6309 Monarch Park Place, Suite 203
Niwot, CO 80503, USA
Phone (303) 443-5060
Toll free (888) 742-5060
Snap-on Incorporated, Kenosha, WI, reported net sales increased to $550.9 million in the third quarter of 2004, compared to $525.6 million in the prior year quarter, up $25.3 million or 4.8%. Of the improvement, $16.6 million was due to currency translation and $8.7 million to sales volume. Net earnings were $22.8 million for the third quarter, up 29% from $17.7 million a year ago. The 1.7% increase in year-over-year sales volume was due principally to higher sales of handheld diagnostics tools worldwide, increased sales in the domestic and international dealer operations, and increased sales of equipment worldwide, partially offset by lower sales of industrial tools in North America. In Europe, commercial and industrial tool sales were essentially flat.
In the Commercial and Industrial Group segment, an operating loss of $0.9 million on total revenues of $256.9 million was recorded in the third quarter of 2004 compared with operating earnings of $3.9 million on $245.0 million of total revenues in the third quarter of 2003.
Third-quarter 2004 operating results include $3.2 million of costs for continuous improvement actions, including the consolidation of three European manufacturing facilities, partially offset by a $1.7 million gain from a facility sale. In the third quarter of 2003, continuous improvement costs were $2.2 million.
Additionally, segment profitability was affected by $1.7 million of higher bad debt expense, $1.2 million of increased freight costs, $1.0 million of start-up costs associated with the company's investment to expand its distribution and operating presence in rapidly growing emerging markets, $1.0 million for its portion of the costs associated with the previously mentioned production inefficiencies resulting from the closure of the two U.S. hand-tool facilities, as well as a $2.8 million year-over-year impact from lower LIFO benefits and other inventory costs. Partially offsetting these costs was a $3.9 million benefit from increased selling price adjustments.
Of the $11.9 million increase in total segment revenues, $10.0 million resulted from currency translation and $1.9 million from higher sales volume. Higher sales of vehicle service equipment worldwide and a slight increase in sales of tools in the served commercial marketplace in Europe and Asia were partially offset by a decline in sales of hand and power tools used in industrial applications in North America.
In the Snap-on Dealer Group segment, operating earnings were $11.9 million on total revenues of $260.9 million in the third quarter of 2004, compared with $8.4 million of operating earnings on $249.9 million of total revenues in the third quarter of 2003. In the third quarter of 2004, $0.3 million of continuous improvement costs were incurred compared with $11.6 million a year ago that primarily related to the closure of two hand-tool facilities. In the third quarter of 2004, lower continuous improvement spending and $2.0 million in reduced costs achieved from the consolidation of the plants were partially offset by $4.9 million of costs associated with production inefficiencies from relocating manufacturing operations from these facilities.
Segment operating earnings in the third quarter of 2004 benefited from $5.4 million in higher price adjustments, and were negatively affected by a $3.9 million impact primarily from product sales mix, as well as higher year-over-year costs, including a $3.0 million increase in steel costs and a $1.9 million increase in freight costs. In addition, there was a negative swing of $3.4 million year over year related to LIFO and other inventory costs, partially offset by reduced bad debt expense of $2.1 million in Q3.
Segment total revenues benefited from a $6.3 million increase in sales volume, primarily due to the $5.4 million from the realization of higher prices, and $4.7 million of currency