Briggs & Stratton Corporation Reports Results for the Fourth Quarter And Twelve Months of Fiscal 2001
Briggs & Stratton Corporation Reports Results for the Fourth Quarter And Twelve Months of Fiscal 2001
MILWAUKEE, Aug. 2 Briggs & Stratton Corporation
Briggs & Stratton today announced fourth quarter net income of
$4.5 million or $.21 per diluted share. Fourth quarter net income in the
prior year was $27.6 million or $1.24 per share.
Major factors contributing to the 84% decrease in net income between years
were engine production levels, down 34%, an 18% decrease in engine sales
volume and a shift in sales mix to smaller engines which contribute less gross
profit dollars. A significant offset to these decreases was the lowering of
the effective tax rate for the year to 33.2% from the planned 37.0%. The
change was primarily the result of a Federal tax refund that received final
approval during the fourth quarter.
For the full fiscal year, net income was $48.0 million or $2.21 per
diluted share compared to $126.1 million or $5.52 per share, excluding a
$10.4 million gain on the disposition of our foundry business in fiscal 2000.
Net sales were $1,312.4 million or 18% lower than the $1,592.6 million in
fiscal 2000.
The net income decrease between fiscal years was primarily the result of a
10% engine sales volume decrease, a 15% reduction in plant utilization, the
impact of a strong dollar on exports to Europe, the shift in sales mix to
smaller engines and higher interest expense.
On July 31, 2001, we were notified of the bankruptcy filing of a customer.
At this time we believe our receivable will not be collectible and therefore
have lowered net income from $6.8 million to $4.5 million for the quarter and
from $50.3 million to $48.0 million for the year to reflect the asset
impairment.
The fourth quarter and the full fiscal year ended below the projections we
provided at the end of the third quarter because inventories of both retailers
and original equipment manufacturers were adequate to cover softer retail
demand. Consequently, anticipated engine sales did not materialize.
The acquisition of Generac Portable Products, Inc. was completed on
May 15, 2001. The acquisition added $30.1 million of sales in the fourth
quarter, but as anticipated, had no significant impact on operating income.
Our current estimates for fiscal 2002 anticipate that net income will be
between $58 and $62 million. Sales are estimated to be up 30% between years
with three quarters of that increase attributable to the Generac Portable
Products, Inc. acquisition. The engine sales portion of the increase is based
on our current projection of a 3-4% increase in unit volume and a small
improvement in sales mix.
Gross profit margin for the year is anticipated to be 17.5%. This rate is
a result of projected lower engine plant utilization to allow for a reduction
of finished engine inventory by next year-end. In addition, the rate reflects
the fact that Generac gross margins are projected to be lower than those
experienced in the engine business.
Operating expenses are estimated to be up 18% between years.
Approximately 90% of this increase is caused by the addition of Generac.
Interest expense is estimated to be $45 million and we are assuming an
effective tax rate of 35%.
The estimates for depreciation and capital expenditures are $60 million
and $67 million, respectively.
We anticipate that the results in the first and second quarters of fiscal
2002 will be significantly lower than those for comparable periods in fiscal
2001. In years like fiscal 2001, where there have been adequate supplies of
engines and finished product to satisfy retail demand, the original equipment
manufacturers who buy our products have a tendency to take engines later in
the fiscal year, i.e., closer to retail demand. This tendency will lower both
our engine sales and plant utilization in the first two quarters of fiscal
2002.
First quarter sales are projected to be $215 million, $150 million for
engines and $65 million for consumer products. Gross margins for engines are
estimated to be negative 8% because of low sales and plant utilization.
Consumer product margins are estimated at 17%. Operating expenses are
anticipated to come in at $41 million and interest expense at $10 million.
Using a 35% effective tax rate results in a net loss of approximately
$32 million for the first quarter.
The Company will host a conference call today at 10:00 AM (EDT) to review
this information. A live web cast of the conference call will be available on
its corporate website: http://www.briggsandstratton.com/shareholders . Also
available is a dial-in number to access the call real-time at 877-679-9051. 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 5353604.
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Consolidated Statements of Earnings for the Fiscal Periods Ended June
(In Thousands, Except Per Share Data)
Fourth Quarter Twelve Months
2001 2000 2001 2000
NET SALES $332,305 $400,992 $1,312,446 $1,592,564
COST OF GOODS SOLD 275,041 318,483 1,073,383 1,253,110
Gross Profit on Sales 57,264 82,509 239,063 339,454
ENGINEERING, SELLING,
GENERAL AND ADMINISTRATIVE
EXPENSES 39,940 38,104 139,957 134,225
Income from Operations 17,324 44,405 99,106 205,229
INTEREST EXPENSE (8,976) (6,116) (30,665) (21,267)
GAIN ON DISPOSITION OF ASSETS -- -- -- 16,545
OTHER INCOME (EXPENSE), Net (5,538) 5,471 3,432 16,116
Income Before Provision
for Income Taxes 2,810 43,760 71,873 216,623
PROVISION (CREDIT) FOR
INCOME TAXES (1,690) 16,190 23,860 80,150
NET INCOME $4,500 $27,570 $48,013 $136,473
Average Shares Outstanding 21,599 22,138 21,598 22,788
BASIC EARNINGS PER SHARE $0.21 $1.25 $2.22 $5.99
Diluted Average Shares
Outstanding 21,966 22,156 21,966 22,842
DILUTED EARNINGS PER SHARE $0.21 $1.24 $2.21 $5.97
This release contains certain forward-looking statements that involve
risks and uncertainties that could cause actual results to differ materially
from those projected in the forward-looking statements. The words
"anticipate," "believe," "estimate," "expect," "intend," "may," "objective,"
"plan," "seek," "think," "will" and similar expressions are intended to
identify forward-looking statements. The forward-looking statements are based
on the Company's current views and assumptions and involve risks and
uncertainties that include, among other things, our ability to successfully
forecast demand for our products and appropriately adjust our manufacturing
and inventory levels; changes in our operating expenses; our ability to
successfully integrate the acquisition of Generac Portable Products, Inc. into
our operations; changes in interest rates; the effects of weather on the
purchasing patterns of consumers and original equipment manufacturers
("OEMs"); actions of engine manufacturers and OEMs with whom we compete; the
seasonal nature of our business; changes in laws and regulations, including
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 June 2001 and 2000
(In Thousands)
CURRENT ASSETS: 2001 2000
Cash and Cash Equivalents $88,743 $16,989
Accounts Receivable 145,138 140,097
Inventories 321,700 257,774
Other 57,849 56,434
Total Current Assets 613,430 471,294
OTHER ASSETS:
Investments 46,071 50,228
Prepaid Pension 36,275 5,506
Deferred Loan Costs 10,429 703
Capitalized Software 6,552 6,934
Goodwill 167,077 --
Total Other Assets 266,404 63,371
PLANT AND EQUIPMENT,
at Cost 890,191 838,655
Less - Accumulated Depreciation 473,830 443,075
Net Plant and Equipment 416,361 395,580
$1,296,195 $930,245
CURRENT LIABILITIES: 2001 2000
Accounts Payable $102,559 $117,556
Domestic Notes Payable 3,300 48,809
Foreign Loans 16,291 13,356
Accrued Liabilities 120,032 133,057
Total Current Liabilities 242,182 312,778
OTHER LIABILITIES:
Deferred Revenue on Sale of Plant & Equipment 15,536 15,679
Deferred Income Tax Liability 18,351 4,011
Accrued Pension Cost 14,494 11,428
Accrued Employee Benefits 12,979 12,607
Postretirement Health Care Obligation 61,767 65,765
Long-Term Debt 508,134 98,512
Total Other Liabilities 631,261 208,002
SHAREHOLDERS' INVESTMENT:
Common Stock and Additional Paid-in Capital 36,332 36,767
Retained Earnings 743,230 721,980
Accumulated Other Comprehensive Loss (6,182) (3,931)
Unearned Compensation on Restricted Stock (305) (226)
Treasury Stock, at Cost (350,323) (345,125)
Total Shareholders' Investment 422,752 409,465
$1,296,195 $930,245
Consolidated Statements of Cash Flows
(In Thousands)
Twelve Months Ended
Fiscal June
CASH FLOWS FROM OPERATING ACTIVITIES: 2001 2000
Net Income $48,013 $136,473
Depreciation and Amortization 57,752 51,467
(Gain) Loss on Disposition of Plant and Equipment 1,493 (14,167)
Provision for Deferred Income Taxes 17,691 1,542
Increase in Prepaid Pension (30,769) (5,506)
Decrease in Accounts Receivable 34,606 51,837
Increase in Inventories (7,389) (121,685)
(Increase) in Other Current Assets (55) (2,488)
Increase (Decrease) in Accounts Payable and
Accrued Liabilities (46,388) 1,413
Other, Net (7,139) (21,404)
Net Cash Provided by Operating Activities 67,815 77,482
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Plant and Equipment (61,327) (71,441)
Proceeds Received on Disposition of Plant and
Equipment 4,152 23,511
Cash Paid for Acquisition, Net of Cash Acquired (267,174) --
Other, Net 6,296 5,142
Net Cash Used in Investing Activities (318,053) (42,788)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Borrowings (Repayments) on Loans and Notes
Payable (42,614) 44,005
Proceeds from Issuance of Long-Term Debt 399,415 --
Repayments on Long-Term Debt -- (30,000)
Dividends (26,763) (27,300)
Purchase of Common Stock for Treasury (6,118) (69,083)
Proceeds from Exercise of Stock Options 275 5,561
Net Cash Provided by (Used in) Financing
Activities 324,195 (76,817)
EFFECT OF EXCHANGE RATE CHANGES (2,203) (1,694)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 71,754 (43,817)
CASH AND CASH EQUIVALENTS, Beginning 16,989 60,806
CASH AND CASH EQUIVALENTS, Ending $88,743 $16,989
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