Briggs & Stratton Corporation Reports Results for the Second Quarter of Fiscal 2001
18 January 2001
Briggs & Stratton Corporation Reports Results for the Second Quarter of Fiscal 2001
MILWAUKEE, Jan. 18 Briggs & Stratton Corporation :
Briggs & Stratton today announced second quarter net income of
$19.9 million or $.92 per diluted share. Second quarter net income from the
prior year was $41.1 million or $1.77 per share.
The impact of a strong dollar on exports to Europe, a shift in sales mix
to smaller engines which contribute less gross profit dollars, lower
production levels and greater interest expense contributed to lower net income
by $21.2 million or 52% less than the previous year's second quarter. Net
sales for the second quarter were $367.8 million or 13% lower than last year's
second quarter net sales of $422.2 million.
For the first six months of fiscal 2001, net sales were $548.6 million or
$172.5 million less than in the comparable prior year period. Net income
during the same period was $13.6 million or $.63 per diluted share compared to
$56.4 million or $2.43 per share in fiscal 2000, excluding a $10.4 million
gain on a foundry disposition.
The net income decrease for six months was the result of the same factors
identified for the second quarter in addition to an engine unit sales decrease
of 12%.
We presently estimate that net sales in the third fiscal quarter will be
similar to those of the same period last year. However, we anticipate that
earnings will be 15-20% lower. The primary reasons for our expectation of
lower earnings are the continued weakness of the Euro compared to last year,
higher interest expense and the projected lower utilization of production
facilities this year as we try to reduce finished goods inventory by year end
to a level less than the prior year end.
We believe equipment manufacturers and lawn and garden retailers remain
confident about the upcoming lawn and garden spring selling season, however,
general economic trends make us cautious about how strong the results for the
last six months of the year will be. We anticipate that the current Euro
weakness along with the need to produce fewer engines to meet demand will
cause our earnings to be in the $70 to $75 million range for the full fiscal
year.
The Company will host a conference call today at 10:00 AM (EST) to go over
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)679-9049. 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 4893873.
Consolidated Statements of Earnings for the Fiscal Periods Ended December
(In Thousands)
Second Quarter Six Months
2000 1999 2000 1999
NET SALES $367,803 $422,238 $548,636 $721,171
COST OF GOODS SOLD 298,197 322,515 453,232 566,066
Gross Profit on Sales 69,606 99,723 95,404 155,105
ENGINEERING, SELLING, GENERAL
AND ADMINISTRATIVE EXPENSES 32,756 33,196 66,368 62,836
Income from Operations 36,850 66,527 29,036 92,269
INTEREST EXPENSE (8,317) (5,208) (12,885) (8,335)
GAIN ON DISPOSITION OF ASSETS -- -- -- 16,545
OTHER INCOME, Net 3,100 3,985 5,473 5,618
Income Before Provision
for Income Taxes 31,633 65,304 21,624 106,097
PROVISION FOR INCOME TAXES 11,705 24,160 8,000 39,250
Net Income $19,928 $41,144 $13,624 $66,847
Average Shares Outstanding 21,597 23,092 21,602 23,120
BASIC EARNINGS PER SHARE $0.92 $1.78 $0.63 $2.89
Diluted Average Shares
Outstanding 21,608 23,190 21,617 23,219
DILUTED EARNINGS PER SHARE $0.92 $1.77 $0.63 $2.88
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," "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; and
other factors that may be disclosed from time to time in SEC filings or
otherwise. Some or all of the factors may be beyond the Company's control.
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets as of the End of Fiscal December 2000 and 1999
(In Thousands)
CURRENT ASSETS: 2000 1999
Cash and Cash Equivalents $20,839 $10,282
Accounts Receivable 380,240 395,033
Inventories 341,348 254,168
Other 52,592 56,915
Total Current Assets 795,019 716,398
OTHER ASSETS:
Investments 49,413 44,528
Deferred Income Tax Assets -- 647
Prepaid Pension 19,391 --
Capitalized Software 6,986 6,873
Total Other Assets 75,790 52,048
PLANT AND EQUIPMENT, at Cost 849,910 812,392
Less - Accumulated Depreciation 452,069 420,527
Net Plant and Equipment 397,841 391,865
$1,268,650 $1,160,311
CURRENT LIABILITIES: 2000 1999
Accounts Payable $125,945 $109,108
Domestic Notes Payable 372,580 229,967
Foreign Loans 17,035 17,445
Current Maturities on Long-Term Debt -- 15,000
Accrued Liabilities 140,814 160,003
Total Current Liabilities 656,374 531,523
OTHER LIABILITIES:
Deferred Revenue on Sale of Plant & Equipment 15,611 15,742
Deferred Income Tax Liability 8,451 --
Accrued Pension Cost 12,079 11,620
Accrued Employee Benefits 12,947 13,653
Postretirement Health Care Obligation 64,203 67,286
Long-Term Debt 98,615 113,410
Total Other Liabilities 211,906 221,711
SHAREHOLDERS' INVESTMENT:
Common Stock and Additional Paid-in Capital 36,342 37,235
Retained Earnings 722,224 665,797
Accumulated Other Comprehensive Loss (7,477) (1,211)
Unearned Compensation on Restricted Stock (358) (261)
Treasury Stock, at Cost (350,361) (294,483)
Total Shareholders' Investment 400,370 407,077
$1,268,650 $1,160,311
Consolidated Statements of Cash Flows
(In Thousands)
Six Months Ended Fiscal December
CASH FLOWS FROM OPERATING ACTIVITIES: 2000 1999
Net Income $13,624 $66,847
Depreciation and Amortization 27,305 25,052
(Gain) Loss on Disposition of Plant and Equipment 279 (16,236)
Provision (Credit) for Deferred Income Taxes 3,092 (2,913)
Increase in Accounts Receivable (236,511) (200,916)
Increase in Inventories (83,574) (118,079)
(Increase) Decrease in Other Current Assets 401 (3,356)
Increase in Accounts Payable and Accrued Liabilities 17,118 19,768
Other, Net (18,361) (9,786)
Net Cash Used in Operating Activities (276,627) (239,619)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Plant and Equipment (32,364) (39,440)
Proceeds Received on Disposition of Plant
and Equipment 2,599 23,509
Other, Net 2,933 2,641
Net Cash Used in Investing Activities (26,832) (13,290)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Borrowings on Loans and Notes Payable 327,450 229,253
Dividends (13,380) (13,857)
Purchase of Common Stock for Treasury (6,118) (17,661)
Proceeds from Exercise of Stock Options 275 5,248
Net Cash Provided by Financing Activities 308,227 202,983
EFFECT OF EXCHANGE RATE CHANGES (918) (598)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,850 (50,524)
CASH AND CASH EQUIVALENTS, Beginning 16,989 60,806
CASH AND CASH EQUIVALENTS, Ending $20,839 $10,282