<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 26, 1999
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
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12301 West Wirth Street, Wauwatosa, Wisconsin 53222
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(Address of Principal Executive Offices) (Zip Code)
414/259-5333
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(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 January 28, 2000
- -------------------------------------------------------------------------------
COMMON STOCK, par value $0.01 per share 22,981,270 Shares
1
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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Condensed Balance Sheets -
December 26, 1999 and June 27, 1999 3
Consolidated Condensed Statements of Income -
Three Months and Six Months ended
December 26, 1999 and December 27, 1998 5
Consolidated Condensed Statements of Cash Flow -
Six Months ended December 26, 1999 and
December 27, 1998 6
Notes to Consolidated Condensed Financial
Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 11
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
</TABLE>
2
<PAGE> 3
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)
ASSETS
<TABLE>
<CAPTION>
December 26, June 27,
1999 1999
------------ --------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 10,282 $ 60,806
Accounts receivable, net 395,033 194,096
Inventories -
Finished products and parts 177,240 72,196
Work in process 71,455 59,665
Raw materials 5,473 5,587
----------- -----------
Total inventories 254,168 137,448
Future income tax benefits 37,951 34,383
Prepaid expenses 18,964 16,119
----------- -----------
Total current assets 716,398 442,852
----------- -----------
OTHER ASSETS:
Marketable securities and other investments 44,528 19,024
Deferred income tax assets 647 2,039
Capitalized software 6,873 7,516
----------- -----------
Total other assets 52,048 28,579
----------- -----------
PLANT AND EQUIPMENT:
Cost 812,392 859,848
Less accumulated depreciation 420,527 455,394
----------- -----------
Total plant and equipment, net 391,865 404,454
----------- -----------
$ 1,160,311 $ 875,885
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 4
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS (Continued)
(In thousands)
LIABILITIES & SHAREHOLDERS' INVESTMENT
<TABLE>
<CAPTION>
December 26, June 27,
1999 1999
------------ ---------
(Unaudited)
CURRENT LIABILITIES:
<S> <C> <C>
Accounts payable $ 109,108 $ 117,757
Domestic notes payable 229,967 4,335
Foreign loans 17,445 13,824
Current maturities of long-term debt 15,000 15,000
Accrued liabilities 131,467 119,685
Dividends payable 6,926 -
Federal and state income taxes 21,610 11,901
----------- -----------
Total current liabilities 531,523 282,502
----------- -----------
OTHER LIABILITIES:
Deferred revenue on sale of plant and equipment 15,742 15,798
Accrued pension cost 11,620 17,306
Accrued employee benefits 13,653 13,185
Accrued postretirement health care obligation 67,286 67,877
Long-term debt 113,410 113,307
----------- -----------
Total other liabilities 221,711 227,473
----------- -----------
SHAREHOLDERS' INVESTMENT:
Common stock-
Authorized 60,000 shares, $.01 par value,
Issued 28,927 shares 289 289
Additional paid-in capital 36,946 37,657
Retained earnings 665,797 612,807
Accumulated other comprehensive income (1,211) (1,732)
Unearned compensation on restricted stock (261) (235)
Treasury stock at cost, 5,910 and 5,476 shares,
respectively (294,483) (282,876)
----------- -----------
Total shareholders' investment 407,077 365,910
----------- -----------
$ 1,160,311 $ 875,885
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
Dec. 26 Dec. 27 Dec. 26 Dec. 27
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
NET SALES $ 422,238 $ 359,943 $ 721,171 $ 583,924
COST OF GOODS SOLD 322,515 288,472 566,066 474,841
--------- --------- --------- ---------
Gross profit on sales 99,723 71,471 155,105 109,083
ENGINEERING, SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 33,196 29,107 62,836 58,355
--------- --------- --------- ---------
Income from operations 66,527 42,364 92,269 50,728
INTEREST EXPENSE (5,208) (4,748) (8,335) (8,158)
GAIN ON DISPOSITION OF FOUNDRY ASSETS - - 16,545 -
OTHER INCOME, net 3,985 1,801 5,618 3,948
--------- --------- --------- ---------
Income before provision
for income taxes 65,304 39,417 106,097 46,518
PROVISION FOR INCOME TAXES 24,160 14,780 39,250 17,440
--------- --------- --------- ---------
Net income $ 41,144 $ 24,637 $ 66,847 $ 29,078
========= ========= ========= =========
EARNINGS PER SHARE DATA -
Average shares outstanding 23,092 23,308 23,120 23,467
====== ====== ====== ======
Basic earnings per share $ 1.78 $ 1.06 $ 2.89 $ 1.24
====== ====== ====== ======
Diluted average shares outstanding 23,190 23,481 23,254 23,588
====== ====== ====== ======
Diluted earnings per share $ 1.77 $ 1.05 $ 2.87 $ 1.23
====== ====== ====== ======
CASH DIVIDENDS PER SHARE $ .30 $ .29 $ .60 $ .58
====== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES: Dec. 26, 1999 Dec. 27, 1998
------------- -------------
<S> <C> <C>
Net income $ 66,847 $ 29,078
Adjustments to reconcile net income to net
cash used for operating activities -
Depreciation and amortization 25,052 23,825
Equity in earnings of
unconsolidated affiliates (4,655) (1,687)
(Gain) loss on disposition of plant and
equipment (16,236) 195
Provision (credit) for deferred income taxes (2,913) 2,450
Change in operating assets and liabilities -
Increase in accounts receivable (200,916) (166,692)
Increase in inventories (118,079) (64,625)
Increase in prepaid expenses (3,356) (1,174)
Increase in accounts payable
and accrued liabilities 19,768 30,557
Other, net (5,131) (4,262)
----------- -----------
Net cash used in operating activities (239,619) (152,335)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to plant and equipment (39,440) (29,881)
Proceeds received on disposition of plant
and equipment 23,509 1,382
Other, net 2,641 (391)
----------- -----------
Net cash used in investing activities (13,290) (28,890)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on loans and notes payable 229,253 138,714
Dividends (13,857) (13,618)
Purchase of common stock for treasury (17,661) (35,614)
Proceeds from exercise of stock options 5,248 8,897
----------- -----------
Net cash provided by financing activities 202,983 98,379
----------- -----------
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE
CHANGES ON CASH AND CASH EQUIVALENTS (598) 562
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (50,524) (82,284)
CASH AND CASH EQUIVALENTS, beginning 60,806 84,527
----------- -----------
CASH AND CASH EQUIVALENTS, ending $ 10,282 $ 2,243
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 6,872 $ 7,559
=========== ===========
Income taxes paid $ 32,400 $ 2,937
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE> 7
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. These
condensed financial statements should be read in conjunction with the financial
statements and the notes thereto which were included in the Company's latest
Annual Report on Form 10-K.
Certain amounts in the prior year financial statements have been
reclassified to conform to the current year presentation.
The caption entitled Marketable Securities and Other Investments represents
equity securities of other entities that are held by the Company. Marketable
Securities are classified as available-for-sale and are reported at fair market
value with any changes in fair market value reported in Accumulated Other
Comprehensive Income. Other Investments represent investments in joint ventures
and affiliates and are accounted for using the equity method of accounting.
Financial Accounting Standard (FAS) No. 130, Reporting Comprehensive
Income, requires the reporting of comprehensive income in addition to net income
from operations. 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. Total
comprehensive income is as follows (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------ ------------------------
Dec. 26 Dec. 27 Dec. 26 Dec. 27
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net income $ 41,144 $ 24,637 $ 66,847 $ 29,078
Unrealized gain (loss) on marketable securities 257 (64) 1,153 (64)
Foreign currency translation adjustments (540) 243 (632) 769
-------- -------- -------- --------
Total comprehensive income $ 40,861 $ 24,816 $ 67,368 $ 29,783
======== ======== ======== ========
</TABLE>
The components of Accumulated Other Comprehensive Income are as follows (in
thousands):
<TABLE>
<CAPTION>
Dec. 26 June 27
1999 1999
------- -------
<S> <C> <C>
Cumulative translation adjustments $ (2,941) $ (2,309)
Unrealized gain on marketable securities 1,730 577
--------- --------
Accumulated other comprehensive income $ (1,211) $ (1,732)
========= ========
</TABLE>
At the end of August 1999, the Company contributed its two ductile iron
foundries to Metal Technologies Holding Company, Inc. ("MTHC") in exchange for
$23.6 million in cash and $45.0 million aggregate par value convertible
preferred stock which was recorded at its estimated fair value of $21.6 million.
The transaction resulted in a $16.5 million gain, and is shown as such on the
income statement. The provisions of the preferred stock include a 15% cumulative
dividend and conversion rights into a minimum of 31% of the common stock of
MTHC. MTHC became the primary supplier to Briggs & Stratton Corporation of
ductile iron castings for crankshafts and cam gears.
7
<PAGE> 8
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 the Company's
financial condition and results of operations for the periods included in the
accompanying consolidated condensed financial statements:
RESULTS OF OPERATIONS
SALES
Net sales for the second fiscal quarter totaled $422 million, an increase
of $62 million or 17% compared to the same period of the preceding year. This
increase resulted from the following factors: a favorable mix change in engines
sold of $48 million, a $23 million increase in sales dollars due to a 6%
increase in engine unit shipments, and $6 million from increased prices. The $23
million increase from engine unit sales is offset by a $15 million decrease of
casting sales resulting from the disposition of the foundry assets in the first
quarter of fiscal 2000.
Net sales for the six months ended December 1999 totaled $721 million, an
increase of $137 million or 24% compared to the first six months of the prior
year. This increase resulted from the following factors: an $88 million increase
in sales dollars resulting from a 17% increase in engine unit shipments, a
favorable mix change to higher-priced units of $59 million, and $6 million from
increased prices. These increases were offset by a $16 million decrease in
casting sales for reasons discussed above.
GROSS PROFIT MARGIN
The gross profit rate increased to 24% in the current quarter from 20% in
the preceding year's second quarter. This resulted in additional gross profit
totaling $16 million. Significant reasons for this improvement were $12 million
attributed to the benefit of higher production, and $6 million of price
increases.
The gross profit rate for the six-month period increased to 22% in the
current year from 19% in the preceding year. This resulted in additional gross
profit totaling $20 million. This increase resulted primarily from the same
factors discussed above for the quarter. An increase in engine units produced
attributed a favorable $20 million, and $6 million of price increases.
Offsetting these improvements was a $2 million mix shift to the lower margin
engines.
ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
This category increased $4 million or 14% between the second fiscal
quarters of 2000 and 1999. This resulted primarily from a $2 million increase in
engineering costs related to development and testing of new products and a $1
million increase in profit sharing expense due to improved results.
The $4 million or 8% increase for the comparative six-month periods was due
primarily to the same factors discussed above for the quarter. Engineering costs
and profit sharing expenses both increased $3 million. These increases were
offset by a $2 million decrease in costs related to the Company's POWERCOM
software business that was sold in the first quarter of the preceding year.
8
<PAGE> 9
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
INTEREST EXPENSE
Interest expense increased 10% or $.5 million in the three-month comparison
and increased 2% or $.2 million in the six-month comparison. These increases
were the result of the Company's higher level of short-term borrowings in the
latter part of the second quarter of fiscal 2000 to fund working capital needs.
GAIN ON DISPOSITION OF FOUNDRY ASSETS
At the end of August 1999, the Company contributed its two ductile iron
foundries to Metal Technologies Holding Company, Inc. ("MTHC") in exchange for
$23.6 million in cash and $45.0 million aggregate par value convertible
preferred stock which was recorded at its estimated fair value of $21.6 million.
The transaction resulted in a $16.5 million gain, and is shown as such on the
income statement. The provisions of the preferred stock include a 15% cumulative
dividend and conversion rights into a minimum of 31% of the common stock of
MTHC. MTHC became the primary supplier to Briggs & Stratton Corporation of
ductile iron castings for crankshafts and cam gears.
PROVISION FOR INCOME TAXES
The effective tax rate used in both the three-month and six-month periods
for the current year was 37.0%. This is management's estimate of what the rate
will be for the entire 2000 fiscal year. Last year's rate was 37.5% in both
periods.
EARNINGS PER SHARE
The six-month diluted earnings per share calculation included herein
reflects an immaterial change from the diluted earnings per share presented in
the Company's press release of second quarter financial results. The change
resulted from a correction in diluted shares outstanding.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities for the six-month periods of fiscal
2000 and fiscal 1999 were $240 million and $152 million, respectively. The
significant increase was due to the following:
The fiscal 2000 cash flow from operating activities reflects improved net
income, excluding depreciation and gain on disposition of plant and equipment,
of $23 million. Offsetting this improvement is an increased requirement for
working capital of $110 million, caused primarily by three factors. First is a
$53 million increase in inventories in anticipation of third quarter in-season
demand for engine units. Second is a $34 million increase in accounts receivable
attributed to the increased sales volume when compared to the previous year.
Last are decreased accounts payable and accrued liabilities of $11 million.
Accounts payable and federal and state income taxes payable both decreased
between the comparable six months, $12 million and $3 million respectively,
caused by timing of payments. Accrued liabilities increased $4 million
attributed to an increase in the warranty reserve due to higher sales volume.
Net cash used in investing activities totaled $13 million and $29 million,
respectively. The $16 million decrease is attributed primarily to $23 million of
cash received from the foundry transaction, offset by a $9 million increase in
capital expenditures related to capacity increases and new products.
Net cash provided by financing activities amounted to $203 million and $98
million in fiscal 2000 and 1999, respectively. These financing activities
reflect higher levels of short-term borrowings in the latter part of the second
quarter of fiscal 2000 to fund working capital requirements, causing a $91
million increase in debt between the periods. Also, the Company did not
repurchase as many shares of its common stock in the open market during fiscal
2000.
9
<PAGE> 10
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
FUTURE LIQUIDITY AND CAPITAL RESOURCES
In January 1999, the Board of Directors approved a repurchase of up to 1.3
million shares of the Company's common stock in open market or private
transactions. As of the end of December 1999, stock repurchases totaling 1.0
million shares were made in open market transactions. This repurchase
authorization is intended to minimize dilution from shares issued for employee
benefit plans. Future purchases will be funded from available cash.
Management expects cash flows for capital expenditures to total $80 million
in fiscal 2000 and to be funded from available cash. These anticipated
expenditures include a significant amount for capacity increases, as well as
continuing reinvestment in equipment and new products.
The Company currently intends to increase future cash dividends per share
at a rate approximating the inflation rate, subject to the discretion of its
Board of Directors and requirements of applicable law.
OUTLOOK
Overall, the Company expects that engine unit sales will increase by
approximately 3% to 5% in fiscal 2000 compared to fiscal 1999. As discussed
earlier, the Company experienced a significant increase in engine unit shipments
in the first six months of fiscal 2000. It appears this represents a shift in
original equipment manufacturers' timing of purchases from later in the year to
earlier in the year. Lawn and garden equipment manufacturers are building
product, particularly lawn tractors, earlier this year, hoping to avoid the
engine shortages that developed in the peak selling season last year and the
year before.
The Company believes that demand from the lawn and garden segment will
remain strong through the third fiscal quarter but weaken in the fourth fiscal
quarter. Most of the market's requirements will have been built by the end of
the third fiscal quarter. The Company expects a modest improvement in third
quarter earnings and lower sales and earnings in the fourth quarter. Higher
sales and earnings are expected for the full fiscal year.
OTHER MATTERS
YEAR 2000
The Company has not experienced any significant year 2000 issues to date.
The Company continues to monitor its Year 2000 Program for unexpected issues
that could possibly still develop. The year 2000 problem has many aspects and
potential consequences, some of which are not reasonably foreseeable, and there
can be no assurance that unforeseen consequences will not arise.
The Company has spent to date $33 million on its enterprise-wide
information system. The Company does not expect any additional incremental costs
related to year 2000 matters.
10
<PAGE> 11
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS
Certain statements in Management's Discussion and Analysis of Financial
Condition and Results of Operations may contain 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", "objective", and "think" or
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, the effects of weather on the purchasing patterns of the Company's
customers and end use purchasers of the Company's engines; the seasonal nature
of the Company's business; actions of competitors; changes in laws and
regulations, including accounting standards; employee relations; customer
demand; prices of purchased raw materials and parts; domestic economic
conditions, including housing starts and changes in consumer disposable income;
foreign economic conditions, including currency rate fluctuations; the ability
of the Company's customers and suppliers to meet year 2000 compliance; and
unanticipated internal year 2000 issues. Some or all of the factors may be
beyond the Company's control.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes since the September 7, 1999 filing of
the Company's Annual Report on Form 10-K.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The information required by this item was previously reported in the
Company's Form 10-Q for the first quarter ended September 26, 1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
10.0 Amended and Restated Deferred Compensation Plan for Directors*
11 Computation of Earnings Per Share of Common Stock*
12 Computation of Ratio of Earnings to Fixed Charges*
27 Financial Data Schedule, December 26, 1999*
</TABLE>
[FN]
* Filed herewith
</FN>
(b) Reports on Form 8-K.
There were no reports on Form 8-K for the second quarter ended December 26,
1999.
11
<PAGE> 12
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: February 4, 2000 /s/ James E. Brenn
-------------------------------------------------
James E. Brenn
Senior Vice President and Chief Financial Officer
Date: February 4, 2000 /s/ Todd J. Teske
-------------------------------------------------
Todd J. Teske
Controller
12
<PAGE> 13
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
10.0 Amended and Restated Deferred Compensation Plan for Directors
(Filed herewith)
11 Computation of Earnings Per Share of Common Stock
(Filed herewith)
12 Computation of Ratio of Earnings to Fixed Charges
(Filed herewith)
27 Financial Data Schedule
(Filed herewith)
</TABLE>
13
<PAGE> 1
BRIGGS & STRATTON CORPORATION
Form 10-Q for Quarterly Period Ended December 26, 1999
Exhibit No. 10.0
DEFERRED COMPENSATION PLAN FOR DIRECTORS
AS AMENDED AND RESTATED TO
October 19, 1999
<PAGE> 2
BRIGGS & STRATTON CORPORATION
DEFERRED COMPENSATION PLAN FOR DIRECTORS
AS AMENDED AND RESTATED TO
October 19, 1999
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. "Common Stock" shall mean shares of Briggs & Stratton Corporation
common stock awarded as part of Non-Employee Director Compensation.
e. "Compensation" shall mean payments which the Participant receives from
the Corporation for services, including retainer fees, meeting fees,
consent resolution fees and Common Stock.
f. "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.
g. "Distribution Date" shall mean the date designated by a Participant in
the Notice of Election form for distribution of the Participant's
Accounts.
h. "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 or share of Common Stock credited to such
Account.
<PAGE> 3
i. "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.
j. "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.
k. "Participant" shall mean any Non-Employee Director who elects to defer
any amount of Compensation under the Plan.
l. "Plan" shall mean this Briggs & Stratton Corporation Deferred
Compensation Plan for Directors, as amended and restated.
m. "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. 0. 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. A separate record of each deferred
Participant's Account shall be maintained by the Corporation for each
Participant in the Plan. The Participant's Account shall segregate the reporting
of Common Stock deferrals and cash deferrals.
The Director shall elect to have any cash 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
cash 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 as it would otherwise be 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.
(c) Briggs & Stratton Common Stock Account
Any Common Stock deferred under the Plan shall be credited to the Account
in shares on the same date as they would otherwise be payable to the
Participant. If Common Stock exists in the 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
3
<PAGE> 5
adjustments, if any, by reason of any such change, deemed appropriate in
the number of Common Share Units and/or Common Stock credited to each
Participant's Account.
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 is 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.
If the Participant has a balance in Common Stock, distribution will be made
in shares of Briggs & Stratton Corporation Common Stock. If the Participant has
a balance in Briggs & Stratton Common Share Units, the Participant may elect to
receive distributions in cash or stock; provided that any such distributions
shall be subject to any necessary approvals under securities laws or exchange
requirements.
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
4
<PAGE> 6
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 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.
5
<PAGE> 7
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.
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. 0. 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 - Cash ____%
Retainer - Common Stock ____%
Board Meeting Fees ____%
Committee Meeting Fees ____%
Consent Resolution Fees ____%
Account(s) to be Credited with Cash 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:
Year to Which Payment is Deferred: __ (no later than the year in which you
attain age 71)
Method of Payment:
Deferred account 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. 0. 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. 0. 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:____________________________
____________________________
<PAGE> 11
EXHIBIT "D"
BRIGGS & STRATTON CORPORATION
DEFERRED COMPENSATION PLAN FOR DIRECTORS
NOTICE OF ELECTION
DISTRIBUTION OF ACCOUNT BALANCE IN
BRIGGS & STRATTON COMMON SHARE UNITS
I understand that pursuant to the terms of the Briggs & Stratton
Corporation Deferred Compensation Plan for Directors I may elect to receive any
balance in my account recorded in Briggs & Stratton Corporation Common Share
Units (Common Share Units) in cash or shares of Briggs & Stratton common stock.
I hereby elect that any Common Share Units in my account be paid out to me
at the time of distribution in the following form:
______ Cash
______ Briggs & Stratton common stock
Director:______________________________ Date_______________________
<PAGE> 1
EXHIBIT 11
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE OF COMMON STOCK
(In thousands except per share data)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
------------------------------- ----------------------------
December 26, December 27, December 26, December 27,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
COMPUTATIONS FOR STATEMENTS OF INCOME
Net income $ 41,144 $ 24,637 $ 66,847 $ 29,078
========= ========= ========= =========
Basic earnings per share of common stock:
Average shares of common stock outstanding 23,092 23,308 23,120 23,467
========= ========= ========= =========
Basic earnings per share of common stock $ 1.78 $ 1.06 $ 2.89 $ 1.24
========= ========= ========= =========
Diluted earnings per share of common stock:
Average shares of common stock outstanding 23,092 23,308 23,120 23,467
Incremental common shares applicable to
common stock options based on the common
stock average market price during the period 97 172 133 120
Incremental common shares applicable to restricted
common stock based on the common stock average
market price during the period 1 1 1 1
--------- --------- --------- ---------
Average common shares assuming dilution 23,190 23,481 23,254 23,588
========= ========= ========= =========
Fully diluted earnings per average share of
common stock, assuming conversion of all
applicable securities $ 1.77 $ 1.05 $ 2.87 $ 1.23
========= ========= ========= =========
</TABLE>
<PAGE> 1
EXHIBIT 12
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in thousands)
<TABLE>
<CAPTION>
Six Months Ended
-------------------------------------
December 26, December 27,
1999 1998
------------ ------------
<S> <C> <C>
Net income $ 66,847 $ 29,078
Add:
Interest 8,335 8,158
Income tax expense and other taxes on income 39,250 17,440
Fixed charges of unconsolidated subsidiaries 71 153
---------- ----------
Earnings as defined $ 114,503 $ 54,829
========== ==========
Interest $ 8,335 $ 8,158
Fixed charges of unconsolidated subsidiaries 71 153
---------- ----------
Fixed charges as defined $ 8,406 $ 8,311
========== ==========
Ratio of earnings to fixed charges 13.62 x 6.60 x
========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS OF BRIGGS & STRATTON CORPORATION FOR THE SIX MONTHS ENDED DECEMBER
26, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-02-2000
<PERIOD-START> JUN-28-1999
<PERIOD-END> DEC-26-1999
<CASH> 10,282
<SECURITIES> 0
<RECEIVABLES> 395,033
<ALLOWANCES> 0
<INVENTORY> 254,168
<CURRENT-ASSETS> 716,398
<PP&E> 812,392
<DEPRECIATION> 420,527
<TOTAL-ASSETS> 1,160,311
<CURRENT-LIABILITIES> 531,523
<BONDS> 0
0
0
<COMMON> 289
<OTHER-SE> 407,077
<TOTAL-LIABILITY-AND-EQUITY> 1,160,311
<SALES> 721,171
<TOTAL-REVENUES> 721,171
<CGS> 566,066
<TOTAL-COSTS> 566,066
<OTHER-EXPENSES> 40,673
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,335
<INCOME-PRETAX> 106,097
<INCOME-TAX> 39,250
<INCOME-CONTINUING> 66,847
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 66,847
<EPS-BASIC> 2.89
<EPS-DILUTED> 2.87
</TABLE>
