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Snap-on Q4 and 2001 results

Snap-on Incorporated, Kenosha, WI, announced its 2001 and fourth-quarter results. Earnings from continuing operations for 2001 were $106.7 million compared with $147.8 million in 2000 before special charges in both years. In 2001, special charges were $85.2 million after tax compared with charges of $24.7 million after tax in 2000. Net earnings in 2001 were $19.0 million including a net charge of $2.5 million for the cumulative effect of adopting SFAS No. 133, compared with net income in 2000 of $148.5 million including a cumulative net gain of $25.4 million for a change in accounting principle related to pensions.

Net sales for 2001 were $2,095.7 million, a decline of 3.7% compared with $2,175.7 million in the prior year. An increase in the U.S. dealer business was offset by lower demand for big-ticket equipment worldwide and tools in the commercial and industrial sector. Currency translation had a negative impact of 2% on 2001 consolidated sales.

Fourth-quarter 2001 earnings from continuing operations were $30.1 million compared with $38.2 million in 2000, before special charges in both years. Inclusive of these charges, fourth-quarter 2001 net loss was $17.4 million compared with net earnings of $13.7 million in 2000.

Net sales were $534.6 million for the fourth quarter of 2001, a 3.9% decline compared with $556.3 million in the prior year. A sales increase in the U.S. dealer business was offset by lower sales of equipment worldwide and weaker sales of tools in the industrial sector.

For the fourth quarter of 2001, special charges of $65.5 million ($47.5 million after tax) include $17.2 million in restructuring and non-recurring charges for the consolidation or closure of nine facilities, related asset write-downs and severance costs for the elimination of 340 positions, as part of a previously announced restructuring plan. These actions are on track, and Snap-on expects $40 million in cost savings in 2002. For the full-year 2001, a total of 35 facilities were consolidated or closed and the work force reduction was 6% compared with the original estimate of 4%. Operating expenses include $48.3 million of charges, primarily reflecting $44 million for the previously announced resolution of an arbitration matter that includes patents.

Free cash flow in fourth-quarter 2001 was $69.2 million. In the quarter, cash generated from operations was $89.2 million, reflecting a $54.4 million reduction in inventory levels. As a result, debt was reduced to $474.6 million at year end and the total-debt-to-capital ratio strengthened to 38.0% compared with 39.2% at year-end 2000.

"Snap-on continues to make strides in improving operating performance and cash flow, in spite of the soft economic conditions," said Dale F. Elliott, Snap-on president and CEO. "While economic caution clearly remains the order of the day in the near term, a strong balance sheet and market-leading brands provide a solid foundation. Our businesses are responding to the need to improve operational fitness, pursue profitable growth and deliver value to our customers and shareholders."

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