Good day ladies and gentlemen and welcome to the Snap-on Incorporated 2009 second quarter results conference call. (Operator Instructions) I would now like to introduce your host for today's conference, Marty Ellen, Chief Financial Officer.

Good morning everyone. Thank you for joining us today to review Snap-on’s second quarter 2009 results. By now you should have seen our press release issued this morning. Joining me today is Nick Pinchuk, Snap-on's CEO. Nick will kick off our call this morning with his perspective on our performance. I will then provide a more detailed review of our financial results, afterwards we'll take your questions. Consistent with past practice, we will use slides to help illustrate our discussion. 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 managements 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 rebroadcast by any means without Snap-on's expressed permission. With that said, I will now turn the call over to Nick.

Thanks Marty, good morning everyone, well, the challenges continue. But at the same time the evidence of further improvement of how far we’ve progressed also continued to be evident. Sales were down 23%, 16% if you exclude the impact the currency. And I think its fair to say that the global economy is creating some strong headwinds. Having said that we’re encouraged by our overall results in the face of difficulty. In a period where volumes were quite weak we managed to reach an operating margin before restructuring of 12.8%, double-digit margins in a difficult environment and profit improvement of 160 basis points from the first quarter on essentially flat sales. Solid testimony that our operations are continuing their trend of improvement, that our business models are strong and that RCI and our other value creating processes are in deed working. As part of that progress our emphasis on managing working capital especially inventory levels, resulted in strong operating cash flow. Cash flow for the quarter exceeded $155 million, there are of course some very real costs, unrealized manufacturing capacity, they resulted from reducing inventory levels and creating that cash but we’re showing the discipline to bear those near-term costs in exchange for the long-term benefits of inventory reduction. While we don’t have perfect insight to the future, we do remain confident, confident that the going forward prospects for our businesses remain strong. We see considerable runway in a number of directions and as we said before we are acting aggressively to limit the damage associated with the downturn, rapid continuous improvement, restructuring, focus on sourcing costs, are all being engaged and the benefits I think are evident in the results. But at the same time we continue to invest in those areas we believe will be decisive going forward…

Thanks Nick, I will begin on slide six, reported sales in the second quarter of $590 million were down 23% from last year. Absent the effects of foreign currency this reduction was 16.4%. as expected the effects of currency continued to hit us hard on two fronts given the strengthening of the US dollar from prior year levels. First currency translation reduced reported US dollar sales by $50.2 million contributing a $7.1 million decline in operating income. We also have currency exposure to cross border product flows. The most significant related to our Snap-on branded products, manufactured in the US and sold by our international franchisees. The net global effect was a reduction in gross margin of $3.2 million. So in total currency reduced consolidated operating income in the quarter by $10.3 million. Year to date currency has reduced 2009 operating income by $21.3 million. Assuming current exchange rates hold we expect to see a somewhat lessened currency impact on our third quarter year over year comparisons. We recorded $8.6 million of restructuring costs in the quarter which is a fairly substantial increase over the $2 million recorded both last year and last quarter. We communicated to you last quarter to expect this higher level of restructuring spending in response to the economic climate. Of the $8.6 million, $6.7 million relates to the commercial and industrial segment. Year to date restructuring expenses are $10.6 million, with $8 million related to the C&I segment. We intend to spend about another $12 million over the balance of 2009 with most of this related to the C&I segment. Our full year expected restructuring spending is estimated to result in about $34 million in annualized cost savings. At the end of June our worldwide staffing levels have declined by almost 9% since the beginning…

Thanks Marty, while I believe the message of this quarter is that Snap-on did face headwinds but our operations achieved recording an OI margin of 12.8% before restructuring, up sequentially 160 basis points from what we believe was a fairly encouraging first quarter given the environment. Looking forward we won’t predict the near-term but we do continue to see opportunity in runway. Runway in our franchisee network, in auto repair garages, in critical industries, and in emerging markets and even as we work to limit the damage of this downturn on our enterprise, we continue to invest in those strategic areas. We’re confident that we’re improving our position and will be well placed to take advantage of the future. In this quarter we also acted on a new front, taking charge of our own destiny in the credit company and while there will be a financial transition, we’re confident we have the funding and the capability. After all I think history shows that Snap-on has been successfully managing technician credit for decades both on and off our balance sheet. We have unique understanding of that space and we’re confident we can wheel that capability to our distinct advantage going forward. Before I finish here though I want to thank all of our franchisees and associates for your commitment and your effort. Your contribution to our corporation has once again been extraordinary. Now we’ll turn the call over for your questions.

(Operator Instructions) Your first question comes from the line of Jim Lucas - Janney Montgomery Scott

First question on C&I where clearly that’s where the economic impact has been felt the most as you look at the actions that you’ve taken there, if we go back before the economy turned over you had talked about some of the expectations for the profitability ratios in that business, do you still see longer-term or I should say could you talk about you see the C&I segment in a normalized environment from a profitability standpoint.

Our view of C&I has not changed, what we’re seeing is two big changes this quarter is one I think that we spent a lot of time talking about SNA Europe and Europe is having some difficultly. Our SNA Europe business like many other European businesses are in difficulty but we don’t see that as a long-term reduction of our expectations for that business. \ If you just look at what’s happened in Europe in the recent period, you have announcements on GDP like Spain which has got unemployment of I think almost 20%, they announced their GDP was down three, and that was the good news. France was something like 3.2 down GDP in the first quarter. UK was 4.9, Italy was 6.0, Germany was 6.9, Russia which is an extension of our Eastern European business was 9.8 so they are seeing I think the bad news for breakfast hit them that we saw, the United States saw, earlier. And you’re seeing a lot of that hit the market. At the same time we’re seeing as part of that I think we’re seeing destocking continue for our distributors. So I feel that we’re in a unique time in Europe. That economy will come back eventually. We believe actually we’re holding or gaining share if you base distributor shelf space, if you believe the reports on distributor shelf space. So I think our expectations for SNA Europe continue. The industrial business was off quite substantially in the quarter but we believe the idea about taking the Snap-on brand out to mission critical industries is still quite valid and still being well received. So I think those businesses for the longer-term are still going to achieve the kind of mid double-digit earnings that we all expected.

But when you look at the incremental restructuring that you talked about in the second half of the year do we look at another quarter of kind of break-even before seeing profitability restored, given seasonality, that seems to be the bigger—

Given seasonality I think you do look at another quarter. We’re not expecting much change in the C&I. I think I said in my remarks, this is the vacation period. So this is quite an unpredictable period for us in C&I because they do have a quite a bit of European component of their business. I don’t think we’re expecting near-term and when I said immediate I meant the third quarter, even if we’re spending the restructuring. I don’t necessarily say that we’re expecting much improvement, I would expect the improvement once we get off the vacation period. Part of what I believe is happening is that because of this bad news which is being publicized in Europe its gone beyond the actuality of GDP is that distributors and customers are saying, I’m going to sort of go, at least from a commercial point on view, on vacation early. So I think we’ll probably see a long, we saw some of the vacation creep into the second quarter I think this year and we’ll probably see a pretty good strong vacation effect in the third quarter so we don’t see improvement until we’re coming into the end of the year in C&I.

And switching gear to diagnostics, where we’ve seen a lot of good improvement mix, obviously less facilitation, more software, and maybe this more toward Marty, but how do we think about that business longer-term because of where we’ve seen those margins the last two quarters. Is 20% plus kind of a normalized margin.

Let me just give you some color, as you know the margins in that segment are significantly impacted by the mix of our businesses given the different margin structures and for example this year the whole area of diagnostics and software was about, was over 80% in terms of mix and if you go back a year ago, it was 75% and recall that the year before that the OEM facilitation business which was low margin had a large one-off program if you will involving over 8,000 dealers across Europe. So it is all about the mix. We actually think the diagnostics and software business is the one that has probably the greatest runway going forward because as we’ve said before as repair moves for example from OE dealerships to independents, the need for those products are enormously important. And given that yes we would expect our model always was for the diagnostics and information group to sort of be at or approaching that 20% level, it was obviously greater this quarter in terms of our overall goal of about mid teens operating margins.

I’d just like to amplify on that a little bit, we have a tremendous advantage in that sector in the database we have associated with the installed car park, the wide range of badges and the number of years and models we have in our database in terms of diagnosing products and sometimes I think those of us who don’t do this for a living, the value of that is lost. But I recommend that you read in the New York Times Magazine, the May 24 issue, Matthew Crawford’s article on the value of mechanic labor. This is a guy who was in the think tank in Washington, had a Ph.D. and then went to run a motorcycle shop and he regales you in several paragraphs of the difficulty of working on an older model and having to get advice from experienced technicians. Experience trumps the rule is what he says and what we have in our diagnostics is, one of the things we have Mitchell and in some cases in things like VERUS, is our expert based systems where experienced techs, long time techs, have helped us post solutions into an automated system where our subscribers can access those if they have trouble with some of these long-term vehicles. So we have a great advantage and a great lead in that situation. So the diagnostics business for us I think is going to be strong margins for some time to come.

And you gave us a lot of color on the credit business and the P&L impact and financing needs, but as we think about the cash flow implications particularly with the accounts receivable balance rising, how should we think about the operating cash flow impact of having credit on the balance sheet.

From an operating cash flow point of view yes, we’re going to have to build what will appear in our cash flow going forward an increasing finance receivable portfolio. We said in the release and I said this morning that over the next 12 months it looks to us to be about a $450 million incremental financing need because as we build contracts each and every day they also begin to pay down. So incrementally about $450 million. That will rise a little bit thereafter. That’s not going to be the peak, it may be another $50 or $100 million a couple of three quarters out and so that should box for you what we see as the full financing need. So its important to note that while we expect to build at least a new $800 million portfolio we don’t need to finance $800 million with debt because of the cash flow from that business, Snap-on’s other cash flows and by the way as we model that incremental say close to $550 million need if you dial out more than 12 months, we’ve done that by also reserving what we think is adequate cash on hand for Snap-on so we don’t drive our cash all the way down either.

Your next question comes from the line of David Leiker - Robert W. Baird & Co. David Leiker - Robert W. Baird & Co.: I was wondering if you could discuss the destocking in the commercial and industrial segment, is that something that you think is going to continue or is that going to slow as we go into the third quarter of the year.

I hate to say this, last time I thought, what I said last time was destocking logically can’t continue. I stand by that. When it ends I don’t know. We thought that it might start to abate going off the second quarter but it did not so I’m not going to predict that. But logically it has to and it represents between 40% and 50% of our decrease in Europe. What happened in the United States I’ll tell you, if you use that as any indication, the franchisees destocked in some cases. In some cases at our urgency because we wanted them to generate cash and that took several quarters and then toward the end, in fact in the last quarter that destocking has ended. So I think it probably took two or three or four, about two or three quarters in the US for that to roll out and we’re probably going to see the same kind of thing or more in Europe. I’m not sure. We’ve seen a couple quarters of destocking already. So I guess the short answer is I can’t predict. I know it represents half of our, roughly half of our downturn but we did see a model for this in the US and destocking will end its just hard to predict when. David Leiker - Robert W. Baird & Co.: And if we look at the tools group, you touched briefly on the sequential improvement there, can you just provide a little bit more color on what drove the sequential increase and how you see that trending going forward.

Well the sequential increase was driven in part by 4% increase quarter over quarter in sales, that was one, that helped quite a bit. And then rapid continuous improvement activities throughout those organizations, our RCI improvement, that’s two. And three we’re constantly innovating and launching new products which create a buzz and sometimes get us a little better margins. So those three factors.

Your next question comes from the line of Ben Carter – Southpoint Capital Ben Carter – Southpoint Capital : Congratulations on a great quarter, I had a question on the CIT transition, so it sounds like you’re losing the gain on sale that you get from the CIT partnership and if I understand this correctly that’s about a $25 million impact per quarter starting in Q3.

No I think what’s happening in Q3, we said on the call this morning that the next two quarters the whole segment will lose $8 to $10 million and that’s of course driven by the change. We terminated on July 16 so actually there’ll still be a small benefit in the third quarter because up until the 16 of July we continued to sell contracts to CIT and recognized gain for half a month. So had we terminated July 1 it would have been a little worse in the third quarter improving then somewhat in the fourth quarter. Ben Carter – Southpoint Capital : But if I understand correctly, so instead of reporting a gain in the financial segment of roughly $16 million in Q3 and Q4 we’re going see a loss of $8 to $10 million.

That’s correct, and just to remind everybody that segment includes the Snap-on credit business in the US and our international finance businesses which have always been on our balance sheet which are throwing off interest yield which is what’s in financial services revenue alongside with the gains on the sale of the contracts in the US. There are operating expenses, there are loss provisions and what you see in the second quarter is $16.6 million of operating income on that basis. And you are correct, what we’re telling everybody is that $16.6 million in the second quarter we expect to look like an $8 to $10 million loss in each of the third and fourth quarters, break-even or so by the first quarter, ramping up thereafter as the portfolio builds. Ben Carter – Southpoint Capital : So as I think about the EPS impact, that seems like from the run rate then all else equal that we’ll have about a $0.25 per share in Q3 relative to Q2, is that about right after I tax the difference.

You pretty well have it. Ben Carter – Southpoint Capital : Okay and then in Q1 and Q2 it sounds like the segment will break even but will be comping against a plus 16 contribution from Q1 2009 or somewhere thereabouts, is that about right. So while it won’t be a $0.25 impact maybe it will be 60% of that or something like that.

That’s correct and against that right now we’re funding the business out of our available cash so to the extent we go into the market to raise any more debt that will change whatever you have as interest expense in your models but so far there would be no change because we haven’t borrowed anything. Ben Carter – Southpoint Capital : And have you pursued any other potential partners to replace CIT or do you want to keep all of this funding on your balance sheet going forward.

I think we presented the data on the slide I think to show everybody how economically strong this business has been. We did this ourselves until 1999. There were circumstances in the late 90’s which caused us to believe that in essence creating some financial flexibility through that CIT program by selling the portfolio at that time made sense. Snap-on had just made a number of acquisitions in the 90’s and that was a way to create some liquidity, pay down debt. We’re always going to be looking at the most effective way to finance the business. We think it’s a great return investment for our shareholders and at the same time we will always know that that portfolio gives us some financing flexibility because they’re financed assets and very financible in all sorts of forms in all sorts of capital markets transactions, with our without a joint venture structure. I think the structure just came with the need at the time to look at financing, that part of our balance sheet in a different manner. That could change in the future. We have no existing plans to change that, but we do recognize that that portfolio by itself can create liquidity and give us some flexibility down the road should we need to do so. And otherwise we expect it to provide great returns particularly once we get through the ramp up period. Ben Carter – Southpoint Capital : So in order to mitigate some of the hit we’re going to take on the EPS impact have you considered trying to purchase those receivables out of CIT. Marty Ellen There have been no discussions with CIT about that.

There are no additional questions at this time; I would like to turn it back over to management for any additional or closing comments.

Thank you all for joining us for our second quarter conference call, thank you.