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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________ 
FORM 10-Q
_____________________________________ 
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 28, 2014
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
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
12301 West Wirth Street, Wauwatosa, Wisconsin 53222
(Address of Principal Executive Offices) (Zip Code)
(414) 259-5333
(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 by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   x     No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
x
Accelerated filer
¨
Non-accelerated filer
¨   (Do not check if a smaller reporting company)
Smaller reporting company
¨
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes   ¨     No  x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Class
 
Outstanding at October 31, 2014
COMMON STOCK, par value $0.01 per share
 
45,365,465 Shares

Table of Contents

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
INDEX
 
 
 
Page No.
 
 
PART I – FINANCIAL INFORMATION
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
PART II – OTHER INFORMATION
 
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 2.
 
 
 
Item 6.
 
 
 
 

2
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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)


ASSETS
 
 
 
 
 
 
 
 
September 28,
2014
 
June 29,
2014
CURRENT ASSETS:
 
 
 
 
Cash and Cash Equivalents
 
$
61,898

 
$
194,668

Accounts Receivable, Net
 
166,313

 
220,590

Inventories -
 
 
 
 
Finished Products and Parts
 
370,028

 
268,116

Work in Process
 
127,076

 
102,431

Raw Materials
 
9,784

 
5,556

Total Inventories
 
506,888

 
376,103

Deferred Income Tax Asset
 
47,904

 
48,958

Prepaid Expenses and Other Current Assets
 
39,799

 
30,016

Total Current Assets
 
822,802

 
870,335

OTHER ASSETS:
 
 
 
 
Goodwill
 
160,976

 
144,522

Investments
 
27,056

 
27,137

Debt Issuance Costs
 
4,428

 
4,671

Other Intangible Assets, Net
 
101,594

 
80,317

Long-Term Deferred Income Tax Asset
 
291

 
15,178

Other Long-Term Assets, Net
 
11,458

 
10,539

Total Other Assets
 
305,803

 
282,364

PLANT AND EQUIPMENT:
 
 
 
 
Cost
 
1,040,081

 
1,035,848

Less - Accumulated Depreciation
 
743,160

 
738,841

Total Plant and Equipment, Net
 
296,921

 
297,007

TOTAL ASSETS
 
$
1,425,526

 
$
1,449,706



3
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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
(In thousands, except per share data)
(Unaudited)
 

LIABILITIES & SHAREHOLDERS’ INVESTMENT
 
 
 
 
 
 
 
 
September 28,
2014
 
June 29,
2014
CURRENT LIABILITIES:
 
 
 
 
Accounts Payable
 
$
187,214

 
$
169,271

Accrued Liabilities
 
140,888

 
133,916

Total Current Liabilities
 
328,102

 
303,187

OTHER LIABILITIES:
 
 
 
 
Accrued Pension Cost
 
120,569

 
126,529

Accrued Employee Benefits
 
24,538

 
24,491

Accrued Postretirement Health Care Obligation
 
56,122

 
59,290

Deferred Income Tax Liability
 
3,906

 
—

Other Long-Term Liabilities
 
35,256

 
38,775

Long-Term Debt
 
225,000

 
225,000

Total Other Liabilities
 
465,391

 
474,085

SHAREHOLDERS’ INVESTMENT:
 
 
 
 
Common Stock - Authorized 120,000 shares, $.01 par value, issued 57,854 shares
 
579

 
579

Additional Paid-In Capital
 
73,100

 
78,466

Retained Earnings
 
1,027,469

 
1,048,466

Accumulated Other Comprehensive Loss
 
(199,142
)
 
(195,257
)
Treasury Stock at cost, 12,111 and 11,536 shares, respectively
 
(269,973
)
 
(259,820
)
Total Shareholders’ Investment
 
632,033

 
672,434

TOTAL LIABILITIES AND SHAREHOLDERS’ INVESTMENT
 
$
1,425,526

 
$
1,449,706



The accompanying notes are an integral part of these statements.
4
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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 
 
 
Three Months Ended
 
 
September 28,
2014
 
September 29,
2013
NET SALES
 
$
292,629

 
$
317,304

COST OF GOODS SOLD
 
238,462

 
269,888

RESTRUCTURING CHARGES
 
6,846

 
3,585

Gross Profit
 
47,321

 
43,831

ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
 
70,084

 
68,762

RESTRUCTURING CHARGES
 
955

 
—

Loss from Operations
 
(23,718
)
 
(24,931
)
INTEREST EXPENSE
 
(4,518
)
 
(4,510
)
OTHER INCOME, Net
 
2,373

 
2,093

Loss Before Income Taxes
 
(25,863
)
 
(27,348
)
CREDIT FOR INCOME TAXES
 
(10,584
)
 
(7,999
)
NET LOSS
 
$
(15,279
)
 
$
(19,349
)
 
 
 
 
 
EARNINGS (LOSS) PER SHARE
 
 
 
 
Basic
 
$
(0.34
)
 
$
(0.41
)
Diluted
 
(0.34
)
 
(0.41
)
 
 
 
 
 
WEIGHTED AVERAGE SHARES OUTSTANDING
 
 
 
 
Basic
 
45,113

 
46,997

Diluted
 
45,113

 
46,997

 
 
 
 
 
DIVIDENDS PER SHARE
 
$
0.125

 
$
0.12



The accompanying notes are an integral part of these statements.
5
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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)


 
 
 
Three Months Ended
 
 
September 28,
2014
 
September 29,
2013
Net Loss
 
$
(15,279
)
 
$
(19,349
)
Other Comprehensive Income (Loss):
 
 
 
 
Cumulative Translation Adjustments
 
(9,907
)
 
253

Unrealized Gain (Loss) on Derivative Instruments, Net of Tax
 
3,667

 
(281
)
Unrecognized Pension & Postretirement Obligation, Net of Tax
 
2,355

 
4,350

Other Comprehensive Income (Loss)
 
(3,885
)
 
4,322

Total Comprehensive Loss
 
$
(19,164
)
 
$
(15,027
)



The accompanying notes are an integral part of these statements.
6
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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
 
 
Three Months Ended
 
 
September 28,
2014
 
September 29,
2013
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
Net Loss
 
$
(15,279
)
 
$
(19,349
)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
 
 
 
 
Depreciation and Amortization
 
12,939

 
13,874

Stock Compensation Expense
 
1,605

 
3,040

Loss on Disposition of Plant and Equipment
 
75

 
157

Provision (Credit) for Deferred Income Taxes
 
4,558

 
(1,418
)
Equity in Earnings of Unconsolidated Affiliates
 
(1,887
)
 
(1,529
)
Dividends Received from Unconsolidated Affiliates
 
1,750

 
1,500

Non-Cash Restructuring Charges
 
5,165

 
1,726

Change in Operating Assets and Liabilities:
 
 
 
 
Accounts Receivable
 
70,347

 
20,110

Inventories
 
(117,735
)
 
(61,310
)
Other Current Assets
 
8,628

 
(9,983
)
Accounts Payable, Accrued Liabilities and Income Taxes
 
(13,596
)
 
4,515

Other, Net
 
(5,448
)
 
(4,194
)
Net Cash Used in Operating Activities
 
(48,878
)
 
(52,861
)
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
Additions to Plant and Equipment
 
(7,390
)
 
(11,650
)
Proceeds Received on Disposition of Plant and Equipment
 
172

 
28

Cash Paid for Acquisition, Net of Cash Acquired
 
(62,056
)
 
—

Net Cash Used in Investing Activities
 
(69,274
)
 
(11,622
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
Repayments on Short-Term Debt
 
—

 
(300
)
Net Borrowings on Revolver
 
—

 
—

Treasury Stock Purchases
 
(17,761
)
 
(9,696
)
Stock Option Exercise Proceeds and Tax Benefits
 
3,151

 
994

Net Cash Used in Financing Activities
 
(14,610
)
 
(9,002
)
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
 
(8
)
 
216

NET DECREASE IN CASH AND CASH EQUIVALENTS
 
(132,770
)
 
(73,269
)
CASH AND CASH EQUIVALENTS, Beginning
 
194,668

 
188,445

CASH AND CASH EQUIVALENTS, Ending
 
$
61,898

 
$
115,176



The accompanying notes are an integral part of these statements.
7
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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. General Information
 
The accompanying unaudited condensed consolidated 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 statement of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but also does not include all disclosures required by accounting principles generally accepted in the United States. However, in the opinion of Briggs & Stratton Corporation (the Company), adequate disclosures have been presented to prevent the information from being misleading, and all adjustments necessary to fairly present the results of operations and financial position have been included. All of these adjustments are of a normal recurring nature, except as otherwise noted.

Interim results are not necessarily indicative of results for a full year. The information included in these condensed consolidated financial statements should be read in conjunction with the financial statements and the notes thereto that were included in the Company's latest Annual Report on Form 10-K.
2. New Accounting Pronouncements

In May 2014, the Financial Accounting Standard Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers (Topic 606)." The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, under either full or modified retrospective adoption. Early application is not permitted. Management is currently assessing the potential impact of this new accounting pronouncement on the Company's results of operations, financial position, and cash flow.

8

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES


3. Accumulated Other Comprehensive Income (Loss)
The following tables set forth the changes in accumulated other comprehensive income (loss) (in thousands):
 
 
Three Months Ended September 28, 2014
 
 
Cumulative Translation Adjustments
 
Derivative Financial Instruments
 
Pension and Postretirement Benefit Plans
 
Total
Beginning Balance
 
$
13,053

 
$
(1,084
)
 
$
(207,226
)
 
$
(195,257
)
Other Comprehensive Income (Loss) Before Reclassification
 
(9,907
)
 
5,818

 
—

 
(4,089
)
Income Tax Benefit (Expense)
 
—

 
(2,211
)
 
—

 
(2,211
)
Net Other Comprehensive Income (Loss) Before Reclassifications
 
(9,907
)
 
3,607

 
—

 
(6,300
)
Reclassifications:
 
 
 
 
 
 
 


Realized (Gains) Losses - Foreign Currency Contracts (1)
 
—

 
(393
)
 
—

 
(393
)
Realized (Gains) Losses - Commodity Contracts (1)
 
—

 
179

 
—

 
179

Realized (Gains) Losses - Interest Rate Swaps (1)
 
—

 
311

 
—

 
311

Amortization of Prior Service Costs (Credits) (2)
 
—

 
—

 
(645
)
 
(645
)
Amortization of Actuarial Losses (2)
 
—

 
—

 
4,444

 
4,444

Total Reclassifications Before Tax
 
—

 
97

 
3,799

 
3,896

Income Tax Expense (Benefit)
 
—

 
(37
)
 
(1,444
)
 
(1,481
)
Net Reclassifications
 
—

 
60

 
2,355

 
2,415

Other Comprehensive Income (Loss)
 
(9,907
)
 
3,667

 
2,355

 
(3,885
)
Ending Balance
 
$
3,146

 
$
2,583

 
$
(204,871
)
 
$
(199,142
)
(1) Amounts reclassified to net income (loss) are included in net sales or cost of goods sold. See Note 10 for information related to derivative financial instruments.
(2) Amounts reclassified to net income (loss) are included in the computation of net periodic expense, which is presented in cost of goods sold or engineering, selling, general and administrative expenses. See Note 8 for information related to pension and postretirement benefit plans.


9

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

 
 
Three Months Ended September 29, 2013
 
 
Cumulative Translation Adjustments
 
Derivative Financial Instruments
 
Pension and Postretirement Benefit Plans
 
Total
Beginning Balance
 
$
11,886

 
$
(3,673
)
 
$
(233,141
)
 
$
(224,928
)
Other Comprehensive Income (Loss) Before Reclassification
 
253

 
(2,710
)
 
—

 
(2,457
)
Income Tax Benefit (Expense)
 
—

 
1,038

 
—

 
1,038

Net Other Comprehensive Income (Loss) Before Reclassifications
 
253

 
(1,672
)
 
—

 
(1,419
)
Reclassifications:
 
 
 
 
 
 
 


Realized (Gains) Losses - Foreign Currency Contracts (1)
 
—

 
462

 
—

 
462

Realized (Gains) Losses - Commodity Contracts (1)
 
—

 
1,498

 
—

 
1,498

Realized (Gains) Losses - Interest Rate Swaps (1)
 
—

 
295

 
—

 
295

Amortization of Prior Service Costs (Credits) (2)
 
—

 
—

 
(679
)
 
(679
)
Amortization of Actuarial Losses (2)
 
—

 
—

 
7,729

 
7,729

Total Reclassifications Before Tax
 
—

 
2,255

 
7,050

 
9,305

Income Tax Expense (Benefit)
 
—

 
(864
)
 
(2,700
)
 
(3,564
)
Net Reclassifications
 
—

 
1,391

 
4,350

 
5,741

Other Comprehensive Income (Loss)
 
253

 
(281
)
 
4,350

 
4,322

Ending Balance
 
$
12,139

 
$
(3,954
)
 
$
(228,791
)
 
$
(220,606
)
(1) Amounts reclassified to net income (loss) are included in net sales or cost of goods sold. See Note 10 for information related to derivative financial instruments.
(2) Amounts reclassified to net income (loss) are included in the computation of net periodic expense, which is presented in cost of goods sold or engineering, selling, general and administrative expenses. See Note 8 for information related to pension and postretirement benefit plans.

4. Acquisitions

On August 29, 2014, the Company acquired all of the outstanding shares of Allmand Bros., Inc. ("Allmand") of Holdrege, Nebraska for total cash consideration of $62.1 million , net of cash acquired. Allmand is a leading designer and manufacturer of high quality towable light towers, industrial heaters, and solar LED arrow boards. Its products are used in a variety of industries, including construction, roadway, oil and gas, mining, and sporting and special events. Allmand's products are generally powered by diesel engines, and distributed through national and regional equipment rental companies, equipment dealers and distributors. Allmand currently sells its products and service parts in approximately 40 countries. During the first quarter of fiscal 2015, the Company recorded a preliminary purchase price allocation based on initial estimates of fair value. The preliminary purchase price allocation resulted in the recognition of $17.7 million of goodwill, which was allocated to the Products Segment, and $24.1 million of intangible assets, including $15.7 million of customer relationships, $8.1 million of tradenames, and $0.3 million of other intangible assets.

The results of operations of Allmand have been included in the Condensed Consolidated Statements of Operations since the date of acquisition, which was approximately one month of the first fiscal quarter. Pro forma financial information and allocation of the preliminary purchase price are not presented as the effects of the acquisition are not material to the Company's consolidated results of operations or financial position.

10

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

5. Restructuring Actions
The restructuring actions announced in 2012 were concluded as planned during the fourth quarter of fiscal 2014.
During the first quarter of fiscal 2015, the Company announced and began implementing restructuring actions to narrow its assortment of lower-priced Snapper consumer lawn and garden equipment and consolidate its Products Segment manufacturing facilities in order to reduce costs. The Company will close its McDonough, Georgia plant in the second half of fiscal 2015 and consolidate production into existing facilities in Wisconsin and New York. 

The Company reports restructuring charges associated with manufacturing and related initiatives as costs of goods sold within the Condensed Consolidated Statements of Operations. Restructuring charges reflected as costs of goods sold include, but are not limited to, termination and related costs associated with manufacturing employees, asset impairments and accelerated depreciation relating to manufacturing initiatives, and other costs directly related to the restructuring initiatives implemented. The Company reports all other non-manufacturing related restructuring charges as engineering, selling, general and administrative expenses on the Condensed Consolidated Statements of Operations.

The restructuring actions discussed above resulted in pre-tax charges of $7.8 million ( $5.1 million after tax or $0.11 per diluted share) recorded within the Products Segment for the first quarter of fiscal 2015.

The following is a rollforward of the restructuring reserve (included in Accrued Liabilities within the Condensed Consolidated Balance Sheets) attributable to Products Segment restructuring activities for the three month period ended September 28, 2014 (in thousands):
 
 
Termination Benefits
 
Other Costs
 
Total
Reserve Balance at June 29, 2014
 
$
—

 
$
105

 
$
105

Provisions
 
2,391

 
5,410

 
7,801

Cash Expenditures
 
(224
)
 
(351
)
 
(575
)
Other Adjustments  (1)
 
—

 
(5,164
)
 
(5,164
)
Reserve Balance at September 28, 2014
 
$
2,167

 
$
—

 
$
2,167

(1) Other adjustments includes $1.2 million of asset impairments and $4.0 million of accelerated depreciation.
6. Earnings (Loss) Per Share
    
The Company computes earnings (loss) per share using the two-class method, an earnings allocation formula that determines earnings (loss) per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. The Company’s unvested grants of restricted stock and deferred stock awards contain non-forfeitable rights to dividends (whether paid or unpaid), which are required to be treated as participating securities and included in the computation of basic earnings (loss) per share.

Information on earnings (loss) per share is as follows (in thousands, except per share data):
 
 
Three Months Ended
 
 
September 28,
2014
 
September 29,
2013
Net Loss
 
$
(15,279
)
 
$
(19,349
)
Less: Allocation to Participating Securities
 
(132
)
 
(151
)
Net Loss Available to Common Shareholders
 
$
(15,411
)
 
$
(19,500
)
Average Shares of Common Stock Outstanding
 
45,113

 
46,997

Diluted Average Shares Outstanding
 
45,113

 
46,997

Basic Earnings (Loss) Per Share
 
$
(0.34
)
 
$
(0.41
)
Diluted Earnings (Loss) Per Share
 
$
(0.34
)
 
$
(0.41
)


11

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

The dilutive effect of the potential exercise of outstanding stock-based awards to acquire common shares is calculated using the treasury stock method. The following options to purchase shares of common stock were excluded from the calculation of diluted earnings (loss) per share as the exercise prices were greater than the average market price of the common shares:
 
 
Three Months Ended
 
 
September 28,
2014
 
September 29,
2013
Options to Purchase Shares of Common Stock (in thousands)
 
876

 
1,348

Weighted Average Exercise Price of Options Excluded
 
$
20.31

 
$
31.88


As a result of the Company incurring a net loss for the three months ended September 28, 2014 and September 29, 2013, potential incremental common shares of 928,601 and 975,316 , respectively, were excluded from the calculation of diluted earnings (loss) per share because the effect would have been anti-dilutive.

On January 22, 2014, the Board of Directors of the Company authorized up to $50 million in funds for use in the Company’s common share repurchase program. On August 13, 2014, the Board of Directors of the Company authorized up to an additional $50 million in funds associated with the common share repurchase program. As of September 28, 2014, the total remaining authorization was approximately $69.5 million with an expiration date of June 30, 2016. The common share repurchase program authorizes the purchase of shares of the Company's common stock on the open market or in private transactions from time to time, depending on market conditions and certain governing loan covenants. During the three months ended September 28, 2014 , the Company repurchased 905,164 shares on the open market at an average price of $19.62 per share, as compared to 482,926 shares purchased on the open market at an average price of $20.08 per share during the three months ended September 29, 2013 .

7. Investments

This caption represents the Company’s investments in unconsolidated affiliated companies.

During the third quarter of fiscal 2014, the Company joined with one of its independent distributors to form a venture to distribute service parts. The Company contributed non-cash assets in exchange for receiving an ownership interest in the venture. As a result of the transaction, the Company recorded an investment of $6.5 million . During the first quarter of fiscal 2015, a second independent distributor joined the venture. As a result of the transaction, the Company recorded an additional investment of $2.8 million . The Company uses the equity method to account for this investment. Subsequent to the first quarter of fiscal 2015, the venture acquired a third independent distributor.

12

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

8. Pension and Postretirement Benefits

The Company has noncontributory defined benefit retirement plans and postretirement plans covering certain employees. The following tables summarize the plans’ income and expense for the periods indicated (in thousands):
 
 
Pension Benefits
 
Other Postretirement Benefits
 
 
Three Months Ended
 
Three Months Ended
 
 
September 28,
2014
 
September 29,
2013
 
September 28,
2014
 
September 29,
2013
Components of Net Periodic Expense (Income):
 
 
 
 
 
 
 
 
Service Cost
 
$
830

 
$
1,938

 
$
85

 
$
89

Interest Cost on Projected Benefit Obligation
 
12,461

 
13,452

 
897

 
1,149

Expected Return on Plan Assets
 
(18,687
)
 
(18,566
)
 
—

 
—

Amortization of:
 
 
 
 
 
 
 
 
Prior Service Cost (Credit)
 
45

 
45

 
(690
)
 
(724
)
Actuarial Loss
 
3,297

 
6,270

 
1,147

 
1,459

Net Periodic Expense (Income)
 
$
(2,054
)
 
$
3,139

 
$
1,439

 
$
1,973


On January 1, 2014, an amendment to the Company's defined benefit retirement plans became effective that froze accruals for all U.S. non-bargaining employees. Also, on January 1, 2014, amendments became effective that increased benefits under the defined contribution plans.

The Company expects to make benefit payments of $3.2 million attributable to its non-qualified pension plans during fiscal 2015. During the first three months of fiscal 2015, the Company made payments of approximately $0.5 million for its non-qualified pension plans. The Company anticipates making benefit payments of approximately $13.9 million for its other postretirement benefit plans during fiscal 2015. During the first three months of fiscal 2015, the Company made payments of $4.5 million for its other postretirement benefit plans.
 
During the first three months of fiscal 2015, the Company made no cash contributions to the qualified pension plan. Based upon current regulations and actuarial studies, the Company is required to make no minimum contributions to the qualified pension plan during the remainder of fiscal 2015. The Company may be required to make further contributions in future years depending upon the actual return on plan assets and the funded status of the plan in future periods.
9. Stock Incentives
 
Stock based compensation expense is calculated by estimating the fair value of incentive stock awards granted and amortizing the estimated value over the awards' vesting period. Stock based compensation expense was $1.6 million for the three months ended September 28, 2014 . For the three months ended September 29, 2013 , stock based compensation expense was $3.0 million .

13

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

10. Derivative Instruments & Hedging Activities

The Company enters into derivative contracts designated as cash flow hedges to manage certain interest rate, foreign currency and commodity exposures. Company policy allows derivatives to be used only for identifiable exposures and, therefore, the Company does not enter into hedges for trading purposes where the sole objective is to generate profits.
    
The Company formally designates the financial instrument as a hedge of a specific underlying exposure and documents both the risk management objectives and strategies for undertaking the hedge. The Company formally assesses, both at the inception and at least quarterly thereafter, whether the financial instruments that are used in hedging transactions are effective at offsetting changes in the forecasted cash flows of the related underlying exposure. Because of the high degree of effectiveness between the hedging instrument and the underlying exposure being hedged, fluctuations in the value of the derivative instruments are generally offset by changes in the forecasted cash flows of the underlying exposures being hedged. Derivative financial instruments are recorded on the Condensed Consolidated Balance Sheets as assets or liabilities, measured at fair value. The effective portion of gains or losses on the derivative designated as cash flow hedges are reported as a component of Accumulated Other Comprehensive Income (Loss) (AOCI) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Any ineffective portion of a financial instrument's change in fair value is immediately recognized in earnings.

The Company discontinues hedge accounting prospectively when it determines that the derivative is no longer effective in offsetting cash flows attributable to the hedged risk, the derivative expires or is sold, terminated, or exercised, the cash flow hedge is dedesignated because a forecasted transaction is not probable of occurring, or management determines to remove the designation of the cash flow hedge.

In all situations in which hedge accounting is discontinued and the derivative remains outstanding, the Company continues to carry the derivative at its fair value on the balance sheet and recognizes any subsequent changes in its fair value in earnings. When it is probable that a forecasted transaction will not occur, the Company discontinues hedge accounting and recognizes immediately in earnings gains and losses that were accumulated in other comprehensive income related to the hedging relationship.
    
The Company enters into interest rate swaps to manage a portion of its interest rate risk from financing certain dealer and distributor inventories through a third party financing source. The swaps are designated as cash flow hedges and are used to effectively fix the interest payments to a third party financing source, exclusive of lender spreads, ranging from 1.17% to 1.60% for a notional principal amount of $95 million with expiration dates ranging from July 2017 through May 2019 .

The Company enters into forward foreign currency contracts to hedge the risk from forecasted third party and intercompany sales or payments denominated in foreign currencies. These obligations generally require the Company to exchange foreign currencies for U.S. Dollars, Australian Dollars, Brazilian Real, Canadian Dollars, Chinese Renminbi, Euros, Japanese Yen or Mexican Pesos. These contracts generally do not have a maturity of more than twenty-four months.
    
The Company uses raw materials that are subject to price volatility. The Company hedges a portion of its exposure to the variability of cash flows associated with commodities used in the manufacturing process by entering into forward purchase contracts or commodity swaps. Derivative contracts designated as cash flow hedges are used by the Company to reduce exposure to variability in cash flows associated with future purchases of natural gas. These contracts generally do not have a maturity of more than twenty-four months.
    
The Company has considered the counterparty credit risk related to all its interest rate, foreign currency and commodity derivative contracts and deems any risk of counterparty default to be minimal.
    

14

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

As of September 28, 2014 and June 29, 2014 , the Company had the following outstanding derivative contracts (in thousands):
Contract
 
Notional Amount
 
 
 
 
September 28,
2014
 
June 29,
2014
Interest Rate:
 
 
 
 
 
 
LIBOR Interest Rate (U.S. Dollars)
 
Fixed
 
95,000

 
95,000

Foreign Currency:
 
 
 
 
 
 
Australian Dollar
 
Sell
 
19,582

 
19,904

Brazilian Real
 
Sell
 
31,621

 
—

Canadian Dollar
 
Sell
 
5,500

 
3,100

Chinese Renminbi
 
Buy
 
157,175

 
—

Euro
 
Sell
 
52,650

 
49,300

Japanese Yen
 
Buy
 
694,000

 
530,000

Mexican Peso
 
Sell
 
9,345

 
3,000

Commodity:
 
 
 
 
 
 
Natural Gas (Therms)
 
Buy
 
8,735

 
5,686


The location and fair value of derivative instruments reported in the Condensed Consolidated Balance Sheets are as follows (in thousands):
Balance Sheet Location
 
Asset (Liability) Fair Value
 
 
September 28,
2014
 
June 29,
2014
Interest rate contracts
 
 
 
 
Other Long-Term Assets
 
$
185

 
$
43

Other Long-Term Liabilities
 
(780
)
 
(1,209
)
Foreign currency contracts
 
 
 
 
Other Current Assets
 
6,224

 
337

Other Long-Term Assets
 
441

 
12

Accrued Liabilities
 
(374
)
 
(665
)
Other Long-Term Liabilities
 
—

 
(9
)
Commodity contracts
 
 
 
 
Other Current Assets
 
3

 
39

Accrued Liabilities
 
(118
)
 
(35
)
Other Long-Term Liabilities
 
(24
)
 
(14
)
 
 
$
5,557

 
$
(1,501
)

15

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES


The effect of derivative instruments on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) is as follows (in thousands):
 
 
Three months ended September 28, 2014
 
 
Amount of Gain (Loss)
Recognized in Other
Comprehensive Income
(Loss) on Derivatives, Net of
Taxes (Effective
Portion)
 
Classification of
Gain (Loss)
 
Amount of Gain (Loss)
Reclassified from
AOCI into Income
(Effective Portion)
 
Recognized in
Earnings
(Ineffective Portion)
Interest rate contracts
 
$
351

 
Net Sales
 
$
(311
)
 
$
—

Foreign currency contracts - sell
 
3,445

 
Net Sales
 
464

 
—

Foreign currency contracts - buy
 
(157
)
 
Cost of Goods Sold
 
(71
)
 
—

Commodity contracts
 
28

 
Cost of Goods Sold
 
(179
)
 
—

 
 
$
3,667

 
 
 
$
(97
)
 
$
—


 
 
Three months ended September 29, 2013
 
 
Amount of Gain (Loss)
Recognized in Other
Comprehensive Income
(Loss) on Derivatives, Net of
Taxes (Effective
Portion)
 
Classification of
Gain (Loss)
 
Amount of Gain (Loss)
Reclassified from
AOCI into Income
(Effective Portion)
 
Recognized in
Earnings
(Ineffective Portion)
Interest rate contracts
 
$
(250
)
 
Net Sales
 
$
(295
)
 
$
—

Foreign currency contracts - sell
 
(948
)
 
Net Sales
 
5

 
—

Foreign currency contracts - buy
 
39

 
Cost of Goods Sold
 
(467
)
 
—

Commodity contracts
 
878

 
Cost of Goods Sold
 
(1,498
)
 
—

 
 
$
(281
)
 
 
 
$
(2,255
)
 
$
—


During the next twelve months, the estimated net amount of income on cash flow hedges as of September 28, 2014 expected to be reclassified out of AOCI into earnings is $4.2 million .
11. Fair Value Measurements

The following guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels:

Level 1: Quoted prices for identical instruments in active markets.

Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-driven valuations whose inputs are observable or whose significant value drivers are observable.

Level 3: Significant inputs to the valuation model are unobservable.

16

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

The following table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis as of September 28, 2014 and June 29, 2014 (in thousands):
 
 
 
 
Fair Value Measurements Using
 
 
September 28,
2014
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
 
Derivatives
 
$
6,853

 
$
—

 
$
6,853

 
$
—

Liabilities:
 
 
 
 
 
 
 
 
Derivatives
 
$
1,296

 
$
—

 
$
1,296

 
$
—

 
 
June 29,
2014
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
 
Derivatives
 
$
431

 
$
—

 
$
431

 
$
—

Liabilities:
 
 
 
 
 
 
 
 
Derivatives
 
$
1,932

 
$
—

 
$
1,932

 
$
—


The fair value for Level 2 measurements are based upon the respective quoted market prices for comparable instruments in active markets, which include current market pricing for forward purchases of commodities, foreign currency forwards, and current interest rates.

The Company has currently chosen not to elect the fair value option for any items that are not already required to be measured at fair value in accordance with accounting principles generally accepted in the United States.

The estimated fair value of the Company's Senior Notes (as defined in Note 16) at September 28, 2014 and June 29, 2014 was $252.0 million and $251.4 million , respectively, compared to the carrying value of $225.0 million on each date. The estimated fair value of the Senior Notes is based on quoted market prices for similar instruments and is, therefore, classified as Level 2 within the valuation hierarchy. The carrying value of the Revolver (as defined in Note 16) approximates fair value since the underlying rate of interest is variable based upon LIBOR rates.  

The Company believes that the carrying values of cash and cash equivalents, trade receivables, and accounts payable are reasonable estimates of their fair values at September 28, 2014 and June 29, 2014 due to the short-term nature of these instruments.
12. Warranty

The Company recognizes the cost associated with its standard warranty on Engines and Products at the time of sale. The general warranty period begins at the time of sale and typically covers two years, but may vary due to product type and geographic location. The amount recognized is based on historical failure rates and current claim cost experience. The following is a reconciliation of the changes in accrued warranty costs for the reporting period (in thousands):
 
 
Three Months Ended
 
 
September 28,
2014
 
September 29,
2013
Beginning Balance
 
$
44,744

 
$
45,037

Payments
 
(8,178
)
 
(8,330
)
Provision for Current Year Warranties
 
6,251

 
5,381

Changes in Estimates
 
(14
)
 
42

Ending Balance
 
$
42,803

 
$
42,130



17

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

13. Income Taxes

The effective tax rate for the first quarter of fiscal 2015 was 40.9% , compared to 29.3% for the same respective period of fiscal 2014. The higher tax rate for the first quarter of fiscal 2015 was primarily driven by the reversal of previously recorded reserves as a result of the effective settlement of the Company’s IRS audit for its 2009-2010 consolidated income tax returns.

For the three months ended September 28, 2014 , the Company's unrecognized tax benefits decreased by $2.2 million , all of which impacted the current effective tax rate. This amount substantially consists of the aforementioned reversal of reserves.

Income tax returns are filed in the U.S., state, and foreign jurisdictions and related audits occur on a regular basis. The Company is no longer subject to U.S. federal income tax examinations before fiscal 2012 and is currently under audit by various jurisdictions. With respect to the Company's major foreign jurisdictions, they are no longer subject to tax examinations before fiscal 2004.
14. Commitments and Contingencies
Briggs & Stratton is subject to various unresolved legal actions that arise in the normal course of its business. These actions typically relate to product liability (including asbestos-related liability), patent and trademark matters, and disputes with customers, suppliers, distributors and dealers, competitors and employees.
On May 14, 2010, the Company notified retirees and certain retirement eligible employees of various amendments to the Company-sponsored retiree medical plans intended to better align the plans offered to both hourly and salaried retirees. On August 16, 2010, a putative class of retirees who retired prior to August 1, 2006 and the United Steel Workers filed a complaint in the U.S. District Court for the Eastern District of Wisconsin (Merrill, Weber, Carpenter, et al.; United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO/CLC v. Briggs & Stratton Corporation; Group Insurance Plan of Briggs & Stratton Corporation; and Does 1 through 20, Docket No. 10-C-0700), contesting the Company's right to make these changes. The complaint seeks an injunction preventing the alleged unilateral termination or reduction in insurance coverage to the class of retirees, a permanent injunction preventing defendants from ever making changes to the retirees' insurance coverage, restitution with interest (if applicable) and attorneys' fees and costs. A class has been certified, and discovery has been concluded. Each party filed a summary judgment motion on September 22, 2014. Replies to the motions are due on November 26, 2014.
Although it is not possible to predict with certainty the outcome of these unresolved legal actions or the range of possible loss, the Company believes the unresolved legal actions will not have a material adverse effect on its results of operations, financial position or cash flows.

18

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

15. Segment Information

The Company operates two reportable business segments that are managed separately based on fundamental differences in their operations. Beginning in fiscal 2015, the Company is using “segment income (loss)” as the primary measure to evaluate operating performance and allocate capital resources for the Engines and Products Segments. Previously, the Company used income (loss) from operations. Segment income (loss) is defined as income (loss) from operations plus equity in earnings of unconsolidated affiliates. The Company has recast prior year amounts for comparability. Summarized segment data is as follows (in thousands):
 
 
Three Months Ended
 
 
September 28,
2014
 
September 29,
2013
NET SALES:
 
 
 
 
Engines
 
$
153,116

 
$
183,787

Products
 
166,128

 
153,037

Inter-Segment Eliminations
 
(26,615
)
 
(19,520
)
Total
 
$
292,629

 
$
317,304

GROSS PROFIT:
 
 
 
 
Engines
 
$
27,800

 
$
25,236

Products
 
19,384

 
17,825

Inter-Segment Eliminations
 
137

 
770

Total
 
$
47,321

 
$
43,831

SEGMENT INCOME (LOSS):
 
 
 
 
Engines
 
$
(13,677
)
 
$
(16,557
)
Products
 
(8,291
)
 
(7,615
)
Inter-Segment Eliminations
 
137

 
770

Total
 
$
(21,831
)
 
$
(23,402
)

Pre-tax restructuring charges and acquisition related charges included in gross profit were as follows (in thousands):
 
 
Three Months Ended
 
 
September 28,
2014
 
September 29,
2013
PRE-TAX RESTRUCTURING CHARGES AND ACQUISITION RELATED CHARGES INCLUDED IN GROSS PROFIT:
 
 
 
 
Engines
 
$
—

 
$
1,765

Products
 
8,018

 
1,820

Total
 
$
8,018

 
$
3,585

    
Pre-tax restructuring charges and acquisition related charges included in segment income (loss) were as follows (in thousands):
 
 
Three Months Ended
 
 
September 28,
2014
 
September 29,
2013
PRE-TAX RESTRUCTURING CHARGES AND ACQUISITION RELATED CHARGES INCLUDED IN SEGMENT INCOME (LOSS):
 
 
 
 
Engines
 
$
—

 
$
1,765

Products
 
9,151

 
1,820

Total
 
$
9,151

 
$
3,585


19

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

16. Debt

The following is a summary of the Company’s long-term indebtedness (in thousands):
 
 
September 28,
2014
 
June 29,
2014
Senior Notes
 
$
225,000

 
$
225,000

Multicurrency Credit Agreement
 
—

 
—

 
 
$
225,000

 
$
225,000

 
On December 15, 2010, the Company issued $225 million of 6.875% Senior Notes ("Senior Notes") due December 15, 2020 .  

On October 21, 2013, the Company entered into an amendment to its $500 million multicurrency credit agreement (the “Revolver”), which, among other things, extended the maturity of the Revolver from October 13, 2016 to October 21, 2018 . The initial maximum availability under the revolving credit facility is $500 million . Availability under the revolving credit facility is reduced by outstanding letters of credit. The Company may from time to time increase the maximum availability under the revolving credit facility by up to $250 million if certain conditions are satisfied. In connection with the amendment to the Revolver in the second quarter of fiscal 2014, the Company incurred approximately $0.9 million in new debt issuance costs, which are being amortized over the life of the Revolver using the straight-line method. As of September 28, 2014, there were no borrowings under the Revolver.

The Senior Notes and Revolver contain restrictive covenants. These covenants include restrictions on the Company’s ability to: pay dividends; repurchase shares; incur indebtedness; create liens; enter into sale and leaseback transactions; consolidate or merge with other entities; sell or lease all or substantially all of its assets; and dispose of assets or use proceeds from sales of its assets. The Revolver contains financial covenants that require the Company to maintain a minimum interest coverage ratio and impose a maximum average leverage ratio.

17. Separate Financial Information of Subsidiary Guarantor of Indebtedness

Under the terms of the Company’s Senior Notes and the Revolver (collectively, the “Domestic Indebtedness”), Briggs & Stratton Power Products Group, LLC, a 100% owned subsidiary of the Company, is the joint and several guarantor of the Domestic Indebtedness (the “Guarantor”). The guarantees are full and unconditional guarantees, except for certain customary limitations. Additionally, if at any time a domestic subsidiary of the Company constitutes a significant domestic subsidiary, then such domestic subsidiary will also become a guarantor of the Domestic Indebtedness. Currently, all of the Domestic Indebtedness is unsecured. If the Company were to fail to make a payment of interest or principal on its due date, the Guarantor is obligated to pay the outstanding Domestic Indebtedness. The Company had the following outstanding amounts related to the guaranteed debt (in thousands):
 
 
September 28, 2014 Carrying Amount
 
Maximum
Guarantee
Senior Notes
 
$
225,000

 
$
225,000

Multicurrency Credit Agreement
 
$
—

 
$
500,000


20

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

The following condensed supplemental consolidating financial information reflects the summarized financial information of Briggs & Stratton, its Guarantors and Non-Guarantor Subsidiaries (in thousands):

CONSOLIDATING BALANCE SHEET
As of September 28, 2014
(Unaudited)
 
 
Briggs & Stratton
Corporation
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
CURRENT ASSETS:
 
 
 
 
 
 
 
 
 
 
Cash and Cash Equivalents
 
$
5,286

 
$
1,325

 
$
55,287

 
$
—

 
$
61,898

Accounts Receivable, Net
 
39,949

 
65,113

 
61,251

 
—

 
166,313

Intercompany Accounts Receivable
 
23,193

 
7,916

 
40,156

 
(71,265
)
 
—

Inventories, Net
 
263,039

 
162,690

 
81,159

 
—

 
506,888

Deferred Income Tax Asset
 
31,715

 
14,315

 
1,874

 
—

 
47,904

Prepaid Expenses and Other Current Assets
 
31,432

 
1,983

 
6,384

 
—

 
39,799

Total Current Assets
 
$
394,614

 
$
253,342

 
$
246,111

 
$
(71,265
)
 
$
822,802

OTHER ASSETS:
 
 
 
 
 
 
 
 
 
 
Goodwill
 
$
128,300

 
$
—

 
$
32,676

 
$
—

 
$
160,976

Investments
 
27,056

 
—

 
—

 
—

 
27,056

Investments in Subsidiaries
 
515,452

 
—

 
—

 
(515,452
)
 
—

Intercompany Note Receivable
 
50,984

 
95,772

 
17,258

 
(164,014
)
 
—

Debt Issuance Costs
 
4,428

 
—

 
—

 
—

 
4,428

Other Intangible Assets, Net
 
—

 
55,609

 
45,985

 
—

 
101,594

Long-Term Deferred Income Tax Asset
 
27,417

 
—

 
291

 
(27,417
)
 
291

Other Long-Term Assets, Net
 
7,867

 
2,134

 
1,457

 
—

 
11,458

Total Other Assets
 
$
761,504

 
$
153,515

 
$
97,667

 
$
(706,883
)
 
$
305,803

PLANT AND EQUIPMENT, NET
 
236,240

 
35,162

 
25,519

 
—

 
296,921

TOTAL ASSETS
 
$
1,392,358

 
$
442,019

 
$
369,297

 
$
(778,148
)
 
$
1,425,526

 
 
 
 
 
 
 
 
 
 
 
CURRENT LIABILITIES:
 
 
 
 
 
 
 
 
 
 
Accounts Payable
 
$
103,196

 
$
47,320

 
$
36,698

 
$
—

 
$
187,214

Intercompany Accounts Payable
 
30,047

 
6,124

 
35,094

 
(71,265
)
 
—

Accrued Liabilities
 
84,062

 
36,985

 
19,841

 
—

 
140,888

Total Current Liabilities
 
$
217,305

 
$
90,429

 
$
91,633

 
$
(71,265
)
 
$
328,102

OTHER LIABILITIES:
 
 
 
 
 
 
 
 
 
 
Accrued Pension Cost
 
$
119,578

 
$
408

 
$
583

 
$
—

 
$
120,569

Accrued Employee Benefits
 
24,538

 
—

 
—

 
—

 
24,538

Accrued Postretirement Health Care Obligation
 
41,770

 
14,352

 
—

 
—

 
56,122

Intercompany Note Payable
 
105,355

 
—

 
58,659

 
(164,014
)
 
—

Deferred Income Tax Liabilities
 
—

 
20,874

 
10,449

 
(27,417
)
 
3,906

Other Long-Term Liabilities
 
26,779

 
7,532

 
945

 
—

 
35,256

Long-Term Debt
 
225,000

 
—

 
—

 
—

 
225,000

Total Other Liabilities
 
$
543,020

 
$
43,166

 
$
70,636

 
$
(191,431
)
 
$
465,391

TOTAL SHAREHOLDERS’ INVESTMENT:
 
632,033

 
308,424

 
207,028

 
(515,452
)
 
632,033

TOTAL LIABILITIES AND SHAREHOLDERS’ INVESTMENT
 
$
1,392,358

 
$
442,019

 
$
369,297

 
$
(778,148
)
 
$
1,425,526






21

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

CONSOLIDATING BALANCE SHEET
As of June 29, 2014
 
 
Briggs & Stratton
Corporation
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
CURRENT ASSETS:
 
 
 
 
 
 
 
 
 
 
Cash and Cash Equivalents
 
$
138,926

 
$
2,680

 
$
53,062

 
$
—

 
$
194,668

Accounts Receivable, Net
 
86,099

 
100,062

 
34,429

 
—

 
220,590

Intercompany Accounts Receivable
 
15,987

 
3,492

 
32,826

 
(52,305
)
 
—

Inventories, Net
 
165,159

 
146,749

 
64,195

 
—

 
376,103

Deferred Income Tax Asset
 
33,343

 
13,904

 
1,711

 
—

 
48,958

Prepaid Expenses and Other Current Assets
 
17,436

 
3,508

 
9,072

 
—

 
30,016

Total Current Assets
 
$
456,950

 
$
270,395

 
$
195,295

 
$
(52,305
)
 
$
870,335

OTHER ASSETS:
 
 
 
 
 
 
 
 
 
 
Goodwill
 
$
128,300

 
$
—

 
$
16,222

 
$
—

 
$
144,522

Investments
 
27,137

 
—

 
—

 
—

 
27,137

Investments in Subsidiaries
 
470,391

 
—

 
—

 
(470,391
)
 
—

Intercompany Note Receivable
 
49,293

 
84,567

 
13,876

 
(147,736
)
 
—

Debt Issuance Costs
 
4,671

 
—

 
—

 
—

 
4,671

Other Intangible Assets, Net
 
—

 
55,909

 
24,408

 
—

 
80,317

Long-Term Deferred Income Tax Asset
 
32,507

 
—

 
677

 
(18,006
)
 
15,178

Other Long-Term Assets, Net
 
7,120

 
2,088

 
1,331

 
—

 
10,539

Total Other Assets
 
$
719,419

 
$
142,564

 
$
56,514

 
$
(636,133
)
 
$
282,364

PLANT AND EQUIPMENT, NET
 
241,166

 
39,863

 
15,978

 
—

 
297,007

TOTAL ASSETS
 
$
1,417,535

 
$
452,822

 
$
267,787

 
$
(688,438
)
 
$
1,449,706

 
 
 
 
 
 
 
 
 
 
 
CURRENT LIABILITIES:
 
 
 
 
 
 
 
 
 
 
Accounts Payable
 
$
105,532

 
$
45,171

 
$
18,568

 
$
—

 
$
169,271

Intercompany Accounts Payable
 
21,859

 
6,002

 
24,444

 
(52,305
)
 
—

Accrued Liabilities
 
85,735

 
31,863

 
16,318

 
—

 
133,916

Total Current Liabilities
 
$
213,126

 
$
83,036

 
$
59,330

 
$
(52,305
)
 
$
303,187

OTHER LIABILITIES:
 
 
 
 
 
 
 
 
 
 
Accrued Pension Cost
 
$
125,481

 
$
421

 
$
627

 
$
—

 
$
126,529

Accrued Employee Benefits
 
24,491

 
—

 
—

 
—

 
24,491

Accrued Postretirement Health Care Obligation
 
44,928

 
14,362

 
—

 
—

 
59,290

Intercompany Note Payable
 
85,343

 
—

 
62,393

 
(147,736
)
 
—

Deferred Income Tax Liabilities
 


 
18,006

 
—

 
(18,006
)
 
—

Other Long-Term Liabilities
 
26,732

 
11,037

 
1,006

 
—

 
38,775

Long-Term Debt
 
225,000

 
—

 
—

 
—

 
225,000

Total Other Liabilities
 
$
531,975

 
$
43,826

 
$
64,026

 
$
(165,742
)
 
$
474,085

TOTAL SHAREHOLDERS’ INVESTMENT:
 
672,434

 
325,960

 
144,431

 
(470,391
)
 
672,434

TOTAL LIABILITIES AND SHAREHOLDERS’ INVESTMENT
 
$
1,417,535

 
$
452,822

 
$
267,787

 
$
(688,438
)
 
$
1,449,706


 






22

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the Three Months Ended September 28, 2014
(Unaudited)
 
 
 
Briggs & Stratton
Corporation
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net Sales
 
$
145,579

 
$
116,938

 
$
90,816

 
$
(60,704
)
 
$
292,629

Cost of Goods Sold
 
123,956

 
104,031

 
71,179

 
(60,704
)
 
238,462

Restructuring Charges
 
—

 
6,846

 
—

 
—

 
6,846

Gross Profit
 
21,623

 
6,061

 
19,637

 
—

 
47,321

Engineering, Selling, General and Administrative Expenses
 
36,868

 
17,657

 
15,559

 
—

 
70,084

Restructuring Charges
 
—

 
955

 
—

 
—

 
955

Equity in Loss from Subsidiaries
 
4,721

 
—

 
—

 
(4,721
)
 
—

Income (Loss) from Operations
 
(19,966
)
 
(12,551
)
 
4,078

 
4,721

 
(23,718
)
Interest Expense
 
(4,447
)
 
(71
)
 
—

 
—

 
(4,518
)
Other Income, Net
 
1,926

 
460

 
(13
)
 
—

 
2,373

Income (Loss) before Income Taxes
 
(22,487
)
 
(12,162
)
 
4,065

 
4,721

 
(25,863
)
Provision (Credit) for Income Taxes
 
(7,208
)
 
(4,481
)
 
1,105

 
—

 
(10,584
)
Net Income (Loss)
 
$
(15,279
)
 
$
(7,681
)
 
$
2,960

 
$
4,721

 
$
(15,279
)
Comprehensive Income (Loss)
 
$
(19,164
)
 
$
(7,407
)
 
$
(2,500
)
 
$
9,907

 
$
(19,164
)
CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the Three Months Ended September 29, 2013
(Unaudited)
 
 
 
Briggs & Stratton
Corporation
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net Sales
 
$
174,789

 
$
117,765

 
$
70,409

 
$
(45,659
)
 
$
317,304

Cost of Goods Sold
 
153,466

 
106,804

 
55,277

 
(45,659
)
 
269,888

Restructuring Charges
 
1,870

 
228

 
1,487

 
—

 
3,585

Gross Profit
 
19,453

 
10,733

 
13,645

 
—

 
43,831

Engineering, Selling, General and Administrative Expenses
 
37,508

 
17,598

 
13,656

 
—

 
68,762

Equity in Loss from Subsidiaries
 
5,553

 
—

 
—

 
(5,553
)
 
—

Income (Loss) from Operations
 
(23,608
)
 
(6,865
)
 
(11
)
 
5,553

 
(24,931
)
Interest Expense
 
(4,494
)
 
—

 
(16
)
 
—

 
(4,510
)
Other Income, Net
 
2,192

 
90

 
(189
)
 
—

 
2,093

Income (Loss) before Income Taxes
 
(25,910
)
 
(6,775
)
 
(216
)
 
5,553

 
(27,348
)
Provision (Credit) for Income Taxes
 
(6,561
)
 
(2,504
)
 
1,066

 
—

 
(7,999
)
Net Income (Loss)
 
$
(19,349
)
 
$
(4,271
)
 
$
(1,282
)
 
$
5,553

 
$
(19,349
)
Comprehensive Income (Loss)
 
$
(15,027
)
 
$
(7,119
)
 
$
177

 
$
6,942

 
$
(15,027
)







23

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

CONSOLIDATING STATEMENT OF CASH FLOWS
For the Three Months Ended September 28, 2014
(Unaudited)
 
 
 
Briggs & Stratton
Corporation
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net Cash Provided by (Used in) Operating Activities
 
$
(62,214
)
 
$
11,158

 
$
2,660

 
$
(482
)
 
$
(48,878
)
Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
Additions to Plant and Equipment
 
(4,623
)
 
(1,358
)
 
(1,409
)
 
—

 
(7,390
)
Proceeds Received on Disposition of Plant and Equipment
 
84

 
57

 
31

 
—

 
172

Cash Investment in Subsidiary
 
(4,650
)
 
—

 
—

 
4,650

 
—

Cash Paid for Acquisition, Net of Cash Acquired
 
(62,056
)
 
—

 
—

 
—

 
(62,056
)
Net Borrowings (Repayments) on Loans, Notes Payable and Long-Term Debt
 
14,429

 
—

 
—

 
(14,429
)
 
—

Net Cash Provided by (Used in) Investing Activities
 
(56,816
)
 
(1,301
)
 
(1,378
)
 
(9,779
)
 
(69,274
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
Net Borrowings (Repayments) on Loans, Notes Payable and Long-Term Debt
 
—

 
(11,212
)
 
(3,217
)
 
14,429

 
—

Treasury Stock Purchases
 
(17,761
)
 
—

 
—

 
—

 
(17,761
)
Stock Option Exercise Proceeds and Tax Benefits
 
3,151

 
—

 
—

 
—

 
3,151

Cash Investment in Subsidiary
 
—

 
—

 
4,168

 
(4,168
)
 
—

Net Cash Provided by (Used in) Financing Activities
 
(14,610
)
 
(11,212
)
 
951

 
10,261

 
(14,610
)
Effect of Foreign Currency Exchange Rate Changes on Cash and Cash Equivalents
 
—

 
—

 
(8
)
 
—

 
(8
)
Net Increase (Decrease) in Cash and Cash Equivalents
 
(133,640
)
 
(1,355
)
 
2,225

 
—

 
(132,770
)
Cash and Cash Equivalents, Beginning
 
138,926

 
2,680

 
53,062

 
—

 
194,668

Cash and Cash Equivalents, Ending
 
$
5,286

 
$
1,325

 
$
55,287

 
$
—

 
$
61,898


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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

CONSOLIDATING STATEMENT OF CASH FLOWS
For the Three Months Ended September 29, 2013
(Unaudited)
 
 
 
Briggs & Stratton
Corporation
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net Cash Provided by (Used in) Operating Activities
 
$
(58,591
)
 
$
(8,847
)
 
$
14,577

 
$
—

 
$
(52,861
)
Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
Additions to Plant and Equipment
 
(10,498
)
 
(694
)
 
(458
)
 
—

 
(11,650
)
Proceeds Received on Disposition of Plant and Equipment
 
26

 
2

 
—

 
—

 
28

Cash Investment in Subsidiary
 
1,570

 
—

 
(1,570
)
 
—

 
—

Net Cash Provided by (Used in) Investing Activities
 
(8,902
)
 
(692
)
 
(2,028
)
 
—

 
(11,622
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
        Repayments on Short-Term Debt
 
—

 
—

 
(300
)
 
—

 
(300
)
Net Borrowings (Repayments) on Loans, Notes Payable and Long-Term Debt
 
(9,818
)
 
9,818

 
—

 
—

 
—

Treasury Stock Purchases
 
(9,696
)
 
—

 
—

 
—

 
(9,696
)
Stock Option Exercise Proceeds and Tax Benefits
 
994

 
—

 
—

 
—

 
994

Net Cash Provided by (Used in) Financing Activities
 
(18,520
)

9,818

 
(300
)
 
—

 
(9,002
)
Effect of Foreign Currency Exchange Rate Changes on Cash and Cash Equivalents
 
—

 
—

 
216

 
—

 
216

Net Increase (Decrease) in Cash and Cash Equivalents
 
(86,013
)
 
279

 
12,465

 
—

 
(73,269
)
Cash and Cash Equivalents, Beginning
 
162,628

 
1,275

 
24,542

 
—

 
188,445

Cash and Cash Equivalents, Ending
 
$
76,615

 
$
1,554

 
$
37,007

 
$
—

 
$
115,176

 











25

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

The following table is a reconciliation of financial results by segment, as reported, to adjusted financial results by segment, excluding restructuring actions and acquisition related charges (in thousands, except per share data):
 
 
Three Months Ended Fiscal September
 
 
2015 Reported
 
Adjustments (1)
 
2015 Adjusted (2)
 
2014 Reported
 
Adjustments (1)
 
2014 Adjusted (2)
NET SALES:
 
 
 
 
 
 
 
 
 
 
 
 
Engines
 
$
153,116

 
$
—

 
$
153,116

 
$
183,787

 
$
—

 
$
183,787

Products
 
166,128

 
—

 
166,128

 
153,037

 
—

 
153,037

Inter-Segment Eliminations
 
(26,615
)
 
—

 
(26,615
)
 
(19,520
)
 
—

 
(19,520
)
Total
 
$
292,629

 
$
—

 
$
292,629

 
$
317,304

 
$
—

 
$
317,304

GROSS PROFIT:
 
 
 
 
 
 
 
 
 
 
 
 
Engines
 
$
27,800

 
$
—

 
$
27,800

 
$
25,236

 
$
1,765

 
$
27,001

Products
 
19,384

 
8,018

 
27,402

 
17,825

 
1,820

 
19,645

Inter-Segment Eliminations
 
137

 
—

 
137

 
770

 
—

 
770

Total
 
$
47,321

 
$
8,018

 
$
55,339

 
$
43,831

 
$
3,585

 
$
47,416

SEGMENT INCOME (LOSS) (3):
 
 
 
 
 
 
 
 
 
 
 
 
Engines
 
$
(13,677
)
 
$
—

 
$
(13,677
)
 
$
(16,557
)
 
$
1,765

 
$
(14,792
)
Products
 
(8,291
)
 
9,151

 
860

 
(7,615
)
 
1,820

 
(5,795
)
Inter-Segment Eliminations
 
137

 
—

 
137

 
770

 
—

 
770

Total
 
$
(21,831
)
 
$
9,151

 
$
(12,680
)
 
$
(23,402
)
 
$
3,585

 
$
(19,817
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation from Segment Income (Loss) to Income (Loss) from Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Equity in Earnings from Unconsolidated Affiliates
 
1,887

 
—

 
1,887

 
1,529

 
—

 
1,529

Income (Loss) from Operations
 
$
(23,718
)
 
$
9,151

 
$
(14,567
)
 
$
(24,931
)
 
$
3,585

 
$
(21,346
)
 
 
 
 
 
 
 
 
 
 
 
 
 
INTEREST EXPENSE
 
(4,518
)
 
—

 
(4,518
)
 
(4,510
)
 
—

 
(4,510
)
OTHER INCOME, Net
 
2,373

 
—

 
2,373

 
2,093

 
—

 
2,093

Income (Loss) Before Income Taxes
 
(25,863
)
 
9,151

 
(16,712
)
 
(27,348
)
 
3,585

 
(23,763
)
PROVISION FOR INCOME TAXES
 
(10,584
)
 
3,203

 
(7,381
)
 
(7,999
)
 
734

 
(7,265
)
Net income
 
$
(15,279
)
 
$
5,948

 
$
(9,331
)
 
$
(19,349
)
 
$
2,851

 
$
(16,498
)
 
 
 
 
 
 
 
 
 
 
 
 
 
EARNINGS PER SHARE
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
(0.34
)
 
$
0.13

 
$
(0.21
)
 
$
(0.41
)
 
$
0.06

 
$
(0.35
)
Diluted
 
(0.34
)
 
0.13

 
(0.21
)
 
(0.41
)
 
0.06

 
(0.35
)
(1) For the first quarter of fiscal 2015, includes restructuring charges of $7,801 net of $2,730 of taxes and acquisition related charges of $1,350 net of $473 of taxes. For the first quarter of fiscal 2014, includes restructuring charges of $3,585 net of $734 of taxes.
(2) Adjusted financial results are non-GAAP financial measures. The Company believes this information is meaningful to investors as it isolates the impact that restructuring charges and acquisition related charges have on reported financial results and facilitates comparisons between peer companies. The Company may utilize non-GAAP financial measures as a guide in the forecasting, budgeting, and long-term planning process. While the Company believes that adjusted financial results are useful supplemental information, such adjusted financial results are not intended to replace our GAAP financial results and should be read in conjunction with those GAAP results.
(3) The Company defines segment income (loss) as income (loss) from operations plus equity in earnings from unconsolidated affiliates.


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NET SALES

Consolidated net sales for the first quarter of fiscal 2015 were $292.6 million, a decrease of $24.7 million or 7.8% from the first quarter of fiscal 2014. The decrease primarily relates to lower sales of engines resulting from higher channel inventories in North America and lower sales of engines for snow thrower OEM customers in Europe due to adequate inventories following last season. The decrease in net sales was partially offset by higher sales of pressure washers, snow throwers, lawn and garden equipment and the Allmand acquisition.

Engines Segment net sales of $153.1 million in the first quarter of fiscal 2015 decreased $30.7 million or 16.7% from the prior year. Total engine volumes shipped in the quarter decreased by 18.7% or approximately 200,000 engines. Net sales decreased as anticipated due to higher channel inventories in North America at the end of the current lawn and garden season and lower shipments into the European market for snow throwers.

Products Segment net sales of $166.1 million in the first quarter of fiscal 2015 increased by $13.1 million or 9% from the prior year. This increase was due to higher sales of pressure washers, commercial lawn and garden equipment and snow throwers in the North America market and one month of the Allmand acquisition. Partially offsetting the increase were lower sales of snow throwers in Europe following last year’s mild winter and lower generator sales due to adequate channel inventories and no major storm activity.

GROSS PROFIT

The consolidated gross profit percentage was 16.2% in the first quarter of fiscal 2015, an increase from 13.8% in the same period last year.

The Engines Segment gross profit percentage was 18.2% in the first quarter of fiscal 2015, higher than the 13.7% in the first quarter of fiscal 2014. The Engines Segment adjusted gross profit percentage for the first quarter of 2015 was 18.2%, which was higher than the 14.7% in the first quarter of fiscal 2014. Engines Segment adjusted gross profit margins improved 350 basis points year over year on higher manufacturing volume, improved efficiency and lower retirement plan expense. Engines produced were higher by 12% in the quarter benefitting adjusted gross margins by approximately 230 basis points. Engine production was increased to support higher demand for large engines for riding equipment to support pre-building of products related to the closure of the McDonough, Georgia facility. In addition, plant efficiency improvements, cost reductions and a favorable mix of engines produced benefitted adjusted gross margins by approximately 130 basis points. The previously announced retirement plan changes, which were implemented in January of calendar 2014, improved fiscal 2015 adjusted gross margins by $2.2 million, or 150 basis points. Partially offsetting this improvement was unfavorable sales mix that reduced adjusted gross margins by 160 basis points.

The Products Segment gross profit percentage was 11.7% for the first quarter of fiscal 2015, slightly up from 11.6% in the first quarter of fiscal 2014. The Products Segment adjusted gross profit percentage for the first quarter of 2015 was 16.5%, which was 3.7% higher than the adjusted gross profit percentage for the first quarter of fiscal 2014. Products adjusted gross profit margins increased by 370 basis points year over year due to improved sales mix and higher manufacturing throughput. Favorable sales mix improved adjusted gross margins by 220 basis points due to a focus on selling higher margin lawn and garden equipment and the benefit of one month of the Allmand acquisition. In addition, manufacturing throughput increased year over year by 55% benefitting adjusted gross margins by approximately 190 basis points. Throughput is increased due to higher snow thrower production for channel refill in the North America market and higher production of pressure washers and riding mowers to facilitate the upcoming closure of the McDonough, Georgia plant. Offsetting the increase in adjusted gross profit margins was an unfavorable foreign exchange impact of approximately 40 basis points primarily due to the devaluation of the Australian dollar.

ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Engineering, selling, general and administrative expenses were $70.1 million in the first quarter of fiscal 2015, an increase of $1.3 million or 1.9% from the first quarter of fiscal 2014.

The Engines Segment engineering, selling, general and administrative expenses were $42.9 million in the first quarter of fiscal 2015, a decrease of $0.4 million from the first quarter of fiscal 2014. The decrease was primarily

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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

due to the previously announced retirement plan changes.

The Products Segment fiscal 2015 first quarter engineering, selling, general and administrative expenses were $28.1 million, an increase of $2.7 million from the first quarter of fiscal 2014. The increase was mainly due to $1.5 million related to the Allmand acquisition and increased compensation expense, partially offset by $1.2 million in savings related to the restructuring initiative announced in July 2014.

ACQUISITION

The Company announced on August 29, 2014, that it had completed the acquisition of Allmand Bros., Inc. for approximately $62 million in cash, net of cash acquired. Allmand is a leading designer and manufacturer of high quality towable light towers, industrial heaters, and solar LED arrow boards. Allmand, which is included within our Products Segment, has annual net sales of approximately $80 million.

INTEREST EXPENSE

Interest expense for the first quarter of fiscal 2015 was comparable to the same period a year ago.

PROVISION FOR INCOME TAXES

The effective tax rate for the first quarter of fiscal 2015 was 40.9%, compared to 29.3% for the same respective period last year. The higher tax rate for the first quarter of fiscal 2015 was primarily driven by the reversal of previously recorded reserves as a result of the effective settlement of the Company’s IRS audit for its 2009-2010 consolidated income tax returns.

RESTRUCTURING ACTIONS

The restructuring actions announced in 2012 were concluded as planned during the fourth quarter of fiscal 2014. During the first quarter of fiscal 2015, the Company announced and began implementing restructuring actions to narrow its assortment of lower-priced Snapper consumer lawn and garden equipment and consolidate its Products segment manufacturing facilities in order to reduce costs. The Company will close its McDonough, Georgia plant in the second half of fiscal 2015 and consolidate production into existing facilities in Wisconsin and New York.  Pre-tax restructuring costs for the first quarter of fiscal 2015 were $7.8 million and pre-tax savings were $1.2 million. Pre-tax restructuring cost estimates for fiscal 2015 remain unchanged at $30 million to $37 million. Total annual cost savings as a result of these actions are anticipated to be approximately $15 million to $20 million with approximately $5 million to $7 million expected to be realized in fiscal 2015 and the remainder realized in fiscal 2016.

LIQUIDITY AND CAPITAL RESOURCES
    
Cash flows used in operating activities for the first three months of fiscal 2015 were $48.9 million compared to $52.9 million in the first three months of fiscal 2014. The slight improvement in operating cash flows was primarily related to an improved net loss and a decrease in accounts receivable due to lower sales, partially offset by higher inventory levels and accounts payable.

Cash flows used in investing activities were $69.3 million and $11.6 million during the first three months of fiscal 2015 and fiscal 2014, respectively. The $57.7 million increase in cash used in investing activities was primarily related to $62.1 million of cash paid for the Allmand acquisition during the first quarter of fiscal 2015. The increase was partially offset by $4.3 million of lower additions to plant and equipment during fiscal 2015 compared to fiscal 2014.

Cash flows used in financing activities were $14.6 million during the first three months of fiscal 2015 as compared to $9.0 million of cash flows used in financing activities during the first three months of fiscal 2014. The $5.6 million increase in cash used in financing activities was primarily attributable to $8.1 million of higher treasury stock purchases in fiscal 2015 compared to fiscal 2014, partially offset by $2.2 million of higher stock option exercise proceeds in fiscal 2015 compared to fiscal 2014.


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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

FUTURE LIQUIDITY AND CAPITAL RESOURCES

On December 15, 2010, the Company issued $225 million of 6.875% Senior Notes ("Senior Notes") due December 15, 2020 .  

On October 21, 2013, the Company entered into an amendment to its $500 million multicurrency credit agreement (the “Revolver”), which, among other things, extended the maturity of the Revolver from October 13, 2016 to October 21, 2018 . The initial maximum availability under the revolving credit facility is $500 million . Availability under the revolving credit facility is reduced by outstanding letters of credit. The Company may from time to time increase the maximum availability under the revolving credit facility by up to $250 million if certain conditions are satisfied. As of September 28, 2014 , there were no borrowings under the Revolver.

On January 22, 2014 the Board of Directors of the Company authorized up to $50 million in funds associated with the common share repurchase program. On August 13, 2014, the Board of Directors of the Company authorized up to an additional $50 million in funds for use in the Company’s common share repurchase program. As of September 28, 2014, the total remaining authorization was approximately $69.5 million with an expiration date of June 30, 2016. The common share repurchase program authorizes the purchase of shares of the Company's common stock on the open market or in private transactions from time to time, depending on market conditions and certain governing loan covenants. During the three months ended September 28, 2014 , the Company repurchased 905,164 shares on the open market at an average price of $19.62 per share.

The Company expects capital expenditures to be approximately $60 million to $65 million in fiscal 2015. These anticipated expenditures reflect our plans to continue to reinvest in efficient equipment and innovative new products.

During the first three months of fiscal 2015, the Company made no cash contributions to the qualified pension plan. Based upon current regulations and actuarial studies, the Company estimates that it will make no required minimum contributions to the qualified pension plan during the remainder of fiscal 2015. The Company may be required to make further contributions in future years depending upon the actual return on plan assets and the funded status of the plan in future periods.

Management believes that available cash, cash generated from operations, existing lines of credit and access to debt markets will be adequate to fund the Company’s capital requirements and operational needs for the foreseeable future.

The Revolver and the Senior Notes contain restrictive covenants. These covenants include restrictions on the Company’s ability to: pay dividends; repurchase shares; incur indebtedness; create liens; enter into sale and leaseback transactions; consolidate or merge with other entities; sell or lease all or substantially all of its assets; and dispose of assets or use proceeds from sales of its assets. The Revolver contains financial covenants that require the Company to maintain a minimum interest coverage ratio and impose a maximum leverage ratio. As of September 28, 2014 , the Company was in compliance with these covenants, and expects to be in compliance with all covenants during the remainder of fiscal 2015.

OFF-BALANCE SHEET ARRANGEMENTS

There have been no material changes since the August 26, 2014 filing of the Company’s Annual Report on Form 10-K.

CONTRACTUAL OBLIGATIONS

There have been no material changes since the August 26, 2014 filing of the Company’s Annual Report on Form 10-K.

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CRITICAL ACCOUNTING POLICIES

There have been no material changes in the Company’s critical accounting policies since the August 26, 2014 filing of its Annual Report on Form 10-K. As discussed in our annual report, the preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements.

The most significant accounting estimates inherent in the preparation of our financial statements include a goodwill assessment, estimates as to the realizability of accounts receivable and inventory assets, as well as estimates used in the determination of liabilities related to customer rebates, pension obligations, postretirement benefits, warranty, product liability, group health insurance, litigation and taxation. Various assumptions and other factors underlie the determination of these significant estimates. The process of determining significant estimates is fact specific and takes into account factors such as historical experience, current and expected economic conditions, product mix, and, in some instances, actuarial techniques. The Company re-evaluates these significant factors as facts and circumstances change.
NEW ACCOUNTING PRONOUNCEMENTS

A discussion of new accounting pronouncements is included in the Notes to Condensed Consolidated Financial Statements of this Form 10-Q under the heading "New Accounting Pronouncements" and is incorporated herein by reference.

CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS

This report 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 “believe”, “estimate”, “expect”, “forecast”, “intend”, “plan”, “project”, 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, the ability to successfully forecast demand for our products; changes in interest rates and foreign exchange 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; changes in laws and regulations; changes in customer and OEM demand; changes in prices of raw materials and parts that we purchase; changes in domestic and foreign economic conditions; the ability to bring new productive capacity on line efficiently and with good quality; outcomes of legal proceedings and claims; and other factors disclosed from time to time in our SEC filings or otherwise, including the factors discussed in Item 1A, Risk Factors, of the Company’s Annual Report on Form 10-K and in its periodic reports on Form 10-Q. We are not undertaking any obligation to update any forward-looking statements or other statements we may make even though these statements may be affected by events or circumstances occurring after the forward-looking statements or other statements were made.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes since the August 26, 2014 filing of the Company’s Annual Report on Form 10-K.
ITEM 4. CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act.
INTERNAL CONTROL OVER FINANCIAL REPORTING
There has not been any change in the Company’s internal control over financial reporting during the first fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
A discussion of legal proceedings is included in the Notes to Condensed Consolidated Financial Statements of this Form 10-Q under the heading "Commitments and Contingencies" and is incorporated herein by reference.
ITEM 1A. RISK FACTORS
There have been no material changes since the August 26, 2014 filing of the Company’s Annual Report on Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
The table below sets forth the information with respect to purchases made by or on behalf of the Company of its common stock during the quarterly period ended September 28, 2014 .
2015 Fiscal Month
 
Total Number of Shares Purchased
 
Average Price Paid per Share
 
Total Number of Shares Purchased as Part of a Publicly Announced Program (1)
 
Approximate Dollar Value of Shares that May Yet Be Purchased Under  the Program (1)
June 30, 2014 to July 27, 2014
 
348,869

 
$
19.80

 
348,869

 
$
30,394,716

July 28, 2014 to August 24, 2014
 
397,108

 
19.15

 
397,108

 
72,790,098

August 25, 2014 to September 28, 2014
 
159,187

 
20.42

 
159,187

 
69,539,499

Total FIrst Quarter
 
905,164

 
$
19.62

 
905,164

 
$
69,539,499

(1)
On January 22, 2014 the Board of Directors of the Company authorized up to $50 million in funds associated with the common share repurchase program. On August 13, 2014, the Board of Directors of the Company authorized up to an additional $50 million in funds for use in the Company’s common share repurchase program with an expiration date of June 30, 2016.

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ITEM 6. EXHIBITS
 
Exhibit
Number
 
Description
 
 
 
10.1
 
Stock Option and Stock Award Program, as amended through October 15, 2014 (Filed herewith)
 
 
 
10.2
 
Form of 2014 Omnibus Incentive Plan Stock Option Agreement (Filed herewith)
 
 
 
10.3
 
Form of 2014 Omnibus Incentive Plan Restricted Stock Award Agreement (Filed herewith)
 
 
 
10.4
 
Form of 2014 Omnibus Incentive Plan Restricted Stock Unit Award Agreement (Filed herewith)
 
 
 
10.5
 
Form of 2014 Omnibus Incentive Plan Performance Share Unit Award Agreement (Filed herewith)
 
 
 
31.1
 
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Filed herewith)
 
 
 
31.2
 
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Filed herewith)
 
 
 
32.1
 
Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Furnished herewith)
 
 
 
 
 
 
32.2
 
Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Furnished herewith)
 
 
 
101
 
The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 28, 2014 formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Loss, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) related Notes to Condensed Consolidated Financial Statements

 

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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:
November 5, 2014
 
/s/ David J. Rodgers
 
 
 
 
David J. Rodgers
 
 
 
 
Senior Vice President and Chief Financial Officer and
Duly Authorized Officer
 
 

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EXHIBIT INDEX
 
Exhibit
Number
 
Description
 
 
 
10.1
 
Stock Option and Stock Award Program, as amended through October 15, 2014 (Filed herewith)
 
 
 
10.2
 
Form of 2014 Omnibus Incentive Plan Stock Option Agreement (Filed herewith)
 
 
 
10.3
 
Form of 2014 Omnibus Incentive Plan Restricted Stock Award Agreement (Filed herewith)
 
 
 
10.4
 
Form of 2014 Omnibus Incentive Plan Restricted Stock Unit Award Agreement (Filed herewith)
 
 
 
10.5
 
Form of 2014 Omnibus Incentive Plan Performance Share Unit Award Agreement (Filed herewith)
 
 
 
31.1
 
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Filed herewith)
 
 
 
31.2
 
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Filed herewith)
 
 
 
32.1
 
Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Furnished herewith)
 
 
 
32.2
 
Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Furnished herewith)
 
 
 
101
 
The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 28, 2014 formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Loss, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) related Notes to Condensed Consolidated Financial Statements

34



Exhibit 10.1


Effective 10-15-14







BRIGGS & STRATTON CORPORATION

STOCK OPTION AND STOCK AWARD PROGRAM



















As adopted by the Compensation Committee on April 20, 2004 and amended
through October 15, 2014






















BRIGGS & STRATTON CORPORATION
STOCK OPTION AND STOCK AWARD PROGRAM


1      Objectives

The Stock Option and Stock Award Program (“SOSA Program”) is designed to build upon the Company’s Annual Incentive Plan (“AIP”) by tying the interests of designated senior executives (“Senior Executives”) to the long term consolidated results of the Company. In this way, the objectives of Senior Executives throughout the Company will be more closely aligned with the Company’s shareholders. Whereas the AIP provides for near and intermediate term rewards, the SOSA Program provides a longer term focus by allowing Senior Executives to participate in the long-term appreciation in the equity value of the Company.

The SOSA Program is structured such that each year a Senior Executive is eligible for awards of restricted stock or restricted stock units of the Company's Stock ("Restricted Stock"), options on the Company’s Stock (“SOs”), and/or performance share units of the Company’s Stock (“Performance Share Units”) in such amounts as the Compensation Committee determines.

2      Restricted Stock Awards

For each Plan Year, the Committee shall establish a formula that will create a pool of shares from which Restricted Stock may be awarded to certain Senior Executives designated by title. The formula shall reflect the Company’s intention to qualify, to the extent possible, the awards as performance-based compensation under Section 162(m) of the Code. The number of shares in the pool shall be determined based upon performance against the pre-established performance target(s) in the formula. From the available pool, the Committee shall determine the number of shares of Restricted Stock awarded to each designated Senior Executive. In addition, the Committee shall determine the number of shares of Restricted Stock to be awarded to other Senior Executives. In each case, the number of shares awarded shall be determined by dividing (a) the dollar amount of such Restricted Stock award by (b) the Fair Market Value of Company Stock on the date of grant as determined by the Committee, rounded (up or down) to the nearest 10 shares.

The Committee shall determine whether such stock awards shall consist of shares of restricted stock, restricted stock units or a mix of each type of stock, and may consider each senior executive’s preference in making such determination. All shares of Restricted Stock shall vest on the third anniversary of the date of grant regardless of whether such vesting date occurs before or after retirement and shall have such other terms and conditions as the Committee shall determine, including any that the Committee determines are necessary and appropriate to qualify them for tax deductibility by the Company.

3      Stock Option Awards

For each Plan Year, the number of SOs awarded to each Senior Executive shall be determined by the Committee. The number of SOs awarded shall be determined by dividing (a) the dollar amount of such SO award by (b) the Black-Scholes value of a share of Company stock based on its Fair Market Value on the date of the grant as determined by the Committee, rounded (up or down) to the nearest 10 shares.

All SOs shall vest and be exercisable beginning on the third anniversary of the date of grant and shall terminate on the tenth anniversary of the date of grant unless sooner exercised, unless the Committee determines other dates.

The exercise price for SOs shall be the Fair Market Value per share of the Company's stock on the date of grant. SOs shall have such other terms and conditions as the Committee shall determine.





4      Performance Share Unit Awards

For each Plan Year, the Committee may award Performance Share Units to Senior Executives which may be earned based on the achievement of pre-established performance goals over a designated performance period determined by the Committee. The performance goals shall reflect the Company’s intention to qualify, to the extent possible, the awards as performance-based compensation under Section 162(m) of the Code. The number of Performance Share Units awarded to each Senior Executive, the pre-established performance goals and the performance period shall be determined by the Committee.

5      Limitations on Awards

All awards of Restricted Stock, SOs and Performance Share Units are granted under and are subject to the terms and conditions of the 2014 Omnibus Incentive Plan (the “Plan”), including without limitation the limits on awards stated in Section 4.3 and 4.4 of the Plan.

The Committee shall have the right to modify or amend the SOSA Program from time to time, or suspend it or terminate it entirely. The Committee may suspend or terminate an award of Restricted Stock, SOs or Performance Share Units for a Plan Year at any time prior to delivery of the award agreement to the Senior Executive.

6      Incentive Stock Options

Except as modified herein, SOs are Incentive Stock Options under the Plan as amended from time to time to the extent they are eligible for treatment as such under Section 422 of the Code. If not eligible for ISO treatment, the SOs shall constitute nonqualified stock options. Except as specifically modified herein, SOs shall be governed by the terms of the Plan, and shall be granted as described in this Program annually unless the Committee modifies or terminates either the AIP or the Plan.

7      Definitions

All capitalized terms used herein that are not otherwise defined shall have the same meaning given to them in the Company’s AIP and the Plan.

8      Effective Date

The amendments to the SOSA Program adopted by the Committee on September 29, 2014 shall be effective for the calculation of awards made after October 15, 2014.





Exhibit 10.2
BRIGGS & STRATTON CORPORATION
2014 OMNIBUS INCENTIVE PLAN
STOCK OPTION AGREEMENT



Optionee:          «Name»
No. of Shares:          «Number»
Date of Grant:          ______
Expiration Date:      ______
Option Price:          $______


BRIGGS & STRATTON CORPORATION (the “Company”), a Wisconsin corporation, hereby grants to the above-named employee (the “Optionee”) under the Briggs & Stratton Corporation 2014 Omnibus Incentive Plan (the “Plan”) a stock option to purchase from the Company during the period commencing (except as otherwise provided herein) on ______ and ending (except as otherwise provided herein) on the expiration date set forth above (the "option term") up to but not exceeding in the aggregate the number of shares set forth above of the common stock, $0.01 par value, of the Company ("Common Stock") at the price per share set forth above (the “Option Price”), all in accordance with and subject to the following terms and conditions:

1.      No shares subject to this option may be purchased before _______. On such date and from time to time thereafter, the shares subject to this option may be purchased during the option term. However, upon a Change in Control the shares subject to this option shall become vested and exercisable in accordance with Article 17(a) of the Plan.

2.      The following provisions shall apply with respect to the exercise of the option following termination of employment:

2.1      If the Optionee's employment is terminated for any reason prior to ______, then, unless otherwise stated below or determined by (or pursuant to authority granted by) the Compensation Committee (the "Committee") of the Board of Directors of the Company, this option shall not be exercisable.

2.2.      If the effective date of retirement of the Optionee is before ______, the Optionee may make application (at least one month prior to retirement) to the Committee for this option to become exercisable on such effective date. Such application may be denied or granted in whole or in part.

2.3      In the event that the Optionee's employment shall be terminated by reason of death before the option is exercisable, the option may thereafter be exercised for a period of one year from the date of death.

2.4      In the event that the Optionee's employment shall be terminated by reason of disability or retirement, the option shall remain in effect in accordance with its terms, except that (i) the Committee may accelerate the date on which the option may first be exercised, (ii) if the Optionee dies within three years of such termination of employment, the unexercised portion of any remaining option shall be exercisable immediately for a period of one year from the date of death of the Optionee, and (iii) in no event may any option be exercised more than three years after the date of termination of employment or the expiration of the original option term, whichever period is shorter.





2.5      In the event that an Optionee's employment is terminated for any other reason, no shares may be purchased after the date of termination of employment; except that the option, to the extent then exercisable, may be exercised for the balance of the option term.

Nothing in Sections 2.3, 2.4 or 2.5 above shall permit the purchase of any shares after the expiration date set forth above.

The Optionee's employment shall be deemed to be terminated when he or she is no longer employed by (i) the Company, a subsidiary or an affiliate thereof, or (ii) a corporation, or a parent or subsidiary thereof, substituting a new option for the option granted by this Agreement (or assuming the option granted by this Agreement) by reason of a merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation. Leaves of absence shall not constitute termination of employment.

Notwithstanding anything in the foregoing to the contrary, to the extent permitted under Section 422 of the Code, if the Optionee's employment is terminated by reason of death, disability or retirement and the portion of this option that is otherwise exercisable during the post-termination period as provided above is greater than the portion that is exercisable as an incentive stock option during such post-termination period under Section 422, such post-termination period shall automatically be extended (but not beyond the original option term) to the extent necessary to permit the Optionee to exercise this option either as an incentive stock option or, if exercised after the expiration periods that apply for purposes of Section 422, as a non-qualified stock option.

As used in this section of the Agreement, “disability” shall have the meaning stated in Article 2.15 of the Plan, and “retirement” shall mean termination of employment for reason other than death after the Optionee has achieved 30 years of service, age 62 with at least 10 years of service or age 65.

3.1.      Non-Competition During Employment. The Optionee agrees during his/her employment with the Company he/she shall not, directly or indirectly, either individually or as an employee, agent, partner, shareholder, consultant or in any other capacity, participate in, engage in or have a financial or other interest in any business which is in competition with the Company or any successor or assignee of the Company. The ownership of less than 1% of the outstanding securities of a publicly-traded company or 20% of a private company’s securities or profits, even though that corporation may be a competitor of the Company, shall not be deemed financial participation in a competitor.

3.2.      Non-Competition After Employment. The Optionee agrees that, upon voluntary or involuntary termination of employment with the Company and for a period of two (2) years thereafter, he/she will not, directly or indirectly, individually or as an employee, agent, partner, shareholder, consultant, or in any other capacity, canvass, contact, solicit or accept any of the Company’s customers with whom the Employee had contact during the two (2) year period preceding his/her termination for the purpose of providing services, products or business that are in competition with the services, products or business which the Company provides to such customers. It is understood and agreed that the fluid customer list limitation contemplated by the parties closely approximates the area of the Company’s vulnerability to unfair competition by Optionee and does not deprive optionee of legitimate competitive opportunities to which he/she is entitled.

3.3.      Impairment of Company’s Relationships. The optionee further agrees that during the term of his/her employment and for a period of two (2) years thereafter, he/she will not interfere with or attempt to impair the relationship between the Company and any of its employees nor will the Optionee attempt, directly or indirectly, to solicit, entice, or otherwise induce any other employee to terminate his/her association with the Company. The term “solicit, entice or induce” includes, but is not limited to, the following: (a)




initiating communications with an employee of the Company relating to possible employment; (b) offering bonuses or additional compensation to encourage employees of the Company to terminate their employment and accept employment with a competitor, supplier or customer of the Company; (c) referring employees of the Company to personnel or agents employed or engaged by competitors, suppliers or customers of the Company; or (d) referring personnel or agents employed or engaged by competitors, suppliers or customers of the Company to employees of the Company.

3.4.
Non-Disclosure of Information.

(a) Confidential Information. As used in this Agreement, “Confidential Information” shall mean any and all information whether generated by the Company or by a third party at the Company’s request, disclosed by the Company to Optionee during the period of the Optionee’s employ with the Company, including, without limitation, trade secrets, design documents, copyright material, inventions, technology, processes, marketing data, business strategies, financial information and records, product information (including, without limitation, any product designs, specifications, capabilities, drawings, diagrams, blueprints, models and similar items), customer and prospective customer lists, supplier and vendor lists, product pricing formulas, software and similar information, in any form (whether oral, electronic, written, graphic or other printed form or obtained from access to or observation of the Company’s facilities or operations). Confidential Information does not include information or data which is:
(1) at the time of disclosure, or thereafter becomes, available to the general public by publication or otherwise through (i) no fault or negligence of the Optionee or (ii) no breach of this Agreement by Optionee;
(2) in the possession of the Optionee prior to disclosure thereof by the Company as evidenced by written records of the Optionee prepared prior to the date of disclosure of such information to the Optionee;
(3) independently developed by the Optionee without the benefit of any of the Confidential Information as evidenced by the written records of the Optionee prepared to the date of disclosure of such information to the Optionee; or
(4) disclosed to Optionee by a third party having no obligation of confidentiality to the Company with respect to the information so disclosed.

(b) Trade Secrets. The parties also acknowledge that certain of the Company’s Confidential Information is a trade secret (“Trade Secret”) as that term is defined in Sec. 134.90(1)(c) of the Wisconsin Uniform Trade Secrets Act, i.e. information, including a formula, pattern, compilation, program, device, method, technique or process, that (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure, and (ii) is the subject of efforts that are reasonable under the circumstance to maintain its secrecy.

(c) Disclosure of Confidential Information. Except as required in the performance of his or her duties of employment, and for a period of two (2) years following the termination of his or her employment with the Company, Optionee shall not disclose to a third party or use any of the Company’s Confidential Information and shall not remove any of the Company’s Confidential Information in any form or media from the Company’s offices, unless he or she first obtains the written consent of the Company.





(d) Disclosure of Trade Secrets. Optionee shall never disclose to a third party or use any of the Company’s Trade Secrets and shall not remove any of the Company’s Trade Secrets in any form or media from the Company’s offices, unless he or she first obtains the written consent of the Company. The parties acknowledge that this obligation has no termination date.

3.5.      Waiver of Unintended Effects. It is not the purpose of the Agreement to preclude Optionee from engaging in employment that is not competitive with the Company, does not pose a competitive threat to the Company, and does not interfere with the Company’s protectable business interests. If during the term of this Agreement Optionee wishes to engage in a business that may involve a violation of the literal terms of this Agreement but Optionee believes it will not pose a competitive threat to the Company, Optionee agrees to submit to the Company in writing a request to engage in this business. Any such request must specifically refer to this Agreement. The Company agrees that it will respond to the request with reasonable promptness and that it will not unreasonably withhold permission to engage in the business specified in the request, regardless of the terms of this Agreement, if the business sought to be engaged in is not competitive with that of the Company and does not pose a competitive threat to the Company. Any such permission granted by the Company must be in writing, shall extend only to the business specifically identified in Optionee’s written request, and shall not otherwise constitute a wavier of the Company’s rights under this Agreement.

3.6.      Common Law of Torts and Trade Secrets. The parties agree that nothing in this Agreement shall be construed to limit or negate the common law of torts or trade secrets where it provides the Company with broader protection than that provided herein.

4.      If the Committee determines that the Optionee has breached any of the obligations stated in section 3 of the Agreement, the Optionee shall forfeit any outstanding option that has not yet been exercised. If the Committee determines that there has been a material restatement of the Company’s annual report to the SEC due to negligence or misconduct by one or more persons, the Company may recover all or any portion of the gain the Optionee realized by exercising an option within twelve (12) months after the restated Plan Year.

5.      Exercise of this option shall occur on the date (the “Date of Exercise”) the Company receives at its principal executive offices (i) a written notice (the “Notice of Exercise”) specifying the number of shares to be purchased, and (ii) payment by certified check, cashier's check or confirmation of a wire transfer for the Option Price for such shares. In lieu of such payment by certified check, cashier's check or wire transfer, the Optionee may pay the Option Price by a cashless (broker-assisted) exercise or may tender to the Company (i) outstanding shares of Common Stock, having a Fair Market Value, determined on the Date of Exercise, equal to the Option Price for the number of shares being purchased, or (ii) a combination of shares of outstanding Common Stock, as described above, so valued and payment as aforesaid which equals said Option Price, together, in each case, with payment of any applicable stock transfer tax. If the Fair Market Value, as so determined, of the shares tendered to the Company shall exceed the Option Price applicable to the number of shares being purchased, an appropriate cash adjustment will be made by the Company for any fractional share remaining. The Company will not deliver shares of Common Stock being purchased upon any exercise of this option unless it has received an acceptable form of payment for all applicable withholding taxes or arrangements satisfactory to the Company for the payment thereof have been made. Withholding taxes may be paid with outstanding shares of Common Stock (including Common Stock delivered upon exercise of this option), such Common Stock being valued at Fair Market Value on Date of Exercise. The Optionee shall have no rights as a stockholder with respect to any shares covered by this option until the date of the issuance of a stock certificate for such shares.





6.      This option is not transferable by the Optionee otherwise than by will or the laws of descent and distribution and is exercisable during the Optionee's lifetime only by the Optionee or by the guardian or legal representative of the Optionee.

7.      The terms and provisions of this Agreement (including, without limiting the generality of the foregoing, terms and provisions relating to the option price and the number and class of shares subject to this option) shall be subject to appropriate adjustment in the event of any recapitalization, merger, consolidation, disposition of property or stock, separation, reorganization, stock dividend, issuance of rights, combination or split-up or exchange of shares, or the like.

8.      Whenever the word "Optionee" is used herein under circumstances such that the provision should logically be construed to apply to the executors, the administrators, or the person or persons to whom this option may be transferred by will or by the laws of descent and distribution, it shall be deemed to include such person or persons.

9.      The terms and provisions of the Plan (a copy of which will be furnished to the Optionee upon written request to the Briggs & Stratton Corporation, 12301 West Wirth Street, Wauwatosa, Wisconsin 53222) are incorporated herein by reference. To the extent any provision of this Agreement is inconsistent or in conflict with any term or provision of the Plan, the Plan shall govern. Capitalized terms not otherwise defined herein have the meaning set forth in the Plan.

IN WITNESS WHEREOF, this Stock Option Agreement has been duly executed as of ______.

BRIGGS & STRATTON CORPORATION


By                           
Todd J. Teske
Chairman, President & CEO


Date____________                                                                                    «Name»






Exhibit 10.3
BRIGGS & STRATTON CORPORATION
RESTRICTED STOCK AWARD AGREEMENT


THIS RESTRICTED STOCK AWARD AGREEMENT, dated as of this ____ day of _________, 20__, is made by BRIGGS & STRATTON CORPORATION (the “Company”) to «Name» (the “Employee”).

WHEREAS , the Company believes it to be in the best interests of the Company and its shareholders to provide an incentive for certain of its key employees to work for and manage the affairs of the Company in such a way that its shares become more valuable; and

WHEREAS , the Employee is a key employee of the Company or one of its subsidiaries or affiliates.

NOW, THEREFORE , in consideration of the premises, the Company hereby awards Restricted Stock to the Employee on the terms, conditions and restrictions hereinafter set forth.

1.      AWARD . The Company hereby awards to the Employee «Number» shares of Restricted Stock on the date hereof (the “Award Date”). Restricted Stock means shares of the common stock of the Company, par value $0.01 per share, granted in accordance with this Agreement and Article 8 of the Company’s 2014 Omnibus Incentive Plan (the “Plan”).

2.      PERIOD OF RESTRICTION . The Restricted Stock shall be forfeitable as described below until the shares become vested upon the first to occur, if any, of the following events:

(a)      The termination of the Employee's employment with the Company or a subsidiary by reason of disability or death.

(b)      Three (3) years from the Award Date.

(c)      A change in control of the Company as defined in Article 2.8 of the Plan.

The period of time during which the Restricted Stock is forfeitable is referred to as the “Period of Restriction.” If the Employee's employment with the Company or one of its subsidiaries terminates during the Period of Restriction for any reason other than retirement, disability or death, the Restricted Stock shall be forfeited to the Company on the date of such termination, without any further obligations of the Company to the Employee and all rights of the Employee with respect to the Restricted Stock shall terminate, unless such forfeiture is waived by the Committee. If the Compensation Committee of the Company’s Board of Directors determines that (i) the Employee has breached any of the obligations stated in section 3 of the Agreement during the Period of Restriction or (ii) the Restricted Stock was awarded with respect to (A) a Plan Year for which there has been a material restatement of the Company’s annual report to the SEC due to negligence or misconduct by one or more persons or (B) any subsequent Plan Year having awards materially affected by the restatement, the Company shall be entitled to declare all or any portion of any unvested Restricted Stock awarded under this Agreement to be forfeited.

Notwithstanding any provisions to the contrary, the Employee may not extend the Period of Restriction.

As used in this section of the Agreement, “disability” shall have the meaning stated in Article 2.15 of the Plan, and “retirement” shall mean termination of employment for reason other than death after the Employee has achieved 30 years of service, age 62 with at least 10 years of service or age 65.





3.
COVENANTS OF NON-DISCLOSURE, NON-SOLICITATION AND NON-COMPETITION .

3.1 Non-Competition During Employment . The Employee agrees during his/her employment with the Company he/she shall not, directly or indirectly, either individually or as an employee, agent, partner, shareholder, consultant or in any other capacity, participate in, engage in or have a financial or other interest in any business which is in competition with the Company or any successor or assignee of the Company. The ownership of less than 1% of the outstanding securities of a publicly-traded company or 20% of a private company’s securities or profits, even though that corporation may be a competitor of the Company, shall not be deemed financial participation in a competitor.

3.2 Non-Competition After Employment . The Employee agrees that, upon voluntary or involuntary termination of employment with the Company and for a period of two (2) years thereafter, he/she will not, directly or indirectly, individually or as an employee, agent, partner, shareholder, consultant, or in any other capacity, canvass, contact, solicit or accept any of the Company’s customers with whom the Employee had contact during the two (2) year period preceding his/her termination for the purpose of providing services, products or business that are in competition with the services, products or business which the Company provides to such customers. It is understood and agreed that the fluid customer list limitation contemplated by the parties closely approximates the area of the Company’s vulnerability to unfair competition by Employee and does not deprive Employee of legitimate competitive opportunities to which he/she is entitled.

3.3 Impairment of Company’s Relationships . The Employee further agrees that during the term of his/her employment and for a period of two (2) years thereafter, he/she will not interfere with or attempt to impair the relationship between the Company and any of its employees nor will the Employee attempt, directly or indirectly, to solicit, entice, or otherwise induce any other employee to terminate his/her association with the Company. The term “solicit, entice or induce” includes, but is not limited to, the following: (a) initiating communications with an employee of the Company relating to possible employment; (b) offering bonuses or additional compensation to encourage employees of the Company to terminate their employment and accept employment with a competitor, supplier or customer of the Company; (c) referring employees of the Company to personnel or agents employed or engaged by competitors, suppliers or customers of the Company; or (d) referring personnel or agents employed or engaged by competitors, suppliers or customers of the Company to employees of the Company.

3.4. Non-Disclosure of Information .

(a) Confidential Information. As used in this Agreement, “Confidential Information” shall mean any and all information whether generated by the Company or by a third party at the Company’s request, disclosed by the Company to Employee during the period of the Employee’s employ with the Company, including, without limitation, trade secrets, design documents, copyright material, inventions, technology, processes, marketing data, business strategies, financial information and records, product information (including, without limitation, any product designs, specifications, capabilities, drawings, diagrams, blueprints, models and similar items), customer and prospective customer lists, supplier and vendor lists, product pricing formulas, software and similar information, in any form (whether oral, electronic, written, graphic or other printed form or obtained from access to or observation of the Company’s facilities or operations). Confidential Information does not include information or data which is:
(1) at the time of disclosure, or thereafter becomes, available to the general public by publication or otherwise through (i) no fault or negligence of the Employee or (ii) no breach of this Agreement by Employee;




(2) in the possession of the Employee prior to disclosure thereof by the Company as evidenced by written records of the Employee prepared prior to the date of disclosure of such information to the Employee;
(3) independently developed by the Employee without the benefit of any of the Confidential Information as evidenced by the written records of the Employee prepared to the date of disclosure of such information to the Employee; or
(4) disclosed to Employee by a third party having no obligation of confidentiality to the Company with respect to the information so disclosed.

(b) Trade Secrets . The parties also acknowledge that certain of the Company’s Confidential Information is a trade secret (“Trade Secret”) as that term is defined in Sec. 134.90(1)(c) of the Wisconsin Uniform Trade Secrets Act, i.e. information, including a formula, pattern, compilation, program, device, method, technique or process, that (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure, and (ii) is the subject of efforts that are reasonable under the circumstance to maintain its secrecy.

(c) Disclosure of Confidential Information . Except as required in the performance of his or her duties of employment, and for a period of two (2) years following the termination of his or her employment with the Company, Employee shall not disclose to a third party or use any of the Company’s Confidential Information and shall not remove any of the Company’s Confidential Information in any form or media from the Company’s offices, unless he or she first obtains the written consent of the Company.

(d) Disclosure of Trade Secrets . Employee shall never disclose to a third party or use any of the Company’s Trade Secrets and shall not remove any of the Company’s Trade Secrets in any form or media from the Company’s offices, unless he or she first obtains the written consent of the Company. The parties acknowledge that this obligation has no termination date.

3.5 Waiver of Unintended Effects . It is not the purpose of the Agreement to preclude Employee from engaging in employment that is not competitive with the Company, does not pose a competitive threat to the Company, and does not interfere with the Company’s protectable business interests. If during the term of this Agreement Employee wishes to engage in a business that may involve a violation of the literal terms of this Agreement but Employee believes it will not pose a competitive threat to the Company, Employee agrees to submit to the Company in writing a request to engage in this business. Any such request must specifically refer to this Agreement. The Company agrees that it will respond to the request with reasonable promptness and that it will not unreasonably withhold permission to engage in the business specified in the request, regardless of the terms of this Agreement, if the business sought to be engaged in is not competitive with that of the Company and does not pose a competitive threat to the Company. Any such permission granted by the Company must be in writing, shall extend only to the business specifically identified in Employee’s written request, and shall not otherwise constitute a wavier of the Company’s rights under this Agreement.

3.6. Common Law of Torts and Trade Secrets . The parties agree that nothing in this Agreement shall be construed to limit or negate the common law of torts or trade secrets where it provides the Company with broader protection than that provided herein.

4.      RIGHTS DURING PERIOD OF RESTRICTION . During the Period of restriction, the Employee shall have the right to vote the Restricted Stock and to receive cash dividends, stock dividends and other distributions made with respect to the Restricted Stock; however, all such stock dividends and




other non-cash distributions shall be forfeitable and subject to the same restrictions as exist regarding the original shares of Restricted Stock. The Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered during the Period of Restriction, except by will or the laws of descent and distribution.

5.      CUSTODY . The Restricted Stock may be credited to the Employee in book entry form and held, along with any stock dividends relating thereto, in custody by the Company or an agent for the Company until the applicable restrictions have expired and the Employee provides other instructions. If any certificates are issued for shares of Restricted Stock or any such stock dividends during the Period of Restriction, such certificates shall bear an appropriate legend as determined by the Company referring to the applicable terms, conditions and restrictions and the Employee shall deliver a signed, blank stock power to the Company relating thereto.

6.      TAX WITHHOLDING . The Employee may satisfy any tax withholding obligations arising with respect to the Restricted Stock in whole or in part by tendering a check to the Company for any required amount, by election to have a portion of the shares withheld to defray all or a portion of any applicable taxes, or by election to have the Company or its subsidiaries withhold the required amounts from other compensation payable to the Employee.

7.      IMPACT ON OTHER BENEFITS . The value of the Restricted Stock awarded hereunder, either on the Award Date or at the time such shares become vested, shall not be includable as compensation or earnings for purposes of any other benefit plan or program offered by the Company or its subsidiaries.

IN WITNESS WHEREOF , this Restricted Stock Award Agreement is executed by the parties as of the date set forth above.

BRIGGS & STRATTON CORPORATION


By:                           
Todd J. Teske
Chairman, President and
Chief Executive Officer


Date:____________                                                                                    «Name»






Exhibit 10.4
BRIGGS & STRATTON CORPORATION
RESTRICTED STOCK UNIT AWARD AGREEMENT


THIS RESTRICTED STOCK UNIT AWARD AGREEMENT, dated as of this ____ day of _________ 20_ _, is made by BRIGGS & STRATTON CORPORATION (the “Company”) to ______________ (the “Employee”).

WHEREAS , the Company believes it to be in the best interests of the Company and its shareholders to provide an incentive for certain of its key employees to work for and manage the affairs of the Company in such a way that its shares become more valuable; and

WHEREAS , the Employee is a key employee of the Company or one of its subsidiaries or affiliates.

NOW, THEREFORE , in consideration of the premises, the Company hereby awards Restricted Stock Units to the Employee on the terms, conditions and restrictions hereinafter set forth.

1.      AWARD . The Company hereby awards to the Employee ______ Restricted Stock Units on the date hereof (the “Award Date”). Restricted Stock Units are the right to receive in the future common stock of the Company in accordance with this Agreement and Article 9 of the Company’s 2014 Omnibus Incentive Plan (the “Plan”).

2.      PERIOD OF RESTRICTION . The Restricted Stock Units shall be forfeitable as described below until it becomes vested upon the first to occur, if any, of the following events:

(a)      The termination of the Employee's employment with the Company or a subsidiary by reason of disability or death.

(b)      Three (3) years from the Award Date.

(c)      A change in control of the Company as defined in Article 2.8 of the Plan.

The period of time during which the Restricted Stock Units are forfeitable is referred to as the “Period of Restriction.” If the Employee's employment with the Company or one of its subsidiaries or affiliates terminates during the Period of Restriction for any reason other than retirement, disability or death, the Restricted Stock Units shall be forfeited to the Company on the date of such termination, without any further obligations of the Company to the Employee and all rights of the Employee with respect to the Restricted Stock Units shall terminate, unless such forfeiture is waived by the Committee. If the Compensation Committee of the Company’s Board of Directors determines that (i) the Employee has breached any of the obligations stated in section 3 of the Agreement during the Period of Restriction or (ii) the Restricted Stock Units were awarded with respect to (A) a Plan Year for which there has been a material restatement of the Company’s annual report to the SEC due to negligence or misconduct by one or more persons or (B) any subsequent Plan Year having awards materially affected by the restatement, the Company shall be entitled to declare all or any portion of any unvested Restricted Stock Units awarded under this Agreement to be forfeited.

Notwithstanding any provisions to the contrary, the Employee may not extend the Period of Restriction.





As used in this section of the Agreement, “disability” shall have the meaning stated in Article 2.15 of the Plan, and “retirement” shall mean termination of employment for reason other than death after the Employee has achieved 30 years of service, age 62 with at least 10 years of service or age 65.

3.
COVENANTS OF NON-DISCLOSURE, NON-SOLICITATION AND NON-COMPETITION .

3.1 Non-Competition During Employment . The Employee agrees during his/her employment with the Company he/she shall not, directly or indirectly, either individually or as an employee, agent, partner, shareholder, consultant or in any other capacity, participate in, engage in or have a financial or other interest in any business which is in competition with the Company or any successor or assignee of the Company. The ownership of less than 1% of the outstanding securities of a publicly-traded company or 20% of a private company’s securities or profits, even though that corporation may be a competitor of the Company, shall not be deemed financial participation in a competitor.

3.2 Non-Competition After Employment . The Employee agrees that, upon voluntary or involuntary termination of employment with the Company and for a period of two (2) years thereafter, he/she will not, directly or indirectly, individually or as an employee, agent, partner, shareholder, consultant, or in any other capacity, canvass, contact, solicit or accept any of the Company’s customers with whom the Employee had contact during the two (2) year period preceding his/her termination for the purpose of providing services, products or business that are in competition with the services, products or business which the Company provides to such customers. It is understood and agreed that the fluid customer list limitation contemplated by the parties closely approximates the area of the Company’s vulnerability to unfair competition by Employee and does not deprive Employee of legitimate competitive opportunities to which he/she is entitled.

3.3 Impairment of Company’s Relationships . The Employee further agrees that during the term of his/her employment and for a period of two (2) years thereafter, he/she will not interfere with or attempt to impair the relationship between the Company and any of its employees nor will the Employee attempt, directly or indirectly, to solicit, entice, or otherwise induce any other employee to terminate his/her association with the Company. The term “solicit, entice or induce” includes, but is not limited to, the following: (a) initiating communications with an employee of the Company relating to possible employment; (b) offering bonuses or additional compensation to encourage employees of the Company to terminate their employment and accept employment with a competitor, supplier or customer of the Company; (c) referring employees of the Company to personnel or agents employed or engaged by competitors, suppliers or customers of the Company; or (d) referring personnel or agents employed or engaged by competitors, suppliers or customers of the Company to employees of the Company.

3.4. Non-Disclosure of Information .

(a) Confidential Information . As used in this Agreement, “Confidential Information” shall mean any and all information whether generated by the Company or by a third party at the Company’s request, disclosed by the Company to Employee during the period of the Employee’s employ with the Company, including, without limitation, trade secrets, design documents, copyright material, inventions, technology, processes, marketing data, business strategies, financial information and records, product information (including, without limitation, any product designs, specifications, capabilities, drawings, diagrams, blueprints, models and similar items), customer and prospective customer lists, supplier and vendor lists, product pricing formulas, software and similar information, in any form (whether oral, electronic, written, graphic or other printed form or obtained from access to or observation of the Company’s facilities or operations). Confidential Information does not include information or data which is:




(1) at the time of disclosure, or thereafter becomes, available to the general public by publication or otherwise through (i) no fault or negligence of the Employee or (ii) no breach of this Agreement by Employee;
(2) in the possession of the Employee prior to disclosure thereof by the Company as evidenced by written records of the Employee prepared prior to the date of disclosure of such information to the Employee;
(3) independently developed by the Employee without the benefit of any of the Confidential Information as evidenced by the written records of the Employee prepared to the date of disclosure of such information to the Employee; or
(4) disclosed to Employee by a third party having no obligation of confidentiality to the Company with respect to the information so disclosed.

(b) Trade Secrets . The parties also acknowledge that certain of the Company’s Confidential Information is a trade secret (“Trade Secret”) as that term is defined in Sec. 134.90(1)(c) of the Wisconsin Uniform Trade Secrets Act, i.e. information, including a formula, pattern, compilation, program, device, method, technique or process, that (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure, and (ii) is the subject of efforts that are reasonable under the circumstance to maintain its secrecy.

(c) Disclosure of Confidential Information . Except as required in the performance of his or her duties of employment, and for a period of two (2) years following the termination of his or her employment with the Company, Employee shall not disclose to a third party or use any of the Company’s Confidential Information and shall not remove any of the Company’s Confidential Information in any form or media from the Company’s offices, unless he or she first obtains the written consent of the Company.

(d) Disclosure of Trade Secrets . Employee shall never disclose to a third party or use any of the Company’s Trade Secrets and shall not remove any of the Company’s Trade Secrets in any form or media from the Company’s offices, unless he or she first obtains the written consent of the Company. The parties acknowledge that this obligation has no termination date.

3.5 Waiver of Unintended Effects . It is not the purpose of the Agreement to preclude Employee from engaging in employment that is not competitive with the Company, does not pose a competitive threat to the Company, and does not interfere with the Company’s protectable business interests. If during the term of this Agreement Employee wishes to engage in a business that may involve a violation of the literal terms of this Agreement but Employee believes it will not pose a competitive threat to the Company, Employee agrees to submit to the Company in writing a request to engage in this business. Any such request must specifically refer to this Agreement. The Company agrees that it will respond to the request with reasonable promptness and that it will not unreasonably withhold permission to engage in the business specified in the request, regardless of the terms of this Agreement, if the business sought to be engaged in is not competitive with that of the Company and does not pose a competitive threat to the Company. Any such permission granted by the Company must be in writing, shall extend only to the business specifically identified in Employee’s written request, and shall not otherwise constitute a waiver of the Company’s rights under this Agreement.

3.6. Common Law of Torts and Trade Secrets . The parties agree that nothing in this Agreement shall be construed to limit or negate the common law of torts or trade secrets where it provides the Company with broader protection than that provided herein.





4.      RIGHTS DURING PERIOD OF RESTRICTION . During the Period of Restriction, the Employee shall not receive any certificate with respect to Restricted Stock Units and shall have no right to vote the Restricted Stock Units or to receive cash dividends, stock dividends and other distributions made with respect to the Restricted Stock Units; however, amounts equal to any dividends or other distributions declared during the Period of Restriction with respect to the Restricted Stock Units will be awarded, automatically deferred and deemed to be reinvested in additional Restricted Stock Units. The Restricted Stock Units may not be sold, assigned, transferred, pledged or otherwise encumbered during the Period of Restriction, except by will or the laws of descent and distribution.

5.      BOOK ACCOUNT . The Restricted Stock Units, including the original award and any additional units attributable to cash dividends, stock dividends or distributions relating to the Restricted Stock Units, shall be credited to a book account for the Employee. Upon expiration of the Period of Restriction, the Company shall issue and deliver to the Employee certificates for shares of the Company’s common stock, par value $0.01 per share, equal to the total number of Restricted Stock Units then credited to the Employee until the Employee provides other instructions, subject to Section 6 below.

6.      TAX WITHHOLDING . The Employee may satisfy any tax withholding obligations arising with respect to the Restricted Stock Units in whole or in part by tendering a check to the Company for any required amount, by election to have a portion of the shares withheld to defray all or a portion of any applicable taxes, or by election to have the Company or its subsidiaries withhold the required amounts from other compensation payable to the Employee.

7.      IMPACT ON OTHER BENEFITS . The value of the Restricted Stock Units shall not be includable as compensation or earnings for purposes of any other benefit plan or program offered by the Company or its subsidiaries or affiliates.

IN WITNESS WHEREOF , this Restricted Stock Unit Award Agreement is executed by the parties as of the date set forth above.

BRIGGS & STRATTON CORPORATION


By:                           
Todd J. Teske
Chairman, President and
Chief Executive Officer


Date:                                                                                             [Employee]





Exhibit 10.5
BRIGGS & STRATTON CORPORATION
2014 OMNIBUS INCENTIVE PLAN
PERFORMANCE SHARE UNIT AWARD AGREEMENT


Participant:
[ Insert name ]
Performance Share Award at Target:
____ Performance Share Units
Performance Period:
Plan Year ____ through Plan Year ____
Performance Measures:
Cumulative Operating Income (“COI”)

BRIGGS & STRATTON CORPORATION (the “Company”), a Wisconsin corporation, hereby awards to the above-named employee (the “Participant”) under the Briggs & Stratton Corporation 2014 Omnibus Incentive Plan (the “Plan”) the number of performance share units at target set forth above, all in accordance with and subject to the attached Performance Share Unit Terms and Conditions.

If there is any inconsistency between this Agreement and the Plan, the Plan shall supersede the conflicting terms and conditions of this Agreement. All capitalized terms shall have the meanings ascribed to them in the Plan, unless specifically set forth otherwise herein.
IN WITNESS WHEREOF, this Performance Share Unit Award Agreement has been duly executed as of _______.

BRIGGS & STRATTON CORPORATION



By                     
Todd J. Teske
Chairman, President and CEO

PARTICIPANT



Date____________                                                                                «Name»
    

















Briggs & Stratton Corporation
Performance Share Unit Terms and Conditions
Section 1. Performance Period
The Performance Period commences on the first day of the three-year performance period stated on the first page of the award and ends on the last day of such period.
Section 2. Value of Performance Share Units

Each Performance Share Unit has a value for purposes of this Agreement equal to one share of common stock of the Company.
Section 3. Performance Share Units and Achievement of Performance Measures

(a) The number of Performance Share Units to be earned under this Agreement shall be based upon the achievement of a level of COI as approved by the Compensation Committee (the “Committee”) of the Company’s Board of Directors for the Performance Period, based on the following table:
Performance Level          COI              % of Target Earned
Minimum              $XXX million              25%
Target                  $YYY million              100%
Maximum              $ZZZ million              200%
(b) “COI” means the Company’s Income from Operations as reported in its consolidated financial statements filed with the SEC for the relevant Performance Period or relevant portion thereof as adjusted by the Committee to exclude or adjust significant nonbudgeted or uncontrollable capital investments or gains or losses from actual financial results in order to properly measure performance.

(c) Straight line interpolation shall be used to determine the number of Shares awarded in the event the ranking does not fall directly on one of the ranks listed in the above table, by rounding up or down to the nearest 10 Shares. For example, if COI is 117.25% of Target and the Performance Share Target Award at Target is 500 Shares, the number of Shares awarded would be 590 (500 x 117.25% = 586.25 rounded up to 590).
(d) No Participant may receive awards under the Plan covering more than 250,000 Shares in any fiscal year. In the event that the maximum number of Shares that may be issued under this Agreement, when combined with any other awards to the Participant for a fiscal year, would cause the Participant to exceed the limit, the maximum number of Shares that may be issued to the Participant shall be reduced so that the limit is met. The number of Shares subject to such reduction shall be paid to the Participant in the following fiscal year if the Participant continues in employment for 12 months, provided that any payment in the following fiscal year shall also be subject to the foregoing limit and, if the limit would be exceeded, the same process shall be repeated until the Shares can be issued without exceeding the limit or the Participant’s employment is terminated.







Section 4. Covenant of Non-Disclosure, Non-Solicitation and Non-Competition
4.1 Non-Competition During Employment . The Participant agrees during his/her employment with the Company he/she shall not, directly or indirectly, either individually or as an employee, agent, partner, shareholder, consultant or in any other capacity, participate in, engage in or have a financial or other interest in any business which is in competition with the Company or any successor or assignee of the Company. The ownership of less than 1% of the outstanding securities of a publicly-traded company or 20% of a private company’s securities or profits, even though that corporation may be a competitor of the Company, shall not be deemed financial participation in a competitor.

4.2 Non-Competition After Employment . The Participant agrees that, upon voluntary or involuntary termination of employment with the Company and for a period of two (2) years thereafter, he/she will not, directly or indirectly, individually or as an employee, agent, partner, shareholder, consultant, or in any other capacity, canvass, contact, solicit or accept any of the Company’s customers with whom the Participant had contact during the two (2) year period preceding his/her termination for the purpose of providing services, products or business that are in competition with the services, products or business which the Company provides to such customers. It is understood and agreed that the fluid customer list limitation contemplated by the parties closely approximates the area of the Company’s vulnerability to unfair competition by Participant and does not deprive Participant of legitimate competitive opportunities to which he/she is entitled.

4.3 Impairment of Company’s Relationships . The Participant further agrees that during the term of his/her employment and for a period of two (2) years thereafter, he/she will not interfere with or attempt to impair the relationship between the Company and any of its employees nor will the Participant attempt, directly or indirectly, to solicit, entice, or otherwise induce any other employee to terminate his/her association with the Company. The term “solicit, entice or induce” includes, but is not limited to, the following: (a) initiating communications with an employee of the Company relating to possible employment; (b) offering bonuses or additional compensation to encourage employees of the Company to terminate their employment and accept employment with a competitor, supplier or customer of the Company; (c) referring employees of the Company to personnel or agents employed or engaged by competitors, suppliers or customers of the Company; or (d) referring personnel or agents employed or engaged by competitors, suppliers or customers of the Company to employees of the Company.

4.4. Non-Disclosure of Information .

(a) Confidential Information . As used in this Agreement, “Confidential Information” shall mean any and all information whether generated by the Company or by a third party at the Company’s request, disclosed by the Company to Participant during the period of the Participant’s employ with the Company, including, without limitation, trade secrets, design documents, copyright material, inventions, technology, processes, marketing data, business strategies, financial information and records, product information (including, without limitation, any product designs, specifications, capabilities, drawings, diagrams, blueprints, models and similar items), customer and prospective customer lists, supplier and vendor lists, product pricing formulas, software and similar information, in any form (whether oral, electronic, written, graphic or other printed form or obtained from access to or observation of the Company’s facilities or operations). Confidential Information does not include information or data which is:
(1) at the time of disclosure, or thereafter becomes, available to the general public by publication or otherwise through (i) no fault or negligence of the Participant or (ii) no breach of this Agreement by Participant;




(2) in the possession of the Participant prior to disclosure thereof by the Company as evidenced by written records of the Participant prepared prior to the date of disclosure of such information to the Participant;
(3) independently developed by the Participant without the benefit of any of the Confidential Information as evidenced by the written records of the Participant prepared to the date of disclosure of such information to the Participant; or
(4) disclosed to Participant by a third party having no obligation of confidentiality to the Company with respect to the information so disclosed.

(b) Trade Secrets . The parties also acknowledge that certain of the Company’s Confidential Information is a trade secret (“Trade Secret”) as that term is defined in Sec. 134.90(1)(c) of the Wisconsin Uniform Trade Secrets Act, i.e. information, including a formula, pattern, compilation, program, device, method, technique or process, that (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure, and (ii) is the subject of efforts that are reasonable under the circumstance to maintain its secrecy.

(c) Disclosure of Confidential Information . Except as required in the performance of his or her duties of employment, and for a period of two (2) years following the termination of his or her employment with the Company, Participant shall not disclose to a third party or use any of the Company’s Confidential Information and shall not remove any of the Company’s Confidential Information in any form or media from the Company’s offices, unless he or she first obtains the written consent of the Company.

(d) Disclosure of Trade Secrets . Participant shall never disclose to a third party or use any of the Company’s Trade Secrets and shall not remove any of the Company’s Trade Secrets in any form or media from the Company’s offices, unless he or she first obtains the written consent of the Company. The parties acknowledge that this obligation has no termination date.

4.5 Waiver of Unintended Effects . It is not the purpose of the Agreement to preclude Participant from engaging in employment that is not competitive with the Company, does not pose a competitive threat to the Company, and does not interfere with the Company’s protectable business interests. If during the term of this Agreement Participant wishes to engage in a business that may involve a violation of the literal terms of this Agreement but Participant believes it will not pose a competitive threat to the Company, Participant agrees to submit to the Company in writing a request to engage in this business. Any such request must specifically refer to this Agreement. The Company agrees that it will respond to the request with reasonable promptness and that it will not unreasonably withhold permission to engage in the business specified in the request, regardless of the terms of this Agreement, if the business sought to be engaged in is not competitive with that of the Company and does not pose a competitive threat to the Company. Any such permission granted by the Company must be in writing, shall extend only to the business specifically identified in Participant’s written request, and shall not otherwise constitute a wavier of the Company’s rights under this Agreement.

4.6. Common Law of Torts and Trade Secrets . The parties agree that nothing in this Agreement shall be construed to limit or negate the common law of torts or trade secrets where it provides the Company with broader protection than that provided herein.






Section 5. Termination Provisions

(a) Except as provided below, the Participant shall be eligible for payment of awarded Performance Share Units as determined in section 3 only if the Participant’s employment with the Company continues through the end of the Performance Period.
(b) If the Participant’s employment with the Company terminates prior to the end of the Performance Period by reason of the occurrence of such Participant’s disability or death, a pro-rated payment will be provided. In the event of disability, the pro-rated payment will be computed as of the end of the Performance Period. The proration shall be based on the number of full months that the Participant was employed during the Performance Period prior to the Disability. In the event of death, COI will be computed as of the end of the Company’s fiscal quarter subsequent to the date of death and compared to Target COI during the same period. The proration shall be based on the number of full months that the Participant was employed during the Performance Period prior to death. The number of earned shares, if any, shall be delivered to the estate of the Participant as soon as practicable after the computations described above.
(c) If the Participant’s employment with the Company terminates prior to the end of the Performance Period by reason of retirement, or if the Participant’s employment with the Company terminates without cause, the Committee, in its sole discretion and taking into consideration the performance of the Participant and the performance of the Company during the Performance Period, may authorize payment to the Participant (or his legal representative) at the end of the Performance Period of all or any portion of the Performance Share Unit award which would have been paid to the Participant for such Performance Period.
(d) If the Committee determines that (i) the Participant has breached any of the obligations stated in section 4 of the Agreement during the Performance Period or (ii) the Performance Share Units were awarded with respect to (A) a Plan Year for which there has been a material restatement of the Company’s annual report to the SEC due to negligence or misconduct by one or more persons or (B) any subsequent Plan Year having awards materially affected by the restatement, the Company shall be entitled to declare all or any portion of any Performance Share Units awarded under this Agreement to be forfeited.
(e) As used in this section of the Agreement, “disability” shall have the meaning stated in Article 2.15 of the Plan, and “retirement” shall mean termination of employment for reason other than death after the Participant has achieved 30 years of service, age 62 with at least 10 years of service or age 65.
Section 6. Dividends

The Participant shall have no right to any dividends which may be paid with respect to Shares until any such Shares are paid to the Participant following the completion of the Performance Period. However, any dividends declared during the Performance Period shall be credited to the Performance Share Units and shall be reinvested as additional Performance Share Units subject to this Agreement on the date the dividends are paid.
Section 7. Form and Timing of Payment of Performance Share Units

(a) The Performance Share Units as finally calculated herein shall be paid to the Participant no later than two and one-half months after the end of the Performance Period, subject to the following:
(i) The Participant shall have no right with respect to any award until such award shall be paid to such Participant.




(ii) The number of Performance Share Units paid to the Participant shall be rounded up or down to the nearest 10 shares.
(b) Performance Share Units awarded, if any, will only be paid out in Shares. Such Shares may be credited to the Participant in book entry form and held, along with any stock dividends relating thereto, in custody by the Company or an agent for the Company until the Participant instructs otherwise.
Section 8. Nontransferability

Performance Share Units may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided in this Agreement, the Participant’s rights under the Plan shall be exercisable during the Participant’s lifetime only by the Participant or the Participant’s legal representative.
Section 9. Administration

This Agreement and the rights of the Participant hereunder are subject to all the terms and conditions of the Plan as amended from time to time, as well as such rules and regulations as the Committee may adopt for administration of the Plan. It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this Agreement, all of which shall be binding upon the Participant. Any inconsistency between the Agreement and the Plan shall be resolved in favor of the Plan.
Section 10. Miscellaneous

(a) This Agreement shall not give the Participant any right to be retained in the employ of the Company. The right and power of the Company to dismiss or discharge the Participant is specifically reserved. The Participant or any person claiming under or through the Participant shall not have any right or interest in the Plan or any award thereunder, unless and until all terms, conditions, and provisions of the Plan that affect the Participant have been complied with as specified herein.
(b) This Agreement shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. To the extent not preempted by federal law, this Agreement shall be governed by, and construed in accordance with, the laws of the State of Wisconsin.
(c) The Company shall have the power and right to deduct or withhold, or require the Participant to remit to the Company, the minimum statutory amount to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising under this Agreement. With respect to withholdings required upon payment of Shares in satisfaction of all of the Performance Share Units awarded, the Company will withhold Shares having an aggregate Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that could be imposed on the transaction.
(d) In the event of a Change in Control, all performance conditions shall be deemed satisfied as if target performance was achieved, and awards will be settled pro rata based on the proportion of the applicable Performance Period that lapsed through the date of the Change in Control in accordance with Article 17(c) of the Plan. Such deemed earned Performance Share Units shall be paid out as soon as practicable.




Exhibit 31.1
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Form 10-Q for Quarterly Period Ended September 28, 2014
Certification of Principal Executive Officer
I, Todd J. Teske, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Briggs & Stratton Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:
November 5, 2014
 
/s/ Todd J. Teske
 
 
 
Todd J. Teske
 
 
 
Chief Executive Officer






Exhibit 31.2
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Form 10-Q for Quarterly Period Ended September 28, 2014
Certification of Principal Financial Officer
I, David J. Rodgers, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Briggs & Stratton Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:
November 5, 2014
 
/s/ David J. Rodgers
 
 
 
David J. Rodgers
 
 
 
Chief Financial Officer






Exhibit 32.1
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Form 10-Q for Quarterly Period Ended September 28, 2014
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Briggs & Stratton Corporation (the “Company”) on Form 10-Q for the quarter ended September 28, 2014 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Todd J. Teske, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Todd J. Teske
Todd J. Teske
Chief Executive Officer
November 5, 2014

This certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.





Exhibit 32.2
BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Form 10-Q for Quarterly Period Ended September 28, 2014
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Briggs & Stratton Corporation (the “Company”) on Form 10-Q for the quarter ended September 28, 2014 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David J. Rodgers, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ David J. Rodgers
David J. Rodgers
Chief Financial Officer
November 5, 2014

This certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.