Snap-on Announces First Quarter 2011 Results

Diluted EPS of $0.96 increases 52.4% from $0.63 last year;
Sales of $693.7 million up 11.6% year over year;
Operating earnings of $99.8 million rises 42.6% from 2010

KENOSHA, Wis., Apr 21, 2011 (BUSINESS WIRE) -- Snap-on Incorporated (NYSE: SNA), a leading global innovator, manufacturer and marketer of tools, equipment, diagnostics, repair information and systems solutions for professional users performing critical tasks, today announced operating results for the first quarter of 2011.

• Sales of $693.7 million increased $72.1 million, or 11.6%, from 2010 levels; excluding $9.1 million of favorable foreign currency translation, organic sales increased 10.0%.
• Gross profit of $330.6 million improved to 47.7% of sales compared with 46.3% a year ago.
• Operating earnings before financial services of $87.3 million increased $15.6 million from 2010 levels and, as a percentage of sales, improved to 12.6% from 11.6% a year ago.
• Financial services operating earnings of $12.5 million increased $14.2 million from 2010 levels primarily due to continued growth in the company's on-book finance portfolio.
• Consolidated operating earnings of $99.8 million increased $29.8 million, or 42.6%, from 2010 levels; as a percentage of revenues, operating earnings improved to 13.9% from 11.1% a year ago.
• Net earnings of $56.2 million, or $0.96 per diluted share, increased from $36.8 million, or $0.63 per diluted share, a year ago.

"We are very encouraged by Snap-on's first quarter performance," said Nick Pinchuk, Snap-on chairman and chief executive officer, "and by the continued strengthening of our strategic position along each of our runways for growth. We believe the progress being made in enhancing the franchise network, expanding in the vehicle repair garage, extending in critical industries and building in emerging markets, coupled with our ongoing commitment to the Snap-on Value Creation Processes and the ramp-up of our on-book finance portfolio, positions Snap-on quite strongly for continued growth going forward. Overall, our first quarter reflects significant effort and achievement across the company. In that regard, I thank our franchisees and associates worldwide for their continued contributions and commitment."

Segment Results

Commercial & Industrial Group segment sales of $272.4 million in the first quarter increased $25.4 million, or 10.3%, from 2010 levels, primarily reflecting continued higher sales to customers in emerging markets and increased sales in the segment's European-based hand tools business. Excluding $4.4 million of favorable foreign currency translation, organic sales increased 8.4%.

Operating earnings of $31.6 million in the period increased $6.2 million from 2010 levels primarily due to higher sales, benefits from the Snap-on Value Creation Processes, including ongoing efficiency and productivity (collectively, "Rapid Continuous Improvement" or "RCI") initiatives, and savings from restructuring actions. As a percentage of sales, the Group's operating earnings of 11.6% in the first quarter increased from 10.3% a year ago.

Snap-on Tools Group segment sales of $282.0 million in the first quarter increased $33.5 million, or 13.5%, from 2010 levels. Excluding $3.9 million of favorable foreign currency translation, organic sales increased 11.7%, largely due to continued higher sales in the United States.

Operating earnings of $37.1 million in the period increased $10.1 million from 2010 levels as contributions from higher sales were partially offset by increased volume-related and other expenses and $2.7 million of higher restructuring costs. As a percentage of sales, operating earnings of 13.2% in the first quarter increased from 10.9% a year ago.

Repair Systems & Information Group segment sales of $227.0 million in the first quarter increased $24.9 million, or 12.3%, from 2010 levels, on particularly strong sales of undercar equipment and increased essential tool and facilitation program sales. Excluding $1.1 million of favorable foreign currency translation, organic sales increased 11.7%.

Operating earnings of $42.8 million in the period increased $5.8 million, or 15.7%, from 2010 levels primarily due to higher sales, lower restructuring costs and benefits from ongoing RCI and restructuring actions, partially offset by increased product development expenses. As a percentage of sales, operating earnings of 18.9% in the first quarter increased from 18.3% a year ago.

Financial Services operating earnings were $12.5 million on $25.8 million of revenue in the first quarter of 2011, as compared with an operating loss of $1.7 million on $9.7 million of revenue last year. The year-over-year increase in both revenue and operating earnings primarily reflects the growth in the company's on-book finance portfolio.

Corporate expenses of $24.2 million in the first quarter of 2011 increased $6.5 million from prior-year levels primarily due to increased performance-based and stock-based (including mark-to-market) compensation expenses and anticipated higher pension expense.

Outlook

Snap-on anticipates continuing with its planned strategic investments in 2011, including further expansion in emerging markets. As a result, the company now expects that capital expenditures in 2011 will approximate $65 million, of which $18.6 million was spent in the first quarter. Snap-on also expects to incur $11 million of higher year-over-year pension expense in 2011 largely due to the amortization of investment losses incurred in 2008 related to its domestic pension plan assets. Interest expense on the $250 million of senior notes issued in December 2010 will approximate $2.7 million per quarter in 2011. Snap-on anticipates that its full year 2011 effective income tax rate will approximate 33.0%.

Conference Call and Webcast April 21, 2011, at 9:00 a.m. Central Time

A discussion of this release will be webcast on Thursday, April 21, 2011, at 9:00 a.m. Central Time, and a replay will be available for at least 10 days following the call. To access the webcast, visit www.snapon.com/sna and click on the link toward the bottom of the page. Additional detail about Snap-on is also available on the Snap-on web site.

About Snap-on

Snap-on Incorporated is a leading global innovator, manufacturer and marketer of tools, equipment, diagnostics, repair information and systems solutions for professional users performing critical tasks. Products and services include hand and power tools, tool storage, diagnostics software, information and management systems, shop equipment and other solutions for vehicle dealerships and repair centers, as well as customers in industry, government, agriculture, aviation and natural resources. Products and services are sold through the company's franchisee, company-direct, distributor and Internet channels. Founded in 1920, Snap-on is a $2.6 billion, S&P 500 company headquartered in Kenosha, Wisconsin.

Forward-looking Statements

Statements in this news release that are not historical facts, including statements that (i) are in the future tense; (ii) include the words "expects," "anticipates," "intends," "approximates," or similar words that reference Snap-on or its management; (iii) are specifically identified as forward-looking; or (iv) describe Snap-on's or management's future outlook, plans, estimates, objectives or goals, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.Snap-on cautions the reader that this news release contains statements, including earnings projections, that are forward-looking in nature and were developed by management in good faith and, accordingly, are subject to risks and uncertainties regarding Snap-on's expected results that could cause (and in some cases have caused) actual results to differ materially from those described or contemplated in any forward-looking statement. Factors that may cause the company's actual results to differ materially from those contained in the forward-looking statements include those found in the company's reports filed with the Securities and Exchange Commission, including the information under the "Safe Harbor" and "Risk Factors" headings in its Annual Report on Form 10-K for the fiscal year ended January 1, 2011, which are incorporated herein by reference.Snap-on disclaims any responsibility to update any forward-looking statement provided in this news release, except as required by law.

For additional information, please visit www.snapon.com.

SNAP-ON INCORPORATED
Condensed Consolidated Statements of Earnings
(Amounts in millions, except per share data)
(unaudited)
		Three Months Ended
		April 2,				April 3,
		2011				2010
Net sales		$	693.7			$	621.6
Cost of goods sold			(363.1	)			(334.0	)
Gross profit			330.6				287.6
Operating expenses			(243.3	)			(215.9	)
Operating earnings before financial services			87.3				71.7
Financial services revenue			25.8				9.7
Financial services expenses			(13.3	)			(11.4	)
Operating earnings (loss) from financial services			12.5				(1.7	)
Operating earnings			99.8				70.0
Interest expense			(16.3	)			(14.0	)
Other income (expense) - net			0.8				0.3
Earnings before income taxes and equity earnings			84.3				56.3
Income tax expense			(27.2	)			(19.0	)
Earnings before equity earnings			57.1				37.3
Equity earnings, net of tax			0.9				0.7
Net earnings			58.0				38.0
Net earnings attributable to noncontrolling interests			(1.8	)			(1.2	)
Net earnings attributable to Snap-on Inc.		$	56.2			$	36.8
Net earnings per share attributable to Snap-on Inc.
Basic		$	0.97			$	0.64
Diluted			0.96				0.63
Weighted-average shares outstanding
Basic			58.2				57.8
Effect of dilutive options			0.5				0.5
Diluted			58.7				58.3

SNAP-ON INCORPORATED
Supplemental Segment Information
(Amounts in millions)
(unaudited)
			Three Months Ended
			April 2,				April 3,
			2011				2010
Net sales
Commercial & Industrial Group			$	272.4			$	247.0
Snap-on Tools Group				282.0				248.5
Repair Systems & Information Group				227.0				202.1
Segment net sales				781.4				697.6
Intersegment eliminations				(87.7	)			(76.0	)
Total net sales			$	693.7			$	621.6
Financial Services revenue				25.8				9.7
Total revenues			$	719.5			$	631.3
Operating earnings (loss)
Commercial & Industrial Group			$	31.6			$	25.4
Snap-on Tools Group				37.1				27.0
Repair Systems & Information Group				42.8				37.0
Financial Services				12.5				(1.7	)
Segment operating earnings				124.0				87.7
Corporate				(24.2	)			(17.7	)
Operating earnings			$	99.8			$	70.0
Interest expense				(16.3	)			(14.0	)
Other income (expense) - net				0.8				0.3
Earnings before income taxes and equity earnings			$	84.3			$	56.3

SNAP-ON INCORPORATED
Condensed Consolidated Balance Sheets
(Amounts in millions)
(unaudited)
					April 2,				January 1,
					2011				2011
Assets
	Cash and cash equivalents				$	517.3			$	572.2
	Trade and other accounts receivable - net					457.6				443.3
	Finance receivables - net					232.8				215.3
	Contract receivables - net					42.4				45.6
	Inventories - net					368.6				329.4
	Deferred income tax assets					83.5				87.0
	Prepaid expenses and other assets					101.1				72.7
	Total current assets					1,803.3				1,765.5
	Property and equipment - net					352.6				344.0
	Deferred income tax assets					91.7				91.5
	Long-term finance receivables - net					370.7				345.7
	Long-term contract receivables - net					131.6				119.3
	Goodwill					822.8				798.4
	Other intangibles - net					194.0				192.8
	Other assets					73.3				72.2
Total Assets					$	3,840.0			$	3,729.4
Liabilities and Shareholders' Equity
	Notes payable and current maturities of long-term debt				$	217.5			$	216.0
	Accounts payable					141.5				146.1
	Accrued benefits					48.7				45.0
	Accrued compensation					66.7				86.7
	Franchisee deposits					39.5				40.4
	Other accrued liabilities					361.0				346.9
	Total current liabilities					874.9				881.1
	Long-term debt					953.0				954.8
	Deferred income tax liabilities					96.6				94.4
	Retiree health care benefits					58.6				59.6
	Pension liabilities					259.2				246.1
	Other long-term liabilities					92.1				89.0
	Total Liabilities					2,334.4				2,325.0
Shareholders' Equity
	Shareholders' Equity attributable to Snap-on Inc.
	Common stock					67.3				67.3
	Additional paid-in capital					174.5				169.2
	Retained earnings					1,681.4				1,644.1
	Accumulated other comprehensive loss					(40.4	)			(104.8	)
	Treasury stock at cost					(393.1	)			(387.3	)
	Total Shareholders' Equity attributable to Snap-on Inc.					1,489.7				1,388.5
	Noncontrolling interests					15.9				15.9
	Total Shareholders' Equity					1,505.6				1,404.4
Total Liabilities and Shareholders' Equity					$	3,840.0			$	3,729.4

SNAP-ON INCORPORATED
Condensed Consolidated Statements of Cash Flow
(Amounts in millions)
(unaudited)
				Three Months Ended
				April 2,				April 3,
				2011				2010
Operating activities:
Net earnings				$	58.0			$	38.0
Adjustments to reconcile net earnings to net cash provided (used) by
operating activities:
Depreciation					12.4				12.3
Amortization of other intangibles					5.9				5.9
Provision for losses on finance receivables					1.8				3.4
Provision for losses on non-finance receivables					5.7				6.3
Stock-based compensation expense					5.9				3.0
Excess tax benefits from stock-based compensation					(1.3	)			(0.2	)
Deferred income tax provision (benefit)					3.6				(4.2	)
Changes in operating assets and liabilities:
(Increase) decrease in trade and other accounts receivable					(9.5	)			(22.7	)
(Increase) decrease in contract receivables					(7.5	)			(10.7	)
(Increase) decrease in inventories					(29.3	)			(22.2	)
(Increase) decrease in prepaid and other assets					(11.5	)			(6.9	)
Increase (decrease) in accounts payable					(6.3	)			6.6
Increase (decrease) in accruals and other liabilities					-				1.8
Net cash provided by operating activities					27.9				10.4
Investing activities:
Additions to finance receivables					(128.2	)			(110.7	)
Collections of finance receivables					86.8				45.5
Capital expenditures					(18.6	)			(5.7	)
Disposal of property and equipment					0.2				0.1
Net cash used by investing activities					(59.8	)			(70.8	)
Financing activities:
Repayment of long-term debt					-				(150.0	)
Proceeds from short-term borrowings					9.6				6.4
Repayments of short-term borrowings					(8.5	)			(5.8	)
Net increase in other short-term borrowings					0.5				0.4
Purchase of treasury stock					(17.6	)			-
Proceeds from stock purchase and option plans					11.8				2.0
Cash dividends paid					(18.9	)			(17.4	)
Excess tax benefits from stock-based compensation					1.3				0.2
Other					(2.1	)			(2.0	)	`
Net cash used by financing activities					(23.9	)			(166.2	)
Effect of exchange rate changes on cash and cash equivalents					0.9				(0.5	)
Decrease in cash and cash equivalents					(54.9	)			(227.1	)
Cash and cash equivalents at beginning of year					572.2				699.4
Cash and cash equivalents at end of period				$	517.3			$	472.3
Supplemental cash flow disclosures:
Cash paid for interest				$	(24.1	)		$	(28.2	)
Net cash paid for income taxes					(8.7	)			(10.2	)

SNAP-ON INCORPORATED
Supplemental Consolidating Data - Condensed Statements of Earnings
(Amounts in millions)
(unaudited)
				Operations*								Financial Services
				Three Months Ended								Three Months Ended
				April 2,				April 3,				April 2,				April 3,
				2011				2010				2011				2010
Net sales				$	693.7			$	621.6			$	-			$	-
Cost of goods sold					(363.1	)			(334.0	)			-				-
Gross profit					330.6				287.6				-				-
Operating expenses					(243.3	)			(215.9	)			-				-
Operating earnings before financial services					87.3				71.7				-				-
Financial services revenue					-				-				25.8				9.7
Financial services expenses					-				-				(13.3	)			(11.4	)
Operating earnings (loss) from financial services					-				-				12.5				(1.7	)
Operating earnings (loss)					87.3				71.7				12.5				(1.7	)
Interest expense					(16.0	)			(14.0	)			(0.3	)			-
Intersegment interest income (expense) - net					7.8				3.8				(7.8	)			(3.8	)
Other income (expense) - net					0.8				0.3				-				-
Earnings (loss) before income taxes and equity earnings					79.9				61.8				4.4				(5.5	)
Income tax (expense) benefit					(25.7	)			(21.4	)			(1.5	)			2.4
Earnings (loss) before equity earnings					54.2				40.4				2.9				(3.1	)
Financial services - net earnings (loss)
attributable to Snap-on Inc.					2.9				(3.1	)			-				-
Equity earnings, net of tax					0.9				0.7				-				-
Net earnings (loss)					58.0				38.0				2.9				(3.1	)
Net earnings attributable to noncontrolling interests					(1.8	)			(1.2	)			-				-
Net earnings (loss) attributable to Snap-on Inc.				$	56.2			$	36.8			$	2.9			$	(3.1	)
* Snap-on Inc. with Financial Services on the equity method.
Transactions between Operations and Financial Services were eliminated to arrive at the consolidated financial statements.

SNAP-ON INCORPORATED
Supplemental Consolidating Data - Condensed Balance Sheets
(Amounts in millions)
(unaudited)
					Operations*						Financial Services
					April 2,			January 1,			April 2,			January 1,
					2011			2011			2011			2011
Assets
	Cash and cash equivalents				$	406.6		$	462.6		$	110.7		$	109.6
	Intersegment receivables					7.6			6.7			-			-
	Trade and other accounts receivable - net					448.0			434.5			9.6			8.8
	Finance receivables - net					-			-			232.8			215.3
	Contract receivables - net					8.1			7.9			34.3			37.7
	Inventories - net					368.6			329.4			-			-
	Deferred income tax assets					82.9			82.4			0.6			4.6
	Prepaid expenses and other assets					102.4			74.1			1.2			0.7
	Total current assets					1,424.2			1,397.6			389.2			376.7
	Property and equipment - net					351.6			343.0			1.0			1.0
	Investment in Financial Services					143.9			134.4			-			-
	Deferred income tax assets					89.4			75.7			2.3			15.8
	Long-term finance receivables - net					-			-			370.7			345.7
	Long-term contract receivables - net					8.5			8.4			123.1			110.9
	Goodwill					822.8			798.4			-			-
	Other intangibles - net					194.0			192.8			-			-
	Other assets					74.1			72.8			0.5			0.5
Total Assets					$	3,108.5		$	3,023.1		$	886.8		$	850.6
Liabilities and Shareholders' Equity
	Notes payable and current maturities of long-term debt				$	217.5		$	216.0		$	-		$	-
	Accounts payable					133.9			129.6			7.6			16.5
	Intersegment payables					-			-			7.6			6.7
	Accrued benefits					48.6			45.0			0.1			-
	Accrued compensation					65.3			83.4			1.4			3.3
	Franchisee deposits					39.5			40.4			-			-
	Other accrued liabilities					248.6			218.1			116.2			132.0
	Total current liabilities					753.4			732.5			132.9			158.5
	Long-term debt and intersegment long-term debt					367.4			418.8			585.6			536.0
	Deferred income tax liabilities					96.5			94.3			0.1			0.1
	Retiree health care benefits					58.6			59.6			-			-
	Pension liabilities					259.2			246.1			-			-
	Other long-term liabilities					67.8			67.4			24.3			21.6
	Total Liabilities					1,602.9			1,618.7			742.9			716.2
	Total Shareholders' Equity attributable to Snap-on Inc.					1,489.7			1,388.5			143.9			134.4
	Noncontrolling interests					15.9			15.9			-			-
	Total Shareholders' Equity					1,505.6			1,404.4			143.9			134.4
Total Liabilities and Shareholders' Equity					$	3,108.5		$	3,023.1		$	886.8		$	850.6
* Snap-on Inc. with Financial Services on the equity method.
Transactions between Operations and Financial Services were eliminated to arrive at the consolidated financial statements.

SOURCE: Snap-on Incorporated

Snap-on Incorporated
Investors:
Leslie Kratcoski, 262/656-6121
Media:
Richard Secor, 262/656-5561