SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For quarterly period ended September 28, 1996
Commission File Number 1-7724
SNAP-ON INCORPOATED
(Exact name of registrant as specified in its charter)
Delaware 39-0622040
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10801 Corporate Drive, Kenosha, Wisconsin 53141-1430
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (414) 656-5200
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 [ ]
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date:
Class Outstanding at October 26,1996
Common stock, $1 per value 60,906,026 shares
<PAGE>
SNAP-ON INCORPORATED
INDEX
Page
Part I. Financial Information
Consolidated Statements of Earnings -
Thirteen Weeks and Thirty-Nine Weeks Ended
September 28, 1996 and September 30, 1995 3
Consolidated Balance Sheets -
September 28, 1996 and December 30, 1995 4-5
Consolidated Statements of Cash Flows -
Thirty-Nine Weeks Ended September 28, 1996
and September 30, 1995 6
Notes to Consolidated Financial Statements 7-8
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-11
Part II. Other Information 12
<PAGE>
PART I. FINANCIAL INFORMATION
SNAP-ON INCORPORATED
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands except per share data)
(Unaudited)
Thirteen Weeks Ended Thirty-Nine Weeks Ended
September 28, September 30, September 28, September 30,
1996 1995 1996 1995
Net sales $347,202 $309,065 $1,076,120 $944,988
Cost of goods sold 170,724 151,026 531,684 460,433
-------- -------- --------- --------
Gross profit 176,478 158,039 544,436 484,555
Operating expenses 141,398 129,227 432,828 396,063
Net finance income (16,424) (16,601) (47,948) (48,717)
-------- -------- --------- --------
Operating earnings 51,504 45,413 159,556 137,209
Interest expense (3,060) (4,134) (9,312) (9,211)
Other income 389 519 459 2,972
-------- -------- --------- --------
Earnings before
income taxes 48,833 41,798 150,703 130,970
Income taxes 18,068 15,469 55,760 48,463
-------- -------- --------- --------
Net earnings $ 30,765 $ 26,329 $ 94,943 $ 82,507
======= ======= ======== ========
Earnings per
weighted average
common share $ .51 $ .43 $ 1.56 $ 1.33
======= ======= ======== ========
Dividends declared
per common share $ - $ - $ .56 $ .54
======= ======= ======== ========
Weighted average
common shares
outstanding 61,039 60,575 61,017 61,770
======= ======= ======== ========
The accompanying notes are an integral part of these statements.
<PAGE>
SNAP-ON INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
September 28, December 30,
1996 1995
ASSETS
Current Assets
Cash and cash equivalents $ 19,461 $ 16,211
Accounts receivable, less allowances 619,411 610,064
Inventories
Finished stock 283,375 264,184
Work in process 45,774 39,977
Raw materials 61,833 56,191
Excess of current cost over LIFO cost (111,804) (109,918)
-------- --------
Total inventory 279,178 250,434
Prepaid expenses and other assets 80,474 69,980
-------- --------
Total current assets 998,524 946,689
Property and equipment
Land 25,749 22,875
Buildings and improvements 163,181 149,087
Machinery and equipment 315,961 296,916
-------- --------
504,891 468,878
Accumulated depreciation (265,729) (248,811)
-------- --------
Total property and equipment 239,162 220,067
Deferred income tax benefits 69,805 61,471
Intangible and other assets 216,606 132,746
--------- ---------
Total assets $1,524,097 $1,360,973
========= =========
The accompanying notes are an integral part of these statements.
<PAGE>
SNAP-ON INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
September 28, December 30,
1996 1995
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 75,562 $ 75,603
Notes payable 19,685 26,213
Accrued compensation 37,060 37,769
Dealer deposits 56,436 65,344
Accrued income taxes 34,581 16,106
Other accrued liabilities 132,365 115,040
-------- --------
Total current liabilities 355,689 336,075
Long-term debt 150,611 143,763
Deferred income taxes 5,604 4,760
Retiree health care benefits 83,618 80,665
Pension and other long-term liabilities 122,443 44,978
-------- --------
Total liabilities 717,965 610,241
SHAREHOLDERS' EQUITY
Preferred stock - authorized 15,000,000
shares of $1 par value; none
outstanding - -
Common stock - authorized 187,500,000
shares of $1 par value; issued -
September 28, 1996 - 65,935,159 shares
December 30, 1995 - 65,357,045 shares 65,935 65,357
Additional contributed capital 64,743 52,464
Retained earnings 814,129 753,356
Foreign currency translation adjustment (14,676) (10,758)
Treasury stock at cost - 5,036,550 and
4,570,800 shares (123,999) (109,687)
-------- --------
Total shareholders' equity 806,132 750,732
-------- --------
Total liabilities and
shareholders' equity $ 1,524,097 $ 1,360,973
========= =========
The accompanying notes are an integral part of these statements.
<PAGE>
SNAP-ON INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Thirty-Nine Weeks Ended
September 28, September 30,
1996 1995
OPERATING ACTIVITIES
Net earnings $ 94,943 $ 82,507
Adjustments to reconcile net earnings
to net cash provided by:
Depreciation 21,420 19,670
Amortization 3,623 5,395
Deferred income taxes (2,317) (13,287)
(Gain) loss on sale of assets 561 (203)
Changes in operating assets and liabilities:
(Increase) decrease in receivables 2,572 (70,718)
Increase in inventories (20,429) (17,308)
Increase in prepaid expenses (2,349) (9,001)
Decrease in accounts payable (2,717) (15,614)
Increase in accruals, deposits and
other long-term liabilities 15,609 40,564
-------- --------
Net cash provided by operating activities 110,916 22,005
INVESTING ACTIVITIES
Capital expenditures (40,075) (20,750)
Acquisitions of businesses (38,649) (19,923)
Disposal of property and equipment 2,544 4,940
(Increase) decrease in other
noncurrent assets 5,814 (3,944)
-------- ---------
Net cash used in investing activities (70,366) (39,677)
FINANCING ACTIVITIES
Payment of long-term debt (39,715) (150)
Increase in long-term debt 45,654 4,795
Increase (decrease) in notes payable (7,420) 142,043
Purchase of treasury stock (14,312) (100,375)
Proceeds from stock plans 12,856 10,276
Cash dividends paid (34,169) (33,185)
--------- ---------
Net cash used in financing activities (37,106) 23,404
Effect of exchange rate changes (194) (474)
--------- ---------
Increase in cash and cash equivalents 3,250 5,258
Cash and cash equivalents at beginning
of year 16,211 9,015
---------- ---------
Cash and cash equivalents at end of period $ 19,461 $ 14,273
======== ========
The accompanying notes are an integral part of these statements.
<PAGE>
SNAP-ON INCORPORATED
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
1. This report should be read in conjunction with the consolidated
financial statements and related notes included in Snap-on
Incorporated's Annual Report for the year ended December 30, 1995.
In the opinion of management, all adjustments (consisting only of
normal recurring adjustments) necessary to a fair statement of
financial condition and results of operations for the thirteen and
thirty-nine weeks ended September 28, 1996 have been made.
Management also believes that the results of operations for the
thirteen and thirty-nine weeks ended September 28, 1996 are not
necessarily indicative of the results to be expected for the full
year.
2. Snap-on Incorporated normally declares and pays in cash four regular,
quarterly dividends. However, the third quarter dividend in each year
is declared in June, giving rise to two regular quarterly dividends
appearing in the second quarter statements and correspondingly, three
regular quarterly dividends appearing in the first twenty-six weeks'
statements.
3. Income tax paid for the thirty-nine week periods ended September 28,
1996 and September 30, 1995 was $50.1 million and $50.4 million.
4. Interest paid for the thirty-nine week periods ended September 28,
1996 and September 30, 1995 was $8.5 million and $10.4 million.
5. On March 31, 1996, the Corporation acquired certain assets and
liabilities of the Automotive Service Equipment Division of FMC
Corporation. The acquired division was renamed the John Bean
Company. John Bean designs, manufactures, and sells high-quality
products for the under-car market. Pro forma results of operations
are not shown as the effect would not be material.
6. Distribution of shares in connection with the three-for-two split of
the Corporation's common stock was made on September 10, 1996. All
share-related amounts have been retroactively restated to reflect
this three-for-two split.
7. Prior to the disposition of Systems Control, Inc. by a subsidiary of
the Corporation on September 29, 1994, Systems Control, Inc.'s
single-purpose subsidiaries, Tejas Testing Technology One, L.C. and
Tejas Testing Technology Two, L.C. (the "Tejas Companies"), entered
into two seven-year contracts with the Texas Natural Resources
Conservation Commission ("TNRCC"), an agency of the State of Texas,
to perform automotive emissions testing in the Dallas/Fort Worth and
southeast regions of Texas in a centralized manner in accordance with
the federal Environmental Protection Agency ("EPA") guidelines
relating to "I/M 240" test-only facilities. The Corporation
guaranteed payment (the "Guaranty") of the Tejas Companies'
obligations under an Agreement for Lease and a seven-year Lease
Agreement, each dated June 22, 1994, in the amount of approximately
$98.8 million plus an interest factor (the "Lease Obligations"),
pursuant to which the Tejas Companies leased the facilities (and
associated testing equipment) necessary to perform the emissions-
testing contracts. The Guaranty was assigned to the lessor's lenders
(the "Lenders") as collateral. Pursuant to an Indemnity Agreement
entered into as of September 29, 1994, the Tejas Companies agreed to
reimburse the Corporation for any payments it made under the
Guaranty.
On May 1, 1995, the State of Texas enacted legislation designed to
terminate the centralized testing program described in the emissions-
testing contracts and directed the governor of the State of Texas to
implement a new program after negotiations with the EPA. On September
12, 1995, the Tejas Companies filed bankruptcy petitions under
Chapter 11 of the Bankruptcy Code in the United States Bankruptcy
Court for the Western District of Texas (Austin Division). The Tejas
Companies have commenced litigation against the TNRCC and related
entities to assert their rights with respect to the emissions-testing
contracts, and the Corporation has intervened in such litigation to
protect its interests. In addition, the Corporation is a creditor in
the Tejas Companies' bankruptcy proceedings and will continue to take
steps to protect its interests in such proceedings.
The Corporation believes that it is probable that there will be
developments, prior to the end of the 1997 Texas legislative session
(approximately May 1997) to enable the Lease Obligations to
ultimately be satisfied. The 1997 legislative session is scheduled to
begin January 14, 1997. The primary basis for such a development
arises under the original contracts to perform centralized emissions
testing. Those contracts obligate the TNRCC to reimburse costs that
the Tejas Companies incurred in the construction and implementation
of the centralized testing program and have not recovered through the
sale of the testing facilities to a third party. Fulfillment of such
obligations requires an appropriation of funds by the Texas
Legislature, which is subject to the political process. The TNRCC is
contractually obligated to seek such appropriation and has affirmed
such obligation. The Tejas Companies are pursuing the cost
reimbursement process described in the emissions-testing contracts.
A second potential basis is that the Lease Obligations could be
satisfied in part in various other ways including a sale of some or
all of the facilities.
The Corporation and the Lenders have been engaged in continuing
discussions concerning this matter, and they have reached an
agreement whereby the Lenders will forbear until at least December
31, 1996 from exercising their rights under the terms of the Guaranty
to cause the Corporation to pay all Lease Obligations to the Lenders
on an accelerated basis. The Corporation continues to make advances
under the Guaranty of approximately $1.8 million per month, which
have totaled $30.3 million through September 28, 1996. The
Corporation is discussing with the Lenders extending beyond December
31, 1996 the Lender s existing agreement to forbear from accelerating
the Lease Obligations. While the Lenders have agreed to forbear
until at least December 31, 1996, given the delay in resolving this
matter and other factors, the Corporation at June 29, 1996 recognized
the remaining net obligation under the Guaranty, which as of
September 28, 1996 is $63.5 million. This is included in Other Long-
term Liabilities on the accompanying consolidated balance sheet. In
addition, the Corporation has recorded as assets the monthly advances
and the other amounts expected to be received from the Tejas
Companies under the Indemnity Agreement. These net receivables total
$93.8 million as of September 28, 1996 and are included in Intangible
and Other Assets. Described previously are mechanisms by which the
Tejas Companies may receive funds to enable them to satisfy their
contractual obligation to the Corporation under the Indemnity
Agreement. The Corporation believes that recovery of the net
receivables from the Tejas Companies is probable, and it will make an
ongoing assessment of the likelihood of realization of such
receivables.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Overview: The Corporation posted record third quarter and nine-month
sales, net earnings, and earnings per share. Net earnings for the third
quarter of 1996 increased 16.8% over the year ago quarter on a net sales
increase of 12.3%. For the first nine months, 1996 net earnings increased
15.1% over the comparable 1995 period on a net sales increase of 13.9%.
Earnings per share for the third quarter and first nine months increased
18.6% and 17.3% over 1995 comparable periods.
The third quarter's results benefited from several focused acquisitions,
higher U.S. dealer van channel sales, and strong sales growth in the
company's European segment. The quarter's results also reflected
continuing improvements in operating efficiencies.
Sales: Net sales for the third quarter of 1996 were $347.2 million, an
increase of 12.3% over third quarter 1995 sales of $309.1 million. Net
sales for the first nine months of 1996 were $1.076 billion, an increase
of 13.9% over 1995 nine-month sales of $945.0 million.
North American sales for the third quarter of 1996 were $268.4 million, an
increase of 6.9% over third quarter 1995 sales of $251.1 million. North
American sales for the first nine months of 1996 were $822.0 million, an
increase of 8.8% over nine-month 1995 sales of $755.8 million. Excluding
the acquisitions of the John Bean Company and Consolidated Devices, Inc.,
sales increased 1% in the third quarter. Sales increases in the dealer
van channel were offset by the weakness in the Industrial business.
European sales for the third quarter of 1996 were $59.4 million, an
increase of 55.9% over third quarter 1995 sales of $38.1 million. For the
first nine months of 1996, European sales were $195.7 million, an increase
of 51.9% over nine-month 1995 sales of $128.8 million. Excluding the
acquisitions of Herramientas Eurotools S.A. and the John Bean Company,
sales increased 16% for the third quarter. Emissions-testing equipment
sales in the United Kingdom and growth in sales through the dealer van
channel both contributed to the increase.
Other International sales for the third quarter of 1996 were $19.4
million, a decrease of 2.4% from third quarter 1995 sales of $19.8
million. Other International sales for the first nine months of 1996 were
$58.4 million, a decrease of 3.3% from nine-month 1995 sales of $60.4
million. For the third quarter, sales in Japan were negatively affected
by the strengthening of the U.S. dollar relative to the yen, and general
weakness in the Japanese economy. Australia continued to record sales
gains.
Earnings: Earnings for the third quarter of 1996 were $30.8 million, an
increase of 16.8% over third quarter 1995 earnings of $26.3 million. Third
quarter earnings per share increased to $.51, an 18.6% increase over third
quarter 1995 earnings per share of $.43. Earnings for the first nine
months of 1996 were $94.9 million, an increase of 15.1% over nine-month
1995 earnings of $82.5 million. Earnings per share for the first nine
months of 1996 rose to $1.56 per share, a 17.3% increase over nine-month
1995 earnings per share of $1.33.
Operating expenses: As a percentage of net sales, third quarter total
operating expenses decreased to 40.7% in 1996 from 41.8% in 1995. As a
percentage of net sales, nine-month operating expenses decreased to 40.2%
in 1996 from 41.9% in 1995. Benefits from continuing general cost
reduction activities, from facilities consolidations implemented over the
past several years, and from a change in business mix because of recent
acquisitions all contributed to the improvement.
FINANCIAL CONDITION
Liquidity: Cash and cash equivalents increased to $19.5 million at the
end of the third quarter from $16.2 million at the end of 1995. Working
capital was $642.8 million at the end of the third quarter versus $610.6
million at the end of 1995. At the end of the quarter, the Corporation
had a $100 million revolving credit facility to support the issuance of
commercial paper.
In September 1994, the Corporation filed a registration statement with the
Securities and Exchange Commission that allows the Corporation to issue
from time to time up to $300 million of unsecured indebtedness. In
October 1995, the Corporation issued $100 million of its notes to the
public. The shelf registration gives the Corporation financing flexibility
to operate the business.
The Corporation has sufficient sources of liquidity to support current and
future working capital requirements, finance capital expenditures and pay
dividends.
Accounts receivable: Accounts receivable increased to $619.4 million at
the end of the third quarter from $610.1 million at the end of 1995. In
the first quarter of 1996, the Corporation executed an additional $50.0
million securitization of its receivables discussed below.
In October 1995, the Corporation entered into agreements that provide for
the sale, without recourse, of an undivided interest in a pool of certain
of its accounts receivable to a third party financing institution. These
agreements, which include subsequent amendments, provide for a maximum of
$200 million of such accounts receivable to be sold and remain outstanding
at any one time. Under these agreements, $100.0 million of interest-
bearing installments were sold, on a revolving basis, in October 1995.
During the first quarter of 1996, the Corporation sold an additional $50.0
million of interest-bearing receivables under these agreements on a
revolving basis. The proceeds were used to pay down debt, and for working
capital and general corporate purposes.
The majority of the Corporation's accounts receivable involve customers'
extended credit and lease purchases of higher-value products. Other
receivables include those from dealers, industrial customers, and
government entities.
Inventories: Inventories increased by 11.5% to $279.2 million at the end
of the third quarter from $250.4 million at the end of 1995. The increase
was due to acquisitions and to several operations preparing for fourth
quarter promotions and product rollouts.
Liabilities: Total short-term and long-term debt was $170.3 million at
the end of the third quarter compared with $170.9 million at the end of
1995.
Average shares outstanding: Average shares outstanding increased slightly
to 61.0 million in 1996's third quarter compared with 60.6 million in last
year's third quarter. For the first nine months of 1996, average shares
outstanding declined to 61.0 million versus 61.8 million in the comparable
nine months of 1995. The Corporation repurchased 373,500 shares of its
common stock in the third quarter of 1996. Year-to-date, the company has
acquired 465,750 shares.
Stock split and dividend increase:
On June 28, 1996, the Corporation's Board of Directors declared an 11.1%
increase in the quarterly dividend on common stock and approved a three-
for-two stock split.
The new quarterly dividend, paid on September 10, 1996, to shareholders of
record on August 20, 1996, is $.20 per share (post-split), or $.80 per
share on an annualized basis.
The three-for-two stock split, which resulted in one additional share
issued for every two shares of the Corporation's stock outstanding, was
distributed on September 10, 1996, to shareholders of record on August 20,
1996. Cash was distributed in lieu of fractional shares.
Other matters: Refer to Note 7 for discussion of a guaranty of lease
obligations relating to emissions testing facilities that were to be used
under a contract with the State of Texas to perform testing services.
Texas has terminated the program to conduct such testing services, and the
Corporation is making payments monthly under such guaranty.
<PAGE>
PART II. OTHER INFORMATION
Item 6: Exhibits and reports on Form 8-K
Item 6(a): Exhibits
Exhibit 10
(a) Amendment No. 1, dated as of March 29, 1996, to the
Receivables Purchase and Sale Agreement, dated as of
October 6, 1995, among Snap-on Credit Corporation, as
Seller, Corporate Asset Funding Company, Inc., as
Investor, and Citicorp North America, Inc. individually
and as Agent.
(b) Amendment No. 1, dated as of March 29, 1996, to the
Receivables Purchase and Sale Agreement, dated as of
October 6, 1995, among Snap-on Credit Corporation, as
Seller, the banks set forth on the signature page
thereof, and Citicorp North America, Inc., individually
and as Agent.
Exhibit 27 Financial Data Schedule
Item 6(b): Reports on Form 8-K
No reports on Form 8-K for the three months ended September 28, 1996 were
required to be filed.
<PAGE>
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: November 12, 1996 /s/ R. A. Cornog
R. A. CORNOG
(Chairman, President and Chief
Executive Officer)
Date: November 12, 1996 /s/ G. D. Johnson
G. D. JOHNSON
(Principal Accounting Officer and
Controller)
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
10a Amendment No. 1, dated as of March 29, 1996, to the
Receivables Purchase and Sale Agreement, dated as of
October 6, 1995, among Snap-on Credit Corporation, as
Seller, Corporate Asset Funding Company, Inc., as
Investor, and Citicorp North America, Inc. individually
and as Agent.
10b Amendment No. 1, dated as of March 29, 1996, to the
Receivables Purchase and Sale Agreement, dated as of
October 6, 1995, among Snap-on Credit Corporation, as
Seller, the banks set forth on the signature page
thereof, and Citicorp North America, Inc., individually
and as Agent.
27 Financial Data Schedule
AMENDMENT NO. 1
Dated as of March 29, 1996
to
RECEIVABLES PURCHASE AND SALE AGREEMENT
Dated as of October 6, 1995
THIS AMENDMENT NO. 1 (the "Amendment") is executed as of March
29, 1996, among SNAP-ON CREDIT CORPORATION, a Wisconsin corporation (the
"Seller"), CORPORATE ASSET FUNDING COMPANY, INC., a Delaware corporation
(the "Investor"), and CITICORP NORTH AMERICA, INC., a Delaware
corporation, individually ("CNAI"), and as agent (the "Agent").
WITNESSETH:
WHEREAS, the Seller, the Investor, CNAI and the Agent are
parties to that certain Receivable Purchase and Sale Agreement dated as of
October 6, 1995 (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the "Investor Agreement");
WHEREAS, the Seller, the Investor, CNAI and the Agent have
agreed to amend the Investor Agreement on the terms and conditions
hereinafter set forth; and
WHEREAS, capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Investor
Agreement;
NOW, THEREFORE, for good and valuable consideration, the
sufficiency of which is hereby acknowledged, the Seller, the Investor,
CNAI and the Agent agree as follows:
Section 1. Amendment to the Investor Agreement. The Investor
Agreement is hereby amended as follows:
(a) Section 1.01 of the Investor Agreement is amended by
deleting in their entirety the definitions of "Fee Letter" and
"Purchase Limit" set forth therein and substituting in their
respective places, the following:
"Fee Letter" means the letter agreement dated as
of October 6, 1995, among the Seller, the Investor,
Citibank, CNAI, the Agent and the "Agent" under and as
defined in the Parallel Purchase Agreement, as such
letter agreement may be amended, restated,
supplemented or otherwise modified from time to time.
"Purchase Limit" means at any time $150,000,000,
as such amount may be increased pursuant to Section
2.03(b) or reduced pursuant to Section 2.03; provided,
however, that at all times on and after the
Termination Date, the "Purchase Limit" shall mean the
aggregate Capital for all Eligible Assets.
(b) Article II of the Investor Agreement is amended by
deleting Section 2.03 thereof in its entirety and substituting
in its place the following:
SECTION 2.03. Termination or Reduction of the
Purchase Limit; Increase of the Purchase Limit.
(a) The Seller may, upon at least five Business
Days' notice to the Agent, terminate in whole or
reduce in part the unused portion of the Purchase
Limit; provided, however, that each partial reduction
shall be in an amount equal to $1,000,000 or an
integral multiple thereof. On each day on which the
Seller shall, pursuant to Section 2.03 of the Parallel
Purchase Agreement, reduce in part the unused portion
of the "Commitment" (as defined in the Parallel
Purchase Agreement"), the Purchase Limit shall reduce
automatically by an equal amount.
(b) Subject to the terms and conditions set
forth below, the Purchase Limit shall be increased on
April 1, 1996, to $175,000,000, and on August 1, 1996,
to $200,000,000; provided, however, that (i) each such
increase shall be subject to the conditions that (A)
on or before April 1, 1996, or August 1, 1996, as the
case may be, the Agent shall have received any fees
payable in connection with such increase as specified
in the Fee Letter, (B) all of the conditions specified
in Section 3.02 of this Agreement shall be satisfied
as of April 1, 1996, or August 1, 1996, as the case
may be, as though such increase were a Purchase or
reinvestment occurring on such date, (C) the
"Commitment" (under and as defined in the Parallel
Purchase Agreement) shall have been increased such
that after giving effect to any such increase in the
Purchase Limit, the amount of the Purchase Limit and
the amount of the "Commitment" (under and as defined
in the Parallel Purchase Agreement) shall be the same,
(D) the Termination Date shall not have occurred and
(E) prior to April 1, 1996, or August 1, 1996, as the
case may be, there shall have been no reduction of the
Purchase Limit pursuant to Section 2.03(a), and (ii)
no increase in the Purchase Limit shall be made on
August 1, 1996, unless (A) the Purchase Limit shall
have been increased as provided herein on April 1,
1996, and (B) as of August 1, 1996, the aggregate
"Maximum Purchase" (under and as defined in the
Parallel Purchase Agreement) of all "Banks" (under and
as defined in the Parallel Purchase Agreement) other
than Citibank or any of its Affiliates shall at least
equal $55,000,000.
Section 2. Effective Date. This Amendment shall become
effective and shall be deemed effective as of the date first above written
upon the satisfaction of the following conditions precedent: (a) no event
has occurred and is continuing which constitutes an Event of Investment
Ineligibility or would constitute an Event of Investment Ineligibility but
for the requirement that notice be given or time elapse or both; (b) the
Termination Date shall not have occurred; and (c) the Agent shall have
received (i) six copies of this Amendment duly executed by the Seller, the
Investor, CNAI and the Agent, (ii) six copies of Amendment No. 1 of even
date herewith to the Parallel Purchase Agreement duly executed by all
parties thereto, and (iii) a copy of the Fee Letter, as amended and
restated as of the date hereof, duly executed by all parties thereto.
Section 3. Reference to and Effect on the Investor Agreement
and the Related Documents. Upon the effectiveness of this Amendment, (i)
the Seller hereby reaffirms all covenants, representations and warranties
made by it in the Investor Agreement to the extent the same are not
amended hereby and agrees that all such covenants, representations and
warranties shall be deemed to have been remade as of the effective date of
this Amendment and (ii) each reference in the Investor Agreement to "this
Agreement," "hereunder," "hereof," "herein" or words of like import shall
mean and be, and any references to the Investor Agreement in any other
document, instrument or agreement executed and/or delivered in connection
with the Investor Agreement shall mean and be, a reference to the Investor
Agreement as amended hereby.
Section 4. Effect. Except as otherwise amended by this
Amendment, the Investor Agreement shall continue in full force and effect
and is hereby ratified and confirmed.
Section 5. Governing Law. This Amendment will be governed by
and construed in accordance with the laws of the State of New York.
Section 6. Severability. Each provision of this Amendment
shall be severable from every other provision of this Amendment for the
purpose of determining the legal enforceability of any provision hereof,
and the unenforceability of one or more provisions of this Amendment in
one jurisdiction shall not have the effect of rendering such provision or
provisions unenforceable in any other jurisdiction.
Section 7. Counterparts. This Amendment may be executed in one
or more counterparts, each of which shall be deemed to be an original, but
all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed as of the date first above written.
SELLER: SNAP-ON CREDIT CORPORATION
By:
Name: Ned R. Brooks
Title: Vice President
INVESTOR: CORPORATE ASSET FUNDING COMPANY, INC.
By: Citicorp North America, Inc.,
as Attorney-in-Fact
By:
Name:
Title:
CNAI/AGENT: CITICORP NORTH AMERICA, INC.,
individually and as Agent
By:
Name:
Title:
AMENDMENT NO. 1
Dated as of March 29, 1996
to
RECEIVABLES PURCHASE AND SALE AGREEMENT
Dated as of October 6, 1995
THIS AMENDMENT NO. 1 (the "Amendment") is executed as of March
29, 1996, among SNAP-ON CREDIT CORPORATION, a Wisconsin corporation (the
"Seller"), THE BANKS parties to the "Parallel Purchase Agreement" referred
to below (the "Banks"), and CITICORP NORTH AMERICA, INC., a Delaware
corporation, individually ("CNAI"), and as agent (the "Agent").
WITNESSETH:
WHEREAS, the Seller, the Banks, CNAI and the Agent are parties
to that certain Receivable Purchase and Sale Agreement dated as of October
6, 1995 (as the same may be amended, restated, supplemented or otherwise
modified from time to time, the "Parallel Purchase Agreement");
WHEREAS, the Seller, the Banks, CNAI and the Agent have agreed
to amend the Parallel Purchase Agreement on the terms and conditions
hereinafter set forth; and
WHEREAS, capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Parallel
Purchase Agreement;
NOW, THEREFORE, for good and valuable consideration, the
sufficiency of which is hereby acknowledged, the Seller, the Banks, CNAI
and the Agent agree as follows:
Section 1. Amendment to the Parallel Purchase Agreement. The
Parallel Purchase Agreement is hereby amended as follows:
(a) Section 1.01 of the Parallel Purchase Agreement is
amended by deleting in their entirety the definitions of
"Commitment," Fee Letter" and "Majority Banks" set forth therein
and substituting in their respective places, the following:
"Commitment" means at any time, $150,000,000, as
such amount may be increased pursuant to Section
2.03(b) or reduced pursuant to Section 2.03; provided,
however, that at all times on and after the
Termination Date, the "Commitment" shall mean the
aggregate Capital for all Eligible Assets.
"Fee Letter" means the letter agreement dated as
of October 6, 1995, among the Seller, Corporate Asset
Funding Company, Inc., Citibank, CNAI, the Agent and
the "Agent" under and as defined in the Investor
Agreement, as such letter agreement may be amended,
restated, supplemented or otherwise modified from time
to time.
"Majority Banks" means, at any time, such Banks
as shall then have outstanding Capital of Percentage
Interests in an aggregate amount exceeding 66-2/3% of
the aggregate amount of Capital outstanding hereunder,
and if at such time no Capital is outstanding
hereunder, such Banks as shall have Percentages
aggregating more than 66-2/3%; provided, however, that
if at any time, but for the application of this
proviso, Citibank alone would constitute the Majority
Banks pursuant to this definition, then "Majority
Banks" shall mean, at such time, Citibank and at least
one other Bank.
(b) Article II of the Parallel Purchase Agreement is
amended by deleting Section 2.03 thereof in its entirety and
substituting in its place the following:
SECTION 2.03. Termination or Reduction of the
Commitment; Increase of the Commitment.
(a) The Seller may, upon at least five Business
Days' notice to the Agent, terminate in whole or
reduce in part the unused portion of the Commitment;
provided, however, that each partial reduction shall
be in an amount equal to $1,000,000 or an integral
multiple thereof. On each day on which the Seller
shall, pursuant to Section 2.03 of the Investor
Agreement reduce in part the unused portion of the
"Purchase Limit" (as defined in the Investor
Agreement"), the Commitment shall reduce automatically
by an equal amount.
(b) Subject to the terms and conditions set
forth below, the Commitment shall be increased on
April 1, 1996, to $175,000,000, and on August 1, 1996,
to $200,000,000; provided, however, that (i) each such
increase shall be subject to the conditions that (A)
on or before April 1, 1996, or August 1, 1996, as the
case may be, the Agent shall have received any fees
payable in connection with such increase as specified
in the Fee Letter, (B) all of the conditions specified
in Section 3.02 of this Agreement shall be satisfied
as of April 1, 1996, or August 1, 1996, as the case
may be, as though such increase were a Purchase or
reinvestment occurring on such date, (C) the "Purchase
Limit" (under and as defined in the Investor
Agreement) shall have been increased such that after
giving effect to any such increase in the Commitment,
the amount of the Commitment and the amount of the
"Purchase Limit" (under and as defined in the Investor
Agreement) shall be the same, (D) the Termination Date
shall not have occurred and (E) prior to April 1,
1996, or August 1, 1996, as the case may be, there
shall have been no reduction of the Commitment
pursuant to Section 2.03(a), and (ii) no increase in
the Commitment shall be made on August 1, 1996, unless
(A) the Commitment shall have been increased as
provided herein on April 1, 1996, and (B) as of August
1, 1996, the aggregate Maximum Purchase of all Banks
other than Citibank or any of its Affiliates shall at
least equal $55,000,000.
Section 2. Effective Date. This Amendment shall become
effective and shall be deemed effective as of the date first above written
upon the satisfaction of the following conditions precedent: (a) no event
has occurred and is continuing which constitutes an Event of Termination
or would constitute an Event of Termination but for the requirement that
notice be given or time elapse or both; (b) the Termination Date shall not
have occurred; and (c) the Agent shall have received (i) six copies of
this Amendment duly executed by the Seller, the Banks, CNAI and the Agent,
(ii) six copies of Amendment No. 1 of even date herewith to the Investor
Agreement duly executed by all parties thereto, and (iii) a copy of the
Fee Letter, as amended and restated as of the date hereof, duly executed
by all parties thereto.
Section 3. Reference to and Effect on the Parallel Purchase
Agreement and the Related Documents. Upon the effectiveness of this
Amendment, (i) the Seller hereby reaffirms all covenants, representations
and warranties made by it in the Parallel Purchase Agreement to the extent
the same are not amended hereby and agrees that all such covenants,
representations and warranties shall be deemed to have been remade as of
the effective date of this Amendment and (ii) each reference in the
Parallel Purchase Agreement to "this Agreement," "hereunder," "hereof,"
"herein" or words of like import shall mean and be, and any references to
the Parallel Purchase Agreement in any other document, instrument or
agreement executed and/or delivered in connection with the Parallel
Purchase Agreement shall mean and be, a reference to the Parallel
Purchase Agreement as amended hereby.
Section 4. Effect. Except as otherwise amended by this
Amendment, the Parallel Purchase Agreement shall continue in full force
and effect and is hereby ratified and confirmed.
Section 5. Governing Law. This Amendment will be governed by
and construed in accordance with the laws of the State of New York.
Section 6. Severability. Each provision of this Amendment
shall be severable from every other provision of this Amendment for the
purpose of determining the legal enforceability of any provision hereof,
and the unenforceability of one or more provisions of this Amendment in
one jurisdiction shall not have the effect of rendering such provision or
provisions unenforceable in any other jurisdiction.
Section 7. Counterparts. This Amendment may be executed in one
or more counterparts, each of which shall be deemed to be an original, but
all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed as of the date first above written.
SELLER: SNAP-ON CREDIT CORPORATION
By:
Name: Ned R. Brooks
Title: Vice President
CNAI/AGENT: CITICORP NORTH AMERICA, INC.,
individually and as Agent
By:
Name:
Title:
BANKS: CITIBANK, N.A.
By:
Name:
Title:
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF SNAP-ON INCORPORATED AS OF AND FOR THE
THIRTY-NINE WEEKS ENDED SEPTEMBER 28, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> OTHER<F1>
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-START> DEC-31-1995
<PERIOD-END> SEP-28-1996
<CASH> 19,461
<SECURITIES> 0
<RECEIVABLES> 635,646
<ALLOWANCES> 16,235
<INVENTORY> 279,178
<CURRENT-ASSETS> 998,524
<PP&E> 504,891
<DEPRECIATION> 265,729
<TOTAL-ASSETS> 1,524,097
<CURRENT-LIABILITIES> 355,689
<BONDS> 150,611
0
0
<COMMON> 65,935
<OTHER-SE> 740,197
<TOTAL-LIABILITY-AND-EQUITY> 1,524,097
<SALES> 1,076,120
<TOTAL-REVENUES> 1,076,120
<CGS> 541,684
<TOTAL-COSTS> 541,684
<OTHER-EXPENSES> 432,828
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,312
<INCOME-PRETAX> 150,703
<INCOME-TAX> 55,760
<INCOME-CONTINUING> 94,943
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 94,943
<EPS-PRIMARY> 1.56
<EPS-DILUTED> 1.56
<FN>
<F1> Schedule is for 39 weeks.
</TABLE>
