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Snap-on Reports EPS of $1.84 for 2001 and $0.52 for the Fourth Quarter Before Special Charges and One-time Items; Achieves Improved Operating Cash Flow and Higher U.S. Dealer Sales
-- Earnings from continuing operations for 2001 were $106.7
million, or $1.84 per share, compared with $147.8 million, or
$2.52 per share, in 2000 before special charges in both years.
In 2001, special charges were $85.2 million after tax, or
$1.47 per share, compared with charges of $24.7 million after
tax, or $0.42 per share, in 2000. Net earnings in 2001 were
$19.0 million, or $0.33 per share, including a net charge of
$2.5 million, or $0.04 per share, for the cumulative effect of
adopting SFAS No. 133, compared with net income in 2000 of
$148.5 million, or $2.53 per share, including a cumulative net
gain of $25.4 million, or $0.43 per share, for a change in
accounting principle related to pensions.
-- Net sales for 2001 were $2,095.7 million, a decline of 3.7%
compared with $2,175.7 million in the prior year. An increase
in the U.S. dealer business was offset by lower demand for
big-ticket equipment worldwide and tools in the commercial and
industrial sector. Currency translation had a negative impact
of 2% on 2001 consolidated sales.
-- Fourth-quarter 2001 earnings from continuing operations were
$30.1 million, or $0.52 per share, compared with $38.2
million, or $0.66 per share, in 2000, before special charges
in both years. Inclusive of these charges, fourth-quarter 2001
net loss was $17.4 million, or $0.30 per share, compared with
net earnings of $13.7 million, or $0.24 per share, in 2000.
-- Net sales were $534.6 million for the fourth quarter of 2001,
a 3.9% decline compared with $556.3 million in the prior year.
A sales increase in the U.S. dealer business was offset by
lower sales of equipment worldwide and weaker sales of tools
in the industrial sector.
-- For the fourth quarter of 2001, special charges of $65.5
million ($47.5 million after tax or $0.82 per share) include
$17.2 million in restructuring and non-recurring charges for
the consolidation or closure of nine facilities, related asset
write-downs and severance costs for the elimination of 340
positions, as part of a previously announced restructuring
plan. These actions are on track, and Snap-on expects $40
million in cost savings in 2002. For the full-year 2001, a
total of 35 facilities were consolidated or closed and the
work force reduction was 6% compared with the original
estimate of 4%. Operating expenses include $48.3 million of
charges, primarily reflecting $44 million for the previously
announced resolution of an arbitration matter that includes
patents.
-- Free cash flow in fourth-quarter 2001 was $69.2 million. In
the quarter, cash generated from operations was $89.2 million,
reflecting a $54.4 million reduction in inventory levels. As a
result, debt was reduced to $474.6 million at year end and the
total-debt-to-capital ratio strengthened to 38.0% compared
with 39.2% at year-end 2000.
"Snap-on continues to make strides in improving operating performance and cash
flow, in spite of the soft economic conditions," said Dale F. Elliott, Snap-on
president and chief executive officer. "While economic caution clearly remains
the order of the day in the near term, a strong balance sheet and market-leading
brands provide a solid foundation. Our businesses are responding to the need to
improve operational fitness, pursue profitable growth and deliver value to our
customers and shareholders."
Fourth QuarterCompared with the prior year, fourth-quarter 2001 sales were adversely impacted by continued difficult economic conditions. Sales declines in the worldwide industrial sector and in equipment for the vehicle-repair market in Europe and North America offset increased U.S. dealer sales of tools and tool storage. Operating profit margin before net finance income, at 9.5% excluding special charges, improved 170 basis points sequentially from the third quarter, benefiting from Snap-on's drive to improve operational fitness. Lower sales and the emphasis on reducing inventories inhibited further margin enhancement and contributed to the lower operating margin compared to the 2000 fourth quarter.
In the Snap-on Dealer Group, worldwide sales were flat as a slight improvement in volume was offset by an unfavorable 1% currency impact. Increased sales of tools and tool storage were offset by a decline in big-ticket equipment and diagnostics sold through the tech rep organization. Excluding tech rep volume, U.S. dealer business sales grew 5%, reflecting the favorable impact of an expanded number of dealers from Snap-on's success with its "More Feet on the Street" program.
In the Commercial and Industrial Group, sales declined 7.4% reflecting continued soft demand for big-ticket capital goods equipment and weaker demand for professional tools in many sectors associated with the manufacturing and industrial marketplace.
Net finance income was up 6.7% over last year. The effects of the favorable interest-rate environment offset lower financing originations, reflecting the slower demand for equipment.
Cash flow was strong in the quarter. Cash generated from operations was $89.2 million compared with $75.1 million for the same period a year ago. A substantial improvement in working capital management was partially offset by the decline in net earnings. Free cash flow was $69.2 million compared with $59.9 million in the fourth quarter of 2000.
Full YearDuring 2001, weakened economic conditions lowered sales demand, which in turn negatively impacted operating margins. Expected progress was achieved, however, due to previously announced actions to control costs, improve underperforming business units and adapt to the changed economic conditions.
In the Snap-on Dealer Group, worldwide net sales declined 1.9%. Excluding currency translation, sales were flat. In the U.S. dealer business, increased sales of tools and tool storage were offset by lower equipment sales through the tech rep organization. Excluding tech rep volume, U.S. dealer business sales were up 3%, in spite of the difficult economy, reflecting the continued strength of the franchised dealer channel. During 2001, Snap-on focused resources on expanding its dealer network through its More Feet on the Street program of second vans and second franchises, achieving a net addition of 203 dealers in the United States. New products, such as the handheld, color graphing scanner and air-powered Crud Thug(TM) material-removing tool, contributed incremental sales and enhanced Snap-on's leadership position in the marketplace.
In the Commercial and Industrial Group, worldwide net sales declined 5.4% for the year. Unfavorable currency translation had a negative impact of 2%. The slowing economy depressed demand for equipment throughout the year, while the demand for tools in many industrial sectors, such as manufacturing, weakened in the second half. Sales in Europe declined 9%, with approximately one-half due to unfavorable currency translation. Equipment business operations are being consolidated in North America, with a clear focus toward achieving an improved operating profit. In Europe, the diagnostics business is progressing toward a pan-European "build-to-order" supply process. New product introductions, such as ergonomic Bahco(R) hand tools and productivity-enhancing wheel balancers and aligners, strengthened Snap-on's marketplace position.
Net finance income in 2001 was below prior year, as lower originations were partially offset by the effects of a more favorable interest-rate environment. In 2000, net finance income benefited from deferred income realized from the sale of extended-credit receivables associated with the formation of the credit joint venture in 1999.
In spite of lower net earnings, free cash flow for 2001 was strong at $110.1 million, as a result of increased working capital turns, compared with the $132.6 million last year. The emphasis on improving inventory management resulted in a $44 million inventory reduction in 2001 following a $36 million reduction in 2000. Total debt at year end was down $68.7 million, or 13%, from last year, and the total-debt-to-capital ratio strengthened to 38.0% at year-end from 39.2% at year-end 2000.
Special ChargesFor the fourth quarter of 2001, special charges of $65.5 million ($47.5 million after tax or $0.82 per share) include restructuring and non-recurring charges of $17.2 million, and $48.3 million of non-comparable charges included in operating expenses. Restructuring charges of $17.0 million were for the consolidation or closure of nine facilities, related asset write-downs and severance costs for the elimination of 340 positions. The $0.2 million in cost of goods for non-recurring items is for inventory write-downs associated with these actions. The $48.3 million charge in operating expenses includes $44.0 million for the resolution of an arbitration matter and $3.0 million in related legal costs, and $1.3 million reflecting a revised estimate of costs related to the termination of a supplier relationship previously disclosed in the second quarter of 2001. As a result of the ongoing review of business operations throughout 2001, the work force reduction was 6% compared with an original estimate of 4%. Restructuring and non-comparable costs (excluding arbitration-related costs) are expected to total $81 million pretax (including an estimated $7-$8 million in transition costs associated with these restructuring actions that are expected to be incurred in the first half of 2002) compared with the original range of $65-$75 million estimated in June 2001.
Outlook"We expect current weak economic conditions to continue to challenge sales growth and profitability, particularly in the first half of 2002," said Elliott. "With $40 million in pretax savings targeted in 2002 from our restructuring and cost control activities, we expect to invest one-half of those savings to support the further development of innovative new products and profitable growth initiatives, such as continued expansion of the Snap-on dealer network."
Assuming no further economic deterioration, continued currency stability and lower sales (attributable to both weak economic and seasonal factors), Snap-on expects first-quarter 2002 EPS to be in a range of $0.42 to $0.47 per share (before restructuring transition costs and without goodwill amortization of $0.05 per share as now required with the adoption of SFAS No. 142). Continued emphasis on inventory reduction along with the continued weak economic conditions will limit Snap-on's ability to benefit from expected restructuring savings in the first quarter. In the second quarter, however, Snap-on expects that improving seasonal volume and the benefits from operational fitness savings will lead to EPS gains year over year. In the second half, should economic conditions begin to improve, Snap-on expects further EPS growth.
A discussion of today's announcement will be broadcast via webcast at www.snapon.com today at 10 a.m. CST. Please see Snap-on's Web site for additional detail.
Snap-on Incorporated is a leading global innovator, manufacturer and marketer of tool, diagnostic and equipment solutions for professional tool users. Product lines include hand and power tools, diagnostics and shop equipment, tool storage, diagnostics software and other solutions for vehicle-service, industrial, government and agricultural customers, and commercial applications, including construction and electrical. Products are sold through its franchised dealer van, company-direct sales and distributor channels, as well as over the Internet. Founded in 1920, Snap-on is a $2+ billion, S&P 500 company headquartered in Kenosha, Wisconsin, and employs approximately 13,500 people worldwide.
Statements in this news release that are not historical facts, including statements (i) that include the words "expects," "targets," "anticipates," or "estimates" or similar words that reference Snap-on or its management; (ii) specifically identified as forward-looking; or (iii) describing Snap-on's or management's future outlook, plans, objectives or goals, are forward-looking statements. Snap-on or its representatives may also make similar forward-looking statements from time to time orally or in writing. Snap-on cautions the reader that these statements are subject to risks, uncertainties or other factors that could cause (and in some cases have caused) actual results to differ materially from those described in any such statement. Those important factors include the validity of the assumptions set forth above and the timing and progress with which Snap-on can continue to achieve further cost reductions and achieve savings from its restructuring initiatives; Snap-on's ability to retain and attract dealers and to withstand external negative factors including terrorist disruptions on business, changes in trade, monetary and fiscal policies, laws and regulations, or other activities of governments or their agencies; and the absence of significant changes in the current competitive environment, inflation, energy supply or pricing, legal proceedings, supplier disruptions, currency fluctuations or the material worsening of economic and political situations around the world. These factors may not constitute all factors that could cause actual results to differ materially from those discussed in any forward-looking statement. Snap-on operates in a continually changing business environment and new factors emerge from time to time. Snap-on cannot predict such factors nor can it assess the impact, if any, of such factors on Snap-on's financial position or its results of operations. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results. Snap-on disclaims any responsibility to update any forward-looking statement provided in this news release.
SNAP-ON INCORPORATED
Consolidated Statements of Earnings
(Amounts in millions, except per share data)
FOURTH QUARTER ENDED YEAR ENDED
-------------------------- --------------------------
December 29, December 30, December 29, December 30,
2001 2000 2001 2000
------------ ----------- ------------ ------------
Net sales $ 534.6 $ 556.3 $ 2,095.7 $ 2,175.7
Cost of goods sold (290.8) (296.7) (1,134.1) (1,169.4)
Cost of goods sold -
non-recurring
charges (0.2) (9.5) (12.6) (9.5)
Operating expenses (241.3) (216.1) (848.7) (792.6)
------------ ----------- ------------ ------------
Operating profit
before net
finance income 2.3 34.0 100.3 204.2
Net finance income 8.0 7.5 35.7 38.1
Restructuring and
other non-recurring
charges (17.0) (11.9) (49.4) (12.3)
Interest expense (8.3) (9.5) (35.5) (40.7)
Other income
(expense) - net (3.0) 0.1 (3.5) 3.3
------------ ----------- ------------ ------------
Earnings (loss)
from continuing
operations before
income taxes (18.0) 20.2 47.6 192.6
Income tax expense
(benefit) from
continuing
operations (0.6) 6.5 26.1 69.5
------------ ----------- ------------ ------------
Earnings (loss)
from continuing
operations $ (17.4) $ 13.7 $ 21.5 $ 123.1
Cumulative effect
of a change in
accounting
principle, net
of tax - - (2.5) 25.4
------------ ----------- ------------ ------------
Net earnings
(loss) $ (17.4) $ 13.7 $ 19.0 $ 148.5
============ =========== ============ ============
Earnings per
share - basic:
Earnings (loss)
from continuing
operations $ (0.30) $ 0.25 $ 0.37 $ 2.11
Cumulative effect
of a change in
accounting
principle,
net of tax - - (0.04) 0.43
------------ ----------- ------------ ------------
Net earnings
(loss) $ (0.30) $ 0.25 $ 0.33 $ 2.54
============ =========== ============ ============
Earnings per
share - diluted:
Earnings (loss)
from continuing
operations $ (0.30) $ 0.24 $ 0.37 $ 2.10
Cumulative
effect of a
change in
accounting
principle,
net of tax - - (0.04) 0.43
------------ ----------- ------------ ------------
Net earnings
(loss) $ (0.30) $ 0.24 $ 0.33 $ 2.53
============ =========== ============ ============
Weighted-average
shares outstanding:
Basic 57.9 58.0 57.9 58.4
Effect of
dilutive options - 0.2 0.2 0.2
------------ ----------- ------------ ------------
Diluted 57.9 58.2 58.1 58.6
============ =========== ============ ============
SNAP-ON INCORPORATED
Consolidated Balance Sheets
(Amounts in millions)
December 29, December 30,
2001 2000
------------- ------------
Assets
Cash and cash equivalents $ 6.7 $ 6.1
Accounts receivable - net of allowances 615.2 644.5
Inventories 375.2 418.9
Prepaid expenses and other assets 142.3 116.9
------------- ------------
Total current assets 1,139.4 1,186.4
Property and equipment - net 327.7 345.1
Deferred income tax benefits 27.7 33.0
Intangibles - net 391.9 424.6
Other assets 87.6 80.0
------------- ------------
Total Assets $ 1,974.3 $2,069.1
============= ============
Liabilities
Accounts payable $ 141.2 $ 161.0
Notes payable and current maturities
of long-term debt 29.1 70.3
Accrued compensation 58.7 56.3
Dealer deposits 42.0 39.8
Deferred subscription revenue 45.0 44.9
Accrued restructuring reserves 23.1 -
Other accrued liabilities 210.3 165.7
------------- ------------
Total current liabilities 549.4 538.0
Long-term debt 445.5 473.0
Deferred income taxes 24.7 24.7
Retiree health care benefits 92.7 92.2
Pension liability 54.5 60.1
Other long-term liabilities 31.7 37.1
------------- ------------
Total Liabilities $ 1,198.5 $1,225.1
Shareholders' Equity
Common stock - $1 par value $ 66.8 $ 66.8
Additional paid-in capital 108.0 71.6
Retained earnings 1,014.7 1,051.3
Accumulated other comprehensive
income (loss) (120.6) (87.2)
Grantor stock trust at fair market value (203.0) (179.6)
Treasury stock at cost (90.1) (78.9)
------------- ------------
Total Shareholders' Equity $ 775.8 $ 844.0
------------- ------------
Total Liabilities and
Shareholders' Equity $ 1,974.3 $2,069.1
============= ============
SNAP-ON INCORPORATED
Supplemental Financial Information
Snap-on has prepared the following unaudited supplemental financial
data to provide additional information. The supplemental data
illustrates the impact on Snap-on's results of operations of the
restructuring, non-recurring and other non-comparable charges
(collectively, "special charges") incurred by Snap-on in 2001 and
2000. Snap-on incurred special charges totaling $120.4 million in
2001, including $65.5 million in the fourth quarter, and $38.6 million
in 2000, of which $38.2 million was incurred in the fourth quarter.
Fourth Quarter Ended Fourth Quarter Ended
December 29, 2001 December 30, 2000
-------------------------- --------------------------
(unaudited - in Before Before
$millions, Special Special Special Special
except EPS) Actuals Charges Charges Actuals Charges Charges
-------- -------- -------- -------- -------- --------
Net sales $ 534.6 $ - $ 534.6 $ 556.3 $ - $ 556.3
Cost of goods sold (290.8) - (290.8) (296.7) - (296.7)
Cost of goods sold
-non-recurring
charges (0.2) (0.2) - (9.5) (9.5) -
Operating expenses (241.3) (48.3) (193.0) (216.1) (16.8) (199.3)
-------- -------- -------- -------- -------- --------
Operating profit
before net
finance income 2.3 (48.5) 50.8 34.0 (26.3) 60.3
Net finance income 8.0 - 8.0 7.5 - 7.5
Restructuring
and other
non-recurring
charges (17.0) (17.0) - (11.9) (11.9) -
Interest expense (8.3) - (8.3) (9.5) - (9.5)
Other income
(expense) - net (3.0) - (3.0) 0.1 - 0.1
-------- -------- -------- -------- -------- --------
Earnings (loss)
from continuing
operations
before income
taxes (18.0) (65.5) 47.5 20.2 (38.2) 58.4
Income tax
expense
(benefit)
from continuing
operations (0.6) (18.0) 17.4 6.5 (13.7) 20.2
-------- -------- -------- -------- -------- --------
Earnings (loss)
from continuing
operations $ (17.4)$ (47.5)$ 30.1 $ 13.7 $ (24.5)$ 38.2
Cumulative effect
of a change in
accounting
principle,
net of tax - - - - - -
-------- -------- -------- -------- -------- --------
Net earnings
(loss) $ (17.4)$ (47.5)$ 30.1 $ 13.7 $ (24.5)$ 38.2
======== ======== ======== ======== ======== ========
Earnings per
share - basic:
Earnings (loss)
from continuing
operations $ (0.30)$ (0.82)$ 0.52 $ 0.25 $ (0.42)$ 0.67
Cumulative effect
of a change in
accounting
principle,
net of tax - - - - - -
-------- -------- -------- -------- -------- --------
Net earnings
(loss) $ (0.30)$ (0.82)$ 0.52 $ 0.25 $ (0.42)$ 0.67
======== ======== ======== ======== ======== ========
Earnings per
share - diluted:
Earnings (loss)
from continuing
operations $ (0.30)$ (0.82)$ 0.52 $ 0.24 $ (0.42)$ 0.66
Cumulative effect
of a change
in accounting
principle,
net of tax - - - - - -
-------- -------- -------- -------- -------- --------
Net earnings
(loss) $ (0.30)$ (0.82)$ 0.52 $ 0.24 $ (0.42)$ 0.66
======== ======== ======== ======== ======== ========
The fourth-quarter 2001 pretax special charge of $65.5 million
includes restructuring and non-recurring charges of $17.2 million
related to the consolidation or closure of nine facilities, related
asset write-downs and severance costs for the elimination of 340
positions. The charge also includes $48.3 million in operating
expenses, including $44.0 million for the resolution of an arbitration
matter that includes patents and $3.0 million in related legal costs,
as well as $1.3 million for a revised estimate of costs related to the
second-quarter 2001 termination of a European supplier relationship.
In the fourth quarter of 2000, Snap-on incurred pretax special charges
totaling $38.2 million, including restructuring and non-recurring
charges of $21.4 million for costs relating to Snap-on's decision to
exit a segment of the emissions-testing business and for severance and
exit costs related to the closure of a vehicle-service business in the
Asia/Pacific region. The fourth-quarter 2000 special charge also
included $16.8 million in operating expenses for legal costs including
the aggressive defense and assertion of Snap-on's intellectual
property and for other emissions-related asset write-downs.
Snap-on has prepared the following unaudited supplemental financial
data to provide additional information. The supplemental data
illustrates the impact on Snap-on's full-year results of operations of
the special charges incurred by Snap-on in 2001 and 2000. Snap-on
incurred special charges totaling $120.4 million in 2001 and $38.6
million in 2000.
Full Year Ended Full Year Ended
December 29, 2001 December 30, 2000
-------------------------- --------------------------
(unaudited - in Before Before
$millions, Special Special Special Special
except EPS) Actuals Charges Charges Actuals Charges Charges
-------- -------- -------- -------- -------- --------
Net sales $2,095.7 $ - $2,095.7 $2,175.7 $ - $2,175.7
Cost of goods
sold (1,134.1) (1.5)(1,132.6)(1,169.4) - (1,169.4)
Cost of goods sold
- non-recurring
charges (12.6) (12.6) - (9.5) (9.5) -
Operating expenses (848.7) (56.9) (791.8) (792.6) (16.8) (775.8)
-------- -------- -------- -------- -------- --------
Operating profit
before net
finance income 100.3 (71.0) 171.3 204.2 (26.3) 230.5
Net finance income 35.7 - 35.7 38.1 - 38.1
Restructuring and
other non-recurring
charges (49.4) (49.4) - (12.3) (12.3) -
Interest expense (35.5) - (35.5) (40.7) - (40.7)
Other income
(expense) - net (3.5) - (3.5) 3.3 - 3.3
-------- -------- -------- -------- -------- --------
Earnings (loss)
from continuing
operations before
income taxes 47.6 (120.4) 168.0 192.6 (38.6) 231.2
Income tax expense
(benefit) from
continuing
operations 26.1 (35.2) 61.3 69.5 (13.9) 83.4
-------- -------- -------- -------- -------- --------
Earnings (loss)
from continuing
operations $ 21.5 $ (85.2)$ 106.7 $ 123.1 $ (24.7)$ 147.8
Cumulative effect
of a change in
accounting
principle, net
of tax (2.5) - (2.5) 25.4 - 25.4
-------- -------- -------- -------- -------- --------
Net earnings
(loss) $ 19.0 $ (85.2)$ 104.2 $ 148.5 $ (24.7)$ 173.2
======== ======== ======== ======== ======== ========
Earnings per
share - basic:
Earnings (loss)
from continuing
operations $ 0.37 $ (1.47)$ 1.84 $ 2.11 $ (0.42)$ 2.53
Cumulative effect
of a change in
accounting
principle, net
of tax (0.04) - (0.04) 0.43 - 0.43
-------- -------- -------- -------- -------- --------
Net earnings
(loss) $ 0.33 $ (1.47)$ 1.80 $ 2.54 $ (0.42)$ 2.96
======== ======== ======== ======== ======== ========
Earnings per
share - diluted:
Earnings (loss)
from continuing
operations $ 0.37 $ (1.47)$ 1.84 $ 2.10 $ (0.42)$ 2.52
Cumulative effect
of a change in
accounting
principle, net
of tax (0.04) - (0.04) 0.43 - 0.43
-------- -------- -------- -------- -------- --------
Net earnings
(loss) $ 0.33 $ (1.47)$ 1.80 $ 2.53 $ (0.42)$ 2.95
======== ======== ======== ======== ======== ========
In 2001, Snap-on incurred pretax special charges of $120.4 million
including $62.0 million for restructuring and other non-recurring
charges ($12.6 million of which is in "Cost of goods sold -
non-recurring charges") and non-comparable charges of $58.4 million.
The $62.0 charge includes $41.0 million in costs primarily for the
consolidation or closure of 35 facilities including asset write-downs,
non-cancelable lease commitments and severance costs; non-recurring
charges of $8.4 million for management transition costs associated
with the April 2001 retirement of Snap-on's president and chief
executive officer and the appointment of Dale F. Elliott, Snap-on's
President - diagnostics and industrial, as successor to this position;
inventory write-downs of $2.3 million associated with the
restructuring activities; and $10.3 million for additional inventory
write-downs and warranty costs associated with the December 2000
announced exiting of an unprofitable segment of the emissions-testing
business. Non-comparable charges of $58.4 million includes $1.5
million in "Cost of goods sold" related to inventory write-downs
associated with the termination of a European supplier relationship
and $56.9 million of charges in "Operating expenses," including $44.0
million for the resolution of an arbitration matter that includes
patents and $3.0 million for related legal costs; $5.9 million for
costs related to the termination of the European supplier
relationship; and $4.0 million for emissions-related bad debts and
other costs.
In 2000, Snap-on incurred pretax special charges totaling $38.6
million, including restructuring and non-recurring charges of $21.8
million for costs relating to Snap-on's decision to exit a segment of
the emissions-testing business and for severance and other exit costs,
including the closure of a vehicle-service business in the
Asia/Pacific region. The 2000 special charge also included $16.8
million in operating expenses for legal costs including the aggressive
defense and assertion of Snap-on's intellectual property and for other
emissions-related asset write-downs.
Snap-on will adopt Statement of Financial Accounting Standards
("SFAS") No. 142, "Goodwill and Other Intangible Assets," at the
beginning of its 2002 fiscal year. SFAS No. 142 requires the periodic
testing of goodwill and indefinite-lived intangible assets for
impairment, as compared to the current method of amortizing such
assets to expense over their estimated useful lives. Snap-on currently
estimates that, on an annualized basis, the pretax impact of
discontinuing goodwill amortization will approximate $13.9 million
($11.9 million after tax or $0.20 per share). As of December 29, 2001,
Snap-on's goodwill balance, net of accumulated amortization, was
$331.2 million. Snap-on is currently evaluating what additional impact
the new accounting standard may have on Snap-on's financial position
or results of operations.
CONTACT: Snap-on Incorporated
Richard Secor (Media), 262/656-5561
William Pfund (Investor), 262/656-6488
URL: www.snapon.com
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