A Collection of Current Outdoor Power Equipment (OPE) Industry Related News Articles From OPEESA's (Outdoor Power Equipment and Engine Service Association) Newsletter "OPE-In-The-Know," the Business of OPE.
MILWAUKEE—October 29 -- ARI, a leading provider of technology solutions that help dealers, distributors and manufacturers in selected vertical markets sell and service their products, today reported results for the fourth fiscal quarter and fiscal year ended July 31, 2009.
Full Year Fiscal 2009 Highlights
* Revenues increased to $17.6 million for fiscal 2009, from revenues of $16.9 million in fiscal 2008.
* Operating income was $767,000 for fiscal 2009, compared to operating income of $821,000 for the prior fiscal year.
* Net income was $424,000 or $0.06 per diluted share for fiscal 2009, compared to net income of $1.4 million or $0.20 per diluted share for fiscal 2008.
Fourth Quarter Fiscal 2009 Highlights
* Revenues increased 24% to $5.3 million for the fourth quarter of fiscal 2009, from revenues of $4.3 million for the fourth quarter of fiscal 2008.
* Operating loss was $105,000 for the fourth quarter of fiscal 2009, compared to an operating loss of $237,000 for the fourth quarter of the prior year.
* The company recorded a net loss of $114,000 or $0.02 per diluted share for the fourth quarter of fiscal 2009, compared to net income of $378,000 or $0.05 per diluted share for the fourth quarter of fiscal 2008.
Operations Review
"Fiscal 2009 was a good year for ARI. We increased revenues, remained profitable and successfully completed two acquisitions, all within a challenging economic environment," said Roy W. Olivier, President and Chief Executive Officer of ARI. "We generated $2.7 million in cash from operations for the year, which we used for the two acquisitions, investments in equipment and software development and for the repayment of debt and capital lease obligations."
Olivier said the increased revenues reflected the continued growth of the company`s marketing services business and increased revenues from catalog subscriptions, partially offset by a decline in professional services fees as companies delayed projects in response to the economic downturn. The two businesses acquired during the year, Channel Blade Technologies Corp. and the finance and insurance assets of Powersports Outsourcing Group, LLC, also contributed to the higher fiscal 2009 revenues. Catalog revenues benefited from the July, 2008 acquisition of InfoAccess, an electronic parts catalog business. "Recurring revenues remained consistent at over 90% renewals for our two core product lines, WebsiteSmartPro and PartSmart®," said Olivier.
"The small decrease in operating income for the year was primarily due to expenses related to the two acquisitions and their integration into ARI," added Brian E. Dearing, Chairman and Interim Chief Financial Officer of ARI. "Factors contributing to the decrease in net income included non-cash charges related to increased valuation reserves for deferred tax assets and amortization expense related to acquired intangible assets. There is also a cash charge related to higher interest payments for debt associated with the Channel Blade acquisition. In addition, shareholders` equity, an indicator of our financial stability, continued to increase in fiscal 2009."
"We made excellent progress on growing our marketing services business over the past year," Oliver added. "We expanded into the marine and recreation vehicle markets through the acquisition of Channel Blade Technologies, the leading provider of websites, lead management and marketing automation solutions for these markets. The synergies with Channel Blade include opportunities to expand its lead generation platform, Footsteps, to our existing customer base, further enhancing the value ARI brings to manufacturers, dealers and distributors in key markets."
"Our recurring revenue model provided stability for ARI during a challenging year for the economy. Because our products support the service and accessorizing side of our customers` businesses, we benefited as many people repaired or enhanced their existing outdoor power equipment, power sports vehicles, motorcycles and other equipment rather than making new purchases. In fact, we saw an 18% increase in parts and accessory sales processed on our e-commerce customer platform during the year," said Olivier.
"We enter fiscal 2010 in a good position. The two acquisitions will contribute to revenues for the full year, as will our key new products SearchEngineSmart and PartStream, each of which we developed and launched during fiscal year 2009.
We also expect to generate cash and remain profitable as we continue to benefit from our significantly reduced cost structure. Our priorities for the year include expanding sales to new customers, retaining current customers and providing additional products to this established customer base, further integrating the two acquisitions and continuing to invest in new product development," added Olivier.
The International Paper mill outside Franklin - gone by next spring, shredding 1,100 jobs.
Also closing next year: the Smithfield Foods Packing Co. South Plant in Smithfield and the CooperVision contact-lens plant in Norfolk.
Combined, the three shutdowns will cost the region at least 2,300 jobs.
Two years ago, Ford Motor Co. closed its Norfolk Assembly Plant, which at its peak employed 2,500 people to produce F-150 trucks.
Will anything be made anymore in Hampton Roads?
Definitely - from power tools to auto parts to Navy warships.
Reports of the death of American manufacturing are greatly exaggerated, say economists and companies.
Yes, manufacturing has taken a huge hit from the recession, compounding decades of employment losses triggered by automation and global competition.
Last month, the federal government reported that employment in manufacturing had fallen by 2.1 million since the recession began. That's about 30 percent of all U.S. jobs lost, said Dave Huether, chief economist for the National Association of Manufacturers.
Yet manufacturing's share of the U.S. gross domestic product, Huether said, has held between 13 and 14 percent for most of the past two decades. That amounts to $1.6 trillion a year.
In September, U.S. industrial production rose 0.7 percent, leading analysts to put manufacturing at the forefront of the recovery.
"It's not the death of manufacturing; it's the restructuring," said Peter Shaw, a professor of business and economics at Tidewater Community College.
Huether called it "a change in composition of manufacturing."
Consumers can't help but notice the declines - in areas such as apparel and cars. Less obvious, he said, are the areas where U.S. manufacturing has grown, including chemical products, pharmaceuticals and computer chips.
Hampton Roads, with its substantial military influence, doesn't rely heavily on manufacturing. Yet as a percentage of "non-farm employment," the region's 7 percent rate for manufacturing exceeds the state's 6.5 percent, said Bill Mezger, an economist with the Virginia Employment Commission.
Despite the future closings, the region shows healthy manufacturing signs.
In contrast with the nation, which lost 51,000 manufacturing jobs from August to September, Hampton Roads gained 700, growing from 53,700 to 54,400, the state announced last week.
Mezger said the growth probably occurred in the auto parts sector, driven in part by the Cash for Clunkers program.
Also promising: More than 40 percent of the local manufacturing jobs - about 23,000 - are in shipbuilding.
"Shipbuilding largely operates by government contracts," Mezger said. "That industry in Hampton Roads seems to be very healthy."
Northrop Grumman Newport News accounts for the lion's share of that number, with a work force of about 19,000, spokeswoman Lauren Green said in an e-mail.
"Our employment has been stable," said Green, who noted that the shipyard has openings for welders, pipefitters and sheet-metal workers. "We are not significantly impacted by the economic downturn, as our contracts span many years."
Last year, the shipyard was awarded federal contracts totaling $11.5 billion, Green said. It is the nation's only builder of aircraft carriers and one of two submarine makers.
Stihl Inc., which makes power tools, is one of the largest manufacturers in South Hampton Roads, with 2,150 employees at its Virginia Beach site and branches, said its president, Fred Whyte. Although it furloughed some workers this year, he said, it didn't lay anyone off and it plans holiday bonuses.
Last week, Stihl announced a new line of 36 lithium-ion-battery-powered products, including hedge trimmers and blowers, to be introduced in the second quarter of 2010. The company has enjoyed 17 straight years of U.S. sales increases. This won't be the 18th, Whyte said, though the company did not experience significant U.S. losses. "Domestic sales are basically on a par with last year," he said.
The German-owned company has invested more than $200 million over the past five years, including the opening of a $25 million guide-bar plant in 2007.
"We are there for the long term," Whyte said, "and the testimony is in bricks and mortar."
The International Paper mill outside Franklin - gone by next spring, shredding 1,100 jobs.
Also closing next year: the Smithfield Foods Packing Co. South Plant in Smithfield and the CooperVision contact-lens plant in Norfolk.
Combined, the three shutdowns will cost the region at least 2,300 jobs.
Two years ago, Ford Motor Co. closed its Norfolk Assembly Plant, which at its peak employed 2,500 people to produce F-150 trucks.
Will anything be made anymore in Hampton Roads?
Definitely - from power tools to auto parts to Navy warships.
Reports of the death of American manufacturing are greatly exaggerated, say economists and companies.
Yes, manufacturing has taken a huge hit from the recession, compounding decades of employment losses triggered by automation and global competition.
Last month, the federal government reported that employment in manufacturing had fallen by 2.1 million since the recession began. That's about 30 percent of all U.S. jobs lost, said Dave Huether, chief economist for the National Association of Manufacturers.
Yet manufacturing's share of the U.S. gross domestic product, Huether said, has held between 13 and 14 percent for most of the past two decades. That amounts to $1.6 trillion a year.
In September, U.S. industrial production rose 0.7 percent, leading analysts to put manufacturing at the forefront of the recovery.
"It's not the death of manufacturing; it's the restructuring," said Peter Shaw, a professor of business and economics at Tidewater Community College.
Huether called it "a change in composition of manufacturing."
Consumers can't help but notice the declines - in areas such as apparel and cars. Less obvious, he said, are the areas where U.S. manufacturing has grown, including chemical products, pharmaceuticals and computer chips.
Hampton Roads, with its substantial military influence, doesn't rely heavily on manufacturing. Yet as a percentage of "non-farm employment," the region's 7 percent rate for manufacturing exceeds the state's 6.5 percent, said Bill Mezger, an economist with the Virginia Employment Commission.
Despite the future closings, the region shows healthy manufacturing signs.
In contrast with the nation, which lost 51,000 manufacturing jobs from August to September, Hampton Roads gained 700, growing from 53,700 to 54,400, the state announced last week.
Mezger said the growth probably occurred in the auto parts sector, driven in part by the Cash for Clunkers program.
Also promising: More than 40 percent of the local manufacturing jobs - about 23,000 - are in shipbuilding.
"Shipbuilding largely operates by government contracts," Mezger said. "That industry in Hampton Roads seems to be very healthy."
Northrop Grumman Newport News accounts for the lion's share of that number, with a work force of about 19,000, spokeswoman Lauren Green said in an e-mail.
"Our employment has been stable," said Green, who noted that the shipyard has openings for welders, pipefitters and sheet-metal workers. "We are not significantly impacted by the economic downturn, as our contracts span many years."
Last year, the shipyard was awarded federal contracts totaling $11.5 billion, Green said. It is the nation's only builder of aircraft carriers and one of two submarine makers.
Stihl Inc., which makes power tools, is one of the largest manufacturers in South Hampton Roads, with 2,150 employees at its Virginia Beach site and branches, said its president, Fred Whyte. Although it furloughed some workers this year, he said, it didn't lay anyone off and it plans holiday bonuses.
Last week, Stihl announced a new line of 36 lithium-ion-battery-powered products, including hedge trimmers and blowers, to be introduced in the second quarter of 2010. The company has enjoyed 17 straight years of U.S. sales increases. This won't be the 18th, Whyte said, though the company did not experience significant U.S. losses. "Domestic sales are basically on a par with last year," he said.
The German-owned company has invested more than $200 million over the past five years, including the opening of a $25 million guide-bar plant in 2007.
"We are there for the long term," Whyte said, "and the testimony is in bricks and mortar."
October 23 -- Magnus Yngen, President and CEO: “Market demand in the quarter was substantially weaker than in the previous year in all product areas. Adjusted for changes in exchange rates and acquisitions, Group sales declined by 11% and operating income by 11% exclusive of the restructuring charge. The decline in income resulted mainly from lower volumes and a less favorable product and country mix.
Lower material costs had a positive effect, as did savings from previously implemented cost cutting measures. Despite a difficult market environment, income for Professional Products remained at a high level. Forestry reported largely unchanged income with a higher margin, while Construction showed a decline.
Cash flow for the nine month period was strong as our efforts to reduce working capital have paid off.
In line with our strategic plan, we intend to implement a number of structural changes to improve internal efficiency. The total cost for these measures is estimated at approx. SEK 400m, of which SEK 59m was charged against operating income in the third quarter.
The remaining part, i.e. approx. SEK 340m, is expected to be charged against operating income in the fourth quarter of 2009. The restructuring refers mainly to consolidation of production in Sweden and the US, and to changes within the sales organization.
Annual savings from all these activities are expected to amount to approximately SEK 400m, and will be generated gradually from the second half of 2010 with full effect as of the start of 2012.”
NET SALES AND INCOME
THIRD QUARTER
Net sales
Net sales for the third quarter amounted to SEK 6,709m (6,830), a decline of 2%.
Adjusted for acquisitions and changes in exchange rates, net sales declined by 11%. Sales for Consumer Products were lower than in the previous year both in North America and outside North America. Sales for Professional Products declined in all product areas with the largest downturns for Construction and Forestry.
Operating income
Operating income, including a restructuring charge of SEK 59m, amounted to SEK 173 (310).
Excluding the restructuring charge, operating income declined by 29% to SEK 232m (325), corresponding to a margin of 3.5% (4.8). The decline resulted mainly from generally lower volumes and a less favorable product and country mix. Lower material costs and savings from previously implemented cost reductions had a positive effect.
In terms of business areas, the decline in operating income refers mainly to Consumer Products outside North America. Professional Products also reported a decline, referring mainly to Construction, while income for Forestry was largely unchanged and margin improved.
Changes in exchange rates, including both translation and transaction effects net of hedging, had a total negative effect on operating income of approximately SEK -74m (64). Hedging contracts had a negative effect of SEK -30m (-12).
Costs for restructuring
The Group intends to implement a number of structural changes during 2009-2010. The total cost for these restructuring measures is estimated at approximately SEK 400m, of which SEK 59m was charged against operating income in the third quarter of 2009. The charge in the third quarter refers to relocation of production of chainsaws and other handheld products from the plant in Valmadrera, Italy to the plant in Shanghai, China. Approximately SEK 10m of this amount refers to non-cash items.
The remaining part of the restructuring cost, i.e. approximately SEK 340m, is expected to be charged against operating income in the fourth quarter of 2009. Approximately SEK 170m of this amount refers to non-cash items.
Capital expenditure related to the restructuring is expected to amount to approximately SEK 400m, of which a new plant in Poland will account for approximately SEK 250m.
Annual savings from all the above mentioned activities are expected to amount to approximately SEK 400m, and will be generated gradually from the second half of 2010 with full effect as of the start of 2012. For further details
Financial net
Net financial items amounted to SEK -65 (-132). Net financial items were positively affected by the SEK 3 billion rights issue earlier in the year and by lower interest rates.
The average interest rate on borrowings at the end of the quarter was 3.16% (4.80). The average fixed interest-term of the loans was extended during the third quarter from 3.3 months to 18.1 months.
Income after financial items
Income after financial items amounted to SEK 108m (178) corresponding to a margin of 1.6% (2.6).
Taxes
Tax was positive in the amount of SEK 22m (-35), as a result of utilization of tax-loss carry forwards and the previously announced changes in Group structure.
Earnings per share
Income for the period was SEK 130m (143), corresponding to SEK 0.23 (0.32) per share after dilution.
NET SALES AND INCOME
JANUARY - SEPTEMBER
Net sales
Net sales amounted to SEK 29,342m (27,216), corresponding to an increase of 8%.
Adjusted for changes in exchange rates and acquisitions, net sales declined by 9%. Sales for Consumer Products in North America rose somewhat from the previous year, while sales for Consumer Products outside North America declined. Sales for Professional Products were lower than in 2008 in all product areas with the largest downturn for Construction.
Operating income
Operating income including restructuring charges of SEK 112m, amounted to SEK 2,075m (2,833), corresponding to a margin of 7.1% (10.4).
Excluding the restructuring charge, operating income declined by 23% to SEK 2,187m (2,848), corresponding to a margin of 7.5% (10.5).
The decline in operating income resulted mainly from a higher share of sales of consumer products with lower margins than professional products, as well as a less favorable mix in terms of products and geographical markets.
Operating income declined for both business areas, with the largest downturn for Professional Products. Income for Consumer Products in North America rose from the previous year and margin improved. All areas within Professional Products reported declines with the largest downturn for Construction. Margin for Forestry was higher than in 2008.
Changes in exchange rates, including both translation and transaction effects net of hedging, had a total negative effect on operating income of SEK -16m (93). Hedging contracts had a negative effect of SEK -48m (-126).
Financial net
Net financial items amounted to SEK -433m (-454). Lower interest rates and lower net debt were partly offset by the negative effect of the weaker SEK, as the greater part of funding is denominated in foreign currencies.
Income after financial items
Income after financial items amounted to SEK 1,642m (2,379), corresponding to a margin of 5.6% (8.7).
Taxes
Total taxes amounted to SEK -287m (-673). The lower tax rate is an effect of previously announced changes in Group structure, a one-time tax repayment in the amount of SEK 40m in the second quarter and utilization of tax-loss carry forwards.
Earnings per share
Income for the period was SEK 1,355m (1,706), corresponding to SEK 2.50 (3.74) per share after dilution.
OUTLOOK FOR FOURTH QUARTER 2009
The gardening season ends during the third quarter, and production for next year’s season normally starts late in the fourth quarter. The major share of Group sales during the fourth quarter normally comprises chainsaws and other forestry equipment as well as products for the construction industry.
Retail inventories of the Group’s garden products at the end of the third quarter are estimated to have been lower than in the previous year. Uncertainty remains regarding shipments in light of the recession, and retailers are expected to continue maintaining inventories at low levels .The Group expects shipments in the fourth quarter to be slightly lower than in the fourth quarter of 2008.
OPERATING CASH FLOW
Operating cash flow for the third quarter declined to SEK 1,411m (2,216). Cash flow in the third quarter was negatively affected by the sale of trade receivables in the second quarter in the amount of SEK 400m.
Operating cash flow for the first nine months improved to SEK 2,936m (1,897), mainly as a result of efforts to reduce working capital, which resulted in lower levels of inventory and trade receivables.
PERFORMANCE BY BUSINESS AREA
THIRD QUARTER
Sales for the Consumer Products business area rose in SEK, but declined after adjustment for changes in exchange rates. Sales in North America in the quarter were lower than in 2008, particularly for handheld equipment as a result of lower demand and in comparison with the previous year when sales were positively impacted by storms.
The Group’s shipments in North America, in both the third quarter and for the nine-month period, outperformed overall industry shipments which are estimated to have declined in most product categories.
Sales outside North America rose slightly in the mass-market channels. Gardena-branded electrical products showed a positive sales trend on the basis of several new products for this season, such as chainsaws and lawnmowers.
Sales of Husqvarna-branded products in the dealer channel declined, particularly within handheld products and in Eastern Europe and Russia.
Operating income for this business area was lower than in the previous year, and margin declined. Income for the North American operation improved somewhat in local currency. Income for the operation outside North America showed a slight improvement in the mass-market channel.
Professional Products
Sales for the Professional Products business area were substantially lower than in the previous year, as a result of weaker demand in most product areas and markets. All product areas reported declines, the largest being for Construction and Forestry.
Operating income for this business area declined, but margin was unchanged. The decline in income was due mainly to lower sales volumes. Income for Forestry declined slightly but margin improved mainly as a result of rationalization of production, and despite substantially lower volumes in markets such as Eastern Europe and Russia. Lawn and Garden reported largely unchanged income and margin. Operating income for Construction decreased from a low level.
CHANGES IN GROUP MANAGEMENT
As of 1 October 2009, Michael Jones was appointed head of Sales in North and Latin America and a member of Group Management. Michael Jones has held various leading positions in General Electric in the US since 1994, most recently as General Manager, Cooking Products within the Appliances Division.
Roger Leon, who was acting head of Sales in North and Latin America, was appointed head of Global purchasing.
October 23 -- Husqvarna intends to implement a number of structural changes in order to reduce costs and improve the Group's competitiveness. The measures are aimed at eliminating overlap and duplication within production and administration, and involve consolidation of production in Sweden and the US, and of the sales organization in Europe and Asia/Pacific.
The changes are scheduled to be implemented in 2009-2010 and will affect approximately 1,200 employees. As a result of an increase in the number of employees in other production facilities in Poland and China, the net reduction in the number of employees is estimated at 400.
The total cost for the restructuring measures is estimated at approximately SEK 400m, of which SEK 59m was charged against operating income in the third quarter of 2009. The charge in the third quarter refers to relocation of production of chainsaws and other handheld products from the plant in Valmadrera, Italy to the plant in Shanghai, China. Approximately SEK 10m of this amount refers to non-cash items.
The remaining part of the restructuring cost, i.e. approximately SEK 340m, is expected to be charged against operating income in the fourth quarter of 2009. Approximately SEK 170m of this amount refers to non-cash items.
Capital expenditure related to the restructuring is expected to amount to approximately SEK 400m, of which a new plant in Poland will account for approximately SEK 250m.
Annual savings from all the above mentioned activities are expected to amount to approximately SEK 400m, and will be generated gradually from the second half of 2010 with full effect as of the start of 2012.
The planned restructuring activities mainly include:
· Relocation of production of riders to a new plant in Poland, and closure of the Rider plant in Huskvarna, Sweden.
· Relocation of production in Tandsbyn, Sweden to Huskvarna, and closure of the plant in Tandsbyn.
· Relocation of lawn-mower production in Höör, Sweden, to the new plant in Poland and intention to divest the remaining operation in Höör.
· Relocation of Construction's operation in Jönköping, Sweden to Huskvarna, and personnel cutbacks within Construction in Spain.
· Intention to divest the plant in Ödeshög, Sweden which produces components for chainsaws, riders and other products.
· Relocation of production of chainsaws and other handheld products in USA from DeQueen, AR to the plant in Nashville, AR and intention to use the facility as a warehouse.
· Closure of the office in Augusta, GA, USA and transfer to Charlotte, NC, USA, which will be the regional head office.
· Consolidation of sales organization in Europe and Asia/Pacific, including establishment of a single sales office for the Nordic region in Huskvarna, Sweden.
"I regret that we have to implement measures which will affect so many employees. Husqvarna's production is too fragmented with a number of small plants, which means inefficient utilization of capital and resources. We also need to finalize the integration of acquired units and realize anticipated synergies. These changes are necessary in order to secure the Group's long-term competitiveness", says Magnus Yngen, CEO and President.
The above changes are subject to requisite approval or negotiations with respective unions.
Milwaukee -- October 22 -- Sagging sales of lawn mower engines and portable generators led Briggs & Stratton Corp. of Wauwatosa to report a fiscal first quarter loss of $8.7 million - more than four times bigger than a year ago.
The company's loss was $8.69 million, or 18 cents a share, compared with a loss of $1.96 million, or 4 cents, a year ago.
Sales for the three months ended Sept. 30 were down 29%, to $324.6 million from $458.2 million.
Sales are expected to fall for the full fiscal year for Briggs, which responded to the slowdown by cutting jobs and consolidating operations.
But the company continues to forecast that net income will grow in 2010 to a range of $40 million to $50 million, from $32 million in 2009. Earnings per share are forecast at 80 cents to $1.01.
The company said it's seeing higher commodity prices, as the cost of aluminum and steel have jumped in recent months, said Jim Brenn, chief financial officer.
Briggs said sales of engines for lawn mowers fell 19% in the quarter, and sales of power products - primarily portable generators - fell 36%.
"Retail sales of lawn and garden equipment during the summer months were not as robust as they were during last year's first quarter," said Todd Teske, president and chief operating officer, during a conference call with investment analysts. That led retailers to reduce inventories, with dealers of premium lawn and garden equipment slashing inventories "to levels that we have not seen for several years," he said.
Helping offset the decline in sales were cost-cutting moves the company has made, including the shutdown of its Port Washington factory, Teske said.
The company recorded $1.4 million in costs linked to the shutdown of its generator and pressure washer factory in Jefferson, announced in July.
MILWAUKEE – October 22 -- Briggs & Stratton Corporation today announced fiscal 2010 first quarter consolidated net sales of $324.6 million and a net loss of $8.7 million or $0.18 per diluted share. Consolidated net sales decreased $133.5 million or 29% from the prior year while the net loss was $6.7 million greater than the same period a year ago.
The $133.5 million consolidated net sales decrease was primarily the result of weaker shipments of both portable generators and engines. The increase in the net loss of $6.7 million was primarily the result of lower sales volumes in both reportable segments and a less favorable effective tax rate, partially offset by lower production costs and operating expenses.
Engines:
Fiscal 2010 first quarter net sales were $210.4 million, $48.2 million or 19% less than the prior year. This decrease reflects a 22% decrease in engine unit shipments compared to the same period a year ago.
The reduction in engine unit volume was attributable to consumer demand for lawn and garden equipment that was softer than that experienced in the same period a year ago and the decrease in demand for engines for portable generators due to the lack of landed hurricanes this year versus the activity experienced in the first quarter last year.
The fiscal 2010 first quarter loss from operations was $5.9 million, which is $0.4 million more than the $5.5 million loss from operations experienced in the first quarter of fiscal 2009. This increase in the loss from operations over the prior year was the result of a decrease in engine unit shipments and an increased provision for potential uncollectible receivables, offset by lower production costs and operating expenses.
The lower production costs are primarily the result of lower costs for purchased materials and components, lower transportation costs and lower warranty expenses. Operating expenses were lower in the fiscal 2010 first quarter compared to the prior year period, due primarily to planned reductions in selling and engineering expenses.
Power Products:
Fiscal 2010 first quarter net sales were $163.6 million, $91.9 million or 36% less than the prior year. The decrease in sales primarily resulted from decreased sales of portable generators due to the lack of hurricanes making landfall in the United States in this year's first quarter. In addition, unit shipments of all lawn and garden products were soft, especially the premium equipment that we sell through the dealer channel.
The fiscal 2010 first quarter income from operations was $3.6 million, an improvement of $1.0 million from the income from operations of $2.6 million reported in the first quarter of fiscal 2009. This improvement in income from operations between years resulted from lower production costs for materials and components and improved absorption related to the mix of product manufactured, partially offset by lower sales.
General:
Interest expense was lower between years because of lower outstanding borrowings. The effective tax rate was 36% versus the 71% used in the first quarter last year. The effective tax rate for the first quarter of fiscal 2009 was significantly higher than the 2010 period because 2009 included the favorable tax impact of foreign dividends.
Outlook:
The company continues to project that fiscal 2010 net income will be in the range of $40 to $50 million or $0.80 to $1.01 per diluted share. Consolidated net sales are projected to be lower between years primarily due to the absence of hurricane related sales of portable generators and selected price reductions to reflect projected lower commodity costs. Production levels for substantially all products are planned to be lower in fiscal 2010 to decrease our investment in working capital. Operating income margins are projected to be in the range of 4.0% to 5.0%, and interest expense and other income are forecasted at $27 million and $5 million, respectively. The effective tax rate for the full year is projected to be in a range of 31% to 34%.
MILWAUKEE, Oct. 21 -- Briggs & Stratton Corporation announced the following results of its Annual Meeting held today:
Shareholders reelected Robert J. O'Toole, John S. Shiely and Charles I. Story as directors to terms expiring in 2012.
Shareholders ratified the selection of PricewaterhouseCoopers LLP as the company's independent auditors and the Rights Agreement as amended by the company on October 13, 2009.
A proposal to amend and restate the Briggs & Stratton Corporation Incentive Compensation Plan was also approved by shareholders.
LINCOLN -- October 20 -- Ariens Company said Tuesday it has acquired an Arizona company and will move production from there to its plant in Auburn.
Ariens said it bought the assets of Parker Inc. of Phoenix, which makes debris maintenance equipment, including blowers, power rakes, lawn sweepers, litter vacuums and portable truck loaders. The purchase price was not disclosed.
Ann Stilp, an Ariens spokeswoman, said the company hasn't determined whether it will continue to produce all of Parker's product line, but whatever it makes will be made in Auburn.
Stilp said the Auburn plant has excess capacity, and the Parker expansion will not require any additional employees.
She said employment at the Auburn plant has steadily grown and is now up to about 100 employees, about 25 fewer than Auburn Consolidated Industries had when it closed its doors two years ago this month.
Ariens bought the ACI plant within weeks and resurrected the Great Dane and EverRide commercial mower brands.
In addition to the Parker acquisition, Ariens earlier this year bought the Treker line of utility vehicles from Great Plains Mfg. and moved production of the product to Auburn.
As part of that move Ariens added a few engineering employees at the Auburn plant, she said.
