Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . 3 Item 2.
Item 2: Description of Properties
The Corporation maintains both leased and owned manufacturing, warehouse, distribution and office facilities throughout the world. The Corporation believes that its facilities are well maintained and have a capacity adequate to meet the Corporation's present and foreseeable future demand. The Corporation's U.S. facilities occupy approximately 4.2 million square feet, of which approximately 84 percent is owned. The Corporation's facilities outside the U.S. contain approximately 1.7 million square feet, of which approximately 69 percent is owned.
The Corporation's principal manufacturing locations and distribution centers are as follows:
Location Type of property Owned/Leased Conway, Arkansas Manufacturing Owned City of Industry, California Manufacturing Leased Escondido, California Manufacturing Owned San Jose, California Manufacturing Leased Sunnyvale, California Manufacturing Leased
Columbus, Georgia Manufacturing Owned Crystal Lake, Illinois Distribution Owned and manufacturing Mt. Carmel, Illinois Manufacturing Owned Ottawa, Illinois Distribution Owned Algona, Iowa Manufacturing Owned
Sioux City, Iowa Manufacturing Owned Natick, Massachusetts Manufacturing Owned Olive Branch, Mississippi Distribution Leased and owned Carson City, Nevada Distribution Owned Robesonia, Pennsylvania Distribution Owned
Johnson City, Tennessee Manufacturing Owned Elizabethton, Tennessee Manufacturing Owned East Troy, Wisconsin Manufacturing Owned Elkhorn, Wisconsin Manufacturing Owned Kenosha, Wisconsin Manufacturing Owned
Milwaukee, Wisconsin Manufacturing Owned Sydney, Australia Distribution Leased Barbara D'oeste, Brazil Manufacturing Owned Calgary, Canada Distribution Leased Mississagua, Canada Manufacturing Leased
Newmarket, Canada Distribution Owned and manufacturing Kettering, England Distribution Owned King's Lynn, England Distribution Owned and manufacturing Altmittweida, Germany Distribution Owned Cork, Ireland Manufacturing Leased Shannon, Ireland Manufacturing Leased
Tokyo, Japan Distribution Leased Amsterdam, the Netherlands Distribution Owned Irun, Spain Manufacturing Owned Urretxu, Spain Manufacturing Owned Vitoria, Spain Distribution Owned and manufacturing
Item 3:
Item 3: Legal Proceedings
Note 4 to the Financial Statements of the Corporation on pages 25 and 26 of its 1996 Annual Report is incorporated herein by reference. None of such litigation is material within the meaning of Section 103 of Regulation S-K in that such matters individually or in the aggregate do not exceed 10% of current assets. The Corporation intervened in litigation commenced by Tejas Testing Technology One, L.C. and Tejas Testing Technology Two, L.C. (the "Tejas Companies"), as described in Note 13 to the Financial Statements of the Corporation on pages 32 and 33 of its 1996 Annual Report, which Note is incorporated herein by reference. Such litigation was commenced on May 2, 1995 and is pending in the United States District Court for the Western District of Texas, Austin Division, and was also commenced on November 20, 1995 in the 345th Judicial District Court of Travis County, Texas. On February 11, 1997, Systems Control, Inc. and Systems Control Acquisition Corp., affiliates of the Tejas Companies, commenced litigation against the Corporation in the Superior Court of the State of California for the County of San Francisco to resist their obligation to indemnify the Corporation in full as described in Note 13.
Item 4:
Item 4: Submission of Matters to a Vote of Security Holders
There was no matter submitted to a vote of the shareholders during the fourth quarter of the fiscal year ending December 28, 1996.
Item 4.1: Executive Officers of the Registrant
The executive officers of the Corporation, their ages as of December 28, 1996, and their current titles and positions held during the last five years are listed below.
Robert A. Cornog (56) - Chairman, President and Chief Executive Officer since July 1991. A Director since 1982.
Branko M. Beronja (62) - Senior Vice President - Diagnostics, North America since April 1996. President - North American Operations from April 1994 to April 1996, and Vice President - Sales, North America from August 1989 to April 1994. A Director since January 1997.
Frederick D. Hay (52) - Senior Vice President - Transportation since February 1996. Prior to joining Snap-on, he was President of the Interior Systems and Components Division of UT Automotive, a business unit of United Technologies Corporation, from December 1989 to January 1996.
Donald S. Huml (50) - Senior Vice President - Finance and Chief Financial Officer since August 1994. Prior to joining Snap-on, he was Vice President and Chief Financial Officer of Saint-Gobain Corporation from December 1990 to August 1994.
Michael F. Montemurro (48) - Senior Vice President - Financial Services and Administration since August 1994. Senior Vice President - Financial Services, Administration and Chief Financial Officer from April 1994 to August 1994. Senior Vice President - Finance and Chief Financial Officer from March 1990 to April 1994.
Jay H. Schnabel (54) - Senior Vice President - Europe since April 1996. Senior Vice President - Diagnostics from April 1994 to April 1996. Senior Vice President - Administration from April 1990 to April 1994. A Director since August 1989.
Gregory D. Johnson (47) - Controller since April 1992. Financial Controller - Asia/Pacific from May 1991 to April 1992.
Susan F. Marrinan (48) - Vice President, Secretary and General Counsel since January 1992. Secretary and General Counsel from November 1990 to January 1992.
There is no family relationship among the executive officers and there has been no involvement in legal proceedings during the past five years that would be material to the evaluation of the ability or integrity of any of the executive officers. Executive officers may be elected by the Board of Directors or appointed by the Chief Executive Officer at the regular meeting of the Board which follows the Annual Shareholders' Meeting, held on the fourth Friday of April each year, and at such other times as new positions are created.
PART II
Item 5:
Item 5: Market for Registrant's Common Equity and Related Stockholder Matters
At December 28, 1996, the Corporation had 60,785,367 shares of common stock outstanding.
On January 26, 1996, the Corporation's Board of Directors authorized the Corporation to repurchase shares of the Corporation's common stock from time to time in the open market or in privately negotiated transactions. The authority allows the repurchase of up to the number of shares issued or delivered from treasury from time to time under the various plans the Corporation has in place that call for the issuance of the Corporation's common stock. Currently, those plans include the Corporation's Employee Stock Ownership Plan, Franchise Dealer Stock Ownership Plan, Amended and Restated 1986 Incentive Stock Program, Amended and Restated Directors' 1993 Fee Plan, and Dividend Reinvestment and Stock Purchase Plan. Based upon the number of shares issued under plans and programs through February 25, 1997, as of that date the Corporation had the authority pursuant to the Board's action to repurchase 243,503 shares.
Additional information required by Item 5 is contained on page 40 of the Corporation's 1996 Annual Report and is incorporated herein by reference to said Annual Report.
Item 6:
Item 6: Selected Financial Data
The information required by Item 6 is contained on pages 36 and 37 of the Corporation's 1996 Annual Report and is incorporated herein by reference to said Annual Report.
Item 7:
Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations
The information required by Item 7 is contained on pages 16 to 19 of the Corporation's 1996 Annual Report and is incorporated herein by reference to said Annual Report.
Item 8:
Item 8: Financial Statements and Supplementary Data
The information required by Item 8 is contained on pages 20 to 34 of the Corporation's 1996 Annual Report and is incorporated herein by reference to said Annual Report.
Item 9:
Item 9: Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
PART III
Item 10:
Item 10: Directors and Executive Officers of the Registrant
The identification of the Corporation's directors as required by Item 10 is contained in the Corporation's Proxy Statement, dated March 14, 1997, and is incorporated herein by reference to said Proxy Statement. With respect to information about the Corporation's executive officers, see caption "Executive Officers of the Registrant" at the end of Part I of this report.
The disclosure of late filers pursuant to Item 405 of Regulation S-K is contained on page 11 of the Corporation's Proxy Statement, dated March 14, 1997, and is incorporated herein by reference to said Proxy Statement.
Item 11:
Item 11: Executive Compensation
The information required by Item 11 is contained on pages 7 to 9 of the Corporation's Proxy Statement, dated March 14, 1997, and is incorporated herein by reference to said Proxy Statement.
Item 12:
Item 12: Security Ownership of Certain Beneficial Owners and Management
The information required by Item 12 is contained on page 5 of the Corporation's Proxy Statement, dated March 14, 1997, and is incorporated herein by reference to said Proxy Statement.
Item 13:
Item 13: Certain Relationships and Related Transactions
None.
PART IV
Item 14:
Item 14: Exhibits, Financial Statement Schedules and Reports on Form 8-K
Item 14(A): Document List
1. List of Financial Statements
The following consolidated financial statements of Snap-on Incorporated, and the Auditors' Report thereon, each included in the 1996 Annual Report of the Corporation to its shareholders for the year ended December 28, 1996, are incorporated by reference in Item 8 of this report:
Consolidated Balance Sheets as of December 28, 1996 and December 30, 1995.
Consolidated Statements of Earnings for the years ended December 28, 1996, December 30, 1995 and December 31, 1994.
Consolidated Statements of Shareholders' Equity for the years ended December 28, 1996, December 30, 1995 and December 31, 1994.
Consolidated Statements of Cash Flows for the years ended December 28, 1996, December 30, 1995 and December 31, 1994.
Notes to Consolidated Financial Statements.
2. Financial Statement Schedule
The following consolidated financial statement schedule of Snap-on Incorporated is included in Item 14(d) as a separate section of this report.
Schedule II Valuation and Qualifying Accounts Page 17
All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are inapplicable and, therefore, have been omitted, or are included in the Corporation's 1996 Annual Report in the Notes to Consolidated Financial Statements for the years ended December 28, 1996, December 30, 1995 and December 31, 1994, which are incorporated by reference in Item 8 of this report.
3. List of Exhibits
The exhibits filed with or incorporated by reference in this report are as specified in the exhibit index.
Item 14(B): Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter of the period covered by this report.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE
We have audited, in accordance with generally accepted auditing standards, the financial statements included in Snap-on Incorporated's (the "Corporation") Annual Report to Shareholders, incorporated by reference in this Form 10-K, and have issued our report thereon dated January 27, 1997. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The schedule listed on page 17 is the responsibility of the Corporation's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Chicago, Illinois January 27, 1997
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our reports included (or incorporated by reference) in this Form 10-K, into the Corporation's previously filed Registration Statement File Nos. 2-53663, 2-53578, 33-7471, 33-22417, 33-37924, 33-39660, 33-57898, 33- 55607, 33-58939, 33-58943, 333-14769, 333-21277 and 333-21285.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Chicago, Illinois March 27, 1997
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) of the Securities Exchange Act of 1934, the Corporation has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SNAP-ON INCORPORATED
By: /s/ R. A. Cornog Date: March 27, 1997 R. A. Cornog, Chairman of the Board of Directors, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Corporation and in the capacities as indicated.
/s/ R. A. Cornog Date: March 27, 1997 R. A. Cornog, Chairman of the Board of Directors, President and Chief Executive Officer
/s/ D. S. Huml Date: March 27, 1997 D. S. Huml, Principal Financial Officer, and Senior Vice President - Finance
/s/ G. D. Johnson Date: March 27, 1997 G. D. Johnson, Principal Accounting Officer, and Controller
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Corporation and in the capacities as indicated.
By: /s/ B. M. Beronja Date: March 27, 1997 B. M. Beronja, Director
By: /s/ D. W. Brinckman Date: March 27, 1997 D. W. Brinckman, Director
By: /s/ B. S. Chelberg Date: March 27, 1997 B. S. Chelberg, Director
By: /s/ R. J. Decyk Date: March 27, 1997 R. J. Decyk, Director
By: /s/ R. F. Farley Date: March 27, 1997 R. F. Farley, Director
By: /s/ L. A. Hadley Date: March 27, 1997 L. A. Hadley, Director
By: /s/ A. L. Kelly Date: March 27, 1997 A. L. Kelly, Director
By: /s/ G. W. Mead Date: March 27, 1997 G. W. Mead, Director
By: /s/ E. H. Rensi Date: March 27, 1997 E. H. Rensi, Director
By: /s/ J. H. Schnabel Date: March 27, 1997 J. H. Schnabel, Director
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Balance of Balance at Subsidiary Charged to Balance beginning at time of costs and at end Description of year acquisition expenses Deductions(1) of year
Allowance for doubtful accounts
Year ended December 28, 1996 $14,650,458 $296,140 $13,611,414 $11,655,431 $16,902,581
Year ended December 30, 1995 $13,180,862 $205,414 $12,999,732 $11,735,550 $14,650,458
Year ended December 31, 1994 $14,946,208 $ 96,355 $ 8,652,343 $10,514,044 $13,180,862
(1) This amount represents write-offs of bad debts.
EXHIBIT INDEX
Item 14(c): Exhibits
(3) (a) Restated Certificate of Incorporation of the Corporation, effective as of March 10, 1995 (incorporated by reference to Exhibit (3)(a) to the Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1994 (Commission File No. 1-7724))
(b) Bylaws of the Corporation, effective as of January 26, 1996
(4) (a) Rights Agreement dated as of October 23, 1987 between the Corporation and Harris Trust and Savings Bank, as Rights Agent (incorporated by reference to Exhibit 1 to the Corporation's Registration Statement on Form 8-A dated October 26, 1987 (Commission File No. 1-7724))
(b) Amendment to Rights Agreement dated as of May 21, 1992 (incorporated by reference to Exhibit 1 to the Corporation's Current Report on Form 8-K dated June 4, 1992 (Commission File No. 1-7724))
(c) Amendment to Rights Agreement dated as of January 28, 1994 (incorporated by reference to Exhibit 1 to the Corporation's Current Report on Form 8-K dated January 28, 1994 (Commission File No. 1-7724))
(d) Amendment to Rights Agreement dated as of June 28, 1996 (incorporated by reference to Exhibit 1.1 to the Corporation's Current Report on Form 8-A dated June 28, 1996 (Commission File No. 1-7724))
The Corporation and its subsidiaries have no long-term debt agreement for which the related outstanding debt exceeds 10% of consolidated total assets as of December 28, 1996. Copies of debt instruments for which the related debt is less than 10% of consolidated total assets will be furnished to the Commission upon request.
(10) Material Contracts
(a) Amended and Restated Snap-on Incorporated 1986 Incentive Stock Plan*
(b) Form of Restated Senior Officer Agreement between the Corporation and each of Robert A. Cornog, Branko M. Beronja, Frederick D. Hay, Donald S. Huml, Michael F. Montemurro and Jay H. Schnabel (incorporated by reference to Exhibit (10)(b) to the Corporation's Annual Report on Form 10-K for the fiscal year ended December 30, 1995 (Commission File No. 1-7724))*
(c) Form of Restated Executive Agreement between the Corporation and each of Richard V. Caskey, Dan G. Craighead, Dale F. Elliott, Gregory D. Johnson, Nicholas L. Loffredo, Denis J. Loverine, Susan F. Marrinan, Lawrence G. Panatera, and William R. Whyte (incorporated by reference to Exhibit (10)(b) to the Corporation's Annual Report on Form 10-K for the fiscal year ended December 30, 1995 (Commission File No. 1-7724))*
(d) Indemnification Agreement for Directors (incorporated by reference to Exhibit B to the Corporation's Proxy Statement dated March 23, 1990 (Commission File No. 1-7724))*
(e) Amended and Restated Snap-on Incorporated Directors' 1993 Fee Plan*
(f) Snap-on Incorporated Deferred Compensation Plan*
(g) Snap-on Incorporated Supplemental Retirement Plan for Officers (incorporated by reference to Exhibit (10)(b) to the Corporation's Annual Report on Form 10-K for the fiscal year ended December 30, 1995 (Commission File No. 1-7724))*
(h) 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 (incorporated by reference to Exhibit (10)(a) to the Corporation's Quarterly Report on Form 10-Q for the quarter ended September 28, 1996 (Commission File No. 1-7724))
(i) 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 pages thereof, and Citicorp North America, Inc., individually and as Agent (incorporated by reference to Exhibit (10)(b) to the Corporation's Quarterly Report on Form 10-Q for the quarter ended September 28, 1996 (Commission File No. 1-7724))
(j) Support Agreement, dated as of October 6, 1995, by Snap-on Incorporated in favor of Corporate Asset Funding Company, Inc., Citibank, N.A. and Citicorp North America, Inc. (incorporated by reference to Exhibit 10.3 to the Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995 (Commission File No. 1-7724))
(13) Annual Report to Shareholders (21) Subsidiaries of the Corporation (23) Consent of Independent Public Accountants (included with Report of Independent Public Accountants on Financial Statement Schedule) (27) Financial Data Schedule
* Denotes management contract or compensatory plan or arrangement