| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| Delaware | 39-0622040 | ||||
| (State of incorporation) | (I.R.S. Employer Identification No.) | ||||
| 2801 80th Street | Kenosha | Wisconsin | 53143 | ||
| (Address of principal executive offices) | (Zip code) | ||||
(262)
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock, $1.00 par value | SNA | New York Stock Exchange |
Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐
Emerging growth company ☐
| Large accelerated filer | ☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
| Emerging growth company | ☐ | ||||||
Class | Outstanding at | |||
| Common Stock, $1.00 par value | ||||
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Net sales Cost of goods sold Gross profit Operating expenses Operating earnings before financial services Financial services revenue Financial services expenses Operating earnings from financial services Operating earnings Interest expense Other income (expense) – net Earnings before income taxes and equity earnings Income tax expense Earnings before equity earnings Equity earnings, net of tax Net earnings Net earnings attributable to noncontrolling interests Net earnings attributable toSnap-on Incorporated Net earnings per share attributable toSnap-on Incorporated: Basic Diluted Weighted-average shares outstanding: Basic Effect of dilutive securities Diluted Dividends declared per common share Comprehensive income (loss): Net earnings Other comprehensive income (loss): Foreign currency translation* Unrealized cash flow hedges, net of tax: Other comprehensive income before reclassifications Reclassification of cash flow hedges to net earnings Defined benefit pension and postretirement plans: Amortization of net unrecognized losses and prior service credits included in net periodic benefit cost Income tax benefit Net of tax Total comprehensive income Comprehensive income attributable to noncontrolling interests Comprehensive income attributable toSnap-on Incorporated ASSETS Current assets: Cash and cash equivalents Trade and other accounts receivable – net Finance receivables – net Contract receivables – net Inventories – net Prepaid expenses and other assets Total current assets Property and equipment: Land Buildings and improvements Machinery, equipment and computer software Accumulated depreciation and amortization Property and equipment – net Deferred income tax assets Long-term finance receivables – net Long-term contract receivables – net Goodwill Other intangibles – net Other assets Total assets LIABILITIES AND EQUITY Current liabilities: Notes payable and current maturities of long-term debt Accounts payable Accrued benefits Accrued compensation Franchisee deposits Other accrued liabilities Total current liabilities Long-term debt Deferred income tax liabilities Retiree health care benefits Pension liabilities Other long-term liabilities Total liabilities Commitments and contingencies (Note 14) Equity Shareholders’ equity attributable toSnap-on Incorporated: Preferred stock(authorized 15,000,000 shares of $1 par value; none outstanding) Common stock(authorized 250,000,000 shares of $1 par value; issued 67,407,599 and 67,400,250 shares, respectively) Additionalpaid-in capital Retained earnings Accumulated other comprehensive loss Treasury stock at cost(10,400,929 and 9,450,393 shares, respectively) Total shareholders’ equity attributable toSnap-on Incorporated Noncontrolling interests Total equity Total liabilities and equity Common Stock Additional Paid-in Capital Retained Earnings Treasury Stock Total Equity Balance at December 31, 2016 Net earnings for the nine months ended September 30, 2017 Other comprehensive income Cash dividends – $2.13 per share Stock compensation plans Share repurchases – 1,348,000 shares Other Balance at September 30, 2017 The following summarizes the changes in total equity for the nine month period ended October 1, 2016: Common Stock Additional Paid-in Capital Retained Earnings Treasury Stock Total Equity Balance at January 2, 2016 Net earnings for the nine months ended Other comprehensive loss Cash dividends – $1.83 per share Stock compensation plans Share repurchases – 492,000 shares Other Balance at October 1, 2016 June 29, 2019: EQUITY millions, except share data) Operating activities: Net earnings Adjustments to reconcile net earnings to net cash provided (used) by operating activities: Depreciation Amortization of other intangibles Provision for losses on finance receivables Provision for losses onnon-finance receivables Stock-based compensation expense Deferred income tax benefit Gain on sale of assets Settlement of treasury lock Changes in operating assets and liabilities, net of effects of acquisitions: Increase in trade and other accounts receivable Increase in contract receivables Increase in inventories Increase in prepaid and other assets Increase in accounts payable Decrease in accruals and other liabilities Net cash provided by operating activities Investing activities: Additions to finance receivables Collections of finance receivables Capital expenditures Acquisitions of businesses, net of cash acquired Disposal of property and equipment Other Net cash used by investing activities Financing activities: Proceeds from issuance of long-term debt Repayments of long-term debt Proceeds from notes payable Repayments of notes payable Net increase in other short-term borrowings Cash dividends paid Purchases of treasury stock Proceeds from stock purchase and option plans Other Net cash used by financing activities Effect of exchange rate changes on cash and cash equivalents Increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of period Supplemental cash flow disclosures: Cash paid for interest Net cash paid for income taxes financial statements. See Note Trade and other accounts receivable Allowances for doubtful accounts Total trade and other accounts receivable – net Finance receivables, net of unearned finance charges of $20.7 million and $17.0 million, respectively Contract receivables, net of unearned finance charges of $17.0 million and $15.6 million, respectively Total Allowances for doubtful accounts: Finance receivables Contract receivables Total Total current finance and contract receivables – net Finance receivables – net Contract receivables – net Total current finance and contract receivables – net Finance receivables, net of unearned finance charges of $16.4 million and $13.0 million, respectively Contract receivables, net of unearned finance charges of $24.3 million and $21.5 million, respectively Total Allowances for doubtful accounts: Finance receivables Contract receivables Total Total long-term finance and contract receivables – net Finance receivables – net Contract receivables – net Total long-term finance and contract receivables – net Depending on the contract, payments for finance and contract receivables are due on a monthly or weekly basis. Weekly payments are converted into a monthly equivalent for purposes of calculating delinquency. Delinquencies are assessed at the end of each month following the monthly equivalent due date. Removal from delinquent status occurs when the cumulative number of monthly payments due has been received by the company. September 30, 2017: Finance receivables Contract receivables December 31, 2016: Finance receivables Contract receivables Performing Nonperforming Total Finance receivables Contract receivables Allowances for doubtful accounts: Beginning of period Provision Charge-offs Recoveries Currency translation End of period 2018: Allowances for doubtful accounts: Beginning of period Provision Charge-offs Recoveries End of period Finished goods Work in progress Raw materials Total FIFO value Excess of current cost over LIFO cost Total inventories – net Balance as of December 31, 2016 Currency translation Acquisitions and related adjustments Balance as of September 30, 2017 2019. See Note 3 for additional information on acquisitions. Amortized other intangible assets: Customer relationships Developed technology Internally developed software Patents Trademarks Other Total Non-amortized trademarks Total other intangible assets Customer relationships Internally developed software Patents Trademarks Other additional analysis of the impacts of the Tax Act, the company revised its prior estimates and recorded $2.1 million of additional tax expense during the 2018 period. The additional $2.1 million tax provision during the first six months of 2018 increased the company’s effective tax rate for the period by 50 basis points. The ultimate impact of the Tax Act may differ from the current estimates, possibly materially, due to changes in interpretations and assumptions the company has made, future guidance that may be issued and actions the company may take as a result of the law. September 30, December 31, 5.50% unsecured notes due 2017 4.25% unsecured notes due 2018 6.70% unsecured notes due 2019 6.125% unsecured notes due 2021 3.25% unsecured notes due 2027 Other debt* Less: notes payable and current maturities of long-term debt: Current maturities of long-term debt Commercial paper borrowings Other notes Total long-term debt Earnings. See Note 16 for additional information on Other income (expense) - net. purposes. item. 29, 2018. 29, 2018. See Note 16 for additional information on Other income (expense) - net. Balance Sheet Presentation Interest rate swaps Treasury locks Foreign currency forwards Foreign currency forwards Equity forwards Total Total derivative instruments Interest rate swaps Treasury locks Treasury locks Statement of Earnings Presentation Foreign currency forwards Other income (expense) – net Equity forwards Operating expenses Finance receivables – net Contract receivables – net Long-term debt, notes payable and current maturities of long-term debt Service cost Interest cost Expected return on plan assets Amortization of unrecognized loss Amortization of prior service credit Net periodic pension cost Interest cost Expected return on plan assets Amortization of unrecognized gain Net periodic postretirement health care cost June 30, 2018. Expected term of option(in years) Expected volatility factor Expected dividend yield Risk-free interest rate model: Outstanding at December 31, 2016 Granted Exercised Forfeited or expired Outstanding at September 30, 2017 Exercisable at September 30, 2017 2018. Non-vested performance awards at December 31, 2016 Granted Vested Cancellations and other Non-vested performance awards at September 30, 2017 Expected term of stock-settled SARs(in years) Expected volatility factor Expected dividend yield Risk-free interest rate model: Outstanding at December 31, 2016 Granted Exercised Forfeited or expired Outstanding at September 30, 2017 Exercisable at September 30, 2017 2018. Expected term of cash-settled SARs(in years) Expected volatility factor Expected dividend yield Risk-free interest rate model: June 30, 2018. Non-vested cash-settled SARs at December 31, 2016 Granted Vested Non-vested cash-settled SARs at September 30, 2017 Weighted-average common shares outstanding Effect of dilutive securities Weighted-average common shares outstanding, assuming dilution Warranty reserve: Beginning of period Additions Usage End of period Interest income Net foreign exchange loss Other Total other income (expense) – net Balance as of July 1, 2017 Other comprehensive income before reclassifications Amounts reclassified from Accumulated OCI Net other comprehensive income (loss) Balance as of September 30, 2017 June 29, 2019: Balance as of December 31, 2016 Other comprehensive income before reclassifications Amounts reclassified from Accumulated OCI Net other comprehensive income Balance as of September 30, 2017 June 29, 2019: Balance as of July 2, 2016 Other comprehensive loss before reclassifications Amounts reclassified from Accumulated OCI Net other comprehensive income (loss) Balance as of October 1, 2016 June 30, 2018: Balance as of January 2, 2016 Other comprehensive loss before reclassifications Amounts reclassified from Accumulated OCI Net other comprehensive income (loss) Balance as of October 1, 2016 June 30, 2018: Details about Accumulated OCI Components Statement of Earnings Gains on cash flow hedges: Treasury locks Income tax expense Net of tax Amortization of net unrecognized losses and prior service credits Income tax benefit Net of tax Total reclassifications for the period, net of tax These Accumulated OCI components are included in the computation of net periodic pension and postretirement health care costs; see Note 10 and Note 11 for further information. Net sales: Commercial & Industrial Group Snap-on Tools Group Repair Systems & Information Group Segment net sales Intersegment eliminations Total net sales Financial Services revenue Total revenues Operating earnings: Commercial & Industrial Group Snap-on Tools Group Repair Systems & Information Group Financial Services Segment operating earnings Corporate Operating earnings Interest expense Other income (expense) – net Earnings before income taxes and equity earnings Assets: Commercial & Industrial Group Snap-on Tools Group Repair Systems & Information Group Financial Services Total assets from reportable segments Corporate Elimination of intersegment receivables Total assets Net sales Cost of goods sold Gross profit Operating expenses Operating earnings before financial services Financial services revenue Financial services expenses Operating earnings from financial services Operating earnings Interest expense Other income (expense) – net Earnings before income taxes and equity earnings Income tax expense Earnings before equity earnings Equity earnings, net of tax Net earnings Net earnings attributable to noncontrolling interests Net earnings attributable toSnap-on Inc. leverage, including higher volumes in lower expense businesses, lower performance-based compensation costs and savings from RCI initiatives. Net sales Cost of goods sold Gross profit Operating expenses Operating earnings before financial services Financial services revenue Financial services expenses Operating earnings from financial services Operating earnings Interest expense Other income (expense) – net Earnings before income taxes and equity earnings Income tax expense Earnings before equity earnings Equity earnings, net of tax Net earnings Net earnings attributable to noncontrolling interests Net earnings attributable toSnap-on Inc. settlement. charge. External net sales Intersegment net sales Segment net sales Cost of goods sold Gross profit Operating expenses Segment operating earnings External net sales Intersegment net sales Segment net sales Cost of goods sold Gross profit Operating expenses Segment operating earnings 2018. business. 24.9% in 2018. 14.3% in 2018. Segment net sales Cost of goods sold Gross profit Operating expenses Segment operating earnings Segment net sales Cost of goods sold Gross profit Operating expenses Segment operating earnings External net sales Intersegment net sales Segment net sales Cost of goods sold Gross profit Operating expenses Segment operating earnings External net sales Intersegment net sales Segment net sales Cost of goods sold Gross profit Operating expenses Segment operating earnings Financial services revenue Financial services expenses Segment operating earnings Financial services revenue Financial services expenses Segment operating earnings 2.5% in the first six months of 2018. performance-based compensation and other costs. performance-based compensation and other costs. Net sales Cost of goods sold Gross profit Operating expenses Operating earnings before financial services Financial services revenue Financial services expenses Operating earnings from financial services Operating earnings Interest expense Intersegment interest income (expense) – net Other income (expense) – net Earnings before income taxes and equity earnings Income tax expense Earnings before equity earnings Financial services – net earnings attributable toSnap-on Equity earnings, net of tax Net earnings Net earnings attributable to noncontrolling interests Net earnings attributable toSnap-on Net sales Cost of goods sold Gross profit Operating expenses Operating earnings before financial services Financial services revenue Financial services expenses Operating earnings from financial services Operating earnings Interest expense Intersegment interest income (expense) – net Other income (expense) – net Earnings before income taxes and equity earnings Income tax expense Earnings before equity earnings Financial services – net earnings attributable toSnap-on Equity earnings, net of tax Net earnings Net earnings attributable to noncontrolling interests Net earnings attributable toSnap-on *Snap-on with Financial Services on the equity method. ASSETS Current assets: Cash and cash equivalents Intersegment receivables Trade and other accounts receivable – net Finance receivables – net Contract receivables – net Inventories – net Prepaid expenses and other assets Total current assets Property and equipment – net Investment in Financial Services Deferred income tax assets Intersegment long-term notes receivable Long-term finance receivables – net Long-term contract receivables – net Goodwill Other intangibles – net Other assets Total assets LIABILITIES AND EQUITY Current liabilities: Notes payable and current maturities of long-term debt Accounts payable Intersegment payables Accrued benefits Accrued compensation Franchisee deposits Other accrued liabilities Total current liabilities Long-term debt and intersegment long-term Deferred income tax liabilities Retiree health care benefits Pension liabilities Other long-term liabilities Total liabilities Total shareholders’ equity attributable toSnap-on Inc. Noncontrolling interests Total equity Total liabilities and equity Cash and cash equivalents Trade and other accounts receivable – net Finance receivables – net Contract receivables – net Inventories – net Prepaid expenses and other assets Total current assets Notes payable and current maturities of long-term debt Accounts payable Other current liabilities Total current liabilities Total working capital 29, 2018 for acquisitions. 29, 2018 interest rate swaps. 2019. earnings. RCI. 2019. 2019. Period Total/Average * Subject to further adjustment pursuant to the 1996 Authorization described below, as of June 29, 2019, the approximate value of shares that may yet be Period Total/Average Aldo J. Pagliari, Principal Financial Officer, Senior Vice President – Finance and Chief Financial OfficerSNAP-ON INCORPORATED Three Months Ended Nine Months Ended September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016 $ 903.8 $ 834.1 $ 2,712.3 $ 2,540.6 (455.2) (415.0) (1,352.7) (1,274.9) 448.6 419.1 1,359.6 1,265.7 (295.5) (261.5) (853.3) (786.3) 153.1 157.6 506.3 479.4 79.0 71.6 233.5 207.2 (23.0) (21.0) (70.4) (60.1) 56.0 50.6 163.1 147.1 209.1 208.2 669.4 626.5 (13.1) (13.1) (38.8) (39.1) (2.1) (0.8) (5.7) (0.3) 193.9 194.3 624.9 587.1 (57.2) (59.6) (187.1) (179.4) 136.7 134.7 437.8 407.7 0.4 0.5 1.2 2.2 137.1 135.2 439.0 409.9 (3.7) (3.5) (10.8) (9.8) $ 133.4 $ 131.7 $ 428.2 $ 400.1 $ 2.33 $ 2.27 $ 7.43 $ 6.89 2.29 2.22 7.27 6.74 57.2 58.0 57.6 58.1 1.1 1.3 1.3 1.3 58.3 59.3 58.9 59.4 $ 0.71 $ 0.61 $ 2.13 $ 1.83 Three Months Ended Six Months Ended June 29, 2019 June 30, 2018 June 29, 2019 June 30, 2018 Net sales $ 951.3 $ 954.6 $ 1,873.0 $ 1,890.1 Cost of goods sold (477.5 ) (467.5 ) (927.6 ) (931.4 ) Gross profit 473.8 487.1 945.4 958.7 Operating expenses (283.9 ) (294.0 ) (568.1 ) (587.9 ) Operating earnings before financial services 189.9 193.1 377.3 370.8 Financial services revenue 84.1 82.0 169.7 165.0 Financial services expenses (23.5 ) (24.2 ) (47.0 ) (50.3 ) Operating earnings from financial services 60.6 57.8 122.7 114.7 Operating earnings 250.5 250.9 500.0 485.5 Interest expense (12.4 ) (12.0 ) (24.9 ) (25.6 ) Other income (expense) – net 2.1 (0.6 ) 3.6 2.2 Earnings before income taxes and equity earnings 240.2 238.3 478.7 462.1 Income tax expense (55.6 ) (55.8 ) (112.5 ) (113.4 ) Earnings before equity earnings 184.6 182.5 366.2 348.7 Equity earnings, net of tax 0.3 0.2 0.8 0.8 Net earnings 184.9 182.7 367.0 349.5 Net earnings attributable to noncontrolling interests (4.5 ) (4.0 ) (8.7 ) (7.8 ) Net earnings attributable to Snap-on Incorporated $ 180.4 $ 178.7 $ 358.3 $ 341.7 Net earnings per share attributable to Snap-on Incorporated: Basic $ 3.27 $ 3.17 $ 6.47 $ 6.04 Diluted 3.22 3.12 6.38 5.93 Weighted-average shares outstanding: Basic 55.2 56.4 55.4 56.6 Effect of dilutive securities 0.8 0.9 0.8 1.0 Diluted 56.0 57.3 56.2 57.6 Dividends declared per common share $ 0.95 $ 0.82 $ 1.90 $ 1.64 SNAP-ON INCORPORATED Three Months Ended Nine Months Ended September 30, October 1, September 30, October 1, 2017 2016 2017 2016 $ 137.1 $ 135.2 $ 439.0 $ 409.9 51.4 (7.8) 138.9 (22.8) – – 6.1 – (0.5) (0.1) (1.2) (0.3) 6.6 7.6 19.8 22.7 (2.3) (2.8) (6.9) (8.3) 4.3 4.8 12.9 14.4 $ 192.3 $ 132.1 $ 595.7 $ 401.2 (3.7) (3.5) (10.8) (9.8) $ 188.6 $ 128.6 $ 584.9 $ 391.4 *There is no reclassification adjustment as there was no sale or liquidation of any foreign entity during any period presented. Three Months Ended Six Months Ended June 29, 2019 June 30, 2018 June 29, 2019 June 30, 2018 Comprehensive income: Net earnings $ 184.9 $ 182.7 $ 367.0 $ 349.5 Other comprehensive income (loss): Foreign currency translation* (8.4 ) (97.6 ) (0.8 ) (58.5 ) Unrealized cash flow hedges, net of tax: Other comprehensive loss before reclassifications — — — (0.8 ) Reclassification of cash flow hedges to net earnings (0.3 ) (0.3 ) (0.7 ) (0.8 ) Defined benefit pension and postretirement plans: Amortization of net unrecognized losses and prior service credits included in net periodic benefit cost 5.9 8.0 11.7 15.6 Income tax benefit (1.5 ) (2.0 ) (2.8 ) (3.8 ) Net of tax 4.4 6.0 8.9 11.8 Total comprehensive income $ 180.6 $ 90.8 $ 374.4 $ 301.2 Comprehensive income attributable to noncontrolling interests (4.5 ) (4.0 ) (8.7 ) (7.8 ) Comprehensive income attributable to Snap-on Incorporated $ 176.1 $ 86.8 $ 365.7 $ 293.4 SNAP-ON INCORPORATED September 30,
2017 December 31,
2016 $ 94.1 $ 77.6 675.2 598.8 505.8 472.5 99.8 88.1 649.9 530.5 121.1 116.5 2,145.9 1,884.0 24.4 19.1 350.3 309.4 872.8 809.6 1,247.5 1,138.1 (773.3) (712.9) 474.2 425.2 81.2 72.8 1,018.6 934.5 310.4 286.7 924.0 895.5 258.3 184.6 43.6 39.9 $ 5,256.2 $ 4,723.2 June 29,
2019 December 29,
2018ASSETS Current assets: Cash and cash equivalents $ 164.0 $ 140.9 Trade and other accounts receivable – net 684.1 692.6 Finance receivables – net 529.0 518.5 Contract receivables – net 91.5 98.3 Inventories – net 725.8 673.8 Prepaid expenses and other assets 112.2 92.8 Total current assets 2,306.6 2,216.9 Property and equipment: Land 31.6 31.7 Buildings and improvements 392.5 368.6 Machinery, equipment and computer software 965.6 944.4 1,389.7 1,344.7 Accumulated depreciation and amortization (883.3 ) (849.6 ) Property and equipment – net 506.4 495.1 Operating lease right-of-use assets 55.4 — Deferred income tax assets 53.9 64.7 Long-term finance receivables – net 1,089.0 1,074.4 Long-term contract receivables – net 347.5 344.9 Goodwill 907.0 902.2 Other intangibles – net 227.9 232.9 Other assets 51.7 42.0 Total assets $ 5,545.4 $ 5,373.1 September 30,
2017 December 31,
2016 $ 453.4 $ 301.4 204.7 170.9 47.8 52.8 74.8 89.8 76.1 66.7 366.0 307.9 1,222.8 989.5 755.0 708.8 28.5 13.1 34.3 36.7 181.8 246.5 93.8 93.4 2,316.2 2,088.0 – – 67.4 67.4 344.4 317.3 3,689.5 3,384.9 (341.8) (498.5) (837.7) (653.9) 2,921.8 2,617.2 18.2 18.0 2,940.0 2,635.2 $ 5,256.2 $ 4,723.2 June 29,
2019 December 29,
2018LIABILITIES AND EQUITY Current liabilities: Notes payable $ 168.2 $ 186.3 Accounts payable 215.3 201.1 Accrued benefits 42.4 52.0 Accrued compensation 62.2 71.5 Franchisee deposits 69.5 67.5 Other accrued liabilities 373.2 373.6 Total current liabilities 930.8 952.0 Long-term debt 947.9 946.0 Deferred income tax liabilities 45.4 41.4 Retiree health care benefits 30.5 31.8 Pension liabilities 136.6 171.3 Operating lease liabilities 35.7 — Other long-term liabilities 109.8 112.0 Total liabilities 2,236.7 2,254.5 Commitments and contingencies (Note 14) Equity Shareholders’ equity attributable to Snap-on Incorporated: — — 67.4 67.4 Additional paid-in capital 371.7 359.4 Retained earnings 4,556.1 4,257.6 Accumulated other comprehensive loss (500.7 ) (462.2 ) (1,206.4 ) (1,123.4 ) Total shareholders’ equity attributable to Snap-on Incorporated 3,288.1 3,098.8 Noncontrolling interests 20.6 19.8 Total equity 3,308.7 3,118.6 Total liabilities and equity $ 5,545.4 $ 5,373.1 SNAP-ON INCORPORATEDninethree month period ended September 30, 2017: Shareholders’ Equity Attributable toSnap-on Incorporated Accumulated
Other
Comprehensive
Income (Loss) Noncontrolling
Interests $ 67.4 $ 317.3 $ 3,384.9 $ (498.5) $ (653.9) $ 18.0 $ 2,635.2 – – 428.2 – – 10.8 439.0 – – – 156.7 – – 156.7 – – (123.0) – – – (123.0) – 27.1 – – 28.8 – 55.9 – – – – (212.6) – (212.6) – – (0.6) – – (10.6) (11.2) $ 67.4 $ 344.4 $ 3,689.5 $ (341.8) $ (837.7) $ 18.2 $ 2,940.0 Shareholders’ Equity Attributable toSnap-on Incorporated Accumulated
Other
Comprehensive
Loss Noncontrolling
Interests $ 67.4 $ 296.3 $ 2,986.9 $ (364.2) $ (573.7) $ 18.0 $ 2,430.7
October 1, 2016 – – 400.1 – – 9.8 409.9 – – – (8.7) – – (8.7) – – (106.3) – – – (106.3) – 22.8 – – 27.1 – 49.9 – – – – (76.4) – (76.4) – – (0.7) – – (9.8) (10.5) $ 67.4 $ 319.1 $ 3,280.0 $ (372.9) $ (623.0) $ 18.0 $ 2,688.6 Shareholders’ Equity Attributable to Snap-on Incorporated Common
Stock Additional
Paid-in
Capital Retained
Earnings Accumulated
Other
Comprehensive
Loss Treasury
Stock Noncontrolling
Interests Total
EquityBalance at March 30, 2019 $ 67.4 $ 361.3 $ 4,428.4 $ (496.4 ) $ (1,163.1 ) $ 20.2 $ 3,217.8 Net Earnings for the three months ended June 29, 2019 — — 180.4 — — 4.5 184.9 Other comprehensive loss — — — (4.3 ) — — (4.3 ) Cash dividends – $0.95 per share — — (52.5 ) — — — (52.5 ) Stock compensation plans — 10.4 — — 16.8 — 27.2 Share repurchases – 365,000 shares — — — — (60.1 ) — (60.1 ) Other — — (0.2 ) — — (4.1 ) (4.3 ) Balance at June 29, 2019 $ 67.4 $ 371.7 $ 4,556.1 $ (500.7 ) $ (1,206.4 ) $ 20.6 $ 3,308.7 Shareholders’ Equity Attributable to Snap-on Incorporated Common
Stock Additional
Paid-in
Capital Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Treasury
Stock Noncontrolling
Interests Total
EquityBalance at December 29, 2018 $ 67.4 $ 359.4 $ 4,257.6 $ (462.2 ) $ (1,123.4 ) $ 19.8 $ 3,118.6 Impact of the Tax Act on Accumulated Other Comprehensive Income (ASU No. 2018-02) — — 45.9 (45.9 ) — — — Balance at December 30, 2018 $ 67.4 $ 359.4 $ 4,303.5 $ (508.1 ) $ (1,123.4 ) $ 19.8 $ 3,118.6 Net Earnings for the six months ended June 29, 2019 — — 358.3 — — 8.7 367.0 Other comprehensive income — — — 7.4 — — 7.4 Cash dividends – $1.90 per share — — (105.3 ) — — — (105.3 ) Stock compensation plans — 12.3 — — 24.5 — 36.8 Share repurchases – 660,000 shares — — — — (107.5 ) — (107.5 ) Other — — (0.4 ) — — (7.9 ) (8.3 ) Balance at June 29, 2019 $ 67.4 $ 371.7 $ 4,556.1 $ (500.7 ) $ (1,206.4 ) $ 20.6 $ 3,308.7 CASH FLOWSmillions) Nine Months Ended September 30,
2017 October 1,
2016 $ 439.0 $ 409.9 48.7 45.7 20.7 18.2 38.6 30.4 7.9 6.1 21.4 21.5 (10.1) (12.5) (0.1) (0.1) 14.9 – (50.8) (31.2) (31.8) (30.8) (86.9) (29.9) (9.7) (28.5) 26.5 27.7 (13.3) (10.9) 415.0 415.6 (670.0) (691.4) 528.9 501.7 (57.3) (56.6) (82.9) – 1.4 1.9 (2.5) 0.3 (282.4) (244.1) 297.8 – (150.0) – 16.8 4.5 (4.5) (5.3) 38.7 15.6 (123.0) (106.3) (212.6) (76.4) 36.2 32.4 (18.9) (11.3) (119.5) (146.8) 3.4 – 16.5 24.7 77.6 92.8 $ 94.1 $ 117.5 $ (49.7) $ (49.2) (168.3) (175.7) Shareholders’ Equity Attributable to Snap-on Incorporated Common
Stock Additional
Paid-in
Capital Retained
Earnings Accumulated
Other
Comprehensive
Loss Treasury
Stock Noncontrolling
Interests Total
EquityBalance at March 31, 2018 $ 67.4 $ 343.9 $ 3,886.7 $ (285.4 ) $ (928.7 ) $ 18.4 $ 3,102.3 Net Earnings for the three months ended June 30, 2018 — — 178.7 — — 4.0 182.7 Other comprehensive loss — — — (91.9 ) — — (91.9 ) Cash dividends – $0.82 per share — — (46.3 ) — — — (46.3 ) Stock compensation plans — 8.7 — — 15.5 — 24.2 Share repurchases – 371,000 shares — — — — (55.2 ) — (55.2 ) Other — — (0.2 ) — — (4.0 ) (4.2 ) Balance at June 30, 2018 $ 67.4 $ 352.6 $ 4,018.9 $ (377.3 ) $ (968.4 ) $ 18.4 $ 3,111.6 Shareholders’ Equity Attributable to Snap-on Incorporated Accumulated Other Comprehensive Loss Balance at December 30, 2017 $ 67.4 $ 343.2 $ 3,772.3 $ (329.0 ) $ (900.0 ) $ 18.4 $ 2,972.3 Net Earnings for the six months ended June 30, 2018 — — 341.7 — — 7.8 349.5 Other comprehensive loss — — — (48.3 ) — — (48.3 ) Cash dividends – $1.64 per share — — (92.8 ) — — — (92.8 ) Stock compensation plans — 9.4 — — 30.3 — 39.7 Share repurchases – 646,000 shares — — — — (98.7 ) — (98.7 ) Other — — (2.3 ) — — (7.8 ) (10.1 ) Balance at June 30, 2018 $ 67.4 $ 352.6 $ 4,018.9 $ (377.3 ) $ (968.4 ) $ 18.4 $ 3,111.6 SNAP-ON INCORPORATED Six Months Ended June 29,
2019 June 30,
2018Operating activities: Net earnings $ 367.0 $ 349.5 Adjustments to reconcile net earnings to net cash provided (used) by operating activities: Depreciation 34.8 35.0 Amortization of other intangibles 10.8 13.0 Provision for losses on finance receivables 24.4 29.4 Provision for losses on non-finance receivables 8.7 5.5 Stock-based compensation expense 14.1 14.6 Deferred income tax provision (benefit) 12.4 (4.1 ) Loss on sales of assets 0.6 0.1 Loss on early extinguishment of debt — 7.8 Changes in operating assets and liabilities, net of effects of acquisitions: (Increase) decrease in trade and other accounts receivable 3.9 (9.1 ) (Increase) decrease in contract receivables 3.0 (4.5 ) Increase in inventories (52.8 ) (24.5 ) (Increase) decrease in prepaid and other assets (27.0 ) 6.4 Increase in accounts payable 16.6 25.4 Decrease in accruals and other liabilities (69.7 ) (25.7 ) Net cash provided by operating activities 346.8 418.8 Investing activities: Additions to finance receivables (431.1 ) (436.7 ) Collections of finance receivables 383.5 379.9 Capital expenditures (48.2 ) (38.6 ) Acquisitions of businesses, net of cash acquired (9.3 ) (3.0 ) Disposals of property and equipment 0.4 0.5 Other 0.8 (2.9 ) Net cash used by investing activities (103.9 ) (100.8 ) Financing activities: Proceeds from issuance of long-term debt — 395.4 Repayments of long-term debt — (457.8 ) Repayment of notes payable — (16.8 ) Net decrease in other short-term borrowings (18.2 ) (37.2 ) Cash dividends paid (105.3 ) (92.8 ) Purchases of treasury stock (107.5 ) (98.7 ) Proceeds from stock purchase and option plans 24.6 28.3 Other (14.3 ) (16.2 ) Net cash used by financing activities (220.7 ) (295.8 ) Effect of exchange rate changes on cash and cash equivalents 0.9 (1.9 ) Increase in cash and cash equivalents 23.1 20.3 Cash and cash equivalents at beginning of year 140.9 92.0 Cash and cash equivalents at end of period $ 164.0 $ 112.3 Supplemental cash flow disclosures: Cash paid for interest $ (23.4 ) $ (27.8 ) Net cash paid for income taxes (92.2 ) (97.4 ) “Snap-on” “Snap-on” or “the company”the “company”).These. These financial statements should be read in conjunction with, and have been prepared in conformity with, the accounting principles reflected in the consolidated financial statements and related notes included inSnap-on’s 2016 2018 Annual Report on Form10-K for the fiscal year ended December 31, 201629, 2018 (“20162018 year end”). The company’s 20172019 fiscal thirdsecond quarter ended on September 30, 2017;June 29, 2019; the 20162018 fiscal thirdsecond quarter ended on October 1, 2016. TheJune 30, 2018. Each of the company’s 20172019 and 20162018 fiscal first and second and third quarters each contained 13 weeks of operating results.Snap-on accounts for investments in unconsolidated affiliates whereSnap-on has a greater than 20% but less than 50% ownership interest under the equity method of accounting. Investments in unconsolidated affiliates of $18.4 million as of September 30, 2017, and $15.2 million as of December 31, 2016, are included in “Other assets” on the accompanying Condensed Consolidated Balance Sheets; no equity investment dividends were received in any period presented. In the normal course of business, the company may purchase products or services from, or sell products and services to, unconsolidated affiliates. Purchases from unconsolidated affiliates were $2.4 million and $2.7 million in the respective fiscal third quarters of 2017 and 2016, and $8.1 million and $10.1 million in the respective first nine months of 2017 and 2016. Sales to unconsolidated affiliates were $0.1 million and zero in the respective fiscal third quarters of 2017 and 2016, and $0.3 million and zero in the respective first nine months of 2017 and 2016. The Condensed Consolidated Financial Statements do not include the accounts of the company’s independent franchisees.Snap-on’s Condensed Consolidated Financial Statements are prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”). All intercompany accounts and transactions have been eliminated.ninesix month periods ended SeptemberJune 29, 2019, and June 30, 2017, and October 1, 2016,2018, have been made. Interim results of operations are not necessarily indicative of the results to be expected for the full fiscal year.The following new accounting pronouncement was adopted in fiscal year 2017:In January 2017, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”)No. 2017-04,Intangibles – Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment, which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fairvalue. Snap-on early adopted this ASU in the second quarter of 2017 in conjunction with its annual impairment test. The amendments in this ASU are being applied on a prospective basis and the adoption did not have a significant impact on the company’s consolidated financial statements.SNAP-ON INCORPORATEDNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)(Unaudited)and related impacts on adoption, are being evaluated bywere adopted in fiscal year 2019:company:In August 2017, the FASB issuedbeginning of Snap-on’s 2019 fiscal year, Snap-on adopted ASUNo. 2017-12,2017-122018-02, Income Statement - Reporting Comprehensive Income - Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (Topic 220), which allows for a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the U.S. Tax Cuts and Jobs Act (the “Tax Act”). The adoption of this ASU resulted in an increase of $45.9 million to Retained Earnings on the company’s Condensed Consolidated Statements of Equity with an offsetting decrease in Accumulated Other Comprehensive Income (Loss).2018,2019, including interim periods within those fiscal years; the ASU allows for early adoption of certain disclosures in any interim period after issuance of the update. The company is currently assessing the impact this ASU will have on its consolidated financial statements.In March 2017, the FASB issued ASUNo. 2017-07,Compensation – Retirement Benefits (Topic 715) – Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which provides additional guidance on the presentation of net periodic pension and postretirement benefit costs in the income statement and on the components eligible for capitalization. The amendments in this ASU require that an employer report the service cost component of the net periodic benefit costs in the same income statement line item as other compensation costs arising from services rendered by employees during the period. Thenon-service-cost components of net periodic benefit costs are to be presented in the income statement separately from the service cost components and outside a subtotal of income from operations. The ASU also allows for the capitalization of the service cost components, when applicable (i.e., as a cost of internally manufactured inventory or a self-constructed asset).The ASU is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods; early adoption is permitted as of the beginning of an annual period for which financial statements (interim or annual) have not been issued or made available for issuance. The amendments in this ASU are to be applied retrospectively. The company does not expect the adoption of this ASU is not expected to have a significant impact on itsthe company’s consolidated income statement.October 2016,August 2018, the FASB issued ASUNo. 2016-16,Income Taxes (Topic 740) – Intra-Entity Transfers2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General Subtopic 715-20 - Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans,which is designed to improve the effectiveness of Assets Other Than Inventory. Thedisclosures by removing and adding disclosures related to defined benefit plans. ASU eliminates the requirement to defer the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. Under the new guidance, an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The ASUNo. 2018-14 is effective for fiscal years beginningending after December 15, 2017, including interim periods within those fiscal years;2020; the ASU allows for early adoption is permitted asin any year end after issuance of the beginning of an annual reporting period for which financial statements (interim or annual) have not been issued or made available for issuance (i.e., the first interim period if an entity issues interim financial statements).update. The amendments in this ASU are to be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings at the time of adoption. The company does not expect the adoption of this ASU is not expected to have a significant impact on its the company’s consolidated financial statements.In August 2016, the FASB issued ASUNo. 2016-15,Statement of Cash Flows (Topic 230), which adds and/or clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows. The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years; early adoption is permitted. The company does not expect the adoption of the ASU to have a significant impact to the designations of operating, investing and financing activities on its consolidated statement of cash flows.SNAP-ON INCORPORATEDNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)(Unaudited)years;years.ASU allowssecond half of 2018 and developed a comprehensive project plan that included representatives from the company’s business segments. The project plan includes analyzing the standard’s potential change on the company’s allowance for early adoption asdoubtful accounts reserves, identifying reporting requirements of the beginning of an interim or annual reporting period beginning after December 15, 2018.new standard, and identifying changes to the company’s business processes, systems and controls to support the accounting and disclosures under Topic 326. The company is currently assessing the impact this ASU will have on its consolidated financial statements.In February 2016,FASB issued ASUNo. 2016-02,Leases (Topic 842), to increase transparencysale of tools, diagnostic and comparability among organizations by recognizing lease assetsequipment products and lease liabilitiesrelated services based on the balance sheet and disclosing key information about leasing arrangements. The ASU is intended to represent an improvement over previous GAAP, which did not require lease assets and lease liabilities to be recognized for most leases. This ASU, which supersedes most current lease guidance, affects any entity that enters into a lease (as that term is defined in the ASU), with some specified scope exemptions. ASUNo. 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years; the ASU allows for early adoption aswhen control of the beginning of an interimproduct passes to the customer or annual reporting period. The companythe service is currently assessing the impact this ASU will have on its consolidated financial statements.In May 2014, the FASB issued ASUNo. 2014-09,Revenue from Contracts with Customers (Topic 606), that, together with several subsequent updates, outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customersprovided and supersedes most current revenue recognition guidance, including industry-specific guidance. Topic 606 is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers inrecognized at an amount that reflects the consideration to which the entity expectsexpected to be entitledreceived in exchange for thosesuch goods or services. Topic 606 also requires additional disclosure about the nature, amount, timing and uncertainty Three Months Ended Six Months Ended (Amounts in millions) June 29,
2019 June 30,
2018 June 29,
2019 June 30,
2018 Revenue from contracts with customers $ 945.8 $ 949.2 $ 1,862.2 $ 1,879.6 Other revenues 5.5 5.4 10.8 10.5 Total net sales 951.3 954.6 1,873.0 1,890.1 Financial services revenue 84.1 82.0 169.7 165.0 Total revenues $ 1,035.4 $ 1,036.6 $ 2,042.7 $ 2,055.1 For the Three Months Ended June 29, 2019 Commercial Snap-on Repair Systems & Industrial Tools & Information Financial Snap-on (Amounts in millions) Group Group Group Services Eliminations Incorporated Net sales by geographic region: North America* $ 121.6 $ 350.1 $ 202.3 $ — $ — $ 674.0 Europe 72.3 36.5 62.3 — — 171.1 All other 69.1 19.2 17.9 — — 106.2 External net sales 263.0 405.8 282.5 — — 951.3 Intersegment net sales 72.0 — 66.4 — (138.4 ) — Total net sales 335.0 405.8 348.9 — (138.4 ) 951.3 Financial services revenue — — — 84.1 — 84.1 Total revenue $ 335.0 $ 405.8 $ 348.9 $ 84.1 $ (138.4 ) $ 1,035.4 For the Six Months Ended June 29, 2019 Commercial Snap-on Repair Systems & Industrial Tools & Information Financial Snap-on (Amounts in millions) Group Group Group Services Eliminations Incorporated Net sales by geographic region: North America* $ 230.5 $ 701.7 $ 387.4 $ — $ — $ 1,319.6 Europe 149.7 73.4 121.8 — — 344.9 All other 132.3 40.9 35.3 — — 208.5 External net sales 512.5 816.0 544.5 — — 1,873.0 Intersegment net sales 145.0 — 132.3 — (277.3 ) — Total net sales 657.5 816.0 676.8 — (277.3 ) 1,873.0 Financial services revenue — — — 169.7 — 169.7 Total revenue $ 657.5 $ 816.0 $ 676.8 $ 169.7 $ (277.3 ) $ 2,042.7 * North America is comprised of the United States, Canada and Mexico. For the Three Months Ended June 30, 2018 Commercial Snap-on Repair Systems & Industrial Tools & Information Financial Snap-on (Amounts in millions) Group Group Group Services Eliminations Incorporated Net sales by geographic region: North America* $ 118.3 $ 346.2 $ 189.4 $ — $ — $ 653.9 Europe 76.6 43.7 68.2 — — 188.5 All other 72.2 22.0 18.0 — — 112.2 External net sales 267.1 411.9 275.6 — — 954.6 Intersegment net sales 70.7 — 67.5 — (138.2 ) — Total net sales 337.8 411.9 343.1 — (138.2 ) 954.6 Financial services revenue — — — 82.0 — 82.0 Total revenue $ 337.8 $ 411.9 $ 343.1 $ 82.0 $ (138.2 ) $ 1,036.6 For the Six Months Ended June 30, 2018 Commercial Snap-on Repair Systems & Industrial Tools & Information Financial Snap-on (Amounts in millions) Group Group Group Services Eliminations Incorporated Net sales by geographic region: North America* $ 225.8 $ 685.1 $ 374.7 $ — $ — $ 1,285.6 Europe 159.5 85.2 135.2 — — 379.9 All other 140.6 46.3 37.7 — — 224.6 External net sales 525.9 816.6 547.6 — — 1,890.1 Intersegment net sales 143.5 — 132.5 — (276.0 ) — Total net sales 669.4 816.6 680.1 — (276.0 ) 1,890.1 Financial services revenue — — — 165.0 — 165.0 Total revenue $ 669.4 $ 816.6 $ 680.1 $ 165.0 $ (276.0 ) $ 2,055.1 * North America is comprised of the United States, Canada and Mexico. For the Three Months Ended June 29, 2019 Commercial Snap-on Repair Systems & Industrial Tools & Information Financial Snap-on (Amounts in millions) Group Group Group Services Eliminations Incorporated Net sales: Vehicle service professionals $ 24.0 $ 405.8 $ 282.5 $ — $ — $ 712.3 All other professionals 239.0 — — — — 239.0 External net sales 263.0 405.8 282.5 — — 951.3 Intersegment net sales 72.0 — 66.4 — (138.4 ) — Total net sales 335.0 405.8 348.9 — (138.4 ) 951.3 Financial services revenue — — — 84.1 — 84.1 Total revenue $ 335.0 $ 405.8 $ 348.9 $ 84.1 $ (138.4 ) $ 1,035.4 For the Six Months Ended June 29, 2019 Commercial Snap-on Repair Systems & Industrial Tools & Information Financial Snap-on (Amounts in millions) Group Group Group Services Eliminations Incorporated Net sales: Vehicle service professionals $ 44.0 $ 816.0 $ 544.5 $ — $ — $ 1,404.5 All other professionals 468.5 — — — — 468.5 External net sales 512.5 816.0 544.5 — — 1,873.0 Intersegment net sales 145.0 — 132.3 — (277.3 ) — Total net sales 657.5 816.0 676.8 — (277.3 ) 1,873.0 Financial services revenue — — — 169.7 — 169.7 Total revenue $ 657.5 $ 816.0 $ 676.8 $ 169.7 $ (277.3 ) $ 2,042.7 For the Three Months Ended June 30, 2018 Commercial Snap-on Repair Systems & Industrial Tools & Information Financial Snap-on (Amounts in millions) Group Group Group Services Eliminations Incorporated Net sales: Vehicle service professionals $ 25.6 $ 411.9 $ 275.6 $ — $ — $ 713.1 All other professionals 241.5 — — — — 241.5 External net sales 267.1 411.9 275.6 — — 954.6 Intersegment net sales 70.7 — 67.5 — (138.2 ) — Total net sales 337.8 411.9 343.1 — (138.2 ) 954.6 Financial services revenue — — — 82.0 — 82.0 Total revenue $ 337.8 $ 411.9 $ 343.1 $ 82.0 $ (138.2 ) $ 1,036.6 For the Six Months Ended June 30, 2018 Commercial Snap-on Repair Systems & Industrial Tools & Information Financial Snap-on (Amounts in millions) Group Group Group Services Eliminations Incorporated Net sales: Vehicle service professionals $ 48.1 $ 816.6 $ 547.6 $ — $ — $ 1,412.3 All other professionals 477.8 — — — — 477.8 External net sales 525.9 816.6 547.6 — — 1,890.1 Intersegment net sales 143.5 — 132.5 — (276.0 ) — Total net sales 669.4 816.6 680.1 — (276.0 ) 1,890.1 Financial services revenue — — — 165.0 — 165.0 Total revenue $ 669.4 $ 816.6 $ 680.1 $ 165.0 $ (276.0 ) $ 2,055.1 2:3: AcquisitionsJuly 28, 2017,April 2, 2019, Snap-on acquired Torque Control SpecialistPower Hawk Technologies, Inc. (“TCS”Power Hawk”), for a preliminary cash purchase price of $8.0 million. The preliminary purchase price is subject to change based upon the finalization of a working capital adjustment that is expected to be completed in the third quarter of 2019. Power Hawk, based in Rockaway, New Jersey, designs, manufactures and distributes rescue tools and related equipment for a variety of military, governmental and fire, rescue and emergency operations.$3.6 million (or $3.5 million, net of cash acquired). TCS,$1.3 million. TMB, based in Adelaide, Australia, distributes a full rangeDorking, United Kingdom, designs planning software used by OEMs to optimize dealer locations and manage the performance of torque products, including wrenches, multipliers and calibrators for use in critical industries.In the third quarter of 2017, thedealer outlets. The company substantially completed the purchase accounting valuations for the acquired net assets of TCS.TMB during the first quarter of 2019. Substantially all of the purchase price over the fair value of the net assets acquired was recorded in “Goodwill” on the accompanying Condensed Consolidated Balance Sheets.$1.9$2.6 million excess of the purchase price over the fair value of the net assets acquired was recorded in “Goodwill” on the accompanying Condensed Consolidated Balance Sheets.TCSTMB have been included in the Repair Systems and Information Group since the acquisition date, and the results of operations and assets of Power Hawk and Fastorq have been included in the Commercial & Industrial Group since the acquisition date.On May 4, 2017,Snap-on acquired Norbar Torque Tools Holding Limited, along with its U.S. and Chinese joint ventures (“Norbar”), for a purchase price of $71.6 million (or $69.9 million, net of cash acquired), which reflects a $0.8 million working capital adjustment finalized in the third quarter of 2017. Norbar, based in Banbury, U.K., designs and manufactures a full range of torque products, including wrenches, multipliers and calibrators for use in critical industries.In the third quarter of 2017, the company substantially completed the purchase accounting valuations for the acquired net assets of Norbar, including intangible assets. The $23.7 million excess of the Norbar purchase price over the fair value of the net assets acquired was recorded in “Goodwill” on the accompanying Condensed Consolidated Balance Sheets. For segment reporting purposes, the results of operations and assets of Norbar have been included in the Commercial & Industrial Group since the acquisition date.On January 30, 2017,Snap-on acquired BTC Global Limited (“BTC”) for a cash purchase price of $9.2 million. BTC, based in Crewe, U.K., designs and implements automotive vehicle inspection and management software for original equipment manufacturer (“OEM”) franchise repair shops.In the second quarter of 2017, the company completed the purchase accounting valuations for the acquired net assets of BTC, including intangible assets. The $5.9 million excess of the BTC purchase price over the fair value of the net assets acquired was recorded in “Goodwill” on the accompanying Condensed Consolidated Balance Sheets. For segment reporting purposes, the results of operations and assets of BTC have been included in the Repair Systems and Information Group since the acquisition date.On November 16, 2016,Snap-on acquired Ryeson Corporation (d/b/a Sturtevant Richmont) for a purchase price of $13.0 million (or $12.6 million, net of cash acquired), which reflects a $0.1 million working capital adjustment finalized in the first quarter of 2017. Sturtevant Richmont designs, manufactures and distributes mechanical and electronic torque wrenches as well as wireless torque error proofing systems for a variety of industrial applications.In the first quarter of 2017, the company completed the purchase accounting valuations for the acquired net assets, including intangible assets. The $5.0 million excess of the Sturtevant Richmont purchase price over the fair value of the net assets acquired was recorded in “Goodwill” on the accompanying Condensed Consolidated Balance Sheets. For segment reporting purposes, the results of operations and assets of Sturtevant Richmont have been included in the Commercial & Industrial Group since the acquisition date.On October 31, 2016,Snap-on acquiredCar-O-Liner Holding AB(“Car-O-Liner”) for a purchase price of $152.0 million (or $148.1 million, net of cash acquired), which reflects a $0.2 million working capital adjustment finalized in the first quarter of 2017.Car-O-Liner designs and manufactures collision repair equipment, and information and truck alignment systems.In the third quarter of 2017, the company substantially completed the purchase accounting valuations for the acquired net assets ofCar-O-Liner, including intangible assets. The $77.7 million excess of theCar-O-Liner purchase price over the fair value of the net assets acquired was recorded in “Goodwill” on the accompanying Condensed Consolidated Balance Sheets. For segment reporting purposes, substantially all ofCar-O-Liner’s results of operations and assets have been included in the Repair Systems & Information Group since the acquisition date, with the remaining portions included in the Commercial & Industrial Group.SNAP-ON INCORPORATEDNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)(Unaudited)The following is a summary of the values of the assets acquired and liabilities assumed ofCar-O-Liner, including adjustments recorded as of the nine months ended September 30, 2017, as a result of new information obtained about facts and circumstances that existed as of the October 31, 2016 acquisition date:(Amounts in millions)Amounts as ofOctober 31, 2016(As Adjusted)Assets acquired:Cash $3.9 Trade and other accounts receivable17.0 Inventories18.3 Property and equipment17.3 Goodwill77.7 Other intangibles:Customer relationships27.2 Non-amortized trademarks27.7 Other assets5.9 Total assets acquired195.0 Liabilities assumed:Accounts payable9.8 Deferred income tax liabilities15.4 Accrued expenses13.5 Pension liabilities4.3 Total liabilities assumed43.0 Net assets acquired $ 152.0 In the nine month period ended September 30, 2017,Snap-on recognized expense of $0.5 million (of which $0.2 million was in “Cost of goods sold” and $0.3 million was in “Operating expenses”) in the accompanying Condensed Consolidated Statements of Earnings related toCar-O-Liner that would have been recognized in 2016 if the provisional adjustments identified in the current reporting period had been recognized as of the October 31, 2016 acquisition date; there was no such expense in the three months ended September 30, 2017.any of these acquisitions as the net effects individually and collectively, were neither significant nor material toSnap-on’s results of operations or financial position.3:6 for further information on goodwill and other intangible assets.SNAP-ON INCORPORATEDNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)(Unaudited)September 30, 2017,June 29, 2019, and December 31, 2016,29, 2018, are as follows:(Amounts in millions) September 30,
2017 December 31,
2016 $ 689.6 $ 612.8 (14.4) (14.0) $ 675.2 $ 598.8 (Amounts in millions) June 29,
2019 December 29,
2018Trade and other accounts receivable $ 703.2 $ 710.1 Allowances for doubtful accounts (19.1 ) (17.5 ) Total trade and other accounts receivable – net $ 684.1 $ 692.6 approachingof approximately four years. ContractFinance receivables are generally secured by the underlying tools and/or diagnostic or equipment products financed.leases. Finance and contractleases, or the expansion of an existing franchise. Contract receivables are generally secured by the underlying tools and/or diagnostic or equipment products financed and, for installment loans to franchisees, other franchisee assets.September 30, 2017,June 29, 2019, and December 31, 2016,29, 2018, are as follows:(Amounts in millions) September 30,
2017 December 31,
2016 $ 522.8 $ 488.1 101.4 89.3 624.2 577.4 (17.0) (15.6) (1.6) (1.2) (18.6) (16.8) $ 605.6 $ 560.6 $ 505.8 $ 472.5 99.8 88.1 $ 605.6 $ 560.6 (Amounts in millions) June 29,
2019 December 29,
2018Finance receivables $ 548.5 $ 538.1 Contract receivables 92.8 99.5 Total 641.3 637.6 Allowances for doubtful accounts: Finance receivables (19.5 ) (19.6 ) Contract receivables (1.3 ) (1.2 ) Total (20.8 ) (20.8 ) Total current finance and contract receivables – net $ 620.5 $ 616.8 Finance receivables – net $ 529.0 $ 518.5 Contract receivables – net 91.5 98.3 Total current finance and contract receivables – net $ 620.5 $ 616.8 September 30, 2017,June 29, 2019, and December 31, 2016,29, 2018, are as follows:(Amounts in millions) September 30,
2017 December 31,
2016 $ 1,055.8 $ 967.5 313.9 289.4 1,369.7 1,256.9 (37.2) (33.0) (3.5) (2.7) (40.7) (35.7) $ 1,329.0 $ 1,221.2 $ 1,018.6 $ 934.5 310.4 286.7 $ 1,329.0 $ 1,221.2 (Amounts in millions) June 29,
2019 December 29,
2018Finance receivables $ 1,130.4 $ 1,116.2 Contract receivables 351.2 348.0 Total 1,481.6 1,464.2 Allowances for doubtful accounts: Finance receivables (41.4 ) (41.8 ) Contract receivables (3.7 ) (3.1 ) Total (45.1 ) (44.9 ) Total long-term finance and contract receivables – net $ 1,436.5 $ 1,419.3 Finance receivables – net $ 1,089.0 $ 1,074.4 Contract receivables – net 347.5 344.9 Total long-term finance and contract receivables – net $ 1,436.5 $ 1,419.3 Receivable balances areThe entire receivable balance of a contract is considered delinquent when contractual payments become 30 days past due.September 30, 2017,June 29, 2019, and December 31, 2016,29, 2018, there were $27.8$24.7 million and $24.9$27.9 million, respectively, of impaired finance receivables, and there were $2.2$3.3 million and $2.0$6.0 million, respectively, of impaired contract receivables.September 30, 2017,June 29, 2019, and December 31, 2016,29, 2018, were immaterial to both the financial services portfolio and the company’s results of operations and financial position.September 30, 2017,June 29, 2019, and December 31, 2016,29, 2018, is as follows:(Amounts in millions) 30-59
Days Past
Due 60-90
Days Past
Due Greater
Than 90
Days Past
Due Total Past
Due Total Not
Past Due Total Greater
Than 90
Days Past
Due and
Accruing $ 16.0 $ 11.6 $ 19.3 $ 46.9 $ 1,531.6 $ 1,578.5 $ 15.1 1.4 0.7 1.7 3.8 411.6 415.4 0.8 $ 15.1 $ 9.8 $ 17.0 $ 41.9 $ 1,413.7 $ 1,455.6 $ 13.2 1.4 0.9 1.4 3.7 375.0 378.7 0.5 (Amounts in millions) Total June 29, 2019: Finance receivables $ 16.0 $ 10.2 $ 16.3 $ 42.5 $ 1,636.4 $ 1,678.9 $ 12.6 Contract receivables 1.3 1.0 1.4 3.7 440.3 444.0 0.3 December 29, 2018: Finance receivables $ 19.4 $ 12.1 $ 20.3 $ 51.8 $ 1,602.5 $ 1,654.3 $ 15.9 Contract receivables 1.7 1.2 5.2 8.1 439.4 447.5 0.2 September 30, 2017,June 29, 2019, and December 31, 2016,29, 2018, is as follows: September 30, 2017 December 31, 2016 (Amounts in millions) Finance
Receivables Contract
Receivables Finance
Receivables Contract
Receivables $ 1,550.7 $ 413.2 $ 1,430.7 $ 376.7 27.8 2.2 24.9 2.0 $ 1,578.5 $ 415.4 $ 1,455.6 $ 378.7 June 29, 2019 December 29, 2018 (Amounts in millions) Performing $ 1,654.2 $ 440.7 $ 1,626.4 $ 441.5 Nonperforming 24.7 3.3 27.9 6.0 Total $ 1,678.9 $ 444.0 $ 1,654.3 $ 447.5 September 30, 2017,June 29, 2019, and December 31, 2016,29, 2018, is as follows:(Amounts in millions) September 30,
2017 December 31,
2016 $ 12.7 $ 11.7 1.5 1.5 (Amounts in millions) June 29,
2019 December 29,
2018Finance receivables $ 12.1 $ 12.0 Contract receivables 3.0 5.8 ninesix months ended SeptemberJune 29, 2019, and June 30, 2017: Three Months Ended
September 30, 2017 Nine Months Ended
September 30, 2017 (Amounts in millions) Finance
Receivables Contract
Receivables Finance
Receivables Contract
Receivables $ 52.5 $ 4.8 $ 48.6 $ 3.9 12.8 0.8 38.6 2.7 (12.6) (0.7) (38.0) (1.9) 1.5 0.2 4.9 0.3 – – 0.1 0.1 $ 54.2 $ 5.1 $ 54.2 $ 5.1 Three Months Ended
June 29, 2019 Six Months Ended
June 29, 2019(Amounts in millions) Allowances for doubtful accounts: Beginning of period $ 61.0 $ 4.7 $ 61.4 $ 4.3 Provision 11.9 1.2 24.4 2.1 Charge-offs (13.9 ) (1.0 ) (28.9 ) (1.7 ) Recoveries 2.0 0.2 4.0 0.3 Currency translation (0.1 ) (0.1 ) — — End of period $ 60.9 $ 5.0 $ 60.9 $ 5.0 The following is a rollforward of the allowances for doubtful accounts for finance and contract receivables for the three and nine months ended October 1, 2016: Three Months Ended
October 1, 2016 Nine Months Ended
October 1, 2016 (Amounts in millions) Finance
Receivables Contract
Receivables Finance
Receivables Contract
Receivables $ 42.6 $ 4.5 $ 38.2 $ 4.4 10.8 0.5 30.4 1.1 (9.2) (0.6) (28.0) (1.3) 1.4 0.1 5.0 0.3 $ 45.6 $ 4.5 $ 45.6 $ 4.5 Three Months Ended
June 30, 2018 Six Months Ended
June 30, 2018(Amounts in millions) Finance
Receivables Contract
Receivables Finance
Receivables Contract
ReceivablesAllowances for doubtful accounts: Beginning of period $ 58.3 $ 4.6 $ 56.5 $ 4.6 Provision 13.6 0.6 29.4 1.1 Charge-offs (14.6 ) (0.5 ) (30.4 ) (1.1 ) Recoveries 1.7 0.1 3.6 0.2 Currency translation — — (0.1 ) — End of period $ 59.0 $ 4.8 $ 59.0 $ 4.8 4:5: Inventories(Amounts in millions) September 30,
2017 December 31,
2016 $ 556.6 $ 467.4 49.5 42.7 118.2 93.6 724.3 603.7 (74.4) (73.2) $ 649.9 $ 530.5 (Amounts in millions) June 29,
2019 December 29,
2018Finished goods $ 622.9 $ 577.0 Work in progress 54.4 51.7 Raw materials 129.9 123.5 Total FIFO value 807.2 752.2 Excess of current cost over LIFO cost (81.4 ) (78.4 ) Total inventories – net $ 725.8 $ 673.8 59%61% of total inventories as of September 30, 2017,June 29, 2019, and December 31, 2016,29, 2018, respectively. The company accounts for itsnon-U.S. inventory on the FIFO method. As of September 30, 2017,June 29, 2019, approximately 32%34% of the company’s U.S. inventory was accounted for using the FIFO method and 68%66% was accounted for using thelast-in,first-out (“LIFO”) method. There were no LIFO inventory liquidations in the three and ninesix months ended SeptemberJune 29, 2019 or June 30, 2017, or October 1, 2016.2018.5:6: Goodwill and Other Intangible Assetsninesix months ended September 30, 2017,June 29, 2019, are as follows:(Amounts in millions) Commercial
& Industrial
Group Snap-on
Tools Group Repair Systems
& Information
Group Total $ 242.4 $ 12.5 $ 640.6 $ 895.5 29.1 – 16.5 45.6 25.7 – (42.8) (17.1) $ 297.2 $ 12.5 $ 614.3 $ 924.0 SNAP-ON INCORPORATEDNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)(Unaudited)(Amounts in millions) Total Balance as of December 29, 2018 $ 286.2 $ 12.5 $ 603.5 $ 902.2 Currency translation (2.0 ) — (1.4 ) (3.4 ) Acquisitions and related adjustments 6.9 — 1.3 8.2 Balance as of June 29, 2019 $ 291.1 $ 12.5 $ 603.4 $ 907.0 $924.0$907.0 million as of September 30, 2017,June 29, 2019, includes (i) $77.7$6.9 million, on a preliminary basis, from the acquisition ofCar-O-Liner, (ii) $23.7 million, on a preliminary basis, from the acquisition of Norbar, (iii) $5.9 Power Hawk and $1.3 million from the acquisition of BTC, (iv) $5.0 million from the acquisition of Sturtevant Richmont, and (v) $1.9 million, on a preliminary basis, from the acquisition of TCS.TMB. The goodwill from theCar-O-Liner acquisition is distributed as follows: $76.9 million in the Repair Systems & Information Group and $0.8 million in the Commercial & Industrial Group. The goodwill from the Norbar, Sturtevant Richmont and TCS acquisitionsPower Hawk is included in the Commercial & Industrial Group and the goodwill from the BTC acquisitionTMB is included in the Repair Systems &and Information Group. See Note 2 for additional information on acquisitions.Since the purchase accounting for deferred taxes for the acquired net assets ofCar-O-Liner, Norbar and TCS were not complete as of September 30, 2017, the allocation of the respective purchase prices and resulting goodwill has been prepared on a preliminary basis and changes to the allocations will occur as the deferred taxes are determined. The company anticipates completing the purchase accounting for these acquisitionsthe Power Hawk acquisition, including the potential identification and quantification of other intangible assets, in the fourth quartersecond half of 2017. September 30, 2017 December 31, 2016 (Amounts in millions) Gross Carrying
Value Accumulated
Amortization Gross Carrying
Value Accumulated
Amortization $ 175.5 $ (95.6) $ 142.6 $ (86.0) 18.9 (18.4) 17.7 (17.7) 174.5 (129.7) 165.7 (118.3) 33.7 (22.5) 31.9 (21.5) 2.9 (1.9) 2.8 (1.8) 7.7 (2.6) 7.2 (2.2) 413.2 (270.7) 367.9 (247.5) 115.8 – 64.2 – $ 529.0 $ (270.7) $ 432.1 $ (247.5) As of September 30, 2017, the $175.5 million gross carrying value of customer relationships includes $29.1 million related to theCar-O-Liner acquisition, $1.2 million related to the BTC acquisition and $1.1 million related to the Norbar acquisition. The $115.8 million gross carrying value ofnon-amortized trademarks as of September 30, 2017, includes $30.2 million related to theCar-O-Liner acquisition, $16.9 million related to the Norbar acquisition and $2.1 million related to the BTC acquisition. June 29, 2019 December 29, 2018 (Amounts in millions) Amortized other intangible assets: Customer relationships $ 171.8 $ (112.4 ) $ 172.2 $ (107.6 ) Developed technology 18.5 (18.4 ) 18.5 (18.3 ) Internally developed software 161.2 (120.3 ) 156.6 (116.6 ) Patents 36.5 (23.4 ) 35.7 (22.9 ) Trademarks 3.3 (2.0 ) 3.2 (2.0 ) Other 7.4 (3.1 ) 7.3 (2.9 ) Total 398.7 (279.6 ) 393.5 (270.3 ) Non-amortized trademarks 108.8 — 109.7 — Total other intangible assets $ 507.5 $ (279.6 ) $ 503.2 $ (270.3 ) 2017,2019, the results of which did not result in any impairment. Significant and unanticipated changes in circumstances, such as declines in profitability and cash flow due to significant and long-term deterioration in macroeconomic, industry and market conditions, the loss of key customers, changes in technology or markets, significant changes in key personnel or litigation, a significant and sustained decrease in share price and/or other events, including effects from the sale or disposal of a reporting unit, could require a provision for impairment of goodwill and/or other intangible assets in a future period. As of September 30, 2017,June 29, 2019, the company had no accumulated impairment losses.SNAP-ON INCORPORATEDNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)(Unaudited) In Years 15 Developed technology 3 36 87 65 39 1112 years.$7.1$5.4 million and $20.7$10.8 million for the respective three and ninesix months ended September 30, 2017,June 29, 2019, and $5.9$6.4 million and $18.2$13.0 million for the respective three and ninesix months ended October 1, 2016.June 30, 2018. Based on current levels of amortizable intangible assets and estimated weighted-average useful lives, estimated annual amortization expense is expected to be $27.6 million in 2017, $26.3 million in 2018, $22.7$21.2 million in 2019, $18.0$18.3 million in 2020, $14.7$16.1 million in 2021, and $9.9$13.3 million in 2022.Note 6: Exit2022, $12.2 million in 2023, and Disposal ActivitiesSnap-on did not record any costs for exit and disposal activities$10.0 million in the three and nine months ended September 30, 2017, or in the three months ended October 1, 2016.Snap-on recorded $0.9 million2024.30.5%23.9% and 31.1%25.0% in the first ninesix months of 2019 and 2018, respectively. During the first six months of 2018, the Internal Revenue Service issued new guidance affecting the computation of the company’s 2017 federal income tax liability. As a result of this new guidance and 2016, respectively. $2.3$2.5 million. Over the next 12 months,Snap-on anticipates taking certain tax positions on various tax returns for which the related tax benefit does not meet the recognition threshold. Accordingly,Snap-on’s gross unrecognized tax benefits may increase by a range of zero to $1.3$1.0 million over the next 12 months for uncertain tax positions expected to be taken in future tax filings.SNAP-ON INCORPORATEDNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)(Unaudited)September 30, 2017,June 29, 2019, and December 31, 2016,29, 2018, consisted of the following:(Amounts in millions)
2017
2016 $ – $ 150.0 250.0 250.0 200.0 200.0 250.0 250.0 300.0 – 208.4 160.2 1,208.4 1,010.2 (250.0) (150.0) (170.0) (130.0) (33.4) (21.4) (453.4) (301.4) $ 755.0 $ 708.8 *Includes fair value adjustments related to interest rate swaps, debt discounts and debt issuance costs.(Amounts in millions) June 29,
2019 December 29,
20186.125% unsecured notes due 2021 $ 250.0 $ 250.0 3.25% unsecured notes due 2027 300.0 300.0 4.10% unsecured notes due 2048 400.0 400.0 Other debt* 166.1 182.3 1,116.1 1,132.3 Less: notes payable Commercial paper borrowings (154.6 ) (177.1 ) Other notes (13.6 ) (9.2 ) (168.2 ) (186.3 ) Total long-term debt $ 947.9 $ 946.0 * Includes the net effects of debt amortization costs and fair value adjustments of interest rate swaps. and current maturities of long-term debt of $453.4$168.2 million as of September 30, 2017,June 29, 2019, included $250 million of 4.25% unsecured notes that mature on January 15, 2018 (the “2018 Notes”), $170$154.6 million of commercial paper borrowings and $33.4$13.6 million of other notes. As of 20162018 year end, notes payable and current maturities of long-term debt of $301.4$186.3 million included $150 million of unsecured 5.50% notes that were repaid in January 2017 upon maturity, $130$177.1 million of commercial paper borrowings and $21.4$9.2 million of other notes. As2016 year end,its unsecured 6.70% notes that were scheduled to mature on March 1, 2019 (the “2019 Notes”), with $26.1 million of the 2019 Notes tendered and repaid on February 27, 2018. On February 20, 2018, Snap-on also issued a notice of redemption for any remaining outstanding 2019 Notes werenot tendered, with the redemption completed on March 22, 2018. The total cash cost for this tender and redemption was $209.1 million, including accrued interest of $1.5 million. Snap-on recorded $7.8 million for the loss on the early extinguishment of debt related to the 2019 Notes, which included the redemption premium and other issuance costs associated with this debt in “Long-term debt”“Other income (expense) - net” on the accompanying Condensed Consolidated Balance Sheets as their scheduled maturity was in excessStatement of one year of the 2016year-end balance sheet date.15, 2017,20, 2018, Snap-on sold, at a discount, $300$400 million of unsecured 3.25%4.10% long-term notes that mature on March 1, 20272048 (the “2027“2048 Notes”). Interest on the 20272048 Notes accrues at a rate of 4.10% per year and is payable semi-annually beginning September 1, 2017.paid semi-annually. Snap-on used a portion of the $297.8$395.4 million of net proceeds from the sale of the 20272048 Notes, reflecting $1.9$3.5 million of transaction costs, to repay the 2019 Notes. The remaining net proceeds were used to repay a portion of its then-outstanding commercial paper borrowings and the remainder was retained for general corporate purposes, which may include working capital, capital expenditures and possible acquisitions.September 30, 2017.June 29, 2019. Borrowings under the Credit Facility bear interest at varying rates based onSnap-on’s then-current, long-term debt ratings. The Credit Facility’s financial covenant requires thatSnap-on maintain, as of each fiscal quarter end, either (i) a ratio not greater than 0.60 to 1.00 of consolidated net debt (consolidated debt net of certain cash adjustments) to the sum of such consolidated net debt plus total equity and less accumulated other comprehensive income or loss (the “Debt Ratio”); or (ii) a ratio not greater than 3.50 to 1.00 of such consolidated net debt to earnings before interest, taxes, depreciation, amortization and certain other adjustments for the preceding four fiscal quarters then ended (the “Debt to EBITDA Ratio”).Snap-on may, up to two times during any five-year period during the term of the Credit Facility (including any extensions thereof), increase the maximum Debt Ratio to 0.65 to 1.00 and/or increase the maximum Debt to EBITDA Ratio to 3.75 to 1.00 for four consecutive fiscal quarters in connection with certain material acquisitions (as defined in the related credit agreement). As of September 30, 2017,June 29, 2019, the company’s actual ratios of 0.260.21 and 1.160.95 respectively, were both within the permitted ranges set forth in this financial covenant.Snap-on generally issues commercial paper to fund its financing needs on a short-term basis and uses the Credit Facility asback-up liquidity to support such commercial paper issuances.and effective as part of a hedged transaction. Gains or losses on derivative instruments recorded in Accumulatedearnings are presented in the same Condensed Consolidated Statement of Earnings line that is used to present the earnings effect of the hedged item. Gains or losses on derivative instruments in accumulated other comprehensive income (loss) (“Accumulated OCI”) must beare reclassified to earnings in the period in which earnings are affected by the underlying hedged item and the ineffective portion of all hedges must be recognized in earnings in the period that such portion is determined to be ineffective.On the dateOnce a derivative contract is entered into,Snap-on designates has until the end of the quarter to designate the derivative as a fair value hedge, a cash flow hedge, a hedge of a net investment in a foreign operation, or a natural hedging instrument whose change in fair value is recognized as an economic hedge against changes in the value of the hedged item.Snap-on does not use derivative instruments for speculative or trading purposes.SNAP-ON INCORPORATEDNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)(Unaudited)As of September 30, 2017,Snap-on had $179.1 million of net foreign currency forward buy contracts outstanding comprised of buy contracts including $66.4 million in euros, $53.6 million in Swedish kronor, $50.6 million in British pounds, $13.1 million in Hong Kong dollars, $11.1 million in Singapore dollars, $6.7 million in South Korean won, $4.4 million in Mexican pesos, $3.3 million in Danish kroner, $3.2 million in Norwegian kroner, and $2.2 million in other currencies, and sell contracts including $13.7 million in Australian dollars, $6.5 million in Canadian dollars, $5.4 million in Indian rupees, $2.8 million in Thai baht, and $7.1 million in other currencies. As of 2016 year end,Snap-on had $144.4 million of net foreign currency forward buy contracts outstanding comprised of buy contracts including $55.0 million in euros, $53.6 million in British pounds, $47.0 million in Swedish kronor, $9.0 million in Hong Kong dollars, $7.0 million in South Korean won, $5.5 million in Singapore dollars, $4.9 million in Mexican pesos, $4.6 million in Norwegian kroner, and $6.4 million in other currencies, and sell contracts including $16.6 million in Japanese yen, $11.8 million in Canadian dollars, $4.4 million in Australian dollars, $4.0 million in Brazilian real, and $11.8 million in other currencies.effective portion of the change in fair value of the designated and qualifying derivative is recorded in “Long-term debt” on the accompanying Condensed Consolidated Balance Sheets, while any ineffective portion is recorded as an adjustment to “Interest expense” on the accompanying Condensed Consolidated Statements of Earnings.Sheets. The notional amount of interest rate swaps outstanding and designated as fair value hedges was $100 million as of both September 30, 2017,June 29, 2019 and December 31, 2016. entered into a $250 million uses treasury lock in the fourth quarter of 2016locks to manage the potential change in interest rates in anticipation of the possible issuance of fixed rate debt. Treasury locks are accounted for as cash flow hedges. The effective differentials to be paid or received on treasury locks related to the anticipated issuance of fixed rate debt are initially recorded in Accumulated OCI. OCI for derivative instruments that are designated and qualify as cash flow hedges. Upon the issuance of debt, the related amount in Accumulated OCI is released over the term of the debt and recognized as an adjustment to interest expense on the Condensed Consolidated Statements of Earnings.2017,2018, Snap-on settled the $250outstanding $300 million treasury lock after it was deemed to be an ineffective hedge related to the 2048 Notes, which were issued in conjunction with the February 2017 issuance of the 2027 Notes.2018. The $14.9$13.3 million gain on the settlement of the treasury lock was recorded in Accumulated OCI and is being amortized over the term of the 2027 Notes and recognized as an adjustment to interest expense“Other income (expense) - net” on the consolidated statementsaccompanying Condensed Consolidated Statements of earnings. As of September 30, 2017,Earnings. There were no treasury locks were outstanding. The notional amount of treasury locks outstanding and designated as cash flow hedges as of both June 29, 2019 and December 31, 2016, was $250 million.September 30, 2017,June 29, 2019, Snap-on had equity forwards in place intended to manage market risk with respect to 120,90092,200 shares ofSnap-on common stock associated with its deferred compensation plans.SNAP-ON INCORPORATEDNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)(Unaudited)Fair Value Measurements:Snap-on has derivative assets and liabilities related to interest rate swaps, treasury locks, foreign currency forwards and equity forwards that are measured at Level 2 fair value on a recurring basis. The fair value of derivative instruments included within the Condensed Consolidated Balance Sheets as of September 30, 2017, and December 31, 2016, are as follows: September 30, 2017 December 31, 2016 (Amounts in millions) Asset
Derivatives
Fair Value Liability
Derivatives
Fair Value Asset
Derivatives
Fair Value Liability
Derivatives
Fair Value Derivatives designated as hedging instruments: Other assets $ 8.1 $ – $ 9.8 $ – Other assets – – 14.3 – 8.1 – 24.1 – Derivatives not designated as hedging instruments: Prepaid expenses and other assets $ 8.5 $ – $ 4.4 $ – Other accrued liabilities – 3.0 – 13.5 Prepaid expenses and other assets 18.0 – 17.9 – 26.5 3.0 22.3 13.5 $ 34.6 $ 3.0 $ 46.4 $ 13.5 As of September 30, 2017, and December 31, 2016, the fair value adjustment to long-term debt related to the interest rate swaps was $8.1 million and $9.8 million, respectively.Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between participants at the measurement date. Level 2 fair value measurements for derivative assets and liabilities are measured using quoted prices in active markets for similar assets and liabilities. Interest rate swaps are valued based on thesix-month LIBOR swap rate for similar instruments. Treasury locks are valued based on the10-year U.S. treasury interest rate. Foreign currency forwards are valued based on exchange rates quoted by domestic and foreign banks for similar instruments. Equity forwards are valued using a market approach based primarily on the company’s stock price at the reporting date. The company did not have any derivative assets or liabilities measured at Level 1 or Level 3, nor did it implement any changes in its valuation techniques as of and for the nine months ended September 30, 2017.The effect of derivative instruments designated as fair value hedges as included in the Condensed Consolidated Statements of Earnings is as follows: Effective Portion of Gain Recognized in Income Three months ended Nine months ended (Amounts in millions) Statement of Earnings
Presentation September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016 Derivatives designated as fair value hedges: Interest expense $ 0.7 $ 0.4 $ 2.1 $ 1.9 SNAP-ON INCORPORATEDNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)(Unaudited)The effect of derivative instruments designated as cash flow hedges as included in Accumulated OCI on the Condensed Consolidated Balance Sheets and the Condensed Consolidated Statements of Earnings is as follows: Effective Portion of Gain
Recognized in
Accumulated OCI
Three months ended Statement of
Earnings
Presentation Effective Portion of Gain
Reclassified from Accumulated
OCI into Income
Three months ended (Amounts in millions) September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016 Derivatives designated as cash flow hedges: $ – $ – Interest expense $ 0.5 $ 0.1 Effective Portion of Gain
Recognized in
Accumulated OCI
Nine months ended Statement of
Earnings
Presentation Effective Portion of Gain
Reclassified from Accumulated
OCI into Income
Nine months ended (Amounts in millions) September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016 Derivatives designated as cash flow hedges: $ 6.1 $ – Interest expense $ 1.2 $ 0.3 The effects of derivative instruments not designated as hedging instruments as included in the Condensed Consolidated Statements of Earnings are as follows: Gain (Loss) Recognized in Income Three months ended Nine months ended (Amounts in millions) September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016 Derivatives not designated as hedging instruments: $ 1.6 $ (0.7) $ (2.3) $ (4.9) (0.9) (0.7) (2.2) (1.4) Snap-on’s foreign currency forwards are typically not designated as hedges for financial reporting purposes. The fair value changes of foreign currency forwards not designated as hedging instruments are reported in earnings as foreign exchange gain or loss in “Other income (expense) – net” on the accompanying Condensed Consolidated Statements of Earnings. The $1.6 million derivative gain recognized in the third quarter of 2017 was more than offset by transaction losses on net exposures of $3.6 million, resulting in a net foreign exchange loss of $2.0 million for the quarter. The $0.7 million derivative loss recognized in the third quarter of 2016 was increased by transaction losses on net exposures of $0.3 million, resulting in a foreign exchange loss of $1.0 million for the quarter. The $2.3 million derivative loss recognized in the first nine months of 2017 was increased by transaction losses on net exposures of $3.4 million, resulting in a 2017year-to-date net foreign exchange loss of $5.7 million. The $4.9 million derivative loss recognized in the first nine months of 2016 was partially offset by transaction gains on net exposures of $4.0 million, resulting in a 2016year-to-date net foreign exchange loss of $0.9 million. The resulting net foreign exchange gains and losses are included in “Other income (expense) – net” on the accompanying Condensed Consolidated Statements of Earnings. See Note 15 for additional information on “Other income (expense) – net.”SNAP-ON INCORPORATEDNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)(Unaudited)Snap-on’s equity forwards are not designated as hedges for financial reporting purposes. Fair value changes of both the equity forwards and related stock-based(mark-to-market) deferred compensation liabilities are reported in “Operating expenses” on the accompanying Condensed Consolidated Statements of Earnings. The $0.9 million derivative loss recognized in the third quarter of 2017 was offset by $0.9 million ofmark-to-market deferred compensation benefit. The $0.7 million derivative loss recognized in the third quarter of 2016 was offset by $0.7 million ofmark-to-market deferred compensation benefit. The $2.2 million derivative loss recognized in the first nine months of 2017 was substantially offset by amark-to-market deferred compensation benefit of $2.1 million. The $1.4 million derivative loss recognized in the first nine months of 2016 was more than offset by amark-to-market deferred compensation benefit of $1.8 million.As of September 30, 2017, the maximum maturity date of any fair value hedge was four years. During the next 12 months,Snap-on expects to reclassify into earnings net gains from Accumulated OCI of approximately $1.0 million after tax at the time the underlying hedge transactions are realized. September 30, 2017 December 31, 2016 (Amounts in millions) Carrying
Value Fair
Value Carrying
Value Fair
Value $ 1,524.4 $ 1,767.1 $ 1,407.0 $ 1,631.2 410.2 448.4 374.8 409.7 1,208.4 1,264.7 1,010.2 1,076.7 June 29, 2019 December 29, 2018 (Amounts in millions) Finance receivables – net $ 1,618.0 $ 1,903.1 $ 1,592.9 $ 1,845.4 Contract receivables – net 439.0 484.3 443.2 481.2 Long-term debt and notes payable 1,116.1 1,181.2 1,132.3 1,136.0 of long-term debt and current maturities of long-term debt was estimated, using Level 2 fair value measurements, based on quoted market values ofSnap-on’s publicly traded senior debt. The carrying value of long-term debt includes adjustments related to fair value hedges. The fair value of notes payable approximates such instruments’ carrying value due to their short-term nature. Three Months Ended Nine Months Ended (Amounts in millions) September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016 $ 5.6 $ 4.8 $ 16.8 $ 14.5 13.9 14.2 41.8 42.6 (21.2) (20.4) (62.2) (60.8) 6.9 7.8 20.8 23.5 (0.2) (0.2) (0.8) (0.8) $ 5.0 $ 6.2 $ 16.4 $ 19.0 Three Months Ended Six Months Ended (Amounts in millions) June 29, 2019 June 30, 2018 June 29, 2019 June 30, 2018 Service cost $ 5.8 $ 6.1 $ 11.8 $ 12.6 Interest cost 14.1 13.2 28.2 26.4 Expected return on plan assets (23.1 ) (22.2 ) (45.5 ) (43.9 ) Amortization of unrecognized loss 6.3 8.4 12.5 16.4 Amortization of prior service credit (0.2 ) (0.3 ) (0.4 ) (0.6 ) Net periodic pension cost $ 2.9 $ 5.2 $ 6.6 $ 10.9 $7.1$9.4 million to its foreign pension plans and $2.3$2.0 million to its domestic pension plans in 2017,2019, as required by law. In the first ninesix months of 2017,2019, Snap-on made $61.2$25.8 million of cash contributions to its domestic pension plans consisting of (i) $60.0$25.0 million of discretionary contributions and (ii) $1.2$0.8 million of required contributions. Depending on market and other conditions,Snap-on may make additional discretionary cash contributions to its pension plans in 2017.2019. Three Months Ended Nine Months Ended (Amounts in millions) September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016 $ 0.5 $ 0.6 $ 1.5 $ 1.7 (0.2) (0.3) (0.6) (0.7) (0.1) – (0.2) – $ 0.2 $ 0.3 $ 0.7 $ 1.0 Three Months Ended Six Months Ended (Amounts in millions) June 29, 2019 June 30, 2018 June 29, 2019 June 30, 2018 Interest cost $ 0.5 $ 0.4 $ 1.0 $ 0.9 Expected return on plan assets (0.2 ) (0.2 ) (0.4 ) (0.4 ) Amortization of unrecognized gain (0.2 ) (0.1 ) (0.4 ) (0.2 ) Net periodic postretirement health care cost $ 0.1 $ 0.1 $ 0.2 $ 0.3 September 30, 2017,June 29, 2019, the 2011 Plan had 3,287,4032,006,598 shares available for future grants. The company uses treasury stock to deliver shares under both the 2001 and 2011 Plans.$7.0$6.8 million and $21.4$14.1 million for the respective three and ninesix months ended September 30, 2017,June 29, 2019, and $7.3$7.9 million and $21.5$14.6 million for the respective three and ninesix months ended October 1, 2016.June 30, 2018. Cash received from stock purchase and option plan exercises during the respective three and ninesix months ended September 30, 2017,June 29, 2019, totaled $1.6$19.8 million and $36.2 million, respectively.$24.6 million. Cash received from stock purchase and option plan exercises during the respective three and ninesix months ended October 1, 2016,June 30, 2018, totaled $4.0$16.8 million and $32.4 million, respectively.$28.3 million. The tax benefit realized from both the exercise and vesting of share-based payment arrangements was $0.8$1.9 million and $12.9$4.6 million for the respective three and ninesix months ended September 30, 2017,June 29, 2019, and $1.8$2.5 million and $14.9$7.6 million for the respective three and ninesix months ended October 1, 2016.ninesix months ended SeptemberJune 29, 2019, and June 30, 2017, and October 1, 2016,2018, using the Black-Scholes valuation model; there were no stock options granted during the three months ended September 30, 2017, or October 1, 2016: Nine Months Ended September 30,
2017 October 1,
2016 5.15 5.05 22.01% 22.17% 1.63% 1.77% 1.78% 1.04% Six Months Ended June 29,
2019 June 30,
20185.53 5.35 Expected volatility factor 21.30% 20.08% Expected dividend yield 1.79% 1.68% Risk-free interest rate 2.54% 2.71% ninesix months ended September 30, 2017,June 29, 2019, is presented below: Shares
(in thousands) Exercise
Price Per
Share* Remaining
Contractual
Term*
(in years) Aggregate
Intrinsic
Value
(in millions) 3,011 $ 100.78 655 168.71 (278) 87.00 (71) 153.52 3,317 114.22 6.6 $ 127.7 2,108 90.90 5.3 122.5 * Weighted-average Outstanding at December 29, 2018 3,130 $ 127.57 Granted 462 155.93 Exercised (156 ) 84.98 Forfeited or expired (49 ) 161.24 Outstanding at June 29, 2019 3,387 132.91 6.4 $ 112.6 Exercisable at June 29, 2019 2,440 122.36 5.4 106.8 * Weighted-average ninesix months ended SeptemberJune 29, 2019, and June 30, 2017,2018, was $29.98 and October 1, 2016, was $31.13 and $22.99,$30.21, respectively. The intrinsic value of options exercised was $2.0$7.4 million and $23.4$12.3 million during the respective three and ninesix months ended September 30, 2017,June 29, 2019, and $4.8$10.2 million and $22.2$21.2 million during the respective three and ninesix months ended October 1, 2016.June 30, 2018. The fair value of stock options vested was $14.0$15.7 million and $12.7$16.0 million during the respective ninesix months ended SeptemberJune 29, 2019, and June 30, 2017, and October 1, 2016.SNAP-ON INCORPORATEDNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)(Unaudited)September 30, 2017,June 29, 2019, there was $23.3$23.1 million of unrecognized compensation cost related tonon-vested stock options that is expected to be recognized as a charge to earnings over a weighted-average period of 1.71.9 years.a certain level,specified levels, the recipient may earn additional shares of stock, not to exceed 100% of the number of performance awards initially granted.ninesix months ended SeptemberJune 29, 2019, and June 30, 2017,2018, was $155.92 and October 1, 2016, was $168.70 and $138.80,$160.25, respectively. PSUs related to 60,98032,114 shares and 94,18650,182 shares were paid out during the respective ninesix months ended SeptemberJune 29, 2019, and June 30, 2017, and October 1, 2016.2018. Earned PSUs are generally paid out following the conclusion of the applicable performance period upon approval by the Organization and Executive Compensation Committee of the company’s Board of Directors (the “Board”).20162018 performance, 45,50233,170 RSUs granted in 20162018 were earned; assuming continued employment, these RSUs will vest at the end of fiscal 2018.2020. Based on the company’s 20152017 performance, 64,32713,648 RSUs granted in 20152017 were earned; assuming continued employment, these RSUs will vest at the end of fiscal 2017.2019. Based on the company’s 20142016 performance, 78,58545,502 RSUs granted in 20142016 were earned; these RSUs vested as of fiscal 20162018 year end and were paid out shortly thereafter.ninesix months ended September 30, 2017,June 29, 2019, are as follows: Shares
(in thousands) Fair Value
Price per
Share* 207 $ 141.94 77 168.70 (5) 142.78 (28) 154.46 251 148.64 * Weighted-average Non-vested performance awards at December 29, 2018 120 $ 164.00 Granted 84 155.92 Vested — — Cancellations and other (17 ) 160.39 Non-vested performance awards at June 29, 2019 187 160.69 * Weighted-average September 30, 2017,June 29, 2019, there was $14.1$16.7 million of unrecognized compensation cost related tonon-vested performance awards that is expected to be recognized as a charge to earnings over a weighted-average period of 1.72.0 years.SNAP-ON INCORPORATEDNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)(Unaudited)Snap-on’speriod-end Snap‑on’s period-end stock price. The company uses historical data regarding SARs exercise and forfeiture behaviors for different participating groups to estimate the expected term of the SARs granted based on the period of time that similar instruments granted are expected to be outstanding. Expected volatility is based on the historical volatility of the company’s stock for the length of time corresponding to the expected term of the SARs. The expected dividend yield is based on the company’s historical dividend payments. The risk-free interest rate is based on the U.S. treasury yield curve in effect as of the grant date (for stock-settled SARs) or reporting date (for cash-settled SARs) for the length of time corresponding to the expected term of the SARs.ninesix months ended SeptemberJune 29, 2019, and June 30, 2017, and October 1, 2016,2018, using the Black-Scholes valuation model; there were no stock-settled SARs granted during the three months ended September 30, 2017, or October 1, 2016: Nine Months Ended September 30,
2017 October 1,
2016 3.99 4.03 19.39% 20.09% 1.46% 1.66% 1.55% 1.11% Six Months Ended June 29,
2019 June 30,
20183.65 3.58 Expected volatility factor 22.60% 20.08% Expected dividend yield 1.81% 1.63% Risk-free interest rate 2.48% 2.40% ninesix months ended September 30, 2017,June 29, 2019, are as follows: Stock-settled
SARs
(in thousands) Exercise
Price Per
Share* Remaining
Contractual
Term*
(in years) Aggregate
Intrinsic
Value
(in millions) 303 $ 125.38 100 168.73 (8) 106.07 (22) 124.88 373 137.49 7.8 $ 6.3 179 118.54 6.8 5.4 * Weighted-averageSNAP-ON INCORPORATEDNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)(Unaudited) Outstanding at December 29, 2018 372 $ 147.41 Granted 92 155.95 Exercised — — Forfeited or expired (5 ) 152.08 Outstanding at June 29, 2019 459 149.13 7.4 $ 7.9 Exercisable at June 29, 2019 278 142.23 6.4 6.7 * Weighted-average ninesix months ended SeptemberJune 29, 2019, and June 30, 2017,2018, was $26.45 and October 1, 2016, was $24.13 and $19.47,$24.71, respectively. The intrinsic value of stock-settled SARs exercised was zero during both the three and $0.5six months ended June 29, 2019, and zero and $0.6 million during the respective three and ninesix months ended SeptemberJune 30, 2017, and $0.1 million and $0.8 million during the respective three and nine months ended October 1, 2016.2018. The fair value of stock-settled SARs vested was $2.1 million and $2.2 million during both the ninerespective three and six months ended SeptemberJune 29, 2019, and June 30, 2017, and October 1, 2016, was $2.1 million.September 30, 2017,June 29, 2019, there was $3.0$3.8 million of unrecognized compensation cost related tonon-vested stock-settled SARs that is expected to be recognized as a charge to earnings over a weighted-average period of 1.72.0 years.ninesix months ended SeptemberJune 29, 2019, and June 30, 2017, and October 1, 2016,2018, using the Black-Scholes valuation model; no cash-settled SARs were granted during the three months ended September 30, 2017, or October 1, 2016: Nine Months Ended September 30,
2017 October 1,
2016 3.38 3.43 19.58% 19.03% 1.57% 1.58% 1.62% 0.88% Six Months Ended June 29,
2019 June 30,
20183.34 3.26 Expected volatility factor 22.52% 20.54% Expected dividend yield 1.87% 1.67% Risk-free interest rate 1.71% 2.63% zero$0.2 million and $0.8$0.5 million during the respective three and ninesix months ended September 30, 2017,June 29, 2019, and $0.1 million and $0.9$2.1 million during the respective three and ninesix months ended October 1, 2016.June 30, 2018. The fair value of cash-settled SARs vested during the nine months ended September 30, 2017, and October 1, 2016, was $0.1 million during both the six months ended June 29, 2019, and $0.2 million, respectively.ninesix months ended September 30, 2017,June 29, 2019, are as follows: Cash-settled
SARs
(in thousands) Fair Value
Price per
Share* 7 $ 40.83 1 13.52 (3) 26.11 5 18.78 * Weighted-average Non-vested cash-settled SARs at December 29, 2018 3 $ 14.89 Granted 1 29.08 Vested (2 ) 28.64 Non-vested cash-settled SARs at June 29, 2019 2 25.72 * Weighted-average September 30, 2017,June 29, 2019, there was $0.1 million of unrecognized compensation cost related tonon-vested cash-settled SARs that is expected to be recognized as a charge to earnings over a weighted-average period of 1.42.0 years.6,9667,605 shares and 7,1456,975 shares of restricted stock tonon-employee directors infor the first ninerespective six months of 2017ended June 29, 2019 and 2016, respectively.June 30, 2018. The fair value of the restricted stock awards is expensed over aone-year vesting period based on the fair value on the date of grant. All restrictions for the restricted stock generally lapse upon the earlier of the first anniversary of the grant date, the recipient’s death or disability or in the event of a change in control, as defined in the 2011 Plan. If termination of the recipient’s service occurs prior to the first anniversary of the grant date for any reason other than death or disability, the shares of restricted stock would be forfeited, unless otherwise determined by the Board.SNAP-ON INCORPORATEDNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)(Unaudited)Employee Stock Purchase PlanSubstantially allSnap-on employees in the United States and Canada are eligible to participate in an employee stock purchase plan. The purchase price of the company’s common stock to participants is the lesser of the mean of the high and low price of the stock on the beginning date (May 15) or ending date (the following May 14) of each plan year. For the nine months ended September 30, 2017, and October 1, 2016, issuances under this plan totaled 26,963 shares and 27,156 shares, respectively. As of September 30, 2017, shares reserved for issuance under this plan totaled 753,600 shares andSnap-on held participant contributions of approximately $1.4 million. Participants are able to withdraw from the plan at any time prior to the ending date and receive back all contributions made during the plan year. No compensation costs were recognized for plan participants in the third quarters of 2017 and 2016. The company recognized compensation costs for plan participants of $0.1 million of expense and a $0.1 million benefit for the respective nine months ended September 30, 2017, and October 1, 2016.Franchisee Stock Purchase PlanAll franchisees in the United States and Canada are eligible to participate in a franchisee stock purchase plan. The purchase price of the company’s common stock to participants is the lesser of the mean of the high and low price of the stock on the beginning date (May 15) or ending date (the following May 14) of each plan year. For the nine months ended September 30, 2017, and October 1, 2016, issuances under this plan totaled 47,314 shares and 42,867 shares, respectively. As of September 30, 2017, shares reserved for issuance under this plan totaled 566,155 shares andSnap-on held participant contributions of approximately $2.8 million. Participants are able to withdraw from the plan at any time prior to the ending date and receive back all contributions made during the plan year. The company did not recognize anymark-to-market costs for plan participants in the third quarters of 2017 and 2016. Expense for plan participants was $0.1 million and a $0.4 million benefit for the respective nine months ended September 30, 2017, and October 1, 2016. Three Months Ended Nine Months Ended September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016 57,200,880 58,013,852 57,643,948 58,076,627 1,054,360 1,251,062 1,220,575 1,292,765 58,255,240 59,264,914 58,864,523 59,369,392 Three Months Ended Six Months Ended June 29, 2019 June 30, 2018 June 29, 2019 June 30, 2018 Weighted-average common shares outstanding 55,253,253 56,429,715 55,383,887 56,540,611 Effect of dilutive securities 787,231 912,347 788,934 1,013,034 Weighted-average common shares outstanding, assuming dilution 56,040,484 57,342,062 56,172,821 57,553,645 September 30, 2017,June 29, 2019, there were 723,2151,223,467 awards outstanding that were anti-dilutive; as of October 1, 2016,June 30, 2018, there were 1,6001,295,441 awards outstanding that were anti-dilutive. Performance-based equity awards are included in the diluted earnings per share calculation based on the attainment of the applicable performance metrics to date. SNAP-ON INCORPORATEDNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)(Unaudited)ninesix months ended SeptemberJune 29, 2019, and June 30, 2017, and October 1, 2016,2018, is as follows: Three Months Ended Nine Months Ended (Amounts in millions) September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016 $ 18.9 $ 16.1 $ 16.0 $ 16.4 1.1 2.8 10.4 8.8 (2.2) (3.3) (8.6) (9.6) $ 17.8 $ 15.6 $ 17.8 $ 15.6 Three Months Ended Six Months Ended (Amounts in millions) June 29, 2019 June 30, 2018 June 29, 2019 June 30, 2018 Warranty reserve: Beginning of period $ 17.3 $ 17.5 $ 17.1 $ 17.2 Additions 4.7 4.1 8.7 7.9 Usage (4.2 ) (4.1 ) (8.0 ) (7.6 ) End of period $ 17.8 $ 17.5 $ 17.8 $ 17.5 The three months ended September 30, 2017, included a $15.0 million charge related to a judgement in an employment-related litigation matter brought by an individual that is being appealed. Although it is not possible to predict the outcome of these legal matters, management believes that the results of theseall legal matters will not have a material impact onSnap-on’s consolidated financial position, results of operations or cash flows.(Amounts in millions) Classification Assets Finance lease assets Property and equipment - net $ 7.8 $ — $ 7.8 Operating lease assets Operating lease right-of-use assets — 60.5 60.5 Liabilities Current: Finance lease liabilities Other accrued liabilities $ 1.2 $ — $ 1.2 Operating lease liabilities Other accrued liabilities — 20.2 20.2 Non-current: Finance lease liabilities Other long-term liabilities $ 6.6 $ — $ 6.6 Operating lease liabilities Operating lease liabilities — 40.4 40.4 Three Months Ended Six Months Ended (Amounts in millions) June 29, 2019 June 29, 2019 Finance lease costs: Amortization of ROU assets $ 0.4 $ 0.7 Interest on lease liabilities — 0.1 Operating lease costs* 6.3 12.5 Total lease costs $ 6.7 $ 13.3 * Includes short-term leases, variable lease costs and sublease income, which are immaterial. Six Months Ended (Amounts in millions) June 29, 2019 Cash paid for amounts included in the measurement of lease liabilities: Financing cash flows from finance leases $ 0.7 Operating cash flows from finance leases 0.1 Operating cash flows from operating leases 11.7 June 29, 2019 ROU assets obtained in exchange for new lease obligations: Finance lease liabilities $ 1.1 Operating lease liabilities 6.2 (Amounts in millions) June 29, 2019 Finance leases: Property and equipment - gross $ 9.1 Accumulated depreciation and amortization (0.7 ) Property and equipment - net $ 8.4 Other accrued liabilities $ 1.5 Other long-term liabilities 7.1 Total finance lease liabilities $ 8.6 Operating leases: Operating lease right-of-use assets $ 55.4 Other accrued liabilities $ 20.8 Operating lease liabilities 35.7 Total operating lease liabilities $ 56.5 June 29, 2019 Weighted-average remaining lease terms: Finance leases 5.5 years Operating leases 3.6 years Weighted-average discount rates: Finance leases 3.1% Operating leases 3.0% (Amounts in millions) Operating Leases Finance Leases Year: 2019 (excluding the six months ended June 29, 2019) $ 11.2 $ 0.8 2020 18.4 1.7 2021 13.4 1.7 2022 8.8 1.7 2023 4.1 1.7 2024 and thereafter 3.7 1.7 Total lease payments 59.6 9.3 Less: amount representing interest (3.1 ) (0.7 ) Total lease liabilities $ 56.5 $ 8.6 (Amounts in millions) Year: 2019 $ 25.6 $ 3.3 2020 18.4 3.2 2021 13.9 2.9 2022 9.8 2.5 2023 4.9 2.2 2024 and thereafter 4.4 1.9 Total minimum lease payments $ 77.0 16.0 Less: amount representing interest (0.9 ) Total present value of minimum capital lease payments $ 15.1 (Amounts in millions) 2018 Other accrued liabilities $ 3.0 Other long-term liabilities 12.1 Total present value of minimum capital lease payments $ 15.1 (Amounts in millions) Lease Receivables Year: 2019 (excluding the six months ended June 29, 2019) $ 60.1 2020 102.8 2021 74.1 2022 50.1 2023 33.8 2024 and thereafter 28.8 Total lease payments 349.7 Less: unearned finance charges (64.3 ) Net investment in leases $ 285.4 Three Months Ended Nine Months Ended (Amounts in millions) September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016 $ – $ 0.2 $ 0.2 $ 0.5 (2.0) (1.0) (5.7) (0.9) (0.1) – (0.2) 0.1 $ (2.1) $ (0.8) $ (5.7) $ (0.3) SNAP-ON INCORPORATEDNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)(Unaudited) Three Months Ended Six Months Ended (Amounts in millions) June 29, 2019 June 30, 2018 June 29, 2019 June 30, 2018 Interest income $ 0.3 $ 0.2 $ 0.7 $ 0.3 Net foreign exchange loss (1.0 ) (0.3 ) (2.5 ) (2.4 ) Net periodic pension and postretirement benefits – non-service 2.8 0.8 5.0 1.4 Settlement of treasury lock — — — 13.3 Loss on early extinguishment of debt — — — (7.8 ) Other — (1.3 ) 0.4 (2.6 ) Total other income (expense) – net $ 2.1 $ (0.6 ) $ 3.6 $ 2.2 16:17: Accumulated Other Comprehensive Income (Loss)September 30, 2017:(Amounts in millions) Foreign
Currency
Translation Cash Flow
Hedges Defined
Benefit
Pension and
Postretirement
Plans Total $ (130.2) $ 14.6 $ (281.4) $ (397.0) 51.4 – – 51.4 – (0.5) 4.3 3.8 51.4 (0.5) 4.3 55.2 $ (78.8) $ 14.1 $ (277.1) $ (341.8) (Amounts in millions) Total Balance at March 30, 2019 $ (170.3 ) $ 11.8 $ (337.9 ) $ (496.4 ) Other comprehensive loss before reclassifications (8.4 ) — — (8.4 ) Amounts reclassified from Accumulated OCI — (0.3 ) 4.4 4.1 Net other comprehensive income (loss) (8.4 ) (0.3 ) 4.4 (4.3 ) Balance as of June 29, 2019 $ (178.7 ) $ 11.5 $ (333.5 ) $ (500.7 ) ninesix months ended September 30, 2017:(Amounts in millions) Foreign
Currency
Translation Cash Flow
Hedges Defined
Benefit
Pension and
Postretirement
Plans Total $ (217.7) $ 9.2 $ (290.0) $ (498.5) 138.9 6.1 – 145.0 – (1.2) 12.9 11.7 138.9 4.9 12.9 156.7 $ (78.8) $ 14.1 $ (277.1) $ (341.8) (Amounts in millions) Total Balance as of December 29, 2018 $ (177.9 ) $ 12.2 $ (296.5 ) $ (462.2 ) Impact of the Tax Act on Accumulated Other Comprehensive Income (ASU No. 2018-02) — — (45.9 ) (45.9 ) Balance at December 30, 2018 (177.9 ) 12.2 (342.4 ) (508.1 ) Other comprehensive loss before reclassifications (0.8 ) — — (0.8 ) Amounts reclassified from Accumulated OCI — (0.7 ) 8.9 8.2 Net other comprehensive income (loss) (0.8 ) (0.7 ) 8.9 7.4 Balance as of June 29, 2019 $ (178.7 ) $ 11.5 $ (333.5 ) $ (500.7 ) October 1, 2016:(Amounts in millions) Foreign
Currency
Translation Cash Flow
Hedges Defined
Benefit
Pension and
Postretirement
Plans Total $ (133.5) $ 0.5 $ (236.8) $ (369.8) (7.8) – – (7.8) – (0.1) 4.8 4.7 (7.8) (0.1) 4.8 (3.1) $ (141.3) $ 0.4 $ (232.0) $ (372.9) SNAP-ON INCORPORATEDNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)(Unaudited)(Amounts in millions) Total Balance at March 31, 2018 $ (43.4 ) $ 13.2 $ (255.2 ) $ (285.4 ) Other comprehensive loss before reclassifications (97.6 ) — — (97.6 ) Amounts reclassified from Accumulated OCI — (0.3 ) 6.0 5.7 Net other comprehensive income (loss) (97.6 ) (0.3 ) 6.0 (91.9 ) Balance as of June 30, 2018 $ (141.0 ) $ 12.9 $ (249.2 ) $ (377.3 ) ninethe six months ended October 1, 2016:(Amounts in millions) Foreign
Currency
Translation Cash Flow
Hedges Defined
Benefit
Pension and
Postretirement
Plans Total $ (118.5) $ 0.7 $ (246.4) $ (364.2) (22.8) – – (22.8) – (0.3) 14.4 14.1 (22.8) (0.3) 14.4 (8.7) $ (141.3) $ 0.4 $ (232.0) $ (372.9) (Amounts in millions) Total Balance as of December 30, 2017 $ (82.5 ) $ 14.5 $ (261.0 ) $ (329.0 ) Other comprehensive loss before reclassifications (58.5 ) (0.8 ) — (59.3 ) Amounts reclassified from Accumulated OCI — (0.8 ) 11.8 11.0 Net other comprehensive income (loss) (58.5 ) (1.6 ) 11.8 (48.3 ) Balance as of June 30, 2018 $ (141.0 ) $ 12.9 $ (249.2 ) $ (377.3 ) ninesix month periods ended SeptemberJune 29, 2019, and June 30, 2017, and October 1, 2016,2018, are as follows: Amount Reclassified from Accumulated OCI Three Months Ended Nine Months Ended September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016
Presentation(Amounts in millions) $ 0.5 $ 0.1 $ 1.2 $ 0.3 Interest expense – – – – Income tax expense 0.5 0.1 1.2 0.3 (6.6) (7.6) (19.8) (22.7) See footnote below* 2.3 2.8 6.9 8.3 Income tax expense (4.3) (4.8) (12.9) (14.4) $ (3.8) $ (4.7) $ (11.7) $ (14.1) Amount Reclassified from Accumulated OCI Three Months Ended Six Months Ended June 29, 2019 June 30, 2018 June 29, 2019 June 30, 2018 (Amounts in millions) Gains on cash flow hedges: Treasury locks $ 0.3 $ 0.3 $ 0.7 $ 0.8 Interest expense Income tax expense — — — — Income tax expense Net of tax 0.3 0.3 0.7 0.8 Amortization of net unrecognized losses and prior service credits (5.9 ) (8.0 ) (11.7 ) (15.6 ) See footnote below* Income tax benefit 1.5 2.0 2.8 3.8 Income tax expense Net of tax (4.4 ) (6.0 ) (8.9 ) (11.8 ) Total reclassifications for the period, net of tax $ (4.1 ) $ (5.7 ) $ (8.2 ) $ (11.0 ) * SNAP-ON INCORPORATEDNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)(Unaudited)17:18: SegmentsFinancial Data by Segment: Three Months Ended Nine Months Ended (Amounts in millions) September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016 $ 314.6 $ 289.3 $ 923.3 $ 862.0 392.7 397.2 1,215.9 1,216.4 333.5 286.1 990.4 860.1 1,040.8 972.6 3,129.6 2,938.5 (137.0) (138.5) (417.3) (397.9) $ 903.8 $ 834.1 $ 2,712.3 $ 2,540.6 79.0 71.6 233.5 207.2 $ 982.8 $ 905.7 $ 2,945.8 $ 2,747.8 $ 50.1 $ 43.7 $ 134.4 $ 124.1 56.3 64.6 207.2 207.6 83.4 71.8 244.0 215.3 56.0 50.6 163.1 147.1 245.8 230.7 748.7 694.1 (36.7) (22.5) (79.3) (67.6) $ 209.1 $ 208.2 $ 669.4 $ 626.5 (13.1) (13.1) (38.8) (39.1) (2.1) (0.8) (5.7) (0.3) $ 193.9 $ 194.3 $ 624.9 $ 587.1 (Amounts in millions) September 30,
2017 December 31,
2016 $ 1,104.0 $ 907.1 734.9 668.1 1,313.5 1,211.0 1,944.3 1,789.7 $ 5,096.7 $ 4,575.9 224.2 212.3 (64.7) (65.0) $ 5,256.2 $ 4,723.2 Three Months Ended Six Months Ended (Amounts in millions) June 29,
2019 June 30,
2018 June 29,
2019 June 30,
2018Net sales: Commercial & Industrial Group $ 335.0 $ 337.8 $ 657.5 $ 669.4 Snap-on Tools Group 405.8 411.9 816.0 816.6 Repair Systems & Information Group 348.9 343.1 676.8 680.1 Segment net sales 1,089.7 1,092.8 2,150.3 2,166.1 Intersegment eliminations (138.4 ) (138.2 ) (277.3 ) (276.0 ) Total net sales $ 951.3 $ 954.6 $ 1,873.0 $ 1,890.1 Financial Services revenue 84.1 82.0 169.7 165.0 Total revenues $ 1,035.4 $ 1,036.6 $ 2,042.7 $ 2,055.1 Operating earnings: Commercial & Industrial Group $ 48.9 $ 49.0 $ 95.4 $ 95.5 Snap-on Tools Group 71.3 79.0 138.5 147.9 Repair Systems & Information Group 88.6 88.7 172.2 174.5 Financial Services 60.6 57.8 122.7 114.7 Segment operating earnings 269.4 274.5 528.8 532.6 Corporate (18.9 ) (23.6 ) (28.8 ) (47.1 ) Operating earnings $ 250.5 $ 250.9 $ 500.0 $ 485.5 Interest expense (12.4 ) (12.0 ) (24.9 ) (25.6 ) Other income (expense) – net 2.1 (0.6 ) 3.6 2.2 Earnings before income taxes and equity earnings $ 240.2 $ 238.3 $ 478.7 $ 462.1 (Amounts in millions) June 29,
2019 December 29,
2018Assets: Commercial & Industrial Group $ 1,136.4 $ 1,087.9 Snap-on Tools Group 794.3 752.7 Repair Systems & Information Group 1,349.6 1,306.3 Financial Services 2,067.4 2,039.6 Total assets from reportable segments $ 5,347.7 $ 5,186.5 Corporate 262.4 249.2 Elimination of intersegment receivables (64.7 ) (62.6 ) Total assets $ 5,545.4 $ 5,373.1 thatthat: (i) are in the future tense; (ii) include the words “expects,” “plans,” “targets,” “estimates,” “believes,” “anticipates,” or similar words that referenceSnap-on Incorporated(“Snap-on” (“Snap‑on” or “the company”) or its management; (iii) are specifically identified as forward-looking; or (iv) describeSnap-on’s or management’s future outlook, plans, estimates, objectives or goals, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.Snap-on cautions the reader that any forward-looking statements included in this document that are based upon assumptions and estimates were developed by management in good faith and are subject to risks, uncertainties or other factors that could cause (and in some cases have caused) actual results to differ materially from those described in any such statement. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results or regarded as a representation by the company or its management that the projected results will be achieved. For those forward-looking statements,Snap-on cautions the reader that numerous important factors, such as those listed below, as well as those factors discussed in its Annual Report on Form10-K for the fiscal year ended December 31, 2016,29, 2018, which are incorporated herein by reference, could affect the company’s actual results and could cause its actual consolidated results to differ materially from those expressed in any forward-looking statement made by, or on behalf of,Snap-on.(such as the recent hurricanes in the southern United States and the Caribbean), planned facility closures or other labor interruptions, the effects of external negative factors, including adverse developments in world financial markets, developments related to tariffs and other trade issues or disputes, weakness in certain areas of the global economy (including as a result of the United Kingdom’s pending exit from the European Union), and significant changes in the current competitive environment, inflation, interest rates and other monetary and market fluctuations, changes in tax rates, ruleslaws and regulations, and the impact of energy and raw material supply and pricing, including steel (as a result of recently-imposed U.S. tariffs on certain steel imports or otherwise) and gasoline, the amount, rate and growth ofSnap-on’s general and administrative expenses, including health care and postretirement costs (resulting from, among other matters, U.S. health care legislation and its ongoing implementation or reform), continuing and potentially increasing required contributions to pension and postretirement plans, the impacts ofnon-strategic business and/or product line rationalizations, and the effects on business as a result of new legislation, regulations or government-related developments or issues, risks associated with data security and technological systems and protections, thepotential reputational damages and costs related to litigation as well as an inability to assure that costs related to litigation will be reduced or eliminated on appeal, and other world or local events outsideSnap-on’s control, including terrorist disruptions.Snap-on disclaims any responsibility to update any forward-looking statement provided in this document, except as required by law.Recent AcquisitionsOn July 28, 2017,Snap-on acquired Torque Control Specialist (“TCS”), for a cash purchase price of $3.6 million (or $3.5 million, net of cash acquired). TCS, based in Adelaide, Australia, distributes a full range of torque products, including wrenches, multipliers and calibrators for use in critical industries. For segment reporting purposes, the results of operations and assets of TCS have been included in the Commercial & Industrial Group since the acquisition date.On May 4, 2017,Snap-on acquired Norbar Torque Tools Holding Limited, along with its U.S. and Chinese joint ventures (“Norbar”), for a purchase price of $71.6 million (or $69.9 million, net of cash acquired), which reflects a $0.8 million working capital adjustment finalized in the third quarter of 2017. Norbar, based in Banbury, U.K., designs and manufactures a full range of torque products, including wrenches, multipliers and calibrators for use in critical industries. For segment reporting purposes, the results of operations and assets of Norbar have been included in the Commercial & Industrial Group since the acquisition date.On January 30, 2017,Snap-on acquired BTC Global Limited (“BTC”) for a cash purchase price of $9.2 million. BTC, based in Crewe, U.K., designs and implements automotive vehicle inspection and management software for original equipment manufacturer (“OEM”) franchise repair shops. For segment reporting purposes, the results of operations and assets of BTC have been included in the Repair Systems & Information Group since the acquisition date.On November 16, 2016,Snap-on acquired Ryeson Corporation (d/b/a Sturtevant Richmont) for a purchase price of $13.0 million (or $12.6 million, net of cash acquired), which reflects a $0.1 million working capital adjustment finalized in the first quarter of 2017. Sturtevant Richmont designs, manufactures and distributes mechanical and electronic torque wrenches as well as wireless torque error proofing systems for a variety of industrial applications. For segment reporting purposes, the results of operations and assets of Sturtevant Richmont have been included in the Commercial & Industrial Group since the acquisition date.On October 31, 2016,Snap-on acquiredCar-O-Liner Holding AB(“Car-O-Liner”) for a purchase price of $152.0 million (or $148.1 million, net of cash acquired), which reflects a $0.2 million working capital adjustment finalized in the first quarter of 2017.Car-O-Liner designs and manufactures collision repair equipment, and information and truck alignment systems. For segment reporting purposes, substantially all ofCar-O-Liner’s results of operations and assets have been included in the Repair Systems & Information Group since the acquisition date, with the remaining portions included in the Commercial & Industrial Group.Pro forma financial information has not been presented for any of these acquisitions as the net effects, individually and collectively, were neither significant nor material toSnap-on’s results of operations or financial position.SNAP-ON INCORPORATEDMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS(continued)RESULTS OF OPERATIONSResults of operations for the three months ended September 30, 2017, and October 1, 2016, are as follows: Three Months Ended (Amounts in millions) September 30, 2017 October 1, 2016 Change $ 903.8 100.0% $ 834.1 100.0% $ 69.7 8.4% (455.2) -50.4% (415.0) -49.8% (40.2) -9.7% 448.6 49.6% 419.1 50.2% 29.5 7.0% (295.5) -32.7% (261.5) -31.3% (34.0) -13.0% 153.1 16.9% 157.6 18.9% (4.5) -2.9% 79.0 100.0% 71.6 100.0% 7.4 10.3% (23.0) -29.1% (21.0) -29.3% (2.0) -9.5% 56.0 70.9% 50.6 70.7% 5.4 10.7% 209.1 21.3% 208.2 23.0% 0.9 0.4% (13.1) -1.4% (13.1) -1.4% – – (2.1) -0.2% (0.8) -0.1% (1.3) NM 193.9 19.7% 194.3 21.5% (0.4) -0.2% (57.2) -5.8% (59.6) -6.6% 2.4 4.0% 136.7 13.9% 134.7 14.9% 2.0 1.5% 0.4 – 0.5 – (0.1) -20.0% 137.1 13.9% 135.2 14.9% 1.9 1.4% (3.7) -0.3% (3.5) -0.4% (0.2) -5.7% $ 133.4 13.6% $ 131.7 14.5% $ 1.7 1.3% NM: Not meaningfulPercentage Disclosure: All income statement line item percentages below “Operating earnings from financial services” are calculated as a percentage of the sum of Net sales and Financial services revenue.Net sales of $903.8 million in the third quarter of 2017 increased $69.7 million, or 8.4%, from 2016 levels, reflecting a $19.5 million, or 2.3%, increase in organic sales (anon-GAAP financial measure that excludes acquisition-related sales and the impact of foreign currency translation), $44.3 million of acquisition-related sales, and $5.9 million of favorable foreign currency translation.Snap-on has significant international operations and is subject to risks inherent with foreign operations, including foreign currency translation fluctuations.adjusted to excludeexcluding acquisition-related sales and the impact of foreign currency translation. Management evaluates the company’s sales performance based on organic sales growth, which primarily reflects growth from the company’s existing businesses as a result of increased output, customer base and geographic expansion, new product development and/or pricing, and excludes sales contributions from acquired operations the company did not own as of the comparable prior-year reporting period. The company’s organic sales disclosures also exclude the effects of foreign currency translation as foreign currency translation is subject to volatility that can obscure underlying business trends. Management believes that thenon-GAAP financial measure of organic sales is meaningful to investors as it provides them with useful information to aid in identifying underlying growth trends in our businesses and facilitatingfacilitates comparisons of our sales performance with prior periods. Three Months Ended (Amounts in millions) June 29, 2019 June 30, 2018 Change Net sales $ 951.3 100.0 % $ 954.6 100.0 % $ (3.3 ) (0.3 )% Cost of goods sold (477.5 ) (50.2 )% (467.5 ) (49.0 )% (10.0 ) (2.1 )% Gross profit 473.8 49.8 % 487.1 51.0 % (13.3 ) (2.7 )% Operating expenses (283.9 ) (29.8 )% (294.0 ) (30.8 )% 10.1 3.4 % Operating earnings before financial services 189.9 20.0 % 193.1 20.2 % (3.2 ) (1.7 )% Financial services revenue 84.1 100.0 % 82.0 100.0 % 2.1 2.6 % Financial services expenses (23.5 ) (27.9 )% (24.2 ) (29.5 )% 0.7 2.9 % Operating earnings from financial services 60.6 72.1 % 57.8 70.5 % 2.8 4.8 % Operating earnings 250.5 24.2 % 250.9 24.2 % (0.4 ) (0.2 )% Interest expense (12.4 ) (1.2 )% (12.0 ) (1.1 )% (0.4 ) (3.3 )% Other income (expense) – net 2.1 0.2 % (0.6 ) (0.1 )% 2.7 NM Earnings before income taxes and equity earnings 240.2 23.2 % 238.3 23.0 % 1.9 0.8 % Income tax expense (55.6 ) (5.4 )% (55.8 ) (5.4 )% 0.2 0.4 % Earnings before equity earnings 184.6 17.8 % 182.5 17.6 % 2.1 1.2 % Equity earnings, net of tax 0.3 0.1 % 0.2 — % 0.1 NM Net earnings 184.9 17.9 % 182.7 17.6 % 2.2 1.2 % Net earnings attributable to noncontrolling interests (4.5 ) (0.5 )% (4.0 ) (0.4 )% (0.5 ) (12.5 )% Net earnings attributable to Snap-on Inc. $ 180.4 17.4 % $ 178.7 17.2 % $ 1.7 1.0 % NM: Not meaningful Percentage Disclosure: All income statement line item percentages below “Operating earnings from financial services” are calculated as a percentage of the sum of Net sales and Financial services revenue. of $448.6 million in the thirdsecond quarter of 2017 compared to $419.12019 decreased $13.3 million, last year.or 2.7%, from 2018, including $11.3 million of unfavorable foreign currency effects. Gross margin (gross profit as a percentage of net sales) of 49.6%49.8% in the quarter declined 60120 basis points (100 basis points (“bps”) equals 1.0 percent) from 50.2%51.0% last year primarily due to 40increased sales in lower gross margin businesses, 20 bps of unfavorable foreign currency effects, and lowerhigher material and other costs. These decreases in gross margin on acquisition related sales,were partially offset by savingsbenefits from the company’s “Rapid Continuous Improvement” or “RCI“RCI” initiatives.”consolidations.optimization. Unless individually significant, it is not practicable to disclose each RCI activity that generated savings and/or segregate RCI savings embedded in sales volume increases.of $295.5 million in the thirdsecond quarter of 20172019, decreased $10.1 million, or 3.4%, compared to $261.5 million last year, as 2017 included a $15.0 million charge related to a judgment in an employment-related litigation matter brought by an individual that is being appealed (“legal charge”). The company can provide no assurance as to the results of that appeal.year. The operating expense margin (operating expenses as a percentage of net sales) of 32.7% was 14029.8% improved 100 bps higher thanfrom 30.8% last year as 170 bps for the legal charge and 30 bps of operating expenses for acquisitions were partially offset byprimarily due to benefits from organic sales volume leverage.of $153.1 million in the third quarter of 2017, including $1.9$5.9 million of unfavorable foreign currency effects, and $15.0 million for the legal charge, decreased $4.5$3.2 million, or 2.9%1.7%, as compared to $157.6 million last year. As a percentage of net sales, operating earnings before financial services of 16.9%, including the legal charge,20.0% compared to 18.9%20.2% last year.of $79.0 million in the thirdsecond quarter of 20172019 increased $2.1 million, or 2.6%, compared to revenue of $71.6 million last year. Financial services operating earnings of $56.0 million in the third quarter of 2017,period, including $0.1$0.4 million of favorableunfavorable foreign currency effects, increased $5.4$2.8 million, or 10.7%4.8%, as compared to $50.6 million last year. The year-over-year increasesincrease in both revenue and operating earnings primarily reflect continuedreflects the growth of the company’s financial services portfolio.of $209.1 million in the thirdsecond quarter of 2017,2019, including $1.8$6.3 million of unfavorable foreign currency effects, and $15.0 million for the legal charge, increased $0.9decreased $0.4 million, or 0.4%0.2%, from $208.2 million last year. As a percentage of revenues (net sales plus financial services revenue), operating earnings of 21.3%24.2% in the quarter was unchanged from last year.23.0% last year.Interest expense was unchanged at $13.1 million in the respective third quarters of 2017 and 2016. See Note 8 to the Condensed Consolidated Financial Statements for information onSnap-on’s debt and credit facilities.was expense of $2.1 million and $0.8 million in the respective third quarters of 2017 and 2016. Other income (expense) – net reflectsincludes net gains and losses associated with hedging and currency exchange rate transactions, non-service components of net periodic benefit costs, and interest income. See Note 1516 to the Condensed Consolidated Financial Statements for information on otherOther income (expense) – net. third 2019 second quarter effective income tax rate on earnings attributable toSnap-on was 30.1%23.6%. The 2018 effective income tax rate was 23.8%, includingwhich included a 0.6%20 bps benefit fromassociated with the legal charge, in 2017 and 31.2% in 2016.implementation of U.S. tax legislation (“tax benefit”). See Note 7 to the Condensed Consolidated Financial Statements for information on income taxes.$133.4$180.4 million, or $2.29$3.22 per diluted share, in the thirdsecond quarter of 2017, including $9.32019, increased $1.7 million, or $0.16$0.10 per diluted share, from 2018 levels. Net earnings attributable to Snap-on in the second quarter of 2018 were $178.7 million, or $3.12 per diluted share, which included $0.5 million, or $0.01 per diluted share, for the after tax legal charge, increased $1.7 million, or $0.07 per diluted share, from 2016 levels. Net earnings attributable toSnap-on in the third quarterbenefit.ninesix months ended SeptemberJune 29, 2019, and June 30, 2017, and October 1, 2016,2018, are as follows: Nine Months Ended (Amounts in millions) September 30, 2017 October 1, 2016 Change $ 2,712.3 100.0% $ 2,540.6 100.0% $ 171.7 6.8% (1,352.7) -49.9% (1,274.9) -50.2% (77.8) -6.1% 1,359.6 50.1% 1,265.7 49.8% 93.9 7.4% (853.3) -31.4% (786.3) -30.9% (67.0) -8.5% 506.3 18.7% 479.4 18.9% 26.9 5.6% 233.5 100.0% 207.2 100.0% 26.3 12.7% (70.4) -30.1% (60.1) -29.0% (10.3) -17.1% 163.1 69.9% 147.1 71.0% 16.0 10.9% 669.4 22.7% 626.5 22.8% 42.9 6.8% (38.8) -1.3% (39.1) -1.4% 0.3 0.8% (5.7) -0.2% (0.3) – (5.4) NM 624.9 21.2% 587.1 21.4% 37.8 6.4% (187.1) -6.3% (179.4) -6.6% (7.7) -4.3% 437.8 14.9% 407.7 14.8% 30.1 7.4% 1.2 – 2.2 0.1% (1.0) -45.5% 439.0 14.9% 409.9 14.9% 29.1 7.1% (10.8) -0.4% (9.8) -0.3% (1.0) 10.2% $ 428.2 14.5% $ 400.1 14.6% $ 28.1 7.0% NM: Not meaningful Six Months Ended (Amounts in millions) June 29, 2019 June 30, 2018 Change Net sales $ 1,873.0 100.0 % $ 1,890.1 100.0 % $ (17.1 ) (0.9 )% Cost of goods sold (927.6 ) (49.5 )% (931.4 ) (49.3 )% 3.8 0.4 % Gross profit 945.4 50.5 % 958.7 50.7 % (13.3 ) (1.4 )% Operating expenses (568.1 ) (30.4 )% (587.9 ) (31.1 )% 19.8 3.4 % Operating earnings before financial services 377.3 20.1 % 370.8 19.6 % 6.5 1.8 % Financial services revenue 169.7 100.0 % 165.0 100.0 % 4.7 2.8 % Financial services expenses (47.0 ) (27.7 )% (50.3 ) (30.5 )% 3.3 6.6 % Operating earnings from financial services 122.7 72.3 % 114.7 69.5 % 8.0 7.0 % Operating earnings 500.0 24.5 % 485.5 23.6 % 14.5 3.0 % Interest expense (24.9 ) (1.2 )% (25.6 ) (1.2 )% 0.7 2.7 % Other income (expense) – net 3.6 0.1 % 2.2 0.1 % 1.4 NM Earnings before income taxes and equity earnings 478.7 23.4 % 462.1 22.5 % 16.6 3.6 % Income tax expense (112.5 ) (5.5 )% (113.4 ) (5.5 )% 0.9 0.8 % Earnings before equity earnings 366.2 17.9 % 348.7 17.0 % 17.5 5.0 % Equity earnings, net of tax 0.8 0.1 % 0.8 — % — NM Net earnings 367.0 18.0 % 349.5 17.0 % 17.5 5.0 % Net earnings attributable to noncontrolling interests (8.7 ) (0.5 )% (7.8 ) (0.4 )% (0.9 ) (11.5 )% Net earnings attributable to Snap-on Inc. $ 358.3 17.5 % $ 341.7 16.6 % $ 16.6 4.9 % NM: Not meaningful Percentage Disclosure: All income statement line item percentages below “Operating earnings from financial services” are calculated as a percentage of the sum of Net sales and Financial services revenue. and Financial services revenue.Net sales of $2,712.3 million in the first ninesix months of 2017 increased $171.72019 decreased $17.1 million, or 6.8%0.9%, from 20162018 levels, reflecting a $76.1$27.4 million, or 3.0%1.5%, increase in organic sales gain and $111.8$1.1 million of acquisition-related sales, partiallymore than offset by $16.2$45.6 million of unfavorable foreign currency translation.$1,359.6 million50.5% in the first ninesix months of 2017 compared to $1,265.7 million last year. Gross margin of 50.1% in 2017 improved 30 bpsdeclined 20 basis points from 49.8%50.7% last year primarily due to benefits from higher sales and savings from the company’s RCI initiatives, partially offset by 2010 bps of unfavorable foreign currency effects. Restructuringeffects, and higher material and other costs, reflected in gross profit were $0.8 millionpartially offset by benefits from the company’s RCI initiatives.ninesix months of 2016.Operating expenses2019, including an $11.6 million first quarter benefit from the settlement of $853.3a patent-related litigation matter that was being appealed (the “legal settlement”), improved $19.8 million, in the first nine months of 2017, including $15.0 million for the legal charge, compared to $786.3 millionor 3.4%, from last year. The operating expense margin of 31.4% in 2017 increased 5030.4% improved 70 bps from 30.9%31.1% last year as 50primarily due to a 60 bps of operating expenses from acquisitions and 50 bpsbenefit from the legal charge were partially offset by benefits from sales volume leverage. Restructuring costs included in operating expenses were $0.1 million in the first nine months of 2016.SNAP-ON INCORPORATEDMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS(continued)of $506.3 million in the first ninesix months of 2017,2019, including $10.1the benefit from the legal settlement and $11.6 million of unfavorable foreign currency effects, and $15.0 million for the legal charge, increased $26.9$6.5 million, or 5.6%1.8%, as compared to $479.4 million last year. As a percentage of net sales, operating earnings before financial services of 18.7%20.1%, including 60 bps of benefit from the legal charge,settlement, partially offset by 20 bps of unfavorable foreign currency effects, compared to 18.9%19.6% last year.of $233.5 million in the first ninesix months of 20172019 increased $4.7 million, or 2.8%, compared to revenue of $207.2 million last year. Financial services operating earnings of $163.1 million in 2017,for the period, including $0.7$0.9 million of unfavorable foreign currency effects, increased $16.0$8.0 million, or 10.9%7.0%, as compared to $147.1 million last year. The year-over-year increasesincrease in both revenue and operating earnings primarily reflect continuedreflects the growth of the company’s financial services portfolio. of $669.4 million in the first ninesix months of 2017,2019, including $10.8the benefit from the legal settlement and $12.5 million of unfavorable foreign currency effects, and $15.0 million for the legal charge, increased $42.9$14.5 million, or 6.8%3.0%, from $626.5 million last year. As a percentage of revenues, operating earnings of 22.7% declined 10 bps from 22.8%24.5% for the first six months of 2019 compared to 23.6% last year. of $38.8 million in the first ninesix months of 20172019 decreased $0.3$0.7 million, from $39.1 millionor 2.7%, compared to last year. See Note 8 to the Condensed Consolidated Financial Statements for information onSnap-on’s debt and credit facilities.wasincludes net gains and losses associated with hedging and currency exchange rate transactions, non-service components of net periodic benefit costs, and interest income. Other income (expense) – net in 2018 included a net gain of $5.5 million associated with a treasury lock settlement gain of $13.3 million related to the issuance of debt, partially offset by $7.8 million of expense related to the early extinguishment of $5.7 million and $0.3 million indebt (collectively, the respective first nine months of 2017 and 2016.“net debt items”). See Note 1516 to the Condensed Consolidated Financial Statements for information on otherOther income (expense) – net.ninesix months of 2017,2019, Snap-on’s effective income tax rate on earnings attributable toSnap-on was 30.5%23.9%. The 2018 effective income tax rate was 25.0%, includingwhich included a 0.2% benefit from50 bps charge associated with the legal charge, and 31.1% in 2016.implementation of U.S. tax legislation (“tax charge”). See Note 7 to the Condensed Consolidated Financial Statements for information on income taxes.$428.2$358.3 million, or $7.27$6.38 per diluted share, in the first ninesix months of 2017,2019, including $9.3an $8.7 million, or $0.16$0.15 per diluted share, benefit from the after-tax legal settlement, increased $16.6 million, or $0.45 per diluted share, from 2018 levels. Net earnings attributable to Snap-on in the first six months of 2018 were $341.7 million, or $5.93 per diluted share, including a $4.1 million, or $0.07 per diluted share, benefit from the after-tax net debt items, and $2.1 million, or $0.04 per diluted share, for the after tax legal charge, increased $28.1 million, or $0.53 per diluted share, from 2016 levels. Net earnings attributable toSnap-on in the first nine months of 2016 were $400.1 million, or $6.74 per diluted share. Exit and Disposal ActivitiesSnap-on did not record any costs for exit and disposal activities in the first nine months of 2017 or the third quarter of 2016.Snap-on recorded $0.9 million of costs for exit and disposal activities in the first nine months of 2016. See Note 6 to the Condensed Consolidated Financial Statements for information onSnap-on’s exit and disposal activities.Snap-on’s Snap‑on’s finance subsidiaries.SNAP-ON INCORPORATEDMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS(continued)All significant intersegmentIntersegment amounts are eliminated to arrive atSnap-on’s consolidated financial results. Three Months Ended (Amounts in millions) September 30, 2017 October 1, 2016 Change $ 250.8 79.7% $ 213.1 73.7% $ 37.7 17.7% 63.8 20.3% 76.2 26.3% (12.4) -16.3% 314.6 100.0% 289.3 100.0% 25.3 8.7% (187.9) -59.7% (176.6) -61.0% (11.3) -6.4% 126.7 40.3% 112.7 39.0% 14.0 12.4% (76.6) -24.4% (69.0) -23.9% (7.6) -11.0% $ 50.1 15.9% $ 43.7 15.1% $ 6.4 14.6% Three Months Ended (Amounts in millions) June 29, 2019 June 30, 2018 Change External net sales $ 263.0 78.5 % $ 267.1 79.1 % $ (4.1 ) (1.5 )% Intersegment net sales 72.0 21.5 % 70.7 20.9 % 1.3 1.8 % Segment net sales 335.0 100.0 % 337.8 100.0 % (2.8 ) (0.8 )% Cost of goods sold (205.8 ) (61.4 )% (204.8 ) (60.6 )% (1.0 ) (0.5 )% Gross profit 129.2 38.6 % 133.0 39.4 % (3.8 ) (2.9 )% Operating expenses (80.3 ) (24.0 )% (84.0 ) (24.9 )% 3.7 4.4 % Segment operating earnings $ 48.9 14.6 % $ 49.0 14.5 % $ (0.1 ) (0.2 )% of $314.6 million in the thirdsecond quarter of 2017 increased $25.32019 decreased $2.8 million, or 8.7%0.8%, from 20162018 levels, reflecting a $0.6$6.2 million, or 0.2%1.9%, organic sales gain $22.7and $1.1 million of acquisition-related sales, and $2.0more than offset by $10.1 million of favorableunfavorable foreign currency translation. The organic sales increase primarily includes a high single-digit gain in sales to customers in critical industries, athe specialty tools business, and low single-digit gaingains in sales inboth the segment’s European-based hand tools business substantially offset by a double-digit decreaseand to customers in sales of power tools, and a mid single-digit sales decreasecritical industries.segment’s Asia Pacific operations.Segment gross profit of $126.7 million in the third quarter of 2017 compared to $112.7 million last year. Third quarter gross margin of 40.3%38.6% in 2017 increased 1302019 declined 80 bps from 39.0%39.4% in 20162018, primarily due to favorable business mixincreased sales in lower gross margin businesses and benefitshigher material and other costs, partially offset by savings from the company’s RCI initiatives. operating expenses of $76.6 million in the third quarter of 2017 compared to $69.0 million last year. The operating expense margin in the quarter of 24.4%24.0% in 2017 increased 502019 improved 90 bps from 23.9%24.9% in 20162018, primarily due to 40 bps of operating expenses for acquisitions. As a result of these factors, segmentthe benefits from organic sales volume leverage, including higher volumes in lower expense businesses, and savings from RCI initiatives. of $50.1 million in the thirdsecond quarter of 2017,2019, including $0.1$0.9 million of favorableunfavorable foreign currency effects, increased $6.4decreased $0.1 million from 2016 levels.2018. Operating margin (segment operating earnings as a percentage of segment net sales) for the Commercial & Industrial Group of 15.9%14.6% in 2017 improved 80 bps from 15.1%2019 compared to 14.5% in 2016. Nine Months Ended (Amounts in millions) September 30, 2017 October 1, 2016 Change $ 712.9 77.2% $ 644.5 74.8% $ 68.4 10.6% 210.4 22.8% 217.5 25.2% (7.1) -3.3% 923.3 100.0% 862.0 100.0% 61.3 7.1% (559.2) -60.6% (527.4) -61.2% (31.8) -6.0% 364.1 39.4% 334.6 38.8% 29.5 8.8% (229.7) -24.8% (210.5) -24.4% (19.2) -9.1% $ 134.4 14.6% $ 124.1 14.4% $ 10.3 8.3% SNAP-ON INCORPORATEDMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS(continued) Six Months Ended (Amounts in millions) June 29, 2019 June 30, 2018 Change External net sales $ 512.5 77.9 % $ 525.9 78.6 % $ (13.4 ) (2.5 )% Intersegment net sales 145.0 22.1 % 143.5 21.4 % 1.5 1.0 % Segment net sales 657.5 100.0 % 669.4 100.0 % (11.9 ) (1.8 )% Cost of goods sold (398.0 ) (60.5 )% (407.1 ) (60.8 )% 9.1 2.2 % Gross profit 259.5 39.5 % 262.3 39.2 % (2.8 ) (1.1 )% Operating expenses (164.1 ) (25.0 )% (166.8 ) (24.9 )% 2.7 1.6 % Segment operating earnings $ 95.4 14.5 % $ 95.5 14.3 % $ (0.1 ) (0.1 )% of $923.3 million in the first ninesix months of 2017 increased $61.32019 decreased $11.9 million, or 7.1%1.8%, from 20162018 levels, reflecting a $22.5$10.9 million, or 2.6%1.7%, organic sales gain and $46.4$1.1 million of acquisition-related sales, partiallymore than offset by $7.6$23.9 million of unfavorable foreign currency translation. The organic sales increase primarily includes mida high single-digit gain in the specialty tools business, and low single-digit gains in sales to both customers in critical industries and in the segment’s European-based hand tools business and in sales to customers in critical industries, partially offset by a mid single-digit decrease in sales of power tools.profitmargin of $364.1 million in39.5% for the first ninesix months of 2017 compared to $334.6 million last year. Gross margin of 39.4%2019 improved 6030 bps from 38.8% last year39.2% in 2018, primarily due to higher sales, savings from the company’s RCI initiatives and 20 bps of favorable foreign currency effects, and benefits from the company’s RCI initiatives, partially offset by ahigher material and other costs.impact from acquisitions. expenses of $229.7 millionearnings in the first ninesix months of 2017 compared to $210.5 million last year. The operating expense margin of 24.8% increased 40 bps from 24.4% last year primarily due to increased costs,2019, including higher costs for research and engineering activities, and 20 bps of operating expenses for acquisitions.As a result of these factors, segment operating earnings of $134.4 million in the first nine months of 2017, including $1.0$2.0 million of favorableunfavorable foreign currency effects, increased $10.3decreased $0.1 million from 20162018 levels. Operating margin for the Commercial & Industrial Group of 14.6%14.5% in the first nine months of 2017 increased2019 improved 20 bps from 14.4% last year. Three Months Ended (Amounts in millions) September 30, 2017 October 1, 2016 Change $ 392.7 100.0% $ 397.2 100.0% $ (4.5) -1.1% (228.5) -58.2% (223.9) -56.4% (4.6) -2.1% 164.2 41.8% 173.3 43.6% (9.1) -5.3% (107.9) -27.5% (108.7) -27.3% 0.8 0.7% $ 56.3 14.3% $ 64.6 16.3% $ (8.3) -12.8% Three Months Ended (Amounts in millions) June 29, 2019 June 30, 2018 Change Segment net sales $ 405.8 100.0 % $ 411.9 100.0 % $ (6.1 ) (1.5 )% Cost of goods sold (222.9 ) (54.9 )% (222.7 ) (54.1 )% (0.2 ) (0.1 )% Gross profit 182.9 45.1 % 189.2 45.9 % (6.3 ) (3.3 )% Operating expenses (111.6 ) (27.5 )% (110.2 ) (26.7 )% (1.4 ) (1.3 )% Segment operating earnings $ 71.3 17.6 % $ 79.0 19.2 % $ (7.7 ) (9.7 )% of $392.7 million in the thirdsecond quarter of 20172019 decreased $4.5$6.1 million, or 1.1%1.5%, from 20162018 levels, reflecting a $6.5$1.0 million, or 1.6%0.2%, organic sales decrease, partially offset by $2.0decline and $5.1 million of favorableunfavorable foreign currency translation. Theorganic sales decrease includes a mid single-digit decreasedecline in the segment’s international franchise operations, partially offset by a low single-digit gain in the segment’s U.S. operations. Six Months Ended (Amounts in millions) June 29, 2019 June 30, 2018 Change Segment net sales $ 816.0 100.0 % $ 816.6 100.0 % $ (0.6 ) (0.1 )% Cost of goods sold (450.0 ) (55.1 )% (447.1 ) (54.8 )% (2.9 ) (0.6 )% Gross profit 366.0 44.9 % 369.5 45.2 % (3.5 ) (0.9 )% Operating expenses (227.5 ) (27.9 )% (221.6 ) (27.1 )% (5.9 ) (2.7 )% Segment operating earnings $ 138.5 17.0 % $ 147.9 18.1 % $ (9.4 ) (6.4 )% double-digit sales gainlow single-digit decline in the company’ssegment’s international franchise operations.profit of $164.2 millionmargin in the third quarterfirst six months of 2017 compared to $173.3 million last year. Gross margin2019 of 41.8% decreased 18044.9% declined 30 bps from 43.6%45.2% last year primarily due to a year-over-year shift in product mix and 7050 bps of unfavorable foreign currency effects.Segment operating expenses of $107.9 million in the third quarter of 2017 compared to $108.7 million last year. 27.5%2019 of 27.9% increased 2080 bps from 27.3%27.1% last year primarily due to the effect of the lower sales.As a result of these factors, segmenthigher field support investments.of $56.3 million in the third quarterfirst six months of 2017,2019, including $2.3$6.9 million of unfavorable foreign currency effects, decreased $8.3$9.4 million from 20162018 levels. Operating margin for theSnap-on Tools Group of 14.3%17.0% in the third quarterfirst six months of 20172019 compared to 16.3%18.1% last year. Nine Months Ended (Amounts in millions) September 30, 2017 October 1, 2016 Change $ 1,215.9 100.0% $ 1,216.4 100.0% $ (0.5) – (691.0) -56.8% (687.8) -56.5% (3.2) -0.5% 524.9 43.2% 528.6 43.5% (3.7) -0.7% (317.7) -26.2% (321.0) -26.4% 3.3 1.0% $ 207.2 17.0% $ 207.6 17.1% $ (0.4) -0.2% SNAP-ON INCORPORATEDMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS(continued) Three Months Ended (Amounts in millions) June 29, 2019 June 30, 2018 Change External net sales $ 282.5 81.0 % $ 275.6 80.3 % $ 6.9 2.5 % Intersegment net sales 66.4 19.0 % 67.5 19.7 % (1.1 ) (1.6 )% Segment net sales 348.9 100.0 % 343.1 100.0 % 5.8 1.7 % Cost of goods sold (187.2 ) (53.7 )% (178.2 ) (51.9 )% (9.0 ) (5.1 )% Gross profit 161.7 46.3 % 164.9 48.1 % (3.2 ) (1.9 )% Operating expenses (73.1 ) (20.9 )% (76.2 ) (22.2 )% 3.1 4.1 % Segment operating earnings $ 88.6 25.4 % $ 88.7 25.9 % $ (0.1 ) (0.1 )% of $1,215.9 million in the first nine monthssecond quarter of 2017 decreased $0.52019 increased $5.8 million, or 1.7%, from 20162018 levels, reflecting a $5.7an $11.7 million, or 0.5%3.5%, organic sales gain, which was more thanpartially offset by $6.2$5.9 million of unfavorable foreign currency translation. The organic sales increase includes a double-digit increase in sales gainto OEM dealerships.company’s international franchise operations partially offset by a low single-digit sales decrease in the company’s U.S. franchise operations.Segment gross profitquarter of $524.9 million in the first nine months of 2017 compared to $528.6 million last year. Gross margin of 43.2%46.3% declined 30180 bps from 43.5%48.1% last year primarily due to 60 bps of unfavorable foreign currency effects,increased sales in lower gross margin businesses and higher material and other costs, partially offset by savings from the company’s RCI initiatives. operating expenses of $317.7 million in the first nine months of 2017 compared to $321.0 million last year. The operating expense margin in the quarter of 26.2%20.9% improved 20130 bps from 26.4%22.2% last year primarily due to the benefits from sales volume leverage, including higher volumes in lower expense businesses, and savings from RCI initiatives.company’s international franchise operations.As a resultsecond quarter of these factors, segment operating earnings of $207.2 million in the first nine months of 2017,2019, including $9.2$1.2 million of unfavorable foreign currency effects, decreased $0.4$0.1 million from 2016 levels. Operating margin for theSnap-on Tools Group of 17.0% in the first nine months of 2017 compared to 17.1% last year.Repair Systems & Information Group Three Months Ended (Amounts in millions) September 30, 2017 October 1, 2016 Change $ 260.3 78.1% $ 223.8 78.2% $ 36.5 16.3% 73.2 21.9% 62.3 21.8% 10.9 17.5% 333.5 100.0% 286.1 100.0% 47.4 16.6% (175.8) -52.7% (153.0) -53.5% (22.8) -14.9% 157.7 47.3% 133.1 46.5% 24.6 18.5% (74.3) -22.3% (61.3) -21.4% (13.0) -21.2% $ 83.4 25.0% $ 71.8 25.1% $ 11.6 16.2% Segment net sales of $333.5 million in the third quarter of 2017 increased $47.4 million, or 16.6%, from 2016 levels, reflecting a $23.7 million, or 8.2%, organic sales gain, $21.6 million of acquisition-related sales and $2.1 million of favorable foreign currency translation. The organic sales increase includes double-digit gains in sales of diagnostic and repair information products to independent repair shop owners and managers, a high single-digit sales increase to OEM dealerships, and a low single-digit sales increase of undercar equipment.Segment gross profit of $157.7 million in the third quarter of 2017 compared to $133.1 million last year. Gross margin of 47.3% improved 80 bps from 46.5% last year as a result of 40 bps of benefits from acquisitions and savings from the company’s RCI initiatives.Segment operating expenses of $74.3 million in the third quarter of 2017 compared to $61.3 million last year. The operating expense margin of 22.3% increased 90 bps from 21.4% last year primarily due to 180 bps of impact from acquisitions, partially offset by benefits of sales volume leverage.SNAP-ON INCORPORATEDMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS(continued)As a result of these factors, segment operating earnings of $83.4 million in the third quarter of 2017, including $0.3 million of favorable foreign currency effects, increased $11.6 million from 2016 levels.2018. Operating margin for the Repair Systems & Information Group of 25.0%25.4% in the thirdsecond quarter of 20172019 compared to 25.1%25.9% last year. Nine Months Ended (Amounts in millions) September 30, 2017 October 1, 2016 Change $ 783.5 79.1% $ 679.7 79.0% $ 103.8 15.3% 206.9 20.9% 180.4 21.0% 26.5 14.7% 990.4 100.0% 860.1 100.0% 130.3 15.1% (519.8) -52.5% (457.6) -53.2% (62.2) -13.6% 470.6 47.5% 402.5 46.8% 68.1 16.9% (226.6) -22.9% (187.2) -21.8% (39.4) -21.0% $ 244.0 24.6% $ 215.3 25.0% $ 28.7 13.3% Six Months Ended (Amounts in millions) June 29, 2019 June 30, 2018 Change External net sales $ 544.5 80.5 % $ 547.6 80.5 % $ (3.1 ) (0.6 )% Intersegment net sales 132.3 19.5 % 132.5 19.5 % (0.2 ) (0.2 )% Segment net sales 676.8 100.0 % 680.1 100.0 % (3.3 ) (0.5 )% Cost of goods sold (356.9 ) (52.7 )% (353.2 ) (51.9 )% (3.7 ) (1.0 )% Gross profit 319.9 47.3 % 326.9 48.1 % (7.0 ) (2.1 )% Operating expenses (147.7 ) (21.9 )% (152.4 ) (22.4 )% 4.7 3.1 % Segment operating earnings $ 172.2 25.4 % $ 174.5 25.7 % $ (2.3 ) (1.3 )% of $990.4 million in the first ninesix months of 2017 increased $130.32019 decreased $3.3 million, or 15.1%0.5%, from 20162018 levels, reflecting a $69.4$10.2 million, or 8.1%1.5%, organic sales gain and $65.4 million of acquisition-related sales, partiallyincrease, more than offset by $4.5$13.5 million of unfavorable foreign currency translation. The organic sales increase includes high single-digit gains in sales of diagnostic and repair information products to independent repair shop owners and managers and in sales to OEM dealerships, and a mid single-digit gain in sales to OEM dealerships, partially offset by a low single-digit decline in sales of undercar equipment.profit of $470.6 millionmargin in the first ninesix months of 2017 compared to $402.5 million47.3% declined 80 bps from 48.1% last year. GrossThe decrease is primarily due to increased sales in lower gross margin businesses and higher material and other costs, partially offset by savings from RCI initiatives.47.5%21.9% improved 7050 bps from 46.8%22.4% last year primarily due to benefits from acquisitions and savings from the company’s RCI initiatives. Restructuring costs includedsales volume leverage, including higher volumes in gross profit were $0.8 millionlower expense businesses.ninesix months of 2016.Segment operating expenses of $226.6 million in the first nine months of 2017 compared to $187.2 million last year. The operating expense margin of 22.9% increased 110 bps from 21.8% last year primarily due to 190 bps of impact from acquisitions, partially offset by sales volume leverage. Restructuring costs included in operating expenses were $0.1 million in the first nine months of 2016.As a result of these factors, segment operating earnings of $244.0 million in the first nine months of 2017,2019, including $1.9$2.7 million of unfavorable foreign currency effects, increased $28.7decreased $2.3 million from 2016 levels. Operating2018. The operating margin for the Repair Systems & Information Group of 24.6%25.4% in the first ninesix months of 20172019 compared to 25.0%25.7% last year. Three Months Ended (Amounts in millions) September 30, 2017 October 1, 2016 Change $ 79.0 100.0% $ 71.6 100.0% $ 7.4 10.3% (23.0) -29.1% (21.0) -29.3% (2.0) -9.5% $ 56.0 70.9% $ 50.6 70.7% $ 5.4 10.7% Three Months Ended (Amounts in millions) June 29, 2019 June 30, 2018 Change Financial services revenue $ 84.1 100.0 % $ 82.0 100.0 % $ 2.1 2.6 % Financial services expenses (23.5 ) (27.9 )% (24.2 ) (29.5 )% 0.7 2.9 % Segment operating earnings $ 60.6 72.1 % $ 57.8 70.5 % $ 2.8 4.8 % of $79.0 million in the thirdsecond quarter of 20172019 increased $7.4$2.1 million, or 10.3%2.6%, from $71.6 million last year, primarily due to $8.0$2.7 million of higher revenue as a result of growth of the company’s financial services portfolio, partially offset by $0.7$0.6 million of decreased revenue from lower average yields on finance and contract receivables. In the third quartersecond quarters of 2019 and 2018, the average yield on finance receivables was 17.9% for 201717.6% and 18.0% for 2016, and the respective17.7%, respectively. The average yield on contract receivables was 9.2% and 9.4%.9.1% for both periods. Originations of $271.8$263.4 million in the thirdsecond quarter of 2017 increased $2.02019 decreased $12.7 million, or 0.7%4.6%, from 20162018 levels.SNAP-ON INCORPORATEDMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS(continued)of $23.0 million in the thirdsecond quarter of 2017 increased $2.02019 decreased $0.7 million from $21.0 million last year primarily due to changeslower provisions for credit losses, partially offset by the impact of growth in both the size of the portfolio and in the provisions for credit losses.portfolio. As a percentage of the average financial services portfolio, financial services expenses were 1.1% in the second quarter of 2019 and 1.2% in boththe second quarter of the third quarters2018.of $56.0 million in the thirdsecond quarter of 2017,2019, including $0.1$0.4 million of favorableunfavorable foreign currency effects, increased $5.4$2.8 million, or 10.7%4.8%, from 20162018 levels. Nine Months Ended (Amounts in millions) September 30, 2017 October 1, 2016 Change $ 233.5 100.0% $ 207.2 100.0% $ 26.3 12.7% (70.4) -30.1% (60.1) -29.0% (10.3) -17.1% $ 163.1 69.9% $ 147.1 71.0% $ 16.0 10.9% Six Months Ended (Amounts in millions) June 29, 2019 June 30, 2018 Change Financial services revenue $ 169.7 100.0 % $ 165.0 100.0 % $ 4.7 2.8 % Financial services expenses (47.0 ) (27.7 )% (50.3 ) (30.5 )% 3.3 6.6 % Segment operating earnings $ 122.7 72.3 % $ 114.7 69.5 % $ 8.0 7.0 % of $233.5 million in the first ninesix months of 20172019 increased $26.3$4.7 million, or 12.7%2.8%, from $207.2 million last year, primarily due to $27.2$5.7 million of higher revenue as a result of continued growth of the company’s financial services portfolio, partially offset by $0.6$1.0 million of decreased revenue from lower average yields on finance and contract receivables. In the first ninesix months of 20172019 and 2016,2018, the average yield on finance receivables was 17.9% for both periods,17.7% and the respective17.8%, respectively. The average yield on contract receivables for 2019 and 2018 was 9.2%9.1% and 9.4%.9.2%, respectively. Originations of $807.0 million in 2017 decreased $8.4 million, or 1.0%, from 2016 levels.Financial services expenses of $70.4$515.9 million in the first ninesix months of 2017 increased $10.32019 decreased $7.5 million, or 1.4%, from $60.12018 levels.changeslower provisions for credit losses, partially offset by the impact of growth in both the size of the portfolio and in the provisions for credit losses.portfolio. As a percentage of the average financial services portfolio, financial services expenses were 3.7% and 3.6%2.2% in the respective first ninesix months of 20172019 and 2016.of $163.1 million in the first ninesix months of 2017,2019, including $0.7$0.9 million of unfavorable foreign currency effects, increased $16.0$8.0 million, or 10.9%7.0%, from 20162018 levels.34 to the Condensed Consolidated Financial Statements for further information on financial services. third second quarter 20172019 general corporate expenses of $36.7$18.9 million increased $14.2decreased $4.7 million from $22.5$23.6 million last year. The year-over-year increasedecrease in general corporate expenses primarily reflects $15.0 million for the legal charge partially offset by lower pension expense.ninesix months of 20172019 of $79.3$28.8 million increased $11.7decreased $18.3 million from $67.6$47.1 million last year. The year-over-year increasedecrease in general corporate expenses primarily reflects $15.0the $11.6 million forbenefit in 2019 from the legal charge partially offset bysettlement and lower pension expense.SNAP-ON INCORPORATEDMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS(continued)SeptemberJune 29, 2019, and June 30, 2017, and October 1, 2016,2018, is as follows: Operations* Financial Services (Amounts in millions) September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016 $ 903.8 $ 834.1 $ – $ – (455.2) (415.0) – – 448.6 419.1 – – (295.5) (261.5) – – 153.1 157.6 – – – – 79.0 71.6 – – (23.0) (21.0) – – 56.0 50.6 153.1 157.6 56.0 50.6 (13.1) (13.0) – (0.1) 17.7 18.3 (17.7) (18.3) (2.1) (0.9) – 0.1 155.6 162.0 38.3 32.3 (43.2) (47.7) (14.0) (11.9) 112.4 114.3 24.3 20.4 24.3 20.4 – – 0.4 0.5 – – 137.1 135.2 24.3 20.4 (3.7) (3.5) – – $ 133.4 $ 131.7 $ 24.3 $ 20.4 Operations* Financial Services (Amounts in millions) June 29,
2019 June 30,
2018 June 29,
2019 June 30,
2018Net sales $ 951.3 $ 954.6 $ — $ — Cost of goods sold (477.5 ) (467.5 ) — — Gross profit 473.8 487.1 — — Operating expenses (283.9 ) (294.0 ) — — Operating earnings before financial services 189.9 193.1 — — Financial services revenue — — 84.1 82.0 Financial services expenses — — (23.5 ) (24.2 ) Operating earnings from financial services — — 60.6 57.8 Operating earnings 189.9 193.1 60.6 57.8 Interest expense (12.3 ) (11.9 ) (0.1 ) (0.1 ) Intersegment interest income (expense) – net 17.8 17.2 (17.8 ) (17.2 ) Other income (expense) – net 2.1 (0.7 ) — 0.1 Earnings before income taxes and equity earnings 197.5 197.7 42.7 40.6 Income tax expense (44.5 ) (45.2 ) (11.1 ) (10.6 ) Earnings before equity earnings 153.0 152.5 31.6 30.0 Financial services – net earnings attributable to Snap-on 31.6 30.0 — — Equity earnings, net of tax 0.3 0.2 — — Net earnings 184.9 182.7 31.6 30.0 Net earnings attributable to noncontrolling interests (4.5 ) (4.0 ) — — Net earnings attributable to Snap-on $ 180.4 $ 178.7 $ 31.6 $ 30.0 ninesix months ended SeptemberJune 29, 2019, and June 30, 2017, and October 1, 2016,2018, is as follows: Operations* Financial Services (Amounts in millions) September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016 $ 2,712.3 $ 2,540.6 $ – $ – (1,352.7) (1,274.9) – – 1,359.6 1,265.7 – – (853.3) (786.3) – – 506.3 479.4 – – – – 233.5 207.2 – – (70.4) (60.1) – – 163.1 147.1 506.3 479.4 163.1 147.1 (38.6) (38.8) (0.2) (0.3) 53.1 53.9 (53.1) (53.9) (5.7) (0.4) – 0.1 515.1 494.1 109.8 93.0 (146.6) (145.1) (40.5) (34.3) 368.5 349.0 69.3 58.7 69.3 58.7 – – 1.2 2.2 – – 439.0 409.9 69.3 58.7 (10.8) (9.8) – – $ 428.2 $ 400.1 $ 69.3 $ 58.7 Operations* Financial Services (Amounts in millions) June 29,
2019 June 30,
2018 June 29,
2019 June 30,
2018Net sales $ 1,873.0 $ 1,890.1 $ — $ — Cost of goods sold (927.6 ) (931.4 ) — — Gross profit 945.4 958.7 — — Operating expenses (568.1 ) (587.9 ) — — Operating earnings before financial services 377.3 370.8 — — Financial services revenue — — 169.7 165.0 Financial services expenses — — (47.0 ) (50.3 ) Operating earnings from financial services — — 122.7 114.7 Operating earnings 377.3 370.8 122.7 114.7 Interest expense (24.8 ) (25.4 ) (0.1 ) (0.2 ) Intersegment interest income (expense) – net 35.5 36.1 (35.5 ) (36.1 ) Other income (expense) – net 3.6 2.1 — 0.1 Earnings before income taxes and equity earnings 391.6 383.6 87.1 78.5 Income tax expense (89.9 ) (93.0 ) (22.6 ) (20.4 ) Earnings before equity earnings 301.7 290.6 64.5 58.1 Financial services – net earnings attributable to Snap-on 64.5 58.1 — — Equity earnings, net of tax 0.8 0.8 — — Net earnings 367.0 349.5 64.5 58.1 Net earnings attributable to noncontrolling interests (8.7 ) (7.8 ) — — Net earnings attributable to Snap-on $ 358.3 $ 341.7 $ 64.5 $ 58.1 September 30, 2017,June 29, 2019, and December 31, 2016,29, 2018, is as follows: Operations* Financial Services (Amounts in millions) September 30,
2017 December 31,
2016 September 30,
2017 December 31,
2016 $ 93.9 $ 77.5 $ 0.2 $ 0.1 21.0 15.0 – – 674.6 598.2 0.6 0.6 – – 505.8 472.5 8.3 7.9 91.5 80.2 649.9 530.5 – – 127.6 122.4 0.8 1.1 1,575.3 1,351.5 598.9 554.5 472.6 423.8 1.6 1.4 311.6 288.7 – – 55.2 49.1 26.0 23.7 553.0 584.7 – – – – 1,018.6 934.5 11.2 11.2 299.2 275.5 924.0 895.5 – – 258.3 184.6 – – 52.6 47.9 – 0.1 $ 4,213.8 $ 3,837.0 $ 1,944.3 $ 1,789.7 Operations* Financial Services (Amounts in millions) June 29,
2019 December 29,
2018 June 29,
2019 December 29,
2018ASSETS Current assets: Cash and cash equivalents $ 163.9 $ 140.5 $ 0.1 $ 0.4 Intersegment receivables 13.4 15.1 — — Trade and other accounts receivable – net 683.4 692.1 0.7 0.5 Finance receivables – net — — 529.0 518.5 Contract receivables – net 6.6 6.6 84.9 91.7 Inventories – net 725.8 673.8 — — Prepaid expenses and other assets 112.8 100.2 7.5 0.5 Total current assets 1,705.9 1,628.3 622.2 611.6 Property and equipment – net 504.8 493.5 1.6 1.6 Operating lease right-of-use asset 53.7 — 1.7 — Investment in Financial Services 334.2 329.5 — — Deferred income tax assets 34.9 45.8 19.0 18.9 Intersegment long-term notes receivable 723.0 701.3 — — Long-term finance receivables – net — — 1,089.0 1,074.4 Long-term contract receivables – net 13.7 11.9 333.8 333.0 Goodwill 907.0 902.2 — — Other intangibles – net 227.9 232.9 — — Other assets 61.9 51.9 0.1 0.1 Total assets $ 4,567.0 $ 4,397.3 $ 2,067.4 $ 2,039.6 Operations* Financial Services (Amounts in millions) September 30,
2017 December 31,
2016 September 30,
2017 December 31,
2016 $ 203.4 $ 151.4 $ 250.0 $ 150.0 203.4 170.3 1.3 0.6 – – 21.0 15.0 47.7 52.8 0.1 – 72.2 85.7 2.6 4.1 76.1 66.7 – – 338.9 292.1 34.5 22.8 941.7 819.0 309.5 192.5 – – 1,308.0 1,293.5 28.5 13.1 – – 34.3 36.7 – – 181.8 246.5 – – 87.5 86.5 15.2 15.0 1,273.8 1,201.8 1,632.7 1,501.0 2,921.8 2,617.2 311.6 288.7 18.2 18.0 – – 2,940.0 2,635.2 311.6 288.7 $ 4,213.8 $ 3,837.0 $ 1,944.3 $ 1,789.7 Operations* Financial Services (Amounts in millions) June 29,
2019 December 29,
2018 June 29,
2019 December 29,
2018LIABILITIES AND EQUITY Current liabilities: Notes payable $ 168.2 $ 186.3 $ — $ — Accounts payable 214.1 199.6 1.2 1.5 Intersegment payables — — 13.4 15.1 Accrued benefits 42.4 52.0 — — Accrued compensation 59.5 66.8 2.7 4.7 Franchisee deposits 69.5 67.5 — — Other accrued liabilities 352.9 355.4 28.4 26.1 Total current liabilities 906.6 927.6 45.7 47.4 Long-term debt and intersegment long-term debt — — 1,670.9 1,647.3 Deferred income tax liabilities 45.4 41.4 — — Retiree health care benefits 30.5 31.8 — — Pension liabilities 136.6 171.3 — — Operating lease liabilities 34.3 — 1.4 — Other long-term liabilities 104.9 106.6 15.2 15.4 Total liabilities 1,258.3 1,278.7 1,733.2 1,710.1 Total shareholders’ equity attributable to Snap-on Inc. 3,288.1 3,098.8 334.2 329.5 Noncontrolling interests 20.6 19.8 — — Total equity 3,308.7 3,118.6 334.2 329.5 Total liabilities and equity $ 4,567.0 $ 4,397.3 $ 2,067.4 $ 2,039.6 (including the repayment of $250 million of unsecured 4.25% notes, due January 15, 2018 (the “2018 Notes”)), payments of interest and dividends, new receivables originated by our financial services businesses, capital expenditures, working capital, the funding of pension plans, and funding for share repurchases and acquisitions, if and as they arise.October 13, 2017,July 12, 2019, Snap-on’s long-term debt and commercial paper were rated, respectively, A2 andP-1 by Moody’s Investors Service;A- andA-2 by Standard & Poor’s; and A and F1 by Fitch Ratings.Snap-on believes that its current credit arrangements are sound and that the strength of its balance sheet affords the company the financial flexibility, including through access to financial markets for potential new financing, to respond to both internal growth opportunities and those available through acquisitions. However,Snap-on cannot provide any assurances of the availability of future financing or the terms on which it might be available, or that its debt ratings may not decrease.September 30, 2017,June 29, 2019, working capital (current assets less current liabilities) of $923.1$1,375.8 million increased $28.6$110.9 million from $894.5$1,264.9 million as of December 31, 201629, 2018 (fiscal 20162018 year end) due toprimarily as a $261.9 millionresult of the net increase in total current assets, partially offset by a $233.3 million increase in total current liabilities aschanges discussed below.September 30, 2017,June 29, 2019, and December 31, 2016:(Amounts in millions) September 30,
2017 December 31,
2016 $ 94.1 $ 77.6 675.2 598.8 505.8 472.5 99.8 88.1 649.9 530.5 121.1 116.5 2,145.9 1,884.0 (453.4) (301.4) (204.7) (170.9) (564.7) (517.2) (1,222.8) (989.5) $ 923.1 $ 894.5 (Amounts in millions) June 29,
2019 December 29,
2018Cash and cash equivalents $ 164.0 $ 140.9 Trade and other accounts receivable – net 684.1 692.6 Finance receivables – net 529.0 518.5 Contract receivables – net 91.5 98.3 Inventories – net 725.8 673.8 Prepaid expenses and other assets 112.2 92.8 Total current assets 2,306.6 2,216.9 Notes payable (168.2 ) (186.3 ) Accounts payable (215.3 ) (201.1 ) Other current liabilities (547.3 ) (564.6 ) Total current liabilities (930.8 ) (952.0 ) Total working capital $ 1,375.8 $ 1,264.9 $94.1$164.0 million as of September 30, 2017,June 29, 2019, increased $16.5$23.1 million from 20162018year-end levels primarily due toto: (i) $528.9$383.5 million of cash from collections of finance receivables; (ii) $415.0$346.8 million of cash generated from operations, including $14.9 million of cash proceeds from the first-quarter 2017 settlement of a treasury lock;operations; and (iii) $297.8 million of net proceeds from the February 15, 2017 issuance of $300 million of unsecured 3.25% notes that mature on March 1, 2027 (the “2027 Notes”); (iv) $51.0 million of net proceeds from notes payable and other short-term borrowings; and (v) $36.2$24.6 million of cash proceeds from stock purchase and option plan exercises. These increases in cash and cash equivalents were partially offset byby: (i) the funding of $670.0$431.1 million of new finance receivables; (ii) the repurchase of 1,348,000660,000 shares of the company’s common stock for $212.6$107.5 million; (iii) the January 2017 repayment of $150 million of long-term notes at maturity (the “2017 Notes”); (iv) dividend payments to shareholders of $123.0$105.3 million; (v)(iv) the funding of $82.9$48.2 million for acquisitions;of capital expenditures; (v) $18.2 million of repayments of notes payable and other short-term borrowings; and (vi) the funding of $57.3$9.3 million of capital expenditures.SNAP-ON INCORPORATEDMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS(continued)$94.1$164.0 million of cash and cash equivalents as of September 30, 2017, $76.7June 29, 2019, $144.9 million was held outside of the United States.Snap-on Snap‑on maintainsnon-U.S. funds in its foreign operations to: (i) provide adequate working capital; (ii) satisfy various regulatory requirements; and/or (iii) take advantage of business expansion opportunities as they arise. The repatriationAlthough the Tax Act generally eliminated U.S. federal taxation of cashdividends from certain foreign subsidiaries, could have adverse net tax consequences on the company shouldSnap-onsuch dividends may still be requiredsubject to pay and record U.S.state income taxestaxation and foreign withholding taxes on such funds. Alternatively, the repatriation of cash from certain other foreign subsidiaries could result in favorable net tax consequences for the company.taxes. Snap-on periodically evaluates its cash held outside the United States and may pursue opportunities to repatriate certain foreign cash amounts to the extent that it does not incur unfavorable net tax consequences.$675.2$684.1 million as of September 30, 2017, increased $76.4June 29, 2019, decreased $8.5 million from 20162018year-end levels primarily due to higher sales, $22.2improved collections, partially offset by $1.9 million of foreign currency translation and $9.1$0.7 million of receivables related to the Norbar, BTC and TCS acquisitions.Power Hawk acquisition. Days sales outstanding (trade and other accounts receivable – net as of the respective period end, divided by the respective trailing 12 months sales, times 360 days) was 66 days at June 29, 2019, and 67 days at September 30, 2017, and 63 days at December 31, 2016.$605.6$620.5 million as of September 30, 2017,June 29, 2019, compared to $560.6$616.8 million at 20162018 year end. The long-term portions of net finance and contract receivables of $1,329.0$1,436.5 million as of September 30, 2017,June 29, 2019, compared to $1,221.2$1,419.3 million at 20162018 year end. The combined $152.8$20.9 million increase in net current and long-term finance and contract receivables over 20162018year-end levels is primarily due to continued growth of the company’s financial services portfolio and $20.0$2.8 million of foreign currency translation. $649.9$725.8 million as of September 30, 2017,June 29, 2019, increased $119.4$52.0 million from 20162018year-end levels primarily due to continued support continuedfor higher customer demand and new product introductions, as well as from $24.1 million of foreign currency translation and $6.0$0.6 million of inventories related to the NorbarPower Hawk acquisition and TCS acquisitions.$0.3 million of foreign currency translation. Inventory turns (trailing 12 months of cost of goods sold, divided by the average of the beginning and ending inventory balance for the trailing 12 months) were 3.12.7 turns and 3.32.9 turns as of September 30, 2017,June 29, 2019, and December 31, 2016,29, 2018, respectively. Inventories accounted for using thefirst-in,first-out (“FIFO”) method approximated 60% and 59%61% of total inventories as of September 30, 2017,June 29, 2019, and December 31, 2016,29, 2018, respectively. All other inventories are accounted for using thelast-in,first-out (“LIFO”) method. The company’s LIFO reserve was $74.4$81.4 million and $73.2$78.4 million as of September 30, 2017,June 29, 2019, and December 31, 2016,29, 2018, respectively.and current maturities of long-term debt of $453.4$168.2 million as of September 30, 2017,June 29, 2019, included $250 million of the 2018 Notes, $170$154.6 million of commercial paper borrowings and $33.4$13.6 million of other notes. As of 20162018 year end, notes payable and current maturities of long-term debt of $301.4$186.3 million included $150 million of the 2017 Notes (that were repaid upon maturity in January 2017), $130$177.1 million of commercial paper borrowings and $21.4$9.2 million of other notes. As of 2016 year end, the 2018 Notes were included in “Long-term debt” on the accompanying Condensed Consolidated Balance Sheets as their scheduled maturity was in excess of one year of the 2016year-end balance sheet date.$204.7$215.3 million as of September 30, 2017,June 29, 2019, increased $33.8$14.2 million from 20162018year-end levels primarily due to the timing of payments and $6.5 millionpayments. foreign currency translation. Other accrued liabilities of $366.0$947.9 million as of September 30, 2017, increased $58.1 million from 2016year-end levels primarily due to higher income tax accruals, the $15.0 million legal charge and $10.3 million of foreign currency translation.SNAP-ON INCORPORATEDMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS(continued)Long-term debt of $755.0 million as of September 30, 2017,ofof: (i) $200 million of unsecured 6.70% notes that mature in 2019; (ii) $250 million of unsecured 6.125% notes that mature in 2021;2021 (the “2021 Notes”); (ii) $300 million of unsecured 3.25% notes that mature in 2027 (the”2027 Notes”); and (iii) $400 million of unsecured 4.10% notes that mature in 2048 (the “2048 Notes”), partially offset by $2.1 million from the net effects of debt amortization costs and fair value adjustments of interest rate swaps. Long-term debt of $946.0 million as of 2018 year end consisted of: (i) $250 million of the 2021 Notes; (ii) $300 million of the 2027 Notes; and (iv) $5.0 million of other long-term debt. Long-term debt of $708.8 million as of 2016 year end consisted of (i) $250(iii) $400 million of the 2018 Notes; (ii) $2002048 Notes, partially offset by $4.0 million from the net effects of unsecured 6.70% notes that mature in 2019; (iii) $250 milliondebt amortization costs and fair value adjustments of unsecured 6.125% notes that mature in 2021; and (iv) $8.8 million of other long-term debt. As of 2016 year end, the 2018 Notes were included in “Long-term debt” on the accompanying Consolidated Balance Sheets as their scheduled maturity was in excess of one year of the 2016year-end balance sheet date; the 2027 Notes were issued in February 2017.as of September 30, 2017, no amounts were outstanding under the Credit Facility.Facility as of June 29, 2019. Borrowings under the Credit Facility bear interest at varying rates based onSnap-on’s then-current, long-term debt ratings. The Credit Facility’s financial covenant requires thatSnap-on maintain, as of each fiscal quarter end, either (i) a ratio not greater than 0.60 to 1.00 of consolidated net debt (consolidated debt net of certain cash adjustments) to the sum of such consolidated net debt plus total equity and less accumulated other comprehensive income or loss (the “Debt Ratio”); or (ii) a ratio not greater than 3.50 to 1.00 of such consolidated net debt to earnings before interest, taxes, depreciation, amortization and certain other adjustments for the preceding four fiscal quarters then ended (the “Debt to EBITDA Ratio”).Snap-on may, up to two times during any five-year period during the term of the Credit Facility (including any extensions thereof), increase the maximum Debt Ratio to 0.65 to 1.00 and/or increase the maximum Debt to EBITDA Ratio to 3.75 to 1.00 for four consecutive fiscal quarters in connection with certain material acquisitions (as defined in the related credit agreement). As of September 30, 2017,June 29, 2019, the company’s actual ratios of 0.260.21 and 1.16,0.95, respectively, were both within the permitted ranges set forth in this financial covenant.Snap-on generally issues commercial paper to fund its financing needs on a short-term basis and uses the Credit Facility asback-up liquidity to support such commercial paper issuances.September 30, 2017,June 29, 2019, Snap-on was in compliance with all covenants of its Credit Facility and other debt agreements.basis, including the repayment of the 2018 Notes upon maturity.basis. Snap-on manages its aggregate short-term borrowings so as not to exceed its availability under the revolving Credit Facility.Snap-on believes that it can access short-term debt markets, predominantly through commercial paper issuances and existing lines of credit, to fund its short-term requirements and to ensure near-term liquidity.Snap-on regularly monitors the credit and financial markets and may take advantage of what it believes are favorable market conditions to issue long-term debt to further improve its liquidity and capital resources. Near-term liquidity requirements forSnap-on include scheduled debt payments, (including the repayment of the 2018 Notes), payments of interest and dividends, funding to support new receivables originated by our financial services businesses, capital expenditures, working capital, the funding of pension plans, and funding for share repurchases and acquisitions, if and as they arise.Snap-on intends to make contributions of $7.1$9.4 million to its foreign pension plans and $2.3$2.0 million to its domestic pension plans in 2017,2019, as required by law. In the first ninesix months of 2017,2019, Snap-on made $60.0$25.0 million of discretionary cash contributions to its domestic pension plans; depending on market and other conditions,Snap-on Snap‑on may make additional discretionary cash contributions to its pension plans in the balance of 2017.$415.0$346.8 million and $415.6$418.8 million in the first ninesix months of 20172019 and 2016,2018, respectively. The $0.6$72.0 million year-over-year decrease in net cash provided by operating activities primarily reflects a decrease of $94.0 million from net changes in operating assets and liabilities, partially offset by $17.5 million of higher net earnings and $14.9 million of cash proceeds from the settlement of a treasury lock.SNAP-ON INCORPORATEDMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS(continued)$282.4$103.9 million in the first ninesix months of 20172019 included additions to finance receivables of $670.0$431.1 million, partially offset by collections of $528.9$383.5 million. Net cash used by investing activities of $244.1$100.8 million in the first ninesix months of 20162018 included additions to finance receivables of $691.4$436.7 million, partially offset by collections of $501.7$379.9 million. Finance receivables are comprised of extended-term installment payment contracts to both technicians and independent shop owners (i.e., franchisees’ customers) to enable them to purchase tools and diagnostic and equipment products on an extended-term payment plan, generally with average payment terms approachingof approximately four years.ninesix months of 20172019 and 2018 also included a total of $82.9$9.3 million (net of $1.8and $3.0 million of cash acquired) for acquisitions. See Note 23 to the Consolidated Financial Statements for information onabout acquisitions.$57.3$48.2 million and $56.6$38.6 million in the first ninesix months of 20172019 and 2016,2018, respectively. Capital expenditures in both years included continued investments related to the company’s execution of its strategic Value Creation Processes around safety, quality, customer connection, innovation and Rapid Continuous Improvement.$119.5$220.7 million in the first ninesix months of 20172019 included the $150 million repaymentrepayments of the 2017 Notes at maturity, and the other items discussed below. These amounts were partially offset bySnap-on’s sale, on February 15, 2017, of $300 million of the 2027 Notes at a discount, from whichSnap-on received $297.8 million of net proceeds, reflecting $1.9 million of transaction costs, and $51.0 million of net proceeds from notes payable and other short-term borrowings.borrowings of $18.2 million. Net cash used by financing activities was $146.8of $295.8 million in the first ninesix months of 2016. 2018 included repayments of long-term debt and notes payable and other short-term borrowings, offset by the proceeds from the issuance of the 2048 Notes. $36.2$24.6 million and $32.4$28.3 million in the respective first ninesix months of 20172019 and 2016.2018. Snap-on has undertaken stock repurchases from time to time to offset dilution created by shares issued for employee and franchisee stock purchase plans, and stock options as well as forand other corporate purposes. In the first ninesix months of 2017,Snap-on2019, Snap‑on repurchased 1,348,000660,000 shares of its common stock for $212.6$107.5 million under its previously announced share repurchase programs, including the up to $500 million share repurchase program approved by the Board of Directors (the “Board”) on August 3, 2017.February 14, 2019. The 20172019 share repurchase program replaced the company’s 1998 and 19992017 share repurchase programs;program, under which $206 million of authorization remained at the company’s 1996 repurchase program remains unchanged.time of its replacement. In the first ninesix months of 2016,2018, Snap-on repurchased 492,000646,000 shares of its common stock for $76.4$98.7 million under its previously announced share repurchase programs. As of September 30, 2017,June 29, 2019, Snap-on had remaining availability to repurchase up to an additional $438.8$445.3 million in common stock pursuant to its BoardBoard’s authorizations.2017.$123.0$105.3 million and $106.3$92.8 million in the first ninesix months of 20172019 and 2016,2018, respectively. On November 3, 2016,8, 2018, the Board increased the quarterly cash dividend by 16.4%15.9% to $0.71$0.95 per share ($2.843.80 per share annualized).Snap-on believes that its cash generated from operations, available cash on hand, and funds available from its credit facilities, will be sufficient to pay dividends in the balance of 2017. SNAP-ON INCORPORATEDMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS(continued)September 30, 2017.June 29, 2019.31, 2016,29, 2018, have not materially changed since that report was filed.20172019 along its defined runways for coherent growth, leveraging capabilities already demonstrated in the automotive repair arena and developing and expanding its professional customer base, not only in automotive repair, but in adjacent markets, additional geographies and other areas, including extending in critical industries, where the cost and penalties for failure can be high. In pursuit of these initiatives,Snap-on expects that capital expenditures in 20172019 will be in a range of $80$90 million to $90$100 million, of which $57.3$48.2 million was expended in the first nine months.six months of the year. Snap-on also anticipates that its full year 20172019 effective income tax rate will be comparable to its 2016 full year rate.2018 rate of 24.0%.Snap-on Snap‑on is exposed to market risk from changes in interest rates and foreign currency exchange rates, including as a result of the weakening of the British poundvis-à-vis the U.S. dollar following the United Kingdom’s vote to exit from the European Union.rates. Snap-on is also exposed to market risk associated with the stock-based portion of its deferred compensation plans.Snap-on monitors its exposure to these risks and attempts to manage the underlying economic exposures through the use of financial instruments such as foreign currency forward contracts, interest rate swap agreements, treasury lock agreements and prepaid equity forward agreements (“equity forwards”).Snap-on does not use derivative instruments for speculative or trading purposes.Snap-on’s broad-based business activities help to reduce the impact that volatility in any particular area or related areas may have on its operating earnings as a whole.Snap-on’s management takes an active role in the risk management process and has developed policies and procedures that require specific administrative and business functions to assist in the identification, assessment and control of various risks.(variance/ (variance/co-variance technique). These inter-relationships were determined by observing interest rate and foreign currency market changes over the preceding quarter.September 30, 2017,June 29, 2019, was $1.8$9.3 million on interest rate-sensitive financial instruments and $0.5$0.1 million on foreign currency-sensitive financial instruments. The VAR model is a risk management tool and does not purport to represent actual losses in fair value that will be incurred bySnap-on, nor does it consider the potential effect of favorable changes in market factors.CreditFinancial receivable credit risk is also monitored regularly through the use of internal proprietary custom scoring models to evaluate each transaction at the time of the application for credit and by periodically updating those credit scores for ongoing monitoring purposes.credit. Snap-on evaluates credit quality through the use of an internal proprietary measuring system that provides a framework to analyze finance and contract receivables on the basis of risk factors of the individual obligor as well as transaction specific risk. The finance and contract receivables are typically monitored through an asset quality review process that closely monitors past due accounts and initiates a progressive collection action process when appropriate. Snap-on’s Snap‑on’s financial reports and to other members of senior management and the Board, as appropriate.September 30, 2017.June 29, 2019. Based upon their evaluation of these disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of September 30, 2017,June 29, 2019, to ensure that information required to be disclosed by the company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange Commission rules and forms, and to ensure that information required to be disclosed by the company in the reports it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.September 30, 2017,June 29, 2019, that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting (as such term is defined in Exchange Act Rules13a-15(f) and15d-15(f)).thirdsecond quarter of fiscal 2017,2019, all of which were purchased pursuant to the Board’s authorizations that the company has publicly announced.Snap-on has undertaken stock repurchases from time to time to offset dilution created by shares issued for employee and franchisee stock purchase plans stock options and equity plans, and for other corporate purposes, as well as when the company believes market conditions are favorable. The repurchase ofSnap-on common stock is at the company’s discretion, subject to prevailing financial and market conditions. Shares
purchased Average
price
per share Shares
purchased as part of
publicly announced
plans or programs Approximate
value of shares
that may yet be
purchased under
publicly
announced plans
or programs* 07/02/17 to 07/29/17 90,000 $ 151.12 90,000 $ 131.2 million 07/30/17 to 08/26/17 390,000 $ 150.16 390,000 $ 456.4 million 08/27/17 to 09/30/17 123,000 $ 146.05 123,000 $ 438.8 million 603,000 $ 149.46 603,000 N/A N/A: Not applicablePeriod 03/31/19 to 04/27/19 100,000 $169.30 100,000 $469.0 million 04/28/19 to 05/25/19 230,073 $164.19 230,073 $444.7 million 05/26/19 to 06/29/19 34,927 $156.31 34,927 $445.3 million Total/Average 365,000 $164.83 365,000 N/A *Subject to further adjustment pursuant to the 1996 Authorization described below, as of September 30, 2017, the approximate value of shares that may yet be purchased pursuant to the outstanding Board authorizations discussed below is $438.8 million.N/A: Not applicable (“the 1996(the “1996 Authorization”). The 1996 Authorization allows the repurchase of up to the number of shares issued or delivered from treasury from time to time under the various plans the company has in place that call for the issuance of the company’s common stock. Because the number of shares that are purchased pursuant to the 1996 Authorization will change from time to time as (i) the company issues shares under its various plans; and (ii) shares are repurchased pursuant to this authorization, the number of shares authorized to be repurchased will vary from time to time. The 1996 Authorization will expire when terminated by the Board. When calculating the approximate value of shares that the company may yet purchase under the 1996 Authorization, the company assumed a price of $152.43, $144.91$169.77, $158.30 and $149.01$165.64 per share of common stock as of the end of the respective fiscal 20172019 months ended JulyApril 27, 2019, May 25, 2019, and June 29, 2017, August 26, 2017, and September 30, 2017.2019.August 3, 2017,February 14, 2019, the Board authorized the repurchase of an aggregate of up to $500 million of the company’s common stock (“the 2017(the “2019 Authorization”). The 20172019 Authorization will expire when the aggregate repurchase price limit is met, unless terminated earlier by the Board. The 2017 Authorization replaced both the 1998 $100 million authorization and the 1999 $50 million authorization, as discussed in “Item 2; Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” above.thirdsecond quarter of 20172019 pursuant to a prepaid equity forward agreement (the “Agreement”) with Citibank that is intended to reduce the impact of market risk associated with the stock-based portion of the company’s deferred compensation plans. The company’s stock-based deferred compensation liabilities, which are impacted by changes in the company’s stock price, increase as the company’s stock price rises and decrease as the company’s stock price declines. Pursuant to the Agreement, Citibank may purchase or sell shares of the company’s common stock (for Citibank’s account) in the market or in privately negotiated transactions. The Agreement has no stated expiration date and does not provide forSnap-on to purchase or repurchase its shares.Citibank Purchases of Snap-on Stock Period 03/31/19 to 04/27/19 — — 04/28/19 to 05/25/19 — — 05/26/19 to 06/29/19 800 $163.92 Total/Average 800 $163.92 Citibank Purchases ofSnap-on Stock Shares
purchased Average
price
per share 07/02/17 to 07/29/17 – – 07/30/17 to 08/26/17 – – 08/27/17 to 09/30/17 12,500 $ 144.50 12,500 $ 144.50 Exhibit 10.1Item 6: Exhibits Snap-on Incorporated 2011 Incentive Stock and Awards Plan (As Amended and Restated) *Exhibit 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.2002Exhibit 31.2 Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.2002Exhibit 32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.2002Exhibit 32.2 Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.2002Exhibit 101.INS XBRL Instance Document**Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL documentExhibit 101.SCH XBRL Taxonomy Extension Schema Document**DocumentExhibit 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document**DocumentExhibit 101.DEF XBRL Taxonomy Extension Definition Linkbase Document**DocumentExhibit 101.LAB XBRL Taxonomy Extension Label Linkbase Document**DocumentExhibit 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document**Document*Reflectsnon-material changes**Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Statements of Earnings for the three and nine months ended September 30, 2017, and October 1, 2016; (ii) Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2017, and October 1, 2016; (iii) Condensed Consolidated Balance Sheets as of September 30, 2017, and December 31, 2016; (iv) Condensed Consolidated Statements of Equity for the nine months ended September 30, 2017, and October 1, 2016; (v) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2017, and October 1, 2016; and (vi) Notes to Condensed Consolidated Financial Statements. October 19, 2017July 18, 2019 /s//s/ Aldo J. Pagliari 62