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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
--- OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended April 2, 1994
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Commission File Number 1-7724
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SNAP-ON INCORPORATED
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(Exact name of registrant as specified in its charter)
DELAWARE 39-0622040
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2801 - 80th Street, Kenosha, Wisconsin 53141-1410
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (414) 656-5200
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Class Outstanding at April 22, 1994
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Common Stock, $1.00 par value 42,728,586 Shares
Page 1 of 11 Pages
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SNAP-ON INCORPORATED
INDEX
Page No.
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Part I. Financial Information:
Consolidated Balance Sheets -
April 2, 1994 and January 1, 1994 3-4
Consolidated Statements of Earnings -
Thirteen Weeks Ended April 2, 1994 and
April 3, 1993 5
Consolidated Statements of Cash Flows -
Thirteen Weeks Ended April 2, 1994 and
April 3, 1993 6
Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-9
Part II. Other Information 10
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PART I. FINANCIAL INFORMATION
SNAP-ON INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
<TABLE>
<CAPTION>
(Unaudited)
April 2, January 1,
1994 1994
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<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ 11,810 $ 6,729
Receivables Less Allowances 542,231 539,949
Inventories:
Finished Stock 183,686 185,260
Work-in-Process 14,285 19,292
Raw Materials 45,880 44,550
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Total Inventories 243,851 249,102
Prepaid Expenses 58,444 58,818
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Total Current Assets 856,336 854,598
PROPERTY AND EQUIPMENT - AT COST
Land 26,644 27,209
Buildings and Improvements 145,914 142,438
Machinery and Equipment 279,431 282,222
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451,989 451,869
Less Accumulated Depreciation (231,138) (227,059)
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Total Property and Equipment 220,851 224,810
Deferred Income Tax Benefit 54,027 53,819
INTANGIBLE AND OTHER ASSETS 87,485 85,706
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TOTAL ASSETS $1,218,699 $1,218,933
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SNAP-ON INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
<TABLE>
<CAPTION>
(Unaudited)
April 2, January 1,
1994 1994
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<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes Payable $ 58,803 $ 66,288
Accounts Payable 46,861 57,280
Accrued Compensation 24,249 33,515
Accrued Retirement Plans, Insurance and Other 86,353 80,327
Accrued Income Taxes 15,555 8,474
Dealer Deposits 62,205 62,153
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Total Current Liabilities 294,026 308,037
Long-Term Debt, Less Current Maturities 99,243 99,683
Deferred Income Taxes 4,470 7,413
Retiree Health Care Benefits - Long-Term 71,603 70,791
Pension - Long-Term 33,442 31,346
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TOTAL LIABILITIES 502,784 517,270
SHAREHOLDERS' EQUITY
Preferred Stock - Authorized 15,000,000 shares
of $1 par value; none outstanding -- --
Common Stock - Authorized 125,000,000 shares
of $1 par value; issued
April 2, 1994, 42,971,254 shares;
January 1, 1994, 42,818,696 shares 42,971 42,819
Additional Contributed Capital 56,547 52,153
Retained Earnings 643,343 632,022
Foreign Currency Translation Adjustment (17,634) (16,019)
Less Treasury Stock (250,000 shares) (9,312) (9,312)
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TOTAL SHAREHOLDERS' EQUITY 715,917 701,663
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TOTAL LIABILITIES &
SHAREHOLDERS' EQUITY $1,218,699 $1,218,933
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SNAP-ON INCORPORATED
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in Thousands Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
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April 2, April 3,
1994 1993
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<S> <C> <C>
Net Sales $298,777 $270,674
Cost of Goods Sold 145,307 131,736
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Gross Profit 153,470 138,938
Operating Expenses 113,867 108,292
Other Income (Expense) - Net (2,360) (1,541)
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Earnings Before Income Taxes 37,243 29,105
Income Taxes 14,409 10,601
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Net Earnings $ 22,834 $ 18,504
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Earnings Per Weighted Average Common Share $ .54 $ .44
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Dividends Declared Per Common Share $ .27 $ .27
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Weighted Average Common Shares Outstanding 42,668 42,436
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SNAP-ON INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
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April 2, April 3,
1994 1993
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<S> <C> <C>
OPERATING ACTIVITIES
Net Earnings $22,834 $18,504
Adjustments to Reconcile Net Earnings to
Net Cash Provided by Operating Activities:
Depreciation 7,546 7,757
Amortization 962 629
Deferred Income Taxes (1,472) 1,589
Gain on Sale of Assets (32) (144)
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Receivables (2,283) 23,733
(Increase) Decrease in Inventories 5,251 (8,351)
(Increase) Decrease in Prepaid Expenses (1,175) 1,486
Increase (Decrease) in Accounts Payable (10,419) (3,052)
Increase (Decrease) in Accruals, Deposits
and Other Long-Term Liabilities 5,091 (7,763)
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NET CASH PROVIDED BY OPERATING ACTIVITIES 26,303 34,388
INVESTING ACTIVITIES
Capital Expenditures (6,532) (7,265)
Disposal of Property and Equipment 2,977 1,090
(Increase) Decrease in Other Noncurrent Assets (1,190) (666)
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NET CASH USED IN INVESTING ACTIVITIES (4,745) (6,841)
FINANCING ACTIVITIES
Payment of Long-Term Debt (410) (104)
Increase in Long-Term Debt - 2,246
Increase (Decrease) in Notes Payable (7,485) (49,526)
Proceeds from Stock Plans 4,546 768
Cash Dividends Paid (11,514) (11,456)
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NET CASH USED IN FINANCING ACTIVITIES (14,863) (58,072)
EFFECT OF EXCHANGE RATE CHANGES (1,614) (709)
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INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 5,081 (31,234)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 6,729 58,973
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CASH AND CASH EQUIVALENTS
AT END OF PERIOD $11,810 $27,739
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INTEREST PAID $ 3,100 $ 3,100
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INCOME TAXES PAID $11,200 $13,800
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</TABLE>
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SNAP-ON INCORPORATED
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
In the opinion of management, all adjustments (consisting of only normal
recurring adjustments) necessary to a fair statement of results of operations
for the thirteen weeks ended April 2, 1994 have been made. Management also
believes that the results of operations for the thirteen weeks ended April 2,
1994 are not necessarily indicative of the results to be expected for the full
year.
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This report should be read in conjunction with the consolidated financial
statements and related notes included in the Corporation's Annual Report for the
year ended January 1, 1994.
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SNAP-ON INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following financial comments pertain to the thirteen weeks ended April 2,
1994 and April 3, 1993.
RESULTS OF OPERATIONS
OVERVIEW: Consolidated net sales for the first quarter, 1994 increased 10.4%,
while net earnings increased 23.4% from the first quarter, 1993. The results
reflected stronger sales from the Corporation's Sun Electric subsidiary, higher
sales to U.S. dealers, a continued strong gross profit margin and reduced
operating expenses as a percent of sales.
SALES: Net sales increased to $298.8 million compared with $270.7 million for
the same period last year. Sales in North America increased to $217.3 million
in first quarter, 1994 from $210.5 million in first quarter, 1993 reflecting
higher demand for product from U.S. dealers, while the U.S. Industrial segment,
Canada and Mexico were flat in comparison to the first quarter, 1993.
Sales outside of North America increased 35.3% to $81.5 million in the first
quarter, 1994 from $60.2 million a year ago. European sales continued to
reflect growth due to the emission testing equipment business in Germany and
increases in the U.K. tool business. Only modest additional revenues are
expected from the German emissions business for the balance of the year.
MARGINS: Gross profit margins continued to reflect a stronger mix of higher
profit Snap-on manufactured product. As a percent of sales, gross margins were
51.4% in the first quarter, 1994 compared to 51.3% a year ago.
EARNINGS: Earnings per share were $.54 compared with $.44 for the first quarter
of 1993.
Operating expenses in the first quarter were $113.9 million versus $108.3
million for the same period last year. As a percentage of net sales, operating
expenses dropped to 38.1% versus 40.0% in the first quarter of 1993. Increased
expenses resulted from additional commissions on sales related to the German
emission program, a higher level of pension expense based on the interest rate
assumptions, the inclusion in the quarter of expenses from the J.H. Williams
acquisition in late 1993, and professional services associated with an outside
consulting contract. Offsetting these increases were reduced costs upon
conpletion of the consolidation of inventory from the U.S. branch warehouses to
four regional distribution centers, reduced product replacement costs and a
lower level of legal expenses.
FINANCIAL CONDITION
OVERVIEW: The Corporation finished the first quarter of 1994 in strong
financial condition. Snap-on continues to generate positive cash flow, reduce
short-term debt, and increase working capital.
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LIQUIDITY: Working capital increased to $562.3 million during the first
quarter, up from $546.6 million at the end of 1993. The ratio of current assets
to current liabilities was 2.9 to 1 at the end of the quarter, compared with 2.8
to 1 at the end of 1993. Cash and short-term investments stood at $11.8 million
at the end of the quarter, compared with $6.7 million at the end of 1993. As of
the end of the quarter, the Corporation had bank lines of credit totaling $171.1
million, of which $39.0 million is unused and available for short-term
borrowing. Cash from operations coupled with these sources of borrowing, are
sufficient to support current and future working capital requirements, finance
capital expenditures, and pay dividends.
ACCOUNTS RECEIVABLE: Accounts receivable increased slightly in the first
quarter to $542.2 million from $539.9 million at year-end 1993. There have been
no material changes to the components of receivables. Most receivables involved
customers' extended-credit purchases of higher-value products. Remaining
accounts receivable include those from dealers, industrial and international
customers, and governments.
INVENTORIES: During the quarter, inventories decreased 2.1%, to $243.9
million, compared with $249.1 million at the end of 1993. In 1993 the
Corporation closed its U.S. branch warehouses, consolidating inventory at four
major distribution centers. Consolidation at these distribution centers
continues to allow the Corporation to reduce inventory levels while maintaining
consistent product availability.
LIABILITIES: Short-term debt at the end of the first quarter was $58.8 million
compared with $66.3 million at the end of 1993. Debt was reduced by using cash
generated from first quarter, 1994 operations and cash on hand at year-end.
Interest expense was $3.0 million for the quarter, up slightly from $2.8 million
for the first quarter of 1993 as short-term interest rates rose slightly.
Long-term debt as a percentage of shareholders' equity was 13.9%, compared with
14.2% at the end of 1993. Total long-term debt stands at $99.2 million, down
from $99.7 million at year-end 1993. The Corporation has no plans for
additional long-term borrowing at this time.
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ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The shareholders of the Corporation were asked to vote on three items at its
Annual Meeting held on April 22, 1994. Item #1 related to the elections of four
director nominees: Bruce S. Chelberg, 35,064,178 for and 292,362 withheld;
Roxanne J. Decyk, 35,058,392 for and 298,148 withheld; Arthur L. Kelly,
35,071,690 for and 284,850 withheld; and Raymond F. Farley, 35,071,350 for and
285,190 withheld. Item #2 related to an amendment to the Corporation
Restatement of the Certificate of Incorporation to change the Corporation's name
from Snap-on Tools Corporation to Snap-on Incorporated. Results were 34,987,174
for, 264,643 against and 104,723 withheld. Item #3 related to the ratification
of Arthur Andersen as independent auditors for the 1994 fiscal year. Results
were 34,992,915 for, 164,365 against and 199,260 withheld. There were
42,652,946 outstanding shares eligible to vote at the Annual Meeting.
PART II. OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
ITEM 6(A): EXHIBITS
None.
ITEM 6(B): REPORTS ON FORM 8-K
On January 28, 1994, the Corporation's Board of Directors adopted
amendments to the Rights Agreement between the Corporation and
Harris Trust and Savings Bank, as Rights Agent. The Form 8-K, dated
January 28, 1994, reporting these amendments is incorporated herein
by reference. No financial statements were filed.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Snap-on Incorporated has duly caused this report to be signed on its behalf by
the undersigned duly authorized persons.
SNAP-ON INCORPORATED
Date: 5/13/94 /s/R. A. CORNOG
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R. A. CORNOG
(Chairman, President and Chief Executive Officer)
Date: 5/13/94 /s/G. D. JOHNSON
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G. D. JOHNSON
(Principal Accounting Officer and Controller)
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