Briggs and Stratton Corporation Reports Results For The 2nd Quarter And First Six Months Of Fiscal 2014

MILWAUKEE -- Jan. 23 -- Briggs and Stratton Corporation today announced financial results for its second fiscal quarter ended December 29, 2013.

Highlights:

• Second quarter fiscal 2014 consolidated net sales were $416.6 million, a decrease of $22.5 million or 5.1% from the prior year.
• Increased sales of lawn and garden equipment were offset by lower sales of standby and portable generators compared to last year when Hurricane Sandy occurred.
• The reduced storm activity reduced net sales and diluted earnings per share by an estimated $55 million and $0.12 in the fiscal quarter compared with last year.
• Second quarter 2014 consolidated net income excluding restructuring charges was $2.3 million, or $1.4 million lower than the adjusted net income of $3.7 million in the second quarter of fiscal 2013.
• The Company recorded pre-tax restructuring charges of $2.3 million ($1.6 million after tax or $0.04 per diluted share) during the three months ended December 29, 2013.

"During the quarter we continued to see year over year sales of lawn and garden equipment and related parts sales improving both in North America and in Australia," commented Todd J. Teske, Chairman, President and Chief Executive Officer of Briggs and Stratton Corporation.

 "While these positive trends were not enough to offset the sales we saw last year related to storms Isaac and Sandy, we remain optimistic for an improved lawn and garden market this spring," continued Teske. "Adjusted margins expanded in the quarter in both the engines and products businesses as we continue to focus on reducing costs, streamlining our operations and delivering margin expanding innovations to consumers.

This spring we are excited to launch several new engine and product solutions including Quiet Power Technology™ that reduces the sound of a walk mower as much as 80%, Ready Start® push button starting for riding mowers, and the new Powerflow + Technology™ pressure washer that has both variable flow and pressure capabilities, to name just a few."

Consolidated Results:

Consolidated net sales for the second quarter of fiscal 2014 were $416.6 million, a decrease of $22.5 million or 5.1% from the second quarter of fiscal 2013, due to lower sales of standby and portable generators, partially offset by higher sales of engines and lawn and garden products.

The quarterly impact of fewer weather related events creating demand for generators and the related engines was an estimated sales decrease of $55 million. The fiscal 2014 second quarter consolidated net income, which includes restructuring charges, was $0.7 million or $0.01 per diluted share.

The second quarter of fiscal 2013 consolidated net loss, which includes restructuring charges, was $0.6 million or $0.02 per diluted share. The impact of the reduced engines and generator sales in the quarter was an estimated $0.12 per diluted share compared with last year's second fiscal quarter.

Included in the consolidated net income for the second quarter of fiscal 2014 were pre-tax charges of $2.3 million related to restructuring actions. Included in consolidated net loss for the second quarter of fiscal 2013 were pre-tax charges of $6.6 million related to restructuring actions. After removing the impact of these items, the adjusted consolidated net income for the second quarter of fiscal 2014 was $2.3 million or $0.05 per diluted share, which was $1.4 million lower compared to the second quarter fiscal 2013 adjusted consolidated net income of $3.7 million or $0.07 per diluted share.

For the first six months of fiscal 2014, consolidated net sales were $733.9 million, a decrease of $14.2 million or 1.9% when compared to the same period a year ago. The consolidated net loss for the first six months of fiscal 2014 was $18.6 million or $0.41 per diluted share. The consolidated net loss for the first six months of fiscal 2013 was $17.2 million or $0.37 per diluted share.

Included in the consolidated net loss for the first six months of fiscal 2014 were pre-tax charges of $5.9 million ($4.4 million after tax or $0.10 per diluted share) related to the restructuring actions. Included in the consolidated net loss for the first six months of fiscal 2013 were pre-tax charges of $11.8 million ($7.6 million after tax or $0.16 per diluted share) related to the restructuring actions. After considering the impact of the restructuring charges, the adjusted consolidated net loss for the first six months of fiscal 2014 was $14.2 million or $0.31 per diluted share, which was an increase of $4.7 million or $0.10 per diluted share compared to the first six months of fiscal 2013 consolidated net loss of $9.5 million or $0.21 per diluted share.

Engines Segment

Engines Segment fiscal 2014 second quarter net sales were $265.7 million, which was $8.5 million or 3.1% lower than the second quarter of fiscal 2013. This decrease in net sales was due to lower sales of engines used in generators due to the lack of storm activity during the quarter. Fiscal 2013 second quarter net sales benefited from the impact of Hurricane Sandy. The decrease was partially offset by higher North American sales of engines used on lawn and garden equipment and related service parts due to OEM's building lawn and garden inventory for the upcoming lawn and garden season. 

The Engines Segment adjusted gross profit percentage for the second quarter of 2014 was 21.0%, which was slightly higher compared to the second quarter of fiscal 2013. The increase was related to a favorable impact of 0.6% from sales mix of higher margin service parts and margin contributed from the Branco acquisition which closed late in the second quarter of fiscal 2013. Partially offsetting the increase was a 0.5% unfavorable impact from foreign exchange primarily related to the Australian Dollar. Manufacturing throughput decreased in the second quarter of 2014 by 9%; however, production mix was favorable as proportionately more large engines were built.

The Engines Segment engineering, selling, general and administrative expenses were $45.6 million in the second quarter of fiscal 2014, an increase of $1.7 million from the second quarter of fiscal 2013. The increase was primarily due to increased compensation costs and the added expenses related to Branco, partially offset by lower retirement plan expenses of $0.8 million.  

Engines Segment net sales for the first six months of fiscal 2014 were $449.5 million, which was $10.8 million or 2.5% higher than the same period a year ago. The increase was primarily driven by higher North American sales of engines used on lawn and garden equipment and related service parts due to strong demand stemming from late season growing conditions as well as the anticipated increased retail demand for the upcoming lawn and garden season. The increase was partially offset by lower sales of engines used in generators due to the lack of storm activity during the first six months of fiscal 2014. Hurricanes Isaac and Sandy occurred during the first six months of fiscal 2013.

The Engines Segment adjusted gross profit percentage for the first six months of 2014 was 18.4%, which was 0.5% lower compared to the first six months of fiscal 2013. The decrease was due to the unfavorable impact of 1.1% due to a 12% reduction in manufacturing throughput and 0.4% attributable to unfavorable foreign exchange. The decrease was partially offset by 1.0% from favorable sales mix of higher margin service parts and the margin contributed by Branco.

The Engines Segment engineering, selling, general and administrative expenses were $88.9 million in the first six months of fiscal 2014, an increase of $2.8 million. The increase is primarily due to increased compensation costs and the added expenses related to Branco partially offset by lower retirement plan expenses of $2.4 million. 

Products Segment

Products Segment fiscal 2014 second quarter net sales were $171.5 million, a decrease of $26.0 million or 13.2% from the second quarter of fiscal 2013. The decrease in net sales was driven by lower net sales of standby and portable generators due to no landed hurricanes in the second quarter of fiscal 2014 and unfavorable foreign exchange predominantly related to the Australian Dollar and the Brazilian Real. Hurricane Sandy occurred in the second quarter of fiscal 2013 and no significant storms occurred in fiscal 2014. This decrease was partially offset by favorable late season growing conditions during the second quarter of fiscal 2014 that led to higher net sales of lawn and garden equipment through our North American dealer channel as well as higher sales of pressure washers and service parts. Net sales also benefited from the Branco acquisition.

The Products Segment adjusted gross profit percentage for the second quarter of 2014 was 13.0%, which was 2.4% higher than the adjusted gross profit percentage for the second quarter of fiscal 2013. The increase was primarily related to a favorable mix of products sold in the second quarter of fiscal 2014 with the additional margin from Branco and an increase in net sales of lawn and garden equipment through the North America dealer channel.  The adjusted gross profit percentage also benefited by 0.7% due to improved manufacturing efficiencies and incremental footprint restructuring savings of $0.3 million. Partially offsetting the increase was a 1.0% unfavorable impact from foreign exchange. 

The Products Segment fiscal 2014 second quarter engineering, selling, general and administrative expenses were $26.2 million, an increase of $0.8 million from the second quarter of fiscal 2013. The increase was mainly attributable to the additional expenses from Branco and higher compensation costs partially offset by lower marketing spend and favorable foreign exchange.

Products Segment net sales for the first six months of fiscal 2014 were $324.6 million, a decrease of $46.2 million or 12.5% from the same period a year ago. The decrease in net sales was driven by lower sales of standby and portable generators due to no landed hurricanes during the first six months of fiscal 2014 and unfavorable foreign exchange predominantly due to the Australian Dollar and the Brazilian Real.  Hurricanes Isaac and Sandy occurred during the first six months of fiscal 2013. This decrease was partially offset by favorable late season growing conditions during the first six months of fiscal 2014 that led to higher sales of lawn and garden equipment through our North American dealer channel as well as higher sales of pressure washers and service parts. Net sales also benefited from the Branco acquisition.

The Products Segment adjusted gross profit percentage for the first six months of 2014 was 12.9%, which was 1.1% higher compared to the first six months of fiscal 2013. The increase was primarily related to a 0.8% benefit from improved manufacturing efficiencies and incremental footprint restructuring savings of $0.8 million. The adjusted gross profit percentage also benefited from a favorable mix of products sold in the first six months of fiscal 2014 with the additional margin from Branco and an increase in net sales through the North America dealer channel. Partially offsetting the increase was a 0.4% unfavorable impact from foreign exchange. 

The Products Segment engineering, selling, general and administrative expenses were $51.7 million in the first six months of fiscal 2014, an increase of $2.9 million from the first six months of fiscal 2013. The increase was mainly attributable to the additional expenses from Branco and higher compensation costs, partially offset by lower marketing spend and favorable foreign exchange.

Corporate Items:

Interest expense for the second quarter and first six months of fiscal 2014 was comparable to the same periods a year ago.

The effective tax rate for the second quarter and first six months of fiscal 2014 were 69.8% and 25.5%, respectively, compared to 156.5% and 27.8% for the same respective periods of fiscal 2013. The tax rate for the second quarter and first six months of fiscal 2014 was primarily driven by net operating losses of certain foreign subsidiaries without a realizable tax benefit. The second quarter and first six months of fiscal 2013 included a tax expense of $1.0 million primarily driven by nondeductible acquisition costs and net operating losses of certain foreign subsidiaries without a realizable tax benefit.

Financial Position:

Net debt at December 29, 2013 was $126.8 million (total debt of $225.0 million less $98.2 million of cash), or $101.8 million lower from the $228.7 million (total debt of $246.9 million less $18.2 million of cash) at December 30, 2012. Cash flows used in operating activities for the first six months of fiscal 2014 were $45.2 million compared to $75.4 million in fiscal 2013. The improvement in operating cash flows was primarily related to changes in working capital needs in fiscal 2014 associated with lower seasonal growth in accounts receivable and inventory due to lower production levels and planned inventory reductions. In addition, no contributions to the pension plan were made in fiscal 2014 compared to $16.2 million in the first half of fiscal 2013.

Restructuring:

The previously announced restructuring actions remain on schedule. Production of horizontal shaft engines was concluded at the Auburn, Alabama plant during the second quarter of 2014. As noted previously, pre-tax restructuring costs for the second quarter and first six months of fiscal 2014 were $2.3 million and $5.9 million, respectively. Pre-tax restructuring cost estimates for fiscal 2014 remain unchanged at $6 million to $8 million. Incremental restructuring savings for fiscal 2014 are expected to be $2 million to $4 million.  

Share Repurchase Program:

On August 8, 2012, the Board of Directors of the Company authorized up to $50 million in funds associated with the common share repurchase program with an expiration date of June 30, 2014. On January 22, 2014, the Board of Directors of the Company authorized up to an additional $50 million in funds for use in the Company's common share repurchase program with an extension of the expiration date to June 30, 2016. The common share repurchase program authorizes the purchase of shares of the Company's common stock on the open market or in private transactions from time to time, depending on market conditions and certain governing loan covenants. During the first six months of fiscal 2014, the Company repurchased 1,066,447 shares on the open market at an average price of $19.77 per share.

Outlook:

For fiscal 2014, the Company has revised its full year guidance to exclude the potential positive benefit of landed hurricanes from the upper end of the revenue and earnings guidance. In addition, the lower end of the guidance has been reduced to give effect to approximately $3.0 million of negative foreign currency fluctuations and the lack of European snow sales that are not likely to be recovered in the second half of the fiscal year.

The Company now expects net income to be in a range of $48 million to $57 million or $1.00 to $1.18 per diluted share prior to the impact of any additional share repurchases and costs related to our announced restructuring actions. Our fiscal 2014 consolidated net sales are projected to be in a range of $1.88 billion to $2.0 billion.

We continue to estimate that the retail market for lawn and garden products will increase 4-6% in the U.S. next season. The estimated incremental impact of exiting the sale of lawn and garden equipment through national mass retailers is approximately $10 million to $15 million of reduced sales in fiscal 2014. In addition, sales in fiscal 2013 were favorably impacted by sales of portable and standby generators in response to power outages during Hurricanes Isaac and Sandy.

The upper end of our earnings projections contemplates a higher market recovery in excess of 10% for the U.S. lawn and garden market. Operating income margins are expected to improve over fiscal 2013 and be in a range of 4.5% to 4.8% and reflect the positive impacts of the restructuring actions. Interest expense and other income are estimated to be approximately $18 million and $5 million, respectively. The effective tax rate is projected to be in a range of 30% to 33% and capital expenditures are projected to be approximately $50 million to $55 million.    

CPSC, Honda Recall Honda and Columbia Brand Walk Mowers

January 15 -- Honda has recalled about 20,800 Honda brand and 48 Columbia brand 21-inch walk lawnmowers in the U.S., along with 3,000 in Canada.

The Honda mowers are red and silver (HRR) and red and gray (HRX). Both have “Honda” on the engine cover. The model and serial numbers are located on the certification label that is affixed to the cutter housing deck behind the engine.  Honda recalled lawnmowers are:

Honda Models ….. Serial Number Range

HRR2169VLA ….. MZCG-8764914 - MZCG-8824353

HRX2174VLA ….. MAGA-2255148 - MAGA-2260227

The Columbia brand lawnmower, model number 12ALD33Q897, comes in orange and black. “Honda” is printed on the engine cover. The Honda engine serial number is located on a label on the back of the engine. It is also stamped into the engine block adjacent to the oil filler cap/dipstick. A range of affected Honda engines installed in Columbia brand lawnmowers sold in the U.S. follows:

Columbia Model ….. Honda Engine Serial Number Range

1A313KC0835 ….. GJARA 3641724 through GJARA 3642215

Incidents/injuries. Honda has received 11 reports of the lawnmower’s blade continuing to rotate after the handlebar control lever was released. No injuries were reported.

Remedy. Consumers should immediately stop using the recalled lawnmowers. Honda model owners should contact a Honda Power Equipment dealer to schedule a free repair. Columbia model owners should contact a Honda Engine dealer to schedule a free repair. American Honda is contacting all registered customers directly. 

Places Sold. Honda brand lawnmowers were sold at Honda Power Equipment dealers and Home Depot stores nationwide from January 2013 through December 2013 for between $580 and $780. Columbia brand lawnmowers were sold at Beaver Valley Supply in Denver, CO; Lawn Equipment Parts Co, Inc. in Marietta, PA, and at Smiths South-Central Sales Co. in Spring Hill, LA, from January  2013 through December 2013 for $500.

OPEI Branches Out to Corded Electric and Battery Product Segments

January 6 -- The Outdoor Power Equipment Institute (OPEI), an international trade association representing 100 small engine, utility vehicle and outdoor power equipment manufacturers and suppliers, announced it is ramping up its regulatory, standards and market reporting and statistics efforts to meet the needs of the corded electric and battery product segments.

In recent months, OPEI has welcomed several new battery/electric companies to its membership, including iRobot, Positec, Stanley Black and Decker and Sunrise Global Marketing, and John Cunningham, president of the Consumer Products Group at Stanley Black and Decker, Inc. recently joined the 2013-2014 OPEI Board of Directors.

To help the industry have a voice in regulatory and standards development, OPEI also formed an Electric Products Committee, currently led by representatives from Stanley Black and Decker and Techtronic Industries, N.A.

The OPEI Electric Products Committee is tasked with coordinating with the International Electrotechnical Commission (IEC) on standards for battery/electric products for international markets, as well as regional adoptions for the North American market. The committee members are given an opportunity to participate, review and give input in the development of product standards.

The first order of business has been the development of the first ever OPEI/ANSI standard for an electric robotic mower. Fourteen member company representatives are currently reviewing IEC standards for electric robotic mowers and identifying modifications for the North American market. Projects are underway to develop standards for battery/electric chain saws, lawn hedge trimmers and lawn trimmers.

As sales and demand for battery/electric driven outdoor power equipment increases, OPEI is expanding its market statistics collection to capture and track the growth of this product segment.

Echo Incorporated Announces Tim Dorsey as New President

Chicago, IL – January 6 -- Effective January 1, 2014 Tim Dorsey becomes the second American President of outdoor power equipment manufacturer ECHO Incorporated, a subsidiary of Yamabiko Corporation of Japan. He replaces retiring President Dan Obringer.

Dorsey has worked for ECHO for 18 years in a variety of positions including the last seven years as Vice President of Systems and Logistics.  As a member of the Executive Team, Dorsey played a key role in the company’s growth and profitability over the years.

“The transition in leadership to Tim will be seamless,” says Obringer. “We have a great Executive Team and Tim has been a key member for the last seven years.  Our business has grown tremendously and I expect this momentum to continue and ECHO to grow and prosper under Tim’s leadership.”

Obringer, who has served as President for the past five years, will remain in an advisory capacity for the next year.

Dorsey and his family live in Cary, IL.  He is a graduate of DePaul University.

ECHO Incorporated is a leading manufacturer of professional-grade, high performance outdoor power equipment for professional and residential use. The corporation markets its products through independent dealers under the brand names ECHO, Shindaiwa, ECHO Bear Cat, and Crary. It also markets the ECHO brand through The Home Depot. The company is based in the Chicago suburbs.

Briggs and Stratton Adds Industry Veterans to its Commercial Power Team

MILWAUKEE, Jan. 07 -- Briggs and Stratton Corporation is adding two commercial engine industry veterans to its Commercial Power sales team.  The Company is pleased to announce the addition of Randy Lockyear as its Senior Director of Commercial Sales. Lockyear will oversee sales in North America of the corporation's commercial engines, notably its Vanguard™ brand of engines.  In addition, Rick Wendt has joined the Company as Director of Commercial Sales, focusing on the light construction and utility commercial business.

Randy Lockyear comes to Briggs and Stratton from Kawasaki Motors Corp., where he spent more than 20 years in a variety of leadership positions, most recently as National Sales Manager North American/Australian Engine Sales.  Rick Wendt comes to the Company from American Honda Motor Company, Inc., where he spent more than 30 years in multiple leadership roles within that organization, most recently as National OEM Sales Manager for Honda engines.

"Randy and Rick are both respected leaders in the commercial and industrial engine community  and we're excited to have them lead our commercial sales team," said Joe Wright, Senior Vice President and President, Briggs and Stratton engines group.  "We have made significant investments in commercial engine innovation and product offerings over the past few years.  The addition of Randy and Rick, with their deep industry knowledge, significantly enhances the strength of our commercial sales team and reinforces our commitment to growing our commercial engine business and profitability."

About Briggs and Stratton Corporation

Briggs and Stratton Corporation, headquartered in Milwaukee, Wisconsin, is the world's largest producer of gasoline engines for outdoor power equipment.  Its wholly owned subsidiaries include North America's number one marketer of portable generators and pressure washers, and it is a leading designer, manufacturer and marketer of lawn and garden and turf care through its Simplicity®, Snapper®, Ferris®, Murray®, Branco® and Victa® brands. Briggs and Stratton products are designed, manufactured, marketed and serviced in over 100 countries on six continents. 

About Briggs and Stratton Commercial Power

Briggs and Stratton® Commercial Power is a leading provider of commercial engine solutions. The Vanguard engine family is the Company's premier line of gasoline, and liquid propane powered single cylinder and V-Twin engines from 5.5 to 36 gross horsepower that power commercial lawnmowers, light construction equipment, utility vehicles, generators, pumps and a variety of other commercial and industrial applications.

Another Perspective: Faltering Carriers and Web Shopping Expectations

December 26, 2013 -- After years of preaching the convenience and reliability of online shopping — shop in your pajamas, with fast, free delivery — retailers may have been too successful at spreading the message this year, contributing to the volume of holiday orders that overwhelmed delivery services like U.P.S. and FedEx.

As the companies scrambled to deliver gifts the day after Christmas, they also struggled to explain how it all happened. Some analysts wondered aloud whether it was not just logistics, but industry and customer expectations that needed to be re-examined, while one suggested the companies might have to reconsider their pricing system.

“We have this perception that anything can be delivered at any time, and that it will be super cheap and really fast — but this is not Santa Claus,” said Sucharita Mulpuru, an analyst at Forrester, the research firm. “It is an operation in which there are constraints, and there are costs associated with getting more packages than were expected to be somewhere on time.”

The volume even surprised the United States Postal Service. Officials said on Thursday that they had expected a 12 percent increase in packages during the holiday season, but package shipments jumped 19 percent, and it added Sunday deliveries to accommodate them. A spokeswoman for FedEx said this season was the busiest the company had ever seen.

But it was United Parcel Service, the world’s largest package delivery company, that was perhaps the most unprepared for the crush. The company hired 55,000 seasonal workers this year, but that number was roughly the same as last year and the year before that — not enough to keep up with rising demand.

“It hasn’t fluctuated that much over the past couple of years,” Natalie Black, a spokeswoman for the company, said of its holiday staffing. “Whether that was part of the problem, I can’t say. Right now, we don’t know what the linchpin was for the network breakdown.

“You can only fit so much in planes,” she added.

It was unclear how many customers were affected, but complaints poured in from across the country and retailers large and small were caught up in the maelstrom.

While bad weather and a short holiday shopping season were cited as possible causes by U.P.S. officials, they also said the volume generated by growth in online shopping was a likely factor. Online sales have been growing for years, and this season, the rise during the weekend before Christmas was extremely steep, up 37 percent, according to IBM Digital Analytics Benchmark. FedEx said that it had predicted it would deliver 22 million packages on its busiest day this year — double the volume in 2007. The actual number is not yet known. One way to address future demand, Ms. Mulpuru, the analyst, suggested, would be to approach the surge the same way that the airlines do: by charging more for the service.

“An airline doesn’t just buy additional aircraft so they can accommodate everyone who wants to fly the day before Thanksgiving for $300,” she said. “They just raise the price of your ticket and force people to go earlier.”

Shipping is often subsidized for shoppers, Ms. Mulpuru said, and it is retailers that have contracts with companies like U.P.S. If rates stay relatively static for retailers they have no incentive not to encourage people to buy as much as possible until the last possible moment, she added.

This year, for example, if customers ordered from Nordstrom by 3 p.m. Eastern on Dec. 23, they were eligible for arrival on Dec. 24. Amazon’s one-day shipping deadline was also Dec. 23, and it even offered same-day delivery on Dec. 24 in some locations.

Shipping has been a crucial battleground for online retailing since the earliest days of e-commerce, but it has become more important over time.

Krista Clark, an analyst with the research firm eMarketer, said services like Amazon Prime, the online retailer’s program that offers unlimited two-day shipping for $79 a year, had conditioned consumers to expect faster delivery of everything.

At the same time, customers aren’t willing to pay for it. “The thing people care about more than fast shipping is free shipping,” Ms. Clark said.

She cited a study by comScore that found that half of shoppers said free shipping was the most valuable benefit an online retailer could offer.

Some retailers have invested more in central warehouses and distribution systems to better handle online orders. Others, such as Gap, Best Buy and Walmart, have relied on their physical stores to fulfill online orders.

That allows retailers to get the goods in the hands of customers more quickly. “People have gotten crazy trying to compete with Amazon with faster delivery,” Ms. Clark said.

In the process, retailers often bypass the traditional shippers like U.P.S. or FedEx in favor of more localized delivery options — or one day, Amazon has suggested, maybe even drones.

EBay has been promoting a fast delivery service called eBay Now, which works with retailers like Macy’s, Target and Toys ‘R’ Us, to deliver orders in one hour from a store to a customer using a network of human couriers.

Although eBay typically charges a $5 fee for the service, during the holidays, it offered it free, including deliveries on Christmas Eve. (An eBay spokeswoman declined to say how many people actually used the service.)

Although eBay Now is available in only a few metropolitan areas, including New York, San Francisco, Chicago and Dallas, the company plans to expand the service more widely. Amazon and Google are also rolling out local delivery services that could divert some of the shipping volume, and revenue, away from U.P.S. and FedEx.

Though explanations were in short supply on Thursday, U.P.S. took to social media to offer abundant apologies, responding individually with direct messages to its unhappy customers on Twitter. As it apologized, it had plenty of company from retailers that were offering their own regrets, while placing most of the blame on the package carriers.

“While we are dependent on our shipping partners to hold up their end of the bargain on getting your orders to you, we also realize that we are accountable for meeting your expectations and take responsibility for what happened here,” Jamie Nordstrom, president of Nordstrom Direct, said in an email to customers. “We feel awful whenever we let a customer down, especially at this time of year.”

A spokeswoman for Kohl’s said the company was “deeply sorry.” Amazon issued gift cards to affected customers. In San Diego, even a distributor of Glock guns and parts took to Twitter to “apologize if any of your orders didn’t arrive in time for Christmas due to the holiday overload.”

On Thursday, those tardy packages began to trickle in.

Todd Sawicki, an entrepreneur in Seattle, ordered several items from Amazon on Dec. 23 and paid extra to get guaranteed delivery on Christmas Eve. On the 24th, a package arrived via U.P.S. from Amazon, and he figured it was the gifts — Legos for his son, and a bracelet and headphones for his wife.

Far from it. Inside was a toilet repair valve he had ordered earlier.

“It was the Amazon equivalent of a lump of coal,” he said.

On Christmas morning, without anything else to give his wife, he presented her with the wrapped valve.

At 11 a.m. on Thursday, he said, the valve was finally swapped out for the intended Christmas gifts.

Elizabeth A. Harris And Vindu Goel          www.nytimes.com    

What Really Caused UPS's Christmas Eve Bottleneck

December 26, 2013 -- In the earliest hours of Dec. 24, packages poured into United Parcel Service Inc. 's main air hub in Louisville, Ky. And they were piling up.

Employees responsible for sorting packages—already deep into a 100-hour week—were furiously getting them ready to be sent on to their destinations at airports around the country. But dozens of other workers responsible for loading those packages into planes to be shipped out were left standing around idle, because the unexpected glut of packages from last-minute shoppers had swamped the company's air fleet.

The dearth of planes stranded a large volume of packages in Louisville in the early hours of Tuesday morning. Many of those that did make it out were shipped too late to make delivery trucks' pickup schedules and were left sitting in warehouses not far from their destinations. By sundown, UPS was forced to tell many Americans that the gifts they had ordered wouldn't arrive before Christmas as promised.

The bottleneck was largely in UPS's air business, which retailers leaned on heavily in the past week as they scrambled to fill down-to-the-wire orders. UPS has a bigger share of retail e-commerce business than FedEx Corp. , but its smaller fleet of cargo planes might have been a limiting factor, people in the industry said. UPS said it had added 23 extra chartered aircraft to its year-round operating fleet of more than 237 planes and regular 293 daily charters. FedEx owned 581 and leased 66 as of May 31.

UPS originally expected to ship about 7.75 million packages in its air network Monday, with about 3.5 million of those sorted at Worldport, as the Louisville hub is known. The facility handles on average 1.6 million packages a day. It isn't yet known how many packages arrived at Worldport during the last minute crush, but on Christmas Eve UPS said the volume of air packages in its system had exceeded its capacity.

It is still too early to know what went wrong, UPS said, adding that the company is analyzing the situation.

Some shoppers also complained of delays with shipments handled by FedEx. A spokeswoman said FedEx "experienced no major service disruptions during this holiday season, and we experienced no major service disruptions in the week before Christmas, despite heavy volume." She said FedEx is working with customers "to address any isolated incidents."

UPS carefully plans how it will handle the holiday peak. Extra resources such as additional cargo planes had been lined up as "hot spares"—company lingo for aircraft that could be fired up quickly in case of a logistics emergency. But it ran into a confluence of factors. Retailers have been encouraging online sales, which have grown much faster than retail sales overall. And retailers likely contributed to the logjam by offering some of their best discounts late in the season in a final push for sales. Many chains dropped prices on the final Saturday before Christmas to levels below what they were offering on Black Friday, according to Simeon Siegel, an analyst with Nomura Equity Research.

That, coupled with retailers' promises of just-in-time deliveries, encouraged many shoppers to put in orders at the last minute. People buying from more than 70 retailers including Toys "R" Us Inc. and Dick's Sporting Goods Inc., whose online shipping is handled by eBay Enterprise, were able to place Web orders as late as 11 p.m. on Monday, Dec. 23, a full 24 hours later than last year.

The result was a surge in online sales shortly before Christmas. UPS had been forecasting an 8% average rise in its daily shipping volumes during the holidays. But online sales in the last weekend before Christmas jumped by 37% from the year before, according to data from IBM Digital Analytics.

On Monday Dec. 23, growth in online orders spiked by 63% from the year before, according to Mercent Corp., which works with more than 550 retailers. By comparison, overall sales of holiday goods rose 2.3% between Nov. 1 and Dec. 24, according to preliminary data from MasterCard Inc.'s Spending Pulse unit.

To cope, retailers shifted more orders from shippers' ground delivery to their air networks to get gifts to customers in time to put them under the tree.

Mercent CEO Eric Best said some of his clients experienced delays.  "It's easy to blame UPS, but it's the retailers that are pushing these next-day shipping offers in the final hours of the shopping season," Mr. Best said. "Retailers are driving consumer expectations to get stuff they ordered by the next day and the later shoppers wait, the harder it is to predict."

The shipping delays at UPS sparked outrage among people who had bought gifts from Amazon.com Inc., Kohl's Corp. and other online retailers in the days and weeks before Christmas. Many had been swayed by guarantees from the retailers that their packages would be delivered by the holiday.

Rudy Lai, a finance executive in Union City, Calif., said part of a gift he ordered from Amazon was scheduled to be delivered on Christmas Eve. That morning, the UPS tracking information showed the item had reached Oakland, Calif., and was "out for delivery," he said. At 5 p.m., he found out that the package "was left in a UPS facility," according to the information.

Retailers including Wal-Mart Stores Inc., Amazon and Kohl's have started issuing customers gift cards and refunds for shipping costs and items that didn't arrive before Christmas. Those retailers are expected to seek reimbursement from UPS or other carriers that had guaranteed arrival times. UPS had made such guarantees for many air shipments during the holidays, though some large retailers may have waived them, analysts said. The company has said it would honor guarantees it made to customers, but it isn't clear how much the carrier might have to pay.

Analysts at StellaService Inc., a startup that measures customer satisfaction with online shopping, placed orders for tablets, boots and other gift items at 25 top retailers including Amazon, Wal-Mart and Kohl's to see if they would receive the gifts in time for Christmas Eve.

The orders were placed on the last day the retailer guaranteed delivery by Dec. 24, the latest of which was Dec. 23. Out of 75 orders, 12 items—from retailers including Dell, Macy's, Gap and Pottery Barn—didn't make it to the analysts' homes by Dec. 25. Eleven of those items were delivered by UPS.

UPS handles 50% to 60% of e-commerce orders, according to Sucharita Mulpuru, an analyst with Forrester Research. And it is an increasingly crucial part of its business. In its 2012 annual report, UPS said "business to consumer" shipments represented over 40% of its domestic package volume and grew rapidly. Its business-to-business shipping volume, meanwhile, was relatively flat.

UPS deployed its spare planes Monday and flew twice as many flights as usual on Christmas Eve. It flew 50% more on Thursday to handle the additional volume.

Laura Stevens, Serena Ng And Shelly Banjo             www.onlinewsj.com

Ex-Dixie Chopper President Charged With Theft

Greencastle, IN -- December 20 -- The former president and one-time chief financial officer of Dixie Chopper/Magic Circle Corp. is facing theft charges following his arrest Thursday.

Simon Paul Delancey Wilson, 39, who was named president and Chief Executive Officer of the Fillmore-based lawnmower manufacturer in October 2011, was arrested Thursday morning in Plainfield where he was reportedly attending the closing on the sale of his home there.

Initially lodged in the Putnam County Jail at 11:15 a.m. Thursday, Wilson bonded out at 6:50 p.m. and made his initial appearance in Putnam Superior Court Friday morning in a brief hearing in front of Judge Denny Bridges.

The judge entered a preliminary not-guilty plea for Wilson, represented by Indianapolis legal counsel, and scheduled a pretrial conference for 8:30 a.m. Feb. 12.

Charged with theft, a Class D felony, Wilson could face six months to three years in prison and a fine of up to $10,000 if found guilty.

A report by investigating officer Det. Pat McFadden of the Putnam County Sheriff's Department alleges that Wilson stole $18,705 in cash and merchandise from the rewards account set up on a corporate American Express Card issued to Magic Circle Corp. in Wilson's name.

He reportedly collected the rewards points from company expenses that were charged to the corporate credit card, allegedly converting them into 17 American Express gift cards of $1,000 each and $1,705 in merchandise he reportedly had sent directly to his Plainfield home.

Wilson has been living and working in Fargo, N.D., since he was asked to resign this past June for "misrepresenting the corporation's financial position," a probable cause affidavit states.

Wilson was elevated to head up Dixie Chopper operations in October 2011 after then-president Gary Morgan was also asked to resign for reasons unrelated to this incident, court documents note.

Morgan was hired from New Holland Corp. in November 2008 to be president and CEO of Dixie Chopper. Soon thereafter, he brought in Wilson from New Holland to be CFO.

Morgan was also issued one of the two original American Express cards acquired when the account was initially opened, Det. McFadden reported. Eventually more cards were added to the account, totaling approximately 40 in 2013.

Dixie Chopper accounts never received any rewards benefits from the American Express program, McFadden's report also noted.

The investigation determined that Wilson did not have Magic Circle Corp. board approval to open a corporate account, as required by corporation bylaws.

Documents indicate Wilson made 13 documented purchases through the rewards program, totaling the $18,705 over the period April 12, 2011-April 5, 2012.

McFadden further noted that Magic Circle provided documentation that none of the cash or merchandise was ever awarded to Wilson as a company bonus. The detective also noted that none of the income was reported on Simon's tax returns.

www.bannergraphic.com

Polaris Announces Strategic Partnership With Ariens Company

MINNEAPOLIS -- December 18 -- Polaris Industries Inc. today announced a strategic partnership with Ariens Company, a Brillion, Wis.-based manufacturer of outdoor power equipment. Ariens is a family-owned manufacturer of snow blowers, lawnmowers and other outdoor power equipment. In the 80 years since its founding, Ariens has driven exceptional growth across its product lines, sold under Ariens, Gravely, and other brands. Both companies will benefit from this arrangement, growing through exposure to adjacent markets while fostering innovation through shared technology and R&D investments.

"By partnering with Ariens, we bring together two leading and highly-respected companies that are well-positioned for growth," said Scott Wine, Polaris Chairman and CEO. "This partnership will enable Polaris to grow beyond our core power sports market, as we will reach new customers with innovative, relevant new products. We are looking forward to working with Ariens for many years to come."

The partnership includes supplying Ariens with a highly differentiated work vehicle. Branded Gravely, the vehicle will have different performance and styling characteristics to meet the requirements of Gravely's work-focused end users. And with both Polaris and Ariens investing in research and development of new technology, this partnership enables the companies to leverage information, technology and R&D investments, making innovation more efficient.

Additionally, it provides both companies access to expanded dealer channel opportunities. The two company's service complementary customer bases through well-developed dealer networks, and this partnership will create new sales opportunities for select dealerships in both networks.

"This partnership will create an even stronger dealer network by bringing together the related categories of outdoor power sports and outdoor power equipment. Dealers for the two companies share a lot of commonality including the understanding of how to serve and service the customers in this outdoor space," said Dan Ariens, Ariens Company President and CEO. "With Polaris' position as the global power sports leader, we are looking forward to collaborating on projects that drive results for both companies."

Beyond market leadership, Polaris and Ariens also share similarities in their business cultures. Both have long histories rooted in the Midwest and have grown significantly with a disciplined focus on lean manufacturing processes, innovative products and passionate employees.

Polaris has successfully executed similar partnerships in the past, notably its ongoing partnership with Bobcat Company and Eicher Motors in India.

About Polaris

Polaris is a recognized leader in the power sports industry with annual 2012 sales of $3.2 billion. Polaris designs, engineers, manufactures and markets innovative, high quality off-road vehicles, including all-terrain vehicles (ATVs) and the Polaris RANGER(R) and RZR(R) side-by-side vehicles, snowmobiles, motorcycles and small vehicles.

Polaris is among the global sales leaders for both snowmobiles and off-road vehicles and has established a presence in the heavyweight cruiser and touring motorcycle market with the Victory and Indian motorcycle brands. Additionally, Polaris continues to invest in the global on-road small vehicle industry with Global Electric Motorcars (GEM), Goupil Industrie SA, Aixam Mega S.A.S., and internally developed vehicles. Polaris enhances the riding experience with a complete line of Polaris and KLIM branded apparel and Polaris accessories and parts.

Polaris Industries Inc. trades on the New York Stock Exchange under the symbol "PII", and the Company is included in the S&P Mid-Cap 400 stock price index.

Information about the complete line of Polaris products, apparel and vehicle accessories are available from authorized Polaris dealers or anytime at www.polaris.com.

About Ariens Company

Established in 1933 in Brillion, Wis., Ariens Company is an outdoor power equipment manufacturing and distribution company serving consumer and professional markets. The company's premium international equipment brands include Ariens Sno-Thro(R) and Ariens lawn and garden products for consumers; Countax(R) and Westwood(R) lawn tractors; and Gravely(R) and Parker(R) commercial equipment for the landscape management, facilities maintenance and sports field sectors. Ariens' affiliates, Stens Corporation, J Thomas and Ariens Pty Ltd. (Australia), supply replacement parts to the outdoor power equipment industry. The company has operations in Wisconsin, Nebraska, Indiana, Michigan, the United Kingdom, Norway and Australia. Visit http://www.ariensco.com for more information.

Exmark, CPSC, Recall Commercial Walk-Behind Mowers Due to Injury Hazard

December 10, 2013

Consumers should stop using this product unless otherwise instructed. It is illegal to resell or attempt to resell a recalled consumer product.

Recall Summary

Name of product:

Commercial Walk-Behind Mowers

Recall Details

Hazard:

The mower’s blade can break and injure the user and others nearby.

Units

About 6,900 in the United States and 330 in Canada

Description

This recall involves 2013 Exmark Commercial 30” Walk-Behind Mowers, model ECKA30 and serial numbers ranging from 313605897 to 313660824. The phrases “Commercial 30” and “Exmark” are printed on the front of the black and red mower. “Exmark” is also printed on the side of the mower. The model and serial numbers are located on a decal affixed to the engine base above the left rear tire.

Incidents/Injuries

None

Remedy

Consumers should immediately stop using the recalled mowers and contact Exmark for a free repair.

Sold at

Exmark dealers nationwide from November 2012 through October 2013 for about $1,800.

Distributor

Exmark Manufacturing Company, Inc., from Beatrice, Neb.

Manufactured in

Mexico

EFCO, CPSC, Recall Gas Trimmers Due to Fire Hazard

December 10, 2013

Consumers should stop using this product unless otherwise instructed. It is illegal to resell or attempt to resell a recalled consumer product.

Recall Summary

Name of product:

efco brand Gas Trimmers from Emak USA

Hazard:

The muffler on the trimmer’s engine can break during use and pose a fire hazard.

Recall Details

Units

About 1,400 in the U.S. and 166 in Canada

Description

The trimmers are used in both residential and professional applications for cutting grass and light brush. The cutting attachments include a trimmer head and metal blade. The trimmers are about 72 inches long. They are colored red and gray with either a bike or loop handle configuration. Three models are recalled in two engine sizes measured in cubic centimeters.  They are: 36cc models 8371 S and 8371 T, and a 40.2cc model 8421 T engine displacement. The brand name “efco” and model number are printed on the front of the engine and the brand name also appears on the wand.

Incidents/Injuries

The firm has received eight reports of incidents, including one resulting in singed hair. No serious injury or property damage have been reported. 

Remedy

Consumers should stop using the recalled trimmers immediately and return them to an authorized efco dealer for a free muffler replacement kit.

Sold at

Authorized efco dealers at both retail stores and online, and Menards stores between June 2009 and July 2013 for about $400.

Manufacturer

Emak USA, Inc., of Wooster, Ohio

Manufactured in

China

Toro, CPSC, Recalls Timemaster and Turfmaster Lawn Mowers Due to Injury Hazard

December 10, 2013

Consumers should stop using this product unless otherwise instructed. It is illegal to resell or attempt to resell a recalled consumer product.

Recall Summary

Name of product:

TimeMaster and TurfMaster lawn mowers

Hazard:

The mower’s blade can break and injure the user and others nearby

Recall Details

Units

About 34,500 in the United States and 1,600 in Canada

Description

This recall involves 2013 Toro TimeMaster 30” and 2013 Toro TurfMaster 30” lawn mowers with the following model and serial numbers: Model number 20199 with serial numbers ranging from 313000101 to 313020271; model number 20200 with serial numbers ranging from 313000101 to 313007366; and, model number 22200 with serial numbers ranging from 313000101 to 313007146.  The phrases “TimeMaster” or “TurfMaster” and “Toro” are printed on the front of the black and red mower. “Toro” is also printed on the side of the mower. The model and serial numbers are located on a decal affixed to the engine base above the left rear tire.

Incidents/Injuries

Toro has received ten reports of blades breaking. No injuries have been reported.

Remedy

Consumers should immediately stop using the recalled mowers and contact Toro for a free repair.

Sold at

Toro dealers nationwide from November 2012 through October 2013 for between $999 and $1,799. 

Distributor

The Toro Co., of Bloomington, Minn.

Manufactured in

Mexico

Husqvarna Group Plant Receives $10 Million New Markets Tax Credit Loan

The Husqvarna Group manufacturing facility in Nashville, Arkansas, has received a $10 million New Markets Tax Credit loan to purchase equipment for a new production process. The expansion will create 22 new jobs at the plant and support more than 800 additional jobs in Southwest Arkansas.

Nashville, AR -- November 21 -- HOPE (Hope Enterprise Corporation/Hope Credit Union) has committed $8,000,000 in New Markets Tax Credit allocation to Husqvarna Group’s Nashville manufacturing facility for new plating and honing equipment for their hand-held lawn tool engine assembly. The funding will be used to purchase new machinery, which will bring the plating and honing process in-house and will be more efficient and environmentally friendly than commonly-used methods.

The new plating and honing line will create 22 new jobs at the 1,200 employee facility. Husqvarna Group operations in Nashville support more than 800 additional jobs in Southwest Arkansas.

“Partnering with HOPE on this initiative will help to bring the right tools to our facilities to help maintain our efficiency in producing outdoor power equipment,” said Jack Fish, VP of Manufacturing, Husqvarna Americas.  “Additionally, when you can add new jobs that will support our local town and economy, that’s great!”

The New Markets Tax Credit Program is run by the U.S. Treasury Department and brings private capital investments into economically distressed areas. The NMTC allocation from HOPE is being paired with a $2 million allocation from Chase Community Development Banking. Chase also served as the equity investor for the $10 million equipment purchase and installation.

“The jobs supported by this investment offer good wages and benefits, and generate a tremendous economic impact in southwest Arkansas,” said HOPE CEO Bill Bynum. “Companies like Husqvarna are vital to a prosperous community, which makes it a perfect fit for our mission, and for our New Markets Tax Credits.”

Rural and inner-city regions of the country have suffered from a chronic shortage of capital for economic development because private capital tends to flow toward where money is already accumulating – in fast-growing metropolitan areas. A desire to bring economic prosperity to low-income communities resulted in the federal New Markets Tax Credit program enacted by Congress as part of the Community Renewal Tax Relief Act of 2000.

“This is a great day for Husqvarna, for Chase and for Nashville, Arkansas. This investment will create jobs - which will strengthen the company, the community and the families who live here,” said Wanda Clark, Vice President, Chase Community Development Banking.

Since 1976, Husqvarna has been a key employer and contributor to the economic engine of Southwest Arkansas. This investment in new equipment will bring the plating and honing process local without the need to source these components from overseas.

Using three previous allocations totaling $50 million, HOPE has financed 108 projects for a total of more than $71 million, with 23 NMTC loans for nearly $6 million in Arkansas.

About HOPE

HOPE (Hope Enterprise Corporation/Hope Credit Union) is a community development financial institution, community development intermediary and policy center that provides affordable financial services; leverages private, public and philanthropic resources; and engages in policy analysis in order to fulfill its mission of strengthening communities, building assets, and improving lives in economically distressed parts of the Mid-South.

Since 1994, HOPE has generated more than $1.7 billion in financing and related services for the unbanked and underbanked, entrepreneurs, homeowners, nonprofit organizations, health care providers and other community development purposes. Collectively, these projects have benefitted more than 400,000 individuals in the Delta, Katrina-affected areas and other distressed communities throughout Arkansas, Louisiana, Mississippi and Tennessee. This impact has been substantially multiplied by HOPE’s policy and intermediary efforts, which have informed and influenced the flow of public and private resources to assist disenfranchised people and places across the Mid-South and nationwide.

About Husqvarna

Husqvarna Group is the world’s largest producer of outdoor power products including robotic lawn mowers, garden tractors, chainsaws and trimmers. The Group is also the European leader in consumer watering products and one of the world leaders in cutting equipment and diamond tools for the construction and stone industries. The Group’s products and solutions are sold via dealers and retailers to both consumers and professional users in more than 100 countries. Net sales in 2012 amounted to SEK 31 billion, and the Group had 15,400 employees on average in more than 40 countries.