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 has been 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 $391 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 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,
resulting in goodwill of $227 million.
The allocation of the purchase price of $391 million, which includes direct
acquisition costs of $14 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 41
Goodwill 227
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Purchase price $ 391
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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 October 2, 1999, has been combined with
the Unaudited Combined Statement of Revenues and Direct Expenses of the Bahco
Group for the three months ended September 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 thirty-nine weeks ended October 2, 1999, has been combined with
the Unaudited Combined Statement of Revenues and Direct Expenses of the Bahco
Group for the nine months ended September 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 actual purchase price allocation 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
October 2, 1999 September 30, 1999 Adjustments Pro forma
----------------------------------------------------------- -------------
<S> <C> <C> <C> <C>
Net sales $ 453,157 $ 75,304 $ - $ 528,461
Cost of goods sold (234,738) (55,349) (615) a (290,702)
Operating expenses (170,504) (18,743) (1,320) b (190,567)
Net finance income 12,267 - - 12,267
Restructuring and other non-recurring charges (5,315) - - (5,315)
Interest expense (5,262) - (3,912) c (9,174)
Other income (expense) - net 16,558 185 - 16,743
---------- ----------- --------- ---------
Earnings (loss) before income taxes 66,163 1,397 (5,847) 61,713
Income tax provision (benefit) 23,613 - (1,400) d 22,213
---------- ----------- --------- ---------
Net earnings (loss) $ 42,550 $ 1,397 $ (4,447) $ 39,500
========== =========== ========= =========
Earnings per weighted average
common share - basic $ .73 $ .67
========== =========
Earnings per weighted average
common share - diluted $ .72 $ .67
========== =========
Weighted average common shares
outstanding - basic 58,491 58,491
Effect of dilutive options 424 424
---------- ---------
Weighted average common shares
outstanding - diluted 58,915 58,915
========== =========
</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
Thiry-nine Weeks Nine Months
Ended Ended Pro forma
October 2, 1999 September 30, 1999 Adjustments Pro forma
----------------------------------------------------------- -------------
<S> <C> <C> <C> <C>
Net sales $ 1,378,895 $ 228,946 $ - $ 1,607,841
Cost of goods sold (716,310) (159,064) (1,845) a (877,219)
Operating expenses (527,215) (57,964) (3,960) b (589,139)
Net finance income 46,400 - - 46,400
Restructuring and other non-recurring charges (14,285) - - (14,285)
Interest expense (15,360) - (11,738) c (27,098)
Other income (expense) - net 3,319 983 - 4,302
----------- ----------- --------- ----------
Earnings (loss) before income taxes 155,444 12,901 (17,543) 150,802
Income tax provision (benefit) 55,654 - (1,377) d 54,277
----------- ----------- --------- ----------
Net earnings (loss) $ 99,790 $ 12,901 $ (16,166) $ 96,525
=========== =========== ========= ==========
Earnings per weighted average
common share - basic $ 1.71 $ 1.65
=========== ==========
Earnings per weighted average
common share - diluted $ 1.69 $ 1.64
=========== ==========
Weighted average common shares
outstanding - basic 58,482 58,482
Effect of dilutive options 424 424
----------- ----------
Weighted average common shares
outstanding - diluted 58,906 58,906
=========== ==========
</TABLE>
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<PAGE>
The following notes to the pro forma adjustments for the Unaudited Pro forma
Statement of Earnings for the third quarter and first nine 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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