Snap-on Incorporated Reports First Quarter 1999 Results
22 April 1999
Snap-on Incorporated Reports First Quarter 1999 Results
KENOSHA, Wis.--April 22, 1999--Snap-on Incorporated today reported record results for any first quarter sales and earnings per share. First quarter 1999 net sales increased 6.1% to $452.6 million, compared with $426.4 million in the first quarter of 1998. Excluding all restructuring charges and non-recurring charges (which collectively are referred to as "1999 charges"), diluted earnings per share improved to $0.57 from $0.56 in the same quarter a year ago, an increase of 1.8%. Net earnings for the first quarter, excluding all 1999 charges, declined 1.6% to $33.4 million from $33.9 million in the 1998 first-quarter period."The trend of improving results on a quarter-over-quarter basis continues," said Robert A. Cornog, Snap-on chairman, president and chief executive officer. "We're making solid progress in creating a more effective and efficient Snap-on due to Project Simplify, our recently implemented restructuring effort. We believe we are now better positioned to continue our efforts to build long-term shareholder value by taking advantage of marketplace opportunities."
The quarter included restructuring charges and other non-recurring charges related to the company's previously announced Project Simplify initiative, which it began implementing late in the third quarter of 1998.
"Snap-on's management and employees have been intensely focused on implementing the initiatives of Project Simplify. I am proud to report that Snap-on is on track, and in some cases ahead of schedule, to meet our goals. Of the $60 million in annualized savings targeted for the year 2000, we are already at $30 million on an annualized run-rate basis," said Mr. Cornog. "We are improving customer access; streamlining manufacturing, engineering, order fulfillment and administration processes; and have eliminated two business units."
The finance income for the first quarter represents a disproportionately large percentage of the full year's anticipated results due to gains on the initial tranche of receivable sales, not subject to recourse. Additionally, extended credit originations during the quarter were strong. Partially offsetting this solid contribution were unplanned operating costs primarily related to emissions programs, mainly increased costs to support a discontinued product line.
The Company noted that it repurchased $14.7 million worth of Snap-on shares during the first quarter 1999. Since 1995, the Company has repurchased $266.5 million worth of Snap-on shares. Snap-on also reiterated that it would continue its program of share repurchases, which will be made from time to time through the open market and other purchases. The Company's outstanding authorizations now total in excess of approximately $140 million.
Snap-on Incorporated is a $1.8 billion leading global developer, manufacturer and distributor of tool and equipment solutions for professional technicians, motor service shop owners, specialty repair centers, original equipment manufacturers, and industrial tool users worldwide. Product lines include hand and power tools, diagnostics and shop equipment, tool storage units, diagnostics software, and other solutions for the transportation service industry.
Statements in this news release that are not historical facts, including statements (i) that include the words "believes," "expects," "anticipates," or "estimates" or words of similar importance with reference to the Corporation or management; (ii) specifically identified as forward-looking; or (iii) describing the Corporation's or management's future plans, objectives or goals, are forward-looking statements. The Corporation or its representatives may also make similar forward-looking statements from time to time orally or in writing. The Corporation 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 Corporation's ability to manufacture, distribute, and/or record the sale of products during the implementation of a new computer system involving the replacement of hardware and software components and the enterprise-wide linking of all functions; the timing or speed with which the Corporation can implement the Project Simplify initiatives and the roll-out of Snap-on Credit LLC without unanticipated complications; the Corporation's ability to withstand external negative factors including changes in trade, monetary and fiscal policies, laws and regulations, or other activities of governments or their agencies; significant changes in the current competitive environment; inflation; currency fluctuations or the material worsening of the economic and political situation in Asia or other parts of the world; and the achievement of productivity improvements and cost reductions. These factors may not constitute all factors that could cause actual results to differ materially from those discussed in any forward-looking statement. The Corporation operates in a continually changing business environment and new factors emerge from time to time. The Corporation cannot predict such factors nor can it assess the impact, if any, of such factors on the Corporation or its results. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results. The Corporation disclaims any responsibility to update any forward-looking statement provided in this news release.
--Consolidated earnings statements and balance sheets are attached--
SNAP-ON INCORPORATED
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in Thousands)
FIRST QUARTER % INCREASE
THREE MONTHS ENDED (DECREASE)
--------------------- -----------
April 3, 1999 April 4, 1998
------------- -------------
Net Sales $ 452,585 $ 426,429 6.1
Cost of goods sold (233,684) (214,884) 8.7
Operating expenses (182,229) (170,832) 6.7
Net finance income 20,992 16,979 23.6
Restructuring and other
non-recurring charges (1,933) - nm
Interest expense (4,681) (4,033) 16.1
Other income (expense)
- net (833) (650) 28.2
------------ ----------- ------
Earnings before
income taxes 50,217 53,009 (5.3)
Income taxes 17,976 19,083 (5.8)
------------ ----------- ------
Net earnings $ 32,241 $ 33,926 (5.0)
============ =========== ======
Earnings per weighted
average common share
- basic $ 0.55 $ 0.57 (3.5)
=========== ========== ======
Earnings per weighted
average common share
- diluted $ 0.55 $ 0.56 (1.8)
=========== ========== ======
Weighted average common
shares outstanding
- basic 58,569 59,894 (2.2)
Weighted average common
shares outstanding
- diluted 58,958 60,757 (3.0)
SNAP-ON INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
April 3, 1999 Jan. 2, 1999 April 4, 1998
--------------- ------------- -------------
ASSETS
Cash and cash equivalents $ 19,238 $ 15,041 $ 8,990
Accounts receivable
less allowances 500,265 554,703 548,432
Inventories 381,697 375,436 420,655
Prepaid expenses
and other assets 135,831 134,652 92,516
---------------------------------------------
Total current assets 1,037,031 1,079,832 1,070,593
Property and
equipment - net 267,275 272,030 266,506
Deferred income tax
benefits 57,527 60,139 57,104
Intangible and other
assets 280,296 262,919 267,683
---------------------------------------------
TOTAL ASSETS $ 1,642,129 $ 1,674,920 $ 1,661,886
=============================================
LIABILITIES
Accounts payable $ 99,975 $ 89,442 $ 95,939
Notes payable and current
maturities of long-term
debt 50,415 93,117 58,165
Accrued compensation 34,997 42,105 33,234
Dealer deposits 41,214 42,421 42,142
Deferred subscription
revenue 34,952 34,793 29,209
Accrued restructuring
reserve 24,529 26,165 -
Other accrued liabilities 155,108 130,010 132,049
---------------------------------------------
Total current
liabilities 441,190 458,053 390,738
Long-term debt 246,288 246,644 204,191
Deferred income taxes 9,615 9,587 12,173
Retiree health care
benefits 89,552 89,124 87,402
Pension and other
long-term liabilities 93,751 109,245 101,019
---------------------------------------------
TOTAL LIABILITIES $ 880,396 $ 912,653 $ 795,523
SHAREHOLDERS' EQUITY
Common stock -
$1 par value 66,697 66,685 66,523
Additional paid in
capital 76,294 117,384 83,896
Retained earnings 902,521 883,207 960,245
Accumulated other
comprehensive income
(loss) (36,936) (30,231) (30,825)
Grantor stock trust at
fair market value (198,392) (241,042) -
Treasury stock at cost (48,451) (33,736) (213,476)
---------------------------------------------
TOTAL SHAREHOLDERS'
EQUITY 761,733 762,267 866,363
---------------------------------------------
TOTAL LIABILITIES
& SHAREHOLDERS'
EQUITY $ 1,642,129 $ 1,674,920 $ 1,661,886
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