Briggs & Stratton Reports Results for the Q2 and Six Months of Fiscal 2000
14 January 2000
Briggs & Stratton Corporation Reports Results for the Second Quarter and Six Months of Fiscal 2000
MILWAUKEE, Jan. 14--Briggs & Stratton Corporation :
Second quarter sales increased 17%. Engine unit shipments increased 6%.
For the first six months of fiscal 2000, sales were up 24%. These increases
were to a great degree the result of a shift in the seasonal pattern. 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. Net income
increased 67% in the second quarter as fixed costs were spread over higher
production.
We believe 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 Y2K transition has occurred and, as expected, demand for
generator engines has evaporated. Fear of Y2K-related power interruptions
drove a significant portion of generator demand in 1999. We believe that
demand will recover because there are good reasons unrelated to Y2K for
consumers to purchase standby generators. We expect a modest improvement in
third quarter earnings, lower sales and earnings in the fourth quarter, and
higher sales and earnings for the full fiscal year.
F. P. Stratton, Jr.
Chairman and Chief Executive Officer
Consolidated Statements of Earnings For Periods Ended December
(In Thousands)
Second Quarter Six Months
1999 1998 1999 1998
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
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 23,219 23,588
DILUTED EARNINGS PER SHARE $1.77 $1.05 $2.88 $1.23
This release contains certain forward-looking statements that involve
risks and uncertainties that could cause actual results to differ materially
from those in the 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 are beyond the Company's control.
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets as of the End of December 1999 and 1998
(In Thousands)
CURRENT ASSETS: 1999 1998
Cash and Cash Equivalents $10,282 $2,243
Accounts Receivable 395,033 302,050
Inventories 254,168 172,503
Other 56,915 45,381
Total Current Assets 716,398 522,177
OTHER ASSETS:
Marketable Securities and Other Investments 44,528 13,013
Deferred Income Tax Assets 647 6,579
Capitalized Software 6,873 7,472
Total Other Assets 52,048 27,064
PLANT AND EQUIPMENT, at Cost 812,392 829,359
Less - Accumulated Depreciation 420,527 433,395
Net Plant and Equipment 391,865 395,964
$1,160,311 $945,205
CURRENT LIABILITIES: 1999 1998
Accounts Payable $109,108 $80,162
Domestic Notes Payable 229,967 135,020
Foreign Loans 17,445 22,254
Current Maturities on Long-Term Debt 15,000 15,000
Accrued Liabilities 160,003 137,816
Total Current Liabilities 531,523 390,252
OTHER LIABILITIES:
Deferred Revenue on Sale of Plant & Equipment 15,742 15,848
Accrued Pension Cost 11,620 21,880
Accrued Employee Benefits 13,653 12,843
Postretirement Health Care Obligation 67,286 69,992
Long-Term Debt 113,410 128,205
Total Other Liabilities 221,711 248,768
SHAREHOLDERS' INVESTMENT:
Common Stock and Additional Paid-in Capital 37,235 37,318
Retained Earnings 665,797 549,265
Accumulated Other Comprehensive Income (1,211) (1,405)
Unearned Compensation on Restricted Stock (261) (263)
Treasury Stock, at Cost (294,483) (278,730)
Total Shareholders' Investment 407,077 306,185
$1,160,311 $945,205
Consolidated Statements of Cash Flows
(In Thousands)
Six Months Ended December
CASH FLOWS FROM OPERATING ACTIVITIES: 1999 1998
Net Income $66,847 $29,078
Depreciation and Amortization 25,052 23,825
(Gain) Loss on Disposition of Plant and Equipment (16,236) 195
Provision (Credit) for Deferred Income Taxes (2,913) 2,450
Increase in Accounts Receivable (200,916) (166,692)
Increase in Inventories (118,079) (64,625)
Increase in Other Current Assets (3,356) (1,174)
Increase in Accounts Payable and Accrued
Liabilities 19,768 30,557
Other, Net (9,786) (5,949)
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 EXCHANGE RATE CHANGES (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