Marty Ellen –SVP, CFO Nick Pinchuk – President, CEO

Jonathan Steinmetz – Morgan Stanley Alexander Paris – Barrington Research Associates Jim Lucas – Janney Montgomery Scott

Please stand by. We are about to begin. Good day ladies and gentlemen and welcome to the 2008 first quarter results conference call hosted by Snap-on Incorporated. (Operator instructions). I would now like to introduce your host for today’s conference, Mr. Marty Ellen, Senior Vice President and Chief Financial Officer. You may begin your conference, sir.

Thank you, Anthony, and good morning everyone. Thank you for joining us today to review Snap-on’s first quarter 2008 results. By now, you should have seen our press release issued this morning. We believe that despite more difficult business conditions in certain markets, this quarter continues to demonstrate the strength of our business model and the progress we are making in many of our core operating and growth initiatives. We will discuss these with you today. Joining me is Nick Pinchuk, Snap-on’s President and CEO. Nick will kick off our call this morning with his perspective on our achievements this quarter. I will then provide a review of our financial results, and afterward we will take your questions. Consistent with past practice, we will use slides to help illustrate our discussions. You can find a copy of these slides on our website next to the audio icon for this call. These slides will be archived on our website along with a transcript of today’s call. Any statements made during this call relative to management’s expectations, estimates, or beliefs or otherwise state management’s or the company’s outlook, plans, or projections are forward-looking statements, and actual results may differ materially from those made in such statements. Additional information and the factors that could cause our results to differ materially from those in the forward-looking statements are contained in our SEC filings. This call is copyrighted material by Snap-on Incorporated. It is intended solely for the purpose of this audience. Therefore, it cannot be recorded, transcribed or re-broadcast by any means without Snap-on’s express permission. With that said, I will now turn the call over to Nick. Nick?

Thanks, Marty. For those of you following the slides my comments are outlined starting on slide #5. In general, Q1 was another encouraging period for our corporation – sales of $722 million and earnings of $0.97 a share. Having said that I think we all know that the business environment was quite turbulent, and for Snap-on, that resulted in some specific positives by favorable interest rates and, of course, it created some general negatives like lower demand for larger purchases. Overall, the operating earnings were up almost 36%, or $25 million. This is even though our sales were up only slightly after adjusting for currency and offsetting the timing of our OEM facilitation program. Nine million of that increase came from our Financial Services segment. That was reflecting continued strong yields, ongoing solid delinquencies, and lower market interest rates. And all of that came together to drive that improvement. Now, we cannot take credit for the earnings that resulted from interest rate movement, but what we can be encouraged by is executing our strategic initiatives across the corporation. With that overview, I would like to give you my take on the quarter. Looking at slide 6 – North American demand for hand and power tools remains strong. Innovation and continuing demand for immediate productivity solutions, they are serving us well. On the other hand, sales of big-ticket items – things like tool storage boxes – they were impacted significantly by the economic atmospheres. Beyond our home market, diversification has been an asset. Our Worldwide businesses provided offsets to the North American turbulence. I believe I highlighted in the last quarter that Snap-on is increasingly an international corporation. In fact, in the period, 44% of our sales came from outside the United States, and it helped. A good example was the…

Thanks Nick. I will begin on slide 12. Net sales of $722 million in the quarter increased $16 million from 2007 levels. Currency translation added $33 million while our OEM business declined by $19.5 million as Nick already mentioned. As we have said before, our revenue comparisons can be significantly impacted by the timing of these OEM programs. Factoring out the impacts of both currency and OEM programs sales decline, sales for the quarter across all of our other businesses were up slightly. On the positive side, we continue to experience higher sales to industrial customers worldwide and growth in emerging markets as well as increased sales of higher-margin diagnostics and information products. On the down side, we experienced a 3.1% decline in US franchise sales in the Snap-on Tools Group. As a measure of productivity improvement, sales per associate were up 10.5% from comparable 2007 levels as we continue to advance our RCI initiatives. In our Financial Services segment, revenue increased $12 million, and operating income improved $9 million, primarily reflecting lower market interest rates. Consolidated gross profit of $326 million was up $16 million compared to the first quarter of 2007. In dollar terms, the gross profit improvement includes $11 million of currency translation, nearly $7 million of savings from RCI initiatives, which more than offset $5.6 million of material and other cost increases. Restructuring costs were lower by $3.6 million, and LIFO-related inventory costs were lower by $2.1 million. These increases were, of course, partially offset by the effect of the lower organic sales. As a percentage of sales, gross margin improved to 45.2% in the quarter, up 130 basis points from prior year levels. The improvement in the gross margin rate was also due to an improved sales mix that resulted from higher sales of higher…

Thanks Marty. I believe we can summarize by saying the first quarter results were affected by some big winds: favorable interest rates in an unfavorable North American economy. The results reflected some challenges, weak big-ticket sales, working off our year-over-year lower van count, and the timing of the OEM essential tool programs. It also represented some nice gains: worldwide Industrial serving critical industries, Asia Pacific increased and growing our capability, and our Diagnostics and Information software sales remain strong. It is also worth noting that RCI again played a big part in our quarter. The operations overcame cost increases and then some with strong productivity and efficiency gains. Going forward we are quite positive. This corporation has strong positions, robust business models, extraordinary brands, and a diverse customer base and significant runway. As we have said in the past, there also remains abundant opportunity for improvement throughout the organization. On top of that, we believe we have a strong team that is committed and capable to take full advantage of the opportunities going forward. With that, operator, I will turn the call over to questions.

Thank you, sir. (Operator instructions). We will take our first question from Jonathan Steinmetz at Morgan Stanley. Jonathan Steinmetz – Morgan Stanley: All right, great, thanks. Good morning everyone, can you hear me okay? So a few questions. First, starting in the dealer group can you just elaborate a little bit upon the $4.6 million of lower franchisee terminations? Just talk a little bit maybe about what exactly this consists of and if you are able to provide the absolute levels year-on-year so that we can compare it and try to get an idea of how long this can persist.

Good morning, John, it is Marty. That is the lower cost of terminations associated with a lower number of terminations. So terminations are going down, that is the good news. You should surmise that from the fact that our van count is starting to level out over the last couple of quarters, and we have improved the process. Our field structure, our franchise performancing structure, one of the reasons it was put in place to work more closely with our franchisees, and those that are in trouble we are working with sooner in the process, and by doing that we recover more in the termination process, particularly in terms of inventory recovery, which the more we get back from them, the lower our accounts receivable exposure is. So that was an important process improvement. I do not have last year’s number, Jonathan, but we actually think going forward we should still expect some favorability in terms of lower termination costs. Jonathan Steinmetz – Morgan Stanley: So not just staying at this level, but from a year-on-year perspective, continuing to be favorable?

We think because we have improved the process, remember that is a big part of our CI is process improvement, we will have terminations, hopefully lower terminations. That continues to be our plan as we build the fleet back of vans and franchisees, but because of the improvement in the process, lower terminations, we expect some upside still in future quarters. Jonathan Steinmetz – Morgan Stanley: Okay, and I know you don’t know the exact number, but just maybe order of magnitude. I am just not exactly sure whether this is a $15 million line item or $20 or $30 or whatever it is, but any order of magnitude that you can provide.

I would characterize it in the mid teens. Jonathan Steinmetz – Morgan Stanley: Okay. Sticking with the dealer group, you guys commented that big ticket items were down substantially and some of the hand tools were up. Can you talk about how far down they were and maybe what percentage of your business this consists of, because it seems like hand tools would have had to be up a lot to get you even to where you were.

Jonathan, this is Nick. Hand tools and power tools were both up. They were up between 5 and 10%. The big ticket items were down somewhat more, closer to 10%, so that’s the kind of balance. We actually sell more power tools and hand tools in aggregate than we do tool storage and what we would classify as big-ticket items. What you do is you have a bigger base of hand tools moving up pretty robustly between 6, 7, 8% depending on what product line you look at, and tool storage is down close to 10%. Jonathan Steinmetz – Morgan Stanley: Okay, we can triangulate with the mix. And the last question I guess I would have is on the finance income. Do you think $12 to $13 million, is that sort of a sustainable level in your view as we move throughout the year? I am just trying to short rate to move back up a little bit in the last few weeks. I am just trying to understand. We have clearly been unable to model this line item, so I am just curious. I know you do not provide guidance, but how should we think about that going forward.

John, this is Marty. As you know, first of all, the revenue, it is the US part of the business that is driving all of this. The revenue that we report comes from the sales of contracts, so the discount rate is very sensitive to that gain and, of course, as I said rates were down 290 basis points. The benchmark rate, I would need look at, there is a two-year treasury given the average term of those contracts. So one has to take a view on where you think interest rates are going to model that. That is point one. I am not going share our view. Everybody has got, probably, their own view. We think rates will stay at these levels for a little while. The other comment I would make is originations are obviously the underlying volume measure you saw in the slide. Originations were up a little bit. Stuff that gets financed through our credit business are the larger ticket items. And actually, interestingly, while we commented tool storage, for example, was down in the quarter if you look at the trajectory through the quarter, it actually picked up a little bit as we exited the quarter. So maybe that is a good sign. But to model it, you really have got to think about the movement and underlying [unintelligible] treasury, and you have got to think about the level of originations. Jonathan Steinmetz – Morgan Stanley: Yeah, and I guess with the originations picking up it seems like there is a little bit of a disconnect, so are people going to you guys more for financing as a source of credit ability, and lastly here, and I’ll jump off and let someone else go on. You had talked in the past about delinquency statistics here without seeing a big uptake are you starting to see any change at all there?

First of all, John is right. I mean, obviously with sales down and originations up that meant more business came. But not surprising over the last couple of years we competed with cheap credit card offerings and like, and of course, those had simply gone away. So we become the next best attractive financing alternative. And the portfolio continues to perform very well. In fact, when we look at 30 days plus and 60 days plus delinquency trends, they are actually down at the end of March and still at very low historic levels, that uptake a little bit we commented at last quarter at the end of December. So that draws the contribution as Nick said, the portfolio yields. We have not changed our pricing parameters. We have priced this credit risk, we think very appropriately, and when we have managed delinquencies well and then get the tailwind associated with a low discount rate, as you have seen here. You would see it again if you went back to 2003 when rates were low, we get a very nice contribution from that business. Jonathan Steinmetz – Morgan Stanley: Okay, thank you.

We will go next to Alexander Paris at Barrington Research Associates. Alexander Paris – Barrington Research Associates: Good morning, great quarter. Of course we would like to see a little better top-line growth. Speaking of that, the RCI, do you have enough projects out there to keep the same kind of net positive contribution or close to it for the remaining quarters of the year to you think?

I think we feel pretty strongly that that is true. I think we said that we had 103 or 104 dedicated RCI people sprinkled throughout the organization. They are all working diligently. We have people here guiding them. We are still involving [not a clue] from Japan. So we feel pretty strong about the opportunity. I think I have shared this with you perhaps before when Marty and I or Jack walk around the corporation, we just see so many ways in which we can improve. And I think we have said that we are targeting 2010, we see ourselves making strong mid double digit returns, and we feel we can get there pretty much through cost reduction. Or we would like to get there through balance, but if we had balance between sales and cost reduction, but if the sales turned down, we believe we have a lot of runway in cost improvement. Alexander Paris – Barrington Research Associates: Great. Looking at China now that you have made the other acquisition, how do you see that business developing? I imagine there is good opportunity, but in terms of your three segments. For example, is there a possibility of van business in China or is it all going to be more C&I and D&I?

I think right now the way I see the China market, there is little possibility of van business. Generally, the vans are effective where technicians own their own tools, and the jurisdictions where that does not happen they usually are relatively marginal. So in China, as most of the world, the technicians do not own their own tools, so the proprietary model will not work. We believe, however, that we have technology and product quality and ergonomics will set us apart from other people and, therefore, be able to get a kind of proprietary priority position in the marketplace. We are seeing that somewhat in equipment now where we throw out our imaging product in there, we are gaining share dramatically, one that will give us a base to start that with hand tools. We have not in the past because we have been lobbing hand tools in there from Europe and the United States, and they just do not have the cost position that can compete in that market. Alexander Paris – Barrington Research Associates: Okay, thank you. Just one other question. I know in the past, once in a while, you have a surprisingly poor third quarter because of some big jump in gasoline prices. How would you see a possibility of a magnetive effect on your third quarter if gasoline goes to $4 as a lot of people are talking?

We have looked at the effect of gasoline on our franchisees. There are probably two factors. One is the lower driving. Generally, though, when we step back and look at the macros in the marketplace now, the spending on automotive repair has remained fairly strong, fairly reasonable. So we feel relatively good about that going forward. Now I can’t predict how that would be affected as the gasoline prices go up and up. On the other hand, on our vans their costs go up. So their costs have probably doubled in the last say six or seven months, and we have been working with them on productivity to make sure that they can make up some of that in terms of their margin expansion. And in the time in which the gasoline prices have risen over the last six or eight months, we have seen our franchisees’ general profitability rise. So we have been able to offset it just by projecting our CI improvements in the franchisee system. Alexander Paris – Barrington Research Associates: Great. Thank you very much.

Sure.

(Operator instructions). We will take our next question from Jim Lucas at Janney Montgomery Scott Jim Lucas – Janney Montgomery Scott: Thanks. Good morning guys. Could you give us a reminder on a couple of these headwind issues which are more timing related, both the van count and the OEM project. At what point do we get to more of an apples to apples comparison? Is that the second half of the year?

Looking out into the second quarter, we see the OEM’s start to decay. I think we would say it would be about half of what it is today, and then it starts to decay down in the third quarter and fourth quarter from that level. So you can see it go from 19, you might chop it in half in terms of effect, and then it gets much less significant in the third and fourth quarter. In terms of the van count, we start to catch up… Our goal is to try to catch up as soon as possible, but you start to get easier comparisons in the third and fourth quarter. Jim Lucas – Janney Montgomery Scott: Okay. I was a little bit surprise to hear about the softness that you are seeing in Southern Europe. When you look at the Western European economy, if you step away from… if we count Eastern Europe as more of an emerging market than Western Europe in general, whether it is in your industrial or equipment businesses, what does the overall environment look like today for you?

Jim, we are actually seeing reasonable growth in places like the UK and Scandinavia and the low countries. We got hurt in the quarter in Spain and Portugal, and if you look at the economic news there in the first quarter, they revised downward their G&P assessments. So we think that had our distributors take a pause. We had the same kind of thing in Italy, which has been slow for some time. So we kind of see that as a quarter effect. What we are seeing now is better order rates. And, in fact, the order book is relatively strong in Europe, so we expect to see some recovery in the second quarter in that area. Our take on that is is that the economic news hit in the first quarter in Spain. We are the market leader in Spain by a long shot, and in Portugal, and in some of those Southern European countries, and distributors just wanted to take a pause. Now we are seeing them come back. The magnitude of that comeback, I am not sure. We expect to see some recovery. Jim Lucas – Janney Montgomery Scott: Okay. And when we take a look here, I mean I think you have done a good job in terms of mapping out the issues impacting the organic numbers in the first quarter and how that potentially gets better as the year progresses. Margins continue to be a great upset prize as well as financial services. When we look at the balance sheet and you had this nice small strategic acquisition in the first quarter, but can you talk about capital allocation priorities? We highlight them every quarter, but have they changed. Are we seeing anything different out there?

Jim, it is Marty. I will make a comment, and then maybe Nick wants to make a comment. First of all, just to add some color, I think we are not just in Spain, but elsewhere I said tool storage seems to be picking up. So hopefully we have got some positive trajectory coming out of first quarter in terms of top line, and we will continue to expand margins as we have said. We remind everybody by 2010 we expect to be mid-teens operating profitability, and we think we are moving directionally there. So we are pleased with that. Capital allocation continues to be the same. Yes, we made a small acquisition. We continue to look for acquisitions like that that will give us a very immediate ability to grow in the markets that are growing or to expand our product offering through our existing distribution or gain access to distribution and customers. Nothing transforming, nothing large, and we continue to want to work the balance sheet to generate as much free cash flow as we can. The priority has always been our dividend, of course, and we look at raising that each and every year if our board so chooses. Share repurchases to offset dilution, we will continue to do that. I have guided you guys on capital spending including the capital addition that we are making in China to bring tool storage manufacturing capability into China. And that is sort of the goal to keep the ship in that straight line for now. Jim Lucas – Janney Montgomery Scott: Okay.

I would like add one thing to that, Jim, is that I would just slightly clarify the characterization of Wanda as a small acquisition. It was small in terms of financial impact, but the physical capabilities are a monster. It is 750,000 square feet of fine manufacturing space. It is a number of product labs. It is 1,000 capable associates. This is a very strong company, which we feel very [unintelligible] about being able to wield to our advantage in the future. I hope someday I can guide you on a tour of the facility. I think you would be impressed. Jim Lucas – Janney Montgomery Scott: I will look forward to that. All right, thank you very much.

(Operator instructions). And with no further questions left in the queue Mr. Ellen I would like to turn the conference back to you for any additional or closing remarks, sir.

Well thank you everybody, and thank you for your interest in Snap-on. Have a good day.

This does conclude today’s presentation. We thank everyone for their participation. You may disconnect your lines at any time.