| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
June 27, 2020
| ☐ | 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) | ||||||||||||||||||||||
| 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 | ☐ | ||||||||||||||||||||||
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| Class | Outstanding at July 24, 2020 | |||||||||||
| Common Stock, $1.00 par value | 54,466,147 shares | |||||||||||
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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 27, 2020: 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 segments. Intersegment amounts are eliminated to arrive at Snap-on’s consolidated financial results. See Note Receivable: Trade and other accounts receivable Allowances for doubtful accounts Total trade and other accounts receivable – net Receivables: 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 Removal from delinquent status occurs when the cumulative amount of monthly contractual payments then due have 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 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 Amortized other intangible assets: Customer relationships Developed technology Internally developed software Patents Trademarks Other Total Non-amortized trademarks Total other intangible assets Customer relationships Developed technology Patents Trademarks Other 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 item. 28, 2019. 28, 2019. 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 29, 2019. Options: 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 June 29, 2019. Awards: 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 June 29, 2019. Expected term of cash-settled SARs(in years) Expected volatility factor Expected dividend yield Risk-free interest rate model: June 29, 2019. Non-vested cash-settled SARs at December 31, 2016 Granted Vested Non-vested cash-settled SARs at September 30, 2017 Directors: 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 27, 2020: 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 27, 2020: 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 29, 2019: 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 29, 2019: 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 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. volumes. 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. External net sales Intersegment net sales Segment net sales Cost of goods sold Gross profit Operating expenses Segment operating earnings direct costs associated with COVID-19. These costs were partially offset by savings from cost containment actions. External net sales Intersegment net sales Segment net sales Cost of goods sold Gross profit Operating expenses Segment operating earnings 2019. material cost savings and by RCI initiatives. cost containment actions. 2020 compared to 14.5% in 2019. Segment net sales Cost of goods sold Gross profit Operating expenses Segment operating earnings sales volumes, 30 bps of direct costs associated with COVID-19 and 20 bps from $0.6 million of restructuring actions in Europe, partially offset by savings from cost containment actions. Segment net sales Cost of goods sold Gross profit Operating expenses Segment operating earnings cost containment actions. External net sales Intersegment net sales Segment net sales Cost of goods sold Gross profit Operating expenses Segment operating earnings managers. direct COVID-19-related costs. External net sales Intersegment net sales Segment net sales Cost of goods sold Gross profit Operating expenses Segment operating earnings managers. savings from cost containment actions and RCI initiatives. Financial services revenue Financial services expenses Segment operating earnings 1.1% in 2019. Financial services revenue Financial services expenses Segment operating earnings 2.2% in 2019. 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 28, 2019: for acquisitions. 28, 2019. 28, 2019. interest rate swaps. 2020. earnings. RCI. The lower capital spending as compared to the prior year was a result of decreased expenditures as a result of the economic uncertainty related to the COVID-19 pandemic. $18.2 million. any. dividends. June 27, 2020. incurred in the first six months of the year. assurances, especially in the current environment. Period Total/Average * Subject to further adjustment pursuant to the 1996 Authorization described below, as of June 27, 2020, 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 Officer 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 27, 2020 June 29, 2019 June 27, 2020 June 29, 2019 Net sales $ 724.3 $ 951.3 $ 1,576.5 $ 1,873.0 Cost of goods sold (383.1) (477.5) (813.7) (927.6) Gross profit 341.2 473.8 762.8 945.4 Operating expenses (250.1) (283.9) (532.8) (568.1) Operating earnings before financial services 91.1 189.9 230.0 377.3 Financial services revenue 84.6 84.1 170.5 169.7 Financial services expenses (27.0) (23.5) (56.0) (47.0) Operating earnings from financial services 57.6 60.6 114.5 122.7 Operating earnings 148.7 250.5 344.5 500.0 Interest expense (13.4) (12.4) (24.8) (24.9) Other income (expense) – net 2.0 2.1 3.5 3.6 Earnings before income taxes and equity earnings 137.3 240.2 323.2 478.7 Income tax expense (31.9) (55.6) (75.8) (112.5) Earnings before equity earnings 105.4 184.6 247.4 366.2 Equity earnings, net of tax 0.5 0.3 0.5 0.8 Net earnings 105.9 184.9 247.9 367.0 Net earnings attributable to noncontrolling interests (4.7) (4.5) (9.5) (8.7) Net earnings attributable to Snap-on Incorporated $ 101.2 $ 180.4 $ 238.4 $ 358.3 Net earnings per share attributable to Snap-on Incorporated: Basic $ 1.86 $ 3.27 $ 4.37 $ 6.47 Diluted 1.85 3.22 4.34 6.38 Weighted-average shares outstanding: Basic 54.4 55.2 54.5 55.4 Effect of dilutive securities 0.4 0.8 0.4 0.8 Diluted 54.8 56.0 54.9 56.2 Dividends declared per common share $ 1.08 $ 0.95 $ 2.16 $ 1.90 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 27, 2020 June 29, 2019 June 27, 2020 June 29, 2019 Comprehensive income (loss): Net earnings $ 105.9 $ 184.9 $ 247.9 $ 367.0 Other comprehensive income (loss): Foreign currency translation* 87.8 (8.4) (20.2) (0.8) Unrealized cash flow hedges, net of tax: Other comprehensive income before reclassifications 1.4 — 1.4 — Reclassification of cash flow hedges to net earnings (0.4) (0.3) (0.8) (0.7) Defined benefit pension and postretirement plans: Amortization of net unrecognized losses and prior service credits included in net periodic benefit cost 8.8 5.9 17.2 11.7 Income tax benefit (2.1) (1.5) (4.1) (2.8) Net of tax 6.7 4.4 13.1 8.9 Total comprehensive income $ 201.4 $ 180.6 $ 241.4 $ 374.4 Comprehensive income attributable to noncontrolling interests (4.7) (4.5) (9.5) (8.7) Comprehensive income attributable to Snap-on Incorporated $ 196.7 $ 176.1 $ 231.9 $ 365.7 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 27,
2020December 28,
2019ASSETS Current assets: Cash and cash equivalents $ 686.2 $ 184.5 Trade and other accounts receivable – net 563.5 694.6 Finance receivables – net 508.5 530.1 Contract receivables – net 97.7 100.7 Inventories – net 784.0 760.4 Prepaid expenses and other assets 132.5 110.2 Total current assets 2,772.4 2,380.5 Property and equipment: Land 31.8 31.9 Buildings and improvements 408.7 405.1 Machinery, equipment and computer software 998.5 988.0 1,439.0 1,425.0 Accumulated depreciation and amortization (929.6) (903.5) Property and equipment – net 509.4 521.5 Operating lease right-of-use assets 50.2 55.6 Deferred income tax assets 47.1 52.3 Long-term finance receivables – net 1,140.3 1,103.5 Long-term contract receivables – net 366.9 360.1 Goodwill 924.5 913.8 Other intangibles – net 241.0 243.9 Other assets 61.7 62.3 Total assets $ 6,113.5 $ 5,693.5 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 27,
2020December 28,
2019LIABILITIES AND EQUITY Current liabilities: Notes payable $ 12.1 $ 202.9 Accounts payable 186.2 198.5 Accrued benefits 48.5 53.3 Accrued compensation 63.9 53.9 Franchisee deposits 83.3 68.2 Other accrued liabilities 435.4 370.8 Total current liabilities 829.4 947.6 Long-term debt 1,436.7 946.9 Deferred income tax liabilities 67.5 69.3 Retiree health care benefits 32.2 33.6 Pension liabilities 109.0 122.1 Operating lease liabilities 33.4 37.5 Other long-term liabilities 96.7 105.7 Total liabilities 2,604.9 2,262.7 Commitments and contingencies (Note 15) Equity Shareholders’ equity attributable to Snap-on Incorporated: — — 67.4 67.4 Additional paid-in capital 383.1 379.1 Retained earnings 4,894.2 4,779.7 Accumulated other comprehensive loss (514.4) (507.9) (1,343.6) (1,309.2) Total shareholders’ equity attributable to Snap-on Incorporated 3,486.7 3,409.1 Noncontrolling interests 21.9 21.7 Total equity 3,508.6 3,430.8 Total liabilities and equity $ 6,113.5 $ 5,693.5 ninethree 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
StockAdditional
Paid-in
CapitalRetained
EarningsAccumulated
Other
Comprehensive
Income (Loss)Treasury
StockNoncontrolling
InterestsTotal
EquityBalance at March 28, 2020 $ 67.4 $ 378.4 $ 4,852.0 $ (609.9) $ (1,356.6) $ 22.1 $ 3,353.4 Net Earnings for the three months ended June 27, 2020 — — 101.2 — — 4.7 105.9 Other comprehensive income — — — 95.5 — — 95.5 Cash dividends – $1.08 per share — — (58.7) — — — (58.7) Stock compensation plans — 4.7 — — 13.0 — 17.7 Other — — (0.3) — — (4.9) (5.2) Balance at June 27, 2020 $ 67.4 $ 383.1 $ 4,894.2 $ (514.4) $ (1,343.6) $ 21.9 $ 3,508.6 Shareholders’ Equity Attributable to Snap-on Incorporated Common
StockAdditional
Paid-in
CapitalRetained
EarningsAccumulated
Other
Comprehensive
LossTreasury
StockNoncontrolling
InterestsTotal
EquityBalance at December 28, 2019 $ 67.4 $ 379.1 $ 4,779.7 $ (507.9) $ (1,309.2) $ 21.7 $ 3,430.8 Impact of adopting the Credit Loss Standard (ASU No. 2016-13) — — (6.1) — — — (6.1) Balance at December 29, 2019 67.4 379.1 4,773.6 (507.9) (1,309.2) 21.7 3,424.7 Net Earnings for the six months ended June 27, 2020 — — 238.4 — — 9.5 247.9 Other comprehensive loss — — — (6.5) — — (6.5) Cash dividends – $2.16 per share — — (117.7) — — — (117.7) Stock compensation plans — 4.0 — — 16.1 — 20.1 Share repurchases – 349,000 shares — — — — (50.5) — (50.5) Other — — (0.1) — — (9.3) (9.4) Balance at June 27, 2020 $ 67.4 $ 383.1 $ 4,894.2 $ (514.4) $ (1,343.6) $ 21.9 $ 3,508.6 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
StockAdditional
Paid-in
CapitalRetained
EarningsAccumulated
Other
Comprehensive
LossTreasury
StockNoncontrolling
InterestsTotal
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
StockAdditional
Paid-in
CapitalRetained
EarningsAccumulated
Other
Comprehensive
Income (Loss)Treasury
StockNoncontrolling
InterestsTotal
EquityBalance at December 29, 2018 $ 67.4 $ 359.4 $ 4,257.6 $ (462.2) $ (1,123.4) $ 19.8 $ 3,118.6 — — 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 Six Months Ended June 27,
2020June 29,
2019Operating activities: Net earnings $ 247.9 $ 367.0 Adjustments to reconcile net earnings to net cash provided (used) by operating activities: Depreciation 36.2 34.8 Amortization of other intangibles 11.4 10.8 Provision for losses on finance receivables 31.4 24.4 Provision for losses on non-finance receivables 11.7 8.7 Stock-based compensation expense 6.9 14.1 Deferred income tax provision (benefit) (1.9) 12.4 Loss on sales of assets 0.2 0.6 Settlement of treasury lock 1.4 — Changes in operating assets and liabilities, net of effects of acquisitions: Trade and other accounts receivable 112.5 3.9 Contract receivables (11.8) 3.0 Inventories (32.0) (52.8) Prepaid and other assets (18.1) (27.0) Accounts payable (8.1) 16.6 Accruals and other liabilities 79.3 (69.7) Net cash provided by operating activities 467.0 346.8 Investing activities: Additions to finance receivables (414.6) (431.1) Collections of finance receivables 357.5 383.5 Capital expenditures (29.0) (48.2) Acquisitions of businesses, net of cash acquired (6.1) (9.3) Disposals of property and equipment 0.9 0.4 Other (4.1) 0.8 Net cash used by investing activities (95.4) (103.9) Financing activities: Proceeds from issuance of long-term debt 489.9 — Net decrease in other short-term borrowings (190.0) (18.2) Cash dividends paid (117.7) (105.3) Purchases of treasury stock (50.5) (107.5) Proceeds from stock purchase and option plans 13.8 24.6 Other (13.1) (14.3) Net cash provided (used) by financing activities 132.4 (220.7) Effect of exchange rate changes on cash and cash equivalents (2.3) 0.9 Increase in cash and cash equivalents 501.7 23.1 Cash and cash equivalents at beginning of year 184.5 140.9 Cash and cash equivalents at end of period $ 686.2 $ 164.0 Supplemental cash flow disclosures: Cash paid for interest $ (21.6) $ (23.4) Net cash paid for income taxes (27.4) (92.2) wholly-ownedwholly owned and majority-owned subsidiaries (collectively,“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 2019 Annual Report on Form10-K for the fiscal year ended December 31, 201628, 2019 (“20162019 year end”). , as updated below.20172020 fiscal thirdyear, which ends on January 2, 2021, will contain 53 weeks of operating results, with the additional week occurring in the fourth quarter. The company’s 2019 fiscal year contained 52 weeks of operating results. Snap-on’s 2020 fiscal second quarter ended on September 30, 2017;June 27, 2020; the 20162019 fiscal thirdsecond quarter ended on October 1, 2016.June 29, 2019. The company’s 20172020 and 20162019 fiscal first, 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 September 30, 2017,June 27, 2020, and October 1, 2016,June 29, 2019, have been made. Interim results of operations are not necessarily indicative of the results to be expected for the full fiscal year.910 for further information on financial instruments.New Accounting StandardsThe 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 valueand related impacts on adoption, are being evaluatedwere adopted by the company:In August 2017, the FASB issued ASUNo. 2017-12,Derivatives and Hedging (Topic 815) –Targeted Improvements to Accounting for Hedging Activities, which improves the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activitiesSnap-on in its financial statements. The amendments in this update also make certain targeted improvements to simplify the application of the hedge accounting guidance in current GAAP. ASUNo. 2017-12 is effective for fiscal years beginning afteryear 2020:15, 2018, including interim periods within those fiscal years; the ASU allows for early adoption 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 of29, 2019, the beginning of an annual periodSnap-on’s fiscal year, the company adopted ASU No. 2018-13, financial statements (interim or annual) have not been issued or made available for issuance.is designed to improve the effectiveness of disclosures by removing, modifying and adding disclosures related to fair value measurements. The amendments in this ASU are to be applied retrospectively. The company does not expect the adoption of this ASU todid not have a significantan impact on its consolidated income statement.In October 2016, the FASB issued ASUNo. 2016-16,Income Taxes (Topic 740) – Intra-Entity Transfers of Assets Other Than Inventory. The 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 ASU is effective for fiscal years beginning aftercompany’s Condensed Consolidated Financial Statements or disclosures.15, 2017, including interim periods within those fiscal years; early adoption is permitted as of29, 2019, 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.,Snap-on’s fiscal year, the first interim period if an entity issues interim financial statements). The amendments in thiscompany adopted 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 to have a significant impact on its the 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)In June 2016, the FASB issued ASUNo. 2016-13,–- Credit Losses (Topic 326), to requirewhich requires the measurement of expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. The main objective of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses onover the contractual life of financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.2019,2020, including interim periods within those fiscal years; thethis ASU allows for early adoption asin any interim period after issuance of the beginning of an interim or annual reporting period beginning after December 15, 2018.update. The company is currently assessing the impact this ASU will have on its consolidated financial statements.In February 2016, the FASB issued ASUNo. 2016-02,Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities 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 as of the beginning of an interim or annual reporting period. The company 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 customers 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 in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Topic 606 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments.Entities have the option of adopting this standard using either a full retrospective approach or a modified retrospective approach (i.e., through a cumulative-effect adjustment directly to retained earnings at the time of adoption).Snap-on commenced its assessment of Topic 606 during the second half of 2014 and developed a comprehensive project plan that included representatives from across the company’s business segments. The project plan included analyzing the standard’s impact on the company’s various revenue streams, comparing its historical accounting policies and practices to the requirements of the new standard, identifying potential differences from applying the requirements of the new standard to its contracts, and providing updates on implementation progress. The company is in the process of identifying and implementing appropriate changes to its business processes, systems and controls to support revenue recognition and disclosures under Topic 606. As of September 30, 2017, and subject to the company’s ongoing evaluation of new transactions and contracts, the company has substantially completed its evaluation of the expected impact of adopting Topic 606 and anticipates that the adoption of this standard willASU is not expected to have a significant impact on the company’s consolidated financial statements. The company believes thatadoption will result in the recognitionsale of an inventory assettools, diagnostic and equipment products and related to certain product returns by increasing the returns liability and an inventory asset for the anticipated valueservices based on when control of the returns;product passes to the corresponding increase incustomer or the inventory assetservice is provided and returns liability is recognized at an amount that reflects the consideration expected to be received in exchange for such goods or services.range of $24 million to $28 million atconsolidated revenues by revenue source:Three Months Ended Six Months Ended (Amounts in millions) June 27,
2020June 29,
2019June 27,
2020June 29,
2019Revenue from contracts with customers $ 718.4 $ 945.8 $ 1,565.0 $ 1,862.2 Other revenues 5.9 5.5 11.5 10.8 Total net sales 724.3 951.3 1,576.5 1,873.0 Financial services revenue 84.6 84.1 170.5 169.7 Total revenues $ 808.9 $ 1,035.4 $ 1,747.0 $ 2,042.7 date of adoption. The adoption will also result in the recognition of an increase in the inventory obsolescence reserve related to the anticipated value on returns in the range of $2 million to $3 million with a corresponding adjustment to beginning retained earnings.The company expects to adopt Topic 606 at the beginningperformance of its 2018 fiscal year usingoperating segments based on segment revenues, including both external and intersegment net sales, and segment operating earnings. Snap-on accounts for both intersegment sales and transfers based primarily on standard costs with reasonable mark-ups established between the modified retrospective approach.For the Three Months Ended June 27, 2020 Commercial Snap-on Repair Systems & Industrial Tools & Information Financial Snap-on (Amounts in millions) Group Group Group Services Eliminations Incorporated Net sales: North America* $ 96.9 $ 291.5 $ 148.5 $ — $ — $ 536.9 Europe 54.9 17.5 36.9 — — 109.3 All other 52.7 14.3 11.1 — — 78.1 External net sales 204.5 323.3 196.5 — — 724.3 Intersegment net sales 57.4 — 48.5 — (105.9) — Total net sales 261.9 323.3 245.0 — (105.9) 724.3 Financial services revenue — — — 84.6 — 84.6 Total revenue $ 261.9 $ 323.3 $ 245.0 $ 84.6 $ (105.9) $ 808.9 For the Six Months Ended June 27, 2020 Commercial Snap-on Repair Systems & Industrial Tools & Information Financial Snap-on (Amounts in millions) Group Group Group Services Eliminations Incorporated Net sales: North America* $ 205.8 $ 618.4 $ 325.8 $ — $ — $ 1,150.0 Europe 122.0 48.6 93.5 — — 264.1 All other 103.7 32.2 26.5 — — 162.4 External net sales 431.5 699.2 445.8 — — 1,576.5 Intersegment net sales 130.3 — 113.8 — (244.1) — Total net sales 561.8 699.2 559.6 — (244.1) 1,576.5 Financial services revenue — — — 170.5 — 170.5 Total revenue $ 561.8 $ 699.2 $ 559.6 $ 170.5 $ (244.1) $ 1,747.0 * 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: 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: 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 27, 2020 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 $ 20.0 $ 323.3 $ 196.5 $ — $ — $ 539.8 All other professionals 184.5 — — — — 184.5 External net sales 204.5 323.3 196.5 — — 724.3 Intersegment net sales 57.4 — 48.5 — (105.9) — Total net sales 261.9 323.3 245.0 — (105.9) 724.3 Financial services revenue — — — 84.6 — 84.6 Total revenue $ 261.9 $ 323.3 $ 245.0 $ 84.6 $ (105.9) $ 808.9 For the Six Months Ended June 27, 2020 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 $ 39.4 $ 699.2 $ 445.8 $ — $ — $ 1,184.4 All other professionals 392.1 — — — — 392.1 External net sales 431.5 699.2 445.8 — — 1,576.5 Intersegment net sales 130.3 — 113.8 — (244.1) — Total net sales 561.8 699.2 559.6 — (244.1) 1,576.5 Financial services revenue — — — 170.5 — 170.5 Total revenue $ 561.8 $ 699.2 $ 559.6 $ 170.5 $ (244.1) $ 1,747.0 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 2:3: AcquisitionsJuly 28, 2017,January 31, 2020, Snap-on acquired Torque Control Specialistsubstantially all of the assets related to the TreadReader product line from Sigmavision Limited (“TCS”Sigmavision”), 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$5.9 million. Sigmavision designs and calibratorsmanufactures handheld devices and drive-over ramps that provide tire information for use in critical industries.In the thirdautomotive industry. During the second quarter of 2017,2020, the company substantially completed the purchase accounting valuations for the acquired net assets of TCS.Sigmavision. The $1.9$5.6 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. For segment reporting purposes, the results of operations and assets of TCS have been included in the Commercial & Industrial Group since the acquisition date.May 4, 2017,August 7, 2019, Snap-on acquired Norbar Torque Tools HoldingCognitran Limited along with its U.S. and Chinese joint ventures (“Norbar”Cognitran”), for a cash purchase price of $71.6$30.6 million (or $69.9$29.6 million, net of cash acquired), which reflects. Cognitran, based in Chelmsford, United Kingdom, specializes in flexible, modular and highly scalable “Software as a $0.8 million working capital adjustment finalized inService” (SaaS) products for OEM customers and their dealers, focused on the thirdcreation and delivery of service, diagnostics, parts and repair information to OEM dealers and connected vehicle platforms. During the second 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.In2020, the third quarter of 2017, the company substantially completed the purchase accounting valuations for the acquired net assets of Norbar, including intangible assets.Cognitran. The $23.7$14.5 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.January 30, 2017,April 2, 2019, Snap-on acquired BTC Global LimitedPower Hawk Technologies, Inc. (“BTC”Power Hawk”) for a cash purchase price of $9.2$7.9 million. BTC,Power Hawk, based in Crewe, U.K.,Rockaway, New Jersey, designs, manufactures and implements automotive vehicle inspectiondistributes rescue tools and management softwarerelated equipment for original equipment manufacturer (“OEM”) franchise repair shops.In the second quartera variety of 2017, themilitary, governmental and fire, rescue and emergency operations. The company completed the purchase accounting valuations for the acquired net assets of BTC,Power Hawk, including intangible assets.assets, in the third quarter of 2019. The $5.9$6.4 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.BTCSigmavision, Cognitran and TMB have been included in the Repair Systems and& Information Group since the respective 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, manufacturesdates, 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 RichmontPower Hawk 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.Balance at Opening Balance at (Amounts in millions) December 28,
2019Topic 326 Adjustments December 29,
2019Current assets Finance receivables - allowance for credit losses $ (19.7) $ (1.7) $ (21.4) Contract receivables - allowance for credit losses (1.5) (0.5) (2.0) Long-term assets Finance receivables - allowance for credit losses (42.2) (3.5) (45.7) Contract receivables - allowance for credit losses (4.1) (2.4) (6.5) Total allowances for credit losses $ (67.5) $ (8.1) $ (75.6) Deferred income tax assets $ 52.3 $ 2.0 $ 54.3 Equity Retained Earnings $ 4,779.7 $ (6.1) $ 4,773.6 ReceivableSNAP-ON INCORPORATEDNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)(Unaudited)September 30, 2017,June 27, 2020, and December 31, 2016,28, 2019, 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 27,
2020December 28,
2019Trade and other accounts receivable $ 587.1 $ 715.5 Allowances for credit losses (23.6) (20.9) Total trade and other accounts receivable – net $ 563.5 $ 694.6 Three Months Ended Six Months Ended (Amounts in millions) June 27, 2020 June 27, 2020 Allowances for credit losses: Beginning of period $ 20.4 $ 20.9 Provision for credit losses 5.5 9.1 Charge-offs (2.4) (5.5) Recoveries — — Currency translation 0.1 (0.9) End of period $ 23.6 $ 23.6 Receivables 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. installment payment contracts to a broad base of customers worldwide, including shop owners, both independents and national chains, for their purchase of tools and diagnostic and equipment products. Contract receivables also includeproducts, as well as extended-term installment loanscontracts to franchisees to meet a number of financing needs, including working capital loans, loans to enable new franchisees to fund the purchase of the franchise and van leases.leases, or the expansion of an existing franchise. Finance and contract receivables are generally secured by the underlying tools and/or diagnostic or equipment products financed and, for installment loanscontracts to franchisees, other franchisee assets.September 30, 2017,June 27, 2020, and December 31, 2016,28, 2019, 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 27,
2020December 28,
2019Finance installment receivables $ 501.3 $ 511.9 Finance lease receivables, net of unearned finance charges of $8.1 million and $11.7 million, respectively 29.2 37.9 Total finance receivables 530.5 549.8 Contract installment receivables 49.0 50.8 Contract lease receivables, net of unearned finance charges of $17.9 million and $18.2 million, respectively 50.8 51.4 Total contract receivables 99.8 102.2 Total 630.3 652.0 Allowances for credit losses: Finance installment receivables (21.5) (19.2) Finance lease receivables (0.5) (0.5) Total finance allowance for credit losses (22.0) (19.7) Contract installment receivables (0.8) (0.5) Contract lease receivables (1.3) (1.0) Total contract allowance for credit losses (2.1) (1.5) Total allowance for credit losses (24.1) (21.2) Total current finance and contract receivables – net $ 606.2 $ 630.8 Finance receivables – net $ 508.5 $ 530.1 Contract receivables – net 97.7 100.7 Total current finance and contract receivables – net $ 606.2 $ 630.8 September 30, 2017,June 27, 2020, and December 31, 2016,28, 2019, 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 27,
2020December 28,
2019Finance installment receivables $ 1,160.1 $ 1,106.0 Finance lease receivables, net of unearned finance charges of $6.0 million and $8.2 million, respectively 30.7 39.7 Total finance receivables 1,190.8 1,145.7 Contract installment receivables 201.6 195.5 Contract lease receivables, net of unearned finance charges of $28.7 million and $29.4 million, respectively 172.3 168.7 Total contract receivables 373.9 364.2 Total 1,564.7 1,509.9 Allowances for credit losses: Finance installment receivables (50.0) (41.6) Finance lease receivables (0.5) (0.6) Total finance allowance for credit losses (50.5) (42.2) Contract installment receivables (3.3) (1.8) Contract lease receivables (3.7) (2.3) Total contract allowance for credit losses (7.0) (4.1) Total allowance for credit losses (57.5) (46.3) Total long-term finance and contract receivables – net $ 1,507.2 $ 1,463.6 Finance receivables – net $ 1,140.3 $ 1,103.5 Contract receivables – net 366.9 360.1 Total long-term finance and contract receivables – net $ 1,507.2 $ 1,463.6 Receivable balancesSnap-on conducts monthly reviews of credit and collection performance for both the finance and contract receivable portfolios focusing on data such as delinquency trends, nonaccrual receivables, and write-off and recovery activity. These reviews allow for the formulation of collection strategies and potential collection policy modifications in response to changing risk profiles in the finance and contract receivable portfolios. The other internal metrics include credit exposure by customer and delinquency classification to further monitor changing risk profiles. The company maintains a system that aggregates credit exposure and provides delinquency data by days past due aging categories. A receivable 30 days or more past due is considered delinquent. However, customers are monitored prior to becoming 30 days past due.(Amounts in millions) 2020 2019 2018 2017 2016 Prior Total Finance Receivables: Delinquent $ 1.5 $ 12.4 $ 8.4 $ 4.9 $ 2.3 $ 0.5 $ 30.0 Non-delinquent 780.8 563.7 225.7 89.7 28.3 3.1 1,691.3 Total Finance receivables $ 782.3 $ 576.1 $ 234.1 $ 94.6 $ 30.6 $ 3.6 $ 1,721.3 Contract receivables: Delinquent $ 0.1 $ 0.7 $ 0.8 $ 1.1 $ 0.5 $ 0.4 $ 3.6 Non-delinquent 100.6 143.1 98.3 63.9 32.6 31.6 470.1 Total Contract receivables $ 100.7 $ 143.8 $ 99.1 $ 65.0 $ 33.1 $ 32.0 $ 473.7 Three Months Ended
June 27, 2020Six Months Ended
June 27, 2020(Amounts in millions) Finance
ReceivablesContract
ReceivablesFinance
ReceivablesContract
ReceivablesAllowances for credit losses: Beginning of period $ 69.2 $ 8.6 $ 61.9 $ 5.6 Impact of adopting ASU No. 2016-13 — — 5.2 2.9 Provision for credit losses 15.1 1.2 31.4 2.6 Charge-offs (14.2) (0.9) (30.1) (2.2) Recoveries 2.2 0.2 4.2 0.2 Currency translation 0.2 — (0.1) — End of period $ 72.5 $ 9.1 $ 72.5 $ 9.1 Three Months Ended
June 29, 2019Six Months Ended
June 29, 2019(Amounts in millions) Finance Receivables Contract Receivables Finance Receivables Contract Receivables Allowances for credit losses: Beginning of period $ 61.0 $ 4.7 $ 61.4 $ 4.3 Provision for credit losses 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 (Amounts in millions) 30-59
Days Past
Due60-90
Days Past
DueGreater
Than 90
Days Past
DueTotal Past
DueTotal Not
Past DueTotal Greater
Than 90
Days Past
Due and
AccruingJune 27, 2020: Finance receivables $ 9.5 $ 5.0 $ 15.5 $ 30.0 $ 1,691.3 $ 1,721.3 $ 12.0 Contract receivables 1.2 0.7 1.7 3.6 470.1 473.7 0.3 December 28, 2019: Finance receivables $ 19.7 $ 12.0 $ 21.4 $ 53.1 $ 1,642.4 $ 1,695.5 $ 17.2 Contract receivables 1.5 0.9 1.5 3.9 462.5 466.4 0.5 Finance receivables that are considered nonperforming include receivables that are on nonaccrual status and receivables that are generally more than 90 days past due. Contract receivables that are considered nonperforming include receivables that are on nonaccrual status and receivables that are generally more than 90 days past due.Finance and contract receivables are evaluated for impairment on a collective basis. A receivable is impairedmay have credit losses when it is probableexpected that all amounts related to the receivable will not be collected according to the contractual terms of the applicable agreement. ImpairedSuch finance and contract receivables are covered by the company’s respective allowances for doubtful accountscredit losses and arecharged-off written-off against the allowances when appropriate. As of September 30, 2017, and December 31, 2016, there were $27.8 million and $24.9 million, respectively, of impaired finance receivables, and there were $2.2 million and $2.0 million, respectively, of impaired contract receivables.It is the general practice ofSnap-on’s financial services business to not engage in contract or loan modifications. In limited instances,Snap-on’s financial services business may modify certain impaired receivables in troubled debt restructurings. The amount and number of restructured finance and contract receivables as of September 30, 2017, and December 31, 2016, were immaterial to both the financial services portfolio and the company’s results of operations and financial position.SNAP-ON INCORPORATEDNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)(Unaudited)The aging of finance and contract receivables as of September 30, 2017, and December 31, 2016, 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 The amount of performing and nonperforming finance and contract receivables based on payment activity as of September 30, 2017, and December 31, 2016, 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 September 30, 2017,June 27, 2020, and December 31, 2016,28, 2019, is as follows:(Amounts in millions) September 30,
2017 December 31,
2016 $ 12.7 $ 11.7 1.5 1.5 The following is a rollforward(Amounts in millions) June 27,
2020December 28,
2019Finance receivables $ 9.8 $ 12.2 Contract receivables 2.3 2.2 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 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 27,
2020December 28,
2019Finished goods $ 679.4 $ 661.0 Work in progress 58.6 57.1 Raw materials 130.5 126.8 Total FIFO value 868.5 844.9 Excess of current cost over LIFO cost (84.5) (84.5) Total inventories – net $ 784.0 $ 760.4 60% and 59%58% of total inventories as of September 30, 2017,both June 27, 2020 and December 31, 2016, respectively.28, 2019. The company accounts for itsnon-U.S. inventory on the FIFO method. As of September 30, 2017,June 27, 2020, approximately 32%31% of the company’s U.S. inventory was accounted for using the FIFO method and 68%69% was accounted for using thelast-in,first-out (“LIFO”) method. There were no0 LIFO inventory liquidations in the three and ninesix months ended September 30, 2017,June 27, 2020, or October 1, 2016.June 29, 2019.5:6: Goodwill and Other Intangible Assetsninesix months ended September 30, 2017,June 27, 2020, 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) Commercial
& Industrial
GroupSnap-on
Tools GroupRepair Systems
& Information
GroupTotal Balance as of December 28, 2019 $ 286.2 $ 12.5 $ 615.1 $ 913.8 Currency translation 2.3 — (0.3) 2.0 Acquisitions and related adjustments — — 8.7 8.7 Balance as of June 27, 2020 $ 288.5 $ 12.5 $ 623.5 $ 924.5 $924.0$924.5 million as of September 30, 2017,June 27, 2020, includes (i) $77.7 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$5.6 million from the acquisition of BTC, (iv) $5.0 million fromcertain assets of Sigmavision. During the acquisitionsecond quarter of Sturtevant Richmont, and (v) $1.9 million, on a preliminary basis, from2020, the acquisitionpurchase accounting valuations for the acquired net assets, including intangible assets, of TCS.Cognitran were completed, resulting in an increase in goodwill of $3.1 million. The goodwill from theCar-O-Liner acquisition is distributed as follows: $76.9 million in the Repair Systems & Information GroupSigmavision and $0.8 million in the Commercial & Industrial Group. The goodwill from the Norbar, Sturtevant Richmont and TCS acquisitions is included in the Commercial & Industrial Group and the goodwill from the BTC acquisitionCognitran is included in the Repair Systems & Information Group. See Note 23 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 acquisitions in the fourth quarter 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) AsJune 27, 2020 December 28, 2019 (Amounts in millions) Gross Carrying
ValueAccumulated
AmortizationGross Carrying
ValueAccumulated
AmortizationAmortized other intangible assets: Customer relationships $ 182.1 $ (122.6) $ 182.9 $ (117.9) Developed technology 19.5 (18.9) 19.8 (18.9) Internally developed software 166.7 (122.1) 168.0 (125.4) Patents 40.5 (24.2) 38.5 (23.7) Trademarks 3.6 (2.1) 3.5 (2.1) Other 7.2 (3.2) 7.3 (3.1) Total 419.6 (293.1) 420.0 (291.1) Non-amortized trademarks 114.5 — 115.0 — Total other intangible assets $ 534.1 $ (293.1) $ 535.0 $ (291.1) 2017,2020, and the results of whichtesting 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 27, 2020, the company had no0 accumulated impairment losses.SNAP-ON INCORPORATEDNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)(Unaudited)In Years 15 2 Internally developed software 36 87 65 39 $7.1$5.7 million and $20.7$11.4 million for the respective three and ninesix months ended September 30, 2017,June 27, 2020, and $5.9$5.4 million and $18.2$10.8 million for the respective three and ninesix months ended October 1, 2016.June 29, 2019. 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 million in 2019, $18.0$22.0 million in 2020, $14.7$19.5 million in 2021, and $9.9$16.3 million in 2022.2022, $13.5 million in 2023, $10.7 million in 2024, and $6.4 million in 2025.6:7: Exit and Disposal Activities did not record any recorded costs for exit and disposal activities in the three and nine monthssix month period ended September 30, 2017, or inJune 27, 2020, as follows:Three Months Ended Six Months Ended (Amounts in millions) June 27, 2020 June 27, 2020 Exit and disposal costs Cost of goods sold: Commercial & Industrial Group $ 2.0 $ 6.4 Repair System & Information Group — 0.7 Total cost of goods sold $ 2.0 $ 7.1 Operating Expenses: Snap-on Tools Group $ 0.6 $ 0.6 Repair System & Information Group 1.4 3.8 Total operating expenses $ 2.0 $ 4.4 Total exit and disposal costs: Commercial & Industrial Group $ 2.0 $ 6.4 Snap-on Tools Group 0.6 0.6 Repair System & Information Group 1.4 4.5 Total exit and disposal costs $ 4.0 $ 11.5 three months ended October 1, 2016.Snap-on recorded $0.9$4.0 million and $11.5 million of costs incurred in the respective three and six month periods ended June 27, 2020, $3.9 million and $11.4 million, respectively, qualified for accrual treatment. Costs associated with exit and disposal activities in the ninefirst three and six months ended October 1, 2016. The majorityof 2020 primarily related to headcount reductions from the ongoing optimization of the $0.8company’s cost structure in Europe and various other management and realignment actions.Balance at First Quarter Balance at Second Quarter Balance at (Amounts in millions) December 28,
2019Provision Usage March 28,
2020Provision Usage June 27,
2020Severance costs: Commercial & Industrial Group $ — $ 4.4 $ — $ 4.4 $ 2.0 $ — $ 6.4 Snap-on Tools Group — — — — 0.6 — 0.6 Repair System & Information Group — 3.1 — 3.1 1.3 — 4.4 Total $ — $ 7.5 $ — $ 7.5 $ 3.9 $ — $ 11.4 as of September 30, 2017, is expected towill be utilized in 2017.the balance of 2020, and the remainder will extend into 2021, primarily for longer-term severance payments. anticipates funding expects to fund the remaining cash requirements of its exit and disposal activities with available cash on hand, cash flows from operationsoperating activities and borrowings under the company’s existing credit facilities. The estimated costs for the exit and disposal activities were based on management’s best business judgmentjudgement under prevailing circumstances.7:8: Income Taxes30.5%24.2% and 31.1%23.9% in the first ninesix months of 20172020 and 2016,2019, respectively. zero0 to $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 zero0 to $1.3$0.9 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)8:9: Short-term and Long-term DebtSeptember 30, 2017,June 27, 2020, and December 31, 2016,28, 2019, 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 27,
2020December 28,
20196.125% 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 3.10% unsecured notes due 2050 500.0 — Other* (1.2) 199.8 1,448.8 1,149.8 Less: notes payable Commercial paper borrowings — (193.6) Other notes (12.1) (9.3) (12.1) (202.9) Total long-term debt $ 1,436.7 $ 946.9 * 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$12.1 million as of September 30, 2017,June 27, 2020, represented other notes. As of 2019 year end, notes payable of $202.9 million included $250 million of 4.25% unsecured notes that mature on January 15, 2018 (the “2018 Notes”), $170$193.6 million of commercial paper borrowings and $33.4$9.3 million of other notes. As of 2016 year end, notes payable and current maturities of long-term debt of $301.4 million included $150 million of unsecured 5.50% notes that were repaid in January 2017 upon maturity, $130 million of commercial paper borrowings and $21.4 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.February 15, 2017,April 30, 2020, Snap-on sold, at a discount, $300$500 million of unsecured 3.25% long-term3.10% notes that mature on MarchMay 1, 20272050 (the “2027“2050 Notes”). Interest on the 20272050 Notes accrues at a rate of 3.10% and is payablepaid semi-annually beginning SeptemberNovember 1, 2017.2020. Snap-on used the $297.8$489.9 million of net proceeds from the sale of the 20272050 Notes, reflecting $1.9$4.4 million of transaction costs, 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 possiblepotential acquisitions.a five-year, $700an $800 million multi-currency revolving credit facility that terminates on December 15, 2020September 16, 2024 (the “Credit Facility”); no0 amounts were outstanding under the Credit Facility as of September 30, 2017.June 27, 2020. Borrowings under the Credit Facility bear interest at varying rates based on either: (i) Snap-on’s then-current, long-term debt ratings. The Credit Facility’s financial covenant requires thatSnap-on maintain, asratings; or (ii) Snap-on’s then-current ratio 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”adjustments (“Consolidated Net Debt”); 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“Consolidated Net Debt to EBITDA Ratio”). The Credit Facility’s financial covenant requires that Snap-on maintain, as of each fiscal quarter end, either (i) a ratio not greater than 0.60 to 1.00 of Consolidated Net Debt to the sum of Consolidated Net Debt plus total equity and less accumulated other comprehensive income or loss (the “Leverage Ratio”); or (ii) a Consolidated Net Debt to EBITDA Ratio not greater than 3.50 to 1.00. Snap-on may, up to two2 times during any five-yearfive-year period during the term of the Credit Facility (including any extensions thereof), elect to increase the maximum DebtLeverage Ratio to 0.65 to 1.00 and/or increase the maximum Consolidated Net Debt to EBITDA Ratio to 3.754.00 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 27, 2020, the company’s actual ratios of 0.260.17 and 1.160.86 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.9:10: Financial Instrumentsand 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 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$100.0 million as of both September 30, 2017,June 27, 2020 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.firstsecond quarter of 2017,2020, Snap-on entered into a $300 million treasury lock to manage changes in interest rates in anticipation of the issuance of fixed rate debt. Snap-on settled the $250$300 million treasury lock in conjunction with the February 2017April 2020 issuance of the 20272050 Notes. The $14.9$1.4 million gain on the settlement of the treasury lock was recorded in Accumulated OCI and is being amortized over the term of the 20272050 Notes and recognized as an adjustment to interest expense on the consolidated statementsCondensed Consolidated Statements of earnings. As of September 30, 2017, no treasury locksEarnings.outstanding. The notional amount of0 treasury locks outstanding and designated as cash flow hedges as of both June 27, 2020, and December 31, 2016, was $250 million.September 30, 2017,June 27, 2020, Snap-on had equity forwards in place intended to manage market risk with respect to 120,900117,000 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 27, 2020 December 28, 2019 (Amounts in millions) Carrying
ValueFair
ValueCarrying
ValueFair
ValueFinance receivables – net $ 1,648.8 $ 1,970.3 $ 1,633.6 $ 1,920.6 Contract receivables – net 464.6 515.8 460.8 505.5 Long-term debt and notes payable 1,448.8 1,590.5 1,149.8 1,238.8 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.SNAP-ON INCORPORATEDNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)(Unaudited)10:11: Pension Plans 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 27, 2020 June 29, 2019 June 27, 2020 June 29, 2019 Service cost $ 6.6 $ 5.8 $ 13.5 $ 11.8 Interest cost 12.3 14.1 24.4 28.2 Expected return on plan assets (23.7) (23.1) (47.4) (45.5) Amortization of unrecognized loss 8.8 6.3 17.2 12.5 Amortization of prior service credit — (0.2) — (0.4) Net periodic pension cost $ 4.0 $ 2.9 $ 7.7 $ 6.6 $7.1$8.7 million to its foreign pension plans and $2.3$2.9 million to its domestic pension plans in 2017,2020, as required by law. In the first nine months of 2017,Snap-on made $61.2 million of cash contributions to its domestic pension plans consisting of (i) $60.0 million of discretionary contributions and (ii) $1.2 million of required contributions. Depending on market and other conditions,Snap-on may make additional discretionary cash contributions to its pension plans in 2017.2020.11:12: Postretirement Health Care Plans 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 27, 2020 June 29, 2019 June 27, 2020 June 29, 2019 Interest cost $ 0.3 $ 0.5 $ 0.7 $ 1.0 Expected return on plan assets (0.1) (0.2) (0.3) (0.4) Amortization of unrecognized gain — (0.2) — (0.4) Net periodic postretirement health care cost $ 0.2 $ 0.1 $ 0.4 $ 0.2 12:13: Stock-based Compensation and Other Stock Planswill continue in accordance with their terms. As of September 30, 2017,June 27, 2020, the 2011 Plan had 3,287,4031,424,015 shares available for future grants. The company uses treasury stock to deliver shares under both the 2001 and 2011 Plans.$7.0$5.8 million and $21.4$6.9 million for the respective three and ninesix months ended September 30, 2017,June 27, 2020, and $7.3$6.8 million and $21.5$14.1 million for the respective three and ninesix months ended October 1, 2016.June 29, 2019. Cash received from stock purchase and option plan exercises during the respective three and ninesix months ended September 30, 2017,June 27, 2020, totaled $1.6$12.3 million and $36.2 million, respectively.$13.8 million. Cash received from stock purchase and option plan exercises during the respective three and ninesix months ended October 1, 2016,June 29, 2019, totaled $4.0$19.8 million and $32.4 million, respectively.$24.6 million. The tax benefit realized from both the exercise and vesting of share-based payment arrangements was $0.8 million and $12.9$2.3 million for the respective three and ninesix months ended September 30, 2017,June 27, 2020, and $1.8$1.9 million and $14.9$4.6 million for the respective three and ninesix months ended October 1, 2016.SNAP-ON INCORPORATEDNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)(Unaudited)Optionscompany’s historicalexpected annual dividend payments.as a percentage of the market value of our common stock as of the date of grant. The risk-free interest rate is based on the U.S. treasury yield curve on the grant date for the expected term of the option.ninesix months ended September 30, 2017,June 27, 2020, and October 1, 2016,June 29, 2019, 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 27,
2020June 29,
20195.53 5.53 Expected volatility factor 21.67% 21.30% Expected dividend yield 2.78% 1.79% Risk-free interest rate 1.50% 2.54% ninesix months ended September 30, 2017,June 27, 2020, 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-averageExercise
Price Per
Share*Outstanding at December 28, 2019 3,114 $ 135.60 Granted 459 155.34 Exercised (60) 65.96 Forfeited or expired (13) 161.36 Outstanding at June 27, 2020 3,500 139.31 6.2 $ 38.9 Exercisable at June 27, 2020 2,590 133.28 5.2 38.9 * Weighted-average ninesix months ended September 30, 2017,June 27, 2020, and October 1, 2016,June 29, 2019, was $31.13$22.95 and $22.99,$29.98, respectively. The intrinsic value of options exercised was $2.0$3.3 million and $23.4$4.7 million during the respective three and ninesix months ended September 30, 2017,June 27, 2020, and $4.8$7.4 million and $22.2$12.3 million during the respective three and ninesix months ended October 1, 2016.June 29, 2019. The fair value of stock options vested was $14.0$14.6 million and $12.7$15.7 million during the respective ninesix months ended September 30, 2017,June 27, 2020, and October 1, 2016.SNAP-ON INCORPORATEDNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)(Unaudited)September 30, 2017,June 27, 2020, there was $23.3$19.5 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 1.72.0 years.Awardsa certain level,specified levels, the recipient may earn additional shares of stock, not to exceed 100% of the number of performance awards initially granted.three-yearthree-year performance period based on the results of the consolidated financial metrics of the company. The performance-based RSUs have aone-yearone-year performance period based on the results of the consolidated financial metrics of the company followed by atwo-yeartwo-year cliff vesting schedule, assuming continued employment.ninesix months ended September 30, 2017,June 27, 2020, and October 1, 2016,June 29, 2019, was $168.70$155.34 and $138.80,$155.92, respectively. PSUs related to 60,98021,184 shares and 94,18632,114 shares were paid out during the respective ninesix months ended September 30, 2017,June 27, 2020, and October 1, 2016.June 29, 2019. Earned PSUs vest and 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”).20162019 performance, 45,502NaN of the RSUs granted in 20162019 were earned. Based on the company’s 2018 performance, 33,170 RSUs granted in 2018 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 2015 were earned; assuming continued employment, these RSUs will vest at the end of fiscal 2017. Based on the company’s 2014 performance, 78,585 RSUs granted in 20142017 were earned; these RSUs vested as of fiscal 20162019 year end and were paid out shortly thereafter.ninesix months ended September 30, 2017,June 27, 2020, 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-averageFair Value
Price per
Share*Non-vested performance awards at December 28, 2019 98 $ 158.94 Granted 82 155.34 Vested — — Cancellations and other (74) 157.49 Non-vested performance awards at June 27, 2020 106 157.17 * Weighted-average September 30, 2017,June 27, 2020, there was $14.1$8.8 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 historicalexpected annual dividend payments.as a percentage of the market value of our common stock as of the date of grant (for stock-settled SARs) or reporting date (for cash-settled SARs). 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 September 30, 2017,June 27, 2020, and October 1, 2016,June 29, 2019, 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 27,
2020June 29,
20193.75 3.65 Expected volatility factor 22.50% 22.60% Expected dividend yield 2.78% 1.81% Risk-free interest rate 1.42% 2.48% ninesix months ended September 30, 2017,June 27, 2020, 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)Exercise
Price Per
Share*Outstanding at December 28, 2019 450 $ 149.18 Granted 92 155.34 Exercised (1) 94.93 Forfeited or expired (6) 130.68 Outstanding at June 27, 2020 535 150.56 7.0 $ 1.4 Exercisable at June 27, 2020 355 147.56 6.0 1.4 * Weighted-average ninesix months ended September 30, 2017,June 27, 2020, and October 1, 2016,June 29, 2019, was $24.13$21.31 and $19.47,$26.45, respectively. The intrinsic value of stock-settled SARs exercised was zero and $0.5 million0 during both the respective three and ninesix months ended September 30, 2017,June 27, 2020, and $0.1 million and $0.8 million during the respective three and nine months ended October 1, 2016.June 29, 2019. The fair value of stock-settled SARs vested was $2.3 million and $2.1 million during both the ninerespective six months ended September 30, 2017,June 27, 2020, and October 1, 2016, was $2.1 million.September 30, 2017,June 27, 2020, there was $3.0$3.5 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 September 30, 2017,June 27, 2020, and October 1, 2016,June 29, 2019, 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 27,
2020June 29,
20193.43 3.34 Expected volatility factor 32.04% 22.52% Expected dividend yield 3.23% 1.87% Risk-free interest rate 0.19% 1.71% zero$0.1 million and $0.8$0.2 million during the respective three and ninesix months ended September 30, 2017,June 27, 2020, and $0.1$0.2 million and $0.9$0.5 million during the respective three and ninesix months ended October 1, 2016.June 29, 2019. The fair value of cash-settled SARs vested was 0 and $0.1 million during the ninerespective six months ended September 30, 2017,June 27, 2020, and October 1, 2016, was $0.1 million and $0.2 million, respectively.ninesix months ended September 30, 2017,June 27, 2020, 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-averageFair Value
Price per
Share*Non-vested cash-settled SARs at December 28, 2019 2 $ 25.96 Granted 1 17.42 Vested (1) 14.58 Non-vested cash-settled SARs at June 27, 2020 2 16.91 * Weighted-average September 30, 2017,June 27, 2020, 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. Directors6,9667,380 shares and 7,1457,605 shares of restricted stock tonon-employee directors infor the first ninerespective six months of 2017ended June 27, 2020, and 2016, respectively.June 29, 2019. The fair value of the restricted stock awards is expensed over aone-yearone-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, 2016.13:14: Earnings Per Share 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 27, 2020 June 29, 2019 June 27, 2020 June 29, 2019 Weighted-average common shares outstanding 54,413,820 55,253,253 54,468,839 55,383,887 Effect of dilutive securities 378,730 787,231 451,621 788,934 Weighted-average common shares outstanding, assuming dilution 54,792,550 56,040,484 54,920,460 56,172,821 September 30, 2017,June 27, 2020, there were 723,2153,238,975 awards outstanding that were anti-dilutive; as of October 1, 2016,June 29, 2019, there were 1,6001,223,467 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)14:15: Commitments and Contingenciesninesix months ended September 30, 2017,June 27, 2020, and October 1, 2016,June 29, 2019, 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 27, 2020 June 29, 2019 June 27, 2020 June 29, 2019 Warranty reserve: Beginning of period $ 17.2 $ 17.3 $ 17.3 $ 17.1 Additions 2.3 4.7 6.0 8.7 Usage (2.3) (4.2) (6.1) (8.0) End of period $ 17.2 $ 17.8 $ 17.2 $ 17.8 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.15:16: Leases(Amounts in millions) June 27,
2020December 28,
2019Finance leases: Property and equipment - gross $ 9.8 $ 9.2 Accumulated depreciation and amortization (2.3) (1.5) Property and equipment - net $ 7.5 $ 7.7 Other accrued liabilities $ 2.9 $ 2.8 Other long-term liabilities 8.9 10.0 Total finance lease liabilities $ 11.8 $ 12.8 Operating leases: Operating lease right-of-use assets $ 50.2 $ 55.6 Other accrued liabilities $ 18.1 $ 19.5 Operating lease liabilities 33.4 37.5 Total operating lease liabilities $ 51.5 $ 57.0 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) Three Months Ended Six Months Ended (Amounts in millions) June 27, 2020 June 29, 2019 June 27, 2020 June 29, 2019 Interest income $ 0.3 $ 0.3 $ 0.7 $ 0.7 Net foreign exchange loss (0.7) (1.0) (2.6) (2.5) Net periodic pension and postretirement benefits – non-service 2.4 2.8 5.4 5.0 Other — — — 0.4 Total other income (expense) – net $ 2.0 $ 2.1 $ 3.5 $ 3.6 16:18: 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) Foreign
Currency
TranslationCash Flow
HedgesDefined
Benefit
Pension and
Postretirement
PlansTotal Balance as of March 28, 2020 $ (295.4) $ 10.3 $ (324.8) $ (609.9) Other comprehensive income before reclassifications 87.8 1.4 — 89.2 Amounts reclassified from Accumulated OCI — (0.4) 6.7 6.3 Net other comprehensive income 87.8 1.0 6.7 95.5 Balance as of June 27, 2020 $ (207.6) $ 11.3 $ (318.1) $ (514.4) 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) Foreign
Currency
TranslationCash Flow
HedgesDefined
Benefit
Pension and
Postretirement
PlansTotal Balance as of December 28, 2019 $ (187.4) $ 10.7 $ (331.2) $ (507.9) Other comprehensive income (loss) before reclassifications (20.2) 1.4 — (18.8) Amounts reclassified from Accumulated OCI — (0.8) 13.1 12.3 Net other comprehensive income (loss) (20.2) 0.6 13.1 (6.5) Balance as of June 27, 2020 $ (207.6) $ 11.3 $ (318.1) $ (514.4) 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) (Amounts in millions) Foreign
Currency
TranslationCash Flow
HedgesDefined
Benefit
Pension and
Postretirement
PlansTotal Balance as of 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) 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) Foreign
Currency
TranslationCash Flow
HedgesDefined
Benefit
Pension and
Postretirement
PlansTotal Balance as of December 29, 2018 $ (177.9) $ 12.2 $ (296.5) $ (462.2) Impact of the Tax Cuts and Jobs 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) ninesix month periods ended September 30, 2017,June 27, 2020, and October 1, 2016,June 29, 2019, 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 27,
2020June 29,
2019June 27,
2020June 29,
2019Statement of Earnings
Presentation(Amounts in millions) Gains on cash flow hedges: Treasury locks $ 0.4 $ 0.3 $ 0.8 $ 0.7 Interest expense Income tax expense — — — — Income tax expense Net of tax 0.4 0.3 0.8 0.7 Amortization of net unrecognized losses and prior service credits (8.8) (5.9) (17.2) (11.7) See footnote below* Income tax benefit 2.1 1.5 4.1 2.8 Income tax expense Net of tax (6.7) (4.4) (13.1) (8.9) Total reclassifications for the period, net of tax $ (6.3) $ (4.1) $ (12.3) $ (8.2) ** These Accumulated OCI components are included in the computation of net periodic pension and postretirement health care costs; see Note 1011 and Note 1112 for further information.SNAP-ON INCORPORATEDNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)(Unaudited)17:19: Segmentsdealership service and repair shops (“OEM dealerships”),dealerships, through direct and distributor channels. Financial Services consists of the business operations ofSnap-on’s finance subsidiaries.significant intersegment amounts are eliminated to arrive atSnap-on’s consolidated financial results. 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 Three Months Ended Six Months Ended (Amounts in millions) June 27,
2020June 29,
2019June 27,
2020June 29,
2019Net sales: Commercial & Industrial Group $ 261.9 $ 335.0 $ 561.8 $ 657.5 Snap-on Tools Group 323.3 405.8 699.2 816.0 Repair Systems & Information Group 245.0 348.9 559.6 676.8 Segment net sales 830.2 1,089.7 1,820.6 2,150.3 Intersegment eliminations (105.9) (138.4) (244.1) (277.3) Total net sales 724.3 951.3 1,576.5 1,873.0 Financial Services revenue 84.6 84.1 170.5 169.7 Total revenues $ 808.9 $ 1,035.4 $ 1,747.0 $ 2,042.7 Operating earnings: Commercial & Industrial Group $ 22.9 $ 48.9 $ 54.4 $ 95.4 Snap-on Tools Group 38.4 71.3 87.0 138.5 Repair Systems & Information Group 50.6 88.6 127.9 172.2 Financial Services 57.6 60.6 114.5 122.7 Segment operating earnings 169.5 269.4 383.8 528.8 Corporate (20.8) (18.9) (39.3) (28.8) Operating earnings 148.7 250.5 344.5 500.0 Interest expense (13.4) (12.4) (24.8) (24.9) Other income (expense) – net 2.0 2.1 3.5 3.6 Earnings before income taxes and equity earnings $ 137.3 $ 240.2 $ 323.2 $ 478.7 (Amounts in millions) June 27,
2020December 28,
2019Assets: Commercial & Industrial Group $ 1,112.8 $ 1,138.8 Snap-on Tools Group 783.5 827.4 Repair Systems & Information Group 1,345.5 1,381.9 Financial Services 2,129.2 2,104.0 Total assets from reportable segments 5,371.0 5,452.1 Corporate 796.1 303.1 Elimination of intersegment receivables (53.6) (61.7) Total assets $ 6,113.5 $ 5,693.5 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)(Unaudited)(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 SNAP-ON INCORPORATEDthatthat: (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” 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 thosethe factors discussed in its Annual Report on Form10-K for the fiscal year ended December 31, 2016, which are incorporated herein by reference,28, 2019, and in Part II, Item 1A. Risk Factors in its quarterly report on Form 10-Q for the quarterly period ended March 28, 2020, and those discussed in this document, 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)Union and the COVID-19 pandemic), 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 U.S. tariffs imposed 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, the impact of changes in financial accounting standards, and other world or local events outsideSnap-on’s control, including terrorist disruptions.disruptions and other outbreaks of infectious diseases. 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, basedAdelaide, Australia, distributes a full range of torque products, including wrenches, multipliers and calibrators for usethis report to “organic sales” refer to sales from continuing operations calculated 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, alongaccordance 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 excludesGAAP, excluding 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.References in this report to “organic sales” refer to sales from continuing operations calculated in accordance with GAAP, adjusted to exclude 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 27, 2020 June 29, 2019 Change Net sales $ 724.3 100.0 % $ 951.3 100.0 % $ (227.0) (23.9) % Cost of goods sold (383.1) (52.9) % (477.5) (50.2) % 94.4 19.8 % Gross profit 341.2 47.1 % 473.8 49.8 % (132.6) (28.0) % Operating expenses (250.1) (34.5) % (283.9) (29.8) % 33.8 11.9 % Operating earnings before financial services 91.1 12.6 % 189.9 20.0 % (98.8) (52.0) % Financial services revenue 84.6 100.0 % 84.1 100.0 % 0.5 0.6 % Financial services expenses (27.0) (31.9) % (23.5) (27.9) % (3.5) (14.9) % Operating earnings from financial services 57.6 68.1 % 60.6 72.1 % (3.0) (5.0) % Operating earnings 148.7 18.4 % 250.5 24.2 % (101.8) (40.6) % Interest expense (13.4) (1.6) % (12.4) (1.2) % (1.0) (8.1) % Other income (expense) – net 2.0 0.2 % 2.1 0.2 % (0.1) (4.8) % Earnings before income taxes and equity earnings 137.3 17.0 % 240.2 23.2 % (102.9) (42.8) % Income tax expense (31.9) (4.0) % (55.6) (5.4) % 23.7 42.6 % Earnings before equity earnings 105.4 13.0 % 184.6 17.8 % (79.2) (42.9) % Equity earnings, net of tax 0.5 0.1 % 0.3 0.1 % 0.2 66.7 % Net earnings 105.9 13.1 % 184.9 17.9 % (79.0) (42.7) % Net earnings attributable to noncontrolling interests (4.7) (0.6) % (4.5) (0.5) % (0.2) (4.4) % Net earnings attributable to Snap-on Inc. $ 101.2 12.5 % $ 180.4 17.4 % $ (79.2) (43.9) % 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. $448.6$341.2 million in the thirdsecond quarter of 20172020, including $3.1 million of direct costs associated with COVID-19, $2.0 million of exit and disposal (“restructuring”) costs and $7.8 million of unfavorable foreign currency effects, compared to $419.1$473.8 million last year.in 2019. Gross margin (gross profit as a percentage of net sales) of 49.6%47.1% in the quarter declined 60270 basis points (100 basis points (“bps”) equals 1.0 percent) from 50.2% last year primarily due to the impact of lower sales volumes, including costs to maintain manufacturing capacity, 40 bps of direct costs associated with COVID-19, 30 bps from costs related to restructuring actions outside of the United States and 10 bps of unfavorable foreign currency effects and lowereffects. 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.$295.5$250.1 million in the thirdsecond quarter of 20172020, including $2.7 million of direct costs associated with COVID-19 and $2.0 million of restructuring charges, compared to $261.5$283.9 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.2019. The operating expense margin (operating expenses as a percentage of net sales) of 32.7% was 14034.5% increased 470 bps higher thanfrom last year as 170 bps for the legal charge and 30primarily due to lower sales volumes, 40 bps of operating expenses for acquisitionsdirect costs associated with COVID-19, 20 bps from costs related to restructuring actions and 10 bps of unfavorable foreign currency effects. These items were partially offset by savings from cost containment actions in response to lower sales volume leverage.$153.1$91.1 million in the thirdsecond quarter of 2017,2020, including $1.9$5.8 million of direct costs associated with COVID-19, $4.0 million of restructuring charges and $3.8 million of unfavorable foreign currency effects, and $15.0 million for the legal charge, decreased $4.5 million, or 2.9%, as compared to $157.6$189.9 million last year.in the second quarter of 2019. As a percentage of net sales, operating earnings before financial services of 16.9%12.6%, including the legal charge,80 bps of direct costs associated with COVID-19, 50 bps of costs from restructuring actions and 20 bps of unfavorable foreign currency effects, compared to 18.9%20.0% last year.$79.0$84.6 million in the thirdsecond quarter of 20172020 compared to revenue of $71.6$84.1 million last year. Financial services operating earnings of $56.0$57.6 million in the third quarter of 2017,period, including $0.1 million of favorable foreign currency effects, increased $5.4 million, or 10.7%, as compared to $50.6 million last year. The year-over-year increases in both revenue and operating earnings primarily reflect continued growth of the company’s financial services portfolio.Operating earnings of $209.1 million in the third quarter of 2017, including $1.8$0.3 million of unfavorable foreign currency effects, compared to $60.6 million last year.$15.0$4.1 million for the legal charge, increased $0.9 million, or 0.4%, from $208.2of unfavorable foreign currency effects, compared to $250.5 million last year. As a percentage of revenues (net sales plus financial services revenue), operating earnings of 21.3%18.4% in the quarter, including 70 bps of direct costs associated with COVID-19, 50 bps of costs from restructuring actions and 20 bps of unfavorable foreign currency effects, compared to 23.0%24.2% last year.was unchanged at $13.1 million in the respective third quarterssecond quarter of 20172020 increased $1.0 million compared to last year. See Note 9 to the Condensed Consolidated Financial Statements for information on Snap-on’s debt and 2016.credit facilities. Six Months Ended (Amounts in millions) June 27, 2020 June 29, 2019 Change Net sales $ 1,576.5 100.0 % $ 1,873.0 100.0 % $ (296.5) (15.8) % Cost of goods sold (813.7) (51.6) % (927.6) (49.5) % 113.9 12.3 % Gross profit 762.8 48.4 % 945.4 50.5 % (182.6) (19.3) % Operating expenses (532.8) (33.8) % (568.1) (30.4) % 35.3 6.2 % Operating earnings before financial services 230.0 14.6 % 377.3 20.1 % (147.3) (39.0) % Financial services revenue 170.5 100.0 % 169.7 100.0 % 0.8 0.5 % Financial services expenses (56.0) (32.8) % (47.0) (27.7) % (9.0) (19.1) % Operating earnings from financial services 114.5 67.2 % 122.7 72.3 % (8.2) (6.7) % Operating earnings 344.5 19.7 % 500.0 24.5 % (155.5) (31.1) % Interest expense (24.8) (1.4) % (24.9) (1.2) % 0.1 0.4 % Other income (expense) – net 3.5 0.2 % 3.6 0.1 % (0.1) (2.8) % Earnings before income taxes and equity earnings 323.2 18.5 % 478.7 23.4 % (155.5) (32.5) % Income tax expense (75.8) (4.3) % (112.5) (5.5) % 36.7 32.6 % Earnings before equity earnings 247.4 14.2 % 366.2 17.9 % (118.8) (32.4) % Equity earnings, net of tax 0.5 — 0.8 0.1 % (0.3) (37.5) % Net earnings 247.9 14.2 % 367.0 18.0 % (119.1) (32.5) % Net earnings attributable to noncontrolling interests (9.5) (0.6) % (8.7) (0.5) % (0.8) (9.2) % Net earnings attributable to Snap-on Inc. $ 238.4 13.6 % $ 358.3 17.5 % $ (119.9) (33.5) % 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. 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 1517 to the Condensed Consolidated Financial Statements for information on otherOther income (expense) – net. third quarter effective income tax rate on earnings attributable toSnap-on was 30.1%24.2%, includingwhich includes a 0.6%20 bps increase related to the restructuring actions. The 2019 effective income tax rate was 23.9%. See Note 8 to the Condensed Consolidated Financial Statements for information on income taxes.charge,settlement.2017the respective three and 31.2% in 2016.six month periods ended June 27, 2020. There were no restructuring costs recorded for the three and six month periods ended June 29, 2019. See Note 7 to the Condensed Consolidated Financial Statements for information on income taxes.Net earnings attributable toSnap-onSnap-on’s exit and disposal activities.Results of operations for the nine months ended September 30, 2017, and October 1, 2016, 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 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 $2,712.3 million in the first nine months of 2017 increased $171.7 million, or 6.8%, from 2016 levels, reflecting a $76.1 million, or 3.0%, organic sales gain and $111.8 million of acquisition-related sales, partially offset by $16.2 million of unfavorable foreign currency translation.Gross profit of $1,359.6 million in the first nine months of 2017 compared to $1,265.7 million last year. Gross margin of 50.1% in 2017 improved 30 bps from 49.8% last year primarily due to benefits from higher sales and savings from the company’s RCI initiatives, partially offset by 20 bps of unfavorable foreign currency effects. Restructuring costs reflected in gross profit were $0.8 million in the first nine months of 2016.Operating expenses of $853.3 million in the first nine months of 2017, including $15.0 million for the legal charge, compared to $786.3 million last year. The operating expense margin of 31.4% in 2017 increased 50 bps from 30.9% last year as 50 bps of operating expenses from acquisitions and 50 bps 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)Operating earnings before financial services of $506.3 million in the first nine months of 2017, including $10.1 million of unfavorable foreign currency effects and $15.0 million for the legal charge, increased $26.9 million, or 5.6%, as compared to $479.4 million last year. As a percentage of net sales, operating earnings before financial services of 18.7%, including the legal charge, compared to 18.9% last year.Financial services revenue of $233.5 million in the first nine months of 2017 compared to revenue of $207.2 million last year. Financial services operating earnings of $163.1 million in 2017, including $0.7 million of unfavorable foreign currency effects, increased $16.0 million, or 10.9%, as compared to $147.1 million last year. The year-over-year increases in both revenue and operating earnings primarily reflect continued growth of the company’s financial services portfolio.Operating earnings of $669.4 million in the first nine months of 2017, including $10.8 million of unfavorable foreign currency effects and $15.0 million for the legal charge, increased $42.9 million, or 6.8%, from $626.5 million last year. As a percentage of revenues, operating earnings of 22.7% declined 10 bps from 22.8% last year.Interest expense of $38.8 million in the first nine months of 2017 decreased $0.3 million from $39.1 million last year. See Note 8 to the Condensed Consolidated Financial Statements for information onSnap-on’s debt and credit facilities. Other income (expense) – net was expense of $5.7 million and $0.3 million in the respective first nine months of 2017 and 2016. See Note 15 to the Condensed Consolidated Financial Statements for information on other income (expense) – net.In the first nine months of 2017,Snap-on’s effective income tax rate on earnings attributable toSnap-on was 30.5%, including a 0.2% benefit from the legal charge, and 31.1% in 2016. See Note 7 to the Condensed Consolidated Financial Statements for information on income taxes.Net earnings attributable toSnap-on of $428.2 million, or $7.27 per diluted share, in the first nine months of 2017, including $9.3 million, or $0.16 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 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 27, 2020 June 29, 2019 Change External net sales $ 204.5 78.1 % $ 263.0 78.5 % $ (58.5) (22.2) % Intersegment net sales 57.4 21.9 % 72.0 21.5 % (14.6) (20.3) % Segment net sales 261.9 100.0 % 335.0 100.0 % (73.1) (21.8) % Cost of goods sold (171.7) (65.6) % (205.8) (61.4) % 34.1 16.6 % Gross profit 90.2 34.4 % 129.2 38.6 % (39.0) (30.2) % Operating expenses (67.3) (25.7) % (80.3) (24.0) % 13.0 16.2 % Segment operating earnings $ 22.9 8.7 % $ 48.9 14.6 % $ (26.0) (53.2) % $314.6$261.9 million in the thirdsecond quarter of 2017 increased $25.32020, reflecting a $66.2 million, or 8.7%, from 2016 levels, reflecting a $0.6 million, or 0.2%20.2%, organic sales gain, $22.7decline and $6.9 million of acquisition-related sales and $2.0 million of favorableunfavorable foreign currency translation.translation, compared to $335.0 million in the second quarter of 2019. The organic sales increasedecrease includes a high single-digit gainmid-teen declines in both sales to customers in critical industries a low single-digit gainand in the segment’s power tools operation.substantially70 bps of direct COVID-19-related costs and 50 bps of unfavorable foreign currency effects. These items were partially offset by a double-digit decrease in sales of power tools, and a mid single-digit sales decrease in the 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% in 2017 increased 130 bps from 39.0% in 2016 primarily due to favorable business mixmaterial cost savings and benefits 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 second quarter of 24.4% in 20172020 of 25.7% increased 50170 bps from 23.9% in 2016as compared to last year primarily due to 40the impact of lower sales volumes and 50 bps of operating expenses for acquisitions. $50.1$22.9 million in the thirdsecond quarter of 2017,2020, including $0.1$3.0 million of favorabledirect costs associated with COVID-19, $2.0 million of restructuring charges and $1.9 million of unfavorable foreign currency effects, increased $6.4compared to $48.9 million from 2016 levels.in the second quarter of 2019. Operating margin (segment operating earnings as a percentage of segment net sales) for the Commercial & Industrial Group of 15.9%8.7% in 2017 improved 80 bps from 15.1%the second quarter of 2020 compared to 14.6% 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% Six Months Ended (Amounts in millions) June 27, 2020 June 29, 2019 Change External net sales $ 431.5 76.8 % $ 512.5 77.9 % $ (81.0) (15.8) % Intersegment net sales 130.3 23.2 % 145.0 22.1 % (14.7) (10.1) % Segment net sales 561.8 100.0 % 657.5 100.0 % (95.7) (14.6) % Cost of goods sold (361.1) (64.3) % (398.0) (60.5) % 36.9 9.3 % Gross profit 200.7 35.7 % 259.5 39.5 % (58.8) (22.7) % Operating expenses (146.3) (26.0) % (164.1) (25.0) % 17.8 10.8 % Segment operating earnings $ 54.4 9.7 % $ 95.4 14.5 % $ (41.0) (43.0) % $923.3$561.8 million in the first ninesix months of 2017 increased $61.32020, reflecting an $84.2 million, or 7.1%, from 2016 levels, reflecting a $22.5 million, or 2.6%13.0%, organic sales gaindecline and $46.4 million of acquisition-related sales, partially offset by $7.6$12.2 million of unfavorable foreign currency translation.translation, partially offset by $0.7 million of acquisition-related sales, compared to $657.5 million in the first six months of 2019. The organic sales increasedecrease primarily includes middouble-digit declines in sales in both the European-based hand tools business and Asia Pacific operations and a high single-digit gainsdecline in sales to customers in critical industries.in sales to customers in critical industries,30 bps of unfavorable foreign currency effects. These items were partially offset by a mid single-digit decrease in sales of power tools.gross profit of $364.1 millionoperating expense margin in the first ninesix months of 20172020 of 26.0% compared to $334.6 million last year. Gross margin25.0% in the first six months of 39.4% improved 602019. The 100 bps from 38.8% last yearincrease is primarily due to higherthe impact of lower sales savings from the company’s RCI initiativesvolumes and 20 bps of favorable foreign currency effects,for direct costs associated with COVID-19, partially offset by a 10 bps impactsavings from acquisitions. Segment operating expenses of $229.7 million in the first nine 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, including higher costs for research and engineering activities, and 20 bps of operating expenses for acquisitions.$134.4$54.4 million in the first ninesix months of 2017,2020, including $1.0$6.4 million of favorablerestructuring charges, $4.7 million of direct costs associated with COVID-19 and $3.1 million of unfavorable foreign currency effects, increased $10.3compared to $95.4 million from 2016 levels.in the first six months of 2019. Operating margin for the Commercial & Industrial Group of 14.6%9.7% in the first nine months of 2017 increased 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 27, 2020 June 29, 2019 Change Segment net sales $ 323.3 100.0 % $ 405.8 100.0 % $ (82.5) (20.3) % Cost of goods sold (188.5) (58.3) % (222.9) (54.9) % 34.4 15.4 % Gross profit 134.8 41.7 % 182.9 45.1 % (48.1) (26.3) % Operating expenses (96.4) (29.8) % (111.6) (27.5) % 15.2 13.6 % Segment operating earnings $ 38.4 11.9 % $ 71.3 17.6 % $ (32.9) (46.1) % $392.7$323.3 million in the thirdsecond quarter of 2017 decreased $4.52020, reflecting a $79.2 million, or 1.1%, from 2016 levels, reflecting a $6.5 million, or 1.6%19.7%, organic sales decrease, partially offset by $2.0decline and $3.3 million of favorableunfavorable foreign currency translation.translation, compared to $405.8 million in the second quarter of 2019. The organic sales decrease includesreflects a mid single-digitmid-teen decline in the U.S. franchise operations and a nearly 40% decrease in the company’s U.S. franchise operations, partially offset by a double-digit sales gainsegment’s international operations.company’s international franchise operations.Segment gross profit of $164.2 million in the thirdsecond quarter of 2017 compared to $173.3 million last year. Gross margin of 41.8% decreased 18041.7% declined 340 bps from 43.6% last year primarily due to a year-over-year shift in product mixlower sales volumes, including costs to maintain manufacturing capacity, 30 bps of direct COVID-19-related costs and 7020 bps of unfavorable foreign currency effects. operating expenses of $107.9 million in the third quarter of 2017 compared to $108.7 million last year. The operating expense margin in the second quarter of 27.5%2020 of 29.8% increased 20230 bps from 27.3% last year primarily due to the effectimpact of the lower sales.$56.3$38.4 million in the thirdsecond quarter of 2017,2020, including $2.3$1.9 million of direct costs associated with COVID-19, $0.6 million of restructuring charges and $1.1 million of unfavorable foreign currency effects, decreased $8.3compared to $71.3 million from 2016 levels.in 2019. Operating margin for theSnap-on Tools Group of 14.3%11.9% in the thirdsecond quarter of 20172020, compared to 16.3%17.6% 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)Six Months Ended (Amounts in millions) June 27, 2020 June 29, 2019 Change Segment net sales $ 699.2 100.0 % $ 816.0 100.0 % $ (116.8) (14.3) % Cost of goods sold (404.0) (57.8) % (450.0) (55.1) % 46.0 10.2 % Gross profit 295.2 42.2 % 366.0 44.9 % (70.8) (19.3) % Operating expenses (208.2) (29.8) % (227.5) (27.9) % 19.3 8.5 % Segment operating earnings $ 87.0 12.4 % $ 138.5 17.0 % $ (51.5) (37.2) % $1,215.9$699.2 million in the first ninesix months of 2017 decreased $0.5 million from 2016 levels,2020, reflecting a $5.7$111.0 million, or 0.5%13.7%, organic sales gain, which was more than offset by $6.2 milliondecline and $5.8 of unfavorable foreign currency translation. The organic sales increase includes a double-digit sales gain in the company’s international franchise operations partially offset by a low single-digit sales decrease in the company’s U.S. franchise operations.Segment gross profit of $524.9translation, compared to $816.0 million in the first ninesix months of 2017 compared to $528.6 million last year. Gross2019. The organic sales decrease reflects a low-teen decline in the U.S. franchise operations and an approximately 25% decline in the segment’s international operations.43.2%2020 of 42.2% declined 30270 bps from 43.5% last year primarily due to 60the impact of lower sales volumes, including costs to maintain manufacturing capacity, 30 bps of unfavorable foreign currency effects and 10 bps of direct COVID-19-related costs.the company’s RCI initiatives.Segment operating expenses of $317.7 million in the first nine months of 2017 compared to $321.0 million last year. The operating expense margin of 26.2% improved 20 bps from 26.4% last year primarily due to sales volume leverage in the company’s international franchise operations.$207.2$87.0 million in the first ninesix months of 2017,2020, including $9.2$1.9 million of direct costs associated with COVID-19, $0.6 million of restructuring charges and $2.5 million of unfavorable foreign currency effects, decreased $0.4compared to $138.5 million from 2016 levels.in 2019. Operating margin for theSnap-on Tools Group of 17.0%12.4% in the first ninesix months of 20172020 compared to 17.1%17.0% last year. 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% Three Months Ended (Amounts in millions) June 27, 2020 June 29, 2019 Change External net sales $ 196.5 80.2 % $ 282.5 81.0 % $ (86.0) (30.4) % Intersegment net sales 48.5 19.8 % 66.4 19.0 % (17.9) (27.0) % Segment net sales 245.0 100.0 % 348.9 100.0 % (103.9) (29.8) % Cost of goods sold (128.8) (52.6) % (187.2) (53.7) % 58.4 31.2 % Gross profit 116.2 47.4 % 161.7 46.3 % (45.5) (28.1) % Operating expenses (65.6) (26.7) % (73.1) (20.9) % 7.5 10.3 % Segment operating earnings $ 50.6 20.7 % $ 88.6 25.4 % $ (38.0) (42.9) % $333.5$245.0 million in the thirdsecond quarter of 2017 increased $47.42020, reflecting a $101.4 million, or 16.6%, from 2016 levels, reflecting a $23.7 million, or 8.2%29.5%, organic sales gain, $21.6decrease and $4.8 million of unfavorable foreign currency translation, partially offset by $2.3 million from acquisition-related sales, compared to $348.9 million in the second quarter of 2019. The lower sales volume reflects organic declines of over 30% in both sales of undercar equipment and $2.1 million of favorable foreign currency translation. The organic sales increase includes double-digit gainsto OEM dealerships, as well as a mid-teen decrease 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.profit of $157.7 millionmargin in the thirdsecond quarter of 2017 compared to $133.1 million last year. Gross margin2020 of 47.3%47.4% improved 80110 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 bpsthe impact of impactreduced sales in lower gross margin businesses and savings from acquisitions,RCI initiatives, partially offset by benefits20 bps of sales volume leverage.$83.4$50.6 million in the thirdsecond quarter of 2017,2020, including $0.3$1.4 million of favorablecosts related to restructuring actions, $0.7 million of direct costs associated with COVID-19 and $0.8 million of unfavorable foreign currency effects, increased $11.6compared to $88.6 million from 2016 levels.in 2019. Operating margin for the Repair Systems & Information Group of 25.0%20.7% in the thirdsecond quarter of 20172020 compared to 25.1%25.4% 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 27, 2020 June 29, 2019 Change External net sales $ 445.8 79.7 % $ 544.5 80.5 % $ (98.7) (18.1) % Intersegment net sales 113.8 20.3 % 132.3 19.5 % (18.5) (14.0) % Segment net sales 559.6 100.0 % 676.8 100.0 % (117.2) (17.3) % Cost of goods sold (292.7) (52.3) % (356.9) (52.7) % 64.2 18.0 % Gross profit 266.9 47.7 % 319.9 47.3 % (53.0) (16.6) % Operating expenses (139.0) (24.8) % (147.7) (21.9) % 8.7 5.9 % Segment operating earnings $ 127.9 22.9 % $ 172.2 25.4 % $ (44.3) (25.7) % $990.4$559.6 million in the first ninesix months of 2017 increased $130.32020, reflecting a $114.3 million, or 15.1%, from 2016 levels, reflecting a $69.4 million, or 8.1%17.1%, organic sales gaindecrease and $65.4 million of acquisition-related sales, partially offset by $4.5$8.0 million of unfavorable foreign currency translation.translation, partially offset by $5.1 million from acquisition-related sales, compared to $676.8 million in the first six months of 2019. The organic sales increase includes highdecrease primarily reflects an approximately 20% decrease in both sales to OEM dealerships and of undercar equipment, as well as a mid single-digit gainsdecrease 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 of undercar equipment.profit of $470.6 millionmargin in the first ninesix months of 2017 compared to $402.5 million last year. Gross margin2020 of 47.5% improved 7047.7% increased 40 bps from 46.8% last year, primarily due to benefits from acquisitionsthe impact of reduced sales in lower gross margin businesses and savings from the company’s RCI initiatives. Restructuringinitiatives, partially offset by 10 bps from $0.7 million of costs includedrelated to restructuring actions in gross profit were $0.8 millionEurope and 10 bps of direct COVID-19-related costs.ninesix months of 2016.Segment operating expenses2020 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%24.8% increased 110290 bps from 21.8% last year primarily due to 190the impact of lower sales volumes and 70 bps from $3.8 million of impactcosts from acquisitions,restructuring actions in Europe, partially offset by sales volume leverage. Restructuring costs included in operating expenses were $0.1 million in the first nine months of 2016.$244.0$127.9 million in the first ninesix months of 2017,2020, including $1.9$4.5 million of costs related to restructuring actions, $0.8 million of direct costs associated with COVID-19 and $1.5 million of unfavorable foreign currency effects, increased $28.7compared to $172.2 million from 2016 levels.in 2019. Operating margin for the Repair Systems & Information Group of 24.6%22.9% in the first ninesix months of 20172020 compared to 25.0%25.4% 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 27, 2020 June 29, 2019 Change Financial services revenue $ 84.6 100.0 % $ 84.1 100.0 % $ 0.5 0.6 % Financial services expenses (27.0) (31.9) % (23.5) (27.9) % (3.5) (14.9) % Segment operating earnings $ 57.6 68.1 % $ 60.6 72.1 % $ (3.0) (5.0) % of $79.0 million in the thirdsecond quarter of 20172020 increased $7.4$0.5 million, or 10.3%0.6%, from $71.6 million last year2019, primarily due to $8.0$1.5 million of higher revenue as a result of growth of the company’s financial services portfolio, partially offset by $0.7$1.0 million of decreased revenue from lower average yields on finance and contract receivables. In the third quartersecond quarters of both 2020 and 2019, the average yieldyields on finance receivables was 17.9% for 2017were 17.6%. In the second quarters of 2020 and 18.0% for 2016, and2019, the respective average yields on contract receivables were 8.2% and 9.1%. The lower yield on contract receivables was 9.2% and 9.4%.in the second quarter of 2020 primarily reflects the impact of business operation support loans to franchiseesin the COVID-19 environment. Originations of $271.8$255.8 million in the thirdsecond quarter of 2017 increased $2.02020 decreased $7.6 million, or 0.7%2.9%, from 20162019 levels.of $23.0 million in the thirdsecond quarter of 20172020 increased $2.0 million from $21.0 million last year primarily due to changes in both the size of the portfolio and in the higher provisions for credit losses.losses and from non-recurring favorable loss experience in the second quarter of 2019. As a percentage of the average financial services portfolio, financial services expenses were 1.2%1.3% in boththe second quarter of the third quarters of 20172020 and 2016.of $56.0 million in the thirdsecond quarter of 2017,2020, including $0.1$0.3 million of favorableunfavorable foreign currency effects, increased $5.4decreased $3.0 million, or 10.7%5.0%, from 20162019 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 27, 2020 June 29, 2019 Change Financial services revenue $ 170.5 100.0 % $ 169.7 100.0 % $ 0.8 0.5 % Financial services expenses (56.0) (32.8) % (47.0) (27.7) % (9.0) (19.1) % Segment operating earnings $ 114.5 67.2 % $ 122.7 72.3 % $ (8.2) (6.7) % of $233.5 million in the first ninesix months of 20172020 increased $26.3$0.8 million, or 12.7%0.5%, from $207.2 million last year2019, primarily due to $27.2$2.3 million of higher revenue as a result of continued growth of the company’s financial services portfolio, partially offset by $0.6$1.5 million of decreased revenue from lower average yields on contract receivables. In the first ninesix months of 20172020 and 2016,2019, the average yieldyields on finance receivables was 17.9% for both periods,were each 17.7%. In the first six months of 2020 and 2019 the respective average yields on contract receivables were 8.6% and 9.1%. The lower yield on contract receivables was 9.2% and 9.4%. in the first six months of 2020 primarily reflects the impact of business operation support loans to franchiseesin the COVID-19 environment. Originations of $807.0 million in 2017 decreased $8.4 million, or 1.0%, from 2016 levels.Financial services expenses of $70.4$511.4 million in the first ninesix months of 20172020 decreased $4.5 million, or 0.9%, from 2019 levels. $10.3 million from $60.1 million last year primarily due to changes in both the size of the portfolio and in thehigher provisions for credit losses.losses related to the company’s fiscal year 2020 adoption of ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), and $2.6 million, recorded in the first quarter of 2020, of higher credit reserve requirements associated with the COVID-19 pandemic. As a percentage of the average financial services portfolio, financial services expenses were 3.7% and 3.6%2.6% in the respective first ninesix months of 20172020 and 2016.of $163.1 million in the first ninesix months of 2017,2020, including $0.7$0.5 million of unfavorable foreign currency effects, increased $16.0decreased $8.2 million, or 10.9%6.7%, from 20162019 levels.34 to the Condensed Consolidated Financial Statements for further information on financial services. third second quarter 20172020 general corporate expenses of $36.7$20.8 million increased $14.2$1.9 million from $22.5$18.9 million last year. Snap-on’s general corporate expenses in the first six months of 2020 of $39.3 million increased $10.5 million from $28.8 million last year. The year-over-year increase in general corporate expenses for the first six months of 2020 primarily reflects $15.0an $11.6 million fornon-recurring benefit from the legal charge partially offset by lower pension expense.Snap-on’s general corporate expensessettlement recorded in the first nine monthsquarter of 20172019.SNAP-ON INCORPORATEDMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS(continued)September 30, 2017,June 27, 2020, and October 1, 2016,June 29, 2019, 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 27,
2020June 29,
2019June 27,
2020June 29,
2019Net sales $ 724.3 $ 951.3 $ — $ — Cost of goods sold (383.1) (477.5) — — Gross profit 341.2 473.8 — — Operating expenses (250.1) (283.9) — — Operating earnings before financial services 91.1 189.9 — — Financial services revenue — — 84.6 84.1 Financial services expenses — — (27.0) (23.5) Operating earnings from financial services — — 57.6 60.6 Operating earnings 91.1 189.9 57.6 60.6 Interest expense (13.4) (12.3) — (0.1) Intersegment interest income (expense) – net 16.5 17.8 (16.5) (17.8) Other income (expense) – net 2.0 2.1 — — Earnings before income taxes and equity earnings 96.2 197.5 41.1 42.7 Income tax expense (21.3) (44.5) (10.6) (11.1) Earnings before equity earnings 74.9 153.0 30.5 31.6 Financial services – net earnings attributable to Snap-on 30.5 31.6 — — Equity earnings, net of tax 0.5 0.3 — — Net earnings 105.9 184.9 30.5 31.6 Net earnings attributable to noncontrolling interests (4.7) (4.5) — — Net earnings attributable to Snap-on $ 101.2 $ 180.4 $ 30.5 $ 31.6 ninesix months ended September 30, 2017,June 27, 2020, and October 1, 2016,June 29, 2019, 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 27,
2020June 29,
2019June 27,
2020June 29,
2019Net sales $ 1,576.5 $ 1,873.0 $ — $ — Cost of goods sold (813.7) (927.6) — — Gross profit 762.8 945.4 — — Operating expenses (532.8) (568.1) — — Operating earnings before financial services 230.0 377.3 — — Financial services revenue — — 170.5 169.7 Financial services expenses — — (56.0) (47.0) Operating earnings from financial services — — 114.5 122.7 Operating earnings 230.0 377.3 114.5 122.7 Interest expense (24.7) (24.8) (0.1) (0.1) Intersegment interest income (expense) – net 34.6 35.5 (34.6) (35.5) Other income (expense) – net 3.5 3.6 — — Earnings before income taxes and equity earnings 243.4 391.6 79.8 87.1 Income tax expense (55.1) (89.9) (20.7) (22.6) Earnings before equity earnings 188.3 301.7 59.1 64.5 Financial services – net earnings attributable to Snap-on 59.1 64.5 — — Equity earnings, net of tax 0.5 0.8 — — Net earnings 247.9 367.0 59.1 64.5 Net earnings attributable to noncontrolling interests (9.5) (8.7) — — Net earnings attributable to Snap-on $ 238.4 $ 358.3 $ 59.1 $ 64.5 September 30, 2017,June 27, 2020, and December 31, 2016,28, 2019, 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 27,
2020December 28,
2019June 27,
2020December 28,
2019ASSETS Current assets: Cash and cash equivalents $ 685.9 $ 184.4 $ 0.3 $ 0.1 Intersegment receivables 13.6 14.2 — — Trade and other accounts receivable – net 562.7 693.5 0.8 1.1 Finance receivables – net — — 508.5 530.1 Contract receivables – net 7.0 6.8 90.7 93.9 Inventories – net 784.0 760.4 — — Prepaid expenses and other assets 132.3 111.8 9.2 7.0 Total current assets 2,185.5 1,771.1 609.5 632.2 Property and equipment – net 507.8 519.8 1.6 1.7 Operating lease right-of-use assets 47.7 52.9 2.5 2.7 Investment in Financial Services 340.9 340.5 — — Deferred income tax assets 24.6 32.7 22.5 19.6 Intersegment long-term notes receivable 267.8 755.5 — — Long-term finance receivables – net — — 1,140.3 1,103.5 Long-term contract receivables – net 14.3 16.0 352.6 344.1 Goodwill 924.5 913.8 — — Other intangibles – net 241.0 243.9 — — Other assets 73.5 73.0 0.2 0.2 Total assets $ 4,627.6 $ 4,719.2 $ 2,129.2 $ 2,104.0 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 27,
2020December 28,
2019June 27,
2020December 28,
2019LIABILITIES AND EQUITY Current liabilities: Notes payable $ 12.1 $ 202.9 $ — $ — Accounts payable 184.7 197.3 1.5 1.2 Intersegment payables — — 13.6 14.2 Accrued benefits 48.5 53.2 — 0.1 Accrued compensation 61.1 52.2 2.8 1.7 Franchisee deposits 83.3 68.2 — — Other accrued liabilities 396.7 353.7 47.7 25.7 Total current liabilities 786.4 927.5 65.6 42.9 Long-term debt and intersegment long-term debt — — 1,704.5 1,702.4 Deferred income tax liabilities 67.5 69.3 — — Retiree health care benefits 32.2 33.6 — — Pension liabilities 109.0 122.1 — — Operating lease liabilities 30.7 34.5 2.7 3.0 Other long-term liabilities 93.2 101.4 15.5 15.2 Total liabilities 1,119.0 1,288.4 1,788.3 1,763.5 Total shareholders’ equity attributable to Snap-on Inc. 3,486.7 3,409.1 340.9 340.5 Noncontrolling interests 21.9 21.7 — — Total equity 3,508.6 3,430.8 340.9 340.5 Total liabilities and equity $ 4,627.6 $ 4,719.2 $ 2,129.2 $ 2,104.0 (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 24, 2020, 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, based on current macroeconomic conditions resulting from the on-going uncertainty caused by COVID-19, 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 27, 2020, working capital (current assets less current liabilities) of $923.1$1,943.0 million increased $28.6$510.1 million from $894.5$1,432.9 million as of December 31, 201628, 2019 (fiscal 2016 year end) due to2019 year-end) primarily 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 27, 2020, 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 27,
2020December 28,
2019Cash and cash equivalents $ 686.2 $ 184.5 Trade and other accounts receivable – net 563.5 694.6 Finance receivables – net 508.5 530.1 Contract receivables – net 97.7 100.7 Inventories – net 784.0 760.4 Prepaid expenses and other assets 132.5 110.2 Total current assets 2,772.4 2,380.5 Notes payable (12.1) (202.9) Accounts payable (186.2) (198.5) Other current liabilities (631.1) (546.2) Total current liabilities (829.4) (947.6) Total working capital $ 1,943.0 $ 1,432.9 $94.1$686.2 million as of September 30, 2017,June 27, 2020, increased $16.5$501.7 million from 20162019 year-end levels primarily due toto: (i) $528.9$489.9 million of net proceeds from the April 30, 2020 issuance of $500 million of unsecured 3.10% notes that mature on May 1, 2050 (the “2050 Notes”); (ii) $467.0 million of cash generated from operations; (iii) $357.5 million of cash from collections of finance receivables; (ii) $415.0 million of cash generated from operations, including $14.9 million of cash proceeds from the first-quarter 2017 settlement of a treasury lock; (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”);and (iv) $51.0 million of net proceeds from notes payable and other short-term borrowings; and (v) $36.2$13.8 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$414.6 million of new finance receivables; (ii) $190.0 million of net repayments on other short-term borrowings; (iii) dividend payments to shareholders of $117.7 million; (iv) the repurchase of 1,348,000349,000 shares of the company’s common stock for $212.6 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$50.5 million; (v) the funding of $82.9$29.0 million for acquisitions;of capital expenditures; and (vi) the funding of $57.3$6.1 million of capital expenditures.SNAP-ON INCORPORATEDMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS(continued)$94.1$686.2 million of cash and cash equivalents as of September 30, 2017, $76.7June 27, 2020, $181.7 million was held outside of the United States.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 Cuts and Jobs Act (“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$563.5 million as of September 30, 2017, increased $76.4June 27, 2020, decreased $131.1 million from 20162019 year-end levels, primarily due to higherthe impact of lower sales $22.2volume as a result of the COVID-19 pandemic, collections and $8.2 million of foreign currency translation and $9.1 million of receivables related to the Norbar, BTC and TCS acquisitions.translation. 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 59 days at June 27, 2020, and 67 days at September 30, 2017, and 63 days at December 31, 2016.$605.6$606.2 million as of September 30, 2017,June 27, 2020, compared to $560.6$630.8 million at 20162019 year end. The long-term portions of net finance and contract receivables of $1,329.0$1,507.2 million as of September 30, 2017,June 27, 2020, compared to $1,221.2$1,463.6 million at 20162019 year end. The combined $152.8$19.0 million increase in net current and long-term finance and contract receivables over 20162019 year-end levels is primarily due to the continued growth of the company’s financial services portfolio, and $20.0 million of foreign currency translation. Inventories – net of $649.9 million as of September 30, 2017, increased $119.4 million from 2016year-end levels primarily to support continued higher customer demand and new product introductions, as well as from $24.1partially offset by $7.5 million of foreign currency translation, and $6.0$8.1 million of inventories relatedprovision charges resulting from the company’s fiscal year 2020 adoption of ASU No. 2016-13, the Norbar and TCS acquisitions.support critical industries, partially offset by $6.1 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 3.12.3 turns and 3.32.6 turns as of September 30, 2017,June 27, 2020, and December 31, 2016,28, 2019, respectively. Inventories accounted for using thefirst-in,first-out (“FIFO”) method approximated 60% and 59%58% of total inventories as of September 30, 2017,both June 27, 2020, and December 31, 2016,28, 2019, respectively. All other inventories are accounted for using thelast-in,first-out (“LIFO”) method. The company’s LIFO reserve was $74.4 million and $73.2$84.5 million as of September 30, 2017,both June 27, 2020, and December 31, 2016, respectively.and current maturities of long-term debt of $453.4$12.1 million as of September 30, 2017,June 27, 2020, represented other notes. There were no commercial paper borrowings outstanding as of June 27, 2020. As of 2019 year end, notes payable of $202.9 million included $250 million of the 2018 Notes, $170$193.6 million of commercial paper borrowings and $33.4$9.3 million of other notes. As of 2016 year end, notes payable and current maturities of long-term debt of $301.4 million included $150 million of the 2017 Notes (that were repaid upon maturity in January 2017), $130 million of commercial paper borrowings and $21.4 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$186.2 million as of September 30, 2017, increased $33.8June 27, 2020, decreased $12.3 million from 20162019 year-end levels primarily due to the timing of payments and $6.5$0.3 million of foreign currency translation.$366.0$435.4 million as of September 30, 2017,June 27, 2020, increased $58.1$64.6 million from 20162019 year-end levels primarily due to higher income tax accruals, for which the $15.0 million legal charge and $10.3payment due date was extended as a result of COVID-19, partially offset by $1.8 million of foreign currency translation.SNAP-ON INCORPORATEDMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS(continued)$755.0$1,436.7 million as of September 30, 2017,June 27, 2020, consisted 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”); (iii) $400 million of unsecured 4.10% notes that mature in 2048 (the “2048 Notes”); and (iv) $500 million of the 2050 Notes, partially offset by $13.3 million from the net effects of debt amortization costs and fair value adjustments of interest rate swaps. Long-term debt of $946.9 million as of 2019 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 $3.1 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.a five-year, $700an $800 million multi-currency revolving credit facility that terminates on December 15, 2020September 16, 2024 (the “Credit Facility”); as of September 30, 2017, no amounts were outstanding under the Credit Facility.Facility as of June 27, 2020. Borrowings under the Credit Facility bear interest at varying rates based on either: (i) Snap-on’s then-current, long-term debt ratings. The Credit Facility’s financial covenant requires thatSnap-on maintain, asratings; or (ii) Snap-on’s then-current ratio 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”adjustments (“Consolidated Net Debt”); 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“Consolidated Net Debt to EBITDA Ratio”). The Credit Facility’s financial covenant requires that Snap-on maintain, as of each fiscal quarter end, either (i) a ratio not greater than 0.60 to 1.00 of Consolidated Net Debt to the sum of Consolidated Net Debt plus total equity and less accumulated other comprehensive income or loss (the “Leverage Ratio”); or (ii) a Consolidated Net Debt to EBITDA Ratio not greater than 3.50 to 1.00. Snap-on may, up to two times during any five-year period during the term of the Credit Facility (including any extensions thereof), elect to increase the maximum DebtLeverage Ratio to 0.65 to 1.00 and/or increase the maximum Consolidated Net Debt to EBITDA Ratio to 3.754.00 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 27, 2020, the company’s actual ratios of 0.260.17 and 1.16,0.86 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.Snap-on’s Credit Facility and other debt agreements also contain certain usual and customary borrowing, affirmative, negative and maintenance covenants. As was in compliance with all covenants of its Credit Facility and other debt agreements.Snap-on believes it has sufficient available cash and access to both committed and uncommitted credit facilities to cover its expected funding needs on both a short-term and long-term basis, includinghowever, it is continuing to monitor the repaymentimpact of the 2018 Notes upon maturity.COVID-19 pandemic on its business and the credit and financial markets. 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, if it believes conditions are favorable, it may take advantage of what it believes are favorable marketsuch 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$8.7 million to its foreign pension plans and $2.3$2.9 million to its domestic pension plans in 2017,2020, as required by law. In the first nine months of 2017,Snap-on made $60.0 million of discretionary cash contributions to its domestic pension plans; dependingDepending on market and other conditions,Snap-on may make additional discretionary cash contributions to its pension plans in the balance of 2017.$415.0$467.0 million and $415.6$346.8 million in the first ninesix months of 20172020 and 2016,2019, respectively. The $0.6$120.2 million year-over-year decreaseincrease in net cash provided by operating activities primarily reflects an increase of $247.8 million from net changes in operating assets and liabilities, partially offset by highera $119.1 million decrease in 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$95.4 million in the first ninesix months of 20172020 included additions to finance receivables of $670.0$414.6 million, partially offset by collections of $528.9$357.5 million. Net cash used by investing activities of $244.1$103.9 million in the first ninesix months of 20162019 included additions to finance receivables of $691.4$431.1 million, partially offset by collections of $501.7$383.5 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 20172020 and 2019 also included a total of $82.9$6.1 million (net of $1.8and $9.3 million of cash acquired) for acquisitions. See Note 23 to the Consolidated Financial Statements for information onabout acquisitions.$57.3$29.0 million and $56.6$48.2 million in the first ninesix months of 20172020 and 2016,2019, 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. Net cash used by financing activities was $146.8 million in the first nine monthsborrowings of 2016. $36.2$13.8 million and $32.4$24.6 million in the respective first ninesix months of 20172020 and 2016.2019, respectively. Snap-on has undertaken stock repurchases from time to time to offset dilution created by shares issued for employee and franchisee stock purchase plans, andas well as stock options, as well asand for other corporate purposes. In the first ninesix months of 2017,2020, Snap-on repurchased 1,348,000349,000 shares of its common stock for $212.6$50.5 million under its previously announced share repurchase programs, including the up to $500 million share repurchase program approved by the Board of Directors on August 3, 2017. The 2017 share repurchase program replaced the company’s 1998 and 1999 share repurchase programs; the company’s 1996 repurchase program remains unchanged.programs. In the first ninesix months of 2016,2019, Snap-on repurchased 492,000660,000 shares of its common stock for $76.4$107.5 million under its previously announced share repurchase programs. As of September 30, 2017,June 27, 2020, Snap-on had remaining availability to repurchase up to an additional $438.8$330.4 million in common stock pursuant to its Board of Directors’ (“Board”)Board’s authorizations. The purchase ofSnap-on common stock is at the company’s discretion, subject to prevailing financial and market conditions.Snap-on believes that its cash generated from operations, available cash on hand, and funds available from its credit facilities, will be sufficient to fund the company’s additional share repurchases, if any, in the balance of 2017.$123.0$117.7 million and $106.3$105.3 million in the first ninesix months of 20172020 and 2016,2019, respectively. On November 3, 2016,8, 2019, the Board increased the quarterly cash dividend by 16.4%13.7% to $0.71$1.08 per share ($2.844.32 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, 2017.31, 2016,28, 2019, and on Form 10-Q for the period ended March 28, 2020, have not materially changed since those reports were filed.reportcapital expenditures in 2020 will be in a range of $75 million to $85 million, of which $29.0 million was filed.Outlookmake continued progress in 2017 alongmaintain focus on 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, expects that capital expenditures in 2017 will be in a range of $80 million to $90 million, of which $57.3 million was expended in the first nine months.Snap-on also currently anticipates that its full year 20172020 effective income tax rate will be comparablein the range of 23% to its 2016 full year rate.25%.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.910 to the Condensed Consolidated Financial Statements for information on foreign currency risk management.possible issuance of fixed rate debt. See Note 910 to the Condensed Consolidated Financial Statements for information on interest rate risk management.(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 27, 2020, was $1.8$23.6 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.910 to the Condensed Consolidated Financial Statements for additional information on stock-based deferred compensation risk management.debt-servicing ability, past payment experience, credit bureau information, and other financial and qualitative factors that may affect the customer’s ability to repay, as well as the value of the underlying collateral. CreditFinance 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.assurances.markets; formarkets. For example, the company is monitoring the impact of and developments related to COVID-19, which has created global economic uncertainty. In addition, the company is monitoring the potential effects of the United Kingdom’s pending exit from the European Union, although it is too soon to know what effects this might have on the world economy or the company. Inflation has not had a significant impact on the company.September 30, 2017.June 27, 2020. 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 27, 2020, 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 27, 2020, 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)).The following chart discloses information regarding the shares repurchased by the company during the thirdsecond quarter of fiscal 2017, all of which were purchased pursuant to the Board’s authorizations that the company has publicly announced.2020. 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 applicable*Subject to further adjustment pursuant to the 1996 Authorization described below,Period Shares
purchasedAverage
price
per shareShares
purchased as part of September 30, 2017, the approximate
publicly announced
plans or programspursuantunder3/29/20 to the outstanding Board authorizations discussed below is $438.8 million.4/25/20— — — $313.7 million 4/26/20 to 5/23/20 — — — $324.4 million 5/24/20 to 6/27/20 — — — $330.4 million Total/Average — — — N/A 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$116.07, $128.88 and $149.01$133.56 per share of common stock as of the end of the respective fiscal 20172020 months ended July 29, 2017, August 26, 2017,April 25, 2020, May 23, 2020, and September 30, 2017.June 27, 2020.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 Analysisthirdsecond quarter of 20172020 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 (Sales) of Snap-on Stock Period Shares
purchased (sold)Average
price
per share3/29/20 to 4/25/20 — — 4/26/20 to 5/23/20 10,300 $120.50 5/24/20 to 6/27/20 (13,000) $138.68 Total/Average (2,700) $130.65 Citibank Purchases ofSnap-on StockItem 6: Exhibits 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 Snap-on Incorporated 2011 Incentive Stock and Awards Plan (As Amended and Restated) *Exhibit 31.1Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.2002Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.2002Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.2002Certification 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 Inline 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 Inline XBRL Taxonomy Extension Schema Document**DocumentExhibit 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document**DocumentExhibit 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document**DocumentExhibit 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document**DocumentExhibit 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document**DocumentExhibit 104 Cover page Inline XBRL data (contained in Exhibit 101) *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. SNAP-ON INCORPORATEDDate:October 19, 2017 /s//s/ Aldo J. Pagliari62