Briggs & Stratton Corporation Reports
Results for the Third Quarter of Fiscal 2001
MILWAUKEE, April 19 Briggs & Stratton Corporation
Briggs & Stratton today announced third quarter net income of
$29.9 million or $1.38 per diluted share. Third quarter net income from the
prior year was $42.1 million or $1.84 per share.
Major contributing factors to the 29% decrease in net income were lower
production levels, the impact of a strong dollar on exports to Europe, lower
shipments of service components and greater interest expense. Net sales for
the third quarter were $430.2 million or 8% lower than last year's third
quarter net sales of $468.7 million.
For the first nine months of fiscal 2001, net income was $43.5 million or
$2.01 per diluted share compared to $98.5 million or $4.28 per share in fiscal
2000, excluding a $10.4 million gain on a foundry disposition in fiscal 2000.
Net sales for nine months were $978.9 or 18% lower than the $1,189.8 million
in the comparable prior year period.
The net income decrease for nine months was the result of the shift in
sales mix to smaller engines which contribute less gross profit dollars, the
impact of a strong dollar on exports to Europe, an engine unit sales decrease
of 7% and lower production levels.
We presently estimate that fourth quarter net sales for our engine
business may be 6-8% lower than those of the same period last year. Current
projections for earnings for the fourth quarter fall in a range of $.52 to
$.72 per diluted share. The primary reasons for our expectation of lower
earnings are the projected lower utilization of production facilities this
year as we try to reduce finished goods inventory by fiscal year-end, the
lower sales volume and higher interest expense.
As previously reported, we do not expect the acquisition of Generac
Portable Products, Inc., which is expected to close in the fiscal fourth
quarter, to significantly impact our fourth quarter results.
The reason for the wide range of earnings estimates in the fourth quarter
is our inability to predict how the weather for the remainder of the fourth
quarter will affect consumer demand. At this time we can only estimate
different scenarios for demand and production because neither we, nor our
customers have a good sense of how the spring selling season will play out.
Fiscal 2002 will be the first full year with Generac included in our
results. Our current estimates project our net income to be in a range of
$3.30 - $3.50 per share. In addition to our previously disclosed Generac
projections for fiscal 2002, we anticipate slightly higher engine sales and
production levels and increases in interest expense. Sales are projected to
approach $1.7 billion. Operating income margins, which include an estimate of
$66 million for depreciation and amortization, will be approximately 9%.
Interest expense is projected at $52 million and we are assuming the same tax
rate between years.
The Company will host a conference call today at 10:00 AM (EDT) to review
this information. A live web cast of the conference call will be available on
its corporate website: http://www.briggsandstratton.com . Also available is
a dial-in number to access the call real-time at 877-679-9054. A replay will
be offered beginning approximately two hours after the call ends and will be
available for one week. Dial 800-615-3210 to access the replay. The pass
code will be 5078873.
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Consolidated Statements of Earnings for the Fiscal Periods Ended March
(In Thousands, Except Per Share Data)
Third Quarter Nine Months
2001 2000 2001 2000
NET SALES $430,221 $468,678 $978,857 $1,189,849
COST OF GOODS SOLD 343,826 366,838 797,058 932,904
Gross Profit on
Sales 86,395 101,840 181,799 256,945
ENGINEERING, SELLING,
GENERAL AND
ADMINISTRATIVE
EXPENSES 33,649 33,285 100,017 96,121
Income from
Operations 52,746 68,555 81,782 160,824
INTEREST EXPENSE (8,804) (6,816) (21,689) (15,151)
GAIN ON DISPOSITION OF
ASSETS -- -- -- 16,545
OTHER INCOME, Net 3,497 5,027 8,970 10,645
Income Before
Provision for
Income Taxes 47,439 66,766 69,063 172,863
PROVISION FOR INCOME
TAXES 17,550 24,710 25,550 63,960
NET INCOME $29,889 $42,056 $43,513 $108,903
Average Shares
Outstanding 21,599 22,842 21,600 23,021
BASIC EARNINGS PER
SHARE $1.38 $1.84 $ 2.01 $4.73
Diluted Average Shares
Outstanding 21,612 22,866 21,614 23,104
DILUTED EARNINGS PER
SHARE $1.38 $1.84 $2.01 $4.71
This release contains certain forward-looking statements that involve
risks and uncertainties that could cause actual results to differ materially
from those projected in the forward-looking statements. The words
"anticipate," "believe," "estimate," "expect," "intend," "may," "objective,"
"plan," "seek," "think," "will" and similar expressions are intended to
identify forward-looking statements. The forward-looking statements are based
on the Company's current views and assumptions and involve risks and
uncertainties that include, among other things, our ability to successfully
forecast demand for our products and appropriately adjust our manufacturing
levels; changes in our operating expenses; our ability to complete our
proposed acquisition of Generac Portable Products, Inc. and successfully
integrate it into our operations; changes in interest rates; the effects of
weather on the purchasing patterns of consumers and original equipment
manufacturers ("OEMs"); changes in the expected speed and timing of the
reduction of generator inventories of Generac and other generator
manufacturers and retailers which had been built up in anticipation of Y2K
concerns; actions of engine manufacturers and OEMs with whom we compete; the
seasonal nature of our business; changes in laws and regulations, including
accounting standards; work stoppages or other consequences of any
deterioration in our employee relations; changes in consumer and OEM demand;
changes in prices of raw materials and parts that we purchase; changes in
domestic economic conditions, including housing starts and changes in consumer
disposable income; changes in foreign economic conditions, including currency
rate fluctuations; and other factors that may be disclosed from time to time
in our SEC filings or otherwise. Some or all of the factors may be beyond our
control. We caution you that any forward-looking statement reflects only our
belief at the time the statement is made. We undertake no obligation to
update any forward-looking statement to reflect events or circumstances after
the date on which the statement is made.
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets as of the End of Fiscal March 2001 and 2000
(In Thousands)
CURRENT ASSETS: 2001 2000
Cash and Cash Equivalents $30,126 $13,805
Accounts Receivable 386,617 433,866
Inventories 294,901 239,941
Other 61,322 58,825
Total Current Assets 772,966 746,437
OTHER ASSETS:
Investments 49,631 48,207
Prepaid Pension 27,018 2,100
Capitalized Software 6,808 6,820
Total Other Assets 83,457 57,127
PLANT AND EQUIPMENT,
at Cost 863,549 825,014
Less - Accumulated Depreciation 464,031 432,198
Net Plant and Equipment 399,518 392,816
$1,255,941 $1,196,380
CURRENT LIABILITIES: 2001 2000
Accounts Payable $106,030 $134,957
Domestic Notes Payable 336,770 216,469
Foreign Loans 13,908 18,647
Current Maturities on Long-Term Debt -- 15,000
Accrued Liabilities 156,037 171,545
Total Current Liabilities 612,745 556,618
OTHER LIABILITIES:
Deferred Revenue on Sale of
Plant & Equipment 15,574 15,711
Deferred Income Tax Liability 12,226 2,565
Accrued Pension Cost 12,557 10,740
Accrued Employee Benefits 13,180 13,892
Postretirement Health Care
Obligation 65,584 65,706
Long-Term Debt 98,666 113,461
Total Other Liabilities 217,787 222,075
SHAREHOLDERS' INVESTMENT:
Common Stock and Additional
Paid-in Capital 36,332 36,767
Retained Earnings 745,421 701,027
Accumulated Other Comprehensive Loss (5,690) (633)
Unearned Compensation on
Restricted Stock (331) (244)
Treasury Stock, at Cost (350,323) (319,230)
Total Shareholders' Investment 425,409 417,687
$1,255,941 $1,196,380
Consolidated Statements of Cash Flows
(In Thousands)
Nine Months Ended Fiscal March
CASH FLOWS FROM OPERATING ACTIVITIES: 2001 2000
Net Income $43,513 $108,903
Depreciation and Amortization 41,685 38,158
(Gain) Loss on Disposition of
Plant and Equipment 371 (16,271)
Provision (Credit) for Deferred
Income Taxes 6,611 (4,062)
Increase in Accounts Receivable (249,365) (239,750)
Increase in Inventories (37,128) (103,852)
(Increase) Decrease in Other
Current Assets 2,341 (1,928)
Increase in Accounts Payable and
Accrued Liabilities 12,457 57,160
Other, Net (25,033) (17,609)
Net Cash Used in Operating Activities (204,548) (179,251)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Plant and Equipment (48,645) (53,861)
Proceeds Received on Disposition
of Plant and Equipment 2,770 23,882
Other, Net 2,933 5,141
Net Cash Used in Investing Activities (42,942) (24,838)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Borrowings on Loans and Notes Payable 288,513 216,957
Dividends (20,072) (20,683)
Purchase of Common Stock for Treasury (6,118) (43,188)
Proceeds from Exercise of Stock Options 275 5,561
Net Cash Provided by Financing Activities 262,598 158,647
EFFECT OF EXCHANGE RATE CHANGES (1,971) (1,559)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 13,137 (47,001)
CASH AND CASH EQUIVALENTS, Beginning 16,989 60,806
CASH AND CASH EQUIVALENTS, Ending $30,126 $13,805
