Exhibit 99.1
Snap-on Terminates
Joint Venture Operating Agreement with CIT; Snap-on Credit
Operations Expected To Be Uninterrupted
KENOSHA, Wis.--(BUSINESS
WIRE)--July 16, 2009--Snap-on Incorporated (NYSE: SNA), a leading
global innovator, manufacturer and marketer of tools, diagnostics,
equipment, software and service solutions for professional users,
today announced that it has notified CIT of termination of the
operating agreement between CIT and Snap-on relating to the
parties’ Snap-on Credit LLC joint venture, pursuant to
Snap-on's rights to terminate under the agreement.
Snap-on and CIT are partners in
Snap-on Credit LLC, which provides a broad range of financial
services to Snap-on’s U.S. franchisees and customers. The
joint venture was established in 1999 and CIT has been the
exclusive purchaser of the financing contracts originated by
Snap-on Credit. Snap-on and CIT have been in ongoing discussions
concerning a longer term new joint venture agreement. Both parties
have agreed to continue these discussions. To the extent a mutually
acceptable agreement can be reached, including CIT resolving its
liquidity issues over a longer term, it is possible the parties
could, at a later date, enter into a new joint venture
agreement.
As a consequence of this
termination, Snap-on will acquire CIT’s interest in the joint
venture for approximately $8.2 million, Snap-on Credit will become
a wholly owned subsidiary of Snap-on Incorporated, and Snap-on
Credit will continue to service the existing portfolio of contracts
owned by CIT. The approximate outstanding balance of this portfolio
is $834 million. Snap-on has no obligation to purchase the existing
portfolio of contracts owned by CIT. The operations of Snap-on
Credit are expected to be uninterrupted by this event and all
activities surrounding the financing of extended credit contracts
to customers, leases of shop equipment and loans to franchisees
will continue without change. With respect to new contract
originations, Snap-on Incorporated will provide the financing. Over
the next twelve months, Snap-on estimates these incremental
financing needs to approximate $450 million. Snap-on believes it
has adequate financial resources to fully provide for the financing
needs of Snap-on Credit including:
- Cash on hand as of July 4, 2009 of $525 million;
Snap-on believes it will continue to generate free cash flow which
could be deployed for financing
