Good day ladies and gentlemen and welcome to the Snap-on Incorporated 2010 Fourth Quarter and Full Year Results Conference. At this time, all participants are in a listen-only mode. At the conclusion of our prepared remarks we will conduct a question-and-answer session. (Operator Instructions) And please note that today’s program is being recorded. I would now like to introduce your host for today’s call, Leslie Kratcoski, Vice President, Investor Relations. You may begin.

Thanks Lisa and good morning everyone. Thank you for joining us today to review Snap-on’s fourth quarter 2010 results which are detailed in our press release issued earlier this morning. We have on the call today Nick Pinchuk, Snap-on’s Chief Executive Officer and Aldo Pagliari, Snap-on's Chief Financial Officer. Nick will kick off our call this morning with his perspective on our performance. Aldo will then provide a more detailed review of our financial results. After Nick provides some closing thoughts, we’ll take your questions. As usual, we have provided slides to supplement 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 the 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 factors that could cause our results to differ materially from those in the forward-looking statements are contained in our SEC filings. With that said, I’d now like to turn the call over to Nick Pinchuk, Nick?

Thanks Leslie. Good morning everyone. As we look at our fourth quarter, we’re once again encouraged both by our financial performance and by our advancements in the areas we’ve identified as being of strategic importance. Overall volumes in the quarter were up 13.6% and the gains were widely spread across customer basis, across operating units, and across geographies. Operating earnings rose nearly 44% and the overall margin of 13.5% increased 270 basis points from last year powered by expansion in the operating company as well as by the ramp up in our financial services profitability. Excluding the financial services operation, the 12.6% operating margin was up well over the 11.5% registered in 2009. Importantly, I think the results confirm continuing progress and the building momentum. It was the fourth consecutive quarter of year-over-year sales increases and these results represent the largest of those gains. Also, the operating margins were the highest of the years defining a bright line of progress throughout 2010. I believe it’s clear that Snap-on closed out 2010 in a much stronger position than when we entered the year. Of course there was improvement in the overall global economic environment and we’ve taken advantage. But we’ve also strengthen our tactical execution driven by our commitment to the Snap-on value creation processes, rapid continuous improvement or RCIs we call it, innovation, customer connection, quality and safety. They continue to drive improvement and the good news is that there’s much more to gain, there is much more to go. Beyond that, we’ve achieved a much more progress in those focused areas that we believe will be strategically decisive for our future, enhancing our franchisee network, expanding the company’s presence with repair shop owners and managers, rolling the Snap-on brand out of the garage, extending into other mission critical areas…

Thanks Nick. Our consolidated operating results are summarized on slide 6. Net sales in the fourth quarter of $697 million increased 12.7% year-over-year. Excluding currency translation, organic sales increased $83 million or 13.6%. The primary drivers behind the year-over-year sales increase include double-digit sales growth across many of our businesses including sales to franchisees in the United States, customers in critical industries and emerging markets, an increased facilitation program activities with automotive OEM dealerships including higher sales of essential tools. Sales of under car equipment to repair facilities were also up significantly, driven by imaging alignment product sales gains across all major geographies. While continuing to be impacted by challenging economic conditions throughout Southern Europe, sales in our European based hand-tool business also experienced year-over-year increases, particularly in Northern Europe. Consolidated gross profit of $319 million in the quarter increased $34.1 million from 2009 levels, driven by higher sales, favorable manufacturing utilization, and savings from ongoing rapid continuous improvement in our RCI initiatives and restructuring actions. These gross profit increases were partially offset by $6.5 million, of lower year-over-year LIFO related inventory evaluation benefits. The higher LIFO benefits in 2009, resulted from inventory reductions including the liquidation of slow moving and excess inventories as we adjusted production response to the weakened demand during the economic down turn. As a result, consolidated gross margin of 45.7% in the quarter decreased 30 basis points from 46% last year. Operating expenses in the quarter of $231 million increased approximately $18 million from the prior year primarily due to higher volume related and other expenses, including $4.1 million of higher U.S. pension expense, largely due to the amortization of investment losses incurred in 2008 related to our domestic pension plan assets. Operating expenses were also impacted by $3.8 million of higher year-over-year performance based…

Thanks Aldo. We believe, the message of our fourth quarter is threefold. First, the Snap-on value creation processes are continuing to drive improvement. We saw the results in our new product, and our profits, and achievements like the Murphy factoring being named in the top 2010 and our successful integration of the credit company. And we believe, there is a long road of progress still to be traveled. Secondly, many of our businesses have recovered returning to pre-recession levels, at the same time we do have selected areas, particularly Southern Europe in the OEM dealership segment that have some way to go. Finally, we see in the results that our runways for growth are clear, we grew substantially in the quarter while still facing the headwinds of Spain and the rest of Southern Europe in the OEM dealership segment. Those increases were driven by decisive strategic gains enhancing our franchise network, expanding with shop owners, extending to critical industries, and building an emerging market and we can see further and expansive opportunities in each of those areas. Overall, I think you’ll remember, we said entering the recession that we would navigate the difficulties and emerge stronger than before. We believe, the fourth quarter results continuing the trend defined to 2010 are evidence that we did just that. But most importantly, those result indicate that we are positioned quite well, Snap-on is positioned quite well to capitalize on the abundant opportunities for growth that stretch out before us. Now, before I turn the call over to the operator I want to finish by thanking our associates and our franchisees. I know many of you’re listening. The fourth quarter and the full year results were only possible because of your efforts on behalf of Snap-on and because of your commitment to our team. For all of that, for your continuing support of our company you have my congratulations and you have my thanks. Now, I’ll turn the call over to the operator for questions. Operator?

Thank you. (Operator Instructions) We will take our first question from Jim Lucas, Janney Montgomery Scott. Jim Lucas – Janney Montgomery Scott: Thanks. Good morning all.

Good morning. Jim Lucas – Janney Montgomery Scott: Couple of questions here. First, for 2010 what did the geographic mix look like at the end of the year, in particular how much did the emerging markets grow in terms of the overall percentage?

Well, I think we said emerging – it’s I think we said 59% is the U.S., about 26% in Europe. Emerging markets is between 5% and 10% in that regard. The emerging markets we generally say is growing faster than GDP. We saw pretty good growth in India particularly in the fourth quarter and the third quarter of this year, we starting to see our business in India pickup quite a bit. I don’t know if we foresaw that so much when we entered the year. Jim Lucas – Janney Montgomery Scott: So, out of curiosity, since you call that out, what is driving the India growth?

Jim, I think it’s the new equipment product. We started out taking equipment focused on China market and launching a mid tier, you might remember we talked a bit about that in the beginning, the early penetration of China was around, I don’t want to say skimming but around the top of the line products in the best garages and then we got some experience and then we came out with a mid-tier line of aligners and balancers and tire changers. When we introduced that in India, it took off quite smartly. Jim Lucas – Janney Montgomery Scott: Okay, so just to clarify the emerging markets in terms of the overall percentage it’s still in the 5% to 10%, you are saying faster growth, but…

Yes, I mean it’s off a small bit, I mean I think actually a lot of people have observed, I found some others have observed, I think you could observe with us and I think I said in my remarks, we are early in the cycle, this repair cycle. Industrial companies around the country I think are up around 20% or 25%. What you see from us is a situation where the repair cycle hasn’t started yet. You know the story, 300 million cars in United States and are all – 45% are over 10 years old, 70 million in China and they are all new. So we haven’t actually seen our business as a broad fit, as an industry really grab hold yet. And that applies not only to automotive repair but also to aerospace and a number of different things. Repair cycle is just starting, we are building to get there and I think we have quite a bit of opportunity and you can see that, just if you compare to other industrial companies, how they are represented in China and other places in the emerging markets. Jim Lucas – Janney Montgomery Scott: Absolutely and on RS&I, what impact does mix have on the margins there, just trying to understand what those new segment, what the margin profile should look like going forward?

Well, I think you are seeing the margin profile now, what happened is that you get some headwinds when the OEM facilitation business starts building and that happened in this quarter, it had been under represented in prior quarters. When the OEM manufacturers start having this central tool distributions those were lower margins, more than 10 points lower at a gross margin level. I think what you are seeing now is a good base to model going forward. I don’t think you are going to see a big mix change, because I think the facilitation business is now reasonably represented as a mixed piece. Jim Lucas – Janney Montgomery Scott: Okay, that’s helpful. On the tools group Aldo, do we – is the LIFO comps kind of worked their way out at this point, so 2011 more apple-to-apples.

Jim that’s a good characterization. Certainly as inventory build there will be some impact of LIFO but you won’t have that year-over-year noise that you had in the fourth quarter of this year. So, yes you characterized it correctly. Jim Lucas – Janney Montgomery Scott: Okay and final one for me on the credit business, first expected a contribution from a cash basis this year and secondly any update CIT disputes?

First half, we expect that the portfolio grows, yes you’ll see sequential improvement as we have seen consistently over the last quarter since the termination of the joint venture back in July of ’09. So we don’t provide the exact guidance on what that buildup will be, but you will see, we expect there will be incremental improvements in each quarter as we go forward. With respect to CIT really there is no further update of consequence, so we have a meeting scheduled with an arbitrator in the second quarter of this year, we are hoping that the matter will be fully resolved by that point in time, but really nothing much else to say in that matter. Jim Lucas – Janney Montgomery Scott: Great, thank you.

Our next question today will come from David Leiker, Robert W. Baird.

Hi David. David Leiker – Robert W. Baird: Although as we look forward on the growth profit line with the LIFO, are we through the point now that on a go forward basis we are not going to see LIFO benefits flow through the income statement anywhere?

I don’t believe we will see LIFO benefits David. I would expect as the economy is continuing to recover and we continue to grow inventories will pick up appropriately. So, and with that if anything you’ll have some LIFO expense creep into the financials, but not the benefits. David Leiker – Robert W. Baird: How big do you think those expenses might end up running, do you have any thoughts?

I don’t know, I don’t think they are being significant. David Leiker – Robert W. Baird: Okay. And then as we look at the organic performance across the businesses, tools business and diagnostics, both have seen an acceleration and that’s relative to what we saw in the prior quarters. Is that something that we’re seeing some real strong underlying growth there accelerate or there is something else going on?

Well I think the tools, actually the tools business looks fairly strong. It’s hard to say, I think we are seeing some real positives there. I think I said in the last call, everybody says they are gaining share. I think we feel quite confident that we are improving our position with technicians in the tools group. I think you are seeing technicians themselves become a little bit more, they are a little bit confident of their future and not necessarily, it’s not necessarily pin up demand, it’s just they are going back business as usual in terms of buying. When you – we just had to kick off David and the kick off events were I think are best ever. Now these are events which lead up the year, we hold them in January and have distributed around the country in places like Chicago and Deadwood, South Dakota, and Phoenix and so on. And the attendance at those was a record and the enthusiasm for the programs that are coming forward was very positive. So I have to say that the anecdotal reports from the individual dealers, I attended a couple of them myself. The anecdotal reports from the dealers seem to match up with the numbers to say that we are gaining position and this looks like that that group is getting its momentum moving forward positively. It recovered from I think we are back to 2008 levels, so you can say we are at pre-recession levels. So the fourth quarter I think is a pretty good quarter for them. David Leiker – Robert W. Baird: Do you think that, if you look at that business here in the U.S. in particular, in the tools side you are back to normal customer behavior. Is there a…

Yes, I’d say that. I’d say we are seeing – in the United States the business grew 15%, 16%. So big number and so we feel pretty positive about that and I wouldn’t call it pinned up demand. I just think customers are – they’ve been fortified by the continuing demand in the shops even through the recession, now they’re getting more confident and they are going back to business as usual and by the way, we are stronger than when we entered, our franchisees are stronger, their cash is better, determination is better, and our products are better. David Leiker – Robert W. Baird: I think I have a question on the repair side is that back to normal level of demands or not yet?

I think it’s back to normal levels of demand. Now of course the comps gets tougher in 2011 as you know, but I feel positive about that business. David Leiker – Robert W. Baird: And then lastly, I was a little late getting on, but Europe, the Southern part of the region particularly in the C&I business has done bit of a lag, has that gotten back, is that starting to support the year end or not?

So if you think about us going forward you can think of us this way. We have a number of businesses that are fully recovered and then we’ve got places that have, still kind of caught in a kind of a recession level, which is the OEM dealership business for reasons of consolidation. And the Southern European business, that’s, I think that’s how you can look at us going forward. David Leiker – Robert W. Baird: Okay, thank you.

(Operator Instructions). Next up is Dax Vlassis, Gates Capital Management. Dax Vlassis – Gates Capital Management: Yes, I think you said that C&I group – was the restructuring charges were about $4.8 million, doubt the year-over-year. Can you give us the absolute numbers?

Well, actually I think I said that the tools group was the $4.6 million year-over-year charges. Is that, you are talking about the fourth quarter or the full year? Dax Vlassis – Gates Capital Management: I’m talking about the fourth quarter.

$4.6 million is in the tools group, that’s was the tools group years.

It was last year’s number. In 2010 we have a nominal amount, so it’s about $4.8 million difference year-over-year. Dax Vlassis – Gates Capital Management: Yes, commercial and industrial, there is an increase – gross profit, increased due to higher sales $4.8 million lower restructuring costs?

Correct, those $4.6 million were occurred late last year, we had a nominal reversal this year. So $4.8 million is total difference [ph]. Dax Vlassis – Gates Capital Management:

No, I don’t think so. And I think our big seasonality quarter is the third quarter. It’s the third quarter all right, because we have European businesses and so you see vacations flow through the numbers. But, generally, we have little seasonality in the other three quarters. Now, there can be a little turbulence in expense because when you start out the year you are spending on things like I said the kick off meetings and so on, so the expense line can move somewhat based on those things. But, generally I’d say in the terms of the top line, in terms of – it’s pretty much no seasonality. Dax Vlassis – Gates Capital Management: Okay and if I exclude the impact from financial services, looking forward and not just from a general perspective, if I look at the financial services segment and ex-out the sort of working capital requirements of that business, and I’m just looking at the core three segments, are we at a working capital level with those now that you would generate some pretty substantial free cash flow from those segments exclusive of the financial services segment?

Yes, I think that’s right. I would say that, we think that moving forward, now I am not going to say that we are not going to add any working capital as our sales move upwards, that’s not the situation. But I think the free cash flow from what we call OPCO, the operating company outside of the financial services, we are pretty robust. Dax Vlassis – Gates Capital Management: Right because I mean it seems like the CapEx levels are low and if working capital is back up to a high-level, you should generate a fair amount of free cash flow here.

Yes, I think that’s true, the one exception to that might be if you say as you expand in emerging market that tends to be a structural build. So that’s a little different but generally the rest of the business. So I would that you – in a broad sense you’re correct. Dax Vlassis – Gates Capital Management: Okay, and my last question is on the restructuring expenses going forward, it seems like the lot of the expenses have trailed-off, do you have any – what are your expectations for…?

No, I wouldn’t characterize them as trailed off, we spent, I think we spent $15 million this year, we spent…

14.2.

Okay, thank you 14.2 this year and we – and last year we spent just over 20, 22 or something like that and I think we consider ourselves controlled restructures, we spent about in that area every year, so I think you’re going to see about that level going forward. Dax Vlassis – Gates Capital Management: $14 million through the P&L that…?

Like we spent this year, I’m not saying we’re going to spend that amount this year or less but that’s the kind of money if you go back and you look at what we’ve done in the past, it’s the kind of money we spent that’s generally what we can handle in a year, we feel pretty positive about doing it, we feel we can execute it and so those are the kinds of numbers we generally turn out. We see opportunities. Dax Vlassis – Gates Capital Management: If that’s an annual number why is it restructuring non returning nature, I mean will that be part operations or is there some programs that would have a specific end date and it’s just not in 2011?

It really will be just more program specific, restructuring definitions and accounting terminology and if it’s a specific and unique program as compared to the prior year it’s categorized by that. So I think what Nick is saying is we still see opportunities to improve ourselves, we’re going to continue to look for those opportunities and we’ll invest accordingly if we see a return on those projects. Dax Vlassis – Gates Capital Management: Okay, I appreciate it.

(Operator Instructions) Next, we’ll go to Alex Guestio [ph], Barrington Research. Alex Guestio – Barrington Research: Hi Nick, hi Aldo, hi Leslie, how are you guys?

Good morning.

Good morning. Alex Guestio – Barrington Research: Most of my questions were answered. Just concerning the franchisees, how many were in the – how many did you have in the quarter and do you see…?

I couldn’t quite hear you Alec could you say that again? Alex Guestio – Barrington Research: I’m sorry. How many franchisee did you have in the quarter?

I think the number advance is about 3464 in the U.S. Alex Guestio – Barrington Research: In the U.S.?

That’s the number we usually quote. I think there is, I don’t know the actual international number, but… Alex Guestio – Barrington Research: Is that up quarter-to-quarter and as of last year?

4800 (inaudible). Alex Guestio – Barrington Research: Is that up?

No, it’s about, it’s up, it’s about flat. Alex Guestio – Barrington Research: Any ideas of that moving up in fiscal ’11?

We have some open routes that we could fill and our structural, as we get more efficient, the structural nature open routes can get filled. I think we found that we want to be very selective as who we put in the trucks and it served us very well, going forward. And so that’s really the idea that has dominated the last four or five quarters, that doesn’t mean we won’t increase in the future, but… Alex Guestio – Barrington Research: So you haven’t had the purge as much because of such a higher standard?

Right, right. If you actually got here and you looked at all the real detail our inter mortality is one way down, which has made all the difference for us in terms of terminations. So that’s been a very big positive as you might imagine. So I would say that you would be entitled to believe that over the last say two or three years, we’ve learned a lot how to manage the franchise systems with lower cost associated with turbulence in the franchisees. And we paid lot of attention to their profitability as well. So we boosted their profits on an average basis and then paid attention whose going in there and that all works pretty well. Actually, it’s one of the things I just want to say little bit more, it’s one of the great advantages for Snap-on because when you have so many franchisees you may have the big portion of the 3500 people in the United States were capable of running these franchisees, it’s kind of a barrier to entry and a tactical advantage that’s hard to duplicate and hard to deal with some of our competitors. Alex Guestio – Barrington Research: What was the growth in tools for international was it 6.7 Aldo?

6.7% was the growth outside United States in the quarter. Alex Guestio – Barrington Research: I think you guys mentioned before, it’s pretty difficult to implement van strategy into India or China, is that correct?

No, no, of course. Actually – generally, it is difficult because the van strategy flourishes best when technicians own their own tools. India and China, the technicians do not own the tools, the shops own them. So we use direct and distributors to manage our distribution in that place. Just an aside for the international businesses, remember that if you look back to last year, when we were in the recessions, the international tools businesses did not go down, the international van channels did not sink as much as other U.S. businesses so the comparisons were much tougher for those, U.K. and Australia businesses. Alex Guestio – Barrington Research: You mentioned critical areas, was there any particular areas that was more – grew outstanding in the quarter or was it just across the board?

Yes, actually we grew it ever one of those areas in the quarter and we’re quite please with them. But I would say if you ask me that question, the broad category of natural resources seems to be the strongest things like mining and, oil and gas, and we’d put power generation in natural resources. So we felt that to be a pleasing trend. Alex Guestio – Barrington Research: I know you mentioned that Europe represented like 26% of revenue?

26%. Alex Guestio – Barrington Research: Would you be able to say how much it’s like Southern Europe in that 26%?

Well, I can say that our Spanish, I’ll say this, I know the Spanish number. Our Spanish number is between 20% and 25% of our European business. We acquired business in Spain several years ago, one of our major acquisition. So we have a fairly large share of the Spanish market. Alex Guestio – Barrington Research: Is there any – are you guys looking any small tuck-in acquisitions, is that, does that make any amount of sense strategically right now?

Say that again, please? Alex Guestio – Barrington Research: Any like tuck-in acquisitions?

Yes, I mean well, our view on acquisitions is this is that, the Snap-on umbrella is – we use to think ourselves as somebody who sold hand tools through vans to auto mechanics but when you step back at it, the real Snap-on proposition is making work easier for professionals who operate in critical industries. That’s a fairly wide but yet coherent space where the whole Snap-on proposition works powerfully. And so we are looking at acquisitions in those areas, we’re receptive to acquisitions that would, in emerging markets, an acquisition that would put us in a better position to serve repair shop owners and managers. We made once several year of our (inaudible) or anybody anything that would further and give us greater weight in critical industries in alternative manner in places like natural resources or aerospace and so on. So we’re alert to those and we’re reviewing them. I don’t – I – yes? Alex Guestio – Barrington Research: What about and I know you’re gaining ground in the heavy, medium truck is that where acquisition would help or is that more of a organic.

Well, I don’t see us, I don’t necessarily see us – looking at that for an acquisition, I think we have quite a bit of capability right inside Snap-on to fully mine that position. When people always ask me what are we going to do with our cash, well I think we have quite a bit of capability, quite a bit of runway enrolling the Snap-on brand out of the garage in – its building an emerging mark, on expanding with repair shop owners and managers. Remember, that’s the different, that’s the different customer base than technicians. So we’re investing in organic growth there, but we’re looking for acquisitions. I’m not sure heavy truck would be a, is a clear opportunity, but that doesn’t mean I would disqualify if a great property came in – was available. Alex Guestio – Barrington Research: All right. Thanks for answering my question.

Sure thank you.

Our final question today is the follow up from Jim Lucas.

Yes Jim. Jim Lucas – Janney Montgomery Scott: , :

It remains about the same Jim. Jim Lucas – Janney Montgomery Scott: And any thoughts or color you could share on the ramp of material inflation we’re seeing in particular lot of press these days about the rising steel prices. Can you just kind of give us an update of where you stand in terms of pricing, it would offset this rising inflation.

Yes, we had some pricing in the quarter. We’re seeing some mild inflation. Remember, we don’t buy any particular one quantity. I think we said in the past that to the extent the inflation is quite visible that if steel prices go up to clearly or oil price is spiked dramatically and stay up like gasoline prices are up and things like that. We can price for that, we think we can find to offset, so we can find offsets for those – for that pressure. If you go back, I think the last time we saw spikes in 2008, I think gasoline was like $4 a gallon and so, in 2008. Oil went from 80 to 140 that was one of our best years. So I don’t think we’re trembling over commodity inflation, I’m not to say it isn’t a challenge but in history we’ve been able to find ways to offset it. Jim Lucas – Janney Montgomery Scott: And just from clarifications standpoint. When do you normally put your, if I remember correctly, it’s usually an annual price increase you put through and then to your response of being able to pass through when inflation is visible, is there a normal lag from when you realize that price?

Yes, first of all, across the range of businesses, there is no particular period I can say that we put in pricing. I mean the tools group is different than SNA Europe and that’s different than Asia and so on. You can say I think that there is a kind of maybe quarter lag and this kind of thing, we’ll see a two to three month lag and when we put in pricing and see it come out in marketplace. Jim Lucas – Janney Montgomery Scott: Great, thank you.

All right, thank you.

And at this time there are no further questions, I’ll turn the conference back over to management for any additional or closing remarks.

Thanks everyone, this is Leslie. We thank you for joining us today. A replay of this call will be available on snapon.com shortly. And as always, we appreciate your interest on Snap-on. Have a good day. Bye.

And once again that does conclude today’s conference, thank you all for your participation.