Snap-on Announces Third Quarter 2010 Results

Operating earnings of $30.6 million in the third quarter increased $21.1 million from 2009 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, operating earnings of 11.7% in the third quarter increased from 4.3% a year ago.

Operating earnings of $28.2 million in the third quarter declined $1.3 million from 2009 levels. The comparison to 2009 is impacted by $4.1 million of unfavorable year-over-year LIFO-related inventory valuation expense primarily as a result of benefits recorded last year. Contributions from higher sales and favorable currency effects in 2010 were more than offset by the LIFO impact and increased volume-related and other expenses. As a percentage of sales, operating earnings of 10.9% in the third quarter compared with 12.6% a year ago; adjusted for LIFO-related inventory effects, operating earnings as a percentage of sales was 11.1% in both periods.

Operating earnings of $41.7 million in the third quarter increased $11.2 million, or 36.7%, from 2009 levels primarily due to higher sales, lower restructuring costs, benefits from ongoing RCI initiatives and savings from restructuring actions. As a percentage of sales, operating earnings of 20.1% in the third quarter increased from 15.9% a year ago.

Since the July 16, 2009 termination of the financial services operating agreement with CIT Group Inc. (CIT), Snap-on is providing financing for the majority of new loans originated by Snap-on Credit LLC (SOC) and SOC is recording the interest yield on the new on-book finance portfolio over the life of the contracts as financial services revenue. Prior to July 16, 2009, SOC sold substantially all new contract originations to CIT and recorded gains on the sale of the contracts as financial services revenue. Snap-on expects that operating earnings from financial services, which is before interest expense, will continue to improve as the on-book finance portfolio grows.

Snap-on presently expects that full-year 2010 restructuring costs will approximate $15 million. Snap-on also anticipates continuing with its planned strategic investments, including expansion in emerging growth markets. The company currently expects that full-year 2010 capital expenditures will be about $45 million. Snap-on also expects to incur approximately $16 million of higher year-over-year pension expense in 2010. Snap-on anticipates that the effective income tax rate for full-year 2010 will approximate 33.6%.

Snap-on Incorporated is a leading global innovator, manufacturer and marketer of tools, equipment, diagnostics, repair information and systems solutions for professional users. 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 $2.4 billion, S&P 500 company headquartered in Kenosha, Wisconsin.

Adjustments to reconcile net earnings to net cash provided (used) by operating activities:

Adjustments to reconcile net earnings to net cash provided (used) by operating activities:

Transactions between Operations and Financial Services were eliminated to arrive at the consolidated financial statements.

Transactions between Operations and Financial Services were eliminated to arrive at the consolidated financial statements.

Transactions between Operations and Financial Services were eliminated to arrive at the consolidated financial statements.