<PAGE>   1
                      SECURITIES AND EXCHANGE COMMISSION

                            WASHINGTON, D.C. 20549

                                  FORM 10-K

                FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
               SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                 ACT OF 1934

     (MARK ONE)
         [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

         [  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
         SECURITIES EXCHANGE ACT OF 1934

                 FOR THE TRANSITION PERIOD FROM ____ TO ____

                       COMMISSION FILE NUMBER: 33-73247

                       GENERAC PORTABLE PRODUCTS, INC.
                        GENERAC PORTABLE PRODUCTS, LLC
                                  GPPW, INC.

    (EXACT NAME OF REGISTRANTS AS SPECIFIED IN THEIR RESPECTIVE CHARTERS)


                DELAWARE                                13-4006887
                DELAWARE                                39-1932782
                WISCONSIN                               13-4012695
                (STATE OR OTHER JURISDICTION            (I.R.S EMPLOYER
                OF INCORPORATION OR                     IDENTIFICATION NUMBERS)
                ORGANIZATION)

                                1 GENERAC WAY
                          JEFFERSON, WISCONSIN 53549
                                (920) 674-3750
                   (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)


                SECURITIES OF GENERAC PORTABLE PRODUCTS, INC.
            REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

                SECURITIES OF GENERAC PORTABLE PRODUCTS, INC.
            REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

                 SECURITIES OF GENERAC PORTABLE PRODUCTS, LLC
            REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

                 SECURITIES OF GENERAC PORTABLE PRODUCTS, LLC
               REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                 11-1/4 % Senior Subordinated Notes Due 2006

                           SECURITIES OF GPPW, INC.
            REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

                           SECURITIES OF GPPW, INC.
               REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                 11-1/4 % Senior Subordinated Notes Due 2006


<PAGE>   2


         Indicate by check mark whether the registrants (1) have filed all
         reports required to be filed by Section 13 or 15 (d) of the
         Securities Exchange Act of 1934 during the preceding 12 months (or
         for such shorter period that the registrants were required to file
         such reports), and (2) has been subject to such filing requirements
         for the past 90 days. Yes X  No
                                  ---   ---

         Indicate by check mark if disclosure of delinquent filers pursuant to
         Item 405 of Regulation S-K is not contained herein, and will not be
         contained, to the best of the registrants' knowledge, in definitive
         proxy or information statements incorporated by reference in Part III
         of this Form 10-K or any amendment to this Form 10-K [X].

         The aggregate market value of voting stock held by non-affiliates of
         Generac Portable Products, Inc. is not determinable as such shares
         were privately placed and there is currently no public market for
         such shares. None of the voting or non-voting common equity of either
         Generac Portable Products, LLC or GPPW, Inc. is held by
         non-affiliates.

         The number of shares of common stock of each of Generac Portable
         Products, Inc. and GPPW, Inc. outstanding as of March 15, 2001 is as
         follows:

         Generac Portable Products, Inc.              8,500
         GPPW, Inc.                                   1,000


                                      2


<PAGE>   3


                                    PART I

ITEM 1.  BUSINESS

THE COMPANY

         Generac Portable Products, Inc. (together with its direct and
indirect wholly owned subsidiaries, the "company" or "Generac") was
incorporated in the state of Delaware on April 29, 1998. Generac Portable
Products, Inc. is a holding company that owns 100% of the stock of each of
GPPW, Inc, a Wisconsin  corporation,  and GPPD, Inc, a Delaware corporation.
GPPW,Inc. and GPPD, Inc. hold, respectively, 5% and 95% member interests in
Generac Portable Products, LLC, a Delaware limited liability company.

         The company's predecessor, Generac Power Systems, Inc. ("GPSI"),
formerly known as Generac Corporation, was founded in 1959. On July 9, 1998,
Generac purchased the business and substantially all of the assets of GPSI's
Portable Products Division (the "Predecessor").

         The company's principal executive offices are located at 1 Generac
Way, Jefferson, Wisconsin, 53549 and its telephone number is (920) 674-3750.

BUSINESS

         Generac is a leading designer, manufacturer and marketer of
engine-powered tools and related accessories for use in both consumer and
commercial applications. The company has domestic operations located in
Jefferson, Wisconsin and branch operations in the United Kingdom, Germany and
Spain. Generac sells primarily to large home center retailers throughout the
United States, Canada and Europe.

         Generac's two principal product lines are portable generators and
pressure washers. The company sells its products through multiple channels of
retail distribution, including the leading home center chains, mass merchants
and warehouse clubs as well as independent dealers. Generac has been a major
supplier of portable generators to Sears since 1961, and is one of two
suppliers to Sears of pressure washers, both marketed under the Craftsman
label. The company is also a core supplier of portable generators and pressure
washers, both marketed under the Generac label, to Home Depot. In addition,
the company is a core supplier for many of the leading retail home centers and
do-it-yourself retailers.

         In addition to the manufacture of portable generators and pressure
washers, Generac also manufactures core components for those products,
including alternators and pressure washer pumps, in cases where such
integration improves operating profitability by providing lower costs,
streamlined production processes or the standardization of components.

PRODUCTS

         The company primarily produces portable generators and pressure
washers built around commercially available small gasoline powered engines.

                                      3

<PAGE>   4


         PORTABLE GENERATORS. Applications for portable generators include
running power tools and other appliances at residential as well as remote
construction sites, providing electrical power in connection with the use of
recreational vehicles and at camping sites and, more recently, providing
homeowners with back-up power and home security. The company's portable
generator product offerings range from premium-priced models, incorporating
advanced operating features and performance characteristics built around the
proprietary Generac-Nagano engine, to value-priced products built around
conventional commercially available lawn mower-type engines. Generac's
generator line includes the most basic units without protective frames to
complete units, and the simplest electrical outlet features to full control
panels with related features that are attractive to the industrial and
contractor markets. The entire portable generator product line incorporates
various value-added features such as low oil shutdown and reduced noise
levels. Many of the company's premium Generac-Nagano engine-powered generators
are equipped with voltage regulators which provide superior voltage control
and surge capacity for starting large electrical loads. The Generac-Nagano
engine-powered units also feature lighter weight for portability, compact
size, reduced maintenance and lower fuel consumption. Electric start is
available on certain models and the contractor units incorporate a unique idle
control device which further reduces noise, greatly extends engine operating
life and additionally reduces fuel consumption. Oversized fuel tanks for
longer operating times are standard with these units.

         PRESSURE WASHERS. Pressure washers have been used in commercial
applications for over 50 years. In recent years, the consumer pressure washer
market has evolved, driven by increased awareness of the utility and the ease
of use of the product. Consumer applications include car washing, deck
cleaning, and pre-treating exterior surfaces prior to painting. Common
commercial applications include stripping paint, removing graffiti, farm and
agricultural uses, automotive uses, and factory and warehouse applications.
The company's engine-driven pressure washers incorporate unique value added
features such as push-button electric start, a thermal overload device, which
prevents overheating and resulting failures and an exclusive unloading circuit
which makes starting easier. Generac's electric pressure washer product line
offers reduced noise levels, a long operating life and an automatic start-stop
feature that protects against damage from overheating or running dry. The
company's proprietary pump, based on different combinations of internally
designed components and a low-cost aluminum pump head, promotes greater
manufacturing flexibility and a faster response to evolving end-user needs. As
with the company's portable generators, end-users are offered a premium
Generac-Nagano engine-powered product which features lower fuel consumption,
longer life and lower noise levels.

         NEW AND RELATED PRODUCTS. All of the company's new product
initiatives are based on its core manufacturing and marketing strengths. The
company has identified several new product and business opportunities in which
it can provide added value to end-users and attractive profit margins to
retailers. These include residential power transfer systems to complement
portable generators and engine-driven air compressors. Generac has recently
introduced its residential power transfer system to the market and anticipates
significant growth potential for this product. In addition, Generac entered
into a long-term supply, licensing and distribution agreement with Thomas
Industries Inc. ("Thomas"). Thomas is the recognized leader in the design and
manufacture of pumps and compressors for use in global OEM applications.
Thomas is also the leading producer of contractor duty air compressors
utilizing oil-less pump technology. Under

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<PAGE>   5


the agreement, Generac will manufacture and sell the existing line of Thomas
air compressor products utilizing the Thomas (R) and Ultra Air-Pac (R)
trademarks.

DISTRIBUTION AND MARKETING

         The company's two largest customers are Home Depot and Sears, which
individually accounted for more than 10% of sales, and combined accounted for
approximately 61% of sales, in 2000. The company also sells to other consumer
home centers and warehouse clubs, as well as mass merchants, hardware stores
and outdoor power equipment dealers. In addition to traditional retail
distribution, Generac offers its products through national catalog companies
such as Northern Hydraulic, Sears Power Tool catalog and its own
"special-order" service.

         The company has been a major supplier of portable generators to Sears
since 1961 and one of two suppliers to Sears of pressure washers since Sears
first introduced that product category in 1994. Generac has developed a
longstanding partnership with Sears involving the development of exclusive
product offerings under the Craftsman label, high levels of in-store sales
support, well-coordinated merchandising and promotional campaigns and access
to Sears' nationwide service network. The company continues to increase its
sales through Sears' expanding hardware distribution channels including its
new local hardware stores, dealer stores and Orchard Supply.

         Over the past five years, Generac has expanded the distribution of
its products, marketed under the Generac name, to home centers and warehouse
clubs. Borrowing from its experience at Sears, Generac offers to its customers
a total category management approach, including value-added, in-store services
such as merchandising, informational materials, sales associate training and
product support. Major U.S. retail customers now include B.J.'s Wholesale
Club, Costco, Home Base, Home Depot, Lowe's, Sam's Club, Sears and Tru-Serv
Incorporated. Generac is well-represented in six of the leading home center
retailers in Europe.

         The company employs a two-tiered sales force to sell its products
through mass merchants, home centers and independent dealer channels. Product
managers are responsible for developing sales programs tailored to
retailer-specific needs in the home center and warehouse club channels.
Territory sales managers are responsible for establishing new independent
dealers, training sales associates at a store level, and managing and reducing
product returns. Territory sales managers also serve as the primary interface
between the company's manufacturing operation and its independent dealer
network. Generac has assembled a comprehensive after-sales service network in
North America for portable generators and pressure washers comprised of (1)
approximately 3,000 authorized independent dealers, (2) five independently
owned master parts distributors and (3) a company-owned fleet of mobile
service training vehicles. Although most independent dealers do not generate
the traffic to be competitive with mass merchants, home centers or warehouse
clubs, Generac continues to maintain its independent dealer network for the
express purpose of providing the after sales service capability that supports
its products. Most of the master part distributors have their own sales force,
which effectively broadens the availability of the company's products and
spare parts.

                                      5


<PAGE>   6

PRODUCT TECHNOLOGY AND DEVELOPMENT

         The majority of the company's new product development initiatives are
based on the generator and pressure washer markets. However, the company has
new product categories under development, and its research and development
group is continually developing and field-testing various products. Generac
incurred research and development costs of $2.6 million in 2000, $2.7 million
in 1999 and $1.9 million in 1998.

         The company's product development program for the generator product
line includes manual and automatic power transfer systems for residential use,
residential back-up power generators and generators designed to operate on
gaseous fuels such as natural gas and liquid petroleum gas. The company's
product development program for the pressure washer product line includes a
new and improved pump design which will allow for easier starting on Generac's
core line of pressure washers and an expanded line of accessories. In both
categories research and development is continuing to focus on product cost
reductions and performance enhancements to existing models.

INTERNATIONAL OPERATIONS

         The company has been successful in building long-term customer
relationships with the leading home center retailers in European markets
located in the U.K., Germany, Switzerland, Spain, Belgium and France. To
support the company's growing European power generator business, local sales
offices have been established in Winsford, U.K., Cologne, Germany and
Barcelona, Spain. To service Generac's European customer base more
effectively, the company designs and assembles its European products in its
Cheshire, England facility. This facility imports alternators, engines and
other components and assembles portable generators to meet local product
requirements and quality assurance regulations. Generac's international
operations have contributed approximately 9% of total net sales for fiscal
year 2000. See Note 12 to the company's consolidated financial statements.

COMPETITION

         The U.S. engine powered tools industry has experienced significant
consolidation over the last ten to 15 years. The number of competitors in its
products categories has decreased from approximately 20 in 1985 to
approximately ten today, of which only four companies have national
distribution capabilities. The principal competitive factors in the engine
powered tools industry include price, service, product performance, technical
innovation and delivery. In the manufacture and sale of portable generators,
Generac competes primarily with Coleman Powermate, a division of The Coleman
Company, Inc., and Honda Engine Company. In the manufacture and sale of
pressure washers, Generac competes primarily with DeVilbiss Air Power Company,
an affiliate of Pentair, Inc., and, to a lesser extent, with The Coleman
Company, Inc., Alfred Karcher GmbH & Co. and Campbell Hausfeld, an affiliate
of Scott & Fetzer, Inc.

         As measured by net sales, the company believes it was the largest
supplier of both portable generators and consumer pressure washers in the
North American market in 2000.

                                      6

<PAGE>   7

RAW MATERIALS AND SUPPLIERS

         The company has used the Generac-Nagano overhead valve industrial
engine in certain of its products since 1992. Currently, approximately 19% of
the company's sales are from products that incorporate the Generac-Nagano
engine. At the time of the acquisition of the Portable Products Division of
GPSI, the company entered into an engine supply agreement with GPSI. This
agreement provides that GPSI will supply the company with certain models of
the Generac-Nagano engine for use in the company's pressure washers and
consumer portable generators on an exclusive basis as long as the company
makes minimum annual purchases of Generac-Nagano engines. This agreement also
gives the company the right to increase the number of engines purchased based
on the company's forecast requirements. The initial term of the engine supply
agreement is until 2007, with provision for three year renewals, subject to
certain conditions. The company also purchases engines from Briggs & Stratton,
Tecumseh Products and Honda.

         The company manufactures many of the other components used in its
products. It also purchases a variety of basic materials and component parts.
The company has not experienced any difficulty obtaining necessary purchased
supplies.

EMPLOYEE AND LABOR RELATIONS

         As of December 31, 2000, the company had approximately 630 employees,
the majority of whom were involved in production and distribution, with the
balance engaged in technical, administration, sales and clerical work. Of
these employees, 568 were employed in the United States and 62 in
international operations. All of the company's production employees are
covered by a collective bargaining agreement which was renegotiated in October
1999 and expires on February 15, 2003. The company considers its relations
with its employees to be good.

ENVIRONMENTAL MATTERS

         The company's operations are subject to a variety of federal, state
and local laws and regulations governing, among other things, emissions to
air, discharge to waters, the generation, handling, storage, transportation,
treatment and disposal of waste and other materials and health and safety
matters. The company believes that its business, operations and facilities
have been and are being operated in compliance in all material respects with
applicable environmental and health and safety laws and regulations, many of
which provide for substantial fines and criminal sanctions for violations. The
company does not currently anticipate any material adverse effect on its
business, financial condition or results of operations as a result of
compliance with federal, state or local environmental laws or regulations or
remediation costs. However, the operation of manufacturing plants entails
risks in these areas, and there can be no assurance that the company will not
incur material costs or liabilities in the future. In addition, potentially
significant expenditures could be required in order to comply with evolving
environmental and health and safety laws, regulations or requirements that may
be adopted or imposed in the future.

                                      7

<PAGE>   8


INTELLECTUAL PROPERTY

         The company's patents and trademarks taken individually, and as a
whole, are not critical to the ongoing success of its business.

SEASONALITY

         Sales of certain products of Generac are subject to seasonal
variation. Due to seasonal and regional weather factors, sales of pressure
washers and related working capital requirements are typically higher during
the first and second quarters than at other times of the year. The residential
and commercial construction markets are sensitive to cyclical changes in the
economy.


FORWARD-LOOKING STATEMENTS AND CAUTIONARY STATEMENTS UNDER THE PROVISIONS OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

         This report, including the "Business" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" ("MD&A")
sections, contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995, which can be identified by
the use of forward-looking terminology such as "may," "intend," "will,"
"expect," "anticipate," "plan," "management believes," "estimate," "continue"
or "position" or the negatives of or other variations on those terms or
comparable terminology. In particular, any statement, expressed or implied,
concerning future operating results or the ability to generate revenues,
income or cash flow are forward-looking statements. Readers are cautioned that
reliance on any forward-looking statements involves risks and uncertainties
and that, although the company believes that the assumptions on which the
forward-looking statements contained in this report are based are reasonable,
any of those assumptions could prove to be inaccurate. As a result, the
forward-looking statements based on those assumptions also could be incorrect,
and actual results may differ materially from any results indicated or
suggested by those forward-looking statements. The uncertainties in this
regard include, but are not limited to, the impact of leverage, dependence on
major customers, fluctuating demand for portable generators and pressure
washers, risks in product and technology development, competition, litigation
and capital requirements and those discussed in "Environmental Matters" in
this section, Item 3 of this report and other cautionary statements contained
throughout the "Business" and "MD&A" sections of this report. All
forward-looking statements are expressly qualified by the cautionary
statements set forth therein. In light of these and other uncertainties, the
inclusion of a forward-looking statement in this report should not be regarded
as a representation by the company that the company's plans and objectives
will be achieved.

                                      8


<PAGE>   9

ITEM 2.  PROPERTIES

         The principal properties of the company, the location, the primary
use, the square feet and the ownership status thereof as of December 31, 2000
are set forth in the table below:

<TABLE>
<CAPTION>
                                                                                       OWNED/
         LOCATION                           USE                    SQUARE FEET         LEASED          LEASE EXPIRATION
---------------------------    -------------------------------    -------------     -------------    ---------------------
<S>                            <C>                                <C>               <C>              <C>
Jefferson, WI                        Corporate Office/              250,000            Owned                  -
                                  Manufacturing/ Warehouse
Jefferson, WI                            Warehouse                  106,000            Leased           December 2001
Sullivan, WI                          Office/Warehouse               52,000            Leased            October 2002
Cambridge, WI                            Warehouse                   20,000            Leased              Monthly
Watertown, WI                            Warehouse                   52,000            Leased           December 2001
Waukesha, WI                             Warehouse                   40,000            Leased              Monthly
Waukesha, WI                               Office                     760              Leased              May 2001
Cheshire, England                   Manufacturing/Office             45,000            Owned                  -
Cologne, Germany                        Sales Office                 6,000             Leased           December 2005
Barcelona, Spain                        Sales Office                 1,100             Leased             April 2003
</TABLE>


         The company believes that its existing leased facilities are adequate
for the operations of the company. The company does not believe that it will
have any difficulty renewing any real property lease or readily obtaining an
alternative facility.


ITEM 3.  LEGAL PROCEEDINGS

         From time to time, Generac is subject to legal proceedings and other
claims arising in the ordinary course of its business. Generac maintains
insurance coverage against claims in the amount which it believes to be
adequate. Generac believes that it is not presently a party to any litigation
the outcome of which would have a material adverse effect on its financial
condition, the results of operations or cash flows.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters were submitted to a vote of the company's security holders
during the last quarter of its fiscal year ended December 31, 2000.

                                      9

<PAGE>   10



                                   PART II

ITEM 5.  MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         There is no established trading market for the common stock of
Generac Portable Products, Inc. As of March 15, 2001, 18 persons held the
8,500 outstanding shares of common stock of Generac Portable Products, Inc.
Generac Portable Products, Inc. has not declared or paid dividends since its
inception in April 1998 and has no intention to pay dividends for the
foreseeable future.

         There is no established trading market for the common equity of
either GPPW, Inc. or Generac Portable Products, LLC. All of the issued and
outstanding shares of common stock of GPPW, Inc. are held by Generac Portable
Products, Inc. All of the member interests in Generac Portable Products, LLC
are held by GPPW, Inc. and GPPD, Inc. No cash dividends or distributions have
been paid or made by either GPPW, Inc. or Generac Portable Products, LLC since
their respective formations. The indenture, dated as of July 1, 1998, by and
among Generac Portable Products, LLC , GPPW, Inc. and HSBC Bank USA (formerly
known as Marine Midland Bank), as trustee, with respect to the 11-1/4% Senior
Subordinated Notes due 2006, contains restrictions on the ability of GPPW,
Inc. and Generac Portable Products, LLC to declare or pay dividends or make
distributions on their respective equity securities.


                                      10


<PAGE>   11



ITEM 6.  SELECTED FINANCIAL DATA

SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA

         The selected historical financial information of Generac for the
years ended December 31, 2000, 1999 and for the period July 10, 1998 through
December 31, 1998 has been derived from, and should be read in conjunction
with, the audited historical financial statements of Generac (including the
related notes) included elsewhere herein. The selected historical financial
information of the Predecessor from January 1, 1998 through July 9, 1998 have
been derived from, and should be read in conjunction with, the audited
historical financial statements of GPSI's Portable Products Division
(including the related notes) included elsewhere herein. The selected
historical financial information for the years ended December 31, 1997 and
1996 have been derived from the audited historical financial statements of
GPSI's Portable Products Division. The selected Pro Forma financial
information for the year ended December 31, 1998 combines the results of the
Predecessor for the period January 1, 1998 through July 9, 1998 with the
Company's results for the period July 10, 1998 through December 31, 1998 and
have been prepared to reflect the consummation of the acquisition of the
Portable Products Division of GPSI on July 9, 1998, as if it had occurred on
January 1, 1998, using the purchase method of accounting. The following table
should also be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" that appears later in this
report.

                                      11

<PAGE>   12
                            (dollars in millions)

<TABLE>
<CAPTION>
                                                  Predecessor                      Company          Pro Forma         Company
                                           ---------------------------------  -----------------  --------------  -----------------
                                                             January 1, 1998    July 10, 1998
                                                                 through           through
                                             1996     1997     July 9, 1998   December 31, 1998      1998          1999     2000
                                           -------  -------  --------------   -----------------    -------       -------   -------
                                                                                                  (unaudited)
<S>                                       <C>       <C>      <C>              <C>                 <C>            <C>      <C>
STATEMENT OF OPERATIONS DATA:
    Net sales                              $122.6   $178.0       $139.6              $136.9        $276.4         $398.1   $242.5
    Gross profit                             27.3     46.9         35.0                38.6          73.8          107.2     50.4
    Selling & service expense                13.9     21.7         16.6                16.9          33.6           47.3     32.4
    General and administrative expense        4.4      4.2          2.4                 2.9           5.3           10.1      7.9
    Intangible asset amortization               -        -            -                 2.5           5.3            5.4      5.4
                                           -------  -------      -------             -------       -------        -------  -------
    Income from operations                    9.0     21.0         16.0                16.3          29.6           44.4      4.7
    Interest Expense                          2.2      2.1          1.4                 9.7          20.0           20.8     21.3
    Deferred financing cost amortization        -        -            -                 0.4           0.8            0.9      1.2
    Other (income) expense                      -      0.2          0.1                 (.2)         (0.1)           1.8     (0.1)
    Income Taxes (a)                            -        -            -                 2.2           3.1            7.4     (6.2)
                                           -------  -------      -------             -------       -------        -------  -------
    Net Income (loss)                      $  6.8   $ 18.7       $ 14.5              $  4.2        $  5.8         $ 13.5   $(11.5)
                                           =======  =======      =======             =======       =======        =======  =======


BALANCE SHEET DATA:
    Working capital                          29.3     40.5         68.5                57.5                         60.6     76.6
    Total assets                             53.1     65.3        105.8               332.0                        357.5    350.8
    Total debt, including current portion       -        -            -               197.8                        189.4    207.7
    Stockholders' equity (b)                 41.6     52.8         81.9               103.3                        115.2    105.6


OTHER FINANCIAL DATA:
    EBITDA (c)                               10.5     22.3         16.7                20.0          37.0           52.1     14.3
    Depreciation and amortization             1.5      1.5          0.8                 3.9           8.1            9.2     10.7
    Interest expense                          2.2      2.1          1.4                 9.7          20.0           20.8     21.3
    Capital expenditures                      2.3      1.4          1.6                 3.8           5.4           12.5      2.9
CASH FLOW DATA:
    Net cash provided by (used in)
      operating activities                   17.3      8.2        (13.6)               16.2                         20.3    (19.1)
    Net cash provided by (used in)
     investing activities                    (2.3)    (1.4)        (1.6)               (3.8)                       (12.5)    (2.9)
    Net cash provided by (used in)
     financing activities                   (14.2)    (6.8)        14.8               (11.5)                        (8.9)    22.1
</TABLE>

                                      12
<PAGE>   13

NOTES TO SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA

(a)      Historically, the Predecessor's taxable income was included in GPSI's
         taxable income. GPSI and its stockholders elected to be treated as an
         S Corporation for federal and certain state income tax purposes.
         Accordingly, no provision for income taxes is included in the
         Predecessor's financial statements. Generac has been subject to state
         and federal income taxes since July 9, 1998.

(b)      Stockholders' equity represents business unit investment for all
         Predecessor periods shown and represents common stock,
         paid-in-capital, retained earnings, accumulated other comprehensive
         income and excess of purchase price over book value of net assets
         acquired from entities partially under common control for periods
         subsequent to July 9, 1998.

(c)      EBITDA  represents  earnings before  interest,  taxes,  depreciation,
         amortization  and certain other  non-recurring  charges (principally
         the expenses from the withdrawn common stock offering).  EBITDA is a
         widely recognized  financial  indicator of a company's  ability to
         service or incur debt.  EBITDA is not a measure of operating
         performance  computed in  accordance  with accounting  principles
         generally  accepted in the United States of America and should not be
         considered as a substitute  for operating  performance  computed in
         accordance with accounting  principles  generally accepted in the
         United States of America and should not be  considered  as a
         substitute  for  operating  income,  net  income,  cash flows from
         operations,  or other statement of operations or cash flow data
         prepared in conformity  with  generally  accepted  accounting
         principles,  or as a measure of  profitability  or  liquidity.  In
         addition,  EBITDA may not be comparable  to similarly  titled
         measures of other companies.  EBITDA may not be indicative of the
         historical  operating  results of Generac or the Predecessor,  nor is
         it meant to be predictive of future  results of operations  or cash
         flows.  See also the statement of cash flows  contained  within the
         historical financial statements included elsewhere in this report.

                                      13

<PAGE>   14

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION AND
         RESULTS OF OPERATIONS

         References to Generac means Generac  Portable  Products,  Inc. and
its  subsidiaries,  on a  consolidated  basis,  and, as the context requires,
the Predecessor.  The "Predecessor" refers to the Portable Products Division
of GPSI.

GENERAL

         The company is a leading designer, manufacturer and marketer of
engine-powered tools and related accessories for use in both consumer and
commercial applications. In 2000, the company generated $242.5 million in net
sales, $4.7 million in operating income and $14.3 million in EBITDA. In 2000,
domestic sales represented 90.9% of total net sales and international sales
represented 9.1% of total net sales.

         The table below sets forth the company's results of operations for
the periods indicated. Included in the table is a presentation of EBITDA,
which represents earnings before interest, taxes, depreciation, amortization
and certain other non-recurring charges (principally the expenses from the
withdrawn common stock offering). EBITDA is included herein because management
believes that certain investors find it to be a useful tool for measuring a
company's ability to service its debt. EBITDA is not a measure of operating
performance computed in accordance with accounting principles generally
accepted in the United States of America and should not be considered as a
substitute for operating performance computed in accordance with accounting
principles generally accepted in the United States of America or as a
substitute for operating income, net income, cash flows from operations, or
other statement of operations or cash flow data prepared in accordance with
accounting principles generally accepted in the United States of America, or
as a measure of profitability or liquidity. In addition, EBITDA may not be
comparable to similarly titled measures of other companies. EBITDA may not be
indicative of the company's historical operating results or those of the
Predecessor, nor is it meant to be predictive of future results of operations
or cash flows. See also the statement of cash flows contained within the
financial statements included elsewhere in this report.

                                      14

<PAGE>   15


  (dollars in millions)

<TABLE>
<CAPTION>
                                 Pro Forma                        Company
                               -----------------------------    ----------------------------------------------------------------
                                             (unaudited)

                                  1998            % of Sales        1999            % of Sales        2000         % of Sales
                               ------------   --------------    -------------   -------------      -----------   ---------------
Net Sales
              Domestic             $ 255.4            92.4%           $359.0           90.2%           $220.4             90.9%
              International           21.0             7.6%             39.1            9.8%             22.1              9.1%
                               ------------   --------------    -------------   -------------      -----------   ---------------
<S>                            <C>            <C>               <C>             <C>                <C>           <C>
Total net sales                      276.4           100.0%            398.1          100.0%            242.5            100.0%

Gross profit                          73.8            26.7%            107.2           26.9%             50.4             20.8%

Operating expenses                    44.2            16.0%             62.8           15.8%             45.7             18.8%

Operating income                      29.6            10.7%             44.4           11.2%              4.7              1.9%

Net income (loss)                      5.8             2.1%             13.5            3.4%            (11.5)            -4.7%

EBITDA                                37.0            13.4%             52.1           13.1%             14.3              5.9%
</TABLE>

         The company sells its portable generators, pressure washers and other
products primarily to home center chains, mass merchants and warehouse clubs
as well as to independent dealers. Generac's two largest customers, Home Depot
and Sears, accounted for approximately 61% of total net sales in 2000, 62.5%
in 1999 and 65.7% of total net sales in 1998. Generac's international sales
represented approximately 9% of total net sales in 2000, 10% in 1999 and 8% in
1998.

         Cost of sales consists of the cost of engines and raw materials and
costs to manufacture and package Generac's products. These costs may vary
based on the volume of production for any given period. Prior to 2000,
physical inventories had been taken during the fourth quarter to supplement
the company's count procedures during the year. As a result, cost of sales and
gross margins may be affected by adjustments recorded after physical
inventories to reflect variances between actual and estimated costs. Operating
expenses consist of costs incurred to sell and distribute Generac's products,
including volume, promotional and other sales incentives, shipping,
commissions and warranty costs. These costs are impacted by sales volume as
other sales and service support costs, including personnel and training,
research and development costs and general and administrative costs, are
generally not impacted by incremental volume changes in the short run.

         The company's business dates back to 1959, when it was part of GPSI.
In 1997, the company became a separately identifiable division of GPSI with
separate financial reporting. On

                                      15

<PAGE>   16

July 9, 1998, Generac Portable Products, LLC acquired the production,
marketing, sales, engineering, research and development (and in the U.K.,
Spain and Germany, importation) and administrative operations of GPSI's
Portable Products Division located at its facilities in Wisconsin, England,
Spain and Germany. The purchase price was approximately $314.2 million in
cash, including $8.7 million in fees and expenses, after post-closing
adjustments of $1.0 million. This was funded primarily through the issuance of
$110.0 million of 11 1/4% Senior Subordinated Notes due 2006, borrowings of
$94.2 million under a new bank credit facility and the issuance of $110.0
million of common stock of Generac Portable Products, Inc., constituting 100%
of the outstanding Generac Portable Products, Inc. common stock, to The Beacon
Group III - Focus Value Fund, L.P., members of management and other investors.
Additionally, Generac Portable Products, LLC entered into a capital lease
arrangement with GPSI for certain manufacturing equipment with a fair value of
approximately $2.6 million. As a result of purchase accounting in connection
with the acquisition, goodwill of approximately $214 million was recorded,
which is being amortized on a straight-line basis over a period of 40 years.
In addition, since the acquisition, the company's net income has been affected
by an increase in interest expense as a result of the borrowings in connection
with the acquisition.

         The pro forma results of operations for the year ended December 31,
1998 combines the results of the Predecessor for the period January 1, 1998
through July 9, 1998 with the company's results for the period July 10, 1998
through December 31, 1998 and have been prepared to reflect the consummation
of the acquisition of the Predecessor on July 9, 1998, as if it had occurred
on January 1, 1998, using the purchase method of accounting. As a result of
the use of purchase accounting for the acquisition of the Predecessor, pro
forma adjustments reflect increased goodwill and intangible asset
amortization. In addition, pro forma adjustments were made to reflect
increased interest expenses incurred on borrowings made in connection with the
acquisition.

         Prior to July 10, 1998, the Predecessor's taxable income was included
in GPSI's taxable income. GPSI and its stockholders elected to be treated as
an S Corporation for federal and state income tax purposes. Accordingly, no
provision for income taxes is included in the Predecessor's financial
statements for periods prior to July 10, 1998. The company has been subject to
state and federal income taxes since July 10, 1998. Consequently, a pro forma
adjustment was made to reflect income taxes that would have been incurred
prior to July 9, 1998.


RESULTS OF OPERATIONS

         YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

         Net sales. Net sales decreased $155.6 million, or 39.1%, to $242.5
million for 2000 from $398.1 million for 1999.

         Domestic sales decreased $138.6 million, or 38.6%, to $220.4 million
for 2000 from $359.0 million for 1999. This decrease was primarily reflective
of increased demand for generators during 1999 resulting from consumer
concerns relating to possible Year 2000 power outages. These consumer concerns
were not present during 2000, which combined with higher than normal generator
inventory levels at retail customer locations has resulted in a lower

                                      16

<PAGE>   17

volume of customer orders for generators. Furthermore, the lack of tropical
storms and weather events in 2000 as compared to 1999 adversely effected
generator demand. The decrease in generator sales was partially offset by an
increase in pressure washer sales due primarily to the introduction of
pressure washer products at Sam's Club and Menards, and an expanded pressure
washer product offering at Sears.

         International sales decreased $17.0 million, or 43.5%, to $22.1
million for 2000 from $39.1 million for 1999. This decrease was primarily
reflective of increased generator sales in 1999 by the company's branch in the
United Kingdom to meet the strong demand of existing domestic customers as
described above. This decrease in sales was partially offset by an increase in
generator sales into Spain resulting primarily from the establishment of
branch operations in Spain during July 1999.

         Gross profit. Gross profit decreased $56.8 million, or 53.0%, to
$50.4 million for 2000 from $107.2 million for 1999. This decrease was
reflective of decreased overall sales as described above and decreased gross
margins due to a greater sales mix of lower margin pressure washers. Gross
profit margin decreased to 20.8% for 2000 from 26.9% for 1999.

         Operating expenses. Operating expenses decreased $17.1 million, or
27.2%, to $45.7 million for 2000 from $62.8 million for 1999. The decrease was
due primarily to decreases in both selling and service expenses and general
and administrative expenses. Selling and service expenses decreased due to
decreases in selling and distribution costs that are impacted by sales volume.
The decrease in general and administrative expenses was primarily reflective
of a decrease in costs incurred to support the company's new business software
which was implemented during 1999 and headcount reductions made during 2000 to
more appropriately match the company's sales volume. As a percentage of sales,
operating expenses increased to 18.8% for 2000 from 15.8% for 1999.

         Net income (loss). Net income decreased $25.0 million to a net loss
of $11.5 million in 2000 from a net income of $13.5 million for 1999. This
decrease in net income was primarily due to the decreased availability of
operating earnings, resulting from decreased sales volumes combined with lower
gross margins, to cover certain fixed charges. This decrease in net income was
partially offset by approximately $1.2 million in costs incurred during 1999
in conjunction with the company's planned initial public offering of its
common stock, which was withdrawn in July 1999. As a percentage of sales, net
income decreased to a net loss of (4.7)% for 2000 from net income of 3.4% for
1999.

         EBITDA. EBITDA decreased $37.8 million, or 72.6%, to $14.3 million
for 2000 from $52.1 million for 1999. This decrease was due to decreased sales
volumes and gross margins as described above. As a percentage of sales, EBITDA
decreased to 5.9% for 2000 from 13.1% for 1999.

                                      17

<PAGE>   18

         YEAR ENDED DECEMBER 31, 1999 (COMPANY) COMPARED TO YEAR ENDED
DECEMBER 31, 1998 (PRO FORMA)

         Net sales.  Net sales  increased  $121.7  million,  or 44.0%,  to
$398.1  million  for 1999 from  $276.4  million for 1998 pro forma.

         Domestic sales increased $103.6 million, or 40.6%, to $359.0 million
for 1999 from $255.4 million for 1998 pro forma. This increase was primarily
due to increased sales of generators and related accessories to existing
customers resulting from new store additions and sales to new customers. A
significant portion of the increased demand for generators resulted from
consumer concerns relating to possible Year 2000 power outages.

         International sales increased $18.1 million, or 86.2%, to $39.1
million for 1999 from $21.0 million for 1998 pro forma. This increase was due
to increased generator sales by the company's branch in the United Kingdom to
meet the demand of existing domestic customers.

         Gross profit. Gross profit increased $33.4 million, or 45.3%, to
$107.2 million for 1999 from $73.8 million for 1998 pro forma. This increase
was due to increased overall sales as described above and improved gross
margins due to a greater sales mix of higher margin generators, partially
offset by higher costs incurred for certain engines. Gross profit margin
increased slightly to 26.9% for 1999 from 26.7% for 1998 pro forma.

         Operating expenses. Operating expenses increased $18.6 million, or
42.1%, to $62.8 million for 1999 from $44.2 million for 1998 pro forma. The
increase was due to increases in selling and service expenses and general and
administrative expenses. Selling and service expenses increased due to selling
and distribution costs that are impacted by sales volume and increases in
sales force personnel, promotional expenses for new pressure washer product
offerings, certain sales incentives offered to new domestic customers and
incentives for sales into home centers in Germany. The increase in general and
administrative expenses was reflective of increased training and support costs
related to the company's new business software implementation and increases in
personnel to support certain finance, accounting and human resource functions
which had previously been shared with GPSI. As a percentage of sales,
operating expenses decreased slightly to 15.8% for 1999 from 16.0% for 1998
pro forma.

         Net income. Net income increased $7.7 million, or 132.8%, to $13.5
million for 1999 from $5.8 million for 1998 pro forma. This increase in net
income was primarily due to the availability of operating earnings from the
increased sales volume to cover certain fixed charges. The increase was
partially offset by approximately $1.2 million in costs incurred on a pretax
basis in conjunction with the company's planned initial public offering of its
common stock, which was withdrawn in July 1999. As a percentage of sales, net
income increased to 3.4% for 1999 from 2.1% for 1998 pro forma.

         EBITDA. EBITDA increased $15.1 million, or 40.8%, to $52.1 million
for 1999 from $37.0 million for 1998 pro forma. This increase was due to
increased sales volume and improved gross margins as described above. As a
percentage of sales, EBITDA decreased slightly to 13.1% for 1999 from 13.4%
for 1998 pro forma.

                                      18

<PAGE>   19


LIQUIDITY AND CAPITAL RESOURCES

         To finance its capital expenditure program and fund its operational
and liquidity needs, Generac has relied principally on cash flow generated
from operations and the $30 million revolving credit portion of its credit
facility. Generac principally requires liquidity to meet debt service
requirements, finance its capital expenditures and provide working capital.

         At December 31, 2000, Generac had approximately $207.7 million of
outstanding debt, including $110.0 million of senior notes payable, $85.8
million under its credit facility, $10.5 million of senior zero coupon notes
and $1.4 million under capital lease obligations. Cash interest paid during
2000 was approximately $21.4 million.

         Generac Portable Products, LLC is a party to a credit facility with a
group of lenders and Bankers Trust Company, as Administrative Agent, under
which it is able to borrow up to $115 million. The original credit facility
consisted of a $45 million senior secured term loan facility, a $40 million
senior secured term loan facility and a $30 million senior secured revolving
credit facility, less the amount outstanding under letters of credit.
Effective October 30, 2000, the company amended its credit facility which,
among other things, waived existing financial covenant violations at September
30, 2000 and revised requirements relating to certain financial ratios and
tests for periods through December 31, 2001 including maximum levels of
leverage, minimum levels of interest coverage and minimum required levels of
earnings before interest, income taxes, depreciation and amortization.
Additionally, the amendment provides certain limits on the amount of
outstanding revolving loans through March 31, 2001. As of March 15, 2001,
Generac Portable Products, LLC had approximately $8.6 million of available
funds under this credit facility.

         On July 2, 1998, Generac Portable Products, LLC and GPPW, Inc. issued
$110.0 million of their 11-1/4% Senior Subordinated Notes (the "Notes") due
2006, which are guaranteed by Generac Portable Products, Inc. The senior notes
are redeemable at the option of the issuers at any time after July 1, 2002 at
an initial redemption price of 107.625% of the principal amount of the notes
at maturity, plus accrued and unpaid interest, with declining redemption
prices thereafter. Interest on the senior notes is payable semi-annually on
January 1 and July 1 in the amount of $6,187,500.

         On November 20, 2000, The Beacon Group III - Focus Value Fund, L.P.
(the "Fund"), Generac's majority stockholder, purchased a unit (the "Unit")
consisting of a newly issued senior zero coupon note with an aggregate
principal amount of $19.5 million, due July 1, 2006 and a warrant to purchase
340 shares of the common stock of Generac in exchange for an aggregate of $15
million in cash. The proceeds from the sale of the Unit were used by Generac
to repay the principal of, and interest on, revolving indebtedness, and for
general corporate purposes. Both the senior zero coupon notes and the warrants
have been recorded in the financial statements at their estimated fair market
values.

         Cash used in operating activities for the year ended December 31,
2000 totaled $19.1 million. The activity in operating cash flows during 2000
was primarily a result of the decreased

                                      19

<PAGE>   20

net income, higher levels of inventory for generators and related components
resulting from low levels of customer orders and a decrease in accrued
liabilities resulting primarily from the settlement of significant 1999
year-end sales incentives with the company's major customers. This decrease
was partially offset by other timing differences relating to supplier payments
and customer receipts. Cash provided by operating activities for the year
ended December 31, 1999 totaled $20.3 million. The activity in operating cash
flows was primarily a result of 1999 earnings plus non-cash charges. Positive
cash flows were partially offset by a net increase in working capital to
support increased sales activity. Cash provided by operating activities
totaled $16.2 million for the period July 10, 1998 through December 31, 1998
and cash used for operating activities totaled $13.6 million for the period
January 1, 1998 through July 9, 1998.

         Capital expenditures were $2.9 million, $12.5 million and $5.4
million in 2000, 1999 and 1998, respectively. The capital expenditures related
primarily to plant expansions at the company's facilities, new production
machinery, and updating the company's business software. Generac expects to
spend approximately $2.5 million in 2001 for various capital projects,
including cost improvement and quality enhancement initiatives and updating
management information systems. Generac spent approximately $2.6 million, $2.7
million and $1.9 million in 2000, 1999 and 1998, respectively, on research and
development.

         The company expects its principal sources of liquidity to be from its
operating activities and funding from the revolving portion of the credit
facility. Based upon the current level of operations and anticipated growth,
Generac believes that future cash flow from operations, together with
available borrowings under the credit facility will be adequate to meet
Generac's anticipated requirements for capital expenditures, working capital,
interest payments and scheduled principal payments for at least the next 12
months.

INITIAL PUBLIC OFFERING COSTS

         During 1999, Generac incurred approximately $1.2 million of expenses
in conjunction with its efforts to complete an initial public offering of its
common stock. Generac withdrew its offering during July 1999 as it did not
believe that the price at which the stock could be sold adequately represented
the value of the company at that time. Consequently, these costs were expensed
during the year ended December 31, 1999.

RAW MATERIAL COSTS AND INFLATION

         The rate of inflation over recent years has been relatively low and
has not had a significant effect on Generac's results of operations.
Approximately 47% of Generac's cost of goods sold relate to small gasoline
engines which in total have not been subject to material price fluctuations.
Generac purchases steel, copper, paperboard, and plastics from various
suppliers. While all such materials are available from numerous independent
suppliers, commodity raw materials are subject to price fluctuations.

                                      20

<PAGE>   21

EURO CONVERSION

         On January 1, 1999, member countries of the European Monetary Union
(EMU) began a three-year transition from their national currencies to a new
common currency, the "Euro". In the first phase, the permanent rates of
exchange between the members' national currency and the Euro were established
and monetary, capital, foreign exchange, and interbank markets were converted
to the Euro. National currencies will continue to exist as legal tender and
may continue to be used in commercial transactions. By January 2002, Euro
currency will be issued and by July 2002, the respective national currencies
will be withdrawn. Generac has operations in member countries of the EMU and,
accordingly, has established action plans that are continuing to be
implemented to address the Euro's impact on information systems, currency
exchange rate risk, taxation, contracts, competition and pricing. Based on its
current assessment, management believes that the costs of the Euro conversion
will not have a material impact on Generac's operations, cash flows or
financial condition.

FUTURE ACCOUNTING CHANGES

         In June 1998, the Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities". This
statement requires all derivative instruments to be recorded in the
consolidated balance sheets at their fair value. Changes in fair value of
derivatives are required to be recorded each period in current earnings or
other comprehensive income (loss), depending on whether the derivative is
designated as part of a hedge transaction and if it is, the type of hedge
transaction. In June 1999, the statement's effective date was delayed by one
year, and it will be effective January 1, 2001 for Generac. Given the
company's current derivative and hedging activities, the effect of adoption
will not have a material effect on the company's results of operations or
financial position.

         In January 2001, the Emerging Issues Task Force ("EITF") reached a
consensus on a subset of EITF No. 00-22, "Accounting for "Points" and Certain
Other Time- or Volume-Based Sales Incentive Offers, and Offers for Free
Products or Services to be Delivered in the Future." This issue requires
recognition of the liability associated with time- or volume-based incentives
as earned by the customer and classification of these incentives as a
reduction of net revenue. EITF 00-22 is effective for the Company in the first
quarter of 2001. The Company classifies these incentives as selling and
service expense and is currently evaluating the impact of implementing EITF
00-22.

SUBSEQUENT EVENTS

         On March 21, 2001, Generac Portable Products, Inc. entered into an
Agreement and Plan of Merger (the "Merger Agreement") with Briggs & Stratton
Corporation ("Briggs"), GPP Merger Corporation, a wholly owned direct
subsidiary of Briggs, and The Beacon Group III - Focus Value Fund, L.P., the
majority shareholder of Generac ("Beacon"), providing for the merger of GPP
Merger Corporation into Generac, with Generac as the surviving corporation.
The closing of the Merger is expected to occur on (a) the later of April 30,
2001 or (b) the second business day after satisfaction of the conditions of
the Merger.

                                      21

<PAGE>   22

         Pursuant to the terms of the Merger Agreement, the existing
shareholders of Generac and the holders of warrants to purchase Generac stock
(collectively, the "Shareholders") will receive (a) $55 million, adjusted
downward for purchase price adjustments related to the failure, if any, to
meet certain targets for shareholders' equity and working capital minus the
transaction costs of Generac and the Shareholders (the "Base Price"), plus (b)
an amount (the "Earnout") equal to (A) 40% of the amount by which Generac's
consolidated earnings before interest, taxes, depreciation and amortization,
excluding unusual gains and losses, for the 12-month period ending June 30,
2002, multiplied by 6, exceeds the sum of the Base Price plus the transaction
costs of Generac and the Shareholders plus the aggregate amount of
indebtedness of Generac on a consolidated basis as of the closing of the
Merger, minus (B) the amount, if any, payable to holders of options for
Generac stock, which options will be cancelled in connection with the Merger.
In no event, however, will the sum of the Base Price plus the transaction
costs of Generac and the Shareholders plus the aggregate amount of
indebtedness of Generac on a consolidated basis as of the closing of the
Merger plus the Earnout plus the option payments exceed $350 million.

         It is expected that the Merger will constitute a "change of control"
under the Indenture dated as of July 1, 1998 (the "Indenture") between Generac
Portable Products, LLC ("LLC") and GPPW Inc. ("GPPW" and together with LLC,
the "Offerors") and HSBC Bank USA (formerly Marine Midland Bank), as trustee,
with respect to the 11-1/4% Senior Subordinated Notes due 2006 (the "Notes")
of the Offerors. The Offerors are wholly owned subsidiaries of Generac. As a
consequence of the "change of control", the Offerors will be obligated within
30 days after the Merger is consummated to make an offer to purchase all or a
portion of the Notes at a purchase price equal to 101% of the principal amount
of the Notes plus accrued and unpaid interest to the date of payment.

         In addition, it is expected that consummation of the Merger will
constitute an event of default under Generac's existing credit facility under
the Credit Agreement dated as of July 9, 1998 among LLC, GPPW, Bankers Trust
Company, as administrative agent, and the various banks and financial
institutions parties thereto (as amended, the "Credit Agreement"). If LLC is
unable to obtain a waiver of such event of default, LLC's lenders under the
Credit Agreement may cause the loans thereunder to become immediately due and
payable. In addition, it is also expected that consummation of the Merger will
constitute an event of default under LLC's zero coupon notes due July 1, 2006
under the Unit Purchase Agreement, dated as of November 20, 2000, among
Generac, LLC and Beacon. If LLC is unable to obtain a waiver of such event of
default, Beacon may cause such zero coupon notes to become immediately due and
payable. In the event LLC defaults on the Credit Agreement or the zero coupon
notes and the lenders or Beacon, as the case may be, cause the loans or zero
coupon notes to become immediately due and payable, there can be no assurance
that LLC will be able to make its respective payments thereunder or that LLC
will be able to pay the Notes upon the occurrence of an event of default
following the acceleration of amounts owing under the Credit Agreement or the
zero coupon notes.

         LLC expects that an event of default will occur under the Credit
Agreement on March 31, 2001 arising from a failure by Generac to comply with
one or more financial covenants set forth in the Credit Agreement. LLC intends
to seek a waiver of such event of default from the lenders party to the Credit
Agreement. If such event of default occurs and LLC is unable to obtain a

                                      22

<PAGE>   23


waiver of such event of default, the lenders under the Credit Agreement may
cause the loans thereunder to become immediately due and payable, which would
constitute an event of default under the zero coupon notes and the Notes.
There can be no assurance that LLC would be able to make payments under the
Credit Agreement, the zero coupon notes and the Notes in such circumstances.

         On March 27, 2001, Generac Portable Products, LLC and GPPW, Inc.
commenced a cash tender offer and consent solicitation (the "Offer") for all
of the Notes, upon the terms and subject to the conditions set forth in the
Offer, for $1,010 for each $1,000 principal amount of Notes validly tendered
pursuant to the Offer. In addition, tendering holders of the Notes will
receive accrued and unpaid interest on their Notes accepted for purchase to,
but not including, the payment date. The Offer will expire at on April 27,
2001, unless extended. In conjunction with the Offer, the company is
soliciting consents of the registered holders of Notes to the adoption of
certain proposed amendments to the Indenture relating to the Notes. The
proposed amendments will be effective when the Offer is consummated as to all
Notes that are not purchased in the Offer, provided all other conditions to
the Offer have otherwise been satisfied. The Offer is being made in connection
with the Merger Agreement entered into on March 21, 2001 and is conditioned
upon, among other things, the completion of the merger and the receipt of the
consents necessary to adopt the proposed amendments as well as certain other
conditions.


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Generac is exposed to market risk from changes in interest rates and,
to a lesser extent, foreign exchange rates and commodities. To reduce such
risks, Generac selectively uses financial instruments. All hedging
transactions are authorized and executed pursuant to clearly defined policies
and procedures, which strictly prohibit the use of financial instruments for
trading purposes. A discussion of the company's accounting policies for
derivative financial instruments is included in the summary of Significant
Accounting Policies in Note 2 to the Consolidated Financial Statements
included elsewhere in this report.

         The fair value of the Notes is estimated at $28.1 million as of
December 31, 2000 based upon market quotations as of that date. Generac
estimates that this fair value would increase by approximately $3.9 million
based upon an assumed 10% decrease in market interest rates and that the fair
value would decrease by approximately $3.1 million based upon an assumed 10%
increase in market interest rates, compared with the average, effective yield
at December 31, 2000.

         Generac uses interest rate swaps to modify the company's exposure to
interest rate movements. Net interest payments or receipts from interest rate
swaps are recorded as adjustments to interest expense in the consolidated
statement of operations on a current basis. The company's earnings exposure
related to adverse movements in interest rates is primarily derived from
outstanding floating rate debt instruments that are indexed to Eurodollar
money rates. A 10% increase/decrease in the average interest rate of 10.0% at
December 31, 2000 on the company's debt under its bank credit facility would
result in an increase/decrease in annual pre-tax interest expense of
approximately $513,000 after giving effect to an outstanding interest rate

                                      23

<PAGE>   24


swap. A 10% increase/decrease in Eurodollar rates would increase/decrease the
fair value of the interest rate swap by approximately $425,000 as compared to
its fair value at December 31, 2000.

         Generac has manufacturing, sales and distribution facilities
throughout Europe and sources raw materials from around the world.
Accordingly, Generac Portable Products makes investments and enters into
transactions denominated in various foreign currencies. Generac is primarily
exposed to fluctuations in various European currencies. Due to the relative
stability of these currencies, management has not deemed it necessary to
currently pursue a foreign currency hedging strategy. Management does not
believe the company's foreign currency exposure is material.

         The company's exposure to commodity price changes relates to certain
manufacturing operations that utilize raw commodities. Generac manages its
exposure to changes in those prices primarily through its procurement and
sales practices. This exposure is not material to Generac.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The company's financial statements are included in this report as
indicated in the Index to Financial Statements and Financial Statement
Schedules on page 38 and incorporated herein by reference.


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         None.

                                      24

<PAGE>   25


                                   PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS

         The following table sets forth the name, age and position of each of
the directors and executive officers of Generac.

<TABLE>
<CAPTION>
NAME                                        AGE                        POSITION
----                                        ---                        --------
<S>                                        <C>      <C>
Dorrance J. Noonan, Jr                      48       President, Chief Executive Officer and Director  of
                                                     Generac Portable Products, LLC; Director and Vice
                                                     President of Generac Portable Products, Inc.; Vice President of GPPW, Inc .
Gary J. Lato                                41       Chief Financial Officer and Secretary of Generac
                                                     Portable Products, LLC;
                                                     Secretary and Vice President of Generac Portable Products, Inc.; Vice President
                                                     of GPPW, Inc.
James H. Deneffe                            57       Senior Vice President - Sales, Generac Portable Products, LLC
Wesley C Sodemann                           57       Vice President of Engineering, Generac Portable Products, LLC
J. David Bramhill                           45       Vice President of Operations, Generac Portable Products, LLC
Robert M. Saeger                            55       Vice President of Service and Planning, Generac Portable Products, LLC
Timothy J. Lemont                           47       Vice President of Marketing, Generac Portable Products, LLC
Rosemary A. Wallner                         44       Vice President of Human Resources of Generac Portable Products Portable
                                                     Products, LLC
Faith Rosenfeld                             49       President of GPPW, Inc.
Eric R. Wilkinson(1)                        45       President and Director of Generac Portable Products, Inc.
Richard A. Aube                             32       Secretary, Treasurer and Director of GPPW, Inc.;
                                                     Treasurer of Generac Portable Products, Inc.;
                                                     Director of Generac Portable Products, LLC
R. Eugene Cartledge(1)(2)                   71       Chairman of the Board of Generac Portable Products, Inc.
Thomas A. Commes(2)                         58       Director of Generac Portable Products, Inc.
Thomas G. Mendell                           54       Director of Generac Portable Products, Inc.
R. Ralph Parks(1)                           57       Director of Generac Portable Products, Inc.
James P. Schadt(2)                          62       Director of Generac Portable Products, Inc.
</TABLE>

-------------------------

(1) MEMBER OF THE COMPENSATION COMMITTEE

(2) MEMBER OF THE AUDIT COMMITTEE

                                      25

<PAGE>   26


         DORRANCE J. NOONAN, JR., President, Chief Executive Officer and
Director of Generac Portable Products, LLC and Director of Generac Portable
Products, Inc. since July 1998 and Vice President of Generac Portable Products,
Inc. and GPPW, Inc. since September 1999, served in various management positions
with GPSI from 1990 to 1998, most recently as Chief Operating Officer from 1997
to 1998. Prior to joining GPSI, Mr. Noonan was Manager of Sales and Marketing at
Artcraft Industries from 1988 to 1990, a registered securities broker at
Prudential-Bache Securities from 1985 to 1988, and Manager of International
Sales and Marketing at the Perfex Division of McQuay-Perfex from 1981 to 1985.

         GARY J. LATO, Chief Financial Officer and Secretary of Generac
Portable Products, LLC since July 1998 Vice President of Generac Portable
Products, Inc. and GPPW, Inc. since September 1999 and Secretary of Generac
Portable Products, Inc. since June 2000, joined GPSI in 1991, serving as
Director of Finance in 1991 and as Vice President -- Finance from 1992 to 1998.
Prior to joining GPSI, Mr. Lato held various positions, including most recently
as Senior Audit Manager, at Price Waterhouse LLP from 1981 to 1991.

         JAMES H. DENEFFE, Senior Vice President -- Sales of Generac Portable
Products, LLC since July 1998, held that position at GPSI from 1996 to 1998.
Mr. Deneffe joined GPSI in 1978, serving as Vice President -- Consumer
Products Sales and Marketing from 1982 to 1995 and as Group Sales Manager from
1978 to 1981.

         WESLEY C. SODEMANN,  Vice President of Engineering of Generac
Portable  Products,  LLC since July 1998, held that position at GPSI from 1996
to 1998.  Mr.  Sodemann also served as Chief  Engineer of GPSI from 1979 to
1996 and as Associate  Engineer from 1965 to 1979.

         J. DAVID BRAMHILL, Vice President of Operations of Generac Portable
Products, LLC since December 2000. Mr. Bramhill served as Vice President of
International Operations since July 1998, held that position at GPSI from 1997
to 1998 and served as European Operations Manager for GPSI from 1992 to 1996.
Prior to joining GPSI, Mr. Bramhill served in various management and
engineering positions at Heulins Manufacturing, Crewe, Cheshire, England (1991
to 1992) and Rolls-Royce Motor Car Company, Ltd. and Rolls-Royce Aerospace,
Crewe, Cheshire, England (1972 to 1991).

         ROBERT M. SAEGER, Vice President of Service and Planning of Generac
Portable Products, LLC, has held that position since July 1998. From 1997 to
1998, Mr. Saeger served as Director of Accounting/Controller with GPSI and
also served as Director of Accounting and Financial Control from 1990 to 1996,
as Accounting Manager from 1983 to 1990 and as Assistant Controller from 1976
to 1983.

         TIMOTHY J. LEMONT, Vice President of Marketing of Generac Portable
Products, LLC, joined Generac in March 1999. Prior to this he was with
Harnischfeger Industries, Inc. from 1985 to 1999, most recently as Vice
President of Business Development for the P&H Mining Equipment Division. In
addition, Mr. Lemont has held various positions, including most recently as
Senior Tax Manager, at Price Waterhouse LLP in Milwaukee, Wisconsin from 1980
through 1985.

         ROSEMARY A. WALLNER, Vice President of Human Resources of Generac
Portable Products, LLC, joined Generac in July 1999. Prior to this she served
as Vice President of Human Resources with RVSI Systemation Engineered Products
from 1998 to 1999. In addition,

                                      26

<PAGE>   27

Ms. Wallner served as Vice President of Human Resources for GB Electrical, a
wholly-owned subsidiary of Applied Power, Inc., from 1989 to 1997, with a one
year assignment as Director of Manufacturing.

         FAITH  ROSENFELD,  President  of GPPW,  Inc.  since  July 1998,  has
been a Managing  Director  of The Beacon  Group,  LLC (an affiliate of The
Beacon Group III -- Focus Value Fund, L.P.) since its inception in 1993.
Prior to joining The Beacon Group,  LLC, Ms. Rosenfeld  was  employed  by
Goldman,  Sachs & Co. for 14 years where she held  various  positions,
including,  most  recently,  Vice President, Investment Banking Division. Ms.
Rosenfeld is a director of SBL, Inc. and Savia International, Ltd.

         ERIC R. WILKINSON,  President and Director of Generac Portable
Products,  Inc. since July 1998, has been a Managing  Director of The Beacon
Group, LLC since 1994.  Prior to joining The Beacon Group,  LLC, Mr. Wilkinson
was a partner of Apax Partners & Cie SA, a European private equity firm, from
1989 to 1994 and a partner of Bain & Company, the  strategy-consulting  firm,
from 1983 to 1989. Mr. Wilkinson is a director of Doctors Health Systems,
Etinuum Inc.,  EyeWeb,  Inc., The Identity  Group,  OnCare Inc.,  National
Century Financial Enterprises, Inc. and International Components Corporation.

         RICHARD A. AUBE,  Treasurer of Generac Portable  Products,  Inc.,
Director of Generac Portable  Products,  LLC and Secretary, Treasurer  and
Director of GPPW,  Inc.  since July 1998,  has been with The Beacon Group,
LLC since 1993,  most recently as a Managing Director.  Prior to joining The
Beacon Group,  LLC, Mr. Aube was a financial analyst in the Natural Resources
Group of Morgan Stanley & Co. Incorporated. Mr. Aube is a director of Capstone
Turbine Corporation.

         R. EUGENE CARTLEDGE,  Chairman of the Board of Generac Portable
Products,  Inc. since July 1998, was Chairman of the Board and Chief Executive
Officer of Union Camp Corp. from 1986 until his retirement in June 1994. Mr.
Cartledge is a director of Blount,  Inc., Chase Brass Industries, Inc., Delta
Airlines Incorporated, Sunoco, Inc., Union Camp Corp. and UCAR International
Inc.

         THOMAS A. COMMES, Director of Generac Portable Products,  Inc. since
March 1999, served as President,  Chief Operating Officer and director of The
Sherwin-Williams  Company from 1986 until his retirement in 1999. Mr. Commes
is also a director of KeyCorp, and is a trustee of The Cleveland Clinic
Foundation and Vocational Guidance Services.

         THOMAS G. MENDELL,  Director of Generac Portable  Products,  Inc.
since July 1998, has been a Managing  Director of The Beacon Group, LLC since
1994. Prior to joining The Beacon Group,  LLC, Mr. Mendell was a partner of
Goldman,  Sachs & Co. where he served as a member of the firm's  Investment
Committee  and head of GS Capital.  Mr.  Mendell is a director  of Doctors
Health  Systems,  Wallace Theaters, Inc., Coherent Networks, Inc., The
Identity Group and OnCare Inc.

         R. RALPH PARKS,  Director of Generac  Portable  Products,  Inc.
since July 1998,  has been a Managing  Director of The Beacon Group,  LLC ,
since 1999.  Mr. Parks was  previously a

                                      27

<PAGE>   28

limited  partner of the The Beacon  Group,  LP (an affiliate of The Beacon
Group III -- Focus Value Fund, L.P.) since 1997.  Prior to joining The Beacon
Group, LP, Mr. Parks was a partner of Goldman,  Sachs & Co. and head of its
Investment Banking Services for Europe and Canada.

         JAMES P.  SCHADT,  Director of Generac  Portable  Products,  Inc.
since July 1999,  had been active  with the  management  of Reader's  Digest
Association,  Inc.  from 1991 until his  retirement  in 1997,  serving as
director  and as the  President  and Chief Operating  Officer and,  later,  as
the Chairman and Chief  Executive  Officer.  Mr. Schadt is currently the
Chairman of Dailey Capital Management,  L.P., and he is a trustee and Chairman
of the Weinberg College of Arts and Sciences Board of Advisors.  Mr. Schadt is
also a trustee of the American Enterprise Institute and a director of TSI
International Inc.

         Directors of each of Generac Portable  Products,  LLC, GPPW, Inc. and
Generac Portable  Products,  Inc. will hold office until his or her successor
has been elected and  qualified.  Officers of each of Generac  Portable
Products,  LLC,  GPPW,  Inc. and Generac Portable Products, Inc. are elected
by their respective boards of directors and serve at the discretion of such
boards of directors.

                                      28

<PAGE>   29

ITEM 11.  EXECUTIVE COMPENSATION

         The following table sets forth information regarding the compensation
paid during the company's last three completed fiscal years to the Chief
Executive Officer and each of the other four most highly compensated executive
officers of Generac as of December 31, 2000.

                          SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                   ANNUAL COMPENSATION             (1)
NAME AND                                           -------------------          ALL OTHER
PRINCIPAL POSITION                      YEAR   SALARY ($)        BONUS($)    COMPENSATION ($)
------------------                      ----   ----------        --------    ----------------
<S>                                     <C>    <C>               <C>         <C>
Dorrance J. Noonan, Jr.
      Chief Executive Officer           2000    200,000           156,000               9,912
                                        1999    160,000            23,169              13,132
                                        1998    136,500            26,340               5,287

Gary J. Lato
      Chief Financial Officer           2000    175,000           131,250               4,730
                                        1999    150,000            22,336               6,977
                                        1998    131,250            25,500               3,127

James H. Deneffe
      Senior Vice President
      Sales and Marketing               2000    175,000           131,250              18,287
                                        1999    150,000            22,336              20,072
                                        1998    131,250            25,500              11,737

Wesley C. Sodemann
      Vice President of Engineering     2000    140,000            64,625              20,925
                                        1999    110,000            18,963              17,896
                                        1998    101,923            24,000              56,258

Timothy J. Lemont
      Vice President of Marketing       2000    140,000            73,438               9,174
                                        1999     91,346                 -               3,313
</TABLE>

(1)  All other compensation includes the value of deferred compensation
     agreements maintained with the officers of Generac Portable Products,
     LLC.

                                      29

<PAGE>   30

                      OPTION GRANTS IN LAST FISCAL YEAR

         There were no options granted during fiscal 2000 to the executive
officers named in the Summary Compensation Table. Furthermore, there were no
options granted to board members and certain key employees during 2000.

               AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                      AND FISCAL YEAR-END OPTION VALUES

         The following table sets forth information with respect to the
executive officers named in the Summary Compensation Table concerning the
options granted during fiscal 1999 and 1998 and outstanding at fiscal year-end
2000. To date, no such options have been exercised.

<TABLE>
<CAPTION>
                                                               NUMBER OF SECURITIES                  VALUE OF UNEXERCISED
                                                              UNDERLYING UNEXERCISED                 IN-THE-MONEY OPTIONS
                             SHARES                             OPTIONS AT FY-END                       AT FY-END (1)
                          ACQUIRED ON       VALUE       ---------------------------------    ------------------------------------
NAME                      EXERCISE (#)   REALIZED ($)    EXERCISABLE       UNEXERCISABLE       EXERCISABLE       UNEXERCISABLE
-------------             ------------   ------------   --------------  -----------------    ---------------   ------------------
<S>                       <C>            <C>            <C>             <C>                  <C>               <C>
Dorrance J. Noonan, Jr.             -              -          101.190            151.786              $ -                   $ -
Gary J. Lato                        -              -           80.952            121.429                -                     -
James H. Deneffe                    -              -           40.476             60.714                -                     -
Wesley C. Sodemann                  -              -           40.476             60.714                -                     -
Timothy J. Lemont                   -              -           40.476             60.714                -                     -
</TABLE>

(1) Assumes the fair market value of the shares underlying the options is
$6,221.72 as compared to the exercise prices (ranging from $12,941 to $16,349
per share) payable for such shares. The fair market value at fiscal year-end
2000 of $6,221.72 is approximately the price per share at which the company
was valued in conjunction with the sale of the company's stock to Briggs and
Stratton Corporation subsequent to December 31, 2000. See also discussion at
"Subsequent Event" in Part II, Item 7 of this report.


DIRECTOR'S COMPENSATION

         Directors of Generac do not receive director's fees or attendance
fees. Directors are reimbursed for their reasonable expenses incurred in
connection with attending meetings and performing their duties as directors.
Outside directors are eligible to receive options to purchase Generac Portable
Products, Inc. common stock pursuant to the the company's stock option plan.
See "-- Stock Option Plan." Options to purchase 202.380 shares of Generac
Portable Products, Inc. common stock were granted to certain directors during
1998. Options to purchase 101.190 shares of common stock were granted to
certain directors during 1999. A total of 50.595 of options to purchase shares
of Generac Portable Products, Inc. common stock were forfeited by a director
during 1999.

                                      30


<PAGE>   31

BENEFIT PLANS

         Generac has established two non-contributory defined benefit plans
covering substantially all employees: bargaining/hourly and
non-bargaining/salaried groups. Participants begin vesting after three years
of service and fully vest after seven years of service. The benefits paid
under the salaried plan are based upon years of service and the participant's
defined final monthly compensation. Benefits paid under the hourly plan are
based on a unit amount at the date of termination multiplied by the
participants' credited service. The plans provide for a continuation of
participant's years of service credited with GPSI.

         Generac Portable Products has also established 401(k) employee
retirement savings plans for the benefit of its employees. Generac pays all
administrative costs of the plan. The company contribution for the year ended
December 31, 2000 was approximately $132,000. No contributions were made to
the plan for the year ended December 31, 1999 or for the period ended December
31, 1998. Additionally, there are unfunded deferred compensation plans for
certain key employees.

STOCK OPTION PLAN

         In order to attract, retain and motivate selected employees, officers
and directors, and to encourage such persons to devote their best efforts to
the business and financial success of Generac, Generac has adopted the Generac
Portable Products, Inc. Stock Option Plan. Under this Plan, stock options to
acquire up to 1,619 shares of common stock, in the aggregate, may be granted
under a time-vesting formula at an exercise price equal to the fair market
value of the common stock at the date of grant. The options become exercisable
in equal increments beginning on the first anniversary of the grant date over
a three to five-year period and expire ten years subsequent to the grant date.

         Stock option transactions for the years ended December 31, 2000, 1999
and the period from July 9, 1998 through December 31, 1998 are summarized as
follows:

<TABLE>
<CAPTION>
                                                       2000                       1999                     1998
                                             -------------------------  --------------------------  --------------------
<S>                                          <C>                        <C>                         <C>
Options granted                                                     -                         304                 1,164
Exercise price - options granted                                  N/A                    $ 16,349              $ 12,945
Options forfeited                                                 101                          51                     -
Exercise price - options forfeited                           $ 12,945                    $ 12,945                   N/A
Options outstanding                                             1,316                       1,417                 1,164
Exercised options                                                   -                           -                     -
Exercisable options                                               557                         243                     -
Remaining contractual life (years)                                8.4                         9.4                   8.5
Fair value at grant date                                          N/A                     $ 5,469               $ 4,340
</TABLE>



                                       31
<PAGE>   32


         The fair value was estimated using the minimum value method in
accordance with SFAS No. 123, "Accounting for Stock-Based Compensation",
assuming an expected option life of 7 years and a risk-free interest rate of
6%.

         The stock option plan is administered by Generac Portable Products,
Inc.'s board of directors. The board of directors designates which employees
of Generac are eligible to receive awards under the stock option plan, and the
amount, timing and other terms and conditions applicable to such awards. As of
December 31, 2000 approximately 3.6% of the outstanding shares of such stock
were reserved for future grants. Options are exercisable in accordance with
the terms established by the board of directors.

COMPENSATION COMMITTEE INTERLOCK AND INSIDER PARTICIPATION

         The Compensation Committee of the board of directors of Generac
Portable Products, Inc. establishes salary, incentives and other forms of
compensation. During the year ending December 31, 2000, the Compensation
Committee was composed of Messrs. Cartledge and Wilkinson. During the year
ended December 31, 2000, none of the company's executive officers served on
the board of directors or on the compensation committee of any other entity
which has one or more executive officers serving as a member of Generac
Portable Products, Inc.'s board of directors or the Compensation Committee.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         All of the common  stock of GPPW,  Inc.  is held by Generac  Portable
Products,  Inc.  All of the equity  interest in Generac Portable Products, LLC
is held indirectly by Generac Portable  Products,  Inc. through two wholly
owned  subsidiaries:  GPPD, Inc. and GPPW, Inc. GPPD, Inc. holds 95% of the
limited liability company interests in Generac Portable  Products,  LLC and
GPPW, Inc. holds the remaining 5% interest.

         The following table sets forth certain information as of March 1,
2001, with respect to the beneficial ownership of Generac Portable Products,
Inc.'s common stock by (1) each person who beneficially owns more than 5% of
such shares; (2) each of Generac's directors; (3) each of the executive
officers named in the Summary Compensation Table; and (4) all executive
officers and directors of Generac as a group. Unless otherwise indicated, the
address for each of our officers and directors is c/o Generac Portable
Products, Inc., 1 Generac Way, Jefferson, Wisconsin 53549.

         Beneficial ownership is determined in accordance with the rules of
the SEC. In computing the number of shares beneficially owned by a person and
the percentage ownership of that person, shares of common stock subject to
options or warrants held by that person that are currently exercisable or will
become exercisable within 60 days are deemed outstanding, while such shares
are not deemed outstanding for purposes of computing the percentage ownership
of any other person. Unless otherwise indicated in the footnotes below, the
following persons and entities have sole voting and investment power with
respect to all shares beneficially owned, subject to community property laws
where applicable.

                                      32

<PAGE>   33

<TABLE>
<CAPTION>
                                                                                         SHARES
                                                                                   BENEFICIALLY OWNED
                                                                        --------------------------------------
NAME OF BENEFICIAL OWNER                                                      NUMBER                PERCENT
-------------------------------------                                   -------------------       ------------
<S>                                                                     <C>                       <C>
5% HOLDERS:
      The Beacon Group III - Focus Value Fund, L.P. (1)                          5,038.182 (14)         59.3%
      California Public Employees' Retirement System (2)                         1,931.818              22.7%
      Capital d' Amerique CDPQ Inc. (3)                                            571.818               6.7%

DIRECTORS:
      R. Eugene Cartledge (4)                                                       80.094 (5)           *
      Thomas G. Mendell                                                          5,038.182 (6)          59.3%
      R. Ralph Parks                                                                67.460 (7)           *
      Thomas A. Commes                                                              33.730 (5)           *
      Eric R. Wilkinson                                                          5,038.182 (6)          59.3%
      James P. Schadt                                                               16.865 (13)          *

OFFICERS:
      Dorrance J. Noonan, Jr.                                                      178.463 (8)           2.1%
      Gary J. Lato                                                                 158.225 (9)           1.9%
      James H. Deneffe                                                             117.749 (10)          1.4%
      Wesley C. Sodemann                                                            42.408 (10)          *
      Timothy M. Lemont                                                             40.476 (10)          *
      Faith Rosenfeld                                                            5,038.182 (6)          59.3%
      All directors and executive officers as a group
            (15 individuals) (12)                                                  840.525 (11)          9.9%
</TABLE>

----------------

* Less than 1%.

(1) The address of The Beacon Group III -- Focus Value Fund, L.P. is 399 Park
    Avenue, New York, New York 10022.

(2) The address of  California  Public  Employees'  Retirement  System is
    Lincoln Plaza -- 400 P Street,  P.O. Box 942707,  Sacramento, California
    94229.

(3) The address of Capital d'Amerique CDPQ Inc. is 1981, Avenue McGill
    College, 9th Floor, Montreal, Quebec H3A3C7.

(4) 23.182 shares are owned by the Cartledge Family Limited Partnership, of
    which Mr. Cartledge is the general partner.

                                      33

<PAGE>   34

(5) Includes options to purchase 33.730 shares of common stock currently
    exercisable.

(6) Messrs.  Wilkinson  and Mendell and Ms.  Rosenfeld may be deemed to share
    beneficial  ownership of shares of common stock owned of record by The
    Beacon  Group III -- Focus Value Fund,  L.P. by virtue of their status as
    partners of The Beacon  Group,  an affiliate of the  general  partner of
    The Beacon  Group III -- Focus Value Fund,  L.P.  Messrs.  Wilkinson  and
    Mendell and  Ms.Rosenfeld  disclaim beneficial  ownership  of the shares
    of common stock owned by The Beacon  Group III -- Focus Value Fund,  L.P.
    The business  address of Messrs.  Wilkinson and Mendell and Ms. Rosenfeld
    is c/o The Beacon Group III -- Focus Value Fund, L.P., 399 Park Avenue,
    New York, New York 10022.

(7) Includes options to purchase 67.460 shares of common stock currently
    exercisable.

(8) Includes options to purchase 101.190 shares of common stock currently
    exercisable.

(9) Includes options to purchase 80.952 shares of common stock currently
    exercisable.

(10) Includes options to purchase 40.476 shares of common stock currently
     exercisable.

(11) Includes options to purchase 556.548 shares of common stock currently
     exercisable.

(12) Does not include 5,038.182 shares as to which Messrs. Wilkinson and
     Mendell and Ms. Rosenfeld may be deemed to have beneficial ownership by
     virtue of their indirect control of The Beacon Group III -- Focus Value
     Fund, L.P.

(13) Includes options to purchase 16.865 shares of common stock currently
     exercisable.

(14) Includes warrants to purchase 340 shares of common stock currently
     exercisable.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

PRINCIPAL STOCKHOLDERS' AGREEMENT

         The Beacon Group III -- Focus Value Fund, L.P., certain other of
Generac Portable Products, Inc.'s stockholders and Generac Portable Products,
Inc. entered into a stockholders' agreement for the purposes, among others, of
establishing the composition of the board of directors of Generac Portable
Products, Inc. and limiting the manner and terms by which the common stock
owned by the stockholders may be transferred. The provisions of the
stockholders' agreement generally terminate upon the occurrence of a
registered underwritten public offering of common stock having an aggregate
offering price of at least $100 million. The following summary of the material
terms of the stockholders' agreement is not intended to be exhaustive and is
qualified in its entirety by reference to the provisions of the stockholders'
agreement.

                                      34

<PAGE>   35


         ELECTION OF DIRECTORS. Until the occurrence of a public offering as
described above or at the time Beacon ceases to hold 25% or more of the
outstanding shares of common stock, each stockholder has agreed to vote all of
its shares so that:

         - at least four members of the board are designated by Beacon;

         - the chief executive officer of Generac Portable Products, LLC is a
         member of the board;

         - the removal from the board, with or without cause, of any
         Beacon-designated director is only at Beacon's written request; and

         - in the event that any Beacon-designated director for any reason
         ceases to serve as a member of the board during his or her term of
         office, the resulting vacancy is filled by an individual designated
         by Beacon.

         RESTRICTIONS ON TRANSFER OF SHARES. The minority stockholders have
agreed that they will not sell or transfer any interest in any of their shares
except pursuant to a public sale or as otherwise permitted or required in
accordance with the terms of the stockholders' agreement.

         FIRST OFFER RIGHT. If a minority stockholder desires to sell any of
its shares other than to a permitted transferee or pursuant to a public sale,
then Generac Portable Products, Inc. has the right to elect to purchase all,
but not less than all, of the offered shares on substantially the same terms
and conditions as the proposed sale. Generac Portable Products, Inc. may elect
to assign its right to purchase the offered shares to the non-selling
stockholders on a pro rata basis. In the event an assignment by Generac
Portable Products, Inc. is made and any non-selling stockholder fails to elect
to participate in the selling stockholder's sale of shares, the participating
stockholders each have the right to purchase such non-participating
stockholder's pro rata share of the unsubscribed portion of offered shares.

         If Generac Portable Products, Inc. or, in the event an assignment by
Generac Portable Products, Inc. is made, the non-selling stockholders do not
elect to purchase all of the offered shares, the selling stockholder is free
to sell the offered shares to any person other that Generac Portable Products,
Inc. at a price no less than and upon terms and conditions no more favorable
than the price, terms and conditions set forth in the selling stockholder's
notice to Generac Portable Products, Inc. and each other stockholder.

         TAG-ALONG RIGHTS. In the event of a sale of its shares by a minority
stockholder to a third party purchaser, each non-selling minority stockholder
has the right to participate in the proposed sale of shares in an amount up to
such non-selling stockholder's pro rata share of shares, on the same terms and
conditions as the proposed sale.

         If Beacon desires to sell any of its shares other than to a permitted
transferee or pursuant to a public sale, each non-selling stockholder has the
right to participate in the sale by Beacon of its shares, in a percentage of
such non-selling stockholder's shares equal to the same percentage of Beacon's
shares being sold by Beacon, at the same price, on the same terms and
conditions as the proposed sale.

                                      35

<PAGE>   36


         To the extent any of the non-selling stockholders exercises its
tag-along rights, the number of shares proposed to be sold by Beacon or the
selling stockholder, as the case may be, will be correspondingly reduced. If
any non-selling stockholder fails to elect to participate in Beacon's or the
selling stockholder's sale, Beacon or the selling stockholder, as the case may
be, will give notice of such failure to the remaining non-selling stockholders
who did so elect. Each participating stockholder shall have the right to sell
its pro rata share of the unsubscribed portion of shares proposed to be sold.

         LIMITATION ON CERTAIN ACTIONS BY GENERAC PORTABLE  PRODUCTS,  INC.
Without the prior  affirmative vote of the stockholders who hold at least a
majority of the outstanding common stock, Generac Portable Products, Inc. has
agreed not to:

         - adopt or effect any plan of sale, merger, consolidation,
         dissolution, reorganization or recapitalization of Generac Portable
         Products, Inc.;

         - offer for sale or sell all or substantially all of the assets of
         Generac Portable Products, Inc.;

         - amend or restate the certificate of incorporation or the bylaws
         other than in conformity with the stockholders' agreement;

         - redeem any shares of capital stock of Generac Portable  Products,
         Inc. other than pursuant to the  stockholders'  agreement or on a pro
         rata basis among all stockholders; or

         - change the type of business activities in which Generac Portable
         Products, Inc. is engaged.

         SALE OF GENERAC/COME-ALONG RIGHT. Each stockholder has agreed, if the
board and the stockholders holding at least a majority of the outstanding
shares approve a sale of Generac Portable Products, Inc., to vote for such
sale and to take all actions, at Generac Portable Products, Inc.'s expense,
reasonably requested by Generac Portable Products, Inc. in order to consummate
such sale.

         PARTICIPATION/PREEMPTIVE  RIGHTS.  Generac  Portable  Products,  Inc.
has  agreed to grant to each  stockholder  the right to purchase all or any
part of such stockholder's proportionate percentage of any future eligible
offering.

         REGISTRATION  RIGHTS.  Beacon and certain other  stockholders  of
Generac  Portable  Products,  Inc. are  entitled,  under the Stockholders'
Agreement,  to certain rights with respect to the  registration of their
shares of common stock under the Securities Act of 1933  following  an initial
public  offering of Generac  Portable  Products,  Inc.  common  stock.  Beacon
may require that Generac Portable Products,  Inc. use its best efforts to
register its registrable  securities for public resale,  provided that the
anticipated offering  price would exceed $25 million.  Generac  Portable
Products,  Inc.  must bear all the  registration  expenses for two of the
registrations  that Beacon is entitled to. The other holders of  registrable
securities  may require that Generac  Portable

                                      36

<PAGE>   37

Products, Inc. use its best efforts to register their  registrable  securities
for public resale on Form S-3, provided that the expected offering price would
exceed $10  million.  Generac  Portable  Products,  Inc.  must bear all the
registration  expenses for all of the Form S-3 registrations  that are not
underwritten  and for three of the Form S-3  registrations  that are
underwritten.  If  Generac  Portable Products,  Inc.  registers any of its
common stock for its own account,  the holders of registrable  securities are
entitled to include their shares of common stock in the  registration, subject
to the ability of the  underwriters  to limit the number of shares included in
the offering. Generac Portable Products, Inc. must bear all registration
expenses.

EMPLOYEE STOCKHOLDERS' AGREEMENT

         Employees who own stock of Generac Portable Products, Inc. are also
subject to an employee stockholders' agreement. This agreement restricts their
right to transfer their stock except with the written consent of Beacon or
otherwise in compliance with the terms of the agreement. In addition, under
certain conditions, this agreement will require them to sell a pro rata
portion of their stock in a transaction in which Beacon is selling its stock.
This agreement also provides the employees with tag-along rights if Beacon
sells its stock and provides Generac Portable Products, Inc. the right to
purchase stock held by terminated employees or employees that have filed for
personal bankruptcy or have been declared insolvent.

UNIT PURCHASE AGREEMENT

         On November 20, 2000, The Beacon Group III - Focus Value Fund, L.P.
(the "Fund"), Generac's majority stockholder, purchased a unit (the "Unit")
consisting of a newly issued senior zero coupon note with an aggregate
principal amount of $19.5 million, due July 1, 2006 and a warrant to purchase
340 shares of the common stock of Generac in exchange for an aggregate of $15
million in cash. The warrants have an exercise price of $.01 per share and are
exercisable at any time through November 20, 2010. The proceeds from the sale
of the Unit were used by Generac to repay the principal of, and interest on,
revolving indebtedness, and for general corporate purposes. Both the senior
zero coupon notes and the warrants have been recorded in the financial
statements at their estimated fair market values at the issuance date. The
difference between the consideration paid by the Fund ($15 million) and the
combined fair market values of the zero coupon notes and attached warrants
approximated $2.5 million and has been recorded as an increase in additional
paid-in capital.


                                      37

<PAGE>   38

                                   PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)      The following documents are filed, incorporated by reference, as part
         of this report:

     1.  Financial Statements:

         See "Index to Financial Statements and Financial Statement Schedules"
         on page 38, the Reports of Independent Accountants on pages 40 and 65
         and the Consolidated Financial Statements on pages 41 to 63 and pages
         66 to 71.

     2.  Financial Statement Schedules:

         See "Index to Consolidated Financial Statements and Financial
         Statement Schedules" on page 39, the Reports of Independent
         Accountants on pages 40 and 65 and the Financial Statement Schedules
         on pages 64 and 72.

     3.  Exhibits

         See "Index to Exhibits" on pages 76 to 77.

(b)      No Current Reports on Form 8-K were filed during the last quarter of
         the year ended December 31, 2000.

                                      38

<PAGE>   39



                        INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                                         PAGE
<S>                                                                                                    <C>
CONSOLIDATED FINANCIAL STATEMENTS OF GENERAC PORTABLE PRODUCTS, INC.

       Report of Independent Accountants                                                                     40
       Consolidated Balance Sheets as of December 31, 2000 and 1999                                          41
       Consolidated Statements of Income (Loss) for the years ended December 31, 2000, 1999
            and for the period July 10, 1998 through December 31, 1998                                       42
       Consolidated Statement of Changes in Stockholders' Equity for the years ended
            December 31, 2000, 1999 and for the period July 10, 1998 through December 31, 1998               43
       Consolidated Statement of Cash Flows for the years ended December 31, 2000, 1999
            and for the period July 10, 1998 through December 31, 1998                                       44
       Notes to Consolidated Financial Statements                                                       45 - 63
       Schedule I - Generac Portable Products, Inc. Schedule of Combined Valuation Accounts                  64


FINANCIAL STATEMENTS OF PORTABLE PRODUCTS DIVISION, A BUSINESS UNIT OF GENERAC
       CORPORATION

       Independent Auditors' Report                                                                          65
       Statement of Income for the Six Months and Nine Days Ended July 9, 1998                               66
       Statement of Cash Flows for the Six Months and Nine Days Ended July 9, 1998                           67
       Notes to Financial Statements                                                                    68 - 71
       Schedule II - Portable Products Division, A Business Unit of Generac Corporation
            Schedule of Combined Valuation Accounts                                                          72
</TABLE>

                                      39

<PAGE>   40

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
of Generac Portable Products, Inc.

         In our opinion, the consolidated financial statements listed in the
accompanying index under Item 14(a)(1) present fairly, in all material
respects, the financial position of Generac Portable Products, Inc. and its
subsidiaries at December 31, 2000 and 1999, and the results of their
operations and their cash flows for the years ended December 31, 2000 and 1999
and for the period July 10, 1998 through December 31, 1998, in conformity with
accounting principles generally accepted in the United States of America. In
addition, in our opinion, the financial statement schedules listed in the
index under Item 14(a)(2) present fairly, in all material respects, the
information set forth therein when read in conjunction with the related
consolidated financial statements. These financial statements and financial
statement schedules are the responsibility of Generac Portable Products,
Inc.'s management; our responsibility is to express an opinion on these
financial statements and financial statement schedules based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.


         As discussed in Note 7 to the consolidated financial statements, the
Company expects that an event of default will occur under its bank credit
agreement on March 31, 2001 as a result of a failure to comply with one or more
required financial covenants. In addition, as discussed in Note 16 to the
financial statements, the Company has entered into a merger agreement for the
sale of all outstanding shares of the Company's capital stock to Briggs &
Stratton Corporation. Consummation of the pending merger is expected to also
constitute an event of default under its bank credit agreement and zero coupon
notes. If one or more events of default occur and the Company is unable to
obtain a waiver, the lenders under the bank credit agreement may cause all
amounts thereunder to become immediately due and payable, which would also
constitute an event of default under the Company's zero coupon notes and senior
subordinated notes, and could lead to an acceleration of amounts payable under
such notes. In such circumstances, there can be no assurance that the Company
would be able to make the required payments under the bank credit agreement and
its zero coupon and senior subordinated notes, or, if necessary, to obtain
suitable alternative financing.



PRICEWATERHOUSECOOPERS LLP

Milwaukee, Wisconsin
February 26, 2001, except as to Note 16 which is as of March 27, 2001

                                      40

<PAGE>   41

                       GENERAC PORTABLE PRODUCTS, INC.
                         CONSOLIDATED BALANCE SHEETS
                       AS OF DECEMBER 31, 2000 AND 1999
                    (AMOUNTS IN 000'S, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                                            2000               1999
                                                                                         ---------          ---------
<S>                                                                                      <C>                <C>
ASSETS
Current assets:
      Cash and cash equivalents                                                          $    281           $    384
      Accounts receivable (less allowances of $193 and $548, respectively)                 38,762             55,465
      Inventories                                                                          69,908             58,372
      Deferred income taxes                                                                 1,557              1,171
      Prepaid expenses and other current assets                                             4,749                144
                                                                                         ---------          ---------
          Total current assets                                                            115,257            115,536

Property, plant and equipment, net                                                         27,609             28,911
Intangible assets, net                                                                    201,791            206,229
Deferred financing costs, net                                                               6,134              6,608
Other                                                                                          41                205
                                                                                         ---------          ---------
          Total assets                                                                   $350,832           $357,489
                                                                                         =========          =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
      Current portion of long-term debt                                                  $  8,218           $  8,869
      Trade accounts payable                                                               17,635             23,793
      Accrued employee compensation, benefits and payroll withholdings                      1,924              3,263
      Other accrued liabilities                                                            10,900             18,991
                                                                                         ---------          ---------
          Total current liabilities                                                        38,677             54,916

Long-term debt obligations                                                                199,521            180,520
Other long-term obligations                                                                 1,049              1,089
Deferred income taxes                                                                       3,908              5,717
                                                                                         ---------          ---------
          Total liabilities                                                               243,155            242,242

Commitments and contingencies (Note 13)

Common stock warrants                                                                       2,115                  -

Stockholders' equity:
      Common stock, $.01 par value, 12,000 shares authorized; 8,500 shares
          issued and outstanding                                                                1                  1
      Additional paid-in capital                                                          112,481            109,999
      Retained earnings                                                                     6,276             17,741
      Accumulated other comprehensive (loss) income                                        (1,538)              (836)
      Excess of purchase price over book value of net assets acquired
         from entities partially under common control                                     (11,658)           (11,658)
                                                                                         ---------          ---------
          Total stockholders' equity                                                      105,562            115,247
                                                                                         ---------          ---------
          Total liabilities and stockholders' equity                                     $350,832           $357,489
                                                                                         =========          =========
</TABLE>


The accompanying notes are an integral part of the financial statements.

                                      41

<PAGE>   42

                       GENERAC PORTABLE PRODUCTS, INC.
                   CONSOLIDATED STATEMENTS OF INCOME (LOSS)
                             (AMOUNTS IN $000'S)

<TABLE>
<CAPTION>
                                                                                                        FOR THE PERIOD
                                                                   FOR THE YEAR       FOR THE YEAR      JULY 10, 1998
                                                                      ENDED              ENDED             THROUGH
                                                                   DECEMBER 31,       DECEMBER 31,       DECEMBER 31,
                                                                       2000               1999               1998
                                                                 ---------------     ---------------   ---------------
<S>                                                              <C>                 <C>               <C>
Net sales                                                             $ 242,489           $ 398,096         $ 136,862
Cost of sales                                                           192,061             290,885            98,245
                                                                 ---------------     ---------------   ---------------
         Gross profit                                                    50,428             107,211            38,617
Operating expenses:
     Selling and service                                                 32,356              47,251            16,935
     General and administrative                                           7,911              10,118             2,865
     Intangible asset amortization                                        5,440               5,368             2,531
                                                                 ---------------     ---------------   ---------------
         Income from operations                                           4,721              44,474            16,286
Other expense:
     Interest expense                                                    21,333              20,823             9,674
     Deferred financing cost amortization                                 1,213                 909               401
     Expenses from withdrawn common stock offering (Note 15)                  -               1,160                 -
     Other expense (income), net                                           (107)                619              (171)
                                                                 ---------------     ---------------   ---------------
         Income (loss) before income taxes                              (17,718)             20,963             6,382
Provision (benefit) for income taxes                                     (6,253)              7,424             2,180
                                                                 ---------------     ---------------   ---------------
         Net income (loss)                                            $ (11,465)           $ 13,539           $ 4,202
                                                                 ===============     ===============   ===============
</TABLE>

The accompanying notes are an integral part of the financial statements.


                                      42
<PAGE>   43

                       GENERAC PORTABLE PRODUCTS, INC.
          CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
 FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND FOR THE PERIOD JULY 10, 1998
                          THROUGH DECEMBER 31, 1998

                    (AMOUNTS IN 000'S, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                                           Accumulated
                                          Common Stock          Additional                   Other
                                        ---------------------    Paid-in      Retained    Comprehensive
                                        Shares      Amount       Capital      Earnings    Income (Loss)   Other (A)      Total
                                        ------     ----------   ----------    ---------   -------------   ---------    ---------
<S>                                     <C>        <C>          <C>           <C>         <C>             <C>          <C>
Balances, July 9, 1998                   8,500     $        1    $109,999     $      -      $     -        $(11,658)   $ 98,342

Comprehensive income:

  Net income                                 -              -           -        4,202            -               -       4,202

  Translation adjustments                    -              -           -            -          723               -         723
                                        ------     -----------   ---------    ---------     --------       ---------   ---------

Total comprehensive income                   -              -           -        4,202          723               -       4,925
                                        ------     -----------   ---------    ---------     --------       ---------   ---------

Balances, December 31, 1998              8,500     $        1    $109,999     $  4,202      $   723         (11,658)   $103,267
                                        ======     ===========   =========    =========     ========       =========   =========



Balances, December 31, 1998              8,500     $        1    $109,999     $  4,202      $   723         (11,658)   $103,267

Comprehensive income (loss):

  Net income                                 -              -           -       13,539            -               -      13,539

  Translation adjustments                    -              -           -            -       (1,559)              -      (1,559)
                                        ------     -----------   ---------    ---------     --------       ---------   ---------

Total comprehensive income (loss)            -              -           -       13,539       (1,559)              -      11,980

                                        ------     -----------   ---------    ---------     --------       ---------   ---------
Balances, December 31, 1999              8,500     $        1    $109,999     $ 17,741      $  (836)       $(11,658)   $115,247
                                        ======     ===========   =========    =========     ========       =========   =========


Balances, December 31, 1999              8,500     $        1    $109,999     $ 17,741      $  (836)       $(11,658)   $115,247

Capital contribution                         -              -       2,482            -            -               -       2,482

Comprehensive income (loss):

  Net loss                                   -              -           -      (11,465)           -               -     (11,465)

  Translation adjustments                    -              -           -            -         (702)              -        (702)
                                        ------     -----------   ---------    ---------     --------       ---------   ---------

Total comprehensive income (loss)            -              -           -      (11,465)        (702)              -     (12,167)
                                        ------     -----------   ---------    ---------     --------       ---------   ---------
Balances, December 31, 2000              8,500     $        1    $112,481     $  6,276      $(1,538)       $(11,658)   $105,562
                                        ======     ===========   =========    =========     ========       =========   =========
</TABLE>


(A)  Amount represents the excess of the purchase price paid in connection
     with the Acquisition over the book value of net assets acquired not
     recognized as a result of certain continuing shareholder interests.

The accompanying notes are an integral part of the financial statements.

                                      43

<PAGE>   44



                       GENERAC PORTABLE PRODUCTS, INC.
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (AMOUNTS IN $000'S)

<TABLE>
<CAPTION>
                                                                                                                 FOR THE PERIOD
                                                                          FOR THE YEAR       FOR THE YEAR         JULY 10, 1998
                                                                             ENDED               ENDED               THROUGH
                                                                       DECEMBER 31, 2000   DECEMBER 31, 1999    DECEMBER 31, 1998
                                                                       -----------------   -----------------    -----------------
<S>                                                                    <C>                 <C>                  <C>
Operating activities:
      Net income (loss)                                                  $(11,465)              $ 13,539              $  4,202
      Adjustments to reconcile net income (loss) to
      net cash provided by (used in) operating activities
         Depreciation                                                       4,050                  2,881                 1,022
         Amortization                                                       6,653                  6,277                 2,932
         Accretion on senior zero coupon notes                                116                      -                     -
         Deferred income taxes                                             (2,195)                 3,180                 1,366
         Loss on sale of fixed assets                                           -                      5                     -
         Increase (decrease) in cash due to changes in:
                 Accounts receivable                                       16,281                (11,253)                6,696
                 Inventories                                              (11,882)               (12,791)               (3,627)
                 Other assets                                              (5,683)                   582                  (726)
                 Trade accounts payable                                    (5,873)                11,226                (2,106)
                 Accrued liabilities                                       (9,139)                 6,688                 6,454
                                                                         ---------              ---------             ---------
         Net cash provided by (used in) operating activities              (19,137)                20,334                16,213
                                                                         ---------              ---------             ---------

Investing activities:
     Capital expenditures                                                  (2,938)               (12,463)               (3,814)
     Proceeds from sale of fixed assets                                         -                     17                    34
                                                                         ---------              ---------             ---------
         Net cash used for investing activities                            (2,938)               (12,446)               (3,780)
                                                                         ---------              ---------             ---------

Financing activities:
     Net borrowings (payments) under revolving loan facility               16,700                   (600)              (11,008)
     Payments on other long-term debt obligations                          (8,868)                (7,794)                 (434)
     Issuance of zero coupon notes and common stock warrants               15,000                      -                     -
     Payment of deferred financing costs                                     (739)                  (532)                  (77)
                                                                         ---------              ---------             ---------
         Net cash provided by (used for) financing activities              22,093                 (8,926)              (11,519)
                                                                         ---------              ---------             ---------

Effect of exchange rate changes on cash                                      (121)                  (106)                   15
                                                                         ---------              ---------             ---------

Net (decrease) increase in cash and cash equivalents                         (103)                (1,144)                  929

Cash and cash equivalents:
      Beginning of period                                                $    384               $  1,528              $    599
                                                                         ---------              ---------             ---------
      End of period                                                      $    281               $    384              $  1,528
                                                                         =========              =========             =========

Supplemental cash flow information:
     Cash paid for interest                                              $ 21,413               $ 21,708              $  2,260
                                                                         =========              =========             =========
     Cash paid for taxes                                                 $    356               $  4,610              $      -
                                                                         =========              =========             =========
</TABLE>


The accompanying notes are an integral part of the financial statements.

                                      44


<PAGE>   45
                       GENERAC PORTABLE PRODUCTS, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLAR AMOUNTS IN THOUSANDS UNLESS INDICATED)

1.   FORMATION OF GENERAC PORTABLE PRODUCTS AND NATURE OF BUSINESS

     Generac Portable Products, Inc. ("Generac" or the "company"), a Delaware
corporation, was formed on April 29, 1998 by an investor group organized by
The Beacon Group III--Focus Value Fund L.P. for the purpose of acquiring,
through its indirect wholly-owned limited liability company, Generac Portable
Products, LLC, net assets of the Portable Products Division of Generac Power
Systems, Inc. ("GPSI"), formerly known as GPSI. The primary business activity
of Generac consists of its indirect ownership of 100% of the limited liability
company interests in Generac Portable Products, LLC, a Delaware limited
liability company (the "Operating Company"), through two wholly-owned
subsidiaries: GPPW, Inc. a Wisconsin corporation ("GPPW"), and GPPD, Inc., a
Delaware corporation ("GPPD"). GPPW and GPPD hold, respectively, 5% and 95%
limited liability company interests in Generac Portable Products, LLC. Generac
had no operations during the period April 29, 1998 through July 8, 1998; its
only business activity involved the issuance of $110 million of common stock
to finance a portion of the purchase price discussed below.

     On July 9, 1998, Generac caused Generac Portable Products, LLC to
purchase substantially all of the assets, and assume certain of the
liabilities, of the Portable Products Division (the "Predecessor") of GPSI
(the "Acquisition"). The aggregate consideration paid for the net assets of
the Predecessor was approximately $330 million, which included cash acquired
of $0.6 million, direct acquisition costs of $1.4 million and assumed
liabilities of $23.9 million. The purchase price paid for the Predecessor was
adjusted for a post-closing adjustment of $1.0 million based on net working
capital at July 9, 1998, as defined.

     The Acquisition has been accounted for using the purchase method of
accounting and accordingly, the purchase price was allocated to identifiable
assets acquired and liabilities assumed based upon their estimated fair
values, subject to certain limitations (see Note 2), with the excess purchase
price recorded as goodwill. Goodwill of approximately $214 million has been
recorded as a result of the Acquisition. The following table sets forth the
pro forma information for Generac as if the Acquisition had occurred on
January 1, 1998. This information is unaudited and does not purport to
represent actual sales or net income had the Acquisition actually occurred on
January 1, 1998.

<TABLE>
<CAPTION>
                                            PRO FORMA INFORMATION
                                              FOR THE YEAR ENDED
                                              DECEMBER 31, 1998
                                              -----------------
<S>                                         <C>
Net sales                                         $ 276,413
Net income                                            5,835
</TABLE>


                                      45

<PAGE>   46

     In addition to the issuance of common stock by Generac, the purchase
price was financed through the issuance of Senior Subordinated Notes of $110
million and borrowings of $96.6 million under a $115 million bank credit
facility (see Note 7).

     Generac, with domestic operations located in Jefferson, Wisconsin and
branch operations in the United Kingdom, Germany and Spain, is a leading
designer, manufacturer and marketer of engine-powered tools and related
accessories for use in both consumer and commercial applications.

2.       SIGNIFICANT ACCOUNTING POLICIES

         USE OF ESTIMATES: Generac prepares its financial statements in
conformity with generally accepted accounting principles, which require
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities, disclosures of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

         PRINCIPLES  OF  CONSOLIDATION:   Generac's  consolidated  financial
statements  include  the  accounts  of  its  wholly-owned subsidiaries. All
significant intercompany transactions and balances have been eliminated.

         BASIS OF ACCOUNTING: Pursuant to the Financial Accounting Standards
Board's Emerging Issues Task Force Issue No. 88-16, "Basis in Leveraged Buyout
Transactions," Generac has limited its accounting basis resulting from the
Acquisition as a result of certain shareholders which also held an interest in
the Predecessor through ownership interests in GPSI. Such limitation was based
upon the lesser of each continuing shareholder's interest in Generac or the
Predecessor, and the Predecessor's historical book value at July 9, 1998. The
difference between the continuing shareholders' basis in the Predecessor and
their proportionate equity in the book value of the Predecessor was not
material. The difference between the total consideration paid in connection
with the Acquisition and the accounting basis recognized is reported as a
separate component of stockholders' equity.

         CASH AND CASH  EQUIVALENTS:  Generac  considers  all  investments
with a  maturity  of  three  months  or less at the date of purchase to be
cash equivalents.

         INVENTORIES:  Inventories  are  stated at the lower of cost
(first-in,  first-out  method)  or  market  (replacement  cost or estimated
net realizable value).

         RESEARCH AND DEVELOPMENT COSTS: Generac has an ongoing program of new
product development and existing product enhancement through redesign of
existing products and the addition of new models. Costs related to these
programs are expensed as incurred and totaled $2,553, $2,682 and $1,011 for
the years ended December 31, 2000 and 1999 and for the period ended December
31, 1998, respectively. Costs related to manufacturing start-up activities for
new products are included in cost of sales as incurred.

                                      46

<PAGE>   47


         PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment is
recorded at cost and includes equipment under leases which have been
capitalized. Maintenance and repair costs are charged to expense as incurred.
Gains and losses on disposition of property, plant and equipment are reflected
in income. Depreciation of property, plant and equipment are recorded using
principally the straight-line method for financial reporting purposes over the
estimated useful lives of the assets or terms of related leases as follows:

<TABLE>
<S>                                      <C>
Land improvements                             20
Buildings                                     40
Machinery and equipment                     7-10
Dies and tools                               3-5
Office equipment                            5-10
Vehicles                                     3-5
</TABLE>

         CAPITALIZED SOFTWARE: Generac capitalizes purchased software as well
as internally developed software. Internal software development costs are
capitalized from the time the internal use software is considered probable of
completion until the software is ready for use. Business analysis, system
evaluation, selection and software maintenance costs are expensed as incurred.
Capitalized software costs are amortized using the straight-line method over
the estimated useful life of the software. Capitalized software costs are
recorded as office equipment for financial statement purposes.

         INTANGIBLE ASSETS: Goodwill, representing the recognized portion of
the cost of the Acquisition in excess of the fair values assigned to
identifiable net assets acquired, is being amortized on a straight-line basis
over 40 years. The non-compete agreement and patents and trademarks are being
amortized on a straight-line basis over 10 years. Generac assesses the
carrying value of goodwill and other intangibles at each balance sheet date.
Consistent with Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of", such assessments include, as appropriate, a comparison of
(a) the estimated future nondiscounted cash flows anticipated to be generated
during the remaining amortization period to (b) the net carrying value of the
asset. Impairment assessments of goodwill made in accordance with SFAS No. 121
are made in connection with an analysis of related long-lived assets acquired
in the Acquisition when events or changes in circumstances indicate the
carrying amount of either asset may not be recoverable. Generac recognizes
impairment losses resulting from diminution in value, if any, on a current
basis based upon estimated fair value of the related assets.

         DEFERRED FINANCING COSTS: Expenses associated with the issuance of
debt instruments are capitalized and are being amortized over the terms of the
respective financing arrangement using the effective interest rate and
straight-line methods over periods ranging from 5 to 8 years.

                                      47

<PAGE>   48

         INTEREST RATE SWAPS: To limit the effect of increases in interest
rates, Generac has entered into an interest rate swap arrangement. The
differential between the contract floating and fixed rates is accrued each
period and recorded as an adjustment of interest expense.

         PRODUCT WARRANTIES: Generac provides that warranted products are
merchantable and free of defects in workmanship and material generally for a
period of one year. Warranty reserves are provided as charges to operations
under selling and service expense for estimated normal warranty costs and, if
applicable, for any significant problems known to exist on products sold.
Warranty expense totaled $3,950, $5,793 and $1,989 for the years ended
December 31, 2000 and 1999 and for the period ended December 31, 1998,
respectively.

         INCOME TAXES: Deferred income tax assets and liabilities are
determined based upon the difference between the financial statement and tax
bases of assets and liabilities, as measured by enacted tax rates which will
be in effect when these differences are expected to reverse. Deferred income
tax expense is the result of changes in the deferred tax assets and
liabilities. A valuation allowance is provided when it is considered more
likely than not that some portion or all of recorded deferred income tax
assets will not be realized.

         FAIR VALUE OF FINANCIAL INSTRUMENTS: The carrying amounts reported in
the consolidated balance sheets for cash and cash equivalents, accounts
receivable, accounts payable, and short-term borrowings approximate fair value
due to the short-term maturity of these financial instruments. The amounts
reported for borrowings under the bank credit facility approximate fair value
since the underlying instruments bear interest at a variable rate that
reprices frequently. The fair value of Generac's Senior Subordinated Notes at
December 31, 2000 and 1999 is based upon market quotations as of such date.
The fair value of the interest rate swap arrangement is the amount at which it
could be settled, based on a quote obtained from the respective financial
institution (see Note 7).

         REVENUE RECOGNITION: Revenue is recognized by the company when all of
the following criteria are met: persuasive evidence of an arrangement exists;
delivery has occurred and ownership has transferred to the customer; the price
to the customer is fixed or determinable; and collectability is reasonably
assured. These criteria are satisfied, and accordingly, revenue is recognized,
upon shipment by the company. Provisions for estimated product returns and
sales incentives are recorded in the period in which the sales are recognized.
In December 1999, the Securities and Exchange Commission ("SEC") released
Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in
Financial Statements." SAB 101 was effective for the Company in the fourth
quarter of 2000 and did not have a material effect on the company's financial
statements.

         SHIPPING AND HANDLING FEES AND COSTS: During the fourth quarter of
2000, the company adopted the provisions of the Emerging Issues Task Force
("EITF") Issue No. 00-10, "Accounting for Shipping and Handling Fees and
Costs." In accordance with EITF 00-10, revenue from shipping and handling
costs is reflected in net sales. The costs associated with shipping and
handling of product for the years ended December 31, 2000 and 1999 and for the
period ended December 31, 1998 were $4,219, $8,021, and $3,128, respectively,
and are reflected in selling and service expense.

                                      48

<PAGE>   49

         FOREIGN CURRENCY TRANSLATION: The translation of the assets and
liabilities of Generac's international branch operations into U.S. dollars is
performed for balance sheet accounts using current exchange rates in effect at
the balance sheet date and for revenue and expense accounts using an average
exchange rate during the period. The gains or (losses) resulting from such
translation are reflected as translation adjustments in accumulated other
comprehensive income (loss).

         FUTURE ACCOUNTING CHANGES: In June 1998, the Financial Accounting
Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities". This statement requires all derivative instruments to
be recorded in the consolidated balance sheets at their fair value. Changes in
fair value of derivatives are required to be recorded each period in current
earnings or other comprehensive income (loss), depending on whether the
derivative is designated as part of a hedge transaction and if it is, the type
of hedge transaction. In June 1999, the statement's effective date was delayed
by one year, and it will be effective January 1, 2001 for Generac. Given the
company's current derivative and hedging activities, the effect of adoption
will not have a material effect on the company's results of operations or
financial position.

         In January 2001, the Emerging Issues Task Force ("EITF") reached a
consensus on a subset of EITF No. 00-22, "Accounting for "Points" and Certain
Other Time- or Volume-Based Sales Incentive Offers, and Offers for Free
Products or Services to be Delivered in the Future." This issue requires
recognition of the liability associated with time- or volume-based incentives
as earned by the customer and classification of these incentives as a
reduction of net revenue. EITF 00-22 is effective for the Company in the first
quarter of 2001. The Company classifies these incentives as selling and
service expense and is currently evaluating the impact of implementing EITF
00-22.


3.       INVENTORIES

         Inventories consist of the following at December 31, 2000 and 1999:

<TABLE>
<CAPTION>
                                                2000                  1999
                                          -----------------     -----------------
<S>                                       <C>                   <C>
Raw materials and sub-assemblies          $         43,488      $         33,814
Finished goods                                      26,420                24,558
                                          -----------------     -----------------
                                          $         69,908      $         58,372
                                          =================     =================
</TABLE>

                                      49

<PAGE>   50



4.       PROPERTY, PLANT AND EQUIPMENT

         Property, plant and equipment consist of the following at December
         31, 2000 and 1999:

<TABLE>
<CAPTION>
                                              2000                  1999
                                        -----------------     -----------------
<S>                                     <C>                   <C>
Land and land improvements              $          1,061      $          1,095
Buildings                                          9,565                 9,642
Machinery and equipment                           13,188                12,438
Dies and tools                                     3,806                 3,194
Office equipment                                   7,866                 5,899
Vehicles                                              28                    24
                                        -----------------     -----------------
                                                  35,514                32,292
Accumulated depreciation                          (7,905)               (3,875)
                                        -----------------     -----------------
                                                  27,609                28,417
Construction in progress                               -                   494
                                        -----------------     -----------------
                                        $         27,609      $         28,911
                                        =================     =================
</TABLE>

5.       INTANGIBLE ASSETS

         Intangible assets consist of the following at December 31, 2000 and
         1999:

<TABLE>
<CAPTION>
                                              2000                  1999
                                        -----------------     -----------------
<S>                                     <C>                   <C>
Goodwill                                $        214,179      $        213,928
Trademarks and patents                               100                   100
Noncompete agreement                                 852                   100
                                        -----------------     -----------------
                                                 215,131               214,128
Accumulated amortization                         (13,340)               (7,899)
                                        -----------------     -----------------
                                        $        201,791      $        206,229
                                        =================     =================
</TABLE>

6.       OTHER ACCRUED LIABILITIES

         Other accrued liabilities consist of the following at December 31,
         2000 and 1999:

<TABLE>
<CAPTION>
                                              2000                  1999
                                        -----------------     -----------------
<S>                                     <C>                   <C>
Sales incentives                        $          3,248      $          9,370
Product warranty                                   1,023                 1,984
Accrued interest                                   6,333                 6,529
Other                                                296                 1,108
                                        -----------------     -----------------
                                        $         10,900      $         18,991
                                        =================     =================
</TABLE>


                                      50

<PAGE>   51
7.       LONG-TERM DEBT OBLIGATIONS

         Long-term debt consists of the following at December 31, 2000 and
         1999:

<TABLE>
<CAPTION>
                                              2000                  1999
                                        -----------------     -----------------
<S>                                     <C>                   <C>
Bank credit facility                    $         85,854      $         77,493
Senior zero coupon notes                          10,519                     -
Senior subordinated notes                        110,000               110,000
Capital lease obligations                          1,366                 1,896
                                        -----------------     -----------------
                                                 207,739               189,389
Less:  current portion                            (8,218)               (8,869)
                                        -----------------     -----------------
                                        $        199,521      $        180,520
                                        =================     =================
</TABLE>

         In connection with the Acquisition, Generac Portable Products, LLC
entered into a $115 million bank credit facility (the "Senior Secured Credit
Facility"). The Senior Secured Credit Facility provides for maximum borrowings
under two term loans of $45 million ("A Term Loan") and $40 million ("B Term
Loan"), respectively, with balances outstanding at December 31, 2000 of $31.4
million and $37.7 million, respectively. The Senior Secured Credit Facility also
provides for maximum borrowings of $30 million, less the amount outstanding
under letters of credit, under revolving loan arrangements due December 31,
2003, with a balance outstanding at December 31, 2000 of $16,700. The A Term
Loan Facility will mature 5 1/2 years from July 9, 1998. The B Term Loan
Facility will mature seven years from July 9, 1998. The A Term Loan Facility
will provide for amortization of $2.5 million in the first year, $6.25 million
in the second year, $7.5 million in the third year, $10.0 million in the fourth
year, $12.5 million in the fifth year and $6.25 million in the sixth year. The B
Term Loan Facility will provide for nominal annual amortization in the first
five years and amortization of $19 million in each of the sixth and seventh
years. Additionally, Generac is also required to make an annual principal
payment equal to its excess cash flow, as defined. There is no required excess
cash flow payment for the year ended December 31, 2000. The interest rates under
the A Term Loan Facility and the revolving loan portion of the facility will be
based, at the option of Generac Portable Products, LLC, on either a Eurodollar
rate plus 3.25% per annum or a base rate plus 2.25% per annum, subject to a
pricing grid that will provide for reductions in the applicable interest rate
margins based on Generac's consolidated debt to earnings before interest, income
taxes, depreciation and amortization ("EBITDA") ratio. The interest rate under
the B Term Loan Facility is based, at the option of Generac Portable Products,
LLC, on a Eurodollar rate plus 3.75% or a base rate plus 2.75%, subject to a
pricing grid that will provide for reductions in the applicable interest rate
margins based on Generac's consolidated debt to EBITDA ratio. The weighted
average interest rate for the term loans as of December 31, 2000 was 10.0%.
Borrowings under the revolving loans bear interest at the prime rate plus 2.25%.
A commitment fee of 0.50% per annum is charged on the unused revolving loan
portion of the Senior Secured Credit Facility, subject to a pricing grid that
will provide for reductions in the applicable commitment fee margin based on


                                      51
<PAGE>   52
Generac's consolidated debt to EBITDA ratio. Substantially all of Generac's
assets are pledged as collateral under the Senior Secured Credit Facility.

         Effective October 15, 1998, Generac entered into an interest rate
swap agreement with a major financial institution to reduce the impact of
changes in interest rates on its floating rate long-term debt. The notional
amount of this agreement was $30 million at December 31, 2000. Interest
expense has been adjusted for the net amount payable under this agreement.
This agreement decreased Generac's interest expense for the year ended
December 31, 2000 by $230. The fair value of the interest rate swap agreement
was $35 at December 31, 2000, which is the amount Generac would have received
to settle the instrument at such date. Generac is exposed to credit loss in
the event of non-performance by the financial institution, however, management
does not anticipate such non-performance.

         Also on July 9, 1998, Generac Portable Products, LLC and GPPW issued
$110 million of 11.25% Senior Subordinated Notes due June 30, 2006 (the
"Notes") to BT Alex. Brown Incorporated (the "Initial Purchaser"). The Initial
Purchaser subsequently resold the Notes to qualified institutional buyers
pursuant to Rule 144A of the Securities Exchange Act and to a limited number
of institutional accredited investors that agreed to comply with certain
transfer restrictions and other conditions. The estimated fair value of the
Notes at December 31, 2000 is approximately $28.1 million.

         The Notes are redeemable, at Generac's option, in whole at any time
or in part from time to time, on and after July 1, 2002, upon not less than 30
nor more than 60 days' notice, at the following redemption prices (expressed
as percentages of the principal amount thereof) if redeemed during the
twelve-month period commencing on July 1 of the year set forth below, plus, in
each case, accrued and unpaid interest thereon, if any, to the date of
redemption:

<TABLE>
<CAPTION>
Year                                      Percentage
----                                      ----------
<S>                                       <C>
2002                                        107.625%
2003                                        104.750%
2004                                        102.875%
2005 and thereafter                         100.000%
</TABLE>

         At any time, or from time to time, on or prior to July 1, 2001,
Generac may, at its option, use the net cash proceeds of one or more Public
Equity Offerings, as defined, to redeem the Notes at a redemption price equal
to 111.25% of the principal amount thereof plus accrued and unpaid interest
thereon, if any, to the date of redemption; provided that at least 65% of the
principal amount of Notes originally issued remains outstanding immediately
after any such redemption.

         The Senior Secured Credit Facility and the indenture governing the
Notes contain a number of covenants that, among other things, restrict the
ability of Generac to dispose of assets, repay other indebtedness, incur
additional indebtedness, pay dividends, prepay subordinated

                                      52

<PAGE>   53

indebtedness (including, in the case of the Senior Secured Credit Facility,
the Notes), incur liens, make capital expenditures and make certain
investments or acquisitions, engage in mergers or consolidations, engage in
certain transactions with affiliates and otherwise restrict the activities of
Generac. In addition, under the Senior Secured Credit Facility, Generac
Portable Products, LLC will be required to satisfy specified financial ratios
and tests, including a minimum level of EBITDA. Effective October 30, 2000,
the company amended its credit facility which, among other things, waived
existing financial covenant violations at September 30, 2000 and revised
requirements relating to certain financial ratios and tests for periods
through December 31, 2001 including maximum levels of leverage, minimum levels
of interest coverage and minimum required levels of earnings before interest,
income taxes, depreciation and amortization. Additionally, the amendment
provides certain limits on the amount of outstanding revolving loans through
March 31, 2001.

         On November 20, 2000, The Beacon Group III - Focus Value Fund, L.P.
(the "Fund"), Generac's majority stockholder, purchased a unit (the "Unit")
consisting of a newly issued senior zero coupon note with an aggregate
principal amount of $19.5 million, due July 1, 2006, and a warrant to purchase
340 shares of the common stock of Generac in exchange for an aggregate of $15
million in cash. The warrants have an exercise price of $.01 per share and are
exercisable at any time through November 20, 2010. The proceeds from the sale
of the Unit were used by Generac to repay the principal of, and interest on,
revolving indebtedness, and for general corporate purposes. Both the senior
zero coupon notes and the warrants have been recorded in the financial
statements at their estimated fair market values at the issuance date. The
difference between the consideration paid by the Fund ($15 million) and the
combined fair market values of the zero coupon notes and attached warrants
totaled $2,482 and has been recorded as an increase in additional paid-in
capital.


         Generac expects that an event of default will occur under the Senior
Secured Credit Facility on March 31, 2001 arising from a failure by Generac to
comply with one or more financial covenants set forth in the Senior Secured
Credit Facility. Generac intends to seek a waiver of such event of default from
the lenders party to the Senior Secured Credit Facility. If such event of
default occurs and Generac is unable to obtain a waiver of such event of
default, the lenders under the Senior Secured Credit facility may cause the
loans thereunder to become immediately due and payable, which would constitute
an event of default under the zero coupon notes and the Notes. There can be no
assurance that Generac would be able to make payments under the Senior Secured
Credit Facility, the zero coupon notes and the Notes in such circumstances.

         Capital lease obligations relate to Generac's obligations on leases
for industrial equipment. These obligations are due in monthly installments
including principal and interest at a rate of 8.6% and mature November 30,
2002.

         The aggregate scheduled maturities of long-term debt and capital
lease obligations in subsequent years are as follows:

<TABLE>
<S>                                  <C>
2001                                 $         8,218
2002                                          13,266
2003                                          38,172
2004                                          18,376
2005                                           9,188
Thereafter                                   120,519
                                    -----------------
                                     $       207,739
                                    =================
</TABLE>


                                      53
<PAGE>   54

8.       EMPLOYEE RETIREMENT AND SAVINGS PLANS

         In connection with the Acquisition, Generac established
noncontributory defined benefit pension plans (salaried and hourly) covering
substantially all of its employees. The unfunded benefit obligation assumed as
of the Acquisition date totaled $678. Benefits under the salaried plan are
based upon years of service and the participants' defined final average
monthly compensation. Benefits under the hourly plan are based on a unit
amount at the date of termination multiplied by the participants' credited
service. The plans provide for a continuation of participants' years of
service as credited with GPSI. Generac's funding policy is to contribute
amounts that equal or exceed the minimum requirements of the Employee
Retirement Income Security Act of 1974 ("ERISA"). Net pension expense is
comprised of the following components:

<TABLE>
<CAPTION>
                                                                                                        FOR THE PERIOD
                                                                                                        JULY 10, 1998
                                                                                                           THROUGH
                                                           2000                   1999                DECEMBER 31, 1998
                                                     ------------------     -----------------     ---------------------------
<S>                                                  <C>                    <C>                   <C>
Service cost                                                     $ 414                 $ 340                            $ 48
Interest cost on projected benefit obligation                      110                    88                              24
Return on assets                                                   (26)                   (1)                              -
Amortization of net loss from earlier periods                       53                    21                               -
                                                     ------------------     -----------------     ---------------------------
                                                                 $ 551                 $ 448                            $ 72
                                                     ==================     =================     ===========================
</TABLE>

         The following table summarizes those items comprising the change in
the benefit obligation:

<TABLE>
<CAPTION>
                                                                                                     JULY 10, 1998
                                                                                                        THROUGH
                                                            2000                1999               DECEMBER 31, 1998
                                                        --------------     ---------------     ---------------------------
<S>                                                     <C>                <C>                 <C>
Benefit obligation as of the beginning of the period          $ 1,614               $ 750                           $ 678
Service cost                                                      414                 340                              48
Interest cost                                                     110                  88                              24
Actuarial loss (gain)                                            (422)                436                               -
                                                        --------------     ---------------     ---------------------------
Benefit obligation as of the end of the period                $ 1,716             $ 1,614                           $ 750
                                                        ==============     ===============     ===========================
</TABLE>

         The following table summarizes those items comprising the change in
the fair value of plan assets during 2000 and 1999. There were no assets
contributed to the plans as of December 31, 1998:

<TABLE>
<CAPTION>
                                                                            2000                1999
                                                                        --------------     ---------------
<S>                                                                     <C>                <C>
Fair value of plan assets as of the beginning of the period             $         101      $            -
Company contributions                                                             525                 100
Actual return on plan assets                                                       26                   1
                                                                        --------------     ---------------
Fair value of plan assets as of the end of the period                   $         652      $          101
                                                                        ==============     ===============
</TABLE>

                                      54

<PAGE>   55

         The following table summarizes the funded status of the plans as of
December 31, 2000 and 1999:

<TABLE>
<CAPTION>
                                       2000                1999
                                   --------------     ---------------
<S>                                <C>                <C>
Funded status of plan              $      (1,064)     $       (1,513)
Unrecognized net loss (gain)                 (19)                415
                                   --------------     ---------------
Net amount recognized              $      (1,083)     $       (1,098)
                                   ==============     ===============
</TABLE>

         The assumptions used in developing the pension information as of
December 31, 2000 and 1999 were as follows:

<TABLE>
<CAPTION>
                                         2000                   1999
                                   ------------------     -----------------
<S>                                <C>                    <C>
Discount rate                                  7.50%                 8.00%
Return on plan assets                          8.00%                 8.00%
Rate of compensation increase                  5.50%                 5.50%
</TABLE>

         In connection with the Acquisition, Generac established deferred
compensation plans for certain key employees and at December 31, 2000 and
1999, approximately $469 and $401, respectively, was included in other
long-term obligations related to such plans. Deferred compensation expense
charged to operations was $68, $61 and $23 for the years ended December 31,
2000 and 1999 and the period ended December 31, 1998, respectively. In
connection with the Acquisition, Generac established a qualified 401(k) profit
sharing plan covering substantially all full-time employees. The company
contribution for the year ended December 31, 2000 was $132. No contributions
were made to the plan for the year ended December 31, 1999 or for the period
ended December 31, 1998.

                                      55

<PAGE>   56


9.       INCOME TAXES

         The provision for income taxes consists of the following:

<TABLE>
<CAPTION>
                                                                                          FOR THE
                                                                                          PERIOD
                                                                                        JULY 10, 1998
                                                                                          THROUGH
                                                                                         DECEMBER 31,
                                                           2000             1999            1998
                                                    -----------------  --------------   -------------
<S>                                                 <C>                <C>              <C>
Current:
          Federal                                           $ (4,014)        $ 3,799         $   781
          State                                                  (44)            295              33
          Foreign                                                  -             150               -
                                                    -----------------  --------------   -------------
                  Total current                               (4,058)          4,244             814

Deferred:
          Federal and state                                   (2,195)          3,180           1,366
                                                    -----------------  --------------   -------------
                  Total provision for income taxes          $ (6,253)        $ 7,424         $ 2,180
                                                    =================  ==============   =============
</TABLE>

         The components of consolidated pretax income (loss) for the years
ended December 31, 2000 and 1999 are as follows:

<TABLE>
<CAPTION>
                                   2000                1999
                          --------------------  ------------------
<S>                       <C>                   <C>
United States              $          (16,015)   $         21,247
Europe                                 (1,703)               (284)
                          --------------------  ------------------
Total                      $          (17,718)   $         20,963
                          ====================  ==================
</TABLE>


         The following reconciles the U.S. federal statutory income tax rate
with Generac's effective tax rate:

<TABLE>
<CAPTION>
                                                                                                               FOR THE PERIOD
                                                                                                               JULY 10, 1998
                                                                                                                  THROUGH
                                                            2000                         1999                DECEMBER 31, 1998
                                                  --------------------------     --------------------   ---------------------------
<S>                                               <C>                            <C>                    <C>
U.S. federal statutory income tax rate                               (34.0%)                   34.0%                         34.0%
State income taxes, net of federal benefit                             (0.3)                     1.8                           1.0
Foreign income taxes, net of federal benefit                              -                      0.7                             -
Amortization of excess tax goodwill                                    (1.5)                    (1.3)                         (2.0)
Other                                                                   0.5                      0.2                           1.2
                                                  --------------------------     --------------------   ---------------------------
                                                                     (35.3%)                   35.4%                         34.2%
                                                  ==========================     ====================   ===========================
</TABLE>

                                      56

<PAGE>   57

         Deferred income taxes reflected in the balance sheet consist of the
following at December 31, 2000 and 1999:

<TABLE>
<CAPTION>
                                                               2000                           1999
                                                    ---------------------------     --------------------------
<S>                                                 <C>                             <C>
   Deferred tax assets:
               Net operating loss carryforwards      $                   4,830       $                      -
               Inventories and receivables                               1,003                            271
               Sales incentives                                            141                            197
               Accrued warranty                                            331                            607
               Employee benefits                                           171                            203
               Other                                                       824                              -
                                                    ---------------------------     --------------------------
                                                                         7,300                          1,278

   Deferred tax liabilities:
               Fixed assets                                             (1,344)                          (688)
               Intangible assets                                        (8,307)                        (5,105)
               Other                                                         -                            (31)
                                                    ---------------------------     --------------------------
                                                                        (9,651)                        (5,824)
                                                    ---------------------------     --------------------------
                                                     $                  (2,351)      $                 (4,546)
                                                    ===========================     ==========================
</TABLE>

         The company has approximately $13,625 in both federal and state net
operating loss carryforwards. These carryforwards expire at various dates
through fiscal 2020. The Tax Reform Act of 1986 imposed substantial
restrictions on the utilization of net operating losses in the event of an
"ownership change" as defined in Section 382 of The Internal Revenue Code of
1986.


10.      STOCKHOLDERS' EQUITY

         In connection with the initial capitalization of Generac, The Beacon
Group III--Focus Value Fund, L.P., management of Generac and certain other
investors purchased an aggregate of $110 million of common stock, par value of
$.01 per share, constituting 100% of Generac's outstanding common stock. Upon
consummation of the Acquisition, The Beacon Group III--Focus Value Fund, L.P.
and the other stockholders of Generac, and Generac, entered into a
Stockholders' Agreement which includes certain transfer restrictions, voting
agreements and registration rights. Employees who own stock of Generac are
also subject to agreements that restrict their right to transfer their stock
and, under certain conditions, require them to sell a pro rata portion of
their stock in a transaction in which The Beacon Group III--Focus Value Fund,
L.P. is selling its stock. Generac is not obligated to purchase this stock.

         As discussed in footnote 7, the Unit consisting of a zero coupon note
and attached warrants were recorded in the financial statements at their
respective fair market values at issuance. The difference between the
consideration paid by the Fund ($15 million) and the

                                      57

<PAGE>   58

combined fair market values of the zero coupon notes and attached warrants
totaled $2,482 and has been recorded as an increase in additional paid-in
capital.

         Effective July 9, 1998, Generac's board of directors approved the
Generac Portable Products, Inc. Stock Option Plan which provides for the
granting of stock options as an incentive to members of the board of directors
and certain key employees. Under this Plan, stock options to acquire up to
1,619 shares of common stock, in the aggregate, may be granted under a
time-vesting formula at an exercise price equal to the fair market value of
the common stock at the date of grant. The options become exercisable in equal
increments beginning on the first anniversary of the grant date over a three
to five-year period and expire ten years subsequent to the grant date.

         Stock option transactions for the years ended December 31, 2000 and
1999 and the period ended December 31, 1998 are summarized as follows:

<TABLE>
<CAPTION>
                                                       2000                       1999                     1998
                                             -------------------------  --------------------------  --------------------
<S>                                          <C>                        <C>                         <C>
Options granted                                                     -                         304                 1,164
Exercise price - options granted                                  N/A    $                 16,349    $           12,945
Options forfeited                                                 101                          51                     -
Exercise price - options forfeited            $                12,945    $                 12,945                   N/A
Options outstanding                                             1,316                       1,417                 1,164
Exercised options                                                   -                           -                     -
Exercisable options                                               557                         243                     -
Remaining contractual life (years)                                8.4                         9.4                   8.5
Fair value at grant date                                          N/A    $                  5,469    $            4,340
</TABLE>

         The fair value was estimated using the minimum value method in
accordance with SFAS No. 123, "Accounting for Stock-Based Compensation",
assuming an expected option life of 7 years and a risk-free interest rate of
6%.

         Generac applies Accounting Principles Board Opinion No. 25 and
related interpretations in accounting for its stock option plan. Accordingly,
no compensation expense has been recognized in the statement of income for the
years ended December 31, 2000 and 1999 and during the period ended December
31, 1998. If compensation cost had been determined in accordance with SFAS
No.123, net income would have decreased approximately $892, $843 and $351
during the years ended December 31, 2000 and 1999 and during the period ended
December 31, 1998, respectively.

         On May 20, 1999, the company effected a 1,250 for one common stock
split and on May 28, 1999, the company effected a 1.189 for one common stock
split. On June 9, 2000, the company effected a one for 1,486.25 reverse common
stock split. All share information in these consolidated financial statements
has been retroactively adjusted to reflect these stock splits.

                                      58

<PAGE>   59


11.      LEASES

         Generac leases certain manufacturing equipment, computer equipment
and vehicles under operating leases with lease terms ranging up to 5 years.
Additionally, in connection with the Acquisition, Generac entered into a
capital lease arrangement with GPSI for certain manufacturing equipment.
Property, plant and equipment at December 31, 2000 and 1999 includes $1,753
and $2,102, respectively, for equipment under capital leases, which is net of
$863 and $514 in accumulated depreciation, respectively. Following is a
summary of future minimum payments under capitalized leases and operating
leases that have initial or remaining non-cancelable lease terms in excess of
one year at December 31, 2000:

<TABLE>
<CAPTION>
                                                   Operating              Capital
                                                     Leases                Leases
                                                -----------------     -----------------
<S>                                             <C>                   <C>
2001                                                     $   724               $   673
2002                                                         233                   830
2003                                                          90                     -
2004                                                          29                     -
Thereafter                                                    15                     -
                                                -----------------     -----------------
                                                         $ 1,091                 1,503
                                                =================
Less amount representing interest                                                 (137)
                                                                      -----------------
Present value of minimum lease payments                                        $ 1,366
                                                                      =================
</TABLE>

         Total rent expense recognized by Generac for the years ended December
31, 2000 and 1999 and for the period ended December 31, 1998 was $2,472,
$2,521 and $559, respectively.

12.      SEGMENT INFORMATION

         Generac is a leading designer, manufacturer and marketer of
engine-powered tools and related accessories for use in both consumer and
commercial applications. Engineering, manufacturing, marketing and
administrative resources are generally not product specific and Generac
evaluates operating performance based upon the combined results of these
product lines.

         Information regarding Generac's geographic areas is summarized below:

<TABLE>
<CAPTION>
                                                         United
                                                         States            Europe          Consolidated
                                                    -----------------   --------------   ------------------
<S>                                                 <C>                 <C>              <C>
As and for the year ended December 31, 2000:
       Net sales to unaffiliated customers                 $ 220,428          $22,061            $ 242,489
       Long-lived assets                                     233,371            2,204              235,575
As and for the year ended December 31, 1999:
       Net sales to unaffiliated customers                   358,999           39,097              398,096
       Long-lived assets                                     239,448            2,505              241,953
As and for the period ended December 31, 1998:
       Net sales to unaffiliated customers                   126,740           10,122              136,862
       Long-lived assets                                     235,517            2,574              238,091
</TABLE>

                                      59

<PAGE>   60

         Generac sells primarily to large home center retailers. Two customers
accounted for approximately 61% of net sales for the year ended December 31,
2000. Both customers individually comprise more than 10% of Generac's net
sales. Included in accounts receivable at December 31, 2000 are amounts due
from these two customers aggregating $20,854. Three customers accounted for
approximately 73% and 74% of net sales for the year ended December 31, 1999
and for the period ended December 31, 1998, respectively. All three customers
individually comprise more than 10% of Generac's net sales. Included in
accounts receivable at December 31, 1999 are amounts due from these three
customers aggregating $33,236.

         Generac purchases its materials from a broad supplier base. Three
suppliers accounted for approximately 46% of purchases for the year ended
December 31, 2000. Accounts payable to these three suppliers approximated
$8,867 at December 31, 2000. Two suppliers accounted for approximately 44% and
41% of purchases for the year ended December 31, 1999 and the period ended
December 31, 1998, respectively. Accounts payable to these two suppliers
approximated $7,049 at December 31, 1999. Each of these suppliers individually
comprised more than 10% of Generac's purchases for the respective periods.


13.      COMMITMENTS, CONTINGENCIES AND RELATED PARTY TRANSACTIONS

         In the normal course of business Generac is involved in certain legal
actions and claims. It is the opinion of management that such litigation and
claims will be resolved without material adverse effect on Generac's financial
position, results of operations or cash flows.

         On September 29, 1999, Generac commenced an arbitration against
Generac Power Systems, Inc. ("GPSI"), entitled In the Matter of An Arbitration
Between Generac Portable Products, Inc. and Generac Power Systems, Inc.,
formerly known as Generac Corporation, under the auspices of the American
Arbitration Association in Milwaukee, Wisconsin. The dispute concerned the
respective rights of the company and GPSI to manufacture and sell in the
retail market portable generators with an output level greater than ten
kilowatts and home standby stationary generators. On May 18, 2000, the company
and GPSI reached an agreement which amended and further clarified the original
non-compete agreement between the two companies. The agreement provides for,
among other things, that the company has the right to manufacture and sell
certain portable air-cooled generators and air-cooled home standby generators
up to and including twenty kilowatts, that GPSI is restricted from
manufacturing any portable air-cooled generator below 12.5 kilowatts and that
the company will pay a 2% royalty on sales of home standby stationary
generators in excess of $15 million during the term of the agreement to GPSI.

         The company capitalized costs incurred in conjunction with the
development of the amended non-compete agreement approximating $702, and will
amortize these costs over the remaining life of the non-compete agreement.

                                      60

<PAGE>   61



14.      SEPARATE FINANCIAL INFORMATION OF CO-ISSUERS AND GUARANTOR OF THE
NOTES

         In connection with the Acquisition, Generac Portable Products, LLC
and GPPW co-issued the Notes, and while Generac Portable Products, LLC and
GPPW are jointly and severally liable for the obligations under the Notes,
GPPW does not conduct any operations, or have any assets of any kind other
than its investment in Generac Portable Products, LLC. Generac has provided a
full and unconditional guarantee of the Notes. However, because Generac has no
operating activities independent of Generac Portable Products, LLC, Generac's
consolidated financial statements are essentially the same as those of Generac
Portable Products, LLC. The following condensed supplemental consolidating
financial information reflects the investments of Generac, GPPW and GPPD in
Generac Portable Products, LLC using the equity method. Generac, GPPW and GPPD
are dependent upon Generac Portable Products, LLC for cash flows to fund their
income tax liabilities arising from their respective investments. GPPW and
GPPD are wholly-owned subsidiaries of Generac, and GPPW and GPPD hold a 5% and
95% ownership interest in Generac Portable Products, LLC, respectively.


<TABLE>
<CAPTION>
AS OF DECEMBER 31, 2000
                               GENERAC PORTABLE                               GENERAC PORTABLE
                                PRODUCTS, INC.        GPPW         GPPD         PRODUCTS, LLC      ELIMINATIONS     CONSOLIDATED
                               ------------------   ---------  -------------  ------------------   --------------  ---------------
<S>                            <C>                  <C>        <C>            <C>                  <C>             <C>
 Current assets                $           5,523    $    276   $      5,247   $         109,734    $      (5,523)  $      115,257
 Investment in affiliates                117,220       5,785        109,820                   -         (232,825)               -
 Noncurrent assets                         3,908           -              -             235,575           (3,908)         235,575
                               ------------------   ---------  -------------  ------------------   --------------  ---------------
                               $         126,651    $  6,061   $    115,067   $         345,309    $    (242,256)  $      350,832
                               ==================   =========  =============  ==================   ==============  ===============

 Current liabilities           $           5,523    $      -   $          -   $          38,677    $      (5,523)  $       38,677
 Long-term debt                                -           -              -             199,521                -          199,521
 Other long-term obligations               3,908         195          3,713               1,049           (3,908)           4,957
 Common stock warrants                         -           -              -               2,115                -            2,115
 Stockholders' equity                    117,220       5,866        111,354             103,947         (232,825)         105,562
                               ------------------   ---------  -------------  ------------------   --------------  ---------------
                               $         126,651    $  6,061   $    115,067  $          345,309    $    (242,256)  $      350,832
                               ==================   =========  =============  ==================   ==============  ===============

<CAPTION>
AS OF DECEMBER 31, 1999
                               GENERAC PORTABLE                               GENERAC PORTABLE
                                PRODUCTS, INC.        GPPW         GPPD         PRODUCTS, LLC      ELIMINATIONS     CONSOLIDATED
                               ------------------   ---------  -------------  ------------------   --------------  ---------------
<S>                            <C>                  <C>        <C>            <C>                  <C>             <C>
 Current assets                $           1,619    $     59   $      1,112   $         114,365    $      (1,619)  $      115,536
 Investment in affiliates                126,905       6,596        125,303                   -         (258,804)               -
 Noncurrent assets                         5,717           -              -             241,953           (5,717)         241,953
                               ------------------   ---------  -------------  ------------------   --------------  ---------------
                               $         134,241    $  6,655   $    126,415   $         356,318    $    (266,140)  $      357,489
                               ==================   =========  =============  ==================   ==============  ===============

 Current liabilities           $           1,619    $     23   $        425   $          54,468    $      (1,619)  $       54,916
 Long-term debt                                -           -              -             180,520                -          180,520
 Other long-term obligations               5,717         286          5,431               1,089           (5,717)           6,806
 Stockholders' equity                    126,905       6,346        120,559             120,241         (258,804)         115,247
                               ------------------   ---------  -------------  ------------------   --------------  --------------
                               $         134,241    $  6,655   $    126,415   $         356,318    $    (266,140)  $      357,489
                               ==================   =========  =============  ==================   ==============  ===============
</TABLE>

                                      61

<PAGE>   62

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 2000
                                           GENERAC PORTABLE
                                            PRODUCTS, INC.       GPPW          GPPD
                                          -------------------  ---------   -------------
<S>                                       <C>                  <C>         <C>
 Net sales                                 $               -    $     -     $         -
 Gross profit                                              -          -               -
 Operating expenses                                        -          -               -
                                          -------------------  ---------   -------------
 Income from operations                                    -          -               -
 Interest expense                                          -          -               -
 Other expense (income), net                               -          -               -
 Equity in earnings of affiliates                    (11,465)      (886)        (16,909)
                                          -------------------  ---------   -------------
 Income (loss) before income taxes                   (11,465)      (886)        (16,909)
 Provision (benefit) for income taxes                      -       (317)         (6,013)
                                          -------------------  ---------   -------------
 Net income (loss)                         $         (11,465)   $  (569)    $   (10,896)
                                          ===================  =========   =============
<CAPTION>

FOR THE YEAR ENDED DECEMBER 31, 1999
                                           GENERAC PORTABLE
                                            PRODUCTS, INC.       GPPW          GPPD
                                          -------------------  ---------   -------------
<S>                                       <C>                  <C>         <C>
 Net sales                                 $               -    $     -     $         -
 Gross profit                                              -          -               -
 Operating expenses                                        -          -               -
                                          -------------------  ---------   -------------
 Income from operations                                    -          -               -
 Interest expense                                          -          -               -
 Other expense (income), net                               -          -               -
 Equity in earnings of affiliates                     13,539      1,045          19,856
                                          -------------------  ---------   -------------
 Income before income taxes                           13,539      1,045          19,856
 Provision for income taxes                                -        368           6,994
                                          -------------------  ---------   -------------
 Net income                                $          13,539    $   677     $    12,862
                                          ===================  =========   =============

<CAPTION>

FOR THE PERIOD ENDED DECEMBER 31, 1998
                                           GENERAC PORTABLE
                                            PRODUCTS, INC.       GPPW          GPPD
                                          -------------------  ---------   -------------
<S>                                       <C>                  <C>         <C>
 Net sales                                 $               -    $     -     $         -
 Gross profit                                              -          -               -
 Operating expenses                                        -          -               -
                                          -------------------  ---------   -------------
 Income from operations                                    -          -               -
 Interest expense                                          -          -               -
 Other expense (income), net                               -          -               -
 Equity in earnings of affiliates                      4,202        319           6,063
                                          -------------------  ---------   -------------
 Income before income taxes                            4,202        319           6,063
 Provision for income taxes                                -        109           2,071
                                          -------------------  ---------   -------------
 Net income                                $           4,202    $   210     $     3,992
                                          ===================  =========   =============

<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 2000
                                          GENERAC PORTABLE
                                            PRODUCTS, LLC     ELIMINATIONS     CONSOLIDATED
                                          ------------------  --------------  ---------------
<S>                                       <C>                  <C>         <C>
 Net sales                                 $        242,489    $          -    $     242,489
 Gross profit                                        50,428               -           50,428
 Operating expenses                                  45,707               -           45,707
                                          ------------------  --------------  ---------------
 Income from operations                               4,721               -            4,721
 Interest expense                                    21,333               -           21,333
 Other expense (income), net                          1,106               -            1,106
 Equity in earnings of affiliates                         -          29,260                -
                                          ------------------  --------------  ---------------
 Income (loss) before income taxes                  (17,718)         29,260          (17,718)
 Provision (benefit) for income taxes                    77               -           (6,253)
                                          ------------------  --------------  ---------------
 Net income (loss)                         $        (17,795)   $     29,260    $     (11,465)
                                          ==================  ==============  ===============
<CAPTION>

FOR THE YEAR ENDED DECEMBER 31, 1999
                                          GENERAC PORTABLE
                                            PRODUCTS, LLC     ELIMINATIONS     CONSOLIDATED
                                          -------------------  ---------   -------------
<S>                                       <C>                  <C>         <C>

 Net sales                                 $        398,096    $          -    $     398,096
 Gross profit                                       107,211               -          107,211
 Operating expenses                                  62,737               -           62,737
                                          ------------------  --------------  ---------------
 Income from operations                              44,474               -           44,474
 Interest expense                                    20,823               -           20,823
 Other expense (income), net                          2,688               -            2,688
 Equity in earnings of affiliates                         -         (34,440)               -
                                          ------------------  --------------  ---------------
 Income before income taxes                          20,963         (34,440)          20,963
 Provision for income taxes                              62               -            7,424
                                          ------------------  --------------  ---------------
 Net income                                $         20,901    $    (34,440)   $      13,539
                                          ==================  ==============  ===============

<CAPTION>

FOR THE PERIOD ENDED DECEMBER 31, 1998
                                          GENERAC PORTABLE
                                            PRODUCTS, LLC     ELIMINATIONS     CONSOLIDATED
                                          ------------------  --------------  ---------------
<S>                                       <C>                  <C>         <C>

 Net sales                                 $        136,862    $          -    $     136,862
 Gross profit                                        38,617               -           38,617
 Operating expenses                                  22,331               -           22,331
                                          ------------------  --------------  ---------------
 Income from operations                              16,286               -           16,286
 Interest expense                                     9,674               -            9,674
 Other expense (income), net                            230               -              230
 Equity in earnings of affiliates                         -         (10,584)               -
                                          ------------------  --------------  ---------------
 Income before income taxes                           6,382         (10,584)           6,382
 Provision for income taxes                               -               -            2,180
                                          ------------------  --------------  ---------------
 Net income                                $          6,382    $    (10,584)   $       4,202
                                          ==================  ==============  ===============
</TABLE>


15.      EXPENSES FROM WITHDRAWN COMMON STOCK OFFERING

         During the year ended December 31, 1999, Generac incurred certain
fees and expenses in conjunction with its efforts to complete an initial
public offering of its common stock. Generac withdrew its initial public stock
offering during July 1999. Expenses related to this offering of approximately
$1.2 million were recorded during the year ended December 31, 1999.

                                      62
<PAGE>   63


16.      SUBSEQUENT EVENTS

         On March 21, 2001, Generac Portable Products, Inc. entered into an
Agreement and Plan of Merger (the "Merger Agreement") with Briggs & Stratton
Corporation, ("Briggs"), GPP Merger Corporation, a wholly owned direct
subsidiary of Briggs, and The Beacon Group III -- Focus Value Fund, L.P., the
majority shareholder of Generac ("Beacon"), providing for the merger of GPP
Merger Corporation into Generac, with Generac as the surviving corporation. The
closing of the Merger is expected to occur on (a) the later of April 30, 2001 or
(b) the second business day after satisfaction of the conditions of the Merger.

         Pursuant to the terms of the Merger Agreement, the existing
shareholders of Generac and the holders of warrants to purchase Generac stock
(collectively, the "Shareholders") will receive (a) $55 million, adjusted
downward for purchase price adjustments related to the failure, if any, to meet
certain targets for shareholders' equity and working capital minus the
transaction costs of Generac and the Shareholders (the "Base Price"), plus (b)
an amount (the "Earnout") equal to (A) 40% of the amount by which Generac's
consolidated earnings before interest, taxes, depreciation and amortization,
excluding unusual gains and losses, for the 12-month period ending June 30,
2002, multiplied by 6, exceeds the sum of the Base Price plus the transaction
costs of Generac and the Shareholders plus the aggregate amount of indebtedness
of Generac on a consolidated basis as of the closing of the Merger, minus (B)
the amount, if any, payable to holders of options for Generac stock, which
options will be cancelled in connection with the Merger. In no event, however,
will the sum of the Base Price plus the transaction costs of Generac and the
Shareholders plus the aggregate amount of indebtedness of Generac on a
consolidated basis as of the closing of the Merger plus the Earnout plus the
option payments exceed $350 million.

         It is expected that the Merger will constitute a "change of control"
under the Indenture dated as of July 1, 1998 (the "Indenture") between Generac
Portable Products, LLC ("LLC") and GPPW Inc. ("GPPW" and together with LLC, the
"Offerors") and HSBC Bank USA (formerly Marine Midland Bank), as trustee, with
respect to the 11-1/4% Senior Subordinated Notes due 2006 (the "Notes") of the
Offerors. The Offerors are wholly owned subsidiaries of Generac. As a
consequence of the "change of control", the Offerors will be obligated within 30
days after the Merger is consummated to make an offer to purchase all or a
portion of the Notes at a purchase price equal to 101% of the principal amount
of the Notes plus accrued and unpaid interest to the date of payment.

         In addition, it is expected that consummation of the Merger will
constitute an event of default under Generac's existing credit facility under
the Credit Agreement dated as of July 9, 1998 among LLC, GPPW, Bankers Trust
Company, as administrative agent, and the various banks and financial
institutions parties thereto (as amended, the "Credit Agreement"). If LLC is
unable to obtain a waiver of such event of default, LLC's lenders under the
Credit Agreement may cause the loans thereunder to become immediately due and
payable. In addition, it is also expected that consummation of the Merger will
constitute an event of default under LLC's zero coupon notes due July 1, 2006
under the Unit Purchase Agreement, dated as of November 20, 2000, among Generac,
LLC and Beacon. If LLC is unable to obtain a waiver of such event of default,
Beacon may cause such zero coupon notes to become immediately due and payable.
In the event LLC defaults on the Credit Agreement or the zero coupon notes and
the lenders or Beacon, as the case may be, cause the loans or zero coupon notes
to become immediately due and payable, there can be no assurance that LLC will
be able to make its respective payments thereunder or that LLC will be able to
pay the Notes upon the occurrence of an event of default following the
acceleration of amounts owing under the Credit Agreement or the zero coupon
notes.

         On March 27, 2001, Generac Portable Products, LLC and GPPW, Inc.
commenced a cash tender offer and consent solicitation (the "Offer") for all of
the Notes, upon the terms and subject to the conditions set forth in the Offer,
for $1,010 for each $1,000 principal amount of Notes validly tendered pursuant
to the Offer. In addition, tendering holders of the Notes will receive accrued
and unpaid interest on their Notes accepted for purchase to, but not including,
the payment date. The Offer will expire at on April 27, 2001, unless extended.
In conjunction with the Offer, the company is soliciting consents of the
registered holders of Notes to the adoption of certain proposed amendments to
the Indenture relating to the Notes. The proposed amendments will be effective
when the Offer is consummated as to all Notes that are not purchased in the
Offer, provided all other conditions to the Offer have otherwise been satisfied.
The Offer is being made in connection with the Merger Agreement entered into on
March 21, 2001 and is conditioned upon, among other things, the completion of
the merger and the receipt of the consents necessary to adopt the proposed
amendments as well as certain other conditions.







                                      63

<PAGE>   64

                                  SCHEDULE I
                       GENERAC PORTABLE PRODUCTS, INC.
                   SCHEDULE OF COMBINED VALUATION ACCOUNTS

<TABLE>
<CAPTION>
                                                                  BALANCE AT
                                                                  BEGINNING        CHARGES TO                         BALANCE AT
                                                                  OF PERIOD         EXPENSE          DEDUCTIONS      END OF PERIOD
                                                                ---------------  --------------   --------------   -----------------
<S>                                                             <C>              <C>              <C>              <C>
ACCOUNTS RECEIVABLE:
       For the Year Ended December 31, 2000                                548             157              512                  193
       For the Year Ended December 31, 1999                                242             372               66                  548
       For the Period July 10, 1998 through December 31, 1998              225              17                -                  242

<CAPTION>
                                                                   BALANCE AT
                                                                   BEGINNING       CHARGES TO                         BALANCE AT
                                                                   OF PERIOD        EXPENSE          DEDUCTIONS      END OF PERIOD
                                                                ---------------  --------------   --------------   -----------------
<S>                                                             <C>              <C>              <C>              <C>
INVENTORY
       For the Year Ended December 31, 2000                              1,511             581              811                1,281
       For the year ended December 31, 1999                                774           2,089            1,352                1,511
       For the period July 10, 1998 through December 31, 1998              500             593              319                  774
</TABLE>


                                      64


<PAGE>   65

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Generac Corporation:

         We have audited the accompanying statements of income and cash flows
for the six months and nine days ended July 9, 1998. Our audit also included
the financial statement schedule listed at Item 14 (a) 2. These financial
statements and financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audit.

         We conducted our audit in accordance with auditing standards
generally accepted in the United States of America. Those standards require
that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.

         The accompanying financial statements have been prepared from the
separate records maintained by the Business Unit and may not necessarily be
indicative of the conditions that would have existed or the results of
operations if the Business Unit had been operated as an unaffiliated company.
Portions of certain income and expenses represent allocations made from
Generac Corporation of items applicable to the Company as a whole.

         In our opinion, such financial statements present fairly, in all
material respects, the results of operations and cash flows of the Portable
Products Division, a Business Unit of Generac Corporation for the six months
and nine days ended July 9, 1998 in conformity with accounting principles
generally accepted in the United States of America. Also, in our opinion, such
financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.

DELOITTE & TOUCHE LLP

Milwaukee, Wisconsin
January 29, 1999

                                      65

<PAGE>   66


                 PORTABLE PRODUCTS DIVISION, A BUSINESS UNIT
                            OF GENERAC CORPORATION

                        STATEMENT OF INCOME (IN 000'S)

<TABLE>
<CAPTION>
                                          FOR THE SIX MONTHS
                                             AND NINE DAYS
                                          ENDED JULY 9, 1998
                                       --------------------------
<S>                                    <C>
Net sales                              $                 139,551
Cost of sales                                            104,537
                                       --------------------------
     Gross profit                                         35,014
                                       --------------------------

Expenses
  Selling and service                                     16,624
  General and administative                                2,380
                                       --------------------------
     Total expenses                                       19,004
                                       --------------------------

Income from operations                                    16,010
Other expenses
  Interest expense                                         1,409
  Foreign currency                                           108
                                       --------------------------
     Total other expense                                   1,517
                                       --------------------------

Net income                             $                  14,493
                                       ==========================

Comprehensive income
  Net income                           $                  14,493
  Translation adjustments                                   (535)
                                       --------------------------
     Total comprehensive
        income                         $                  13,958
                                       ==========================
</TABLE>

See notes to financial statements.

                                       66
<PAGE>   67

                 PORTABLE PRODUCTS DIVISION, A BUSINESS UNIT
                            OF GENERAC CORPORATION

                      STATEMENT OF CASH FLOWS (IN 000'S)

<TABLE>
<CAPTION>
                                                  FOR THE SIX MONTHS
                                                    AND NINE DAYS
                                                  ENDED JULY 9, 1998
                                              ---------------------------
<S>                                           <C>
Operating Activities:
  Net income                                   $                  14,493
  Adjustments to reconcile net
     income to net cash used in
     operating activities:
     Depreciation                                                    796
     (Increase) decrease in assets:
        Accounts receivable                                      (29,943)
        Inventories                                              (10,054)
        Prepaid expenses                                            (224)
     Increase in liabilities:
        Accounts payable                                           7,936
        Accrued liabilities                                        3,428
                                              ---------------------------
           Net cash used in
              operating activities                               (13,568)

Investing Activities--Capital
  expenditures                                                    (1,553)

Financing Activities--Increase
  in business unit investment, net                                14,787

Effect of exchange rate changes
  on cash                                                           (132)
                                              ---------------------------

Net decrease in cash
  and cash equivalents                                              (466)

Cash and cash equivalents:
  Beginning of Period                                              1,065
                                              ---------------------------
  End of Period                                $                     599
                                              ===========================
</TABLE>

See notes to financial statements.

                                      67

<PAGE>   68
                   PORTABLE PRODUCTS DIVISION, A BUSINESS UNIT
                             OF GENERAC CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                   SIX MONTHS AND NINE DAYS ENDED JULY 9, 1998


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         The accompanying financial statements include the accounts of the
Portable Products Division located in Jefferson, Wisconsin and its branches in
the United Kingdom and Germany, a Business Unit ("Business Unit") of Generac
Corporation ("Generac"). The Business Unit designs and manufactures portable
generators, pressure washers and other engine-powered tools for the world
market.

     CASH EQUIVALENTS -- The Business Unit considers all investments purchased
with a maturity of three months or less to be cash equivalents.

     REVENUE RECOGNITION -- Net sales and costs of sales are recognized as the
related products are shipped. A provision for estimated sales returns is
recorded in the period in which the sales are recognized.

     SHIPPING AND HANDLING FEES AND COSTS: During the fourth quarter of 2000,
the Business Unit adopted the provisions of the Emerging Issues Task Force
("EITF") Issue No. 00-10, "Accounting for Shipping and Handling Fees and Costs."
In accordance with EITF 00-10, revenue from shipping and handling costs is
reflected in net sales. The costs associated with shipping and handling of
product for the six months and nine days ended July 9, 1998 were $3,471 and are
reflected in selling and service expense.

     RESEARCH AND DEVELOPMENT COSTS -- The Business Unit has an ongoing program
of new product development and existing product enhancement through redesign of
existing products and the addition of new models. Costs related to these
programs are expensed as incurred and totaled $925,000 for the six months and
nine days ended July 9, 1998.

     DEPRECIATION -- Costs of property, plant and equipment are depreciated
using the straight-line method over the estimated useful lives of the assets as
follows:

<TABLE>
<CAPTION>
                                                         Years
                                                         -----
<S>                                                     <C>
Land improvements                                            20
Buildings                                                    40
Machinery and equipment                                      10
Dies and tools                                           3 to 5
Vehicles                                                      4
Office equipment                                        5 to 10
</TABLE>


                                       68
<PAGE>   69


     PRODUCT WARRANTIES -- The Business Unit provides that warranted products
are merchantable and free of defects in workmanship and material generally for a
period of one year. Warranty reserves are provided as charges to operations
under selling and service expense for estimated normal warranty costs and, if
applicable, for any significant problems known to exist on products sold.
Warranty expense totaled $1,848,000 for the six months and nine days ended July
9, 1998.

     FOREIGN CURRENCY TRANSLATION -- The translation of the branch accounts into
U.S. dollars is performed for revenue and expense accounts using an average
exchange rate during the period. The gains or (losses) resulting from such
translation are reflected as "cumulative translation adjustments" in business
unit investment. Such adjustments amounted to $(703,000) through July 9, 1998.

     USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

2.   BUSINESS UNIT INVESTMENT

     The Business Unit is an operating unit of Generac with separate financial
reporting. The financial statements for the six months and nine days ended July
9, 1998 include allocations by Generac for certain operating and employee
benefit costs incurred on behalf of the Business Unit. These costs are allocated
based on estimates of time and services provided, specifically identifiable
charges, or relevant criteria that establish the Business Unit's pro rata charge
of costs common to all Generac operating units. Allocated support costs from
Generac to the Business Unit during the six months and nine days ended July 9,
1998 included manufacturing support of $125,000, service support of $11,000,
research and development support of $21,000, general and administrative support
of $152,000 and human resource and employee benefits support of $76,000.

     Research and development expenses totaling $131,000 were incurred by the
Business Unit's United Kingdom branch during the six months and nine days ended
July 9, 1998 on behalf of Generac and charged to Generac.

     The Business Unit and Generac supply each other with certain inventories.
Total inventories transferred during the six months and nine days ended July 9,
1998 were $7,855,000 from Generac to the Business Unit and $350,000 from the
Business Unit to Generac. Commencing February 1, 1998, certain production was
transferred from the Business Unit to Generac. During the five months and nine
days ended July 9, 1998, the Business Unit purchased $12,223,000 of inventories
related to such transferred production.

     The Business Unit is also charged a portion of Generac's interest expense
based upon levels of Business Unit investment. This interest charge aggregated
$1,354,000 during the six months and nine days ended July 9, 1998. Management
believes the allocations and activities between the Business Unit and Generac
are reasonable under the circumstances; however, they may not


                                       69
<PAGE>   70


be indicative of amounts that would be required to be incurred if the Business
Unit operated on a stand-alone basis.

The changes (in $000's) within the business unit investment for the period ended
July 9, 1998 are as follows:

<TABLE>
<S>                                               <C>
Balance at January 1, 1998                           $ 52,763
  Net income                                           14,493
  Cumulative translation adjustments                     (535)
  Activity with parent, net                            15,189
                                                  ------------
Balance at July 9, 1998                              $ 81,910
                                                  ============
</TABLE>

3.   S CORPORATION ELECTION

     Generac and its Stockholders have elected for federal and certain state
income tax purposes to be treated as a S Corporation under provisions of the
Internal Revenue Code. Accordingly, Generac's taxable income is includable in
the individual tax returns of its Stockholders and no provision for income taxes
is included in the accompanying financial statements.

4.   PROVISION FOR DOUBTFUL ACCOUNTS

     The provision for doubtful accounts charged to operations was $67,000 for
the six months and nine days ended July 9, 1998.



5.   EMPLOYEE RETIREMENT AND SAVINGS PLANS

         Generac has noncontributory pension plans (salaried and hourly)
covering substantially all of its employees including the employees of the
Business Unit. The benefits under the salaried plan are based upon years of
service and the participants' defined final average monthly compensation. The
benefits under the hourly plan are based on a unit amount at the date of
termination multiplied by the participants' credited service. Generac's funding
policy for these plans is to contribute amounts at least equal to the minimum
annual amount required by applicable regulations. Total pension expense
allocated to the Business Unit for the six months and nine days ended July 9,
1998 was $231,000.

         Generac maintains deferred compensation plans for key employees of the
Business Unit. Deferred compensation expense charged to operations was $18,000
for the six months and nine days ended July 9, 1998.


                                       70
<PAGE>   71

6.   RENT EXPENSE

     Generac leases certain manufacturing equipment, computer equipment and
vehicles used in the Business Unit under operating leases for lease terms
ranging up to five years.

     Total rent expense for the six months and nine days ended July 9, 1998 was
approximately $476,000.

7.   MAJOR CUSTOMERS

     Two customers accounted for approximately 69% of net sales for the six
months and nine days ended July 9, 1998.

8.   FOREIGN OPERATIONS

     Sales for the Business Unit's European operations accounted for
approximately 8% of net sales for the six months and nine days ended July 9,
1998.

9.   CONTINGENCIES

     In the normal course of business the Business Unit is involved in certain
legal actions and claims. It is the opinion of management that such litigation
and claims will be resolved without material effect on the Business Unit's
results of operations.

10.  SUBSEQUENT EVENT

     On July 9, 1998, Generac completed the sale of substantially all of the
assets and the assumption of certain liabilities of the Business Unit to Generac
Portable Products, LLC (a company formed by The Beacon Group III -- Focus Value
Fund, L.P.) for a net purchase price of approximately $305 million, including
expenses.


                                       71
<PAGE>   72

                                   SCHEDULE II
       PORTABLE PRODUCTS DIVISION, A BUSINESS UNIT OF GENERAC CORPORATION
                     SCHEDULE OF COMBINED VALUATION ACCOUNTS

<TABLE>
<CAPTION>
                                                             BALANCE AT
                                                              BEGINNING          CHARGES TO                           BALANCE AT
                                                              OF PERIOD            EXPENSE           DEDUCTIONS      END OF PERIOD
                                                            ------------        ------------        ------------    ---------------
<S>                                                         <C>                 <C>                 <C>             <C>
ACCOUNTS RECEIVABLE:
       Six Months and Nine Days Ended July 9, 1998                  172                 67                  14                225
</TABLE>


<TABLE>
<CAPTION>
                                                             BALANCE AT
                                                              BEGINNING          CHARGES TO                           BALANCE AT
                                                              OF PERIOD            EXPENSE           DEDUCTIONS      END OF PERIOD
                                                            ------------        ------------        ------------    ---------------
<S>                                                         <C>                 <C>                 <C>             <C>
INVENTORY
       Six Months and Nine Days Ended July 9, 1998                  350                412                 262                500
</TABLE>


                                       72
<PAGE>   73


                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

                                            GENERAC PORTABLE PRODUCTS, INC.
                                            (Registrant)

Date:  March 30, 2001               By      /s/ ERIC R. WILKINSON
                                            -----------------------
                                            Eric R. Wilkinson
                                            President

                                POWER OF ATTORNEY

         The undersigned officers and directors of Generac Portable Products,
Inc. hereby severally constitute Eric R. Wilkinson, President of Generac
Portable Products, Inc., or Richard A. Aube, Secretary and Treasurer of Generac
Portable Products, Inc., and each of them singly our true and lawful attorneys,
with full power to them and each of them singly, to sign for us in our names in
the capacities indicated below the Annual Report on Form 10-K filed herewith and
any and all amendments thereto, and generally to do all such things in our name
and on our behalf in our capacities as officers and directors to enable Generac
Portable Products, Inc. to comply with the provisions of the Securities Exchange
Act of 1934, as amended, and all requirements of the Securities and Exchange
Commission, hereby ratifying and confirming our signatures as they may be signed
by our said attorneys, or any one of them, on the Annual Report on Form 10-K and
any and all amendments thereto.

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of Generac
Portable Products, Inc. and in the capacities and on the date indicated.

Date:  March 30, 2001               By      /s/ ERIC R. WILKINSON
                                            -----------------------
                                            Eric R. Wilkinson
                                            President

Date:  March 30, 2001               By      /s/ RICHARD A. AUBE
                                            ------------------------
                                            Richard A. Aube
                                            Treasurer

Date:  March 30, 2001               By      /s/ R. EUGENE CARTLEDGE
                                            -------------------------
                                            R. Eugene Cartledge
                                            Chairman of the Board

Date:  March 30, 2001               By      /s/ THOMAS A. COMMES
                                            ----------------------
                                            Thomas A. Commes
                                            Director


                                       73
<PAGE>   74


Date:  March 30, 2001               By      /s/ GARY J. LATO
                                            ------------------
                                            Gary J. Lato
                                            Vice President and Secretary

Date:  March 30, 2001               By      /s/ THOMAS G. MENDELL
                                            ----------------------
                                            Thomas G. Mendell
                                            Director

Date:  March 30, 2001               By      /s/ DORRANCE J. NOONAN, JR.
                                            -----------------------------
                                            Dorrance J. Noonan, Jr.
                                            Vice President and Director

Date:  March 30, 2001               By      /s/ R. RALPH PARKS
                                            --------------------
                                            R. Ralph Parks
                                            Director

Date:  March 30, 2001               By      /s/ JAMES P. SCHADT
                                            ---------------------
                                            James P. Schadt
                                            Director

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

                                            GENERAC PORTABLE PRODUCTS, LLC
                                            (Registrant)

Date:  March 30, 2001               By      /s/ DORRANCE J. NOONAN, JR.
                                            -----------------------------
                                            Dorrance J. Noonan, Jr.
                                            President and Chief Executive
                                            Officer

                                POWER OF ATTORNEY

         The undersigned officers and directors of Generac Portable Products,
LLC hereby severally constitute Gary J. Lato, Chief Financial Officer of Generac
Portable Products, LLC, our true and lawful attorney, with full power to him, to
sign for us in our names in the capacities indicated below the Annual Report on
Form 10-K filed herewith and any and all amendments thereto, and generally to do
all such things in our name and on our behalf in our capacities as officers and
directors to enable Generac Portable Products, LLC to comply with the provisions
of the Securities Exchange Act of 1934, as amended, and all requirements of the
Securities and Exchange Commission, hereby ratifying and confirming our
signatures as they may be signed by our said attorney on the Annual Report on
Form 10-K and any and all amendments thereto.

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of Generac
Portable Products, LLC and in the capacities and on the date indicated.


                                       74
<PAGE>   75


Date:  March 30, 2001               By      /s/ DORRANCE J. NOONAN, JR.
                                            -----------------------------
                                            Dorrance J. Noonan, Jr.
                                            President, Chief Executive Officer
                                            and Director

Date:  March 30, 2001               By      /s/ GARY J. LATO
                                            ------------------
                                            Gary J. Lato
                                            Chief Financial Officer

Date:  March 30, 2001               By      /s/ RICHARD A. AUBE
                                            ------------------------
                                            Richard A. Aube
                                            Director

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

                                            GPPW, INC.
                                            (Registrant)

Date  March 30, 2001                By      /s/ FAITH ROSENFELD
                                            ---------------------
                                            Faith Rosenfeld
                                            President

                                POWER OF ATTORNEY

         The undersigned officers and directors of GPPW, Inc. hereby severally
constitute Richard A. Aube, Secretary and Treasurer of GPPW, Inc., our true and
lawful attorney, with full power to him, to sign for us in our names in the
capacities indicated below the Annual Report on Form 10-K filed herewith and any
and all amendments thereto, and generally to do all such things in our name and
on our behalf in our capacities as officers and directors to enable GPPW, Inc.
to comply with the provisions of the Securities Exchange Act of 1934, as
amended, and all requirements of the Securities and Exchange Commission, hereby
ratifying and confirming our signatures as they may be signed by our said
attorney on the Annual Report on Form 10-K and any and all amendments thereto.

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of GPPW,
Inc. and in the capacities and on the date indicated.

Date  March 30, 2001                By      /s/ FAITH ROSENFELD
                                            ---------------------
                                            Faith Rosenfeld
                                            President

Date:  March 30, 2001               By      /s/ RICHARD A. AUBE
                                            ------------------------
                                            Richard A. Aube
                                            Secretary, Treasurer and Director


                                       75
<PAGE>   76


<TABLE>
<CAPTION>
     EXHIBIT
     NUMBER     DESCRIPTION OF EXHIBITS
     ------     -----------------------
<S>             <C>
      2.1       Agreement and Plan of Merger by and Among Briggs and Stratton
                Corporation, GPP Merger Corporation, Generac Portable Products,
                Inc. and The Beacon Group III - Focus Value Fund, L.P.
                (incorporated by reference to Exhibit 2.1 to the Registrants'
                Form 8-K Current Report dated March 23, 2001).
      3.1       Certificate of Incorporation of GPPC, Inc. (incorporated by
                reference to Exhibit 3.1 to the Registrants' Registration
                Statement on Form S-4 dated July 26, 1999).
      3.2       Certificate of Amendment of Certificate of Incorporation Before
                Payment of Any Part of the Capital of GPPC, Inc. (incorporated
                by reference to Exhibit 3.2 to the Registrants' Registration
                Statement on Form S-4 dated July 26, 1999).
      3.3       Certificate of Amendment of Certificate of Incorporation Before
                Payment of Any Part of the Capital of Generac Portable Products,
                Inc. (incorporated by reference to Exhibit 3.3 to the
                Registrants' Registration Statement on Form S-4 dated July 26,
                1999).
      3.4       By-Laws of Generac Portable Products, Inc. (incorporated by
                reference to Exhibit 3.4 to the Registrants' Registration
                Statement on Form S-4 dated July 26, 1999).
      3.5       Certificate of Formation of Generac Portable Products, LLC
                (incorporated by reference to Exhibit 3.5 to the Registrants'
                Registration Statement on Form S-4 dated July 26, 1999).
      3.6       Limited Liability Company Agreement of Generac Portable
                Products, LLC (incorporated by reference to Exhibit 3.6 to the
                Registrants' Registration Statement on Form S-4 dated July 26,
                1999).
      3.7       Articles of Incorporation of GPPW, Inc. (incorporated by
                reference to Exhibit 3.7 to the Registrants' Registration
                Statement on Form S-4 dated July 26, 1999).
      3.8       By-laws of GPPW, Inc. (incorporated by reference to Exhibit 3.8
                to the Registrants' Registration Statement on Form S-4 dated
                July 26, 1999).
      3.9       Certificate of Amendment of Restated Certificate of
                Incorporation of Generac Portable Products, Inc.
      4.1       Indenture, dated as of July 1, 1998 among Generac Portable
                Products, LLC, GPPW, Inc. and Marine Midland Bank, as trustee
                (incorporated by reference to Exhibit 4.1 to the Registrants'
                Registration Statement on Form S-4 dated July 26, 1999).
      4.2       Registration Rights Agreement, dated as of July 2, 1998 among
                Generac Portable Products, LLC, GPPW, Inc. and Deutsche Bank
                Securities Inc. (incorporated by reference to Exhibit 4.2 to the
                Registrants' Registration Statement on Form S-4 dated July 26,
                1999).
      4.3       Form of Security for 11 1/4% senior subordinated notes due 2006
                issued by Generac Portable Products, LLC and GPPW, Inc.
                (including the form of Guarantee) (incorporated by reference to
                Exhibit 4.4 to the Registrants' Registration Statement on Form
                S-4 dated July 26, 1999).
</TABLE>


                                       77
<PAGE>   77


<TABLE>
<S>             <C>
      4.4       Stockholders' Agreement by and among Generac Portable Products,
                Inc., The Beacon Group III - Focus Value Fund L.P. and other
                stockholders dated as of July 9, 1998 (incorporated by reference
                to Exhibit 4.1 to the Registrants' Registration Statement on
                Form S-1 dated May 21, 1999).
      4.5       Unit Purchase Agreement, dated as of November 20, 2000 by and
                among Generac Portable Products, Inc., Generac Portable
                Products, LLC and The Beacon Group - Focus Value Fund III.
      10.1      OEM Engine Supply Agreement dated July 9, 1998 between Generac
                Corporation and Generac Portable Products, Inc. (incorporated by
                reference to Exhibit 10.1 to the Registrants' Registration
                Statement on Form S-4 dated July 26, 1999).
      10.2      Fourth Amendment, dated as of October 18, 2000, to Credit
                Agreement dated July 9, 1998 among Generac Portable Products,
                LLC, Generac Portable Products, Inc., GPPW, Inc., various banks
                and Bankers Trust Company, as administrative agent.
      24.1      Powers of Attorney (included in the signature pages of this Form
                10-K).
</TABLE>



                                       78