Briggs & Stratton Corporation Reports Fiscal 2019 Third Quarter Results

Published

MILWAUKEE, April 25, 2019 /PRNewswire/ -- Briggs & Stratton Corporation (NYSE: BGG) today announced financial results for its third fiscal quarter ended March 31, 2019.

  • Third fiscal quarter net sales decreased 4% to $580 million from $604 million in the prior year.  The decrease is largely driven by continued weather-related market softness in Australia and Europe as well as the impact to U.S. sales from the Sears bankruptcy.
  • Ongoing favorable sales momentum led to 18% growth of engines and products designed for commercial markets, on a trailing twelve-month basis, and accounted for 30% of trailing twelve-month sales.
  • Quarterly GAAP gross profit margin of 16.7% and adjusted gross profit margin of 17.4% decreased from last year's GAAP gross profit margin of 21.6% and adjusted gross profit margin of 21.9%, primarily due to sales mix, lower production volumes as planned, and start-up inefficiencies associated with our business optimization initiatives.
  • Third quarter GAAP net income of $8.0 million, or $0.19 per diluted share, included business optimization charges and acquisition integration charges compared to GAAP net income of $31.9 million, or $0.74 per diluted share in the prior year. Excluding these items, adjusted net income for the fiscal 2019 third quarter was $14.6 million, or $0.34 per diluted share, compared with $36.2 million, or $0.84 per diluted share, for the prior year.
  • The company is revising its fiscal 2019 earnings outlook to $0.45 to $0.55 per diluted share, before business optimization costs and other charges, from previous guidance of $1.10 to $1.30 per diluted share. The revision reflects continued weather-related market softness and the impact of temporary inefficiencies associated with the start-up of business optimization initiatives.
  • The company's preliminary estimates for fiscal 2020 include meaningful sales and earnings improvement from the fiscal 2019 outlook. Net sales for fiscal 2020 are expected to be in a range of $1.98 billion to $2.03 billion and diluted earnings per share are expected to be in a range of $1.20 to $1.40, excluding business optimization program costs.  Further context will be provided in tomorrow's earnings conference call. 

Todd J. Teske, Chairman, President and Chief Executive Officer, commented, "We were disappointed in the quarterly results. Lower shipments due to the Sears bankruptcy, weather-related softness particularly in Australia and Europe, and inefficiencies from start-up activities related to our business optimization initiatives tempered overall sales performance and reduced quarterly profitability more than previously expected.  While incurring these elevated start-up costs were difficult from a financial performance perspective, they helped enable us to meet important customer delivery commitments on robust sales across commercial lines and position us well for long-term growth."  Teske continued, "Actions are already underway to improve operating performance.  Fulfillment levels in our service parts business have meaningfully improved, and we are now positioned to support demand during the peak season.  Similarly, production of commercial Vanguard engines is increasing, following the on-shoring from our joint venture. Quality and performance for this line remain high, as closer proximity to our primary customer base is helping us win new business. Production is also increasing at our new facility for Ferris mowers and other commercial products. Growing conditions are favorable throughout much of North America and Europe, which set the stage for a more normal grass-cutting season. The much-needed additional capacity is also giving us the resources to meet the higher demand for our innovative commercial products.  Taken together, we are well-positioned to regain momentum on delivering the business optimization program pre-tax savings of up to $40 million by fiscal 2021 and are confident that our strategic actions position us for improving trends in revenue growth, profitability and capital returns as we enter fiscal 2020 and beyond." 

Fiscal 2019 Outlook:

  • Net sales are now expected to be in a range of $1.86 billion to $1.91 billion (previously $1.90 billion to $1.96 billion), a $40 million reduction. The decrease contemplates $30 million in lower sales in Australia and Europe due to unfavorable weather conditions and a cautious retail sentiment. North America service parts sales are anticipated to be $10 million lower than previously estimated due to lower sales to date through the third quarter.
  • Operating margin is expected to be 2.6% to 2.8% (previously 4.5% to 4.8%), before the impact of charges from the business optimization program, bad debt charge, litigation settlement charge or acquisition integration costs. The reduction is due to the company's expectation of lower sales as well as unfavorable sales mix, lower manufacturing volumes and temporarily elevated inefficiencies.
  • Equity in earnings of unconsolidated affiliates is expected to be $11.5 million, and interest expense is expected to be $28.5 million, adjusted for business optimization charges and premiums paid to retire senior notes. Due to lower expected earnings, the consolidated tax rate is expected to be in a range of 10% to 12%.
  • Net income is now expected to be in a range of $19 million to $23 million (previously $47 million to $55 million), or $0.45 to $0.55 per diluted share (previously $1.10 to $1.30 per diluted share), before the impact of charges.
  • The company continues to anticipate capital expenditures of approximately $65 million.
  • The company's business optimization program is expected to generate pre-tax savings of $35 million to $40 million by fiscal 2021 and related total program pre-tax charges are expected to be up to $70 million, including fiscal 2019 program costs of $42 million to $46 million.

Conference Call Information:

The company will host a conference call tomorrow at 10:00 AM (ET) to review the third quarter financial results. A live webcast of the conference call will be available on the company's corporate website: http://investors.basco.com.

Also available is a dial-in number to access the call real-time at (877) 233-9136 and enter Conference ID 9389953. A replay will be offered beginning approximately two hours after the call ends and will be available for one week. Dial (855) 859-2056 and enter the Conference ID to access the replay.

Non-GAAP Financial Measures:

This release refers to non-GAAP financial measures including "adjusted gross profit", "adjusted engineering, selling, general, and administrative expenses", "adjusted segment income (loss)", "adjusted net income (loss)", and "adjusted diluted earnings (loss) per share." Refer to the accompanying financial schedules for supplemental financial data and corresponding reconciliations of these non-GAAP financial measures to certain GAAP financial measures.

Safe Harbor Statement:

This release contains certain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. The words "anticipate", "believe", "estimate", "expect", "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 its 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 the company competes; changes in laws and regulations, including U.S. tax reform, changes in tax rates, laws and regulations as well as related guidance; imposition of new, or changes in existing, duties, tariffs and trade agreements; changes in customer and OEM demand; changes in prices of raw materials and parts that the company purchases; changes in domestic and foreign economic conditions (including effects from the U.K.'s decision to exit the European Union); the ability to bring new productive capacity on line efficiently and with good quality; outcomes of legal proceedings and claims; the ability to realize anticipated savings from the business optimization program and restructuring actions; and other factors disclosed from time to time in the company's 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. The company undertakes no obligation to update forward-looking statements made in this release to reflect events or circumstances after the date of this release.

About Briggs & Stratton Corporation:

Briggs & Stratton Corporation (NYSE: BGG), headquartered in Milwaukee, Wisconsin, is focused on providing power to get work done and make people's lives better. Briggs & Stratton is the world's largest producer of gasoline engines for outdoor power equipment, and is a leading designer, manufacturer and marketer of power generation, pressure washer, lawn and garden, turf care and job site products through its Briggs & Stratton®, Simplicity®, Snapper®, Ferris®, Vanguard®, Allmand®, Billy Goat®, Murray®, Branco®, and Victa® brands. Briggs & Stratton products are designed, manufactured, marketed and serviced in over 100 countries on six continents. For additional information, please visit www.basco.com and www.briggsandstratton.com.

 

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations for the Periods Ended March
(In Thousands, except per share data)
 Three Months Ended March   Nine Months Ended March 
FY2019 FY2018 FY2019 FY2018
NET SALES $580,196 $604,069 $1,364,655 $1,379,599
COST OF GOODS SOLD 483,209 473,796 1,131,422 1,090,196
Gross Profit  96,987 130,273 233,233 289,403
ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 79,521 80,156 267,553 245,304
EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES (205) 713 5,786 6,438
Income (Loss) from Operations 17,261 50,830 (28,534) 50,537
INTEREST EXPENSE (9,088) (8,617) (21,731) (19,167)
OTHER INCOME  953 1,350 391 3,297
Income (Loss) before Income Taxes 9,126 43,563 (49,874) 34,667
PROVISION (CREDIT) FOR INCOME TAXES 1,121 11,675 (14,331) 34,163
Net Income (Loss) $     8,005 $   31,888 $    (35,543) $            504
EARNINGS (LOSS) PER SHARE
Basic   $       0.19 $       0.74 $         (0.86) $           0.00
Diluted $       0.19 $       0.74 $         (0.86) $           0.00
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic   41,527 42,064 41,691 42,108
Diluted 41,527 42,307 41,691 42,362

 

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES Supplemental International Sales Information
Consolidated Statements of Operations for the Periods Ended March (In Thousands)
(In Thousands, except per share data)
 Three Months Ended March   Nine Months Ended March 
 Three Months Ended March   Nine Months Ended March  FY2019 FY2018 FY2019 FY2018
FY2019 FY2018 FY2019 FY2018 International sales based on product shipment destination $142,817 $160,653 $379,468 $432,538
NET SALES $580,196 $604,069 $1,364,655 $1,379,599
COST OF GOODS SOLD 483,209 473,796 1,131,422 1,090,196
Gross Profit  96,987 130,273 233,233 289,403
ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 79,521 80,156 267,553 245,304
EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES (205) 713 5,786 6,438
Income (Loss) from Operations 17,261 50,830 (28,534) 50,537
INTEREST EXPENSE (9,088) (8,617) (21,731) (19,167)
OTHER INCOME  953 1,350 391 3,297
Income (Loss) before Income Taxes 9,126 43,563 (49,874) 34,667
PROVISION (CREDIT) FOR INCOME TAXES 1,121 11,675 (14,331) 34,163
Net Income (Loss) $     8,005 $   31,888 $    (35,543) $            504
EARNINGS (LOSS) PER SHARE
Basic   $       0.19 $       0.74 $         (0.86) $           0.00
Diluted $       0.19 $       0.74 $         (0.86) $           0.00
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic   41,527 42,064 41,691 42,108
Diluted 41,527 42,307 41,691 42,362

 

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES Supplemental International Sales Information BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations for the Periods Ended March (In Thousands) Consolidated Balance Sheets as of the End of March
(In Thousands, except per share data) (In Thousands)
 Three Months Ended March   Nine Months Ended March 
 Three Months Ended March   Nine Months Ended March  FY2019 FY2018 FY2019 FY2018 CURRENT ASSETS: FY2019 FY2018
FY2019 FY2018 FY2019 FY2018 International sales based on product shipment destination $142,817 $160,653 $379,468 $432,538 Cash and Cash Equivalents $      23,863 $      56,165
NET SALES $580,196 $604,069 $1,364,655 $1,379,599 Accounts Receivable, Net 253,536 259,472
COST OF GOODS SOLD 483,209 473,796 1,131,422 1,090,196 Inventories 525,210 438,492
Gross Profit  96,987 130,273 233,233 289,403 Prepaid Expenses and Other Current Assets 34,682 35,953
Total Current Assets 837,291 790,082
ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 79,521 80,156 267,553 245,304
EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES (205) 713 5,786 6,438 OTHER ASSETS:
Income (Loss) from Operations 17,261 50,830 (28,534) 50,537 Goodwill 169,693 164,213
Investments 46,937 50,224
INTEREST EXPENSE (9,088) (8,617) (21,731) (19,167) Other Intangible Assets, Net 97,465 98,021
OTHER INCOME  953 1,350 391 3,297 Deferred Income Tax Asset 31,031 34,886
Income (Loss) before Income Taxes 9,126 43,563 (49,874) 34,667 Other Long-Term Assets, Net 20,365 20,932
Total Other Assets 365,491 368,276
PROVISION (CREDIT) FOR INCOME TAXES 1,121 11,675 (14,331) 34,163
Net Income (Loss) $     8,005 $   31,888 $    (35,543) $            504
PLANT AND EQUIPMENT:
EARNINGS (LOSS) PER SHARE At Cost 1,208,747 1,161,535
Basic   $       0.19 $       0.74 $         (0.86) $           0.00 Less - Accumulated Depreciation 795,467 762,186
Diluted $       0.19 $       0.74 $         (0.86) $           0.00 Plant and Equipment, Net 413,280 399,349
$ 1,616,062 $ 1,557,707
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic   41,527 42,064 41,691 42,108
Diluted 41,527 42,307 41,691 42,362 CURRENT LIABILITIES:
Accounts Payable $    272,125 $    202,822
Short-Term Debt 211,545 131,556
Accrued Liabilities 143,432 157,895
Total Current Liabilities 627,102 492,273
OTHER LIABILITIES:
Accrued Pension Cost 179,487 197,749
Accrued Employee Benefits 20,122 21,787
Accrued Postretirement Health Care Obligation 25,294 29,547
Other Long-Term Liabilities 61,050 53,737
Long-Term Debt 195,464 202,332
Total Other Liabilities 481,417 505,152
SHAREHOLDERS' INVESTMENT:
Common Stock 579 579
Additional Paid-In Capital 77,523 75,001
Retained Earnings 1,018,265 1,089,364
Accumulated Other Comprehensive Loss (255,021) (280,546)
Treasury Stock, at Cost (333,803) (324,116)
Total Shareholders' Investment 507,543 560,282
$ 1,616,062 $ 1,557,707

 

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES Supplemental International Sales Information BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations for the Periods Ended March (In Thousands) Consolidated Balance Sheets as of the End of March Consolidated Statements of Cash Flows
(In Thousands, except per share data) (In Thousands) (In Thousands)
 Three Months Ended March   Nine Months Ended March 
 Three Months Ended March   Nine Months Ended March  FY2019 FY2018 FY2019 FY2018 CURRENT ASSETS: FY2019 FY2018 Nine Months Ended March
FY2019 FY2018 FY2019 FY2018 International sales based on product shipment destination $142,817 $160,653 $379,468 $432,538 Cash and Cash Equivalents $      23,863 $      56,165
NET SALES $580,196 $604,069 $1,364,655 $1,379,599 Accounts Receivable, Net 253,536 259,472 CASH FLOWS FROM OPERATING ACTIVITIES: FY2019 FY2018
COST OF GOODS SOLD 483,209 473,796 1,131,422 1,090,196 Inventories 525,210 438,492 Net Income (Loss) $                  (35,543) $                        504
Gross Profit  96,987 130,273 233,233 289,403 Prepaid Expenses and Other Current Assets 34,682 35,953 Adjustments to Reconcile Net Income (Loss) to Net Cash Used in Operating Activities:
Total Current Assets 837,291 790,082 Depreciation and Amortization 47,385 43,756
ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 79,521 80,156 267,553 245,304 Stock Compensation Expense 5,496 5,312
EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES (205) 713 5,786 6,438 OTHER ASSETS: Loss on Disposition of Plant and Equipment 66 1,595
Income (Loss) from Operations 17,261 50,830 (28,534) 50,537 Goodwill 169,693 164,213 Provision (Credit) for Deferred Income Taxes (19,247) 24,744
Investments 46,937 50,224 Equity in Earnings of Unconsolidated Affiliates  (8,403) (9,068)
INTEREST EXPENSE (9,088) (8,617) (21,731) (19,167) Other Intangible Assets, Net 97,465 98,021 Dividends Received from Unconsolidated Affiliates  10,510 9,810
OTHER INCOME  953 1,350 391 3,297 Deferred Income Tax Asset 31,031 34,886 Pension Cash Contributions - (30,000)
Income (Loss) before Income Taxes 9,126 43,563 (49,874) 34,667 Other Long-Term Assets, Net 20,365 20,932 Changes in Operating Assets and Liabilities:
Total Other Assets 365,491 368,276 Accounts Receivable (70,876) (25,948)
PROVISION (CREDIT) FOR INCOME TAXES 1,121 11,675 (14,331) 34,163 Inventories (113,407) (62,780)
Net Income (Loss) $     8,005 $   31,888 $    (35,543) $            504 Other Current Assets (856) (3,430)
PLANT AND EQUIPMENT: Accounts Payable, Accrued Liabilities and Income Taxes 77,905 11,287
EARNINGS (LOSS) PER SHARE At Cost 1,208,747 1,161,535 Other, Net 2,079 15,198
Basic   $       0.19 $       0.74 $         (0.86) $           0.00 Less - Accumulated Depreciation 795,467 762,186    Net Cash Used in Operating Activities (104,891) (19,020)
Diluted $       0.19 $       0.74 $         (0.86) $           0.00 Plant and Equipment, Net 413,280 399,349
$ 1,616,062 $ 1,557,707 CASH FLOWS FROM INVESTING ACTIVITIES:
WEIGHTED AVERAGE SHARES OUTSTANDING Capital Expenditures (46,379) (77,483)
Basic   41,527 42,064 41,691 42,108 Proceeds Received on Disposition of Plant and Equipment 31 339
Diluted 41,527 42,307 41,691 42,362 CURRENT LIABILITIES: Cash Paid for Acquisitions, Net of Cash Acquired (8,865) (1,800)
Accounts Payable $    272,125 $    202,822    Net Cash Used in Investing Activities (55,213) (78,944)
Short-Term Debt 211,545 131,556
Accrued Liabilities 143,432 157,895 CASH FLOWS FROM FINANCING ACTIVITIES:
Total Current Liabilities 627,102 492,273 Net Borrowings on Revolver 163,509 131,556
Long Term Note Payable - 7,685
OTHER LIABILITIES: Debt Issuance Costs - (1,154)
Accrued Pension Cost 179,487 197,749 Treasury Stock Purchases (11,937) (8,710)
Accrued Employee Benefits 20,122 21,787 Repayments of Long Term Debt (5,424) (19,781)
Accrued Postretirement Health Care Obligation 25,294 29,547 Stock Option Exercise Proceeds and Tax Benefits 1,823 3,943
Other Long-Term Liabilities 61,050 53,737 Payments Related to Shares Withheld for Taxes for Stock Compensation (257) (1,147)
Long-Term Debt 195,464 202,332 Cash Dividends Paid (11,891) (12,007)
Total Other Liabilities 481,417 505,152    Net Cash Provided by Financing Activities 135,823 100,385
SHAREHOLDERS' INVESTMENT: EFFECT OF EXCHANGE RATE CHANGES (239) 1,090
Common Stock 579 579 NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH (24,520) 3,511
Additional Paid-In Capital 77,523 75,001 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, Beginning 1 49,218 61,707
Retained Earnings 1,018,265 1,089,364 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, Ending 2 $                   24,698 $                   65,218
Accumulated Other Comprehensive Loss (255,021) (280,546)
Treasury Stock, at Cost (333,803) (324,116)
Total Shareholders' Investment 507,543 560,282
$ 1,616,062 $ 1,557,707

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES Supplemental International Sales Information BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations for the Periods Ended March (In Thousands) Consolidated Balance Sheets as of the End of March Consolidated Statements of Cash Flows 1 Included within Beginning Cash, Cash Equivalents, and Restricted Cash is approximately $4.3 million and $0 of restricted cash as of July 1, 2018 and July 2, 2017, respectively.
(In Thousands, except per share data) (In Thousands) (In Thousands)
 Three Months Ended March   Nine Months Ended March  2 Included within Ending Cash, Cash Equivalents, and Restricted Cash is approximately $0.8 million and $9.1 million of restricted cash as of March 31, 2019 and April 1, 2018, respectively. 
 Three Months Ended March   Nine Months Ended March  FY2019 FY2018 FY2019 FY2018 CURRENT ASSETS: FY2019 FY2018 Nine Months Ended March
FY2019 FY2018 FY2019 FY2018 International sales based on product shipment destination $142,817 $160,653 $379,468 $432,538 Cash and Cash Equivalents $      23,863 $      56,165
NET SALES $580,196 $604,069 $1,364,655 $1,379,599 Accounts Receivable, Net 253,536 259,472 CASH FLOWS FROM OPERATING ACTIVITIES: FY2019 FY2018
COST OF GOODS SOLD 483,209 473,796 1,131,422 1,090,196 Inventories 525,210 438,492 Net Income (Loss) $                  (35,543) $                        504
Gross Profit  96,987 130,273 233,233 289,403 Prepaid Expenses and Other Current Assets 34,682 35,953 Adjustments to Reconcile Net Income (Loss) to Net Cash Used in Operating Activities:
Total Current Assets 837,291 790,082 Depreciation and Amortization 47,385 43,756
ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 79,521 80,156 267,553 245,304 Stock Compensation Expense 5,496 5,312
EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES (205) 713 5,786 6,438 OTHER ASSETS: Loss on Disposition of Plant and Equipment 66 1,595
Income (Loss) from Operations 17,261 50,830 (28,534) 50,537 Goodwill 169,693 164,213 Provision (Credit) for Deferred Income Taxes (19,247) 24,744
Investments 46,937 50,224 Equity in Earnings of Unconsolidated Affiliates  (8,403) (9,068)
INTEREST EXPENSE (9,088) (8,617) (21,731) (19,167) Other Intangible Assets, Net 97,465 98,021 Dividends Received from Unconsolidated Affiliates  10,510 9,810
OTHER INCOME  953 1,350 391 3,297 Deferred Income Tax Asset 31,031 34,886 Pension Cash Contributions - (30,000)
Income (Loss) before Income Taxes 9,126 43,563 (49,874) 34,667 Other Long-Term Assets, Net 20,365 20,932 Changes in Operating Assets and Liabilities:
Total Other Assets 365,491 368,276 Accounts Receivable (70,876) (25,948)
PROVISION (CREDIT) FOR INCOME TAXES 1,121 11,675 (14,331) 34,163 Inventories (113,407) (62,780)
Net Income (Loss) $     8,005 $   31,888 $    (35,543) $            504 Other Current Assets (856) (3,430)
PLANT AND EQUIPMENT: Accounts Payable, Accrued Liabilities and Income Taxes 77,905 11,287
EARNINGS (LOSS) PER SHARE At Cost 1,208,747 1,161,535 Other, Net 2,079 15,198
Basic   $       0.19 $       0.74 $         (0.86) $           0.00 Less - Accumulated Depreciation 795,467 762,186    Net Cash Used in Operating Activities (104,891) (19,020)
Diluted $       0.19 $       0.74 $         (0.86) $           0.00 Plant and Equipment, Net 413,280 399,349
$ 1,616,062 $ 1,557,707 CASH FLOWS FROM INVESTING ACTIVITIES:
WEIGHTED AVERAGE SHARES OUTSTANDING Capital Expenditures (46,379) (77,483)
Basic   41,527 42,064 41,691 42,108 Proceeds Received on Disposition of Plant and Equipment 31 339
Diluted 41,527 42,307 41,691 42,362 CURRENT LIABILITIES: Cash Paid for Acquisitions, Net of Cash Acquired (8,865) (1,800)
Accounts Payable $    272,125 $    202,822    Net Cash Used in Investing Activities (55,213) (78,944)
Short-Term Debt 211,545 131,556
Accrued Liabilities 143,432 157,895 CASH FLOWS FROM FINANCING ACTIVITIES:
Total Current Liabilities 627,102 492,273 Net Borrowings on Revolver 163,509 131,556
Long Term Note Payable - 7,685
OTHER LIABILITIES: Debt Issuance Costs - (1,154)
Accrued Pension Cost 179,487 197,749 Treasury Stock Purchases (11,937) (8,710)
Accrued Employee Benefits 20,122 21,787 Repayments of Long Term Debt (5,424) (19,781)
Accrued Postretirement Health Care Obligation 25,294 29,547 Stock Option Exercise Proceeds and Tax Benefits 1,823 3,943
Other Long-Term Liabilities 61,050 53,737 Payments Related to Shares Withheld for Taxes for Stock Compensation (257) (1,147)
Long-Term Debt 195,464 202,332 Cash Dividends Paid (11,891) (12,007)
Total Other Liabilities 481,417 505,152    Net Cash Provided by Financing Activities 135,823 100,385
SHAREHOLDERS' INVESTMENT: EFFECT OF EXCHANGE RATE CHANGES (239) 1,090
Common Stock 579 579 NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH (24,520) 3,511
Additional Paid-In Capital 77,523 75,001 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, Beginning 1 49,218 61,707
Retained Earnings 1,018,265 1,089,364 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, Ending 2 $                   24,698 $                   65,218
Accumulated Other Comprehensive Loss (255,021) (280,546)
Treasury Stock, at Cost (333,803) (324,116)
Total Shareholders' Investment 507,543 560,282
$ 1,616,062 $ 1,557,707

SUPPLEMENTAL SEGMENT INFORMATION

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES Supplemental International Sales Information BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES Engines Segment:
Consolidated Statements of Operations for the Periods Ended March (In Thousands) Consolidated Balance Sheets as of the End of March Consolidated Statements of Cash Flows 1 Included within Beginning Cash, Cash Equivalents, and Restricted Cash is approximately $4.3 million and $0 of restricted cash as of July 1, 2018 and July 2, 2017, respectively.  Three Months Ended March   Nine Months Ended March 
(In Thousands, except per share data) (In Thousands) (In Thousands) (In Thousands) FY2019 FY2018 FY2019 FY2018
 Three Months Ended March   Nine Months Ended March  2 Included within Ending Cash, Cash Equivalents, and Restricted Cash is approximately $0.8 million and $9.1 million of restricted cash as of March 31, 2019 and April 1, 2018, respectively.       Net Sales $ 336,243 $ 384,292 $ 727,351 $ 790,543
 Three Months Ended March   Nine Months Ended March  FY2019 FY2018 FY2019 FY2018 CURRENT ASSETS: FY2019 FY2018 Nine Months Ended March
FY2019 FY2018 FY2019 FY2018 International sales based on product shipment destination $142,817 $160,653 $379,468 $432,538 Cash and Cash Equivalents $      23,863 $      56,165      Gross Profit as Reported $   72,529 $   96,780 $ 144,272 $ 183,428
NET SALES $580,196 $604,069 $1,364,655 $1,379,599 Accounts Receivable, Net 253,536 259,472 CASH FLOWS FROM OPERATING ACTIVITIES: FY2019 FY2018 Business Optimization 623 903 1,712 2,031
COST OF GOODS SOLD 483,209 473,796 1,131,422 1,090,196 Inventories 525,210 438,492 Net Income (Loss) $                  (35,543) $                        504      Adjusted Gross Profit $   73,151 $   97,683 $ 145,984 $ 185,459
Gross Profit  96,987 130,273 233,233 289,403 Prepaid Expenses and Other Current Assets 34,682 35,953 Adjustments to Reconcile Net Income (Loss) to Net Cash Used in Operating Activities:
Total Current Assets 837,291 790,082 Depreciation and Amortization 47,385 43,756      Gross Profit % as Reported 21.6% 25.2% 19.8% 23.2%
ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 79,521 80,156 267,553 245,304 Stock Compensation Expense 5,496 5,312      Adjusted Gross Profit % 21.8% 25.4% 20.1% 23.5%
EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES (205) 713 5,786 6,438 OTHER ASSETS: Loss on Disposition of Plant and Equipment 66 1,595
Income (Loss) from Operations 17,261 50,830 (28,534) 50,537 Goodwill 169,693 164,213 Provision (Credit) for Deferred Income Taxes (19,247) 24,744      Segment Income (Loss) as Reported $   22,833 $   47,718 $  (16,579) $   35,776
Investments 46,937 50,224 Equity in Earnings of Unconsolidated Affiliates  (8,403) (9,068) Business Optimization 5,211 2,896 27,083 7,243
INTEREST EXPENSE (9,088) (8,617) (21,731) (19,167) Other Intangible Assets, Net 97,465 98,021 Dividends Received from Unconsolidated Affiliates  10,510 9,810      Adjusted Segment Income $   28,044 $   50,614 $   10,504 $   43,019
OTHER INCOME  953 1,350 391 3,297 Deferred Income Tax Asset 31,031 34,886 Pension Cash Contributions - (30,000)
Income (Loss) before Income Taxes 9,126 43,563 (49,874) 34,667 Other Long-Term Assets, Net 20,365 20,932 Changes in Operating Assets and Liabilities:      Segment Income (Loss) % as Reported 6.8% 12.4% (2.3%) 4.5%
Total Other Assets 365,491 368,276 Accounts Receivable (70,876) (25,948)      Adjusted Segment Income % 8.3% 13.2% 1.4% 5.4%
PROVISION (CREDIT) FOR INCOME TAXES 1,121 11,675 (14,331) 34,163 Inventories (113,407) (62,780)
Net Income (Loss) $     8,005 $   31,888 $    (35,543) $            504 Other Current Assets (856) (3,430)
PLANT AND EQUIPMENT: Accounts Payable, Accrued Liabilities and Income Taxes 77,905 11,287
EARNINGS (LOSS) PER SHARE At Cost 1,208,747 1,161,535 Other, Net 2,079 15,198
Basic   $       0.19 $       0.74 $         (0.86) $           0.00 Less - Accumulated Depreciation 795,467 762,186    Net Cash Used in Operating Activities (104,891) (19,020)
Diluted $       0.19 $       0.74 $         (0.86) $           0.00 Plant and Equipment, Net 413,280 399,349
$ 1,616,062 $ 1,557,707 CASH FLOWS FROM INVESTING ACTIVITIES:
WEIGHTED AVERAGE SHARES OUTSTANDING Capital Expenditures (46,379) (77,483)
Basic   41,527 42,064 41,691 42,108 Proceeds Received on Disposition of Plant and Equipment 31 339
Diluted 41,527 42,307 41,691 42,362 CURRENT LIABILITIES: Cash Paid for Acquisitions, Net of Cash Acquired (8,865) (1,800)
Accounts Payable $    272,125 $    202,822    Net Cash Used in Investing Activities (55,213) (78,944)
Short-Term Debt 211,545 131,556
Accrued Liabilities 143,432 157,895 CASH FLOWS FROM FINANCING ACTIVITIES:
Total Current Liabilities 627,102 492,273 Net Borrowings on Revolver 163,509 131,556
Long Term Note Payable - 7,685
OTHER LIABILITIES: Debt Issuance Costs - (1,154)
Accrued Pension Cost 179,487 197,749 Treasury Stock Purchases (11,937) (8,710)
Accrued Employee Benefits 20,122 21,787 Repayments of Long Term Debt (5,424) (19,781)
Accrued Postretirement Health Care Obligation 25,294 29,547 Stock Option Exercise Proceeds and Tax Benefits 1,823 3,943
Other Long-Term Liabilities 61,050 53,737 Payments Related to Shares Withheld for Taxes for Stock Compensation (257) (1,147)
Long-Term Debt 195,464 202,332 Cash Dividends Paid (11,891) (12,007)
Total Other Liabilities 481,417 505,152    Net Cash Provided by Financing Activities 135,823 100,385
SHAREHOLDERS' INVESTMENT: EFFECT OF EXCHANGE RATE CHANGES (239) 1,090
Common Stock 579 579 NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH (24,520) 3,511
Additional Paid-In Capital 77,523 75,001 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, Beginning 1 49,218 61,707
Retained Earnings 1,018,265 1,089,364 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, Ending 2 $                   24,698 $                   65,218
Accumulated Other Comprehensive Loss (255,021) (280,546)
Treasury Stock, at Cost (333,803) (324,116)
Total Shareholders' Investment 507,543 560,282
$ 1,616,062 $ 1,557,707

Third Quarter Highlights

  • Engine unit volumes decreased by 18%, or approximately 456,000 engines, in the third quarter of fiscal 2019 compared to the same period last year. Domestically, as anticipated, consumer engine sales decreased due to the Sears bankruptcy and the pull forward of shipments to the second quarter to enable channel partners to restock inventory and facilitate brand transitions this year. Sales into Australia and Europe declined by over 25% in the third quarter due to prolonged historic drought conditions in Australia and elevated channel inventories in Europe following last summer's drought. Domestic service parts sales declined slightly year over year. The decrease in sales was mitigated by a nearly 10% increase in commercial Vanguard engine sales and higher pricing to offset cost inflation and tariffs.
  • The gross profit percentage decreased by 360 basis points from last year due to unfavorable sales mix (160 bps), a 14% reduction in manufacturing volume as planned (130 bps) and inefficiencies (100 bps). Unfavorable sales mix was caused by proportionately less sales outside the U.S. and slightly lower service parts sales. Inefficiencies from start-up activities related to the company's ERP upgrade and the on-shoring of Vanguard engines led to temporarily elevated supply chain and labor costs to ensure timely delivery on the robust growth of Vanguard engines and improve the throughput of service parts sales. Higher prices offset higher commodity costs and tariffs. Foreign exchange was slightly favorable to margins in the quarter.
  • GAAP ESG&A expenses were consistent year over year and adjusted ESG&A expenses decreased $3.0 million from last year due to lower employee compensation costs.

 


BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES Supplemental International Sales Information BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES Engines Segment: Products Segment:
Consolidated Statements of Operations for the Periods Ended March (In Thousands) Consolidated Balance Sheets as of the End of March Consolidated Statements of Cash Flows 1 Included within Beginning Cash, Cash Equivalents, and Restricted Cash is approximately $4.3 million and $0 of restricted cash as of July 1, 2018 and July 2, 2017, respectively.  Three Months Ended March   Nine Months Ended March   Three Months Ended March   Nine Months Ended March 
(In Thousands, except per share data) (In Thousands) (In Thousands) (In Thousands) FY2019 FY2018 FY2019 FY2018 (In Thousands) FY2019 FY2018 FY2019 FY2018
 Three Months Ended March   Nine Months Ended March  2 Included within Ending Cash, Cash Equivalents, and Restricted Cash is approximately $0.8 million and $9.1 million of restricted cash as of March 31, 2019 and April 1, 2018, respectively.       Net Sales $ 336,243 $ 384,292 $ 727,351 $ 790,543      Net Sales $ 271,209 $ 245,169 $ 698,879 $ 653,845
 Three Months Ended March   Nine Months Ended March  FY2019 FY2018 FY2019 FY2018 CURRENT ASSETS: FY2019 FY2018 Nine Months Ended March
FY2019 FY2018 FY2019 FY2018 International sales based on product shipment destination $142,817 $160,653 $379,468 $432,538 Cash and Cash Equivalents $      23,863 $      56,165      Gross Profit as Reported $   72,529 $   96,780 $ 144,272 $ 183,428      Gross Profit as Reported $   24,348 $   32,773 $   89,402 $ 105,570
NET SALES $580,196 $604,069 $1,364,655 $1,379,599 Accounts Receivable, Net 253,536 259,472 CASH FLOWS FROM OPERATING ACTIVITIES: FY2019 FY2018 Business Optimization 623 903 1,712 2,031 Business Optimization 3,267 971 6,978 2,493
COST OF GOODS SOLD 483,209 473,796 1,131,422 1,090,196 Inventories 525,210 438,492 Net Income (Loss) $                  (35,543) $                        504      Adjusted Gross Profit $   73,151 $   97,683 $ 145,984 $ 185,459      Adjusted Gross Profit $   27,615 $   33,744 $   96,380 $ 108,063
Gross Profit  96,987 130,273 233,233 289,403 Prepaid Expenses and Other Current Assets 34,682 35,953 Adjustments to Reconcile Net Income (Loss) to Net Cash Used in Operating Activities:
Total Current Assets 837,291 790,082 Depreciation and Amortization 47,385 43,756      Gross Profit % as Reported 21.6% 25.2% 19.8% 23.2%      Gross Profit % as Reported 9.0% 13.4% 12.8% 16.1%
ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 79,521 80,156 267,553 245,304 Stock Compensation Expense 5,496 5,312      Adjusted Gross Profit % 21.8% 25.4% 20.1% 23.5%      Adjusted Gross Profit % 10.2% 13.8% 13.8% 16.5%
EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES (205) 713 5,786 6,438 OTHER ASSETS: Loss on Disposition of Plant and Equipment 66 1,595
Income (Loss) from Operations 17,261 50,830 (28,534) 50,537 Goodwill 169,693 164,213 Provision (Credit) for Deferred Income Taxes (19,247) 24,744      Segment Income (Loss) as Reported $   22,833 $   47,718 $  (16,579) $   35,776      Segment Income (Loss) as Reported $    (5,682) $      2,392 $  (11,514) $   14,356
Investments 46,937 50,224 Equity in Earnings of Unconsolidated Affiliates  (8,403) (9,068) Business Optimization 5,211 2,896 27,083 7,243 Business Optimization 4,407 1,309 13,207 5,259
INTEREST EXPENSE (9,088) (8,617) (21,731) (19,167) Other Intangible Assets, Net 97,465 98,021 Dividends Received from Unconsolidated Affiliates  10,510 9,810      Adjusted Segment Income $   28,044 $   50,614 $   10,504 $   43,019 Litigation Settlement - - 2,000 -
OTHER INCOME  953 1,350 391 3,297 Deferred Income Tax Asset 31,031 34,886 Pension Cash Contributions - (30,000) Retailer Bankruptcy Bad Debt Expense - - 4,132 -
Income (Loss) before Income Taxes 9,126 43,563 (49,874) 34,667 Other Long-Term Assets, Net 20,365 20,932 Changes in Operating Assets and Liabilities:      Segment Income (Loss) % as Reported 6.8% 12.4% (2.3%) 4.5% Acquisition Related Charges 287 - 523 -
Total Other Assets 365,491 368,276 Accounts Receivable (70,876) (25,948)      Adjusted Segment Income % 8.3% 13.2% 1.4% 5.4%      Adjusted Segment Income (Loss) $       (988) $      3,701 $      8,348 $   19,615
PROVISION (CREDIT) FOR INCOME TAXES 1,121 11,675 (14,331) 34,163 Inventories (113,407) (62,780)
Net Income (Loss) $     8,005 $   31,888 $    (35,543) $            504 Other Current Assets (856) (3,430)      Segment Income (Loss) % as Reported (2.1%) 1.0% (1.6%) 2.2%
PLANT AND EQUIPMENT: Accounts Payable, Accrued Liabilities and Income Taxes 77,905 11,287      Adjusted Segment Income (Loss) % (0.4%) 1.5% 1.2% 3.0%
EARNINGS (LOSS) PER SHARE At Cost 1,208,747 1,161,535 Other, Net 2,079 15,198
Basic   $       0.19 $       0.74 $         (0.86) $           0.00 Less - Accumulated Depreciation 795,467 762,186    Net Cash Used in Operating Activities (104,891) (19,020)
Diluted $       0.19 $       0.74 $         (0.86) $           0.00 Plant and Equipment, Net 413,280 399,349
$ 1,616,062 $ 1,557,707 CASH FLOWS FROM INVESTING ACTIVITIES:
WEIGHTED AVERAGE SHARES OUTSTANDING Capital Expenditures (46,379) (77,483)
Basic   41,527 42,064 41,691 42,108 Proceeds Received on Disposition of Plant and Equipment 31 339
Diluted 41,527 42,307 41,691 42,362 CURRENT LIABILITIES: Cash Paid for Acquisitions, Net of Cash Acquired (8,865) (1,800)
Accounts Payable $    272,125 $    202,822    Net Cash Used in Investing Activities (55,213) (78,944)
Short-Term Debt 211,545 131,556
Accrued Liabilities 143,432 157,895 CASH FLOWS FROM FINANCING ACTIVITIES:
Total Current Liabilities 627,102 492,273 Net Borrowings on Revolver 163,509 131,556
Long Term Note Payable - 7,685
OTHER LIABILITIES: Debt Issuance Costs - (1,154)
Accrued Pension Cost 179,487 197,749 Treasury Stock Purchases (11,937) (8,710)
Accrued Employee Benefits 20,122 21,787 Repayments of Long Term Debt (5,424) (19,781)
Accrued Postretirement Health Care Obligation 25,294 29,547 Stock Option Exercise Proceeds and Tax Benefits 1,823 3,943
Other Long-Term Liabilities 61,050 53,737 Payments Related to Shares Withheld for Taxes for Stock Compensation (257) (1,147)
Long-Term Debt 195,464 202,332 Cash Dividends Paid (11,891) (12,007)
Total Other Liabilities 481,417 505,152    Net Cash Provided by Financing Activities 135,823 100,385
SHAREHOLDERS' INVESTMENT: EFFECT OF EXCHANGE RATE CHANGES (239) 1,090
Common Stock 579 579 NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH (24,520) 3,511
Additional Paid-In Capital 77,523 75,001 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, Beginning 1 49,218 61,707
Retained Earnings 1,018,265 1,089,364 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, Ending 2 $                   24,698 $                   65,218
Accumulated Other Comprehensive Loss (255,021) (280,546)
Treasury Stock, at Cost (333,803) (324,116)
Total Shareholders' Investment 507,543 560,282
$ 1,616,062 $ 1,557,707

Third Quarter Highlights

  • Net sales increased by $26.0 million, or 10.6%, from the same period last year. The increase was primarily due to 16% growth in commercial products on higher sales of Ferris mowers and growth of commercial stand-on blowers from the Hurricane acquisition in early fiscal 2019. Residential sales grew slightly on higher volumes of standby generators and pressure washers, partially offset by lower sales of portable generators and riding mowers following cool spring temperatures in the U.S. Sales also benefited from higher prices to offset cost inflation.
  • The gross profit percentage decreased 440 basis points and adjusted gross profit percentage decreased by 360 basis points compared to the third quarter last year. The decrease in the adjusted gross profit percentage is largely attributed to inefficiencies (180 bps) and unfavorable sales mix (170 bps). Inefficiencies from start-up activities related to the ERP upgrade, elevated international container shipping rates and higher supply chain and labor costs to ensure our ability to meet delivery commitments on the robust growth of Ferris mowers. We also incurred higher labor costs to improve the throughput of service parts to support increased shipments during the peak season. Unfavorable sales mix was driven by lower sales of portable generators due to less spring storms, as well as lower sales of riding mowers through the dealer channel. Strong sales of pressure washers were driven by elevated pollen levels this spring and brand transitions at retail. Partially offsetting the unfavorable sales mix was the favorable impact of higher commercial sales. Increases in pricing largely offset higher material and tariff costs.
  • GAAP ESG&A expenses decreased by $0.8 million and adjusted ESG&A expenses decreased by $1.9 million compared with the previous year from lower employee compensation costs.

Non-GAAP Financial Measures

Briggs & Stratton Corporation prepares its financial statements using Generally Accepted Accounting Principles (GAAP). When a company discloses material information containing non-GAAP financial measures, SEC regulations require that the disclosure include a presentation of the most directly comparable GAAP measure and a reconciliation of the GAAP and non-GAAP financial measures. Management's inclusion of non-GAAP financial measures in this release is intended to supplement, not replace, the presentation of the financial results in accordance with GAAP. Briggs & Stratton Corporation management believes that these non-GAAP financial measures, when considered together with the GAAP financial measures, provide information that is useful to investors in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportionately positive or negative impact on results in any particular period. Management also believes that these non-GAAP financial measures enhance the ability of investors to analyze the company's business trends and to understand the company's performance. In addition, management may utilize non-GAAP financial measures as a guide in the company's forecasting, budgeting and long-term planning process. Non-GAAP financial measures should be considered in addition to, and not as a substitute for, or superior to, financial measures presented in accordance with GAAP. The following tables are reconciliations of the non-GAAP financial measures:

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES Supplemental International Sales Information BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES Engines Segment: Products Segment: BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations for the Periods Ended March (In Thousands) Consolidated Balance Sheets as of the End of March Consolidated Statements of Cash Flows 1 Included within Beginning Cash, Cash Equivalents, and Restricted Cash is approximately $4.3 million and $0 of restricted cash as of July 1, 2018 and July 2, 2017, respectively.  Three Months Ended March   Nine Months Ended March   Three Months Ended March   Nine Months Ended March  Adjusted Segment Information for the Three Month Periods Ended March
(In Thousands, except per share data) (In Thousands) (In Thousands) (In Thousands) FY2019 FY2018 FY2019 FY2018 (In Thousands) FY2019 FY2018 FY2019 FY2018 (In Thousands, except per share data)
 Three Months Ended March   Nine Months Ended March  2 Included within Ending Cash, Cash Equivalents, and Restricted Cash is approximately $0.8 million and $9.1 million of restricted cash as of March 31, 2019 and April 1, 2018, respectively.       Net Sales $ 336,243 $ 384,292 $ 727,351 $ 790,543      Net Sales $ 271,209 $ 245,169 $ 698,879 $ 653,845
 Three Months Ended March   Nine Months Ended March  FY2019 FY2018 FY2019 FY2018 CURRENT ASSETS: FY2019 FY2018 Nine Months Ended March  Three Months Ended March 
FY2019 FY2018 FY2019 FY2018 International sales based on product shipment destination $142,817 $160,653 $379,468 $432,538 Cash and Cash Equivalents $      23,863 $      56,165      Gross Profit as Reported $   72,529 $   96,780 $ 144,272 $ 183,428      Gross Profit as Reported $   24,348 $   32,773 $   89,402 $ 105,570   FY2019Reported Adjustments1  FY2019Adjusted   FY2018Reported Adjustments   FY2018Adjusted
NET SALES $580,196 $604,069 $1,364,655 $1,379,599 Accounts Receivable, Net 253,536 259,472 CASH FLOWS FROM OPERATING ACTIVITIES: FY2019 FY2018 Business Optimization 623 903 1,712 2,031 Business Optimization 3,267 971 6,978 2,493
COST OF GOODS SOLD 483,209 473,796 1,131,422 1,090,196 Inventories 525,210 438,492 Net Income (Loss) $                  (35,543) $                        504      Adjusted Gross Profit $   73,151 $   97,683 $ 145,984 $ 185,459      Adjusted Gross Profit $   27,615 $   33,744 $   96,380 $ 108,063 Gross Profit
Gross Profit  96,987 130,273 233,233 289,403 Prepaid Expenses and Other Current Assets 34,682 35,953 Adjustments to Reconcile Net Income (Loss) to Net Cash Used in Operating Activities: Engines $         72,529 $              623 $         73,151 $         96,780 $            903 $         97,683
Total Current Assets 837,291 790,082 Depreciation and Amortization 47,385 43,756      Gross Profit % as Reported 21.6% 25.2% 19.8% 23.2%      Gross Profit % as Reported 9.0% 13.4% 12.8% 16.1% Products 24,348 3,267 27,615 32,773 971 33,744
ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 79,521 80,156 267,553 245,304 Stock Compensation Expense 5,496 5,312      Adjusted Gross Profit % 21.8% 25.4% 20.1% 23.5%      Adjusted Gross Profit % 10.2% 13.8% 13.8% 16.5% Inter-Segment Eliminations 110 - 110 720 - 720
EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES (205) 713 5,786 6,438 OTHER ASSETS: Loss on Disposition of Plant and Equipment 66 1,595 Total $         96,987 $           3,889 $      100,876 $      130,273 $         1,874 $      132,147
Income (Loss) from Operations 17,261 50,830 (28,534) 50,537 Goodwill 169,693 164,213 Provision (Credit) for Deferred Income Taxes (19,247) 24,744      Segment Income (Loss) as Reported $   22,833 $   47,718 $  (16,579) $   35,776      Segment Income (Loss) as Reported $    (5,682) $      2,392 $  (11,514) $   14,356
Investments 46,937 50,224 Equity in Earnings of Unconsolidated Affiliates  (8,403) (9,068) Business Optimization 5,211 2,896 27,083 7,243 Business Optimization 4,407 1,309 13,207 5,259 Engineering, Selling, General and Administrative Expenses
INTEREST EXPENSE (9,088) (8,617) (21,731) (19,167) Other Intangible Assets, Net 97,465 98,021 Dividends Received from Unconsolidated Affiliates  10,510 9,810      Adjusted Segment Income $   28,044 $   50,614 $   10,504 $   43,019 Litigation Settlement - - 2,000 - Engines $         49,287 $           3,835 $         45,452 $         49,124 $            587 $         48,537
OTHER INCOME  953 1,350 391 3,297 Deferred Income Tax Asset 31,031 34,886 Pension Cash Contributions - (30,000) Retailer Bankruptcy Bad Debt Expense - - 4,132 - Products 30,234 1,428 28,806 31,032 338 30,694
Income (Loss) before Income Taxes 9,126 43,563 (49,874) 34,667 Other Long-Term Assets, Net 20,365 20,932 Changes in Operating Assets and Liabilities:      Segment Income (Loss) % as Reported 6.8% 12.4% (2.3%) 4.5% Acquisition Related Charges 287 - 523 - Total $         79,521 $           5,263 $         74,258 $         80,156 $            925 $         79,231
Total Other Assets 365,491 368,276 Accounts Receivable (70,876) (25,948)      Adjusted Segment Income % 8.3% 13.2% 1.4% 5.4%      Adjusted Segment Income (Loss) $       (988) $      3,701 $      8,348 $   19,615
PROVISION (CREDIT) FOR INCOME TAXES 1,121 11,675 (14,331) 34,163 Inventories (113,407) (62,780) Equity in Earnings of Unconsolidated Affiliates
Net Income (Loss) $     8,005 $   31,888 $    (35,543) $            504 Other Current Assets (856) (3,430)      Segment Income (Loss) % as Reported (2.1%) 1.0% (1.6%) 2.2% Engines $             (408) $              753 $              345 $                 62 $         1,406 $           1,468
PLANT AND EQUIPMENT: Accounts Payable, Accrued Liabilities and Income Taxes 77,905 11,287      Adjusted Segment Income (Loss) % (0.4%) 1.5% 1.2% 3.0% Products 203 - 203 651 - 651
EARNINGS (LOSS) PER SHARE At Cost 1,208,747 1,161,535 Other, Net 2,079 15,198 Total $             (205) $              753 $              548 $              713 $         1,406 $           2,119
Basic   $       0.19 $       0.74 $         (0.86) $           0.00 Less - Accumulated Depreciation 795,467 762,186    Net Cash Used in Operating Activities (104,891) (19,020)
Diluted $       0.19 $       0.74 $         (0.86) $           0.00 Plant and Equipment, Net 413,280 399,349 Segment Income (Loss)
$ 1,616,062 $ 1,557,707 CASH FLOWS FROM INVESTING ACTIVITIES: Engines $         22,833 $           5,211 $         28,044 $         47,718 $         2,896 $         50,614
WEIGHTED AVERAGE SHARES OUTSTANDING Capital Expenditures (46,379) (77,483) Products (5,682) 4,694 (988) 2,392 1,309 3,701
Basic   41,527 42,064 41,691 42,108 Proceeds Received on Disposition of Plant and Equipment 31 339 Inter-Segment Eliminations 110 - 110 720 - 720
Diluted 41,527 42,307 41,691 42,362 CURRENT LIABILITIES: Cash Paid for Acquisitions, Net of Cash Acquired (8,865) (1,800) Total $         17,261 $           9,905 $         27,166 $         50,830 $         4,205 $         55,035
Accounts Payable $    272,125 $    202,822    Net Cash Used in Investing Activities (55,213) (78,944)
Short-Term Debt 211,545 131,556 Interest Expense $         (9,088) $                 15 $         (9,073) $         (8,617) $         2,017 $         (6,600)
Accrued Liabilities 143,432 157,895 CASH FLOWS FROM FINANCING ACTIVITIES:
Total Current Liabilities 627,102 492,273 Net Borrowings on Revolver 163,509 131,556 Income before Income Taxes 9,126 9,920 19,046 43,563 6,222 49,785
Long Term Note Payable - 7,685 Provision for Income Taxes 1,121 3,288 4,409 11,675 1,876 13,551
OTHER LIABILITIES: Debt Issuance Costs - (1,154) Net Income  $           8,005 $           6,632 $         14,637 $         31,888 $         4,346 $         36,234
Accrued Pension Cost 179,487 197,749 Treasury Stock Purchases (11,937) (8,710)
Accrued Employee Benefits 20,122 21,787 Repayments of Long Term Debt (5,424) (19,781) Earnings Per Share
Accrued Postretirement Health Care Obligation 25,294 29,547 Stock Option Exercise Proceeds and Tax Benefits 1,823 3,943 Basic   $             0.19 $             0.15 $             0.34 $             0.74 $           0.10 $             0.84
Other Long-Term Liabilities 61,050 53,737 Payments Related to Shares Withheld for Taxes for Stock Compensation (257) (1,147) Diluted 0.19 0.15 0.34 0.74 0.10 0.84
Long-Term Debt 195,464 202,332 Cash Dividends Paid (11,891) (12,007)
Total Other Liabilities 481,417 505,152    Net Cash Provided by Financing Activities 135,823 100,385
SHAREHOLDERS' INVESTMENT: EFFECT OF EXCHANGE RATE CHANGES (239) 1,090
Common Stock 579 579 NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH (24,520) 3,511
Additional Paid-In Capital 77,523 75,001 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, Beginning 1 49,218 61,707
Retained Earnings 1,018,265 1,089,364 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, Ending 2 $                   24,698 $                   65,218
Accumulated Other Comprehensive Loss (255,021) (280,546)
Treasury Stock, at Cost (333,803) (324,116)
Total Shareholders' Investment 507,543 560,282
$ 1,616,062 $ 1,557,707

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES Supplemental International Sales Information BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES Engines Segment: Products Segment: BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations for the Periods Ended March (In Thousands) Consolidated Balance Sheets as of the End of March Consolidated Statements of Cash Flows 1 Included within Beginning Cash, Cash Equivalents, and Restricted Cash is approximately $4.3 million and $0 of restricted cash as of July 1, 2018 and July 2, 2017, respectively.  Three Months Ended March   Nine Months Ended March   Three Months Ended March   Nine Months Ended March  Adjusted Segment Information for the Three Month Periods Ended March 1 For the third quarter of fiscal 2019, business optimization expenses include $1.4 million ($0.9 million after tax) of non-cash charges related to accelerated depreciation, and $8.4 million ($5.6 million after tax) of cash charges related primarily to activities associated with the upgrade to the Company's ERP system, professional services, employee termination benefits, and plant rearrangement activities. The Company recognized $0.2 million ($0.1 million after tax) related to acquisition integration activities. 
(In Thousands, except per share data) (In Thousands) (In Thousands) (In Thousands) FY2019 FY2018 FY2019 FY2018 (In Thousands) FY2019 FY2018 FY2019 FY2018 (In Thousands, except per share data)
 Three Months Ended March   Nine Months Ended March  2 Included within Ending Cash, Cash Equivalents, and Restricted Cash is approximately $0.8 million and $9.1 million of restricted cash as of March 31, 2019 and April 1, 2018, respectively.       Net Sales $ 336,243 $ 384,292 $ 727,351 $ 790,543      Net Sales $ 271,209 $ 245,169 $ 698,879 $ 653,845
 Three Months Ended March   Nine Months Ended March  FY2019 FY2018 FY2019 FY2018 CURRENT ASSETS: FY2019 FY2018 Nine Months Ended March  Three Months Ended March 
FY2019 FY2018 FY2019 FY2018 International sales based on product shipment destination $142,817 $160,653 $379,468 $432,538 Cash and Cash Equivalents $      23,863 $      56,165      Gross Profit as Reported $   72,529 $   96,780 $ 144,272 $ 183,428      Gross Profit as Reported $   24,348 $   32,773 $   89,402 $ 105,570   FY2019Reported Adjustments1  FY2019Adjusted   FY2018Reported Adjustments   FY2018Adjusted
NET SALES $580,196 $604,069 $1,364,655 $1,379,599 Accounts Receivable, Net 253,536 259,472 CASH FLOWS FROM OPERATING ACTIVITIES: FY2019 FY2018 Business Optimization 623 903 1,712 2,031 Business Optimization 3,267 971 6,978 2,493
COST OF GOODS SOLD 483,209 473,796 1,131,422 1,090,196 Inventories 525,210 438,492 Net Income (Loss) $                  (35,543) $                        504      Adjusted Gross Profit $   73,151 $   97,683 $ 145,984 $ 185,459      Adjusted Gross Profit $   27,615 $   33,744 $   96,380 $ 108,063 Gross Profit
Gross Profit  96,987 130,273 233,233 289,403 Prepaid Expenses and Other Current Assets 34,682 35,953 Adjustments to Reconcile Net Income (Loss) to Net Cash Used in Operating Activities: Engines $         72,529 $              623 $         73,151 $         96,780 $            903 $         97,683
Total Current Assets 837,291 790,082 Depreciation and Amortization 47,385 43,756      Gross Profit % as Reported 21.6% 25.2% 19.8% 23.2%      Gross Profit % as Reported 9.0% 13.4% 12.8% 16.1% Products 24,348 3,267 27,615 32,773 971 33,744
ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 79,521 80,156 267,553 245,304 Stock Compensation Expense 5,496 5,312      Adjusted Gross Profit % 21.8% 25.4% 20.1% 23.5%      Adjusted Gross Profit % 10.2% 13.8% 13.8% 16.5% Inter-Segment Eliminations 110 - 110 720 - 720
EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES (205) 713 5,786 6,438 OTHER ASSETS: Loss on Disposition of Plant and Equipment 66 1,595 Total $         96,987 $           3,889 $      100,876 $      130,273 $         1,874 $      132,147
Income (Loss) from Operations 17,261 50,830 (28,534) 50,537 Goodwill 169,693 164,213 Provision (Credit) for Deferred Income Taxes (19,247) 24,744      Segment Income (Loss) as Reported $   22,833 $   47,718 $  (16,579) $   35,776      Segment Income (Loss) as Reported $    (5,682) $      2,392 $  (11,514) $   14,356
Investments 46,937 50,224 Equity in Earnings of Unconsolidated Affiliates  (8,403) (9,068) Business Optimization 5,211 2,896 27,083 7,243 Business Optimization 4,407 1,309 13,207 5,259 Engineering, Selling, General and Administrative Expenses
INTEREST EXPENSE (9,088) (8,617) (21,731) (19,167) Other Intangible Assets, Net 97,465 98,021 Dividends Received from Unconsolidated Affiliates  10,510 9,810      Adjusted Segment Income $   28,044 $   50,614 $   10,504 $   43,019 Litigation Settlement - - 2,000 - Engines $         49,287 $           3,835 $         45,452 $         49,124 $            587 $         48,537
OTHER INCOME  953 1,350 391 3,297 Deferred Income Tax Asset 31,031 34,886 Pension Cash Contributions - (30,000) Retailer Bankruptcy Bad Debt Expense - - 4,132 - Products 30,234 1,428 28,806 31,032 338 30,694
Income (Loss) before Income Taxes 9,126 43,563 (49,874) 34,667 Other Long-Term Assets, Net 20,365 20,932 Changes in Operating Assets and Liabilities:      Segment Income (Loss) % as Reported 6.8% 12.4% (2.3%) 4.5% Acquisition Related Charges 287 - 523 - Total $         79,521 $           5,263 $         74,258 $         80,156 $            925 $         79,231
Total Other Assets 365,491 368,276 Accounts Receivable (70,876) (25,948)      Adjusted Segment Income % 8.3% 13.2% 1.4% 5.4%      Adjusted Segment Income (Loss) $       (988) $      3,701 $      8,348 $   19,615
PROVISION (CREDIT) FOR INCOME TAXES 1,121 11,675 (14,331) 34,163 Inventories (113,407) (62,780) Equity in Earnings of Unconsolidated Affiliates
Net Income (Loss) $     8,005 $   31,888 $    (35,543) $            504 Other Current Assets (856) (3,430)      Segment Income (Loss) % as Reported (2.1%) 1.0% (1.6%) 2.2% Engines $             (408) $              753 $              345 $                 62 $         1,406 $           1,468
PLANT AND EQUIPMENT: Accounts Payable, Accrued Liabilities and Income Taxes 77,905 11,287      Adjusted Segment Income (Loss) % (0.4%) 1.5% 1.2% 3.0% Products 203 - 203 651 - 651
EARNINGS (LOSS) PER SHARE At Cost 1,208,747 1,161,535 Other, Net 2,079 15,198 Total $             (205) $              753 $              548 $              713 $         1,406 $           2,119
Basic   $       0.19 $       0.74 $         (0.86) $           0.00 Less - Accumulated Depreciation 795,467 762,186    Net Cash Used in Operating Activities (104,891) (19,020)
Diluted $       0.19 $       0.74 $         (0.86) $           0.00 Plant and Equipment, Net 413,280 399,349 Segment Income (Loss)
$ 1,616,062 $ 1,557,707 CASH FLOWS FROM INVESTING ACTIVITIES: Engines $         22,833 $           5,211 $         28,044 $         47,718 $         2,896 $         50,614
WEIGHTED AVERAGE SHARES OUTSTANDING Capital Expenditures (46,379) (77,483) Products (5,682) 4,694 (988) 2,392 1,309 3,701
Basic   41,527 42,064 41,691 42,108 Proceeds Received on Disposition of Plant and Equipment 31 339 Inter-Segment Eliminations 110 - 110 720 - 720
Diluted 41,527 42,307 41,691 42,362 CURRENT LIABILITIES: Cash Paid for Acquisitions, Net of Cash Acquired (8,865) (1,800) Total $         17,261 $           9,905 $         27,166 $         50,830 $         4,205 $         55,035
Accounts Payable $    272,125 $    202,822    Net Cash Used in Investing Activities (55,213) (78,944)
Short-Term Debt 211,545 131,556 Interest Expense $         (9,088) $                 15 $         (9,073) $         (8,617) $         2,017 $         (6,600)
Accrued Liabilities 143,432 157,895 CASH FLOWS FROM FINANCING ACTIVITIES:
Total Current Liabilities 627,102 492,273 Net Borrowings on Revolver 163,509 131,556 Income before Income Taxes 9,126 9,920 19,046 43,563 6,222 49,785
Long Term Note Payable - 7,685 Provision for Income Taxes 1,121 3,288 4,409 11,675 1,876 13,551
OTHER LIABILITIES: Debt Issuance Costs - (1,154) Net Income  $           8,005 $           6,632 $         14,637 $         31,888 $         4,346 $         36,234
Accrued Pension Cost 179,487 197,749 Treasury Stock Purchases (11,937) (8,710)
Accrued Employee Benefits 20,122 21,787 Repayments of Long Term Debt (5,424) (19,781) Earnings Per Share
Accrued Postretirement Health Care Obligation 25,294 29,547 Stock Option Exercise Proceeds and Tax Benefits 1,823 3,943 Basic   $             0.19 $             0.15 $             0.34 $             0.74 $           0.10 $             0.84
Other Long-Term Liabilities 61,050 53,737 Payments Related to Shares Withheld for Taxes for Stock Compensation (257) (1,147) Diluted 0.19 0.15 0.34 0.74 0.10 0.84
Long-Term Debt 195,464 202,332 Cash Dividends Paid (11,891) (12,007)
Total Other Liabilities 481,417 505,152    Net Cash Provided by Financing Activities 135,823 100,385
SHAREHOLDERS' INVESTMENT: EFFECT OF EXCHANGE RATE CHANGES (239) 1,090
Common Stock 579 579 NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH (24,520) 3,511
Additional Paid-In Capital 77,523 75,001 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, Beginning 1 49,218 61,707
Retained Earnings 1,018,265 1,089,364 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, Ending 2 $                   24,698 $                   65,218
Accumulated Other Comprehensive Loss (255,021) (280,546)
Treasury Stock, at Cost (333,803) (324,116)
Total Shareholders' Investment 507,543 560,282
$ 1,616,062 $ 1,557,707

 

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES Supplemental International Sales Information BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES Engines Segment: Products Segment: BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations for the Periods Ended March (In Thousands) Consolidated Balance Sheets as of the End of March Consolidated Statements of Cash Flows 1 Included within Beginning Cash, Cash Equivalents, and Restricted Cash is approximately $4.3 million and $0 of restricted cash as of July 1, 2018 and July 2, 2017, respectively.  Three Months Ended March   Nine Months Ended March   Three Months Ended March   Nine Months Ended March  Adjusted Segment Information for the Three Month Periods Ended March 1 For the third quarter of fiscal 2019, business optimization expenses include $1.4 million ($0.9 million after tax) of non-cash charges related to accelerated depreciation, and $8.4 million ($5.6 million after tax) of cash charges related primarily to activities associated with the upgrade to the Company's ERP system, professional services, employee termination benefits, and plant rearrangement activities. The Company recognized $0.2 million ($0.1 million after tax) related to acquisition integration activities.  Adjusted Segment Information for the Nine Month Periods Ended March
(In Thousands, except per share data) (In Thousands) (In Thousands) (In Thousands) FY2019 FY2018 FY2019 FY2018 (In Thousands) FY2019 FY2018 FY2019 FY2018 (In Thousands, except per share data) (In Thousands, except per share data)
 Three Months Ended March   Nine Months Ended March  2 Included within Ending Cash, Cash Equivalents, and Restricted Cash is approximately $0.8 million and $9.1 million of restricted cash as of March 31, 2019 and April 1, 2018, respectively.       Net Sales $ 336,243 $ 384,292 $ 727,351 $ 790,543      Net Sales $ 271,209 $ 245,169 $ 698,879 $ 653,845
 Three Months Ended March   Nine Months Ended March  FY2019 FY2018 FY2019 FY2018 CURRENT ASSETS: FY2019 FY2018 Nine Months Ended March  Three Months Ended March   Nine Months Ended March 
FY2019 FY2018 FY2019 FY2018 International sales based on product shipment destination $142,817 $160,653 $379,468 $432,538 Cash and Cash Equivalents $      23,863 $      56,165      Gross Profit as Reported $   72,529 $   96,780 $ 144,272 $ 183,428      Gross Profit as Reported $   24,348 $   32,773 $   89,402 $ 105,570   FY2019Reported Adjustments1  FY2019Adjusted   FY2018Reported Adjustments   FY2018Adjusted FY2019Reported Adjustments1 FY2019Adjusted FY2018Reported Adjustments FY2018Adjusted
NET SALES $580,196 $604,069 $1,364,655 $1,379,599 Accounts Receivable, Net 253,536 259,472 CASH FLOWS FROM OPERATING ACTIVITIES: FY2019 FY2018 Business Optimization 623 903 1,712 2,031 Business Optimization 3,267 971 6,978 2,493
COST OF GOODS SOLD 483,209 473,796 1,131,422 1,090,196 Inventories 525,210 438,492 Net Income (Loss) $                  (35,543) $                        504      Adjusted Gross Profit $   73,151 $   97,683 $ 145,984 $ 185,459      Adjusted Gross Profit $   27,615 $   33,744 $   96,380 $ 108,063 Gross Profit Gross Profit
Gross Profit  96,987 130,273 233,233 289,403 Prepaid Expenses and Other Current Assets 34,682 35,953 Adjustments to Reconcile Net Income (Loss) to Net Cash Used in Operating Activities: Engines $         72,529 $              623 $         73,151 $         96,780 $            903 $         97,683 Engines $      144,272 $           1,712 $      145,984 $      183,428 $         2,031 $      185,459
Total Current Assets 837,291 790,082 Depreciation and Amortization 47,385 43,756      Gross Profit % as Reported 21.6% 25.2% 19.8% 23.2%      Gross Profit % as Reported 9.0% 13.4% 12.8% 16.1% Products 24,348 3,267 27,615 32,773 971 33,744 Products 89,402 6,978 96,380 105,570 2,493 108,063
ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 79,521 80,156 267,553 245,304 Stock Compensation Expense 5,496 5,312      Adjusted Gross Profit % 21.8% 25.4% 20.1% 23.5%      Adjusted Gross Profit % 10.2% 13.8% 13.8% 16.5% Inter-Segment Eliminations 110 - 110 720 - 720 Inter-Segment Eliminations (441) - (441) 405 - 405
EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES (205) 713 5,786 6,438 OTHER ASSETS: Loss on Disposition of Plant and Equipment 66 1,595 Total $         96,987 $           3,889 $      100,876 $      130,273 $         1,874 $      132,147 Total $      233,233 $           8,690 $      241,923 $      289,403 $         4,524 $      293,927
Income (Loss) from Operations 17,261 50,830 (28,534) 50,537 Goodwill 169,693 164,213 Provision (Credit) for Deferred Income Taxes (19,247) 24,744      Segment Income (Loss) as Reported $   22,833 $   47,718 $  (16,579) $   35,776      Segment Income (Loss) as Reported $    (5,682) $      2,392 $  (11,514) $   14,356
Investments 46,937 50,224 Equity in Earnings of Unconsolidated Affiliates  (8,403) (9,068) Business Optimization 5,211 2,896 27,083 7,243 Business Optimization 4,407 1,309 13,207 5,259 Engineering, Selling, General and Administrative Expenses Engineering, Selling, General and Administrative Expenses
INTEREST EXPENSE (9,088) (8,617) (21,731) (19,167) Other Intangible Assets, Net 97,465 98,021 Dividends Received from Unconsolidated Affiliates  10,510 9,810      Adjusted Segment Income $   28,044 $   50,614 $   10,504 $   43,019 Litigation Settlement - - 2,000 - Engines $         49,287 $           3,835 $         45,452 $         49,124 $            587 $         48,537 Engines $      163,997 $         22,754 $      141,243 $      151,154 $         2,582 $      148,572
OTHER INCOME  953 1,350 391 3,297 Deferred Income Tax Asset 31,031 34,886 Pension Cash Contributions - (30,000) Retailer Bankruptcy Bad Debt Expense - - 4,132 - Products 30,234 1,428 28,806 31,032 338 30,694 Products 103,556 12,884 90,672 94,150 2,766 91,384
Income (Loss) before Income Taxes 9,126 43,563 (49,874) 34,667 Other Long-Term Assets, Net 20,365 20,932 Changes in Operating Assets and Liabilities:      Segment Income (Loss) % as Reported 6.8% 12.4% (2.3%) 4.5% Acquisition Related Charges 287 - 523 - Total $         79,521 $           5,263 $         74,258 $         80,156 $            925 $         79,231 Total $      267,553 $         35,638 $      231,915 $      245,304 $         5,348 $      239,956
Total Other Assets 365,491 368,276 Accounts Receivable (70,876) (25,948)      Adjusted Segment Income % 8.3% 13.2% 1.4% 5.4%      Adjusted Segment Income (Loss) $       (988) $      3,701 $      8,348 $   19,615
PROVISION (CREDIT) FOR INCOME TAXES 1,121 11,675 (14,331) 34,163 Inventories (113,407) (62,780) Equity in Earnings of Unconsolidated Affiliates Equity in Earnings of Unconsolidated Affiliates
Net Income (Loss) $     8,005 $   31,888 $    (35,543) $            504 Other Current Assets (856) (3,430)      Segment Income (Loss) % as Reported (2.1%) 1.0% (1.6%) 2.2% Engines $             (408) $              753 $              345 $                 62 $         1,406 $           1,468 Engines $           3,146 $           2,617 $           5,763 $           3,502 $         2,630 $           6,132
PLANT AND EQUIPMENT: Accounts Payable, Accrued Liabilities and Income Taxes 77,905 11,287      Adjusted Segment Income (Loss) % (0.4%) 1.5% 1.2% 3.0% Products 203 - 203 651 - 651 Products 2,640 - 2,640 2,936 - 2,936
EARNINGS (LOSS) PER SHARE At Cost 1,208,747 1,161,535 Other, Net 2,079 15,198 Total $             (205) $              753 $              548 $              713 $         1,406 $           2,119 Total $           5,786 $           2,617 $           8,403 $           6,438 $         2,630 $           9,068
Basic   $       0.19 $       0.74 $         (0.86) $           0.00 Less - Accumulated Depreciation 795,467 762,186    Net Cash Used in Operating Activities (104,891) (19,020)
Diluted $       0.19 $       0.74 $         (0.86) $           0.00 Plant and Equipment, Net 413,280 399,349 Segment Income (Loss) Segment Income (Loss)
$ 1,616,062 $ 1,557,707 CASH FLOWS FROM INVESTING ACTIVITIES: Engines $         22,833 $           5,211 $         28,044 $         47,718 $         2,896 $         50,614 Engines $       (16,579) $         27,083 $         10,504 $         35,776 $         7,243 $         43,019
WEIGHTED AVERAGE SHARES OUTSTANDING Capital Expenditures (46,379) (77,483) Products (5,682) 4,694 (988) 2,392 1,309 3,701 Products (11,514) 19,862 8,348 14,356 5,259 19,615
Basic   41,527 42,064 41,691 42,108 Proceeds Received on Disposition of Plant and Equipment 31 339 Inter-Segment Eliminations 110 - 110 720 - 720 Inter-Segment Eliminations (441) - (441) 405 - 405
Diluted 41,527 42,307 41,691 42,362 CURRENT LIABILITIES: Cash Paid for Acquisitions, Net of Cash Acquired (8,865) (1,800) Total $         17,261 $           9,905 $         27,166 $         50,830 $         4,205 $         55,035 Total $       (28,534) $         46,945 $         18,411 $         50,537 $      12,502 $         63,039
Accounts Payable $    272,125 $    202,822    Net Cash Used in Investing Activities (55,213) (78,944)
Short-Term Debt 211,545 131,556 Interest Expense $         (9,088) $                 15 $         (9,073) $         (8,617) $         2,017 $         (6,600) Interest Expense $       (21,731) $              263 $       (21,468) $       (19,167) $         2,017 $       (17,150)
Accrued Liabilities 143,432 157,895 CASH FLOWS FROM FINANCING ACTIVITIES:
Total Current Liabilities 627,102 492,273 Net Borrowings on Revolver 163,509 131,556 Income before Income Taxes 9,126 9,920 19,046 43,563 6,222 49,785 Income (Loss) before Income Taxes (49,874) 47,208 (2,666) 34,667 14,519 49,186
Long Term Note Payable - 7,685 Provision for Income Taxes 1,121 3,288 4,409 11,675 1,876 13,551 Provision for Income Taxes (14,331) 9,602 (4,729) 34,163 (21,104) 13,059
OTHER LIABILITIES: Debt Issuance Costs - (1,154) Net Income  $           8,005 $           6,632 $         14,637 $         31,888 $         4,346 $         36,234 Net Income (Loss) $       (35,543) $         37,606 $           2,063 $              504 $      35,623 $         36,127
Accrued Pension Cost 179,487 197,749 Treasury Stock Purchases (11,937) (8,710)
Accrued Employee Benefits 20,122 21,787 Repayments of Long Term Debt (5,424) (19,781) Earnings Per Share Earnings (Loss) Per Share
Accrued Postretirement Health Care Obligation 25,294 29,547 Stock Option Exercise Proceeds and Tax Benefits 1,823 3,943 Basic   $             0.19 $             0.15 $             0.34 $             0.74 $           0.10 $             0.84 Basic   $            (0.86) $             0.90 $             0.04 $             0.00 $           0.84 $             0.84
Other Long-Term Liabilities 61,050 53,737 Payments Related to Shares Withheld for Taxes for Stock Compensation (257) (1,147) Diluted 0.19 0.15 0.34 0.74 0.10 0.84 Diluted (0.86) 0.90 0.04 0.00 0.83 0.83
Long-Term Debt 195,464 202,332 Cash Dividends Paid (11,891) (12,007)
Total Other Liabilities 481,417 505,152    Net Cash Provided by Financing Activities 135,823 100,385
SHAREHOLDERS' INVESTMENT: EFFECT OF EXCHANGE RATE CHANGES (239) 1,090
Common Stock 579 579 NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH (24,520) 3,511
Additional Paid-In Capital 77,523 75,001 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, Beginning 1 49,218 61,707
Retained Earnings 1,018,265 1,089,364 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, Ending 2 $                   24,698 $                   65,218
Accumulated Other Comprehensive Loss (255,021) (280,546)
Treasury Stock, at Cost (333,803) (324,116)
Total Shareholders' Investment 507,543 560,282
$ 1,616,062 $ 1,557,707

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES Supplemental International Sales Information BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES Engines Segment: Products Segment: BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations for the Periods Ended March (In Thousands) Consolidated Balance Sheets as of the End of March Consolidated Statements of Cash Flows 1 Included within Beginning Cash, Cash Equivalents, and Restricted Cash is approximately $4.3 million and $0 of restricted cash as of July 1, 2018 and July 2, 2017, respectively.  Three Months Ended March   Nine Months Ended March   Three Months Ended March   Nine Months Ended March  Adjusted Segment Information for the Three Month Periods Ended March 1 For the third quarter of fiscal 2019, business optimization expenses include $1.4 million ($0.9 million after tax) of non-cash charges related to accelerated depreciation, and $8.4 million ($5.6 million after tax) of cash charges related primarily to activities associated with the upgrade to the Company's ERP system, professional services, employee termination benefits, and plant rearrangement activities. The Company recognized $0.2 million ($0.1 million after tax) related to acquisition integration activities.  Adjusted Segment Information for the Nine Month Periods Ended March 1 For the first nine months of fiscal 2019, business optimization expenses include $2.9 million ($2.3 million after tax) of non-cash charges related to accelerated depreciation, and $44.2 million ($34.5 million after tax) of cash charges related primarily to activities associated with the upgrade to the Company's ERP system, professional services, employee termination benefits, and plant rearrangement activities. The Company recognized bad debt expense of $4.1 million ($3.1 million after tax) after a major retailer announced that it had filed for bankruptcy protection. The Company recognized $2.0 million ($1.5 million after tax) for amounts accrued related to a litigation settlement and $0.5 million ($0.3 million after tax) related to acquisition integration activities. Interest expense includes $0.2 million ($0.2 million after tax) for premiums paid to repurchase senior notes. Tax expense includes a $1.1 million charge associated with the Tax Cuts and Jobs Act of 2017 to record the impact of the inclusion of foreign earnings. 
(In Thousands, except per share data) (In Thousands) (In Thousands) (In Thousands) FY2019 FY2018 FY2019 FY2018 (In Thousands) FY2019 FY2018 FY2019 FY2018 (In Thousands, except per share data) (In Thousands, except per share data)
 Three Months Ended March   Nine Months Ended March  2 Included within Ending Cash, Cash Equivalents, and Restricted Cash is approximately $0.8 million and $9.1 million of restricted cash as of March 31, 2019 and April 1, 2018, respectively.       Net Sales $ 336,243 $ 384,292 $ 727,351 $ 790,543      Net Sales $ 271,209 $ 245,169 $ 698,879 $ 653,845
 Three Months Ended March   Nine Months Ended March  FY2019 FY2018 FY2019 FY2018 CURRENT ASSETS: FY2019 FY2018 Nine Months Ended March  Three Months Ended March   Nine Months Ended March 
FY2019 FY2018 FY2019 FY2018 International sales based on product shipment destination $142,817 $160,653 $379,468 $432,538 Cash and Cash Equivalents $      23,863 $      56,165      Gross Profit as Reported $   72,529 $   96,780 $ 144,272 $ 183,428      Gross Profit as Reported $   24,348 $   32,773 $   89,402 $ 105,570   FY2019Reported Adjustments1  FY2019Adjusted   FY2018Reported Adjustments   FY2018Adjusted FY2019Reported Adjustments1 FY2019Adjusted FY2018Reported Adjustments FY2018Adjusted
NET SALES $580,196 $604,069 $1,364,655 $1,379,599 Accounts Receivable, Net 253,536 259,472 CASH FLOWS FROM OPERATING ACTIVITIES: FY2019 FY2018 Business Optimization 623 903 1,712 2,031 Business Optimization 3,267 971 6,978 2,493
COST OF GOODS SOLD 483,209 473,796 1,131,422 1,090,196 Inventories 525,210 438,492 Net Income (Loss) $                  (35,543) $                        504      Adjusted Gross Profit $   73,151 $   97,683 $ 145,984 $ 185,459      Adjusted Gross Profit $   27,615 $   33,744 $   96,380 $ 108,063 Gross Profit Gross Profit
Gross Profit  96,987 130,273 233,233 289,403 Prepaid Expenses and Other Current Assets 34,682 35,953 Adjustments to Reconcile Net Income (Loss) to Net Cash Used in Operating Activities: Engines $         72,529 $              623 $         73,151 $         96,780 $            903 $         97,683 Engines $      144,272 $           1,712 $      145,984 $      183,428 $         2,031 $      185,459
Total Current Assets 837,291 790,082 Depreciation and Amortization 47,385 43,756      Gross Profit % as Reported 21.6% 25.2% 19.8% 23.2%      Gross Profit % as Reported 9.0% 13.4% 12.8% 16.1% Products 24,348 3,267 27,615 32,773 971 33,744 Products 89,402 6,978 96,380 105,570 2,493 108,063
ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 79,521 80,156 267,553 245,304 Stock Compensation Expense 5,496 5,312      Adjusted Gross Profit % 21.8% 25.4% 20.1% 23.5%      Adjusted Gross Profit % 10.2% 13.8% 13.8% 16.5% Inter-Segment Eliminations 110 - 110 720 - 720 Inter-Segment Eliminations (441) - (441) 405 - 405
EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES (205) 713 5,786 6,438 OTHER ASSETS: Loss on Disposition of Plant and Equipment 66 1,595 Total $         96,987 $           3,889 $      100,876 $      130,273 $         1,874 $      132,147 Total $      233,233 $           8,690 $      241,923 $      289,403 $         4,524 $      293,927
Income (Loss) from Operations 17,261 50,830 (28,534) 50,537 Goodwill 169,693 164,213 Provision (Credit) for Deferred Income Taxes (19,247) 24,744      Segment Income (Loss) as Reported $   22,833 $   47,718 $  (16,579) $   35,776      Segment Income (Loss) as Reported $    (5,682) $      2,392 $  (11,514) $   14,356
Investments 46,937 50,224 Equity in Earnings of Unconsolidated Affiliates  (8,403) (9,068) Business Optimization 5,211 2,896 27,083 7,243 Business Optimization 4,407 1,309 13,207 5,259 Engineering, Selling, General and Administrative Expenses Engineering, Selling, General and Administrative Expenses
INTEREST EXPENSE (9,088) (8,617) (21,731) (19,167) Other Intangible Assets, Net 97,465 98,021 Dividends Received from Unconsolidated Affiliates  10,510 9,810      Adjusted Segment Income $   28,044 $   50,614 $   10,504 $   43,019 Litigation Settlement - - 2,000 - Engines $         49,287 $           3,835 $         45,452 $         49,124 $            587 $         48,537 Engines $      163,997 $         22,754 $      141,243 $      151,154 $         2,582 $      148,572
OTHER INCOME  953 1,350 391 3,297 Deferred Income Tax Asset 31,031 34,886 Pension Cash Contributions - (30,000) Retailer Bankruptcy Bad Debt Expense - - 4,132 - Products 30,234 1,428 28,806 31,032 338 30,694 Products 103,556 12,884 90,672 94,150 2,766 91,384
Income (Loss) before Income Taxes 9,126 43,563 (49,874) 34,667 Other Long-Term Assets, Net 20,365 20,932 Changes in Operating Assets and Liabilities:      Segment Income (Loss) % as Reported 6.8% 12.4% (2.3%) 4.5% Acquisition Related Charges 287 - 523 - Total $         79,521 $           5,263 $         74,258 $         80,156 $            925 $         79,231 Total $      267,553 $         35,638 $      231,915 $      245,304 $         5,348 $      239,956
Total Other Assets 365,491 368,276 Accounts Receivable (70,876) (25,948)      Adjusted Segment Income % 8.3% 13.2% 1.4% 5.4%      Adjusted Segment Income (Loss) $       (988) $      3,701 $      8,348 $   19,615
PROVISION (CREDIT) FOR INCOME TAXES 1,121 11,675 (14,331) 34,163 Inventories (113,407) (62,780) Equity in Earnings of Unconsolidated Affiliates Equity in Earnings of Unconsolidated Affiliates
Net Income (Loss) $     8,005 $   31,888 $    (35,543) $            504 Other Current Assets (856) (3,430)      Segment Income (Loss) % as Reported (2.1%) 1.0% (1.6%) 2.2% Engines $             (408) $              753 $              345 $                 62 $         1,406 $           1,468 Engines $           3,146 $           2,617 $           5,763 $           3,502 $         2,630 $           6,132
PLANT AND EQUIPMENT: Accounts Payable, Accrued Liabilities and Income Taxes 77,905 11,287      Adjusted Segment Income (Loss) % (0.4%) 1.5% 1.2% 3.0% Products 203 - 203 651 - 651 Products 2,640 - 2,640 2,936 - 2,936
EARNINGS (LOSS) PER SHARE At Cost 1,208,747 1,161,535 Other, Net 2,079 15,198 Total $             (205) $              753 $              548 $              713 $         1,406 $           2,119 Total $           5,786 $           2,617 $           8,403 $           6,438 $         2,630 $           9,068
Basic   $       0.19 $       0.74 $         (0.86) $           0.00 Less - Accumulated Depreciation 795,467 762,186    Net Cash Used in Operating Activities (104,891) (19,020)
Diluted $       0.19 $       0.74 $         (0.86) $           0.00 Plant and Equipment, Net 413,280 399,349 Segment Income (Loss) Segment Income (Loss)
$ 1,616,062 $ 1,557,707 CASH FLOWS FROM INVESTING ACTIVITIES: Engines $         22,833 $           5,211 $         28,044 $         47,718 $         2,896 $         50,614 Engines $       (16,579) $         27,083 $         10,504 $         35,776 $         7,243 $         43,019
WEIGHTED AVERAGE SHARES OUTSTANDING Capital Expenditures (46,379) (77,483) Products (5,682) 4,694 (988) 2,392 1,309 3,701 Products (11,514) 19,862 8,348 14,356 5,259 19,615
Basic   41,527 42,064 41,691 42,108 Proceeds Received on Disposition of Plant and Equipment 31 339 Inter-Segment Eliminations 110 - 110 720 - 720 Inter-Segment Eliminations (441) - (441) 405 - 405
Diluted 41,527 42,307 41,691 42,362 CURRENT LIABILITIES: Cash Paid for Acquisitions, Net of Cash Acquired (8,865) (1,800) Total $         17,261 $           9,905 $         27,166 $         50,830 $         4,205 $         55,035 Total $       (28,534) $         46,945 $         18,411 $         50,537 $      12,502 $         63,039
Accounts Payable $    272,125 $    202,822    Net Cash Used in Investing Activities (55,213) (78,944)
Short-Term Debt 211,545 131,556 Interest Expense $         (9,088) $                 15 $         (9,073) $         (8,617) $         2,017 $         (6,600) Interest Expense $       (21,731) $              263 $       (21,468) $       (19,167) $         2,017 $       (17,150)
Accrued Liabilities 143,432 157,895 CASH FLOWS FROM FINANCING ACTIVITIES:
Total Current Liabilities 627,102 492,273 Net Borrowings on Revolver 163,509 131,556 Income before Income Taxes 9,126 9,920 19,046 43,563 6,222 49,785 Income (Loss) before Income Taxes (49,874) 47,208 (2,666) 34,667 14,519 49,186
Long Term Note Payable - 7,685 Provision for Income Taxes 1,121 3,288 4,409 11,675 1,876 13,551 Provision for Income Taxes (14,331) 9,602 (4,729) 34,163 (21,104) 13,059
OTHER LIABILITIES: Debt Issuance Costs - (1,154) Net Income  $           8,005 $           6,632 $         14,637 $         31,888 $         4,346 $         36,234 Net Income (Loss) $       (35,543) $         37,606 $           2,063 $              504 $      35,623 $         36,127
Accrued Pension Cost 179,487 197,749 Treasury Stock Purchases (11,937) (8,710)
Accrued Employee Benefits 20,122 21,787 Repayments of Long Term Debt (5,424) (19,781) Earnings Per Share Earnings (Loss) Per Share
Accrued Postretirement Health Care Obligation 25,294 29,547 Stock Option Exercise Proceeds and Tax Benefits 1,823 3,943 Basic   $             0.19 $             0.15 $             0.34 $             0.74 $           0.10 $             0.84 Basic   $            (0.86) $             0.90 $             0.04 $             0.00 $           0.84 $             0.84
Other Long-Term Liabilities 61,050 53,737 Payments Related to Shares Withheld for Taxes for Stock Compensation (257) (1,147) Diluted 0.19 0.15 0.34 0.74 0.10 0.84 Diluted (0.86) 0.90 0.04 0.00 0.83 0.83
Long-Term Debt 195,464 202,332 Cash Dividends Paid (11,891) (12,007)
Total Other Liabilities 481,417 505,152    Net Cash Provided by Financing Activities 135,823 100,385
SHAREHOLDERS' INVESTMENT: EFFECT OF EXCHANGE RATE CHANGES (239) 1,090
Common Stock 579 579 NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH (24,520) 3,511
Additional Paid-In Capital 77,523 75,001 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, Beginning 1 49,218 61,707
Retained Earnings 1,018,265 1,089,364 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, Ending 2 $                   24,698 $                   65,218
Accumulated Other Comprehensive Loss (255,021) (280,546)
Treasury Stock, at Cost (333,803) (324,116)
Total Shareholders' Investment 507,543 560,282
$ 1,616,062 $ 1,557,707

 

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SOURCE Briggs & Stratton Corporation

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