Exhibit 99
UNAUDITED PRO FORMA FINANICAL STATEMENT SCHEDULE
OF BAHCO GROUP AB ACQUISITION
On September 30, 1999, the Corporation acquired Sandvik Saws and Tools, formerly
a wholly owned operating unit of Sandvik AB. Sandvik Saws and Tools business now
operates as the Bahco Group AB ("Bahco"). Bahco is a manufacturer and supplier
of professional tool products and employs approximately 2,400 people. Of those,
approximately 1,000 employees are in Sweden. Products are manufactured at 11
plants in Sweden, Germany, Portugal, France, England, the United States and
Argentina.
The acquisition is being accounted for as a purchase and the results of Bahco
have been included in the accompanying consolidated financial statements since
the date of the acquisition. The total purchase price of approximately $384
million includes the purchase of facilities, a number of brand names and
trademarks, and certain other assets and liabilities. The Corporation funded the
acquisition through working capital and an expansion of an existing commercial
paper credit facility.
A preliminary goodwill allocation in accordance with the criteria established
under Accounting Principles Board ("APB") Opinion No. 16, "Business
Combinations," has been performed. The cost of the acquisition has been
allocated on the basis of the fair market value of the assets acquired and the
liabilities assumed. This allocation, to be finalized in 2000, results in
preliminary goodwill of $219 million being recorded.
The preliminary allocation of the purchase price of $384 million, which includes
direct acquisition costs of $10 million, is as follows:
(Amounts in millions)
Fair value of property and equipment $ 98
Fair value of patents and trademarks 25
Other net assets acquired 42
Goodwill 219
------
Purchase price $ 384
======
Assigned useful lives are as follows:
Patents 13 years
Trademarks 40 years
Goodwill 40 years
The following unaudited pro forma statement of earnings of the Corporation gives
effect to the acquisition of Bahco as if the acquisition had occurred on January
1, 1998, after giving effect to certain adjustments for depreciation,
amortization, interest expense, and income taxes associated with the purchase
method of accounting as performed at the time of the acquisition.
For pro forma purposes, the Corporation's Unaudited Consolidated Statement of
Earnings for the thirteen weeks ended July 3, 1999, has been combined with the
Unaudited Combined Statement of Revenues and Direct Expenses of the Bahco Group
for the three months ended June 30, 1999, and the effects of pro forma
adjustments as set forth in the notes thereto.
For pro forma purposes, the Corporation's Unaudited Consolidated Statement of
Earnings for the twenty-six weeks ended July 3, 1999, has been combined with the
Unaudited Combined Statement of Revenues and Direct Expenses of the Bahco Group
for the six months ended June 30, 1999, and the effects of pro forma adjustments
as set forth in the notes thereto.
The following unaudited pro forma statements of earnings are based on historical
financial data and on assumptions and adjustments described in the notes
thereto. All such assumptions and adjustments are inherently subject to
significant uncertainty and contingencies. It can be expected that some or all
of the assumptions on which the following unaudited pro forma statements of
earnings are based will prove to be inaccurate. As a result, the unaudited pro
forma statements of earnings do not purport to represent what the Corporation's
results of operations would have been if the acquisition of Bahco had occurred
on January 1, 1998, and is not intended to project the Company's results of
operations for any future period. The final purchase price allocation, when
completed in 2000, will result in changes to the amount of recorded assets and
goodwill included as pro forma amounts.
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<PAGE>
<TABLE>
Unaudited Pro Forma Statement of Earnings
(Amounts in thousands except per share data)
<CAPTION>
Snap-on Bahco Group
Incorporated Unaudited
Unaudited Combined
Consolidated Statement of
Statement Revenues and
of Earnings Direct Expenses
Thirteen Weeks Three-Months
Ended Ended Pro forma
July 3, 1999 June 30, 1999 Adjustments Pro forma
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 473,153 $ 73,957 $ - $ 547,110
Cost of goods sold (247,888) (52,259) (615) a (300,762)
Operating expenses (174,482) (18,605) (1,320) b (194,407)
Net finance income 13,141 - - 13,141
Restructuring and other non-recurring charges (7,037) - - (7,037)
Interest expense (5,417) - (3,913) c (9,330)
Other income (expense) - net (12,406) 674 - (11,732)
Earnings (loss) before income taxes 39,064 3,767 (5,848) 36,983
---------- ----------- -------- ---------
Income tax provision (benefit) 14,065 - (755) d 13,310
---------- ----------- -------- ---------
Net earnings (loss) $ 24,999 $ 3,767 $ (5,093) $ 23,673
========== =========== ======== =========
Earnings per weighted average
common share - basic $ .43 $ .41
========== =========
Earnings per weighted average
common share - diluted $ .42 $ .40
========== =========
Weighted average common shares
outstanding - basic 58,384 58,384
Effect of dilutive options 420 420
---------- ---------
Weighted average common shares
outstanding - diluted 58,804 58,804
========== =========
</TABLE>
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<PAGE>
<TABLE>
Unaudited Pro Forma Statement of Earnings
(Amounts in thousands except per share data)
<CAPTION>
Snap-on Bahco Group
Incorporated Unaudited
Unaudited Combined
Consolidated Statement of
Statement Revenues and
of Earnings Direct Expenses
Twenty-six Weeks Six Months
Ended Ended Pro forma
July 3, 1999 June 30, 1999 Adjustments Pro forma
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 925,738 $ 153,642 $ - $1,079,380
Cost of goods sold (481,572) (103,715) (1,230) a (586,517)
Operating expenses (356,711) (39,221) (2,640) b (398,572)
Net finance income 34,133 - - 34,133
Restructuring and other non-recurring charges (8,970) - - (8,970)
Interest expense (10,098) - (7,826) c (17,924)
Other income (expense) - net (13,239) 798 - (12,441)
Earnings (loss) before income taxes 89,281 11,504 (11,696) 89,089
---------- ----------- --------- ----------
Income tax provision (benefit) 32,041 - 23 d 32,064
---------- ----------- --------- ----------
Net earnings (loss) $ 57,240 $ 11,504 $ (11,719) $ 57,025
========== =========== ========= ==========
Earnings per weighted average
common share - basic $ .98 $ .98
========== ==========
Earnings per weighted average
common share - diluted $ .97 $ .97
========== ==========
Weighted average common shares
outstanding - basic 58,477 58,477
Effect of dilutive options 420 420
---------- ----------
Weighted average common shares
outstanding - diluted 58,897 58,897
========== ==========
</TABLE>
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<PAGE>
The following notes to the pro forma adjustments for the Unaudited Pro forma
Statement of Earnings for the second quarter and first six months of 1999
represent the adjustments that would have resulted from the acquisition of the
Bahco Group had the acquisition occurred on January 1, 1998.
(a) To adjust depreciation expense for the preliminary change in the basis to
fair market value of property, plant and equipment.
(b) To adjust depreciation and amortization expense for the preliminary change
in the basis to fair market value of property, plant and equipment and
intangible assets, including goodwill.
(c) To record additional interest expense resulting from the debt issued to
acquire the Bahco Group.
(d) To record an income tax benefit(expense) to return to an appropriate
consolidated effective tax rate of 36% for 1999.
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