------------------------------------------------------------------------------
COMMON STOCK, par value $0.01 per share 28,927,000 Shares
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<PAGE> 2
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
INDEX
Page No.
--------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Condensed Balance Sheets -
December 31, 1995, July 2, 1995 and
January 1, 1995 3
Consolidated Condensed Statements of Income -
Three Months and Six Months Ended
December 31, 1995 and January 1, 1995 4
Consolidated Condensed Statements of Cash Flows -
Six Months Ended December 31, 1995 and
January 1, 1995 5
Notes to Consolidated Condensed Financial
Statements 6
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition 7
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9
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<PAGE> 3
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands of dollars)
ASSETS
<TABLE>
<CAPTION>
Dec.31 July 2 Jan. 1
1995 1995 1995
--------- ------- --------
CURRENT ASSETS: (Unaudited) (Unaudited)
<S> <C> <C> <C>
Cash and cash equivalents $ 6,323 $170,648 $ 10,956
Receivables, net 270,142 94,116 288,973
Inventories -
Finished products and parts 156,117 96,540 109,970
Work in process 44,087 40,107 35,004
Raw materials 4,560 4,027 5,469
----------------------------------
Total inventories $204,764 $140,674 $150,443
Future income tax benefits 31,744 31,376 32,349
Prepaid expenses 14,796 16,516 20,001
----------------------------------
Total current assets $527,769 $453,330 $502,722
----------------------------------
PREPAID PENSION COST $ 727 $ - $ 7,873
----------------------------------
DEFERRED INCOME TAX ASSET $ 4,157 $ 1,866 -
----------------------------------
PLANT AND EQUIPMENT, at cost: $759,178 $726,331 $692,563
Less - Accumulated depreciation and
unamortized investment tax credit 387,056 383,034 390,223
----------------------------------
Total plant and equipment, net $372,122 $343,297 $302,340
----------------------------------
$904,775 $798,493 $812,935
==================================
<CAPTION>
LIABILITIES & SHAREHOLDERS' INVESTMENT
<S> <C> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 62,251 $ 63,913 $ 58,798
Domestic notes payable 101,558 6,750 1,750
Foreign loans 20,066 19,653 21,595
Accrued liabilities 94,602 108,817 109,506
Dividends payable 7,521 - 7,232
Federal and state income taxes 12,815 (1,878) 13,571
----------------------------------
Total current liabilities $298,813 $197,255 $212,452
----------------------------------
DEFERRED INCOME TAX LIABILITY $ - $ - $ 9,660
----------------------------------
ACCRUED EMPLOYEE BENEFITS $ 17,260 $ 16,447 $ 15,918
----------------------------------
ACCRUED PENSION COST $ - $ 1,606 -
----------------------------------
ACCRUED POSTRETIREMENT HEALTH CARE OBLIGATION $ 69,143 $ 68,707 $ 65,341
----------------------------------
LONG-TERM DEBT $ 75,000 $ 75,000 $ 75,000
----------------------------------
SHAREHOLDERS' INVESTMENT:
Common stock-
Authorized 60,000,000 shares, $.01 par value
Issued and outstanding 28,927,000 shares $ 289 $ 289 $ 289
Additional paid-in capital 41,327 41,698 42,059
Retained earnings 403,209 397,627 393,388
Cumulative translation adjustments (266) (136) (1,172)
----------------------------------
Total shareholders' investment $444,559 $439,478 $434,564
----------------------------------
$904,775 $798,493 $812,935
==================================
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE> 4
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In thousands of dollars except amounts per share)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ -----------------
Dec. 31 Jan. 1 Dec. 31 Jan. 1
1995 1995 1995 1995
------- -------- ------- ---------
<S> <C> <C> <C> <C>
NET SALES $329,357 $366,717 $518,834 $594,562
COST OF GOODS SOLD 263,594 283,193 433,930 471,239
-------- -------- -------- --------
Gross profit on sales $ 65,763 $ 83,524 $ 84,904 $123,323
ENGINEERING, SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 24,801 26,697 49,284 48,973
--------- ------- -------- --------
Income from operations $ 40,962 $ 56,827 $ 35,620 $ 74,350
INTEREST EXPENSE (2,919) (2,121) (4,976) (4,212)
OTHER INCOME, net 541 557 2,620 3,859
-------- -------- -------- --------
Income before provision
for income taxes $ 38,584 $ 55,263 $ 33,264 $ 73,997
PROVISION FOR INCOME TAXES 14,660 21,550 12,640 28,860
-------- -------- -------- --------
Net income $ 23,924 $ 33,713 $ 20,624 $ 45,137
======== ======== ======== ========
PER SHARE DATA* -
Net income $ .82 $ 1.17 $ .71 $ 1.56
====== ====== ====== ======
Cash dividends $ .26 $ .25 $ .52 $ .48
====== ====== ====== ======
</TABLE>
* Based on 28,927,000 shares outstanding.
The accompanying notes are an integral part of these statements.
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<PAGE> 5
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Increase(Decrease) in Cash and Cash Equivalents
(In thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES: Dec. 31, 1995 Jan. 1, 1995
------------- ------------
<S> <C> <C>
Net income $ 20,624 $ 45,137
Adjustments to reconcile net income to
net cash provided by operating activities -
Depreciation 20,938 22,662
(Gain)Loss on disposition of plant and
equipment 680 (7)
(Increase)decrease in operating assets -
Accounts receivable (176,026) (166,376)
Inventories (64,090) (64,773)
Other current assets 1,352 1,066
Other assets (3,018) 808
Increase(decrease) in liabilities -
Accounts payable and accrued
liabilities 6,337 3,686
Other liabilities (357) (900)
--------- --------
Net cash used by
operating activities $(193,560) $(158,697)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to plant and equipment $ (51,423) $ (41,416)
Proceeds received on sale of plant and equipment 928 2,032
--------- ---------
Net cash used in investing activities $ (50,495) $ (39,384)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on domestic and
foreign loans $ 95,221 $ 2,022
Dividends (15,042) (13,885)
Purchase of common stock for treasury (547) (295)
Proceeds from exercise of stock options 176 140
--------- ---------
Net cash provided(used) by financing
activities $ 79,808 $ (12,018)
--------- ---------
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE
CHANGES ON CASH AND CASH EQUIVALENTS $ (78) $ (46)
--------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS $(164,325) $(210,145)
CASH AND CASH EQUIVALENTS, beginning 170,648 221,101
--------- ---------
CASH AND CASH EQUIVALENTS, ending $ 6,323 $ 10,956
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 4,596 $ 4,180
========= =========
Income taxes paid $ 2,576 $ 26,748
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE> 6
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
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 generally accepted accounting
principles. However, in the opinion of the Company, 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. It is suggested that these condensed financial statements be read in
conjunction with the financial statements and the notes thereto included in the
Company's latest annual report on Form 10-K.
During the current quarter, the Company recorded a change in an
accounting estimate originally made in the last quarter of fiscal 1995. During
that period, a charge totaling $19,059,000 was added to pension and
postretirement health care expenses to reflect the costs of early retirement
windows that were offered and accepted at the end of fiscal 1995. In October
1995, when the retirements were to occur, a number of those employees who had
accepted the offer canceled their acceptance, and thus a credit totaling
$3,477,000 was recorded as a change in the original accounting estimate during
the second quarter of fiscal 1996.
The Financial Accounting Standards Board issued SFAS No. 123 "Accounting
for Stock-Based Compensation" in October 1995, which establishes financial
accounting and reporting standards for stock-based employee compensation. The
Company plans to adopt only the pro forma disclosure requirements of this
statement, and will continue to apply the accounting provisions of APB Opinion
No. 25 to stock-based employee compensation arrangements, as is allowed by the
statement. This disclosure will be effective for the financial statements
ending in June 1997.
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<PAGE> 7
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The following is Management's discussion and analysis of certain
significant factors which have affected the Company's results of operations and
financial condition during the periods included in the accompanying consolidated
condensed financial statements.
RESULTS OF OPERATIONS
SALES
Net sales for the second fiscal quarter of 1996 decreased 10% or
$37,360,000 compared to the same period in the preceding year. Approximately
two-thirds of this decrease is attributable to the absence of lock sales. This
business was spun off to the shareholders at the end of February 1995. The
remaining portion of the change is due to a 7% decrease in engine units sold
between years. This occurred because domestic manufacturers of lawn and garden
equipment continued their reduced production rates from the first fiscal
quarter. As was the case in the first quarter, the decrease in unit sales was
larger than the decrease in sales dollars because it occurred primarily in the
Company's lower selling price small engine line. There were small improvements
in export sales for the quarter which were offset by reductions in service
sales.
Net sales for the six months ended December 1995 decreased 13% to
$518,834,000. Over half of this decrease was attributable to the spun-off lock
business. Engine unit shipments were down 13%. All other comments made above
are applicable to this period.
GROSS PROFIT
Gross profit decreased 21%, reflecting a decrease in rate from 23% last
year to 20% in the current year. This decrease was the result of the absence of
gross profit from the spun-off lock business, lower unit sales, the spreading of
fixed costs over fewer engine units and the expected lower manufacturing
efficiency associated with the four new plants. Partially offsetting this was
lower profit sharing accruals, the credit resulting from a change in an
accounting estimate (described in the notes on page 6), and a small reduction in
aluminum costs, the major raw material used in the manufacture of engines.
The same factors caused the decrease in gross profits of $38,419,000 or
31% when comparing the first six months of fiscal 1996 to the same period in
fiscal 1995. Added to these factors was the first quarter start-up cost of the
new plants which totaled $9,800,000.
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<PAGE> 8
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION (Continued)
ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
This category of expenses decreased $1,896,000 or 7% between the second
quarter of fiscal 1996 and 1995. This decrease resulted primarily from the lack
of engineering and selling expenses that were part of the spun-off lock business
and lower profit sharing accruals.
Six-month comparison in this category reflects a 1% increase between
years. Larger advertising and marketing expenses in the first quarter were
almost offset by the reductions described in the preceding paragraph.
INTEREST EXPENSE
Interest expense for the second fiscal quarter of 1996 increased 38%
over the same period in the preceding year. This increase reflects the use of
domestic short-term borrowing to finance increases in accounts receivable and
inventories and capital expenditures associated with plant projects described
later. There was no domestic short-term borrowing in the second quarter of the
preceding year. The same factors effected the six-month interest experience
comparisons.
OTHER INCOME
Other income was comparable between quarters. However, the six-month
comparison reflects a 32% reduction due to lower investment income because of
the lack of investable funds.
PROVISION FOR INCOME TAXES
The effective tax rate used for the first six months of operations was
38%. This rate reflects management's estimate of what the rate will be for the
entire fiscal year.
OUTLOOK
The outlook for retail sales of outdoor power equipment this spring
seems to be good. The econometric forecasting services the Company uses
predicts retail sales will be somewhat stronger than last spring, assuming
normal weather. Retailers are optimistic, and their indications to their
equipment suppliers reflect their optimism. Equipment manufacturers are
optimistic, too, and their indications reflect their optimism. However, the
rate at which they are taking engines does not validate their optimism. Unless
this rate changes soon, prudence will dictate that the Company should reduce
assembly rates so as to keep the end of season inventory within a reasonable
range. It now appears that earnings for the third quarter are unlikely to reach
last year's record level and that a return to favorable comparisons will be
postponed to the fourth quarter. It is now certain that earnings for the full
year will be lower than for last year.
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<PAGE> 9
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION (Continued)
FINANCIAL CONDITION
Cash and cash equivalents decreased $164,325,000 since the end of the
previous fiscal year. Cash was used to finance the $176,026,000 increase in
accounts receivable, the $64,090,000 increase in inventories, capital
expenditures totaling $51,423,000, and payment of dividends totaling
$15,042,000. Additional funds were obtained from net profits and depreciation
and new short-term debt.
The increase in accounts receivable is a normal seasonal increase at
this time of the year. Inventory increases are mostly in the finished goods
category which reflects the Company's continued maintenance of a stable rate of
production. The continuance of this production rate was discussed previously in
the Outlook section.
Additions to plant and equipment during the first six months of fiscal
1996 totaled $51,423,000. Capital projects involving three new engine plants, a
foundry and plant expansions were substantially completed during the December
quarter. These new plants are now in operation. The Company plans to spend
approximately $30,000,000 of additional capital expenditures on other projects
during the remainder of the fiscal year.
CALIFORNIA EMISSION STANDARDS
Recently the California Air Resources Board has granted the Company's request
that the California standard for carbon monoxide be relaxed to harmonize it
with that adopted by the U.S. Environmental Protection Agency (EPA). As a
result of this change, a wider range of the Company's engines will meet
California's current emission standards.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
10.3(c) Amendment to Economic Value Added Incentive Compensation Plan.
(Filed herewith.)
10.11 Officer Employment Agreement.
(Filed herewith.)
10.12 Deferred Compensation Plan for Directors.
(Filed herewith.)
27 Financial Data Schedule.
(Filed herewith.)
</TABLE>
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<PAGE> 10
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION (Continued)
(b) Reports on Form 8-K.
There were no reports on Form 8-K for the second quarter ended December
31, 1995.
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 8, 1996 /s/ R. H. Eldridge
------------------------------------------
R. H. Eldridge
Executive Vice President & Chief Financial Officer,
Secretary-Treasurer
Date: February 8, 1996 /s/ J. E. Brenn
------------------------------------------
J. E. Brenn
Vice President and Controller
-10-
<PAGE> 11
BRIGGS & STRATTON CORPORATION
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
10.3(c) Amendment to Economic Value Added Incentive Compensation Plan
(Filed herewith)
10.11 Officer Employment Agreement
(Filed herewith)
10.12 Deferred Compensation Plan for Directors
(Filed herewith)
27 Financial Data Schedule
(Filed herewith)
</TABLE>
<PAGE> 1
BRIGGS & STRATTON CORPORATION
Form 10-Q for Quarterly Period Ended December 31, 1995
Exhibit No. 10.3(c)
AMENDMENT TO BRIGGS & STRATTON CORPORATION
ECONOMIC VALUE ADDED INCENTIVE COMPENSATION PLAN
RESOLVED, that Section V.B. Target Incentive Awards., of the Briggs &
Stratton Corporation Economic Value Added Incentive Compensation Plan be amended
by deleting "Secretary-Treasurer" from the list of Executive Positions.
<PAGE> 1
BRIGGS & STRATTON CORPORATION
Form 10-Q for Quarterly Period Ended December 31, 1995
Exhibit No. 10.11
OFFICER EMPLOYMENT AGREEMENT
<PAGE> 2
AGREEMENT
This Agreement is made this 26th day of October, 1995, by and
between Briggs & Stratton Corporation, a Wisconsin corporation (the "Employer")
and James A. Wier (the "Employee"). In consideration of the promises set forth
herein, the parties hereto agree as follows:
1. Employment. Employer shall employ Employee from the
date hereof until June 30, 2000, unless such employment shall be
terminated earlier as specified herein. During the term specified in
the preceding sentence, Employee's position (including status,
offices, titles and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and
assigned immediately preceding the date hereof and the Employee's
service shall be performed at the location where he was employed
immediately preceding the date hereof or any office or location less
than 35 miles from such location.
Employer may terminate Employee's employment at any time for
any of the following causes:
(a) the continuing inability of the Employee, for
a period of at least 90 days, to perform and carry out his
duties and responsibilities under this Agreement for any
reason, including mental or physical disability. The
determination of such inability shall be made in the sole
discretion of the Board of Directors of the Employer;
(b) gross negligence or repeated neglect by
Employee in the performance of duties for Employer;
(c) material breach by Employee of the terms of
this Agreement; or
(d) death.
2. Salary. During the term specified in Section 1 hereof,
Employer shall pay Employee a monthly salary of no less than
$18,708.33, payable in semi-monthly installments, or at such other
intervals as salary is paid to other senior executives of the Employer
generally.
3. Other Compensation and Benefits. Except as specified in
this Section 3 and Sections 4 and 5 hereof, Employee shall participate
in such executive compensation structures and employee benefit plans
as shall cover senior executives of the Employer generally and his
participation and benefits (and the participation and benefits of any
person claiming through his status as a
<PAGE> 3
participant) shall be governed by the terms and conditions of such
structures and plans.
Effective with respect to stock option grants made during and
after 1996, the number of stock options which shall be granted
Employee shall be one-half of the number of options which would have
been granted to him by application of the formula or other method of
determination used by the Employer for the grant of options to other
senior executives of the Employer at the time in question.
For purposes of determining any cash bonus to which Employee
may be entitled and the computation of which is a function of base
salary, Employee's monthly base salary during the term covered hereby
shall be deemed to be actual base salary, plus $4,166.67.
4. Supplemental Pension Benefits. If Employee's employment
shall continue until June 30, 2000, he shall be entitled to a monthly
pension benefit commencing July 1, 2000 equal to $20,833.33, which
shall be payable in the form of a joint and 50% survivor annuity --
i.e., the monthly pension shall be $20,833.33 during Employee's
lifetime, and should the spouse to whom he was legally married on July
1, 2000 survive him, she will be paid a monthly annuity for her life
of $10,416.67. Such amounts shall include any amounts to which the
Employee and such surviving spouse may be entitled under any qualified
defined benefit pension plan maintained by the Employer and any
unfunded supplemental defined benefit pension plan maintained by the
Employer. To the extent that Employee is covered by a plan or plans
described in the preceding sentence, he shall make all such elections
and file all such papers as the Employer shall require so that
benefits under such plans shall be payable in the form and at the time
specified in the first sentence of this Section 4. To the extent that
the benefits specified under this Section 4 exceed the benefits
payable under such plans, any and all such benefits shall be an
unfunded obligation of the Employer as to which the Employee and any
person claiming through the Employee shall be merely a general
unsecured creditor of the Employer; provided that the Company shall
cause this benefit to be covered by the "rabbi" trust which it
maintains with respect to other executive benefits.
If Employee's employment is terminated prior to June 30, 2000,
under the rules of Section l.a. hereof, he shall be entitled to the
benefits described in the first paragraph of this Section 4,
commencing on the first day of the first calendar month commencing
after the date that his employment is so terminated except that the
number set forth in the schedule below, which corresponds to the date
that his employment is so terminated, shall be substituted for
$20,833.33 (and one-half of such number shall be substituted for
$10,416.67).
<PAGE> 4
<TABLE>
<CAPTION>
Date of Termination of Employment Monthly Benefit Amount
--------------------------------- ----------------------
<S> <C>
On or after July 1, 1999, but prior
to June 30, 2000 $20,000.00
On or after July 1, 1998, but prior
to June 30, 1999 $19,166.67
On or after July 1, 1997, but prior
to June 30, 1998 $18,333.33
On or after July 1, 1996, but prior
to June 30, 1997 $17,500.00
Prior to June 30, 1996 $16,666.67
</TABLE>
5. Medical Coverage. If Employee's employment shall
continue until June 30, 2000, he shall be entitled to purchase medical
coverage for the period commencing on his separation from service and
continuing until he reaches age 65 as though he were covered by the
medical coverage continuation rules of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA") for that entire
period.
6. Competition. As a condition to the receipt of the
benefits described in Section 4 hereof which are in excess of the
benefits which would otherwise be payable to Employee under any
qualified defined benefit pension plan or unfunded supplemental
defined benefit pension plan maintained by Employer and covering other
senior executives of the Employer, Employee agrees to abide by the
terms of this Section 6. For a period of 3 years after the Employee's
separation from service with the Employer, Employee will not, directly
or indirectly, own, manage, operate, control, be connected with the
ownership, management, operation or control of any entity in the
United States of America which competes with the Employer, or be
employed by, perform service for, consult with or solicit business for
any such entity. Employee agrees that the restrictions set forth in
this Section 6 are fair and reasonable and are reasonably required for
the protection of the Employer. Employer's sole remedy for Employee's
breach of this Section 6 shall be to forever withhold from Employee,
and any person claiming through Employee, any further payments
described in the first clause of the first sentence of this Section 6.
7. Release. As a condition to the receipt of the benefits
described in the first clause of the first sentence of Section 6
hereof, the Employee shall execute such release as the Employer shall
specify.
<PAGE> 5
8. Integration. This Agreement sets forth the entire
agreement of the parties hereto, and it supersedes any and all prior
agreements, contracts and understandings between the parties hereto,
whether written or oral, with regard to the subject matter hereof,
including without limitation, the two documents each entitled
"Employment Agreement, one of which is dated November 20, 1987, and
the other of which is dated February 19, 1990. This Agreement may be
amended only in writing executed by the parties hereto.
9. Governing Law. This Agreement shall be governed by the
internal laws of the State of Wisconsin.
10. Binding Effect. The rights and obligations of the
Employer hereunder shall inure to the benefit of and shall be binding
upon the respective successors and assigns of Employer.
11. Non-waiver. The waiver by Employer of a breach of any
provision of this Agreement shall not operate or be construed as a
waiver of any other or subsequent breach by the Employee.
12. Board Approval. This Agreement shall be subject to the
approval of the Nominating and Salaried Personnel Committee of the
Board of Directors of the Employer.
13. Headings. Headings are for convenience of reference only.
BRIGGS & STRATTON CORPORATION
By: /s/ F. P. Stratton, Jr. /s/ James A. Wier
------------------------------------ -------------------------
Its: Chairman & Chief Executive Officer James A. Wier
------------------------------------
<PAGE> 1
BRIGGS & STRATTON CORPORATION
Form 10-Q for Quarterly Period Ended December 31, 1995
Exhibit No. 10.12
DEFERRED COMPENSATION PLAN FOR DIRECTORS
<PAGE> 2
BRIGGS & STRATTON CORPORATION
DEFERRED COMPENSATION PLAN FOR DIRECTORS
AS AMENDED AND RESTATED TO
January 16, 1996
SECTION I
PURPOSE
The purpose of the Briggs & Stratton Corporation Deferred Compensation
Plan for Directors is to offer Non-Employee Directors the opportunity to defer
all or a portion of their Compensation for future services as a member of the
Board of Directors.
SECTION II
DEFINITIONS
a. "Beneficiary" shall mean the person or persons designated from
time to time in writing by a Participant to receive payments
under the Plan after the death of such Participant, or, in the
absence of any such designation or in the event that such
designated person or persons shall predecease such
Participant, his estate.
b. "Common Share Unit" shall mean a Deferred Amount which is
converted into a unit or fraction of a unit for purposes of
the Plan by dividing a dollar amount by the Fair Market Value
of one of the Corporation's common shares.
c. "Corporation" shall be Briggs & Stratton Corporation.
d. "Compensation" shall mean payments which the Participant
receives from the Corporation for services, including retainer
fees, meeting fees, and consent resolution fees.
e. "Deferred Amount" shall mean an amount of Compensation
deferred under the Plan and carried during the deferral period
in any Account provided for in the Plan.
f. "Distribution Date" shall mean the date designated by a
Participant in the Notice of Election form for distribution of
the Participant's Accounts.
g. "Dividend Equivalent" shall mean an amount equal to the cash
dividend paid on one of the Corporation's common shares
credited to an Account for each Common Share Unit credited to
such Account.
<PAGE> 3
h. "Fair Market Value" shall mean the closing price of the
Corporation's common shares as reported by the New York Stock
Exchange or such other exchange or national market system on
which the Corporation's common shares may then be listed or
quoted.
i. "Non-Employee Director" shall mean any duly elected or
appointed member of the Board of Directors of the Corporation
who is not an employee of the Corporation or of any subsidiary
of the Corporation.
j. "Participant" shall mean any Non-Employee Director who elects
to defer any amount of Compensation under the Plan.
k. "Plan" shall mean this Briggs & Stratton Corporation Deferred
Compensation Plan for Directors, as amended and restated.
l. "Secretary" shall mean the duly elected Secretary of the
Corporation.
SECTION III
ELECTION, MODIFICATION AND TERMINATION PROCEDURES
Any Non-Employee Director wishing to participate in the Plan must file
with the Secretary of the Corporation at P. O. Box 702, Milwaukee, Wisconsin
53201, a written Notice of Election on the form attached as Exhibit "A" to
defer payment of all or a portion of the Non-Employee Director's Compensation
payable in the future. An effective election with respect to Compensation,
payment of which has been deferred under the terms of this Plan, may not be
modified or revoked. An effective election with regard to future
Compensation, payment of which has not yet been deferred, may be modified by
filing a new Notice of Election or may be terminated by filing a Notice of
Termination on the form attached as Exhibit "B".
SECTION IV
ESTABLISHMENT AND ADMINISTRATION OF
DEFERRED DIRECTORS' COMPENSATION ACCOUNTS
The amount of any Participant's Compensation deferred in accordance with
an election shall be credited to an Account maintained by the Corporation. Such
Account shall remain a part of the general funds of the Corporation, and nothing
contained in this Plan shall be deemed to create a trust or fund of any kind or
create any fiduciary relationship.
The Director shall elect to have any deferrals hereunder credited with
earnings in accordance with (a) or (b) below:
2
<PAGE> 4
(a) Fixed Rate Account
As of the last day of each calendar quarter, the portion of the
Participant's Deferred Amount for which the Participant has selected
earnings to be credited pursuant to this subsection (a) shall be adjusted
as follows:
(1) The Participant's Account shall first be charged with any
distributions made during the quarter.
(2) The Participant's Account balance shall then be credited with
a supplemental amount for that quarter. Such supplemental
amount shall be computed by multiplying the Account balance
after the adjustment provided for in Subsection (1) by a
fraction, the numerator of which is 80% of the prevailing
prime interest rate at the Firstar Bank of Milwaukee on the
last business day of the quarter, and the denominator of which
is four (4).
(3) Finally, the Account shall be credited with the amount, if
any, of Compensation deferred during that quarter.
(b) Briggs & Stratton Common Share Unit Account
Compensation deferred into a Common Share Unit Account shall be credited
to the Account on the same date when it would otherwise by payable to
the Participant. Such Deferred Amounts shall be converted into a
number of Common Share Units on the date credited to the Account by
dividing the Deferred Amount by the Fair Market Value on such date.
If Common Share Units exist in a Participant's Account on a dividend
record date for the Corporation's common shares, Dividend Equivalents
shall be credited to the Participant's Account on the related dividend
payment date, and shall be converted into the number of Common Share
Units which could be purchased with the amount of Dividend Equivalents
so credited.
In the event of any change in the Corporation's common shares
outstanding, by reason of any stock split or dividend,
recapitalization, merger, consolidation, combination or exchange of
stock or similar corporate change, the Secretary shall make such
equitable adjustments, if any, by reason of any such change, deemed
appropriate in the number of Common Share Units credited to each
Participant's Account.
A separate record of each deferred Participant's Account shall be
maintained by the Corporation for each Participant in the Plan.
3
<PAGE> 5
SECTION V
PAYMENT OF DEFERRED DIRECTORS' COMPENSATION
Deferred Amounts shall be paid to a Participant or, in the event of
death, to his designated Beneficiary in accordance with the Notice of Election
and Beneficiary Designation forms that have been filed with the Secretary of
the Corporation. If a Participant elects to receive payment of his Deferred
Amount in annual installments rather than in a lump sum, the payment period
shall not exceed ten years following the payment commencement date. The amount
of any installment payment shall be determined by multiplying the balance of
the Participant's unpaid Account on the date of such installment by a fraction,
the numerator of which is one and the denominator of which is the number of
remaining unpaid installments. Such account balance shall be appropriately
reduced to reflect the installment payment made hereunder.
In no event will an installment payment be less than $1,000.00 and all
installments will be paid annually as soon as it practicable after commencement
of the calendar year selected by the Participant. If a Participant shall die
prior to the receipt of all installment payments, any unpaid balance of
deferred fees and supplemental amounts shall be paid in one lump sum to his
designated Beneficiary(s) as soon as practicable following the month of death.
SECTION VI
WHEN PAYMENT OF DEFERRED AMOUNTS COMMENCES
Compensation may be deferred until any date but no later than the year
in which the Participant attains the age of seventy-one years. The payment in a
lump sum or installments of amounts deferred pursuant to an election under the
Plan shall commence as soon as practicable during the first year to which
payment has been deferred, and shall be paid in accordance with the terms of
such election. If a Participant shall die prior to the first year to which
payment has been deferred, such payment shall be made as soon as practicable
immediately following the month of death.
SECTION VII
DESIGNATION OF BENEFICIARY
Each Non-Employee Director, on becoming a Participant, shall file with
the Secretary of the Corporation a Beneficiary designation on the form attached
as Exhibit "C" designating one or more Beneficiaries to whom payments otherwise
due the Participant shall be made in the event of his or her death. A
Beneficiary designation will be effective only if the signed Beneficiary
designation form is filed with the Secretary of the Corporation while the
Participant is alive, and will cancel all Beneficiary designations signed and
filed previously. If the primary Beneficiary shall survive the Participant
but dies before receiving all the amounts due hereunder, the Deferred Amounts
remaining unpaid at the time of death shall be paid in one lump sum to the
legal representative of the primary Beneficiary's estate. If the primary
Beneficiary shall predecease the Participant, amounts remaining unpaid at the
time of the Participant's death shall be paid in the order specified by the
Participant to the contingent
4
<PAGE> 6
Beneficiary(s) surviving the Participant. If the contingent Beneficiary(s)
dies before receiving all the amounts due hereunder, the unpaid amount shall be
paid in one lump sum to the legal representative of such contingent
Beneficiary(s) estate. If the Participant shall fail to designate a
Beneficiary(s) as provided in this Section, or if all designated
Beneficiaries shall predecease the Participant, the Deferred Amounts remaining
unpaid at the time of such Participant's death shall be paid in one lump sum to
the legal representative of the Participant's estate.
SECTION VIII
NONALIENATION OF BENEFITS
Neither the Participant nor any Beneficiary designated by him shall
have any right to, directly or indirectly, alienate, assign, or encumber any
amount that is or may be payable hereunder.
SECTION IX
ADMINISTRATION OF PLAN
Full power and authority to construe, interpret and administer the Plan
shall be vested in the Corporation's Board of Directors. Decision of the Board
shall be final, conclusive and binding upon all parties.
SECTION X
AMENDMENT OR TERMINATION OF PLAN
The Board of Directors may amend or terminate this Plan at any time. Any
amendment or termination of the Plan shall not affect the rights of
Participants or Beneficiaries to the Deferred Amounts in existence at the time
of such amendment or termination.
SECTION XI
APPLICABLE LAW
The provisions of this Plan shall be interpreted and construed in
accordance with the laws of the State of Wisconsin.
SECTION XII
EFFECTIVE DATE OF PLAN
This Plan shall become operative and in effect on such date as shall be
fixed by the Board of Directors of the Corporation.
5
<PAGE> 7
SECTION XIII
DISCRETION OF BOARD
Anything to the contrary herein notwithstanding, the Board of Directors
shall have the right, in its sole discretion, at any time and from time to
time, to accelerate payments and make distributions to or on behalf of a
Participant or a Beneficiary of a Participant then entitled to distributions
from the Account of such Participant, where the Board of Directors deems
such accelerated payment in the best interest of the Corporation and such
distributees.
6
<PAGE> 8
EXHIBIT "A"
NOTICE OF ELECTION TO DEFER THE PAYMENT OF DIRECTORS' COMPENSATION
Secretary
Briggs & Stratton Corporation
P.O. Box 702
Milwaukee, WI 53201
Re: Briggs & Stratton Corporation
Deferred Compensation Plan For Directors
Pursuant to provisions of the above-referenced Plan, I hereby elect to
have Compensation payable to me for services as a Director of Briggs & Stratton
Corporation deferred in the manner specified below. It is understood and
agreed that this election shall become effective upon receipt of this Notice of
Election by the Secretary of the Corporation. I understand that this election
shall be irrevocable with respect to Compensation that has been deferred
while this election is in effect. This election shall continue in effect for
subsequent terms of office unless I shall modify or revoke it.
Percentage of Compensation Deferred: Retainer _____%
Board Meeting Fees _____%
Committee Meeting Fees _____%
Consent Resolution Fees _____%
Account(s) to be Credited with Deferred Amounts:
(a) Fixed Rate Account _____%
(b) Briggs & Stratton Common Share Unit Account _____%
Payment of deferred Compensation shall commence as soon as practicable in
the year designated below; provided, however, that in no event shall such
payments commence until at least six (6) months have elapsed since my last
Compensation deferral unless payment is being made incident to my death, in
which case payment shall be made as soon as practicable following the month of
death.
Year to Which Payment is Deferred: 19___ (no later than the year in
which you attain age 71)
Method of Payment:
Cash deferred to be paid in:
______ Lump Sum, OR
______ Annual Installments - Number of Years, not to
exceed 10. However, if an unpaid balance of
deferred fees and supplemental amounts exists at the
time of my death, such balance shall be paid in one
lump sum to my designated Beneficiary(s) as soon as
practicable immediately following my death.
_____________________________________ Date____________________
Director
<PAGE> 9
EXHIBIT "B"
NOTICE OF TERMINATION
Secretary
Briggs & Stratton Corporation
P.O. Box 702
Milwaukee, WI 53201
Re: Briggs & Stratton Corporation
Deferred Compensation Plan For Directors
Pursuant to provisions of the above-referenced Plan, I hereby
terminate my participation in the Plan effective upon receipt of this Notice of
Termination by the Secretary of the Corporation.
______________________________________ Date____________________
Director
<PAGE> 10
EXHIBIT "C"
BENEFICIARY DESIGNATION
Secretary
Briggs & Stratton Corporation
P.O. Box 702
Milwaukee, WI 53201
Re: Briggs & Stratton Corporation
Deferred Compensation Plan For Directors
Any Compensation for my services as a Director of Briggs & Stratton
Corporation was deferred under the above-referenced Plan and remain unpaid at
my death shall be paid to the following primary Beneficiary:
_____________________________________________________________
Name
_____________________________________________________________
Address
If the above-named primary Beneficiary shall predecease me, I
designate the following persons as contingent Beneficiaries, in the order
shown, to receive any such unpaid deferred fees:
1. _____________________________________________________________
Name
_____________________________________________________________
Address
2. _____________________________________________________________
Name
_____________________________________________________________
Address
3. _____________________________________________________________
Name
_____________________________________________________________
Address
This supersedes any previous Beneficiary designation made by me with
respect to deferred Compensation under the Plan. I reserve the right to
change the Beneficiary in accordance with the terms of the Plan.
______________________________________ Date____________________
Director
Witnesses: ________________________________
________________________________
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<PERIOD-START> JUL-3-1995
<PERIOD-END> DEC-31-1995
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