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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended September 26, 2004

OR

For the transition period from                      to                     

Commission file number 1-1370

BRIGGS & STRATTON CORPORATION

(Exact name of registrant as specified in its charter)

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 is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes x No ¨

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. (Outstanding shares adjusted for effect of 2-for-1 stock split effective October 29, 2004.)

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BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

INDEX

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PART I - FINANCIAL INFORMATION

CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands)

ASSETS

The accompanying notes are an integral part of these statements.

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CONSOLIDATED CONDENSED BALANCE SHEETS (Continued)

(In thousands, except per share data)

LIABILITIES & SHAREHOLDERS’ INVESTMENT

The accompanying notes are an integral part of these statements.

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CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

The accompanying notes are an integral part of these statements

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CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)

General Information

The accompanying unaudited consolidated condensed 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 presentation of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the U.S. However, in the opinion of Briggs & Stratton Corporation, adequate disclosures have been presented to make the information not misleading, and all adjustments necessary to present fair statements of the results of operations and financial position have been included. All of these adjustments are of a normal recurring nature. These consolidated condensed financial statements should be read in conjunction with the financial statements and the notes thereto which were included in our latest Annual Report on Form 10-K.

Common Stock

On August 4, 2004, Briggs & Stratton’s board approved a two-for-one stock split of its common stock, which became effective on October 29, 2004 upon shareholder approval of the amendment to the Briggs & Stratton Articles of Incorporation. The stock split is payable on November 9, 2004 to shareholders of record on October 29, 2004. The split will be in the form of a stock dividend, with shareholders receiving an additional share for each share currently held. All references in the Consolidated Condensed Financial Statements to the number of common shares and related per share amounts have been restated to reflect the stock split.

Accounts Receivable

Accounts Receivable includes $40 million from a major original equipment manufacturer which we believe may not be fully collectible. Accordingly, we have recorded an additional allowance for doubtful accounts of $10 million for this receivable. Based on information available to date, we believe a $10 million reserve is sufficient to cover our estimate of the potential loss on this account.

Earnings Per Share

Basic earnings per share, for each period presented, is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share, for each period presented, is computed reflecting the potential dilution that would occur if options or other contracts to issue common stock were exercised or converted into common stock at the beginning of the period.

Shares outstanding used to compute diluted earnings per share for the period ended September 26, 2004 excluded 85,000 shares of restricted stock and outstanding options to purchase 2,540,176 shares of common stock. For the quarter ended September 28, 2003, 5,651,688 shares related to convertible debentures and outstanding options to purchase 1,212,055 shares of common stock were excluded. The impact of such common stock equivalents and their effects on income were excluded from the calculation of net income (loss) per share on a diluted basis as their effect is anti-dilutive.

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Information on earnings per share is as follows (in thousands):

Comprehensive Income

Comprehensive income is a more inclusive financial reporting method that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income. Comprehensive income is defined as net income and other changes in shareholders’ investment from transactions and events other than with shareholders. Total comprehensive income (loss) is as follows (in thousands):

The components of Accumulated Other Comprehensive Income are as follows (in thousands):

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Derivatives

Derivatives are recorded on the balance sheet as assets or liabilities, measured at fair value. Briggs & Stratton enters into derivative contracts designated as cash flow hedges to manage its foreign currency exposures. These instruments generally do not have a maturity of more than twelve months. Briggs & Stratton has used interest rate swaps designated as fair value hedges to manage its debt portfolio. These instruments generally have maturities and terms consistent with the underlying debt instrument. In April 2004, all interest rate swaps were terminated.

Changes in the fair value of cash flow hedges are recorded on the Consolidated Condensed Statements of Income or as a component of Accumulated Other Comprehensive Income (Loss). The amounts included in Accumulated Other Comprehensive Income (Loss) will be reclassified into income when the forecasted transactions occur, generally within the next twelve months. These forecasted transactions represent the exporting of products for which Briggs & Stratton will receive foreign currency and the importing of products for which it will be required to pay in a foreign currency. Changes in the fair value of fair value hedges related to interest rate swaps were recorded as an increase/decrease to long-term debt. Changes in the fair value of all derivatives deemed to be ineffective are recorded as either income or expense in the accompanying Consolidated Condensed Statements of Income.

Segment and Geographic Information

Briggs & Stratton operates two reportable business segments that are managed separately based on fundamental differences in their operations. Summarized segment data is as follows (in thousands):

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Warranty

Briggs & Stratton recognizes the cost associated with its standard warranty on Engines and Power Products at the time of sale. 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):

Stock Options

Briggs & Stratton has an Incentive Compensation Plan that is accounted for under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”. Under the plan, no compensation cost has been recognized. Had compensation cost for these plans been determined consistent with Statement of Financial Accounting Standard (“SFAS”) No. 123, “Accounting for Stock-Based Compensation” and SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure”, the Company’s net income and earnings per share would have been reduced to the following pro forma amounts (in thousands, except per share data):

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Pension and Postretirement Benefits

Briggs & Stratton 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):

Employer Contributions:

Briggs & Stratton does not expect to make any contributions to the pension plans in fiscal 2005.

Estimated Benefit Payments:

Briggs & Stratton expects to make benefit payments of approximately $1.6 million for its non-qualified pension plan during fiscal 2005. As of September 26, 2004, Briggs & Stratton had made payments of approximately $0.4 million. Briggs & Stratton anticipates benefit payments of approximately $28.9 million for its other postretirement benefit plans during fiscal 2005. As of September 26, 2004, Briggs & Stratton had made payments of approximately $7.1 million.

Acquisition

On July 7, 2004, Briggs & Stratton and its subsidiary, Briggs & Stratton Power Products Group, LLC (“BSPPG”) acquired Simplicity Manufacturing, Inc. (“Simplicity”). Simplicity designs, manufactures and markets a wide variety of premium yard and garden tractors, lawn tractors, riding mowers, snow throwers, attachments, and other lawn and garden products like rototillers and chipper shredders. The purchase price included $240.4 million of cash, a $10.0 million liability for future tax benefits subject to adjustment based on the actual tax benefits received and $130.1 million of liabilities assumed. The cash paid included $17.8 million of cash acquired and $9.3 million of direct acquisition costs.

The acquisition has been accounted for using the purchase method of accounting. The purchase price was allocated on a preliminary basis to identifiable assets acquired and liabilities assumed based upon their estimated fair values, with the excess purchase price recorded as goodwill. Final adjustments to the purchase price allocation, which will include the resolution of certain tax matters, are not expected to be material to the consolidated financial statements.

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The following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition:

Other intangible assets are comprised of trademarks, patents and customer relationships. Patents have been assigned an estimated weighted average useful life of thirteen years. The customer relationships have been assigned an estimated useful life of twenty-five years. The patents and customer relationships are being amortized on a straight-line basis. The trademarks and goodwill, which are considered to have an indefinite life and will not be amortized, will be tested annually for impairment.

The following table summarizes pro forma results for the three months ended September 28, 2003 as though the business combination had been completed at the beginning of the earliest comparable period (in thousands, except per share data):

The three month pro forma results outlined above have been adjusted to exclude $14.6 million of purchase accounting adjustments recorded by Simplicity related to its fiscal 2003 acquisition of Snapper Products Inc. and include $4.9 million of purchase accounting adjustments related to Briggs & Stratton’s fiscal 2005 acquisition of Simplicity. The information has been prepared for comparative purposes only and does not purport to be indicative of the results of operations which actually would have occurred had the acquisition taken place on the date indicated or which may result in the future.

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Financial Information of Subsidiary Guarantor of Indebtedness

In June 1997, Briggs & Stratton issued $100 million of 7.25% senior notes and in May 2001, Briggs & Stratton issued $275 million of 8.875% senior notes. In addition, Briggs & Stratton has a $275 million revolving credit facility that expires in May 2009 that is used to finance seasonal working capital needs.

Under the terms of Briggs & Stratton’s 8.875% senior notes, 7.25% senior notes and the revolving credit agreement (collectively, the “Domestic Indebtedness”), BSPPG and effective July 7, 2004, its wholly owned subsidiary, Simplicity Manufacturing Inc., are joint and several guarantors of the Domestic Indebtedness (the “Guarantor”). The guarantees are full and unconditional guarantees. Additionally, if at any time a domestic subsidiary of Briggs & Stratton 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 Briggs & Stratton 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. Briggs & Stratton had the following outstanding amounts related to the guaranteed debt (in thousands):

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

BALANCE SHEET

As of September 26, 2004

BALANCE SHEET

As of June 27, 2004

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STATEMENT OF INCOME

For the Three Months Ended September 26, 2004

STATEMENT OF INCOME

For the Three Months Ended September 28, 2003