NET SALES

Consolidated net sales for the second quarter of fiscal 2013 were $439.1 million, a decrease of $8.9 million or 2.0% from the second quarter of fiscal 2012.

Engines Segment fiscal 2013 second quarter net sales were $274.2 million, which was $11.9 million or 4.2% lower than the second quarter of fiscal 2012. This decrease in net sales was driven by reduced shipments of engines used on snow thrower equipment in the North American market and walk mowers in the Australian market. Sales were also impacted by an unfavorable mix of engines sold that reflected proportionately lower sales of large engines and reduced pricing as a result of lower year-over-year material costs.

Products Segment fiscal 2013 second quarter net sales were $197.5 million, a decrease of $17.9 million or 8.3% from the second quarter of fiscal 2012. The decrease in net sales was primarily due to reduced sales of snow thrower equipment and related service parts due to the lack of meaningful snowfall in the U.S. and reduced sales of lawn and garden equipment as a result of unusually dry conditions in the North American and Australian markets. This decrease was partially offset by higher shipments of portable and standby generators due to Hurricane Sandy and slightly improved pricing on lawn and garden equipment sold in the North American market.

For the first six months of fiscal 2013, consolidated net sales were $748.1 million, a decrease of $97.2 million or 11.5% when compared to the same period a year ago.

Engines Segment net sales for the first six months of fiscal 2013 were $438.7 million, which was $50.8 million or 10.4% lower than the same period a year ago. This decrease in net sales was primarily driven by reduced shipments of engines used on snow thrower equipment in the North American market as well as lower sales to OEM customers in the Australian and Asian markets, an unfavorable mix of engines sold that reflected proportionately lower sales of large engines and unfavorable foreign exchange of $1.6 million.

Products Segment net sales for the first six months of fiscal 2013 were $370.8 million, a decrease of $79.9 million or 17.7% from the same period a year ago. The decrease in net sales was primarily due to lower sales volumes of snow equipment due to a lack of meaningful snowfall in the U.S and reduced sales of lawn and garden equipment resulting from prolonged drought conditions in North America and as a result of our decision to exit the sale of lawn and garden equipment through national mass retailers. This decrease was partially offset by improved pricing.

GROSS PROFIT PERCENTAGE

Included in consolidated gross profit were pre-tax charges of $3.2 million ($2.1 million after tax, or $0.04 per diluted share) and $8.3 million ($5.4 million after tax, or $0.11 per diluted share) during the second quarter and first six months of fiscal 2013, respectively, related to previously announced restructuring actions to close the Ostrava, Czech Republic and Newbern, Tennesee manufacturing facilities and the Auburn, Alabama plant consolidation. The Engines Segment and Products Segment recorded $0.8 million and $2.4 million, respectively, of pre-tax restructuring charges within gross profit during the second quarter of fiscal 2013 and $1.9 million and $6.4 million, respectively, for the first six months of fiscal 2013. There were no restructuring costs incurred in the second quarter or first six months of fiscal 2012.

                 BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES


The following table is a reconciliation of gross profit by segment, as reported,
to adjusted gross profit by segment, excluding restructuring charges.
                                    Three Months Ended                     Six Months Ended
                              December 30,        January 1,        December 30,        January 1,
                                  2012               2012               2012               2012
Engines
Engines Net Sales           $      274,195     $      286,099     $      438,710     $      489,477

Engines Gross Profit as
Reported                    $       56,287     $       49,352     $       80,999     $       86,235
Restructuring Charges                  847                  -              1,938                  -
Adjusted Engines Gross
Profit (1)                  $       57,134     $       49,352     $       82,937     $       86,235

Engines Gross Profit % as
Reported                              20.5 %             17.2 %             18.5 %             17.6 %
Adjusted Engines Gross
Profit % (1)                          20.8 %             17.2 %             18.9 %             17.6 %

Products
Products Net Sales          $      197,494     $      215,416     $      370,791     $      450,698

Products Gross Profit as
Reported                    $       18,536     $       26,819     $       37,252     $       54,429
Restructuring Charges                2,353                  -              6,388                  -
Adjusted Products Gross
Profit (1)                  $       20,889     $       26,819     $       43,640     $       54,429

Products Gross Profit %
as Reported                            9.4 %             12.4 %             10.0 %             12.1 %
Adjusted Products Gross
Profit % (1)                          10.6 %             12.4 %             11.8 %             12.1 %

Inter-Segment
Eliminations                         2,090             (2,291 )            2,532               (730 )
Adjusted Gross Profit (1)   $       80,113     $       73,880     $      129,109     $      139,934

(1) Adjusted gross profit is a non-GAAP financial measure. The Company believes this information is meaningful to investors as it isolates the impact that restructuring charges have on gross profit and facilitates comparisons between peer companies. While the Company believes that adjusted gross profit is useful supplemental information, such adjusted results are not intended to replace our Generally Accepted Accounting Principles' ("GAAP") financial results and should be read in conjunction with those GAAP results.

The consolidated gross profit percentage was 17.5% in the second quarter of fiscal 2013, up from 16.5% in the same period last year.

The Engines Segment gross profit percentage was 20.5% in the second quarter of fiscal 2013, higher than the 17.2% in the second quarter of fiscal 2012. Excluding restructuring charges of $0.8 million, adjusted Engines Segment gross profit percentage in the second quarter of fiscal 2013 was 20.8%, an increase of approximately 360 basis points compared to Engines Segment gross profit percentage in the second quarter of fiscal 2012. The adjusted gross profit percentage was favorably impacted by 4.2% due to lower manufacturing costs, partially offset by a planned price decrease. The lower manufacturing costs resulted from start-up costs incurred in fiscal 2012 associated with launching our phase III emissions compliant engines, lower material costs and $2.5 million of cost savings as a result of restructuring actions initiated in fiscal 2012.

The Products Segment gross profit percentage was 9.4% for the second quarter of fiscal 2013, lower than 12.4% in the second quarter of fiscal 2012. Excluding restructuring charges of $2.4 million, adjusted gross profit percentage for the second quarter of 2013 was 10.6%, which was approximately 180 basis points lower compared to the second quarter of fiscal 2012. The adjusted gross profit percentage decreased 4.0% due to unfavorable absorption

and reduced efficiencies associated with a 49% decrease in production. The McDonough, Georgia manufacturing facility was temporarily idled for four weeks in the second quarter of fiscal 2013 to reduce inventory levels in response to a decline in market demand for snow and lawn and garden products and to re-tool the plant for new products to be launched for the upcoming spring season. This decrease was partially offset by a benefit of 2.2% due to cost savings of $4.4 million as a result of restructuring actions. The benefit of implementing price increases on domestic lawn and garden equipment sales was offset by an unfavorable mix of products sold that reflected fewer sales of higher margin service parts as well as lower sales of lawn and garden products in Australia.

The consolidated gross profit percentage for the first six months of fiscal 2013 slightly decreased from 16.6% to 16.2% from the first six months of fiscal 2012.

The Engines Segment gross profit percentage was 18.5% for the first six months of fiscal 2013, higher than the 17.6% for the first six months in fiscal 2012. Excluding restructuring charges of $1.9 million, adjusted Engines Segment gross profit percentage for the first six months of 2013 was 18.9%, which was approximately 130 basis points higher compared to the first six months of fiscal 2012 due to lower manufacturing costs. The lower manufacturing costs improved gross margin by 1.1% due to $4.7 million of cost savings as a result of fiscal 2012 restructuring actions, 1.8% attributable to manufacturing cost improvements because of start-up costs incurred in fiscal 2012 associated with launching our phase III emissions compliant engines, partially offset by 1.6% due to the unfavorable absorption of fixed manufacturing costs as a result of a 6% reduction in engines built.

The Products Segment gross profit percentage was 10.0% for the first six months of fiscal 2013, lower from 12.1% for the first six months in fiscal 2012. Excluding restructuring charges of $6.4 million, adjusted gross profit percentage for the second quarter of 2013 was 11.8%, which was approximately 30 basis points lower compared to the first six months of fiscal 2012. The adjusted gross profit percentage benefited from cost savings of $8.4 million as a result of restructuring actions initiated in fiscal 2012 as well as increased pricing. Offsetting this was the unfavorable impact of reduced absorption and inefficiencies associated with a 43% decrease in production. As previously indicated, we reduced production volumes in the first six months of fiscal 2013 in order to manage inventory levels in response to a decline in near-term market demand.

ENGINEERING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Engineering, selling, general and administrative expenses were $69.2 million in the second quarter of fiscal 2013, a decrease of $4.1 million or 5.6% from the second quarter of fiscal 2012. The decrease in the current year was primarily attributable to lower compensation costs of $3.0 million as a result of the previously announced global salaried employee reduction and reduced selling expenses, which was partially offset by $0.7 million of increased pension expense compared to the same period last year.

Engineering, selling, general and administrative expenses were $134.9 million for the first six months of fiscal 2013, a decrease of $6.1 million or 4.3% from the first six months of fiscal 2012. The decrease in the current year was primarily attributable to lower compensation costs of $6.0 million as a result of the previously announced global salaried employee reduction and reduced selling expenses, which was partially offset by $2.1 million of increased pension expense compared to the same period last year.

INTEREST EXPENSE

Interest expense was lower compared to the prior year periods by $0.2 million and $0.1 million for the second quarter and first six months of fiscal 2013, respectively.

PROVISION FOR INCOME TAXES

The effective tax rates for the second quarter and first six months of fiscal 2013 were 156.2% and 27.8%, respectively, compared to 195.6% and 63.9% in the same respective periods last year. The second quarter and first six months of fiscal 2013 include a tax expense of $1.0 million primarily driven by non-deductible acquisition costs and un-benefitted losses for certain foreign subsidiaries. The second quarter of fiscal 2012 reflected a tax benefit of $5.5 million in spite of a loss before taxes of $2.8 million due to the settlement of U.S. audits and the expiration of a non-U.S. statute of limitation period in the second quarter of fiscal 2012.

RESTRUCTURING ACTIONS

In January 2012, the Company announced plans to reduce manufacturing capacity through closure of its Newbern, Tennessee and Ostrava, Czech Republic plants, as well as the reconfiguration of its plant in Poplar Bluff, Missouri. During fiscal 2012, the Company ceased manufacturing operations at its Newbern, Tennessee and Ostrava, Czech Republic plants, and carried out reconfiguration of the Poplar Bluff, Missouri plant.

In April 2012, the Company announced plans to further reduce manufacturing costs through consolidation of its Auburn, Alabama manufacturing facility as well as the reduction of approximately 10% of the Company's salaried headcount. In fiscal 2012 and fiscal 2013, the Company implemented salaried headcount reductions. Additionally, the Company announced that it will no longer pursue placement of lawn and garden products at national mass retailers beginning in fiscal 2013. The Engines segment will continue to support lawn and garden equipment OEMs who provide lawn and garden equipment to these retailers. The Products segment will continue to focus on innovative, higher margin products that are sold through our network of Simplicity, Snapper and Ferris dealers and regional retailers. The Company will also continue to sell pressure washers and portable and standby generators through the U.S. mass retail channel.

In October 2012, the Company announced changes to its defined benefit pension plan that included freezing accruals for all non-bargaining employees effective January 1, 2014. This plan change resulted in the Company recognizing a pre-tax curtailment charge of $1.9 million in the second quarter of fiscal 2013.

The Company's execution of its previously announced restructuring actions remains largely on schedule. The Company has made progress towards finalizing its exit from the Newbern, Tennessee and Ostrava, Czech Republic manufacturing facilities and the consolidation of its Auburn, Alabama plant. Given the incremental demand for engines and portable generators resulting from storms that occurred in the first six months of fiscal 2013, the Auburn plant consolidation will extend into fiscal 2014.

Pre-tax restructuring costs for the second quarter and first six months of fiscal 2013 were $6.6 million ($4.3 million after tax or $0.09 per diluted share) and $11.8 million ($7.6 million after tax or $0.16 per diluted share), respectively, of which $3.2 million and $8.3 million, respectively, were included in gross profit as previously mentioned. There were no restructuring costs incurred in the second quarter or first six months of fiscal 2012.

The total estimated pre-tax expense related to restructuring actions in fiscal 2013 is expected to be $12 million to $22 million. In addition, the Company continues to anticipate pre-tax savings associated with restructuring actions of $30 million to $35 million in fiscal 2013 and $40 million to $45 million in fiscal 2014.

BRANCO ACQUISITION

The Company also announced on December 7, 2012, that it had completed the acquisition of Campahnia Caetano Branco ("Branco") for total cash consideration of approximately $58 million net of cash acquired, subject to post-closing adjustments. Branco is a leading brand in the Brazilian light power equipment market with a broad range of outdoor power equipment used primarily in light commercial applications in Brazil. The acquisition is not anticipated to have a significant impact on sales or earnings in fiscal 2013.

Cash flows used in operating activities for the first six months of fiscal 2013 were $75.4 million compared to $165.0 million in the first six months of fiscal 2012. The improvement in operating cash flows was primarily related to lower working capital needs in the most recent period associated with less of an increase of receivables and inventory compared to the same period last year, partially offset by contributions to the pension plan of $16.2 million in fiscal 2013.

Cash flows used in investing activities were $68.3 million and $22.3 million during the first six months of fiscal 2013 and fiscal 2012, respectively. The $46.0 million increase in cash used in investing activities was primarily related to $57.8 million of cash payments made for the acquisition of Branco, partially offset by $3.0 million of lower additions to plant and equipment compared to the same period one year ago and $6.3 million of proceeds received on disposition of plant and equipment in fiscal 2013, primarily associated with the sale of the dormant manufacturing facility in Jefferson, Wisconsin and a land parcel adjacent to the Ostrava, Czech Republic plant.

Cash flows provided by financing activities were $5.2 million during the first six months of fiscal 2013 as compared to $4.0 million of cash flows used during the first six months of fiscal 2012. The $9.2 million increase in cash provided by financing activities was primarily attributable to $11.3 million of stock option exercise proceeds in fiscal 2013 and an increase of $3.9 million in net borrowings on the revolver compared to the same period a year ago, partially offset by $7.9 million of higher treasury stock purchases compared to the first six months of last year.

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

On October 13, 2011, the Company entered into a $500 million multicurrency credit agreement (the "Revolver"). The Revolver replaced the amended and restated multicurrency credit agreement dated as of July 12, 2007. The Revolver has a term of five years and all outstanding borrowings on the Revolver are due and payable on October 13, 2016. The initial maximum availability under the revolving credit facility is $500 million. Availability under the revolving credit facility is reduced by outstanding letters of credit. The Company may from time to time increase the maximum availability under the revolving credit facility by up to $250 million if certain conditions are satisfied. Borrowings under the Revolver were $18.9 million and zero as of December 30, 2012 and July 1, 2012, respectively.

On August 10, 2011, the Board of Directors of the Company authorized up to $50 million in funds for use in a common share repurchase program with an expiration of June 30, 2013. On August 8, 2012 the Board of Directors of the Company authorized up to an additional $50 million in funds associated with the common share repurchase program and an extension of the expiration date to June 30, 2014. The common share repurchase program authorizes the purchase of shares of the Company's common stock on the open market or in private transactions from time to time, depending on market conditions and certain governing loan covenants. During the six months ended December 30, 2012, the Company repurchased 1,053,125 shares on the open market at an average price of $18.26 per share.

The Company expects capital expenditures to be approximately $50 million to $60 million in fiscal 2013. These anticipated expenditures reflect our plans to continue to reinvest in efficient equipment and innovative new products.

The Company is required to make contributions to the qualified pension plan of approximately $30 million during fiscal 2013. During the first six months of fiscal 2013, the Company made cash contributions of $16.2 million to the qualified pension plan. The Company may be required to make further contributions in future years depending upon the actual return on plan assets and the funded status of the plan in future periods.

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

The Revolver and the Senior Notes contain restrictive covenants. These covenants include restrictions on the Company's ability to: pay dividends; repurchase shares; incur indebtedness; create liens; enter into sale and leaseback transactions; consolidate or merge with other entities; sell or lease all or substantially all of its assets; and dispose of assets or use proceeds from sales of its assets. The Revolver contains financial covenants that require the Company to maintain a minimum interest coverage ratio and impose a maximum leverage ratio. As of December 30, 2012, the Company was in compliance with these covenants, and expects to be in compliance with all covenants during the remainder of fiscal 2013.

There have been no material changes since the August 28, 2012 filing of the Company's Annual Report on Form 10-K.

There have been no material changes since the August 28, 2012 filing of the Company's Annual Report on Form 10-K, except that subsequent to the filing of the Company's Annual Report on Form 10-K, the Company learned of the final interest rates published by the Internal Revenue Service used to calculate minimum pension contributions under the MAP-21 Act. In addition, the changes announced to freeze the defined benefit pension plans for non-bargaining employees also impacts the future minimum plan funding requirements. Based upon the current regulations and actuarial studies the Company estimates that it will make required minimum contributions to the qualified pension plan of approximately $30 million in fiscal 2013, $10 million in fiscal years 2014-2015, and $55 million in fiscal years 2016-2017.

There have been no material changes in the Company's critical accounting policies since the August 28, 2012 filing of its Annual Report on Form 10-K. As discussed in our annual report, the preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements.

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

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

This report contains certain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. The words "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 our products; changes in interest rates and foreign exchange rates; the effects of weather on the purchasing patterns of consumers and original equipment manufacturers (OEMs); actions of engine manufacturers and OEMs with whom we compete; changes in laws and regulations; changes in customer and OEM demand; changes in prices of raw materials and parts that we purchase; changes in domestic and foreign economic conditions; the ability to bring new productive capacity on line efficiently and with good quality; outcomes of legal proceedings and claims; and other factors disclosed from time to time in our SEC filings or otherwise, including the factors discussed in Item 1A, Risk Factors, of the Company's Annual Report on Form 10-K and in its periodic reports on Form 10-Q.