UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 23, 2003
-------------
SNAP-ON INCORPORATED
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-7724 39-0622040
-------- ------ ----------
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
10801 Corporate Drive, Pleasant Prairie, Wisconsin 53158-1603
-------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (262) 656-5200
--------------
Item 7. Financial Statements and Exhibits
(c) Exhibits
99 Press Release of Snap-on Incorporated, dated July 23, 2003
Item 9. Regulation FD Disclosure
On July 23, 2003, Snap-on Incorporated (the "Corporation") issued a press
release entitled "Snap-on Reports EPS of $0.38 for the Second Quarter, Results
in line with recent outlook; Announces additional actions to enhance
performance." The text of the press release is incorporated herein by reference.
The press release is being furnished pursuant to Item 12 - Results of Operations
and Financial Condition, of Form 8-K and is being presented under Item 9 of Form
8-K in accordance with interim guidance issued by the Securities and Exchange
Commission in Release Nos. 33-8216 and 34-47583.
The press release also contains cautionary statements identifying important
factors that could cause actual results of the Corporation to differ materially
from those described in any forward-looking statement of the Corporation.
The press release also contains information concerning the impacts of foreign
currency translation on certain items of reported results, and this information
may include non-GAAP financial measures. The Corporation presents information in
this manner to show changes in these items of reported results apart from those
related to the quarterly volatility of foreign currency changes.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, Snap-on
Incorporated has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SNAP-ON INCORPORATED
Date: July 23, 2003 By:__/s/ Martin M. Ellen____________________
Martin M. Ellen, Principal Financial Officer,
Senior Vice President - Finance and
Chief Financial Officer
EXHIBIT INDEX
Exhibit Number Description
99 Press Release of Snap-on Incorporated, dated July 23, 2003
entitled "Snap-on Reports EPS of $0.38 for the Second Quarter,
Results in line with recent outlook; Announces additional actions
to enhance performance."
Exhibit 99.1
Snap-on Reports EPS of $0.38 for the Second Quarter
Results in Line with Recent Outlook
Announces Additional Actions to Enhance Performance
KENOSHA, Wis.--(BUSINESS WIRE)--July 23, 2003--Snap-on
Incorporated (NYSE:SNA), a global leader in tools, diagnostics and
equipment, today announced second-quarter results for the period ended
June 28, 2003, that were in line with the company's recent outlook.
-- Net sales were $565.2 million in the second quarter of 2003, a
3.3% increase, including $30.7 million, or 5.6%, due to
favorable currency translation, compared with $547.2 million
of sales in the prior year. Sales increases in the worldwide
franchised dealer operation and equipment facilitation
business were more than offset by decreases in big-ticket
diagnostics and equipment, and tools for industrial and
commercial applications worldwide.
-- Net earnings were $22.3 million, or $0.38 per diluted share,
for the second quarter of 2003 compared with net earnings of
$29.2 million, or $0.50 per diluted share, in the prior year.
The decrease in earnings primarily reflects the impact of
lower sales volume and unfavorable product mix in the
Commercial and Industrial Group, and higher year-over-year
increases in costs for pensions and performance enhancement
actions, partially offset by higher net finance income.
Foreign currency effects on diluted earnings per share were
negligible.
-- Cash flow from operating activities was $37.0 million in the
second quarter of 2003 compared with $57.0 million in the
prior year. Cash flow from operating activities after capital
expenditures of $6.8 million was $30.2 million, exceeding net
earnings, and was used primarily for debt reduction and
payments returned to shareholders in the form of dividends.
-- Snap-on's balance sheet continued to strengthen in the second
quarter of 2003. Total debt, net of $22.8 million of cash, was
$314.1 million at the end of the second quarter and was 25.3%
of total invested capital compared with 34.3% a year ago.
-- To further enhance operating performance and its competitive
position, Snap-on plans to take additional actions to better
align its production capacity. These actions include plans for
phasing out production at certain facilities. As a result,
Snap-on expects to realize annual savings of approximately $12
million beginning in 2004. Costs associated with these actions
are expected to be approximately $22 million for the remainder
of 2003.
"Our continued strong cash flow and improved balance sheet reflect
the progress made in strengthening Snap-on's businesses and
processes," said Dale F. Elliott, chairman and chief executive
officer. "The challenges of the weak economy in North America and
Europe, however, continue to impact our sales and earnings
performance, and underscore the need to accelerate the implementation
of Driven to Deliver(TM) principles. This is reflected in our recent
plans to phase out production at certain facilities and streamline
those activities around core technologies. We will continue to drive
continuous improvement and other performance enhancement activities
within all of our business units, and expect to see positive results
from these efforts going forward."
Second Quarter Results
Net sales were $565.2 million in the second quarter of 2003, a
3.3% increase, including $30.7 million, or 5.6%, due to favorable
currency translation, compared with $547.2 million of sales in the
second quarter of 2002. Sales increases in the worldwide franchised
dealer operation and equipment facilitation business were more than
offset by decreases in big-ticket diagnostics and equipment, and tools
for industrial and commercial applications worldwide.
Net earnings were $22.3 million, or $0.38 per diluted share, in
the second quarter of 2003 compared with $29.2 million, or $0.50 per
diluted share, in the second quarter of 2002. Currency effects on
diluted earnings per share were negligible. Savings from prior
restructuring activities, and the benefits of continuous improvement
actions and better price realization were offset by unfavorable volume
and product mix, principally in the Commercial and Industrial Group.
Lower sales volume in the Commercial and Industrial Group resulted
from continued weak marketplace demand and the impact of a temporary
sales disruption associated with a realignment of the company's North
American equipment marketing and distribution organization. In
addition, the company's earnings were impacted by $5.6 million for
higher year-over-year pension, other retirement and insurance costs,
and $2.0 million of unfavorable operating leverage associated with
Snap-on's emphasis on increased inventory turnover in a weak sales
environment. The second quarter of 2003 included $3.0 million of costs
for ongoing continuous improvement actions, and the prior-year period
included $1.4 million in charges for restructuring-related transition
actions.
Net finance income increased $2.4 million in the second quarter of
2003 compared with a year ago. Increased originations related to the
dealer business, as well as a lower interest-rate environment,
contributed to the increase. Favorable interest rates, along with
substantially lower year-over-year debt levels, resulted in a $1.5
million decrease in Snap-on's interest expense for the quarter.
Segment Results for the Second Quarter
Sales in the worldwide Snap-on Dealer Group were $281.3 million in
the second quarter of 2003, an increase of 1.8%, including $6.1
million from favorable currency translation, compared with $276.4
million in the second quarter of 2002. For the quarter, sales were up
in the North American franchised dealer business, and increased
roughly in line with the growth in dealer sales to end-users of tools,
handheld diagnostics and tool storage. Over the course of the last 12
months, Snap-on's sales growth has been constrained as dealers
continued to improve their inventory turns. While this focus will
continue, Snap-on believes the unfavorable effect on its sales from
this action to be largely behind it at the present time. Solid growth
was also achieved in international markets. Sales through the "tech
rep" sales organization declined significantly year over year,
principally reflecting the continued soft demand for big-ticket
diagnostics products.
Operating earnings for the Dealer Group were $23.6 million
compared with $26.9 million a year ago. The decline primarily
reflected higher costs for performance enhancement actions, lower
manufacturing cost absorption, and higher pension, other retirement
and insurance costs, partially offset by benefits from continuous
improvement actions.
In the Commercial and Industrial Group, sales were $282.3 million
in the second quarter of 2003, up 5.5%, including $22.3 million due to
favorable currency translation, compared with $267.6 million in the
second quarter of 2002. Sales to government entities, including
federal, state and local municipalities, were down year over year.
Weak economic conditions continued to impact the sale of capital goods
equipment to vehicle repair shops in North America, and industrial
tools in such sectors as aerospace and aviation, general manufacturing
and non-residential construction. These declines were partially offset
by higher European equipment sales and growth in the company's
facilitation business for new vehicle dealerships.
Additionally, strategic action taken to strengthen long-term
operating margins, involving a change in distribution in the North
American equipment business, led to a short-term disruption in sales.
The Technical Automotive Group (TAG), a new sales organization focused
on the marketing of equipment in North America, was created to
supplement Snap-on's existing equipment distribution network. This
action enhances Snap-on's alignment of resources to provide better
sales coverage, training and service to its customers. As of the end
of the second quarter, gross profit margins and sales leads were up
significantly, and Snap-on expects improved equipment sales and
profitability trends toward the latter part of 2003 as a result of
this action.
Operating earnings for the Commercial and Industrial Group were
$0.8 million in the second quarter of 2003 compared with $12.4 million
in the prior year. Savings from prior restructuring activities and
ongoing continuous improvement actions were more than offset by the
combined margin impact of lower volume and an unfavorable product
sales mix, as well as the impact associated with the changes to
Snap-on's North American equipment marketing organization, higher
manufacturing and inventory-related costs, and higher expenses
associated with pension, other retirement and insurance costs.
Sales in the Diagnostics and Information Group were $75.9 million
in the second quarter of 2003, down 14.9%, including $2.3 million of
favorable currency translation, compared with $89.2 million a year
ago. The decline is principally due to intersegment sales, with
increased sales of handheld diagnostics products and steady sales in
Europe more than offset by a decline in big-ticket diagnostics in
North America, primarily in products sold through the Dealer Group's
tech rep organization. In addition, the Diagnostics and Information
Group transferred production of certain European equipment products to
the Commercial and Industrial Group, which reduced intersegment sales
for these products.
Operating earnings for the Diagnostics and Information Group were
$5.1 million in the second quarter of 2003 compared with $7.9 million
in the prior year. The earnings for the segment primarily reflect the
impact of lower volume, partially offset by benefits from prior
restructuring initiatives.
Six Month Results
For the first six months of 2003, net sales were $1,108.3 million
compared with $1,057.2 million in the first six months of last year.
Net earnings were $43.7 million, or $0.75 per diluted share, compared
with $53.7 million, or $0.92 per diluted share, in 2002. Included in
2002 earnings is a cumulative effect after-tax gain of $2.8 million,
or $0.05 per diluted share, from an accounting change required by the
adoption of SFAS No. 142.
In the Dealer Group, six-month sales were $546.2 million in 2003
compared with $532.6 million in 2002, and operating earnings were
$47.2 million in 2003 compared with $52.9 million a year ago. In the
Commercial and Industrial Group, six-month sales were $555.0 million
in 2003 compared with $517.1 million in 2002, and operating earnings
were $6.9 million in 2003 compared with $19.4 million a year ago. In
the Diagnostics and Information Group, six-month sales were $152.3
million in 2003 compared with $170.5 million in 2002, and operating
earnings were $7.9 million in 2003 compared with $9.3 million a year
ago.
Cash Flow
Cash flow from operating activities was $37.0 million in the
second quarter of 2003 compared with $57.0 million in 2002. For the
six months, cash flow from operating activities was $55.6 million
compared with $62.4 million a year ago.
A priority for Snap-on has been to use cash flow to reduce debt.
The ratio of total net debt (total debt less cash and cash
equivalents) to total invested capital (total net debt plus
shareholders' equity) strengthened to 25.3% at the end of the 2003
second quarter from 29.2% at the end of fiscal-year 2002, partially
reflecting a reduction of 160 basis points due to currency translation
effect since year-end 2002. This is a significant improvement from the
34.3% a year ago, reflecting both the decrease in debt and an increase
in shareholders' equity.
Another key priority of Snap-on has been to improve working
investment turnover to a targeted four turns by 2005, which is
expected to generate cash of approximately $250 million from the
beginning of fiscal 2001 to the end of 2005. As of the end of the
second-quarter 2003, Snap-on has achieved 2.9 turns (based on the
current quarter end) compared with 2.7 turns in the prior-year period,
which includes inventory turns improving to 3.3 turns (based on a
rolling four-quarters average) compared with 2.9 turns in the
comparable period a year ago. Working investment (accounts receivable
plus inventories less accounts payable) at the end of the second
quarter of 2003 was $788.6 million, including an increase of $51.4
million due to currency translation year to date.
Outlook
Snap-on plans to phase out production at two of its U.S. hand tool
plants, with a planned completion in 2004. The closure of these
facilities would streamline and center production capacity around core
technologies and improve operational effectiveness. As a result,
higher profitability, lower asset intensity and improved customer
service levels are expected to be achieved.
The anticipated savings from these plans would be approximately
$12 million per year, beginning in 2004. In addition, Snap-on expects
that these actions would provide even further inventory reduction and
process improvement opportunities.
Snap-on would expect to record in 2003 approximately $22 million
of costs associated with these actions, of which approximately $17
million would be in the third quarter, including the expected
recognition of approximately $12 million for accelerated pension and
post-retirement medical plan curtailment expenses, with the remaining
costs primarily for severance and transition expenses. In addition,
approximately $4 million of severance and transition expenses would be
recognized in 2004 over the phase-out period.
Snap-on will continue to emphasize the consistent and widespread
application of its Driven to Deliver strategic framework, including
the implementation of performance improvement initiatives. The company
remains committed to seeking opportunities for process improvements
that will enhance competitiveness and customer responsiveness
throughout its global organization.
On June 26, 2003, Snap-on stated that it expected full-year 2003
earnings per diluted share to increase 5% to 10% year over year.
Snap-on today sees no change in the business and economic factors, as
outlined below, underlying that expectation. However, as a consequence
of the costs associated with the actions outlined above that will
reduce earnings per share in 2003 by approximately $0.25, Snap-on now
expects full-year 2003 earnings to be in the range of $1.65 to $1.75
per share.
At the present time, Snap-on continues to expect no significant
change in the steady demand of tools by vehicle-service technicians. A
potential concern regarding possible increases in oil and gasoline
prices appears to have receded at present, but there is still little
indication of broad improvement in the general economy, particularly
in the industrial and capital goods sectors. The full-year earnings
expectation also recognizes that Snap-on expects to incur costs to
implement business improvements; is incurring higher pension, other
retirement and insurance costs, and expects to continue to fund new
product development. The full-year earnings expectation also
recognizes that Snap-on assumes ongoing savings from its continuous
improvement initiatives, a positive effect of 53 weeks in the 2003
fiscal year and no significant change in the continued introduction of
successful new products.
A discussion of this announcement will be Webcast at 10:00 a.m.
CDT today, and a replay will be available on Snap-on's Web site for at
least one week following the call. To access the audio presentation,
go to www.snapon.com, click on the Investor Information tab at the top
of the page and then on Presentations in the menu to the left. There
you will see the link to the call. Additional detail about Snap-on is
also available on the Snap-on Web site.
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
12,800 people worldwide.
Statements in this news release that are not historical facts,
including statements (i) that include the words "expects," "believes,"
or "anticipates," 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, estimates,
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 and bases
underlying such statements and the timing and progress with which
Snap-on can continue to achieve savings from its cost reduction and
other Operational Fitness initiatives; Snap-on's capability to retain
and attract dealers and effectively implement new programs; its
ability to capture new business; the success of new products and other
Profitable Growth initiatives; Snap-on's ability to withstand external
negative factors including terrorist disruptions on business; changes
in trade, monetary and fiscal policies, regulatory reporting
requirements, laws and regulations, or other activities of governments
or their agencies, including military actions and such aftermath that
might occur, disruption arising from planned facility closures, and
the absence of significant changes in inflation, the current
competitive environment, 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. Any opinions, estimates or forecasts regarding
Snap-on performance made by analysts are theirs alone and do not
represent the opinions, forecasts or predictions of Snap-on or its
management, nor does Snap-on endorse or otherwise comment on such
forecasts.
SNAP-ON INCORPORATED
Consolidated Statements of Earnings
(Amounts in millions, except per share data)
(unaudited)
Three Months Ended Six Months Ended
------------------- -------------------
June 28, June 29, June 28, June 29,
2003 2002 2003 2002
--------- --------- --------- ---------
Net sales $565.2 $547.2 $1,108.3 $1,057.2
Cost of goods sold (319.1) (295.8) (616.8) (570.1)
--------- --------- --------- ---------
Gross profit 246.1 251.4 491.5 487.1
Operating expenses (216.6) (204.2) (429.5) (405.5)
Net finance income 11.2 8.8 21.7 16.1
--------- --------- --------- ---------
Operating earnings 40.7 56.0 83.7 97.7
Interest expense (6.0) (7.5) (12.4) (15.3)
Other income (expense) - net (0.4) (2.9) (4.1) (3.0)
--------- --------- --------- ---------
Earnings before income taxes 34.3 45.6 67.2 79.4
Income tax expense (12.0) (16.4) (23.5) (28.5)
--------- --------- --------- ---------
Earnings before cumulative
effect $22.3 $29.2 $43.7 $50.9
Cumulative effect of a change
in accounting principle, net
of tax - - - 2.8
--------- --------- --------- ---------
Net earnings $22.3 $29.2 $43.7 $53.7
========= ========= ========= =========
Earnings per share - basic and
diluted:
Earnings before cumulative
effect $0.38 $0.50 $0.75 $0.87
Cumulative effect of a change
in accounting principle, net
of tax - - - 0.05
--------- --------- --------- ---------
Net earnings $0.38 $0.50 $0.75 $0.92
========= ========= ========= =========
Weighted-average shares
outstanding:
Basic 58.2 58.2 58.2 58.1
Effect of dilutive options 0.2 0.5 0.1 0.5
--------- --------- --------- ---------
Diluted 58.4 58.7 58.3 58.6
========= ========= ========= =========
SNAP-ON INCORPORATED
Net Sales and Operating Earnings by Reportable Segment
(Amounts in millions)
(unaudited)
Three Months Ended Six Months Ended
------------------- -------------------
June 28, June 29, June 28, June 29,
2003 2002 2003 2002
--------- --------- --------- ----------
Net sales to external
customers
Snap-on Dealer Group $273.5 $270.2 $532.7 $521.9
Commercial and Industrial
Group 250.1 236.9 493.5 456.6
Diagnostics and Information
Group 41.6 40.1 82.1 78.7
--------- --------- --------- ----------
Total net sales to external
customers $565.2 $547.2 $1,108.3 $1,057.2
========= ========= ========= ==========
Intersegment sales
Snap-on Dealer Group $7.8 $6.2 $13.5 $10.7
Commercial and Industrial
Group 32.2 30.7 61.5 60.5
Diagnostics and Information
Group 34.3 49.1 70.2 91.8
--------- --------- --------- ----------
Total intersegment sales $74.3 $86.0 $145.2 $163.0
========= ========= ========= ==========
Total net sales
Snap-on Dealer Group $281.3 $276.4 $546.2 $532.6
Commercial and Industrial
Group 282.3 267.6 555.0 517.1
Diagnostics and Information
Group 75.9 89.2 152.3 170.5
--------- --------- --------- ----------
Segment net sales 639.5 633.2 1,253.5 1,220.2
Intersegment eliminations (74.3) (86.0) (145.2) (163.0)
--------- --------- --------- ----------
Total consolidated net sales $565.2 $547.2 $1,108.3 $1,057.2
========= ========= ========= ==========
Operating earnings
Snap-on Dealer Group $23.6 $26.9 $47.2 $52.9
Commercial and Industrial
Group 0.8 12.4 6.9 19.4
Diagnostics and Information
Group 5.1 7.9 7.9 9.3
--------- --------- --------- ----------
Segment operating earnings 29.5 47.2 62.0 81.6
Net finance income 11.2 8.8 21.7 16.1
--------- --------- --------- ----------
Operating earnings 40.7 56.0 83.7 97.7
Interest expense (6.0) (7.5) (12.4) (15.3)
Other income (expense) - net (0.4) (2.9) (4.1) (3.0)
--------- --------- --------- ----------
Earnings before income taxes $34.3 $45.6 $67.2 $79.4
========= ========= ========= ==========
Segment net sales are defined as total net sales, including both net
sales to external customers and intersegment sales, before elimination
of intersegment activity. For 2003 reporting, segment operating
earnings (for all periods presented) are defined as segment net sales
less cost of goods sold and operating expenses, including applicable
restructuring and other non-recurring charges. Certain prior-year
reclassifications have been made to conform to the 2003 management
reporting structure.
SNAP-ON INCORPORATED
Consolidated Statements of Cash Flows
(Amounts in millions)
(unaudited)
Three Months Ended
------------------
June 28, June 29,
2003 2002
--------- ---------
Operating activities
Net earnings $22.3 $29.2
Adjustments to reconcile net earnings to net cash
provided (used) by operating activities:
Depreciation 14.8 12.4
Amortization of intangibles 0.4 0.2
Deferred income tax provision (benefit) (4.9) 2.5
Loss (gain) on mark to market for cash
flow hedges 1.5 (2.8)
Changes in operating assets and liabilities,
net of effects of acquisitions:
(Increase) decrease in receivables 6.1 17.4
(Increase) decrease in inventories 1.3 (10.2)
(Increase) decrease in prepaid and other assets (7.5) (20.5)
Increase (decrease) in accounts payable (10.0) 18.5
Increase (decrease) in accruals and other
liabilities 13.0 10.3
-------- ---------
Net cash provided by operating activities 37.0 57.0
Investing activities
Capital expenditures (6.8) (12.4)
Proceeds from disposal of property and equipment 3.3 0.1
-------- ---------
Net cash used in investing activities (3.5) (12.3)
Financing activities
Payment of long-term debt (0.2) (0.7)
Increase in long-term debt - 1.3
Net decrease in short-term borrowings (23.4) (37.6)
Purchase of treasury stock - (3.2)
Proceeds from stock purchase and option plans 4.8 9.1
Proceeds from termination of interest rate swap
agreement 5.1 -
Cash dividends paid (14.8) (13.9)
-------- ---------
Net cash used in financing activities (28.5) (45.0)
Effect of exchange rate changes on cash 2.4 1.1
-------- ---------
Increase in cash and cash equivalents 7.4 0.8
Cash and cash equivalents at beginning of period 15.4 5.4
-------- ---------
Cash and cash equivalents at end of period $22.8 $6.2
======== =========
Supplemental cash flow disclosures
Cash paid for interest $4.8 $6.0
Cash paid for income taxes $7.6 $0.7
SNAP-ON INCORPORATED
Consolidated Statements of Cash Flows
(Amounts in millions)
(unaudited)
Six Months Ended
------------------
June 28, June 29,
2003 2002
--------- ---------
Operating activities
Net earnings $43.7 $53.7
Adjustments to reconcile net earnings to net cash
provided (used) by operating activities:
Cumulative effect of a change in accounting
principle, net of tax - (2.8)
Depreciation 29.0 25.7
Amortization of intangibles 0.9 0.8
Deferred income tax provision (benefit) (7.8) 22.9
Gain on sale of assets - (0.3)
Loss (gain) on mark to market for cash flow hedges 0.7 (0.7)
Changes in operating assets and liabilities,
net of effects of acquisitions:
(Increase) decrease in receivables 10.9 1.7
(Increase) decrease in inventories 9.8 (25.3)
(Increase) decrease in prepaid and other assets (29.4) (30.0)
Increase (decrease) in accounts payable (2.6) 57.0
Increase (decrease) in accruals and other
liabilities 0.4 (40.3)
-------- ---------
Net cash provided by operating activities 55.6 62.4
Investing activities
Capital expenditures (13.0) (26.3)
Acquisitions of businesses - net of cash acquired 0.1 (0.8)
Proceeds from disposal of property and equipment 3.8 4.1
-------- ---------
Net cash used in investing activities (9.1) (23.0)
Financing activities
Payment of long-term debt (0.2) (2.8)
Increase in long-term debt - 2.2
Net decrease in short-term borrowings (23.8) (22.6)
Purchase of treasury stock (3.8) (6.4)
Proceeds from stock purchase and option plans 6.2 16.5
Proceeds from termination of interest rate swap
agreement 5.1 -
Cash dividends paid (29.1) (27.8)
-------- ---------
Net cash used in financing activities (45.6) (40.9)
Effect of exchange rate changes on cash 3.5 1.0
-------- ---------
Increase (decrease) in cash and cash equivalents 4.4 (0.5)
Cash and cash equivalents at beginning of year 18.4 6.7
-------- ---------
Cash and cash equivalents at end of period $22.8 $6.2
======== =========
Supplemental cash flow disclosures
Cash paid for interest $12.4 $15.3
Cash paid (refunded) for income taxes $8.3 $(3.9)
SNAP-ON INCORPORATED
Consolidated Balance Sheets
(Amounts in millions)
June 28, December 28,
2003 2002
------------- ------------
(unaudited)
Assets
Cash and cash equivalents $22.8 $18.4
Accounts receivable - net of allowances 580.1 556.2
Inventories - net 385.1 369.9
Prepaid expenses and other assets 127.9 106.5
------------- ------------
Total current assets 1,115.9 1,051.0
Property and equipment - net 335.0 330.2
Deferred income tax benefits 65.0 60.9
Goodwill - net 397.6 366.4
Other intangibles - net 68.3 65.7
Other assets 124.0 119.9
------------- ------------
Total Assets $2,105.8 $1,994.1
============= ============
Liabilities
Accounts payable $176.6 $170.9
Notes payable and current maturities
of long-term debt 31.9 56.4
Accrued compensation 44.5 44.4
Dealer deposits 39.6 46.1
Deferred subscription revenue 29.6 42.5
Income taxes 43.5 29.8
Other accrued liabilities 205.1 162.3
------------- ------------
Total current liabilities 570.8 552.4
Long-term debt 305.0 304.3
Deferred income taxes 35.7 33.6
Retiree health care benefits 94.6 94.0
Pension liability 128.2 136.6
Other long-term liabilities 44.6 42.8
------------- ------------
Total Liabilities $1,178.9 $1,163.7
Shareholders' Equity
Common stock - $1 par value $66.9 $66.9
Additional paid-in capital 80.3 72.9
Retained earnings 1,078.8 1,064.2
Accumulated other comprehensive
income (loss) (44.3) (123.8)
Grantor stock trust at fair market value (148.8) (147.5)
Treasury stock at cost (106.0) (102.3)
------------- ------------
Total Shareholders' Equity $926.9 $830.4
------------- ------------
Total Liabilities and Shareholders'
Equity $2,105.8 $1,994.1
============= ============
SNAP-ON INCORPORATED
Supplemental Balance Sheet Information
(Amounts in millions)
(unaudited)
June 28, 2003 June 29, 2002 Change
-------------- ------------- -------
Accounts receivable
Trade accounts receivable $545.7 $542.2 $3.5
Installment receivables 49.0 39.7 9.3
Other accounts receivable 34.9 47.6 (12.7)
-------------- ------------- -------
Total $629.6 $629.5 $0.1
Allowance for doubtful accounts (49.5) (39.9) (9.6)
-------------- ------------- -------
Total accounts receivable -
net $580.1 $589.6 $(9.5)
============== ============= =======
Loss reserves as a % of
receivables 7.9% 6.3%
Inventory
Raw materials $92.6 $88.9 $3.7
Work in process 47.0 51.2 (4.2)
Finished goods 340.1 369.8 (29.7)
Excess of current cost over LIFO
cost (94.6) (95.4) 0.8
-------------- ------------- -------
Total inventory - net $385.1 $414.5 $(29.4)
============== ============= =======
CONTACT: Snap-on Incorporated
Richard Secor, 262-656-5561 (Media)
William Pfund, 262-656-6488 (Investors)
www.snapon.com