UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM10-Q

(Mark one)

☒
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2017~~

April 3, 2021

☐
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number1-7724

Snap-on Incorporated

(Exact name of registrant as specified in its charter)

Delaware

39-0622040

(State of incorporation)

(I.R.S. Employer Identification No.)

~~2801 80~~^th ~~Street, Kenosha, Wisconsin~~

~~53143~~

2801 80th Street,

Kenosha,

Wisconsin

53143

(Address of principal executive offices)

(Zip code)

(262)656-5200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-2 of the Exchange Act.

~~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

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date:


~~Class~~				~~Outstanding at October 13, 2017~~
~~Common Stock, $1.00 par value~~				~~57,007,188 shares~~

~~TABLE OF CONTENTS~~

Class

~~Page~~

Outstanding at April 16, 2021

~~Part I: Financial Information~~

Common Stock, $1.00 par value

54,079,984 shares

Table of Contents

TABLE OF CONTENTS

~~Item 1.~~

~~Financial Statements~~

Page

Part I: Financial Information

Item 1.

Financial Statements

Condensed Consolidated Statements of Earnings (unaudited) – Three ~~and Nine~~ Months Ended
~~September 30, 2017,~~ April 3, 2021, and ~~October 1, 2016~~March 28, 2020

Condensed Consolidated Statements of Comprehensive Income (unaudited) – Three ~~and Nine~~ Months Ended ~~September 30, 2017,~~April 3, 2021, and ~~October 1, 2016~~March 28, 2020

Condensed Consolidated Balance Sheets (unaudited) – ~~September 30, 2017,~~April 3, 2021, and ~~December 31, 2016~~January 2, 2021

~~5-6~~

Condensed Consolidated Statements of Equity (unaudited) – ~~Nine~~Three Months Ended ~~September 30, 2017,~~April 3, 2021, and ~~October 1, 2016~~March 28, 2020

Condensed Consolidated Statements of Cash Flows (unaudited) – ~~Nine~~Three Months Ended ~~September 30, 2017,~~April 3, 2021, and ~~October 1, 2016~~March 28, 2020

Notes to Condensed Consolidated Financial Statements (unaudited)

~~9-36~~

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~37-56~~

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

~~57-58~~

Item 4.

Controls and Procedures

~~58-59~~

Part II: Other Information

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

~~59-60~~

Item 6.

Exhibits

Signatures

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1: Financial Statements

SNAP-ON INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Amounts in millions, except per share data)

(Unaudited)

   Three Months Ended    Nine Months Ended
     September 30,
2017      October 1,
2016      September 30,
2017      October 1,
2016
Net sales
     $ 903.8         $ 834.1         $ 2,712.3         $ 2,540.6
Cost of goods sold
       (455.2)          (415.0)          (1,352.7)          (1,274.9)








Gross profit
   448.6       419.1       1,359.6       1,265.7
Operating expenses
   (295.5)      (261.5)      (853.3)      (786.3)








Operating earnings before financial services
   153.1       157.6       506.3       479.4
Financial services revenue
   79.0       71.6       233.5       207.2
Financial services expenses
   (23.0)      (21.0)      (70.4)      (60.1)








Operating earnings from financial services
   56.0       50.6       163.1       147.1








Operating earnings
   209.1       208.2       669.4       626.5
Interest expense
   (13.1)      (13.1)      (38.8)      (39.1)
Other income (expense) – net
   (2.1)      (0.8)      (5.7)      (0.3)








Earnings before income taxes and equity earnings
   193.9       194.3       624.9       587.1
Income tax expense
   (57.2)      (59.6)      (187.1)      (179.4)








Earnings before equity earnings
   136.7       134.7       437.8       407.7
Equity earnings, net of tax
   0.4       0.5       1.2       2.2








Net earnings
   137.1       135.2       439.0       409.9
Net earnings attributable to noncontrolling interests
   (3.7)      (3.5)      (10.8)      (9.8)








Net earnings attributable toSnap-on Incorporated
     $ 133.4         $ 131.7         $ 428.2         $ 400.1








Net earnings per share attributable toSnap-on Incorporated:

Basic
     $ 2.33         $ 2.27         $ 7.43         $ 6.89
Diluted
   2.29       2.22       7.27       6.74
Weighted-average shares outstanding:

Basic
   57.2       58.0       57.6       58.1
Effect of dilutive securities
   1.1       1.3       1.3       1.3








Diluted
   58.3       59.3       58.9       59.4








Dividends declared per common share
     $ 0.71         $ 0.61         $ 2.13         $ 1.83


	Three Months Ended
	April 3, 2021		March 28, 2020
Net sales	$	1,024.6	$	852.2
Cost of goods sold	(511.0)		(430.6)
Gross profit	513.6		421.6
Operating expenses	(312.7)		(282.7)
Operating earnings before financial services	200.9		138.9

Financial services revenue	88.6		85.9
Financial services expenses	(23.3)		(29.0)
Operating earnings from financial services	65.3		56.9

Operating earnings	266.2		195.8
Interest expense	(14.3)		(11.4)
Other income (expense) – net	4.3		1.5
Earnings before income taxes and equity earnings	256.2		185.9
Income tax expense	(59.1)		(43.9)
Earnings before equity earnings	197.1		142.0
Equity earnings, net of tax	0.5		0
Net earnings	197.6		142.0
Net earnings attributable to noncontrolling interests	(5.0)		(4.8)
Net earnings attributable to Snap-on Incorporated	$	192.6	$	137.2

Net earnings per share attributable to Snap-on Incorporated:
Basic	$	3.55	$	2.52
Diluted	3.50		2.49

Weighted-average shares outstanding:
Basic	54.2		54.5
Effect of dilutive securities	0.9		0.5
Diluted	55.1		55.0

Dividends declared per common share	$	1.23	$	1.08

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

SNAP-ON INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in millions)

(Unaudited)

   Three Months Ended    Nine Months Ended
     September 30,        October 1,        September 30,        October 1,
   2017    2016    2017    2016
Comprehensive income (loss):

Net earnings
     $ 137.1           $ 135.2           $ 439.0           $ 409.9
Other comprehensive income (loss):

Foreign currency translation*
   51.4         (7.8)        138.9         (22.8)
Unrealized cash flow hedges, net of tax:

Other comprehensive income before reclassifications
   –           –           6.1         –
Reclassification of cash flow hedges to net earnings
   (0.5)        (0.1)        (1.2)        (0.3)
Defined benefit pension and postretirement plans:

Amortization of net unrecognized losses and prior service credits included in net periodic benefit cost
   6.6         7.6         19.8         22.7
Income tax benefit
   (2.3)        (2.8)        (6.9)        (8.3)








Net of tax
   4.3         4.8         12.9         14.4








Total comprehensive income
     $ 192.3           $ 132.1           $ 595.7           $ 401.2
Comprehensive income attributable to noncontrolling interests
   (3.7)        (3.5)        (10.8)        (9.8)








Comprehensive income attributable toSnap-on Incorporated
     $ 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
	April 3, 2021		March 28, 2020
Comprehensive income (loss):
Net earnings	$	197.6	$	142.0
Other comprehensive income (loss):
Foreign currency translation*	(29.0)		(108.0)
Unrealized cash flow hedges, net of tax:

Reclassification of cash flow hedges to net earnings	(0.4)		(0.4)
Defined benefit pension and postretirement plans:
Amortization of net unrecognized losses included in net periodic benefit cost	9.1		8.4
Income tax benefit	(2.2)		(2.0)
Net of tax	6.9		6.4
Total comprehensive income	175.1		40.0

Comprehensive income attributable to noncontrolling interests	(5.0)		(4.8)
Comprehensive income attributable to Snap-on Incorporated	$	170.1	$	35.2

* There is no reclassification adjustment as there was no sale or liquidation of any foreign entity during any period presented.

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

SNAP-ON INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in millions, except share data)

(Unaudited)

     September 30,
2017      December 31,
2016
ASSETS

Current assets:

Cash and cash equivalents
       $ 94.1             $ 77.6
Trade and other accounts receivable – net
   675.2         598.8
Finance receivables – net
   505.8         472.5
Contract receivables – net
   99.8         88.1
Inventories – net
   649.9         530.5
Prepaid expenses and other assets
   121.1         116.5




Total current assets
       2,145.9             1,884.0
Property and equipment:

Land
   24.4         19.1
Buildings and improvements
   350.3         309.4
Machinery, equipment and computer software
   872.8         809.6




   1,247.5         1,138.1
Accumulated depreciation and amortization
   (773.3)        (712.9)




Property and equipment – net
   474.2         425.2
Deferred income tax assets
   81.2         72.8
Long-term finance receivables – net
   1,018.6         934.5
Long-term contract receivables – net
   310.4         286.7
Goodwill
   924.0         895.5
Other intangibles – net
   258.3         184.6
Other assets
   43.6         39.9




Total assets
       $ 5,256.2             $ 4,723.2


	April 3, 2021		January 2, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	904.6	$	923.4
Trade and other accounts receivable – net	650.8		640.7
Finance receivables – net	527.4		530.2
Contract receivables – net	108.0		112.5
Inventories – net	730.1		746.5
Prepaid expenses and other assets	131.6		129.7
Total current assets	3,052.5		3,083.0

Property and equipment:
Land	33.6		34.0
Buildings and improvements	427.8		432.0
Machinery, equipment and computer software	1,035.6		1,033.4
Property and equipment – gross	1,497.0		1,499.4
Accumulated depreciation and amortization	(977.9)		(973.2)
Property and equipment – net	519.1		526.2

Operating lease right-of-use assets	49.9		51.9
Deferred income tax assets	49.8		50.3
Long-term finance receivables – net	1,118.3		1,136.3
Long-term contract receivables – net	374.0		374.7
Goodwill	1,161.8		982.4
Other intangibles – net	254.6		260.8
Other assets	93.5		91.7
Total assets	$	6,673.5	$	6,557.3

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

SNAP-ON INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in millions, except share data)

(Unaudited)

     September 30,
2017      December 31,
2016
LIABILITIES AND EQUITY

Current liabilities:

Notes payable and current maturities of long-term debt
       $ 453.4             $ 301.4
Accounts payable
   204.7         170.9
Accrued benefits
   47.8         52.8
Accrued compensation
   74.8         89.8
Franchisee deposits
   76.1         66.7
Other accrued liabilities
   366.0         307.9




Total current liabilities
   1,222.8         989.5
Long-term debt
   755.0         708.8
Deferred income tax liabilities
   28.5         13.1
Retiree health care benefits
   34.3         36.7
Pension liabilities
   181.8         246.5
Other long-term liabilities
   93.8         93.4




Total liabilities
       2,316.2             2,088.0




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)
   67.4         67.4
Additionalpaid-in capital
   344.4         317.3
Retained earnings
   3,689.5         3,384.9
Accumulated other comprehensive loss
   (341.8)        (498.5)
Treasury stock at cost(10,400,929 and 9,450,393 shares, respectively)
   (837.7)        (653.9)




Total shareholders’ equity attributable toSnap-on Incorporated
   2,921.8         2,617.2
Noncontrolling interests
   18.2         18.0




Total equity
   2,940.0         2,635.2




Total liabilities and equity
       $ 5,256.2             $ 4,723.2


	April 3, 2021		January 2, 2021
LIABILITIES AND EQUITY
Current liabilities:
Notes payable and current maturities of long-term debt	$	268.5	$	268.5
Accounts payable	235.9		222.9
Accrued benefits	74.5		59.7
Accrued compensation	73.3		89.9
Franchisee deposits	76.3		78.4
Other accrued liabilities	505.6		445.5
Total current liabilities	1,234.1		1,164.9

Long-term debt	1,182.3		1,182.1
Deferred income tax liabilities	74.9		70.4
Retiree health care benefits	33.8		34.5
Pension liabilities	117.6		127.1
Operating lease liabilities	32.0		34.0
Other long-term liabilities	100.9		97.7
Total liabilities	2,775.6		2,710.7

Commitments and contingencies (Note 15)	0		0

Equity
Shareholders’ equity attributable to Snap-on Incorporated:
Preferred stock (authorized 15,000,000 shares of $1 par value; NaN outstanding)	0		0
Common stock (authorized 250,000,000 shares of $1 par value; issued 67,437,885 and 67,430,958 shares, respectively)	67.4		67.4
Additional paid-in capital	419.7		391.7
Retained earnings	5,282.5		5,156.9
Accumulated other comprehensive loss	(388.3)		(365.8)
Treasury stock at cost (13,392,053 and 13,328,859 shares, respectively)	(1,505.3)		(1,425.3)
Total shareholders’ equity attributable to Snap-on Incorporated	3,876.0		3,824.9
Noncontrolling interests	21.9		21.7
Total equity	3,897.9		3,846.6
Total liabilities and equity	$	6,673.5	$	6,557.3

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

SNAP-ON INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Amounts in millions, except share data)

(Unaudited)

The following summarizes the changes in total equity for the ~~nine~~three month period ended ~~September 30, 2017:~~

   Shareholders’ Equity Attributable toSnap-on Incorporated

Common
Stock

Additional
Paid-in
Capital

Retained
Earnings
   Accumulated
Other
Comprehensive
Income (Loss)
Treasury
Stock
   Noncontrolling
Interests
Total
Equity



Balance at December 31, 2016
     $ 67.4         $ 317.3      $ 3,384.9      $ (498.5)      $ (653.9)      $ 18.0      $ 2,635.2
Net earnings for the nine months ended
September 30, 2017
   –           –           428.2    –           –           10.8    439.0
Other comprehensive income
   –           –           –           156.7    –           –           156.7
Cash dividends – $2.13 per share
   –           –           (123.0)    –           –           –           (123.0)
Stock compensation plans
   –           27.1    –           –           28.8    –           55.9
Share repurchases – 1,348,000 shares
   –           –           –           –           (212.6)    –           (212.6)
Other
   –           –           (0.6)    –           –           (10.6)    (11.2)


Balance at September 30, 2017
     $     67.4         $     344.4      $     3,689.5      $     (341.8)      $     (837.7)      $     18.2      $     2,940.0


The following summarizes the changes in total equity for the nine month period ended October 1, 2016:

   Shareholders’ Equity Attributable toSnap-on Incorporated

Common
Stock

Additional
Paid-in
Capital

Retained
Earnings
   Accumulated
Other
Comprehensive
Loss
Treasury
Stock
   Noncontrolling
Interests
Total
Equity



Balance at January 2, 2016
     $ 67.4         $ 296.3         $ 2,986.9         $ (364.2)        $ (573.7)        $ 18.0         $ 2,430.7
Net earnings for the nine months ended
October 1, 2016
   –           –           400.1       –           –           9.8       409.9
Other comprehensive loss
   –           –           –           (8.7)      –           –           (8.7)
Cash dividends – $1.83 per share
   –           –           (106.3)      –           –           –           (106.3)
Stock compensation plans
   –           22.8       –           –           27.1       –           49.9
Share repurchases – 492,000 shares
   –           –           –           –           (76.4)      –           (76.4)
Other
   –           –           (0.7)      –           –           (9.8)      (10.5)


Balance at October 1, 2016
     $     67.4         $     319.1         $     3,280.0         $     (372.9)        $     (623.0)        $     18.0         $     2,688.6

April 3, 2021:


	Shareholders’ Equity Attributable to Snap-on Incorporated
	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Noncontrolling Interests		Total Equity
Balance at January 2, 2021	$	67.4	$	391.7	$	5,156.9	$	(365.8)	$	(1,425.3)	$	21.7	$	3,846.6
Net Earnings for the three months ended April 3, 2021	—		—		192.6		—		—		5.0		197.6
Other comprehensive loss	—		—		—		(22.5)		—		—		(22.5)
Cash dividends – $1.23 per share	—		—		(66.7)		—		—		—		(66.7)
Stock compensation plans	—		28.0		—		—		71.9		—		99.9
Share repurchases – 722,000 shares	—		—		—		—		(151.9)		—		(151.9)
Other	—		—		(0.3)		—		—		(4.8)		(5.1)
Balance at April 3, 2021	$	67.4	$	419.7	$	5,282.5	$	(388.3)	$	(1,505.3)	$	21.9	$	3,897.9

The following summarizes the changes in total equity for the three month period ended March 28, 2020:


	Shareholders’ Equity Attributable to Snap-on Incorporated
	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Noncontrolling Interests		Total Equity
Balance 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 three months ended March 28, 2020	—		—		137.2		—		—		4.8		142.0
Other comprehensive loss	—		—		—		(102.0)		—		—		(102.0)
Cash dividends – $1.08 per share	—		—		(59.0)		—		—		—		(59.0)
Stock compensation plans	—		(0.7)		—		—		3.1		—		2.4
Share repurchases – 349,000 shares	—		—		—		—		(50.5)		—		(50.5)
Other	—		—		0.2		—		—		(4.4)		(4.2)
Balance at Balance at March 28, 2020	$	67.4	$	378.4	$	4,852.0	$	(609.9)	$	(1,356.6)	$	22.1	$	3,353.4

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

SNAP-ON INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in millions)

(Unaudited)

   Nine Months Ended
     September 30,
2017      October 1,
2016
Operating activities:

Net earnings
     $ 439.0           $ 409.9
Adjustments to reconcile net earnings to net cash provided (used) by operating activities:

Depreciation
   48.7         45.7
Amortization of other intangibles
   20.7         18.2
Provision for losses on finance receivables
   38.6         30.4
Provision for losses onnon-finance receivables
   7.9         6.1
Stock-based compensation expense
   21.4         21.5
Deferred income tax benefit
   (10.1)        (12.5)
Gain on sale of assets
   (0.1)        (0.1)
Settlement of treasury lock
   14.9         –
Changes in operating assets and liabilities, net of effects of acquisitions:

Increase in trade and other accounts receivable
   (50.8)        (31.2)
Increase in contract receivables
   (31.8)        (30.8)
Increase in inventories
   (86.9)        (29.9)
Increase in prepaid and other assets
   (9.7)        (28.5)
Increase in accounts payable
   26.5         27.7
Decrease in accruals and other liabilities
   (13.3)        (10.9)




Net cash provided by operating activities
   415.0         415.6
Investing activities:

Additions to finance receivables
   (670.0)        (691.4)
Collections of finance receivables
   528.9         501.7
Capital expenditures
   (57.3)        (56.6)
Acquisitions of businesses, net of cash acquired
   (82.9)        –
Disposal of property and equipment
   1.4         1.9
Other
   (2.5)        0.3




Net cash used by investing activities
       (282.4)            (244.1)
Financing activities:

Proceeds from issuance of long-term debt
   297.8         –
Repayments of long-term debt
   (150.0)        –
Proceeds from notes payable
   16.8         4.5
Repayments of notes payable
   (4.5)        (5.3)
Net increase in other short-term borrowings
   38.7         15.6
Cash dividends paid
   (123.0)        (106.3)
Purchases of treasury stock
   (212.6)        (76.4)
Proceeds from stock purchase and option plans
   36.2         32.4
Other
   (18.9)        (11.3)




Net cash used by financing activities
   (119.5)        (146.8)




Effect of exchange rate changes on cash and cash equivalents
   3.4         –




Increase in cash and cash equivalents
   16.5         24.7
Cash and cash equivalents at beginning of year
   77.6         92.8




Cash and cash equivalents at end of period
     $ 94.1           $ 117.5




Supplemental cash flow disclosures:

Cash paid for interest
     $ (49.7)          $ (49.2)
Net cash paid for income taxes
   (168.3)        (175.7)


	Three Months Ended
	April 3, 2021		March 28, 2020
Operating activities:
Net earnings	$	197.6	$	142.0
Adjustments to reconcile net earnings to net cash provided (used) by operating activities:
Depreciation	18.7		18.1
Amortization of other intangibles	6.0		5.7
Provision for losses on finance receivables	11.3		16.3
Provision for losses on non-finance receivables	2.6		5.0
Stock-based compensation expense	12.3		1.1
Deferred income tax provision (benefit)	2.3		(3.6)
Loss on sales of assets	0		0.1

Changes in operating assets and liabilities, net of effects of acquisitions:
Trade and other accounts receivable	(9.8)		34.3
Contract receivables	5.6		1.2
Inventories	8.3		(23.8)
Prepaid and other assets	(1.8)		3.2
Accounts payable	17.5		1.9
Accruals and other liabilities	48.7		11.9
Net cash provided by operating activities	319.3		213.4
Investing activities:
Additions to finance receivables	(216.5)		(212.8)
Collections of finance receivables	228.6		190.7
Capital expenditures	(19.3)		(17.2)
Acquisitions of businesses, net of cash acquired	(200.0)		(6.1)

Other	0		(4.4)
Net cash used by investing activities	(207.2)		(49.8)
Financing activities:




Net increase (decrease) in other short-term borrowings	2.4		(41.9)
Cash dividends paid	(66.7)		(59.0)
Purchases of treasury stock	(151.9)		(50.5)
Proceeds from stock purchase and option plans	93.0		1.5
Other	(7.8)		(7.2)
Net cash used by financing activities	(131.0)		(157.1)

Effect of exchange rate changes on cash and cash equivalents	0.1		(5.2)
Increase (decrease) in cash and cash equivalents	(18.8)		1.3
Cash and cash equivalents at beginning of year	923.4		184.5
Cash and cash equivalents at end of period	$	904.6	$	185.8
Supplemental cash flow disclosures:
Cash paid for interest	$	(19.4)	$	(20.7)
Net cash paid for income taxes	(15.9)		(15.1)

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1: Summary of Accounting Policies

Principles of consolidation and presentation

The Condensed Consolidated Financial Statements include the accounts ofSnap-on Incorporated and its ~~wholly-owned~~wholly 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~~ 2020 Annual Report on Form10-K for the fiscal year ended ~~December 31, 2016~~January 2, 2021 (“~~2016~~2020 year end”).

The company’s ~~2017~~2021 fiscal ~~third~~year, which ends on January 1, 2022, will contain 52 weeks of operating results. The company’s 2020 fiscal year contained 53 weeks of operating results, with the additional week occurring in the fourth quarter. Snap-on’s 2021 fiscal first quarter ended on ~~September 30, 2017;~~April 3, 2021; the ~~2016~~2020 fiscal ~~third~~first quarter ended on ~~October 1, 2016.~~March 28, 2020. The company’s ~~2017~~2021 and ~~2016~~2020 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.~~

In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for the fair presentation of the Condensed Consolidated Financial Statements for the three ~~and nine~~ month periods ended ~~September 30, 2017,~~April 3, 2021, and ~~October 1, 2016,~~March 28, 2020, have been made. Interim results of operations are not necessarily indicative of the results to be expected for the full fiscal year.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Financial Instruments

The fair value of the company’s derivative financial instruments is generally determined using quoted prices in active markets for similar assets and liabilities. The carrying value of the company’snon-derivative financial instruments either approximates fair value, due to their short-term nature, or the amount disclosed for fair value is based upon a discounted cash flow analysis or quoted market values. See Note 910 for further information on financial instruments.

New Accounting Standards

The following new accounting pronouncement was adopted by Snap-on in fiscal year ~~2017:~~

In2021:

On January ~~2017,~~3, 2021, the ~~Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”)~~beginning of Snap-on’s 2021 fiscal year, the company adopted ASU No. ~~2017-04,~~~~Intangibles – Goodwill and Other (Topic 350) –~~ 2019-12, Simplifying the ~~Test~~Accounting for ~~Goodwill Impairment~~Income Taxes, which ~~eliminates~~is designed to simplify the ~~requirement~~accounting for income taxes by removing certain exceptions to ~~calculate~~ the ~~implied fair value~~general principles in Topic 740. The adoption of ~~goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fairvalue. Snap-on~~ ~~early adopted~~ this ASU ~~in the second quarter of 2017 in conjunction with its annual impairment test. The amendments in this ASU are being applied on a prospective basis and the adoption~~ did not have a significant impact on the company’s ~~consolidated financial statements.~~

Condensed Consolidated Financial Statements.

Table of Contents

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

Note 2: Revenue Recognition

Snap-on recognizes revenue from the sale of tools, diagnostic and equipment products and related services based on when control of the product passes to the customer or the service is provided and is recognized at an amount that reflects the consideration expected to be received in exchange for such goods or services.

Revenue Disaggregation: The following ~~new accounting pronouncements,~~table shows the consolidated revenues by revenue source:


	Three Months Ended
(Amounts in millions)	April 3, 2021		March 28, 2020

Revenue from contracts with customers	$	1,018.8	$	846.6
Other revenues	5.8		5.6
Total net sales	1,024.6		852.2
Financial services revenue	88.6		85.9
Total revenues	$	1,113.2	$	938.1

Snap-on evaluates the performance of its operating segments based on segment revenues, including both external and ~~related impacts~~intersegment net sales, and segment operating earnings. Snap-on accounts for both intersegment sales and transfers based primarily on ~~adoption,~~standard costs with reasonable mark-ups established between the segments. Intersegment amounts are ~~being evaluated by the company:~~

~~In August 2017, the FASB issued ASUNo. 2017-12,~~~~Derivatives and Hedging (Topic 815) –~~~~Targeted Improvements~~eliminated 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 activities 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. ASU~~No. 2017-12~~ is effective for fiscal years beginning after December 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 itsarrive at Snap-on’s consolidated financial ~~statements.~~

~~In March 2017, the FASB issued ASUNo. 2017-07,~~~~Compensation – Retirement Benefits (Topic 715) – Improving the Presentation~~results.

Table 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. The~~non-service-cost~~ components of net periodic benefit costs are to be presented in the income statement separately from the service cost components and outside a subtotal of income from operations. The ASU also allows for the capitalization of the service cost components, when applicable (i.e., as a cost of internally manufactured inventory or a self-constructed asset).

The ASU is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods; early adoption is permitted as of the beginning of an annual period for which financial statements (interim or annual) have not been issued or made available for issuance. The amendments in this ASU are to be applied retrospectively. The company does not expect the adoption of this ASU to have a significant 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 after December 15, 2017, including interim periods within those fiscal years; early adoption is permitted as of the beginning of an annual reporting period for which financial statements (interim or annual) have not been issued or made available for issuance (i.e., the first interim period if an entity issues interim financial statements). The amendments in this ASU are to be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings at the time of adoption. The company does not expect the adoption of this ASU 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.

Contents

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

~~In June 2016, the FASB issued ASUNo. 2016-13,~~~~Financial Instruments – Credit Losses (Topic 326)~~~~, to require the measurement of expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable forecasts.~~

The main objective of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit heldfollowing tables represent external net sales disaggregated by ~~a reporting entity at each reporting date. ASUNo. 2016-13~~ is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years; the ASU allows for early adoption as of the beginning of an interim or annual reporting period beginning after December 15, 2018. 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. ASU~~No. 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 isgeography, based on the ~~principle that an entity should recognize revenue to depict the transfer~~customers’ billing addresses:


	For the Three Months Ended April 3, 2021
	Commercial		Snap-on		Repair Systems
	& Industrial		Tools		& Information		Financial				Snap-on
(Amounts in millions)	Group		Group		Group		Services		Eliminations		Incorporated
Net sales:
North America*	$	118.0	$	408.1	$	200.9	$	0	$	—	$	727.0
Europe	84.3		44.2		60.6		0		—		189.1
All other	68.8		26.0		13.7		0		—		108.5
External net sales	271.1		478.3		275.2		0		—		1,024.6
Intersegment net sales	74.6		0		72.4		0		(147.0)		—
Total net sales	345.7		478.3		347.6		0		(147.0)		1,024.6
Financial services revenue	0		0		0		88.6		—		88.6
Total revenue	$	345.7	$	478.3	$	347.6	$	88.6	$	(147.0)	$	1,113.2


	For the Three Months Ended March 28, 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*	$	108.9	$	326.9	$	177.3	$	0	$	—	$	613.1
Europe	67.1		31.1		56.6		0		—		154.8
All other	51.0		17.9		15.4		0		—		84.3
External net sales	227.0		375.9		249.3		0		—		852.2
Intersegment net sales	72.9		0		65.3		0		(138.2)		—
Total net sales	299.9		375.9		314.6		0		(138.2)		852.2
Financial services revenue	0		0		0		85.9		—		85.9
Total revenue	$	299.9	$	375.9	$	314.6	$	85.9	$	(138.2)	$	938.1

* North America is comprised of the United States, Canada and Mexico.

Table 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 will not have a significant impact on the company’s consolidated financial statements. The company believes that the adoption will result in the recognition of an inventory asset related to certain product returns by increasing the returns liability and an inventory asset for the anticipated value of the returns; the corresponding increase in the inventory asset and returns liability is expected to be in the range of $24 million to $28 million at the 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 beginning of its 2018 fiscal year using the modified retrospective approach.~~

Contents

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

The following tables represent external net sales disaggregated by customer type:


	For the Three Months Ended April 3, 2021
	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	$	24.1	$	478.3	$	275.2	$	0	$	—	$	777.6
All other professionals	247.0		0		0		0		—		247.0
External net sales	271.1		478.3		275.2		0		—		1,024.6
Intersegment net sales	74.6		0		72.4		0		(147.0)		—
Total net sales	345.7		478.3		347.6		0		(147.0)		1,024.6
Financial services revenue	0		0		0		88.6		0		88.6
Total revenue	$	345.7	$	478.3	$	347.6	$	88.6	$	(147.0)	$	1,113.2


	For the Three Months Ended March 28, 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	$	19.4	$	375.9	$	249.3	$	0	$	—	$	644.6
All other professionals	207.6		0		0		0		—		207.6
External net sales	227.0		375.9		249.3		0		—		852.2
Intersegment net sales	72.9		0		65.3		0		(138.2)		—
Total net sales	299.9		375.9		314.6		0		(138.2)		852.2
Financial services revenue	0		0		0		85.9		0		85.9
Total revenue	$	299.9	$	375.9	$	314.6	$	85.9	$	(138.2)	$	938.1

Nature of Goods and Services: Snap-on derives net sales from a broad line of products and complementary services that are grouped into three categories: (i) tools; (ii) diagnostics, information and management systems; and (iii) equipment. The tools product category includes hand tools, power tools, tool storage products and other similar products. The diagnostics, information and management systems product category includes handheld and PC-based diagnostic products, service and repair information products, diagnostic software solutions, electronic parts catalogs, business management systems and services, point-of-sale systems, integrated systems for vehicle service shops, original equipment manufacturer (“OEM”) purchasing facilitation services, and warranty management systems and analytics to help OEM dealership service and repair shops (“OEM dealerships”) manage and track performance. The equipment product category includes solutions for the service of vehicles and industrial equipment. Snap-on supports the sale of its diagnostics and vehicle service shop equipment by offering training programs as well as after-sales support to its customers. Through its financial services businesses, Snap-on also derives revenue from various financing programs designed to facilitate the sales of its products and support its franchise business.

Approximately 90% of Snap-on’s net sales are products sold at a point in time through ship-and-bill performance obligations that also includes service repair services. The remaining sales revenue is earned over time primarily on a subscription basis including software, extended warranty and other subscription service agreements.

Table of Contents

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

Snap-on enters into contracts related to the selling of tools, diagnostic and repair information and equipment products and related services. At contract inception, an assessment of the goods and services promised in the contracts with customers is performed and a performance obligation is identified for each distinct promise to transfer to the customer a good or service (or bundle of goods or services). To identify the performance obligations, Snap-on considers all of the goods or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. Contracts with customers are comprised of customer purchase orders, invoices and written contracts.

For certain performance obligations related to software subscriptions, extended warranty and other subscription agreements that are settled over time, Snap-on has elected not to disclose the value of unsatisfied performance obligations for: (i) contracts that have an original expected length of one year or less; (ii) contracts where revenue is recognized as invoiced; and (iii) contracts with variable consideration related to unsatisfied performance obligations. The remaining duration of these unsatisfied performance obligations range from one month up to 60 months. Snap-on had approximately $218.0 million of long-term contracts that have fixed consideration that extends beyond one year as of April 3, 2021. Snap-on expects to recognize approximately 65% of these contracts as revenue by the end of fiscal 2022, an additional 30% by the end of fiscal 2024 and the balance thereafter.

Contract Liabilities (Deferred Revenues): Contract liabilities are recorded when cash payments are received in advance of Snap-on’s performance. The timing of payment is typically on a monthly, quarterly or annual basis. The balance of total contract liabilities was $70.6 million and $61.0 million at April 3, 2021, and January 2, 2021, respectively. The current portion of contract liabilities is included in “Other accrued liabilities” and the non-current portion of such liabilities is included in “Other long-term liabilities” on the accompanying Condensed Consolidated Balance Sheets. During the three months ended April 3, 2021, Snap-on recognized revenue of $31.0 million that was included in the $61.0 million contract liability balance at January 2, 2021, which was primarily from the amortization of software subscriptions, extended warranties and other subscription agreements.

Note 2:3: Acquisitions

On ~~July 28, 2017,~~February 26, 2021, Snap-on acquired ~~Torque Control Specialist~~Dealer-FX Group, Inc. (“~~TCS”~~Dealer-FX”), for a cash purchase price of ~~$3.6~~$200.1 million (or ~~$3.5~~$200.0 million, net of cash acquired). ~~TCS,~~Dealer-FX, based in ~~Adelaide, Australia, distributes~~Markham, Ontario, is a ~~full range~~leading developer, marketer and provider of ~~torque products, including wrenches, multipliers~~service operations software solutions for automotive OEM customers and ~~calibrators for use~~their dealers. Dealer-FX specializes in ~~critical industries.~~

software as a service (SaaS) management systems, communications platforms, extensive data integrations, and offers a digitalized solution that increases productivity and enhances the vehicle owners experience. In the ~~third~~first quarter of ~~2017,~~2021, the company recorded, on a preliminary basis, the $195.2 million excess of the purchase price over the fair value of the net assets acquired in “Goodwill” on the accompanying Condensed Consolidated Balance Sheets. The company anticipates completing the purchase accounting for the acquired net assets of Dealer-FX in 2021.

On September 28, 2020, Snap-on acquired substantially all of the assets of AutoCrib, Inc. (“AutoCrib”) for a cash purchase price of $35.4 million. AutoCrib, based in Tustin, California, designs, manufactures and markets asset and tool control solutions for a variety of aerospace, automotive, military, natural resources and general industry operations. In the first quarter of 2021, the company completed the purchase accounting valuations for the acquired net assets of ~~TCS.~~AutoCrib, including intangible assets. The ~~$1.9~~$18.3 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,~~

On January 31, 2020, Snap-on acquired substantially all of the ~~results of operations and~~ assets ~~of TCS have been included in~~related to the ~~Commercial & Industrial Group since the acquisition date.~~

~~On May 4, 2017,Snap-on~~ ~~acquired Norbar Torque Tools Holding~~TreadReader product line from Sigmavision Limited ~~along with its U.S. and Chinese joint ventures~~ (“~~Norbar”~~Sigmavision”), for a cash 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.,~~$5.9 million. Sigmavision designs and manufactures ~~a full range of torque products, including wrenches, multipliers~~handheld devices and ~~calibrators~~drive-over ramps that provide tire information for use in ~~critical industries.~~

In the ~~third quarter of 2017, the~~automotive industry. The company ~~substantially~~ completed the purchase accounting valuations for the acquired net assets of ~~Norbar,~~Sigmavision, including intangible ~~assets.~~assets, in the second quarter of 2020. The ~~$23.7~~$5.6 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~~Dealer-FX and Sigmavision have been included in the Repair Systems & Information Group since the respective acquisition dates, and the results of operations and assets of AutoCrib have been included in the Commercial & Industrial Group since the acquisition date.

In the second quarter of 2017, the company completed the purchase accounting valuations for the acquired net assets of BTC, including intangible assets. The $5.9 million excess of the BTC purchase price over the fair value of the net assets acquired was recorded in “Goodwill” on the accompanying Condensed Consolidated Balance Sheets. For segment reporting purposes, the results of operations and assets of BTC have been included in the Repair Systems and Information Group since the acquisition date.

~~On November 16, 2016,Snap-on~~ acquired Ryeson Corporation (d/b/a Sturtevant Richmont) for a purchase price of $13.0 million (or $12.6 million, net of cash acquired), which reflects a $0.1 million working capital adjustment finalized in the first quarter of 2017. Sturtevant Richmont designs, manufactures and distributes mechanical and electronic torque wrenches as well as wireless torque error proofing systems for a variety of industrial applications.

In the first quarter of 2017, the company completed the purchase accounting valuations for the acquired net assets, including intangible assets. The $5.0 million excess of the Sturtevant Richmont purchase price over the fair value of the net assets acquired was recorded in “Goodwill” on the accompanying Condensed Consolidated Balance Sheets. For segment reporting purposes, the results of operations and assets of Sturtevant Richmont have been included in the Commercial & Industrial Group since the acquisition date.

~~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 of~~Car-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 INCORPORATED~~

~~NOTES 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 of~~ ~~October 31, 2016~~ ~~(As Adjusted)~~
~~Assets acquired:~~
~~Cash~~	$	~~3.9~~
~~Trade and other accounts receivable~~		~~17.0~~
~~Inventories~~		~~18.3~~
~~Property and equipment~~		~~17.3~~
~~Goodwill~~		~~77.7~~
~~Other intangibles:~~
~~Customer relationships~~		~~27.2~~
~~Non-amortized~~ ~~trademarks~~		~~27.7~~
~~Other assets~~		~~5.9~~

~~Total assets acquired~~		~~195.0~~

~~Liabilities assumed:~~
~~Accounts payable~~		~~9.8~~
~~Deferred income tax liabilities~~		~~15.4~~
~~Accrued expenses~~		~~13.5~~
~~Pension liabilities~~		~~4.3~~

~~Total liabilities assumed~~		~~43.0~~

~~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 to~~Car-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.

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.

See Note 3:6 for further information on goodwill and other intangible assets.

Table of Contents

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

Note 4: Receivables

Trade and Other Accounts ~~Receivable~~

Receivable: Snap-on’s trade and other accounts receivable primarily arise from the sale of tools and diagnostic and equipment products to a broad range of industrial and commercial customers and toSnap-on’s independent franchise van channel on anon-extended-term basis with payment terms generally ranging from 30 to 120 days.

~~SNAP-ON INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Unaudited)~~

The components ofSnap-on’s trade and other accounts receivable as of ~~September 30, 2017,~~April 3, 2021, and ~~December 31, 2016,~~January 2, 2021, are as follows:

(Amounts in millions)    September 30,
2017    December 31,
2016
Trade and other accounts receivable
       $     689.6             $     612.8
Allowances for doubtful accounts
   (14.4)        (14.0)




Total trade and other accounts receivable – net
       $ 675.2             $ 598.8

(Amounts in millions) April 3, 2021 January 2, 2021
Trade and other accounts receivable $ 676.6 $ 667.0
Allowances for credit losses (25.8) (26.3)
Total trade and other accounts receivable – net $ 650.8 $ 640.7

The following is a rollforward of the allowances for credit losses related to trade and other accounts receivable for the three months ended April 3, 2021, and March 28, 2020:

Three Months Ended
(Amounts in millions) April 3, 2021 March 28, 2020
Allowances for credit losses:
Beginning of period $ 26.3 $ 20.9
Provision for credit losses 1.9 3.6
Charge-offs (2.1) (3.1)
Recoveries 0 0
Currency translation (0.3) (1.0)
End of period $ 25.8 $ 20.4

Finance and Contract ~~Receivables~~

Receivables: Snap-on Credit LLC (“SOC”), the company’s financial services operation in the United States, originates extended-term finance and contract receivables on sales ofSnap-on’s products sold through the U.S. franchisee ~~and customer~~ network and to certain other customers ofSnap-on;Snap-on’s foreign finance subsidiaries provide similar financing internationally. Interest income on finance and contract receivables is included in “Financial services revenue” on the accompanying Condensed Consolidated Statements of Earnings.

Snap-on’s 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 ~~approaching~~of approximately four years.

Contract receivables, with payment terms of up to 10 years, are comprised of extended-term ~~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 include~~products, as well as extended-term ~~installment loans~~contracts 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 loans~~contracts to franchisees, other franchisee assets.

Table of Contents

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

The components ofSnap-on’s current finance and contract receivables as of ~~September 30, 2017,~~April 3, 2021, and ~~December 31, 2016,~~January 2, 2021, are as follows:

(Amounts in millions)    September 30,
2017    December 31,
2016
Finance receivables, net of unearned finance charges of $20.7 million and $17.0 million, respectively
       $     522.8             $     488.1
Contract receivables, net of unearned finance charges of $17.0 million and $15.6 million, respectively
   101.4         89.3




Total
   624.2         577.4




Allowances for doubtful accounts:

Finance receivables
   (17.0)        (15.6)
Contract receivables
   (1.6)        (1.2)




Total
   (18.6)        (16.8)




Total current finance and contract receivables – net
       $ 605.6             $ 560.6




Finance receivables – net
       $ 505.8             $ 472.5
Contract receivables – net
   99.8         88.1




Total current finance and contract receivables – net
       $ 605.6             $ 560.6


(Amounts in millions)	April 3, 2021		January 2, 2021
Finance installment receivables	$	537.3	$	533.9
Finance lease receivables, net of unearned finance charges of $3.2 million and $4.4 million, respectively	13.8		20.2
Total finance receivables	551.1		554.1

Contract installment receivables	55.2		59.1
Contract lease receivables, net of unearned finance charges of $18.2 million in both periods	55.1		55.7
Total contract receivables	110.3		114.8
Total	661.4		668.9

Allowances for credit losses:
Finance installment receivables	(23.6)		(23.6)
Finance lease receivables	(0.1)		(0.3)
Total finance allowance for credit losses	(23.7)		(23.9)

Contract installment receivables	(1.4)		(1.4)
Contract lease receivables	(0.9)		(0.9)
Total contract allowance for credit losses	(2.3)		(2.3)
Total allowance for credit losses	(26.0)		(26.2)
Total current finance and contract receivables – net	$	635.4	$	642.7

Finance receivables – net	$	527.4	$	530.2
Contract receivables – net	108.0		112.5
Total current finance and contract receivables – net	$	635.4	$	642.7

Table of Contents

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

The components ofSnap-on’s finance and contract receivables with payment terms beyond one year as of ~~September 30, 2017,~~April 3, 2021, and ~~December 31, 2016,~~January 2, 2021, are as follows:

(Amounts in millions)    September 30,
2017    December 31,
2016
Finance receivables, net of unearned finance charges of $16.4 million and $13.0 million, respectively
       $ 1,055.8             $ 967.5
Contract receivables, net of unearned finance charges of $24.3 million and $21.5 million, respectively
   313.9         289.4




Total
   1,369.7         1,256.9




Allowances for doubtful accounts:

Finance receivables
   (37.2)        (33.0)
Contract receivables
   (3.5)        (2.7)




Total
   (40.7)        (35.7)




Total long-term finance and contract receivables – net
       $ 1,329.0             $ 1,221.2




Finance receivables – net
       $ 1,018.6             $ 934.5
Contract receivables – net
   310.4         286.7




Total long-term finance and contract receivables – net
       $     1,329.0             $     1,221.2


(Amounts in millions)	April 3, 2021		January 2, 2021
Finance installment receivables	$	1,158.8	$	1,173.1
Finance lease receivables, net of unearned finance charges of $1.7 million and $2.5 million, respectively	11.1		15.6
Total finance receivables	1,169.9		1,188.7

Contract installment receivables	198.4		199.7
Contract lease receivables, net of unearned finance charges of $30.1 million and $30.2 million, respectively	182.5		181.7
Total contract receivables	380.9		381.4
Total	1,550.8		1,570.1

Allowances for credit losses:
Finance installment receivables	(51.5)		(52.1)
Finance lease receivables	(0.1)		(0.3)
Total finance allowance for credit losses	(51.6)		(52.4)

Contract installment receivables	(3.2)		(3.1)
Contract lease receivables	(3.7)		(3.6)
Total contract allowance for credit losses	(6.9)		(6.7)
Total allowance for credit losses	(58.5)		(59.1)
Total long-term finance and contract receivables – net	$	1,492.3	$	1,511.0

Finance receivables – net	$	1,118.3	$	1,136.3
Contract receivables – net	374.0		374.7
Total long-term finance and contract receivables – net	$	1,492.3	$	1,511.0

Credit quality: The company’s receivable portfolio is comprised of 2 portfolio segments, finance and contract receivables, which are the same segments used to estimate expected credit losses reported in the allowance for credit losses. The amortized cost basis for finance and contract receivables is the amount originated adjusted for applicable accrued interest and net of deferred fees or costs, collection of cash, and write-offs. The company monitors and assesses credit risk based on the characteristics of each portfolio segment.

When extending credit, Snap-on evaluates the collectability of the receivables based on a combination of various financial and qualitative factors that may affect a customer’s ability to pay. These factors may include the customer’s financial condition, past payment experience, and credit bureau and proprietary Snap-on credit model information, as well as the value of the underlying collateral.

Table of Contents

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

For finance and contract receivables, Snap-on assesses quantitative and qualitative factors through the use of credit quality indicators consisting primarily of collection experience and related internal metrics. Delinquency is the primary indicator of credit quality for finance and contract receivables. ~~Receivable balances~~Snap-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.

The amortized cost basis of finance and contract receivables by origination year as of April 3, 2021, are as follows:


(Amounts in millions)	2021		2020		2019		2018		2017		Prior		Total
Finance Receivables:
Delinquent	$	0.1	$	15.9	$	11.5	$	6.6	$	3.4	$	1.5	$	39.0
Non-delinquent	388.1		845.2		283.1		115.1		40.5		10.0		1,682.0
Total Finance receivables	$	388.2	$	861.1	$	294.6	$	121.7	$	43.9	$	11.5	$	1,721.0

Contract receivables:
Delinquent	$	0	$	0.5	$	0.4	$	0.5	$	0.2	$	0.2	$	1.8
Non-delinquent	45.4		161.7		115.7		78.2		47.0		41.4		489.4
Total Contract receivables	$	45.4	$	162.2	$	116.1	$	78.7	$	47.2	$	41.6	$	491.2

Allowance for credit losses: The allowance for credit losses utilizes an expected credit loss objective for the recognition of credit losses on receivables over the contractual life using historical experience, asset specific risk characteristics, current conditions, reasonable and supportable forecasts, and the appropriate reversion period, when applicable.

The allowance for credit losses is maintained at a level that is considered adequate to cover credit-related losses on the receivables. Management performs detailed reviews of its receivables on a monthly and/or quarterly basis to assess the adequacy of the allowance and determine if any impairment has occurred. A receivable may have credit losses when it is expected that all amounts related to the receivable will not be collected according to the contractual terms of the agreement. Amounts determined to be uncollectable are charged directly against the allowance, while amounts recovered on previously written-off accounts increase the allowance. For both finance and contract receivables, net write-offs include the principal amount of losses written off as well as written-off accrued interest and fees, and recourse from franchisees on finance receivables. Recovered interest and fees previously written off are recorded through the allowance for credit losses and increase the allowance. Finance receivables are assessed for write-off when an account becomes 120 days past due and are written off typically within 60 days of asset repossession. Contract receivables related to equipment leases are generally written off when an account becomes 150 days past due, while contract receivables related to franchise finance and van leases are generally written off up to 180 days past the asset return date. For finance and contract receivables, customer bankruptcies are generally written off upon notification that the associated debt is not being reaffirmed or, in any event, no later than 180 days past due. Changes to the allowances for credit losses are maintained through adjustments to the provision for credit losses.

For finance receivables, the company uses a vintage loss rate methodology to determine expected losses. Vintage analysis aims to calculate losses based on the timing of the losses relative to the origination of the receivables. The finance receivable portfolio contains a substantial amount of homogeneous contracts which fits well with the vintage analysis.

Table of Contents

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

For contract receivables, the company primarily uses a Weighted-Average Remaining Maturity methodology (“WARM”). The WARM methodology calculates the average annual write-off rate and applies it to the remaining term of the receivables. The WARM method is used since the contract receivables have limited loss experience over generally longer terms and, therefore, the predictive loss patterns are more difficult to estimate.

The company performed a correlation analysis to compare historical losses to many economic factors. The primary economic factors considered were real gross domestic product, civilian unemployment, industrial production index, and repair and maintenance employment rate; the company determined that there is limited correlation between the historical losses and economic factors. As a result, consideration was given to qualitative factors to adjust the reserve balance for asset specific risk characteristics, current conditions and future expectations. Similar qualitative factors are considered for both finance and contract receivables. The qualitative factors used in determining the estimate of expected credit losses are influenced by the changes in the composition of the portfolio, underwriting practices, and other relevant conditions that were different from the historical periods, which included considering the impact of the ongoing coronavirus (“COVID-19”) pandemic.

The allowance for credit losses is adjusted each period for changes in the credit risk and expected lifetime credit losses.

The following is a rollforward of the allowances for credit losses for finance and contract receivables for the three months ended April 3, 2021, and March 28, 2020:


	Three Months Ended April 3, 2021				Three Months Ended March 28, 2020
(Amounts in millions)	Finance Receivables		Contract Receivables		Finance Receivables		Contract Receivables
Allowances for credit losses:
Beginning of period	$	76.3	$	9.0	$	61.9	$	5.6
Impact of adopting ASU No. 2016-13	—		—		5.2		2.9
Provision for credit losses	11.3		0.7		16.3		1.4
Charge-offs	(14.9)		(0.6)		(15.9)		(1.3)
Recoveries	2.6		0.1		2.0		0
Currency translation	0		0		(0.3)		0
End of period	$	75.3	$	9.2	$	69.2	$	8.6

The provision for credit losses for Finance and Contract Receivables for the three months ended March 28, 2020, included $2.1 million and $0.5 million, respectively, as a result of the economic uncertainty associated with the COVID-19 pandemic.

Past due: Depending on the contract, payments for finance and contract receivables are due on a monthly or weekly basis. Weekly payments are converted into a monthly equivalent for purposes of calculating delinquency. Delinquencies are assessed at the end of each month following the monthly equivalent contractual payment due date. The entire receivable balance of a contract is considered delinquent when contractual payments become 30 days past due.

Removal from delinquent status occurs when the cumulative amount of monthly contractual payments then due have been received by the company.

It is the general practice of Snap-on’s financial services business not to engage in contract or loan modifications. In limited instances, Snap-on’s financial services business may modify certain receivables in troubled debt restructurings. The amount and number of restructured finance and contract receivables as of April 3, 2021, and January 2, 2021, were immaterial to both the financial services portfolio and the company’s results of operations and financial position.

Table of Contents

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

The aging of finance and contract receivables as of April 3, 2021, and January 2, 2021, 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
April 3, 2021:
Finance receivables	$	10.5	$	9.7	$	18.8	$	39.0	$	1,682.0	$	1,721.0	$	15.9
Contract receivables	0.5		0.4		0.9		1.8		489.4		491.2		0.1

January 2, 2021:
Finance receivables	$	18.4	$	12.2	$	21.1	$	51.7	$	1,691.1	$	1,742.8	$	18.2
Contract receivables	1.3		0.6		1.5		3.4		492.8		496.2		0.2

Nonaccrual: SOC maintains the accrual of interest income during the progression through the various stages of delinquency prior to processing for write-off. At the time of write-off, the entire balance including the accrued but unpaid interest income amount is recorded as a loss.

Finance receivables are generally placed on nonaccrual status (nonaccrual of interest and other fees): (i) when a customer is placed on repossession status; (ii) upon receipt of notification of bankruptcy; (iii) upon notification of the death of a customer; or (iv) in other instances in which management concludes collectability is not reasonably assured. ~~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 are generally placed on nonaccrual status: (i) when a receivable is more than 90 days past due or at the point a customer’s account is placed on terminated status regardless of its delinquency status; (ii) upon notification of the death of a customer; or (iii) in other instances in which management concludes collectability is not reasonably assured. ~~Contract receivables that are considered nonperforming include receivables that are on nonaccrual status and receivables that are generally more than 90 days past due.~~

The accrual of interest and other fees is resumed when the finance or contract receivable becomes contractually current and collection of all remaining contractual amounts due is reasonably assured. ~~Finance and contract receivables are evaluated for impairment on a collective basis.~~ A receivable ~~is impaired~~may have credit losses when it is ~~probable~~expected that all amounts related to the receivable will not be collected according to the contractual terms of the applicable agreement. ~~Impaired~~Such finance and contract receivables are covered by the company’s respective allowances for ~~doubtful accounts~~credit losses and are~~charged-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 INCORPORATED~~

~~NOTES 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
September 30, 2017:

Finance receivables
     $   16.0         $   11.6         $   19.3         $   46.9         $   1,531.6         $   1,578.5         $   15.1
Contract receivables
   1.4       0.7       1.7       3.8       411.6       415.4       0.8
December 31, 2016:

Finance receivables
     $ 15.1         $ 9.8       $ 17.0         $ 41.9         $ 1,413.7         $ 1,455.6         $ 13.2
Contract receivables
   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
Performing
       $ 1,550.7            $ 413.2            $ 1,430.7            $        376.7
Nonperforming
   27.8        2.2        24.9        2.0








Total
       $        1,578.5            $        415.4            $        1,455.6            $ 378.7

The amount of finance and contract receivables on nonaccrual status as of ~~September 30, 2017,~~April 3, 2021, and ~~December 31, 2016,~~January 2, 2021, is as follows:

(Amounts in millions)    September 30,
2017    December 31,
2016
Finance receivables
       $        12.7             $     11.7
Contract receivables
   1.5         1.5

~~The following is a rollforward~~


(Amounts in millions)	April 3, 2021		January 2, 2021
Finance receivables	$	9.0	$	9.6
Contract receivables	1.8		2.4

Note 5: Inventories

Inventories by major classification are as follows:


(Amounts in millions)	April 3, 2021		January 2, 2021
Finished goods	$	625.8	$	643.4
Work in progress	63.7		61.6
Raw materials	124.9		125.5
Total FIFO value	814.4		830.5
Excess of current cost over LIFO cost	(84.3)		(84.0)
Total inventories – net	$	730.1	$	746.5

Table of ~~the allowances for doubtful accounts for finance and contract receivables for the three and nine months ended September 30, 2017:~~

   Three Months Ended
September 30, 2017    Nine Months Ended
September 30, 2017
(Amounts in millions)    Finance
Receivables    Contract
Receivables    Finance
Receivables    Contract
Receivables
Allowances for doubtful accounts:

Beginning of period
       $ 52.5             $ 4.8             $ 48.6             $ 3.9
Provision
   12.8         0.8         38.6         2.7
Charge-offs
       (12.6)            (0.7)            (38.0)            (1.9)
Recoveries
   1.5         0.2         4.9         0.3
Currency translation
   –             –             0.1         0.1








End of period
       $ 54.2             $ 5.1             $ 54.2             $ 5.1

Contents

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

~~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
Allowances for doubtful accounts:

Beginning of period
       $ 42.6             $ 4.5             $ 38.2             $ 4.4
Provision
   10.8         0.5         30.4         1.1
Charge-offs
       (9.2)        (0.6)        (28.0)        (1.3)
Recoveries
   1.4         0.1         5.0         0.3








End of period
       $ 45.6             $ 4.5             $ 45.6             $ 4.5

~~Note 4: Inventories~~

~~Inventories by major classification are as follows:~~

(Amounts in millions)    September 30,
2017    December 31,
2016
Finished goods
       $ 556.6             $ 467.4
Work in progress
   49.5         42.7
Raw materials
   118.2         93.6




Total FIFO value
   724.3         603.7
Excess of current cost over LIFO cost
       (74.4)            (73.2)




Total inventories – net
       $ 649.9             $ 530.5

Inventories accounted for using thefirst-in,first-out (“FIFO”) method approximated ~~60%~~55% and ~~59%~~57% of total inventories as of ~~September 30, 2017,~~April 3, 2021 and ~~December 31, 2016,~~January 2, 2021, respectively. The company accounts for itsnon-U.S. inventory on the FIFO method. As of ~~September 30, 2017,~~April 3, 2021, approximately ~~32%~~27% of the company’s U.S. inventory was accounted for using the FIFO method and ~~68%~~73% was accounted for using thelast-in,first-out (“LIFO”) method. There were no0 LIFO inventory liquidations in the three ~~and nine~~ months ended ~~September 30, 2017,~~April 3, 2021, or ~~October 1, 2016.~~

March 28, 2020.

Note 5:6: Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill by segment for the ~~nine~~three months ended ~~September 30, 2017,~~April 3, 2021, are as follows:

(Amounts in millions)    Commercial
& Industrial
Group    Snap-on
Tools Group    Repair Systems
& Information
Group    Total
Balance as of December 31, 2016
       $       242.4             $ 12.5             $ 640.6             $ 895.5
Currency translation
   29.1         –             16.5         45.6
Acquisitions and related adjustments
   25.7         –                 (42.8)            (17.1)








Balance as of September 30, 2017
       $ 297.2             $     12.5             $ 614.3             $ 924.0

~~SNAP-ON INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Unaudited)~~


(Amounts in millions)	Commercial & Industrial Group		Snap-on Tools Group		Repair Systems & Information Group		Total
Balance as of January 2, 2021	$	331.2	$	12.4	$	638.8	$	982.4
Currency translation	(10.8)		0		(5.0)		(15.8)
Acquisitions and related adjustments	0		0		195.2		195.2
Balance as of April 3, 2021	$	320.4	$	12.4	$	829.0	$	1,161.8

Goodwill of ~~$924.0~~$1,161.8 million as of ~~September 30, 2017, includes (i) $77.7~~April 3, 2021, included $195.2 million, on a preliminary basis, from the acquisition of~~Car-O-Liner,~~ ~~(ii) $23.7 million, on a preliminary basis, from~~ Dealer-FX. During the ~~acquisition~~first three months ended April 3, 2021, the purchase accounting valuations for the acquired net assets, including intangible assets, of ~~Norbar, (iii) $5.9 million from the acquisition of BTC, (iv) $5.0 million from the acquisition of Sturtevant Richmont, and (v) $1.9 million, on a preliminary basis, from the acquisition of TCS.~~AutoCrib were completed, resulting in no change to goodwill. The goodwill from ~~theCar-O-Liner~~ ~~acquisition~~Dealer-FX is ~~distributed as follows: $76.9 million~~included in the Repair Systems & Information Group and ~~$0.8~~$18.3 million ~~in the Commercial & Industrial Group. The~~of goodwill from the ~~Norbar, Sturtevant Richmont and TCS acquisitions~~2020 AutoCrib acquisition is included in the Commercial & Industrial ~~Group and the goodwill from the BTC acquisition 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.

Additional disclosures related to other intangible assets are as follows:

   September 30, 2017    December 31, 2016
(Amounts in millions)    Gross Carrying
Value    Accumulated
Amortization    Gross Carrying
Value    Accumulated
Amortization
Amortized other intangible assets:

Customer relationships
       $ 175.5             $ (95.6)            $     142.6             $ (86.0)
Developed technology
   18.9         (18.4)        17.7         (17.7)
Internally developed software
   174.5         (129.7)        165.7             (118.3)
Patents
   33.7         (22.5)        31.9         (21.5)
Trademarks
   2.9         (1.9)        2.8         (1.8)
Other
   7.7         (2.6)        7.2         (2.2)








Total
   413.2         (270.7)        367.9         (247.5)
Non-amortized trademarks
   115.8         –             64.2         –








Total other intangible assets
       $     529.0             $     (270.7)            $ 432.1             $ (247.5)

~~As of September 30, 2017, the $175.5 million gross carrying value of customer relationships includes $29.1 million related to theCar-O-Liner~~ ~~acquisition, $1.2 million related to the BTC acquisition and $1.1 million related to the Norbar acquisition. The $115.8 million gross carrying value ofnon-amortized~~ ~~trademarks as of September 30, 2017, includes $30.2 million related to theCar-O-Liner~~ ~~acquisition, $16.9 million related to the Norbar acquisition and $2.1 million related to the BTC acquisition.~~

~~Snap-on~~ ~~completed its annual impairment testing of goodwill and other indefinite-lived intangible assets in the second quarter of 2017, the results of which did not result in any impairment.~~


	April 3, 2021				January 2, 2021
(Amounts in millions)	Gross Carrying Value		Accumulated Amortization		Gross Carrying Value		Accumulated Amortization
Amortized other intangible assets:
Customer relationships	$	190.8	$	(132.8)	$	191.5	$	(130.1)
Developed technology	21.9		(20.3)		21.8		(19.9)
Internally developed software	174.3		(130.5)		172.2		(128.0)
Patents	43.4		(25.1)		43.2		(25.3)
Trademarks	3.8		(2.3)		3.9		(2.4)
Other	8.1		(3.9)		8.2		(3.9)
Total	442.3		(314.9)		440.8		(309.6)
Non-amortized trademarks	127.2		—		129.6		—
Total other intangible assets	$	569.5	$	(314.9)	$	570.4	$	(309.6)

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,~~April 3, 2021, the company had no0 accumulated impairment losses.

Table of Contents

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

The weighted-average amortization periods related to other intangible assets are as follows:


		In Years
Customer relationships			15
Developed technology	3
Internally developed software			3	6
Patents			8	7
Trademarks			6	5
Other			39

Snap-on is amortizing its customer relationships on both an accelerated and straight-line basis over a15-year weighted-average life; the remaining intangibles are amortized on a straight-line basis. The weighted-average amortization period for all amortizable intangibles on a combined basis is 11 years.

The company’s customer relationships generally have contractual terms of three to five years and are typically renewed without significant cost to the company. The weighted-average15-year life for customer relationships is based on the company’s historical renewal experience. Intangible asset renewal costs are expensed as incurred.

The aggregate amortization expense was ~~$7.1~~$6.0 million and ~~$20.7~~$5.7 million for the respective three ~~and nine~~ months ended ~~September 30, 2017,~~April 3, 2021, and ~~$5.9 million and $18.2 million for the respective three and nine months ended October 1, 2016.~~March 28, 2020. 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 million in 2020, $14.7~~$20.4 million in 2021, ~~and $9.9~~$20.7 million in ~~2022.~~

2022, $17.6 million in 2023, $12.6 million in 2024, $8.3 million in 2025, and $7.7 million in 2026.

Note 6:7: Exit and Disposal Activities

Snap-on did ~~not~~0t record any costs for exit and disposal activities in the first three ~~and nine~~ months ended ~~September 30, 2017, or in~~April 3, 2021. For the three months ended ~~October 1, 2016.~~March 28, 2020, Snap-on recorded ~~$0.9~~costs of $7.5 million offor exit and disposal activities. The costs ~~for~~associated with exit and disposal activities by operating segment are as follows:


	Three Months Ended
(Amounts in millions)	April 3, 2021		March 28, 2020
Exit and disposal costs
Cost of goods sold:
Commercial & Industrial Group	$	0	$	4.4
Repair System & Information Group	0		0.7
Total cost of goods sold	$	0	$	5.1

Operating Expenses:

Repair System & Information Group	$	0	$	2.4


Total exit and disposal costs:
Commercial & Industrial Group	$	0	$	4.4

Repair System & Information Group	0		$	3.1
Total exit and disposal costs	$	0	$	7.5

Costs associated with exit and disposal activities in the ~~nine~~first three months ~~ended October 1, 2016. The majority~~of 2020 primarily related to headcount reductions from the ongoing optimization of the ~~$0.8~~company’s cost structure in Europe and various other management and realignment actions.

Table of Contents

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

Snap-on’s exit and disposal accrual activity for the first quarter of 2021 is as follows:


	Balance at		First Three Months				Balance at
(Amounts in millions)	January 2, 2021		Provision		Usage		April 3, 2021
Severance costs:
Commercial & Industrial Group	$	5.8	$	0	$	(0.3)	$	5.5
Snap-on Tools Group	0.4		0		0		0.4
Repair System & Information Group	3.8		0		(0.2)		3.6
Total	$	10.0	$	0	$	(0.5)	$	9.5

As of April 3, 2021, the company expects that of the $9.5 million exit and disposal accrual, ~~as of September 30, 2017, is expected to~~approximately $7.0 million will be utilized in ~~2017.~~the balance of 2021, and the remainder thereafter, primarily for longer-term severance payments.

Snap-on ~~anticipates funding~~ expects to fund the remaining cash requirements of its exit and disposal activities with available cash on hand, cash flows from ~~operations~~operating 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 ~~judgment~~judgement under prevailing circumstances.

Note 7:8: Income Taxes

Snap-on’s effective income tax rate on earnings attributable toSnap-on was ~~30.5%~~23.5% and ~~31.1%~~24.2% in the respective first ~~nine~~three months of ~~2017~~2021 and ~~2016, respectively.~~

2020.

Snap-on and its subsidiaries file income tax returns in the United States and in various state, local and foreign jurisdictions. It is reasonably possible that certain unrecognized tax benefits may either be settled with taxing authorities or the statutes of limitations for such items may lapse within the next 12 months, causingSnap-on’s gross unrecognized tax benefits to decrease by a range of ~~zero~~0 to ~~$2.3~~$0.7 million. Over the next 12 months,Snap-on anticipates taking certain tax positions on various tax returns for which the related tax benefit does not meet the recognition threshold. Accordingly,Snap-on’s gross unrecognized tax benefits may increase by a range of ~~zero~~0 to ~~$1.3~~$0.8 million over the next 12 months for uncertain tax positions expected to be taken in future tax filings.

~~SNAP-ON INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Unaudited)~~

Note 8:9: Short-term and Long-term Debt

Short-term and long-term debt as of ~~September 30, 2017,~~April 3, 2021, and ~~December 31, 2016,~~January 2, 2021, consisted of the following:

(Amounts in millions)
September 30,
2017

December 31,
2016
5.50% unsecured notes due 2017
       $       –                   $        150.0
4.25% unsecured notes due 2018
   250.0           250.0
6.70% unsecured notes due 2019
   200.0           200.0
6.125% unsecured notes due 2021
   250.0           250.0
3.25% unsecured notes due 2027
   300.0           –
Other debt*
   208.4           160.2




   1,208.4           1,010.2
Less: notes payable and current maturities of long-term debt:

Current maturities of long-term debt
   (250.0)          (150.0)
Commercial paper borrowings
   (170.0)              (130.0)
Other notes
   (33.4)          (21.4)




   (453.4)          (301.4)




Total long-term debt
       $    755.0               $        708.8

*Includes fair value adjustments related to interest rate swaps, debt discounts and debt issuance costs.


(Amounts in millions)	April 3, 2021		January 2, 2021
6.125% 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		500.0
Other*	0.8		0.6
	1,450.8		1,450.6
Less: notes payable and current maturities of long-term debt
Current maturities of long-term debt	(250.0)		(250.0)

Other notes*	(18.5)		(18.5)
	(268.5)		(268.5)
Total long-term debt	$	1,182.3	$	1,182.1



*			Includes the net effects of debt amortization costs and fair value adjustments of interest rate swaps.

Table of Contents

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

Notes payable and current maturities of long-term debt of ~~$453.4~~$268.5 million as of ~~September 30, 2017, included $250~~April 3, 2021, consisted of $250.0 million of ~~4.25%~~6.125% unsecured notes that mature on ~~January 15, 2018~~September 1, 2021 (the ~~“2018~~“2021 Notes”), ~~$170 million of commercial paper borrowings and $33.4~~$16.9 million of other ~~notes.~~notes and $1.6 million from the net effects of debt amortization costs and fair value adjustments of interest rate swaps. As of ~~2016~~2020 year end, notes payable ~~and current maturities~~ of ~~long-term debt of $301.4~~$268.5 million included ~~$150~~$250.0 million of ~~unsecured 5.50% notes that were repaid in January 2017 upon maturity, $130 million of commercial paper borrowings and $21.4~~the 2021 Notes, $14.9 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 2016~~year-end~~ ~~balance sheet date.~~

~~On February 15, 2017,Snap-on~~ ~~sold, at a discount, $300~~notes and $3.6 million ~~of unsecured 3.25% long-term notes that mature on March 1, 2027 (the “2027 Notes”). Interest on the 2027 Notes is payable semi-annually beginning September 1, 2017.Snap-on~~ ~~used the $297.8 million of net proceeds~~ from the ~~sale~~net effects of ~~the 2027 Notes, reflecting $1.9 million~~debt amortization costs and fair value adjustments 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 possible acquisitions.

~~SNAP-ON INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Unaudited)~~

interest rate swaps.

Snap-on has ~~a five-year, $700~~an $800 million multi-currency revolving credit facility that terminates on ~~December 15, 2020~~September 16, 2024 (the “Credit Facility”); no0 amounts were outstanding under the Credit Facility as of ~~September 30, 2017.~~April 3, 2021. 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, as~~ratings; 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~~2 times during any five-year period during the term of the Credit Facility (including any extensions thereof), elect to increase the maximum ~~Debt~~Leverage Ratio to 0.65 to 1.00 and/or increase the maximum Consolidated Net Debt to EBITDA Ratio to ~~3.75~~4.00 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,~~April 3, 2021, the company’s actual ratios of ~~0.26~~0.12 and ~~1.16~~0.54 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.

Note 9:10: Financial Instruments

Derivatives:All derivative instruments are reported in the ~~Condensed~~ Consolidated Financial Statements at fair value. Changes in the fair value of derivatives are recorded each period in earnings or on the accompanying ~~Condensed~~ Consolidated Balance Sheets, depending on whether the derivative is designated and effective as part of a hedged transaction. Gains or losses on derivative instruments recorded in ~~Accumulated~~earnings are presented in the same 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 be~~are 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.~~

item.

The criteria used to determine if hedge accounting treatment is appropriate are: (i) the designation of the hedge to an underlying exposure; (ii) whether or not overall risk is being reduced; and (iii) if there is a correlation between the value of the derivative instrument and the underlying hedged item. ~~On the date~~Once 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.

The company is exposed to global market risks, including the effects of changes in foreign currency exchange rates, interest rates, and the company’s stock price, and therefore uses derivatives to manage financial exposures that occur in the normal course of business. The primary risks managed by using derivative instruments are foreign currency risk, interest rate risk and stock-based deferred compensation risk.

Foreign Currency Risk Management:Snap-on has significant international operations and is subject to certain risks inherent with foreign operations that include currency fluctuations. Foreign currency exchange risk exists to the extent thatSnap-on has payment obligations or receipts denominated in currencies other than the functional currency, including intercompany loans denominated in foreign currencies. To manage these exposures,Snap-on identifies naturally offsetting positions and then purchases hedging instruments to protect the residual netexposures. Snap-on manages most of these exposures on a consolidated basis, which allows for netting of certain exposures to take advantage of natural offsets. Foreign currency forward contracts (“foreign currency forwards”) are used to hedge the net exposures. Gains or losses on net foreign currency hedges are intended to offset losses or gains on the underlying net exposures in an effort to reduce the earnings volatility resulting from fluctuating foreign currency exchange rates.Snap-on’s foreign currency forwards are typically not designated as hedges. The fair value changes of these contracts are reported in earnings as foreign exchange gain or loss, which is included in “Other income (expense) –- net” on the accompanying ~~Condensed~~ Consolidated Statements of Earnings.

See Note 17 for additional information on Other income (expense) - net.

Table of Contents

SNAP-ON INCORPORATED

NOTES 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.

Interest Rate Risk Management:Snap-on aims to control funding costs by managing the exposure created by the differing maturities and interest rate structures ofSnap-on’s borrowings through the use of interest rate swap agreements (“interest rate swaps”) and treasury lock agreements (“treasury locks”).

Interest Rate Swaps: Snap-on enters into interest rate swaps to manage risks associated with changing interest rates related to the company’s fixed rate borrowings. Interest rate swaps are accounted for as fair value hedges. The differentials paid or received on interest rate swaps are recognized as adjustments to “Interest expense” on the accompanying Condensed Consolidated Statements of Earnings. The ~~effective portion of the~~ change in the fair value of the derivative is recorded in ~~“Long-term~~“Notes payable and current maturities of 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.~~both April 3, 2021, and January 2, 2021. 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,~~April 3, 2021, and ~~December 31, 2016.~~

January 2, 2021.

Treasury locks:Snap-on ~~entered into a $250 million~~ uses treasury ~~lock in the fourth quarter of 2016~~locks 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. In~~OCI for derivative instruments that are designated and qualify as cash flow hedges. Upon the ~~first quarter of 2017,Snap-on~~ ~~settled the $250 million treasury lock in conjunction with the February 2017~~ issuance of debt, the ~~2027 Notes. The $14.9 million gain on the settlement of the treasury lock was recorded~~related amount in Accumulated OCI ~~and~~ is ~~being amortized~~released over the term of the ~~2027 Notes~~debt and recognized as an adjustment to interest expense on the ~~consolidated statements~~Condensed Consolidated Statements of ~~earnings. As of September 30, 2017, no treasury locks~~Earnings. There were ~~outstanding. The notional amount of~~0 treasury locks outstanding ~~and designated as cash flow hedges~~ as of ~~December 31, 2016, was $250 million.~~

both April 3, 2021, and January 2, 2021.

Stock-based Deferred Compensation Risk Management:Snap-on aims to manage market risk associated with the stock-based portion of its deferred compensation plans through the use of prepaid equity forward agreements (“equity forwards”). Equity forwards are used to aid in offsetting the potentialmark-to-market effect on stock-based deferred compensation from changes inSnap-on’s stock price. Since stock-based deferred compensation liabilities increase as the company’s stock price rises and decrease as the company’s stock price declines, the equity forwards are intended to mitigate the potential impact on deferred compensation expense that may result from suchmark-to-market changes. As of ~~September 30, 2017,~~April 3, 2021, Snap-on had equity forwards in place intended to manage market risk with respect to ~~120,900~~79,100 shares ofSnap-on common stock associated with its deferred compensation plans.

~~SNAP-ON INCORPORATED~~

~~NOTES 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)
Balance Sheet
Presentation
   Asset
Derivatives
Fair Value    Liability
Derivatives
Fair Value    Asset
Derivatives
Fair Value    Liability
Derivatives
Fair Value
Derivatives designated as hedging instruments:
Interest rate swaps
   Other assets        $ 8.1          $ –                $ 9.8            $ –
Treasury locks
   Other assets    –            –            14.3        –








      8.1        –            24.1        –








Derivatives not designated as hedging instruments:
Foreign currency forwards
   Prepaid expenses and other assets        $ 8.5          $ –                $ 4.4            $ –
Foreign currency forwards
   Other accrued liabilities    –            3.0        –            13.5
Equity forwards
   Prepaid expenses and other assets    18.0        –            17.9        –








Total
      26.5        3.0        22.3        13.5








Total derivative instruments
          $     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 the~~six-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 rate swaps
   Interest expense        $     0.7            $    0.4            $     2.1            $     1.9

~~SNAP-ON INCORPORATED~~

~~NOTES 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:
Treasury locks
       $     –                $     –                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:
Treasury locks
       $     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)
Statement of Earnings
Presentation
September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016
Derivatives not designated as hedging instruments:
Foreign currency forwards

  Other income (expense) – net
  $ 1.6      $     (0.7)     $     (2.3)     $     (4.9)
Equity forwards

  Operating expenses
    (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 2017~~year-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 2016~~year-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 INCORPORATED~~

~~NOTES 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 of~~mark-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.~~

Counterparty Risk:Snap-on is exposed to credit losses in the event ofnon-performance by the counterparties to its various financial agreements, including its foreign currency forward contracts, interest rate swap agreements, treasury lock agreements and prepaid equity forward agreements.Snap-on does not obtain collateral or other security to support financial instruments subject to credit risk, but monitors the credit standing of the counterparties and generally enters into agreements with financial institution counterparties with a credit rating ofA- or better.Snap-on does not anticipatenon-performance by its counterparties, but cannot provide assurances.

Fair Value of Financial Instruments:The fair values of financial instruments that do not approximate the carrying values in the financial statements are as follows:

   September 30, 2017    December 31, 2016
(Amounts in millions)    Carrying
Value    Fair
Value    Carrying
Value    Fair
Value
Finance receivables – net
       $        1,524.4            $        1,767.1            $     1,407.0            $     1,631.2
Contract receivables – net
   410.2        448.4        374.8        409.7
Long-term debt, notes payable and current maturities of long-term debt
   1,208.4        1,264.7        1,010.2        1,076.7


	April 3, 2021				January 2, 2021
(Amounts in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
Finance receivables – net	$	1,645.7	$	1,988.8	$	1,666.5	$	2,024.4
Contract receivables – net	482.0		538.5		487.2		545.4
Long-term debt and notes payable and current maturities of long-term debt	1,450.8		1,554.5		1,450.6		1,678.2

Table of Contents

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

The following methods and assumptions were used in estimating the fair value of financial instruments:

•Finance and contract receivables include both short-term and long-term receivables. The fair value estimates of finance and contract receivables are derived utilizing discounted cash flow analyses performed on groupings of receivables that are similar in terms of loan type and characteristics. The cash flow analyses consider recent prepayment trends where applicable. The cash flows are discounted over the average life of the receivables using a current market discount rate of a similar term adjusted for credit quality. Significant inputs to the fair value measurements of the receivables are unobservable and, as such, are classified as Level 3.

•Fair value of long-term debt and current maturities of long-term debt ~~was~~were 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 and current maturities 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.

•The fair value of all other financial instruments, including trade and other accounts receivable, accounts payable and other financial instruments, approximates such instruments’ carrying value due to their short-term nature.

~~SNAP-ON INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Unaudited)~~

Note ~~10:~~11: Pension Plans

Snap-on’s net periodic pension cost included the following components:

   Three Months Ended    Nine Months Ended
(Amounts in millions)    September 30,
2017    October 1,
2016    September 30,
2017    October 1,
2016
Service cost
       $ 5.6             $ 4.8             $ 16.8             $ 14.5
Interest cost
   13.9         14.2         41.8         42.6
Expected return on plan assets
       (21.2)            (20.4)            (62.2)            (60.8)
Amortization of unrecognized loss
   6.9         7.8         20.8         23.5
Amortization of prior service credit
   (0.2)        (0.2)        (0.8)        (0.8)








Net periodic pension cost
       $ 5.0             $ 6.2             $ 16.4             $ 19.0


	Three Months Ended
(Amounts in millions)	April 3, 2021		March 28, 2020
Service cost	$	7.5	$	6.9
Interest cost	10.6		12.1
Expected return on plan assets	(23.6)		(23.7)
Amortization of unrecognized loss	9.1		8.4

Net periodic pension cost	$	3.6	$	3.7

The components of net periodic pension cost, other than the service cost component, are included in “Other income (expense) - net” on the accompanying Condensed Consolidated Statements of Earnings. See Note 17 for additional information on other income (expense) - net.

Snap-on intends to make contributions of ~~$7.1~~$9.2 million to its foreign pension plans and ~~$2.3~~$2.2 million to its domestic pension plans in ~~2017,~~2021, 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.~~

2021.

Note ~~11:~~12: Postretirement Health Care Plans

Snap-on’s net periodic postretirement health care cost included the following components:

   Three Months Ended    Nine Months Ended
(Amounts in millions)    September 30,
2017    October 1,
2016    September 30,
2017    October 1,
2016
Interest cost
       $ 0.5             $ 0.6             $ 1.5             $ 1.7
Expected return on plan assets
       (0.2)            (0.3)            (0.6)            (0.7)
Amortization of unrecognized gain
   (0.1)        –             (0.2)        –








Net periodic postretirement health care cost
       $ 0.2             $ 0.3             $ 0.7             $ 1.0


	Three Months Ended
(Amounts in millions)	April 3, 2021		March 28, 2020
Interest cost	$	0.3	$	0.4
Expected return on plan assets	(0.2)		(0.2)

Net periodic postretirement health care cost	$	0.1	$	0.2

The components of net periodic postretirement health care cost are included in “Other income (expense) - net” on the accompanying Condensed Consolidated Statements of Earnings. See Note 17 for additional information on other income (expense) - net.

Table of Contents

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

Note ~~12:~~13: Stock-based Compensation and Other Stock Plans

The 2011 Incentive Stock and Awards Plan (the “2011 Plan”) provides for the grant of stock options, performance awards, stock appreciation rights (“SARs”) and restricted stock awards (which may be designated as “restricted stock units” or “RSUs”). No further grants are being made under its predecessor, the 2001 Incentive Stock and Awards Plan (the “2001 Plan”), although outstanding awards under the 2001 Plan ~~will~~ continue in accordance with their terms. As of ~~September 30, 2017,~~April 3, 2021, the 2011 Plan had ~~3,287,403~~1,099,455 shares available for future grants. The company uses treasury stock to deliver shares under both the 2001 and 2011 Plans.

Net stock-based compensation expense was ~~$7.0~~$12.3 million and ~~$21.4~~$1.1 million for the respective three ~~and nine~~ months ended ~~September 30, 2017,~~April 3, 2021, and ~~$7.3 million and $21.5 million for the respective three and nine months ended October 1, 2016.~~March 28, 2020. Cash received from stock purchase and option plan exercises during the respective three ~~and nine~~ months ended ~~September 30, 2017,~~April 3, 2021, and March 28, 2020 totaled ~~$1.6~~$93.0 million and $36.2 million, respectively. Cash received from stock purchase and option plan exercises during the three and nine months ended October 1, 2016, totaled $4.0 million and $32.4 million, respectively.$1.5 million. The tax benefit realized from both the exercise and vesting of share-based payment arrangements was ~~$0.8~~$7.7 million and ~~$12.9~~$1.5 million for the respective three ~~and nine~~ months ended ~~September 30, 2017,~~April 3, 2021, and ~~$1.8 million and $14.9 million for the respective three and nine months ended October 1, 2016.~~

~~SNAP-ON INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Unaudited)~~

March 28, 2020.

Stock ~~Options~~

Options: Stock options are granted with an exercise price equal to the market value of a share ofSnap-on’s common stock on the date of grant and have a contractual term of ~~ten~~10 years. Stock option grants vest ratably on the first, second and third anniversaries of the date of grant.

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes valuation model. The company uses historical data regarding stock option exercise and forfeiture behaviors for different participating groups to estimate the period of time that options 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 option. The expected dividend yield is based on the ~~company’s historical~~expected 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.

The following weighted-average assumptions were used in calculating the fair value of stock options granted during the ~~nine~~three months ended ~~September 30, 2017,~~April 3, 2021, and ~~October 1, 2016,~~March 28, 2020, 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
Expected term of option(in years)
     5.15         5.05
Expected volatility factor
   22.01%    22.17%
Expected dividend yield
     1.63%      1.77%
Risk-free interest rate
             1.78%                      1.04%

model:


	Three Months Ended
	April 3, 2021	March 28, 2020
Expected term of option (in years)	5.33	5.53
Expected volatility factor	21.80%	21.67%
Expected dividend yield	2.59%	2.78%
Risk-free interest rate	0.67%	1.50%

A summary of stock option activity as of and for the ~~nine~~three months ended ~~September 30, 2017,~~April 3, 2021, is presented below:

   Shares
(in thousands)    Exercise
Price Per
Share*    Remaining
Contractual
Term*
(in years)    Aggregate
Intrinsic
Value
(in millions)
Outstanding at December 31, 2016
   3,011               $ 100.78
Granted
           655               168.71
Exercised
   (278)          87.00
Forfeited or expired
   (71)          153.52



Outstanding at September 30, 2017
   3,317           114.22            6.6            $     127.7



Exercisable at September 30, 2017
   2,108           90.90            5.3        122.5

* Weighted-average


	Shares (in thousands)	Exercise Price Per Share*		Remaining Contractual Term* (in years)	Aggregate Intrinsic Value (in millions)
Outstanding at January 2, 2021	3,120	$	142.47
Granted	333	189.91
Exercised	(621)	149.90
Forfeited or expired	(1)	155.53
Outstanding at April 3, 2021	2,831	146.41		6.1	$	241.6
Exercisable at April 3, 2021	2,047	137.33		5.0	193.2



*			Weighted-average

Table of Contents

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

The weighted-average grant date fair value of options granted during the ~~nine~~three months ended ~~September 30, 2017,~~April 3, 2021, and ~~October 1, 2016,~~March 28, 2020, was ~~$31.13~~$26.19 and ~~$22.99,~~$22.95, respectively. The intrinsic value of options exercised was ~~$2.0~~$30.8 million and ~~$23.4~~$1.4 million during the respective three ~~and nine~~ months ended ~~September 30, 2017,~~April 3, 2021, and ~~$4.8 million and $22.2 million during the respective three and nine months ended October 1, 2016.~~March 28, 2020. The fair value of stock options vested was ~~$14.0~~$12.5 million and ~~$12.7~~$14.6 million during the respective ~~nine~~three months ended ~~September 30, 2017,~~April 3, 2021, and ~~October 1, 2016.~~

~~SNAP-ON INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Unaudited)~~

March 28, 2020.

As of ~~September 30, 2017,~~April 3, 2021, there was ~~$23.3~~$18.7 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 ~~1.7~~2.1 years.

Performance ~~Awards~~

Share Unit and Restricted Stock Unit Awards: Performance ~~awards, which are granted as performance~~ share units (“PSUs”) ~~and performance-based RSUs,~~ are earned and expensed using the fair value of the award over a contractual term of three years based on the company’s performance. Vesting of the ~~performance awards~~PSUs is dependent upon performance relative topre-defined goals for revenue growth and return on net assets for the applicable performance period. For performance achieved above ~~a certain level,~~specified levels, the recipient may earn additional shares of stock, not to exceed 100% of the number of performance awards initially granted.

The PSUs have a three-year performance period based on the results of the consolidated financial metrics of the company. ~~The performance-based~~

Time-based RSUs ~~have aone-year~~ ~~performance period based on~~are earned and expensed using the ~~results~~fair value of the ~~consolidated financial metrics~~award over the contractual term of three years. Vesting of the ~~company followed by atwo-year~~time-based RSUs is dependent upon continued employment over the 3-year cliff vesting ~~schedule, assuming continued employment.~~

period.

The fair value of ~~performance awards~~PSUs and RSUs is calculated using the market value of a share ofSnap-on’s common stock on the date of grant and assumed forfeitures based on recent historical experience; in recent years, forfeitures have not been significant. The weighted-average grant date fair value of ~~performance~~ awards granted during the ~~nine~~three months ended ~~September 30, 2017,~~April 3, 2021, and ~~October 1, 2016,~~March 28, 2020, was ~~$168.70~~$188.72 and ~~$138.80,~~$155.34, respectively. There were 0 PSUs paid out during the three months ended April 3, 2021. PSUs related to ~~60,980 shares and 94,186~~21,184 shares were paid out during the ~~respective nine~~three months ended ~~September 30, 2017, and October 1, 2016.~~March 28, 2020. 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”).

Based on the company’s 2016 performance, 45,502 RSUs granted in 2016 were earned; assuming continued employment, these RSUs will vest at the end of fiscal 2018. Based on the company’s 2015 performance, 64,327 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 2014 were earned; these RSUs vested as of fiscal 2016 year end and were paid out shortly thereafter.

Changes to the company’snon-vested ~~performance awards~~ PSUs and RSUs during the ~~nine~~three months ended ~~September 30, 2017,~~April 3, 2021, are as follows:

   Shares
(in thousands)    Fair Value
Price per
Share*
Non-vested performance awards at December 31, 2016
              207               $     141.94
Granted
   77           168.70
Vested
   (5)          142.78
Cancellations and other
   (28)          154.46



Non-vested performance awards at September 30, 2017
   251           148.64

* Weighted-average


	Shares (in thousands)	Fair Value Price per Share*
Non-vested performance awards at January 2, 2021	76	$	155.61
Granted	121	188.72
Vested	0	0
Cancellations and other	0	0
Non-vested performance awards at April 3, 2021	197	175.90



*			Weighted-average

As of ~~September 30, 2017,~~April 3, 2021, there was ~~$14.1~~$25.8 million of unrecognized compensation cost related tonon-vested ~~performance awards~~ PSUs and RSUs that isare expected to be recognized as a charge to earnings over a weighted-average period of ~~1.7~~2.5 years.

~~SNAP-ON INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Unaudited)~~

Stock Appreciation Rights (“SARs”)

: The company also issues stock-settled and cash-settled SARs to certain keynon-U.S. employees. SARs have a contractual term of ten years and vest ratably on the first, second and third anniversaries of the date of grant. SARs are granted with an exercise price equal to the market value of a share ofSnap-on’s common stock on the date of grant.

Stock-settled SARs are accounted for as equity instruments and provide for the issuance ofSnap-on common stock equal to the amount by which the company’s stock has appreciated over the exercise price. Stock-settled SARs have an effect on dilutive shares and shares outstanding as any appreciation ofSnap-on’s common stock value over the exercise price will be settled in shares of common stock. Cash-settled SARs provide for the cash payment of the excess of the fair market value ofSnap-on’s common stock price on the date of exercise over the grant price. Cash-settled SARs have no effect on dilutive shares or shares outstanding as any appreciation ofSnap-on’s common stock over the grant price is paid in cash and not in common stock.

Table of Contents

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

The fair value of stock-settled SARs is estimated on the date of grant using the Black-Scholes valuation model. The fair value of cash-settled SARs is revalued(mark-to-market) each reporting period using the Black-Scholes valuation model based on~~Snap-on’speriod-end~~ Snap-on’s period-end stock price. The company uses historical data regarding SARs exercise and forfeiture behaviors for different participating groups to estimate the expected term of the SARs granted based on the period of time that similar instruments granted are expected to be outstanding. Expected volatility is based on the historical volatility of the company’s stock for the length of time corresponding to the expected term of the SARs. The expected dividend yield is based on the ~~company’s historical~~expected 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.

The following weighted-average assumptions were used in calculating the fair value of stock-settled SARs granted during the ~~nine~~three months ended ~~September 30, 2017,~~April 3, 2021, and ~~October 1, 2016,~~March 28, 2020, 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
Expected term of stock-settled SARs(in years)
     3.99         4.03
Expected volatility factor
   19.39%    20.09%
Expected dividend yield
     1.46%      1.66%
Risk-free interest rate
           1.55%                      1.11%

model:


	Three Months Ended
	April 3, 2021	March 28, 2020
Expected term of stock-settled SARs (in years)	3.94	3.75
Expected volatility factor	22.50%	22.50%
Expected dividend yield	2.59%	2.78%
Risk-free interest rate	0.19%	1.42%

Changes to the company’s stock-settled SARs during the ~~nine~~three months ended ~~September 30, 2017,~~April 3, 2021, are as follows:

   Stock-settled
SARs
(in thousands)    Exercise
Price Per
Share*    Remaining
Contractual
Term*
(in years)    Aggregate
Intrinsic
Value
(in millions)
Outstanding at December 31, 2016
   303               $ 125.38
Granted
   100               168.73
Exercised
   (8)          106.07
Forfeited or expired
   (22)          124.88



Outstanding at September 30, 2017
   373           137.49            7.8            $     6.3



Exercisable at September 30, 2017
   179           118.54            6.8            5.4

* Weighted-average

~~SNAP-ON INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Unaudited)~~


	Stock-settled SARs (in thousands)	Exercise Price Per Share*		Remaining Contractual Term* (in years)	Aggregate Intrinsic Value (in millions)
Outstanding at January 2, 2021	502	$	151.59
Granted	83	189.89
Exercised	(38)	143.06
Forfeited or expired	(121)	152.09
Outstanding at April 3, 2021	426	159.64		7.3	$	30.7
Exercisable at April 3, 2021	255	151.29		6.0	20.5



*			Weighted-average

The weighted-average grant date fair value of stock-settled SARs granted during the ~~nine~~three months ended ~~September 30, 2017,~~April 3, 2021, and ~~October 1, 2016,~~March 28, 2020, was ~~$24.13~~$24.05 and ~~$19.47,~~$21.31, respectively. The intrinsic value of stock-settled SARs exercised was ~~zero~~$2.2 million and ~~$0.5 million~~0 during the respective three ~~and nine~~ months ended ~~September 30, 2017,~~April 3, 2021, and ~~$0.1 million and $0.8 million during the respective three and nine months ended October 1, 2016.~~March 28, 2020. The fair value of stock-settled SARs vested was $2.1 million and $2.3 million during ~~both~~ the ~~nine~~respective three months ended ~~September 30, 2017,~~April 3, 2021, and ~~October 1, 2016, was $2.1 million.~~

March 28, 2020.

As of ~~September 30, 2017,~~April 3, 2021, there was ~~$3.0~~$4.3 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 ~~1.7~~2.2 years.

Table of Contents

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

The following weighted-average assumptions were used in calculating the fair value of cash-settled SARs granted during the ~~nine~~three months ended ~~September 30, 2017,~~April 3, 2021, and ~~October 1, 2016,~~March 28, 2020, 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
Expected term of cash-settled SARs(in years)
     3.38         3.43
Expected volatility factor
   19.58%    19.03%
Expected dividend yield
     1.57%      1.58%
Risk-free interest rate
             1.62%                      0.88%

model:


	Three Months Ended
	April 3, 2021	March 28, 2020
Expected term of cash-settled SARs (in years)	3.83	3.66
Expected volatility factor	22.49%	27.06%
Expected dividend yield	2.12%	4.01%
Risk-free interest rate	0.39%	0.30%

The intrinsic value of cash-settled SARs exercised was ~~zero~~$0.5 million and ~~$0.8~~$0.1 million during the respective three ~~and nine~~ months ended ~~September 30, 2017,~~April 3, 2021, and ~~$0.1 million and $0.9 million during the respective three and nine months ended October 1, 2016.~~March 28, 2020. The fair value of cash-settled SARs vested ~~during the nine months ended September 30, 2017, and October 1, 2016,~~ was $0.1 million and ~~$0.2 million, respectively.~~

0 during the respective three months ended April 3, 2021, and March 28, 2020.

Changes to the company’snon-vested cash-settled SARs during the ~~nine~~three months ended ~~September 30, 2017,~~April 3, 2021, are as follows:

   Cash-settled
SARs
(in thousands)    Fair Value
Price per
Share*
Non-vested cash-settled SARs at December 31, 2016
              7               $     40.83
Granted
   1           13.52
Vested
   (3)          26.11



Non-vested cash-settled SARs at September 30, 2017
   5           18.78

* Weighted-average


	Cash-settled SARs (in thousands)	Fair Value Price per Share*
Non-vested cash-settled SARs at January 2, 2021	2	$	36.99
Granted	1	24.05
Vested	(1)	69.68
Non-vested cash-settled SARs at April 3, 2021	2	47.56



*			Weighted-average

As of ~~September 30, 2017,~~April 3, 2021, 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 ~~1.4~~2.2 years.

Restricted Stock Awards –Non-employee ~~Directors~~

Directors: The company awarded ~~6,966~~6,858 shares and ~~7,145~~7,380 shares of restricted stock tonon-employee directors infor the ~~first nine~~respective three months ~~of 2017~~ended April 3, 2021, and ~~2016, respectively.~~March 28, 2020. The fair value of the restricted stock awards is expensed over aone-year vesting period based on the fair value on the date of grant. All restrictions ~~for the restricted stock~~ generally lapse upon the earlier of the first anniversary of the grant date, the recipient’s death or disability or in the event of a change in control, as defined in the 2011 Plan. If termination of the recipient’s service occurs prior to the first anniversary of the grant date for any reason other than death or disability, the shares of restricted stock would be forfeited, unless otherwise determined by the Board.

~~SNAP-ON INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Unaudited)~~

~~Employee Stock Purchase Plan~~

~~Substantially 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 and~~Snap-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 Plan~~

All 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 and~~Snap-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 any~~mark-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.

Note ~~13:~~14: Earnings Per Share

The shares used in the computation of the company’s basic and diluted earnings per common share are as follows:

   Three Months Ended    Nine Months Ended
   September 30,
2017    October 1,
2016    September 30,
2017    October 1,
2016
Weighted-average common shares outstanding
       57,200,880            58,013,852            57,643,948            58,076,627
Effect of dilutive securities
   1,054,360        1,251,062        1,220,575        1,292,765








Weighted-average common shares outstanding, assuming dilution
   58,255,240        59,264,914        58,864,523        59,369,392


	Three Months Ended
	April 3, 2021	March 28, 2020
Weighted-average common shares outstanding	54,184,438	54,523,857
Effect of dilutive securities	933,451	524,511
Weighted-average common shares outstanding, assuming dilution	55,117,889	55,048,368

The dilutive effect of the potential exercise of outstanding options and stock-settled SARs to purchase common shares is calculated using the treasury stock method. As of ~~September 30, 2017,~~April 3, 2021, there were ~~723,215~~400 awards outstanding that were anti-dilutive; as of ~~October 1, 2016,~~March 28, 2020, there were ~~1,600~~2,304,236 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.

Table of Contents

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

Note ~~14:~~15: Commitments and Contingencies

Snap-on provides product warranties for specific product lines and accrues for estimated future warranty cost in the period in which the sale is recorded.Snap-on calculates its accrual requirements based on historic warranty loss experience that is periodically adjusted for recent actual experience, including the timing of claims during the warranty period and actual costs incurred.

Snap-on’s product warranty accrual activity for the three ~~and nine~~ months ended ~~September 30, 2017,~~April 3, 2021, and ~~October 1, 2016,~~March 28, 2020, is as follows:

   Three Months Ended    Nine Months Ended
(Amounts in millions)    September 30,
2017    October 1,
2016    September 30,
2017    October 1,
2016
Warranty reserve:

Beginning of period
       $     18.9             $     16.1             $     16.0             $     16.4
Additions
   1.1         2.8         10.4         8.8
Usage
   (2.2)        (3.3)        (8.6)        (9.6)








End of period
       $ 17.8             $ 15.6             $ 17.8             $ 15.6


	Three Months Ended
(Amounts in millions)	April 3, 2021		March 28, 2020
Warranty reserve:
Beginning of period	$	17.6	$	17.3
Additions	4.1		3.7
Usage	(3.4)		(3.8)
End of period	$	18.3	$	17.2

Snap-on is involved in various legal matters that are being litigated and/or settled in the ordinary course of business. ~~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 ~~these~~all legal matters will not have a material impact onSnap-on’s consolidated financial position, results of operations or cash flows.

Note ~~15:~~16: Leases

Lessee Accounting: Supplemental balance sheet information related to leases as of April 3, 2021, and January 2, 2021 is as follows:


(Amounts in millions)	April 3, 2021		January 2, 2021
Finance leases:
Property and equipment - gross	$	22.9	$	24.3
Accumulated depreciation and amortization	(16.9)		(17.5)
Property and equipment - net	$	6.0	$	6.8

Other accrued liabilities	$	2.6	$	2.7
Other long-term liabilities	6.5		7.4
Total finance lease liabilities	$	9.1	$	10.1

Operating leases:
Operating lease right-of-use assets	$	49.9	$	51.9

Other accrued liabilities	$	19.3	$	19.3
Operating lease liabilities	32.0		34.0
Total operating lease liabilities	$	51.3	$	53.3

Lessor Accounting: Snap-on’s Financial Services business offers its customers lease financing for the lease of tools, diagnostics and equipment products and it offers financing to franchisees for vehicle leases. Sales-type leases are included in both “Finance receivables - net” and “Long-term finance receivables - net” and also in both “Contract receivables - net” and “Long-term contract receivables - net” on the accompanying Condensed Consolidated Balance Sheets.

See Note 4 for further information on finance and contract receivables.

Table of Contents

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

Note 17: Other Income (Expense) – Net

“Other income (expense) – net” on the accompanying Condensed Consolidated Statements of Earnings consists of the following:

   Three Months Ended    Nine Months Ended
(Amounts in millions)    September 30,
2017    October 1,
2016    September 30,
2017    October 1,
2016
Interest income
       $     –               $     0.2             $     0.2             $     0.5
Net foreign exchange loss
   (2.0)        (1.0)        (5.7)        (0.9)
Other
   (0.1)        –           (0.2)        0.1








Total other income (expense) – net
       $ (2.1)            $ (0.8)            $ (5.7)            $ (0.3)

~~SNAP-ON INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Unaudited)~~


	Three Months Ended
(Amounts in millions)	April 3, 2021		March 28, 2020
Interest income	$	0.4	$	0.4
Net foreign exchange loss	(0.2)		(1.9)
Net periodic pension and postretirement benefits – non-service	3.8		3.0


Other	0.3		0
Total other income (expense) – net	$	4.3	$	1.5

Note ~~16:~~18: Accumulated Other Comprehensive Income (Loss)

The following is a summary of net changes in Accumulated OCI by component and net of tax for the three months ended ~~September 30, 2017:~~

(Amounts in millions)    Foreign
Currency
Translation    Cash Flow
Hedges    Defined
Benefit
Pension and
Postretirement
Plans    Total
Balance as of July 1, 2017
       $ (130.2)            $     14.6             $     (281.4)            $     (397.0)
Other comprehensive income before reclassifications
   51.4         –           –           51.4
Amounts reclassified from Accumulated OCI
   –           (0.5)        4.3         3.8








Net other comprehensive income (loss)
   51.4         (0.5)        4.3         55.2








Balance as of September 30, 2017
       $     (78.8)            $ 14.1             $ (277.1)            $ (341.8)

~~The following is a summary of net changes in Accumulated OCI by component and net of tax for the nine months ended September 30, 2017:~~

(Amounts in millions)    Foreign
Currency
Translation    Cash Flow
Hedges    Defined
Benefit
Pension and
Postretirement
Plans    Total
Balance as of December 31, 2016
       $     (217.7)            $ 9.2             $     (290.0)            $     (498.5)
Other comprehensive income before reclassifications
   138.9         6.1         –           145.0
Amounts reclassified from Accumulated OCI
   –           (1.2)        12.9         11.7








Net other comprehensive income
   138.9         4.9         12.9         156.7








Balance as of September 30, 2017
       $ (78.8)            $     14.1             $ (277.1)            $ (341.8)

April 3, 2021:


(Amounts in millions)	Foreign Currency Translation		Cash Flow Hedges		Defined Benefit Pension and Postretirement Plans		Total
Balance as of January 2, 2021	$	(74.7)	$	10.5	$	(301.6)	$	(365.8)
Other comprehensive loss before reclassifications	(29.0)		0		0		(29.0)
Amounts reclassified from Accumulated OCI	0		(0.4)		6.9		6.5
Net other comprehensive income (loss)	(29.0)		(0.4)		6.9		(22.5)
Balance as of April 3, 2021	$	(103.7)	$	10.1	$	(294.7)	$	(388.3)

The following is a summary of net changes in Accumulated OCI by component and net of tax for the three months ended ~~October 1, 2016:~~

(Amounts in millions)    Foreign
Currency
Translation    Cash Flow
Hedges    Defined
Benefit
Pension and
Postretirement
Plans    Total
Balance as of July 2, 2016
       $     (133.5)            $     0.5             $     (236.8)            $     (369.8)
Other comprehensive loss before reclassifications
   (7.8)        –           –           (7.8)
Amounts reclassified from Accumulated OCI
   –           (0.1)        4.8         4.7








Net other comprehensive income (loss)
   (7.8)        (0.1)        4.8         (3.1)








Balance as of October 1, 2016
       $ (141.3)            $ 0.4             $ (232.0)            $ (372.9)

March 28, 2020:


(Amounts in millions)	Foreign Currency Translation		Cash Flow Hedges		Defined Benefit Pension and Postretirement Plans		Total
Balance as of December 28, 2019	$	(187.4)	$	10.7	$	(331.2)	$	(507.9)
Other comprehensive loss before reclassifications	(108.0)		0		0		(108.0)
Amounts reclassified from Accumulated OCI	0		(0.4)		6.4		6.0
Net other comprehensive income (loss)	(108.0)		(0.4)		6.4		(102.0)
Balance as of March 28, 2020	$	(295.4)	$	10.3	$	(324.8)	$	(609.9)

Table of Contents

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

~~The following is a summary of net changes in Accumulated OCI by component and net of tax for nine months ended October 1, 2016:~~

(Amounts in millions)    Foreign
Currency
Translation    Cash Flow
Hedges    Defined
Benefit
Pension and
Postretirement
Plans    Total
Balance as of January 2, 2016
       $     (118.5)            $ 0.7            $     (246.4)            $     (364.2)
Other comprehensive loss before reclassifications
   (22.8)        –           –           (22.8)
Amounts reclassified from Accumulated OCI
   –               (0.3)        14.4         14.1








Net other comprehensive income (loss)
   (22.8)        (0.3)        14.4         (8.7)








Balance as of October 1, 2016
       $ (141.3)            $ 0.4             $ (232.0)            $ (372.9)

The reclassifications out of Accumulated OCI for the three ~~and nine~~ month periods ended ~~September 30, 2017,~~April 3, 2021, and ~~October 1, 2016,~~March 28, 2020, are as follows:

   Amount Reclassified from Accumulated OCI
   Three Months Ended    Nine Months Ended
Details about Accumulated OCI
               Components
   September 30,
2017    October 1,
2016    September 30,
2017    October 1,
2016
Statement of Earnings
Presentation
(Amounts in millions)
Gains on cash flow hedges:

Treasury locks
       $ 0.5             $ 0.1             $ 1.2             $ 0.3         Interest expense
Income tax expense
   –            –            –            –            Income tax expense









Net of tax
   0.5         0.1         1.2         0.3









Amortization of net unrecognized losses and prior service credits
   (6.6)        (7.6)        (19.8)        (22.7)        See footnote below*
Income tax benefit
   2.3         2.8         6.9         8.3         Income tax expense









Net of tax
   (4.3)        (4.8)        (12.9)        (14.4)









Total reclassifications for the period, net of tax
       $     (3.8)            $     (4.7)            $     (11.7)            $     (14.1)


	Amount Reclassified from Accumulated OCI
	Three Months Ended
	April 3, 2021		March 28, 2020		Statement of Earnings Presentation
(Amounts in millions)
Gains on cash flow hedges:
Treasury locks	$	0.4	$	0.4	Interest expense
Income tax expense	0		0		Income tax expense
Net of tax	0.4		0.4

Amortization of net unrecognized losses	(9.1)		(8.4)		See footnote below*
Income tax benefit	2.2		2.0		Income tax expense
Net of tax	(6.9)		(6.4)
Total reclassifications for the period, net of tax	$	(6.5)	$	(6.0)

*

*			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 INCORPORATED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Unaudited)~~

Note ~~17:~~19: Segments

Snap-on’s business segments are based on the organization structure used by management for making operating and investment decisions and for assessing performance.Snap-on’s reportable business segments are: (i) the Commercial & Industrial Group; (ii) theSnap-on Tools Group; (iii) the Repair Systems & Information Group; and (iv) Financial Services. The Commercial & Industrial Group consists of business operations serving a broad range of industrial and commercial customers worldwide, including customers in the aerospace, natural resources, government, power generation, transportation and technical education market segments (collectively, “critical industries”), primarily through direct and distributor channels. TheSnap-on Tools Group consists of business operations primarily serving vehicle service and repair technicians through the company’s worldwide mobile tool distribution channel. The Repair Systems & Information Group consists of business operations serving other professional vehicle repair customers worldwide, primarily owners and managers of independent repair shops and OEM ~~dealership service and repair shops (“OEM dealerships”),~~dealerships, through direct and distributor channels. Financial Services consists of the business operations ofSnap-on’s finance subsidiaries.

Snap-on evaluates the performance of its operating segments based on segment revenues, including both external and intersegment net sales, and segment operating earnings.Snap-on accounts for intersegment sales and transfers based primarily on standard costs with reasonablemark-ups established between the segments. Identifiable assets by segment are those assets used in the respective reportable segment’s operations. Corporate assets consist of cash and cash equivalents (excluding cash held at Financial Services), deferred income taxes and certain other assets. All ~~significant~~ intersegment amounts are eliminated to arrive atSnap-on’s consolidated financial results.

~~Financial Data by Segment:~~

   Three Months Ended    Nine Months Ended
(Amounts in millions)    September 30,
2017    October 1,
2016    September 30,
2017    October 1,
2016
Net sales:

Commercial & Industrial Group
       $ 314.6             $ 289.3             $ 923.3             $ 862.0
Snap-on Tools Group
   392.7         397.2         1,215.9         1,216.4
Repair Systems & Information Group
   333.5         286.1         990.4         860.1








Segment net sales
   1,040.8         972.6         3,129.6         2,938.5
Intersegment eliminations
       (137.0)            (138.5)        (417.3)        (397.9)








Total net sales
       $ 903.8             $ 834.1             $     2,712.3             $ 2,540.6
Financial Services revenue
   79.0         71.6         233.5         207.2








Total revenues
       $ 982.8             $ 905.7             $ 2,945.8             $     2,747.8








Operating earnings:

Commercial & Industrial Group
       $ 50.1             $ 43.7             $ 134.4             $ 124.1
Snap-on Tools Group
   56.3         64.6         207.2         207.6
Repair Systems & Information Group
   83.4         71.8         244.0         215.3
Financial Services
   56.0         50.6         163.1         147.1








Segment operating earnings
   245.8         230.7         748.7         694.1
Corporate
   (36.7)        (22.5)        (79.3)        (67.6)








Operating earnings
       $ 209.1             $ 208.2             $ 669.4             $ 626.5
Interest expense
   (13.1)        (13.1)        (38.8)        (39.1)
Other income (expense) – net
   (2.1)        (0.8)        (5.7)        (0.3)








Earnings before income taxes and equity earnings
       $ 193.9             $ 194.3             $ 624.9             $ 587.1

Table of Contents

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

(Amounts in millions)    September 30,
2017    December 31,
2016
Assets:

Commercial & Industrial Group
       $ 1,104.0             $ 907.1
Snap-on Tools Group
   734.9         668.1
Repair Systems & Information Group
   1,313.5         1,211.0
Financial Services
   1,944.3         1,789.7




Total assets from reportable segments
       $     5,096.7             $ 4,575.9
Corporate
   224.2         212.3
Elimination of intersegment receivables
   (64.7)        (65.0)




Total assets
       $ 5,256.2             $     4,723.2

Financial Data by Segment:


	Three Months Ended
(Amounts in millions)	April 3, 2021		March 28, 2020
Net sales:
Commercial & Industrial Group	$	345.7	$	299.9
Snap-on Tools Group	478.3		375.9
Repair Systems & Information Group	347.6		314.6
Segment net sales	1,171.6		990.4
Intersegment eliminations	(147.0)		(138.2)
Total net sales	1,024.6		852.2
Financial Services revenue	88.6		85.9
Total revenues	$	1,113.2	$	938.1
Operating earnings:
Commercial & Industrial Group	$	50.7	$	31.5
Snap-on Tools Group	98.9		48.6
Repair Systems & Information Group	81.4		77.3
Financial Services	65.3		56.9
Segment operating earnings	296.3		214.3
Corporate	(30.1)		(18.5)
Operating earnings	266.2		195.8
Interest expense	(14.3)		(11.4)
Other income (expense) – net	4.3		1.5
Earnings before income taxes and equity earnings	$	256.2	$	185.9


(Amounts in millions)	April 3, 2021		January 2, 2021
Assets:
Commercial & Industrial Group	$	1,174.0	$	1,210.4
Snap-on Tools Group	771.1		775.3
Repair Systems & Information Group	1,590.6		1,399.7
Financial Services	2,149.0		2,170.3
Total assets from reportable segments	5,684.7		5,555.7
Corporate	1,054.2		1,063.2
Elimination of intersegment receivables	(65.4)		(61.6)
Total assets	$	6,673.5	$	6,557.3

Table of Contents

SNAP-ON INCORPORATED

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

Caution Regarding Forward-Looking Statements:

Statements in this document that are not historical facts, including statements ~~that~~that: (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 those~~the factors discussed in its Annual Report on Form10-K for the fiscal year ended ~~December 31, 2016, which are incorporated herein by reference,~~January 2, 2021, 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.

These risks and uncertainties include, without limitation, uncertainties related to estimates, statements, assumptions and projections generally, and the timing and progress with whichSnap-on can attain value through itsSnap-on Value Creation Processes, including its ability to realize efficiencies and savings from its rapid continuous improvement and other cost reduction initiatives, improve workforce productivity, achieve improvements in the company’s manufacturing footprint and greater efficiencies in its supply chain, and enhance machine maintenance, plant productivity and manufacturing lineset-up and change-over practices, any or all of which could result in production inefficiencies, higher costs and/or lost revenues. These risks include the evolving impact and unknown duration of the coronavirus (“COVID-19”) pandemic, which has the potential to amplify the impact of the other risks facing the company. These risks also include the impact of governmental actions related thereto on Snap-on’s business, as well as uncertainties related toSnap-on’s capability to implement future strategies with respect to its existing businesses, its ability to refine its brand and franchise strategies, retain and attract franchisees, further enhance service and value to franchisees and thereby help improve their sales and profitability, introduce successful new products, successfully pursue, complete and integrate acquisitions, as well as its ability to withstand disruption arising from natural disasters, ~~(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 impact of matters related to 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, ~~rules~~laws and regulations as well as uncertainty surrounding potential changes, 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, ~~the~~potential 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, the ability to effectively manage human capital resources, and other world or local events outsideSnap-on’s control, including terrorist ~~disruptions.~~disruptions and other outbreaks of infectious diseases and civil unrest. Snap-on disclaims any responsibility to update any forward-looking statement provided in this document, except as required by law.

In addition, investors should be aware that generally accepted accounting principles in the United States of America (“GAAP”) prescribe when a company should reserve for particular risks, including litigation exposures. Accordingly, results for a given reporting period could be significantly affected if and when a reserve is established for a major contingency. Reported results, therefore, may appear to be volatile in certain accounting periods.

Table of Contents

SNAP-ON INCORPORATED

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

(continued)

~~Recent Acquisitions~~

~~On July 28, 2017,Snap-on~~ acquired Torque Control Specialist (“TCS”), for a cash purchase price of $3.6 million (or $3.5 million, net of cash acquired). TCS, based in Adelaide, Australia, distributes a full range of torque products, including wrenches, multipliers and calibrators for use in critical industries. For segment reporting purposes, the results of operations and assets of TCS have been included in the Commercial & Industrial Group since the acquisition date.

~~On May 4, 2017,Snap-on~~ acquired Norbar Torque Tools Holding Limited, along with its U.S. and Chinese joint ventures (“Norbar”), for a purchase price of $71.6 million (or $69.9 million, net of cash acquired), which reflects a $0.8 million working capital adjustment finalized in the third quarter of 2017. Norbar, based in Banbury, U.K., designs and manufactures a full range of torque products, including wrenches, multipliers and calibrators for use in critical industries. For segment reporting purposes, the results of operations and assets of Norbar have been included in the Commercial & Industrial Group since the acquisition date.

~~On January 30, 2017,Snap-on~~ acquired BTC Global Limited (“BTC”) for a cash purchase price of $9.2 million. BTC, based in Crewe, U.K., designs and implements automotive vehicle inspection and management software for original equipment manufacturer (“OEM”) franchise repair shops. For segment reporting purposes, the results of operations and assets of BTC have been included in the Repair Systems & Information Group since the acquisition date.

~~On 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 INCORPORATED~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS~~

~~OF OPERATIONS~~

~~(continued)~~

~~RESULTS OF OPERATIONS~~

~~Results 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
Net sales
     $ 903.8       100.0%        $ 834.1         100.0%        $ 69.7       8.4%
Cost of goods sold
   (455.2)      -50.4%      (415.0)      -49.8%      (40.2)      -9.7%







Gross profit
   448.6       49.6%      419.1       50.2%      29.5       7.0%
Operating expenses
     (295.5)      -32.7%        (261.5)      -31.3%        (34.0)        -13.0%







Operating earnings before financial services
   153.1       16.9%      157.6       18.9%      (4.5)      -2.9%

Financial services revenue
   79.0         100.0%      71.6       100.0%      7.4       10.3%
Financial services expenses
   (23.0)      -29.1%      (21.0)      -29.3%      (2.0)      -9.5%







Operating earnings from financial services
   56.0       70.9%      50.6       70.7%      5.4       10.7%








Operating earnings
   209.1       21.3%      208.2       23.0%      0.9       0.4%
Interest expense
   (13.1)      -1.4%      (13.1)      -1.4%      –        –
Other income (expense) – net
   (2.1)      -0.2%      (0.8)      -0.1%      (1.3)      NM







Earnings before income taxes and equity earnings
   193.9       19.7%      194.3       21.5%      (0.4)      -0.2%
Income tax expense
   (57.2)      -5.8%      (59.6)      -6.6%      2.4       4.0%







Earnings before equity earnings
   136.7       13.9%      134.7       14.9%      2.0       1.5%
Equity earnings, net of tax
   0.4       –          0.5       –          (0.1)      -20.0%







Net earnings
   137.1       13.9%      135.2       14.9%      1.9       1.4%
Net earnings attributable to noncontrolling interests
   (3.7)      -0.3%      (3.5)      -0.4%      (0.2)      -5.7%







Net earnings attributable toSnap-on Inc.
     $ 133.4       13.6%        $ 131.7       14.5%        $ 1.7       1.3%

~~NM: Not meaningful~~

Percentage Disclosure: All income statement line item percentages below “Operating earnings from financial services” are calculated as a percentage of the sum of Net sales and Financial services revenue.

~~Net sales of $903.8 million in the third quarter of 2017 increased $69.7 million, or 8.4%, from 2016 levels, reflecting a $19.5 million, or 2.3%, increase in organic sales (anon-GAAP~~ financial measure that excludes acquisition-related sales and the impact of foreign currency translation), $44.3 million of acquisition-related sales, and $5.9 million of favorable foreign currency translation.~~Snap-on~~ ~~has significant international operations and is subject to risks inherent with foreign operations, including foreign currency translation fluctuations.~~

Non-GAAP Measures

References in this report to “organic sales” refer to sales from continuing operations calculated in accordance with GAAP, ~~adjusted to exclude~~excluding 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 ~~facilitating~~facilitates comparisons of our sales performance with prior periods.

Recent Acquisitions

On February 26, 2021, Snap-on acquired Dealer-FX Group, Inc. (“Dealer-FX”) for a cash purchase price of $200.1 million (or $200.0 million, net of cash acquired). Dealer-FX, based in Markham, Ontario, is a leading developer, marketer and provider of service operations software solutions for automotive original equipment manufacturer (“OEM”) customers and their dealers. Dealer-FX specializes in software as a service (SaaS) management systems, communications platforms, extensive data integrations, and offers a digitalized solution that increases productivity and enhances the vehicle owners experience. The acquisition of Dealer-FX complemented and expanded Snap-on’s existing OEM and dealership business that provides electronic parts catalogs, essential tool and diagnostics programs, and custom analytics to OEMs and dealerships.

On January 31, 2020, Snap-on acquired substantially all of the assets of the TreadReader product line from Sigmavision Limited (“Sigmavision”) for a cash purchase price of $5.9 million. Sigmavision designs and manufactures handheld devices and drive-over ramps that provide tire information for use in the automotive industry. The acquisition of the TreadReader product line enhanced and expanded Snap-on’s existing capabilities in serving vehicle repair facilities and expanded the company’s presence with repair shop owners and managers.

For segment reporting purposes, the results of operations and assets of Dealer-FX and Sigmavision have been included in the Repair Systems & Information Group since the respective acquisition dates, and the results of operations and assets of AutoCrib have been included in the Commercial & Industrial Group since the acquisition date.

Pro forma financial information has not been presented for these acquisitions as the net effects were neither significant nor material to Snap-on’s results of operations or financial position.

Effect of COVID-19

During the first quarter of 2021, the COVID-19 pandemic continued to affect the company, although to a lesser extent than in previous periods. The company sustained the accommodation of its operations to the virus environment, continuing without significant disruption to serve its franchisees and other professional customers as they performed essential work, while taking what it believes to be appropriate measures to ensure the health and safety of its personnel. Snap-on also provided direct assistance to its franchisees as they accommodated the turbulence caused by the virus and continued to service their essential technician customers. The company maintained its investment in offsetting the virus impact, including absorbing wages for quarantined associates, event cancellation fees and other related costs. The amounts of these costs are similar to the expenses incurred in the first quarter of 2020. Throughout the pandemic, Snap-on has generally maintained its headcount, manufacturing capacity, brand position and product development. The company’s supply chain and distribution channels have not been materially impacted by the pandemic, and the company has taken steps to ensure access to raw materials and components, but it cannot provide assurances with respect to the future due to the evolving nature of the pandemic environment.

The ultimate impact of COVID-19 on our business, results of operations, financial condition and cash flows is dependent on future developments, including the duration of the pandemic and the related length of its impact on the global economy, which are uncertain and cannot be predicted at this time. See also Part I, Item 1A, Risk Factors in Snap-on’s 2020 Form 10-K for an additional discussion of risks related to COVID-19.

Table of Contents

SNAP-ON INCORPORATED

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

(continued)

RESULTS OF OPERATIONS

Results of operations for the three months ended April 3, 2021, and March 28, 2020, are as follows:


	Three Months Ended
(Amounts in millions)	April 3, 2021				March 28, 2020				Change
Net sales	$	1,024.6	100.0	%	$	852.2	100.0	%	$	172.4	20.2	%
Cost of goods sold	(511.0)		(49.9)	%	(430.6)		(50.5)	%	(80.4)		(18.7)	%
Gross profit	513.6		50.1	%	421.6		49.5	%	92.0		21.8	%
Operating expenses	(312.7)		(30.5)	%	(282.7)		(33.2)	%	(30.0)		(10.6)	%
Operating earnings before financial services	200.9		19.6	%	138.9		16.3	%	62.0		44.6	%

Financial services revenue	88.6		100.0	%	85.9		100.0	%	2.7		3.1	%
Financial services expenses	(23.3)		(26.3)	%	(29.0)		(33.8)	%	5.7		19.7	%
Operating earnings from financial services	65.3		73.7	%	56.9		66.2	%	8.4		14.8	%

Operating earnings	266.2		23.9	%	195.8		20.9	%	70.4		36.0	%
Interest expense	(14.3)		(1.3)	%	(11.4)		(1.2)	%	(2.9)		(25.4)	%
Other income (expense) – net	4.3		0.4	%	1.5		0.1	%	2.8		NM
Earnings before income taxes and equity earnings	256.2		23.0	%	185.9		19.8	%	70.3		37.8	%
Income tax expense	(59.1)		(5.3)	%	(43.9)		(4.7)	%	(15.2)		(34.6)	%
Earnings before equity earnings	197.1		17.7	%	142.0		15.1	%	55.1		38.8	%
Equity earnings, net of tax	0.5		0.1	%	—		—		0.5		NM
Net earnings	197.6		17.8	%	142.0		15.1	%	55.6		39.2	%
Net earnings attributable to noncontrolling interests	(5.0)		(0.5)	%	(4.8)		(0.5)	%	(0.2)		(4.2)	%
Net earnings attributable to Snap-on Inc.	$	192.6	17.3	%	$	137.2	14.6	%	$	55.4	40.4	%



NM: Not meaningful
Percentage Disclosure: All income statement line item percentages below “Operating earnings from financial services” are calculated as a percentage of the sum of Net sales and Financial services revenue.

Net sales of $1,024.6 million in the first quarter of 2021 increased $172.4 million, or 20.2% from 2020 levels, reflecting a $141.9 million, or 16.3%, organic gain, $11.3 million of acquisition-related sales and $19.2 million of favorable foreign currency translation.

Gross profit of ~~$448.6~~$513.6 million in the ~~third~~first quarter of ~~2017~~2021 increased $92.0 million, or 21.8%, compared to ~~$419.1~~$421.6 million last year. Gross margin (gross profit as a percentage of net sales) of ~~49.6%~~50.1% in the quarter ~~declined~~improved 60 basis points (100 basis points (“bps”) equals 1.0 percent) from ~~50.2% last year~~the first quarter of 2020 primarily due to the impact of higher sales volumes, 60 bps from lower costs related to $5.1 million of exit and disposal activities (“restructuring actions”) recorded in the first quarter of 2020 and benefits from the company’s “Rapid Continuous Improvement” or “RCI” initiatives, partially offset by 40 bps of unfavorable foreign currency effects ~~and lower gross margin on acquisition related sales, partially offset by savings from the company’s “Rapid Continuous Improvement” or “RCI initiatives.”~~

Snap-on’s RCI initiatives employ a structured set of tools and processes across multiple businesses and geographies intended to eliminate waste and improve operations. Savings fromSnap-on’s RCI initiatives reflect benefits from a wide variety of ongoing efficiency, productivity and process improvements, including savings generated from product design cost reductions, improved manufacturing lineset-up and change-over practices, lower-cost sourcing initiatives and facility ~~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.

Table of Contents

SNAP-ON INCORPORATED

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

(continued)

Operating expenses of ~~$295.5~~$312.7 million in the ~~third~~first quarter of ~~2017~~2021 compared to ~~$261.5~~$282.7 million in the first quarter of 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. The operating expense margin (operatingyear. Operating expenses as a percentage of net ~~sales)~~sales of ~~32.7% was 140~~30.5% improved 270 bps ~~higher than~~from last year ~~as 170~~primarily due to the impact of higher sales volumes and savings from cost containment actions in response to the COVID-19 pandemic and 30 bps ~~for~~from lower costs related to $2.4 million of restructuring actions recorded in the ~~legal charge and~~first quarter of 2020. These items were partially offset by 30 bps of operating expenses for acquisitions ~~were partially offset~~and by ~~sales volume leverage.~~

costs associated with higher stock-based expenses.

Operating earnings before financial services of ~~$153.1~~$200.9 million in the ~~third~~first quarter of ~~2017, including $1.9~~2021 increased $62.0 million, or 44.6%, compared to $138.9 million in the first quarter of 2020, which included $7.5 million of ~~unfavorable foreign currency effects and $15.0 million~~charges for ~~the legal charge, decreased $4.5 million, or 2.9%, as compared to $157.6 million last year.~~restructuring actions. As a percentage of net sales, operating earnings before financial services of ~~16.9%, including the legal charge, compared to 18.9%~~19.6% improved 330 bps from 16.3% last ~~year.~~

year, which included 90 bps of costs from restructuring actions.

Financial services revenue of ~~$79.0~~$88.6 million in the ~~third~~first quarter of ~~2017~~2021 compared to ~~revenue of $71.6~~$85.9 million last year. Financial services operating earnings of ~~$56.0~~$65.3 million in the ~~third quarter of 2017, including $0.1 million of favorable foreign currency effects, increased $5.4 million, or 10.7%, as~~period compared to ~~$50.6~~$56.9 million ~~last year. The year-over-year increases~~ in ~~both revenue and operating earnings primarily reflect continued growth of~~2020, which included a $2.6 million charge related to higher credit reserves resulting from the ~~company’s financial services portfolio.~~

economic uncertainty associated with the COVID-19 pandemic.

Operating earnings of ~~$209.1~~$266.2 million in the ~~third~~first quarter of ~~2017, including $1.8~~2021 increased $70.4 million, or 36.0%, compared to $195.8 million last year, which included $7.5 million of ~~unfavorable foreign currency effects and $15.0 million~~charges for ~~the legal charge, increased $0.9 million, or 0.4%, from $208.2 million last year.~~restructuring actions. As a percentage of revenues (net sales plus financial services revenue), operating earnings of ~~21.3%~~23.9% in the quarter compared to ~~23.0%~~20.9% last ~~year.~~

year, which included 80 bps of costs from restructuring actions.

Interest expense ~~was unchanged at $13.1 million~~ in the ~~respective third quarters~~first quarter of ~~2017 and 2016.~~ 2021 increased $2.9 million compared to last year. See Note 89 to the Condensed Consolidated Financial Statements for information onSnap-on’s debt and credit facilities.

Other income (expense) – net ~~was expense of $2.1 million and $0.8 million in the respective third quarters of 2017 and 2016. Other income (expense) – net reflects~~includes 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 ~~other~~Other income (expense) – net.

~~Snap-on’s~~ ~~third~~

The 2021 first quarter effective income tax rate on earnings attributable toSnap-on was ~~30.1%~~23.5%. The 2020 effective income tax rate was 24.2%, ~~including~~which included a ~~0.6% benefit from~~10 bps increase related to the ~~legal charge, in 2017 and 31.2% in 2016. See~~restructuring actions. See Note 78 to the Condensed Consolidated Financial Statements for information on income taxes.

Net earnings attributable toSnap-on in the first quarter of ~~$133.4~~2021 were $192.6 million, or ~~$2.29~~$3.50 per diluted share. Net earnings attributable to Snap-on in the first quarter of 2020 were $137.2 million, or $2.49 per diluted share, ~~in the third quarter of 2017, including $9.3~~which included a $6.0 million, or ~~$0.16~~$0.11 per diluted share, ~~for~~after-tax charge related to the ~~after tax legal charge, increased $1.7 million, or $0.07 per diluted share, from 2016 levels. Net earnings attributable toSnap-on~~ ~~in the third quarter~~restructuring actions.

Table of ~~2016 were $131.7 million, or $2.22 per diluted share.~~

Contents

SNAP-ON INCORPORATED

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

(continued)

~~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
Net sales
  $ 2,712.3      100.0%     $ 2,540.6      100.0%     $ 171.7    6.8%
Cost of goods sold
  (1,352.7)   -49.9%     (1,274.9)   -50.2%   (77.8)   -6.1%

Gross profit
1,359.6    50.1%   1,265.7    49.8%   93.9    7.4%
Operating expenses
(853.3)   -31.4%   (786.3)   -30.9%     (67.0)   -8.5%

Operating earnings before financial services
506.3    18.7%   479.4    18.9%   26.9    5.6%

Financial services revenue
233.5    100.0%   207.2    100.0%   26.3    12.7%
Financial services expenses
(70.4)   -30.1%   (60.1)   -29.0%   (10.3)     -17.1%

Operating earnings from financial services
163.1    69.9%   147.1    71.0%   16.0    10.9%

Operating earnings
669.4    22.7%   626.5    22.8%   42.9    6.8%
Interest expense
(38.8)   -1.3%   (39.1)   -1.4%   0.3    0.8%
Other income (expense) – net
(5.7)   -0.2%   (0.3)   –        (5.4)   NM

Earnings before income taxes and equity earnings
624.9    21.2%   587.1    21.4%   37.8    6.4%
Income tax expense
(187.1)   -6.3%   (179.4)   -6.6%   (7.7)   -4.3%

Earnings before equity earnings
437.8    14.9%   407.7    14.8%   30.1    7.4%
Equity earnings, net of tax
1.2    –        2.2    0.1%   (1.0)   -45.5%

Net earnings
439.0    14.9%   409.9    14.9%   29.1    7.1%
Net earnings attributable to noncontrolling interests
(10.8)   -0.4%   (9.8)   -0.3%   (1.0)   10.2%

Net earnings attributable toSnap-on Inc.
  $ 428.2    14.5%     $ 400.1    14.6%     $ 28.1    7.0%

~~NM: Not meaningful~~

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 INCORPORATED~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS~~

~~OF 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 on~~Snap-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 to~~Snap-on~~ ~~in the first nine months of 2016 were $400.1 million, or $6.74 per diluted share.~~

Exit and Disposal Activities

Snap-on did not record any costs for exit and disposal activities in the first ~~nine~~three months ended April 3, 2021. For the three months ended March 28, 2020, Snap-on recorded costs of ~~2017 or the third quarter of 2016.Snap-on~~ ~~recorded $0.9~~$7.5 million ~~of costs~~ for exit and disposal ~~activities in the first nine months of 2016.~~activities. See Note 67 to the Condensed Consolidated Financial Statements for information onSnap-on’s exit and disposal activities.

Segment Results

Snap-on’s business segments are based on the organization structure used by management for making operating and investment decisions and for assessing performance.Snap-on’s reportable business segments are: (i) the Commercial & Industrial Group; (ii) theSnap-on Tools Group; (iii) the Repair Systems & Information Group; and (iv) Financial Services. The Commercial & Industrial Group consists of business operations serving a broad range of industrial and commercial customers worldwide, including customers in the aerospace, natural resources, government, power generation, transportation and technical education market segments (collectively, “critical industries”), primarily through direct and distributor channels. TheSnap-on Tools Group consists of business operations primarily serving vehicle service and repair technicians through the company’s worldwide mobile tool distribution channel. The Repair Systems & Information Group consists of business operations serving other professional vehicle repair customers worldwide, primarily owners and managers of independent repair shops and OEM dealership service and repair shops (“OEM dealerships”), through direct and distributor channels. Financial Services consists of the business operations ofSnap-on’s finance subsidiaries.

~~SNAP-ON INCORPORATED~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS~~

~~OF OPERATIONS~~

~~(continued)~~

Snap-on evaluates the performance of its operating segments based on segment revenues, including both external and intersegment net sales, and segment operating earnings.Snap-on accounts for intersegment sales and transfers based primarily on standard costs with reasonablemark-ups established between the segments. Identifiable assets by segment are those assets used in the respective reportable segment’s operations. Corporate assets consist of cash and cash equivalents (excluding cash held at Financial Services), deferred income taxes and certain other assets. ~~All significant intersegment~~Intersegment amounts are eliminated to arrive atSnap-on’s consolidated financial results.

Commercial & Industrial Group

   Three Months Ended
(Amounts in millions)    September 30, 2017    October 1, 2016    Change
External net sales
     $ 250.8       79.7%        $ 213.1       73.7%        $ 37.7       17.7%
Intersegment net sales
   63.8       20.3%      76.2       26.3%      (12.4)      -16.3%







Segment net sales
   314.6         100.0%      289.3         100.0%      25.3       8.7%
Cost of goods sold
     (187.9)      -59.7%        (176.6)      -61.0%        (11.3)      -6.4%







Gross profit
   126.7       40.3%      112.7       39.0%      14.0       12.4%
Operating expenses
   (76.6)      -24.4%      (69.0)      -23.9%      (7.6)        -11.0%







Segment operating earnings
     $ 50.1       15.9%        $ 43.7       15.1%        $ 6.4       14.6%


	Three Months Ended
(Amounts in millions)	April 3, 2021				March 28, 2020				Change
External net sales	$	271.1	78.4	%	$	227.0	75.7	%	$	44.1	19.4	%
Intersegment net sales	74.6		21.6	%	72.9		24.3	%	1.7		2.3	%
Segment net sales	345.7		100.0	%	299.9		100.0	%	45.8		15.3	%
Cost of goods sold	(211.8)		(61.3)	%	(189.4)		(63.2)	%	(22.4)		(11.8)	%
Gross profit	133.9		38.7	%	110.5		36.8	%	23.4		21.2	%
Operating expenses	(83.2)		(24.0)	%	(79.0)		(26.3)	%	(4.2)		(5.3)	%
Segment operating earnings	$	50.7	14.7	%	$	31.5	10.5	%	$	19.2	61.0	%

Segment net sales of ~~$314.6~~$345.7 million in the ~~third~~first quarter of ~~2017~~2021 increased ~~$25.3~~$45.8 million, or ~~8.7%,~~15.3% from ~~2016~~2020 levels, reflecting a ~~$0.6~~$29.3 million, or ~~0.2%~~9.5%, organic sales ~~gain, $22.7~~increase, $7.3 million of acquisition-related sales and ~~$2.0~~$9.2 million of favorable foreign currency translation. The organic ~~sales increase~~gain primarily includes ~~a high single-digit gain in sales to customers in critical industries, a low single-digit gain~~double-digit increases in sales in the segment’s European-based hand tools business ~~substantially offset by a double-digit decrease in sales of power tools,~~ and Asia Pacific operations, as well as a mid single-digit ~~sales decrease~~increase to customers in critical industries.

Segment gross margin in the ~~segment’s Asia Pacific operations.~~

~~Segment gross profit of $126.7 million in the third~~first quarter of ~~2017 compared to $112.7 million last year. Third quarter gross margin of 40.3% in 2017 increased 130~~38.7% improved 190 bps from ~~39.0% in 2016~~last year, primarily due to ~~favorable business mix~~150 bps from lower costs related to $4.4 million of restructuring actions recorded in the first quarter of 2020 and benefits from ~~the company’s RCI initiatives.~~

higher sales volumes, partially offset by 70 bps of unfavorable foreign currency effects.

Segment operating ~~expenses~~expense as a percentage of ~~$76.6 million~~sales in the ~~third~~first quarter of ~~2017~~24.0% improved 230 bps as compared to ~~$69.0 million last year. The operating expense margin~~2020 primarily as a result of ~~24.4% in 2017 increased 50 bps~~the higher sales volumes and savings from ~~23.9% in 2016 primarily due to 40 bps of operating expenses for acquisitions.~~

cost containment actions.

As a result of these factors, segment operating earnings of ~~$50.1~~$50.7 million in the ~~third~~first quarter of ~~2017,~~2021, including ~~$0.1~~$1.4 million of ~~favorable~~unfavorable foreign currency effects, increased ~~$6.4~~$19.2 million, ~~from 2016 levels.~~or 61.0%, compared to $31.5 million in 2020, which included $4.4 million of restructuring charges. Operating margin (segment operating earnings as a percentage of segment net sales) for the Commercial & Industrial Group of ~~15.9%~~14.7% in ~~2017 improved 80 bps from 15.1%~~the first quarter of 2021 compared to 10.5% in ~~2016.~~

   Nine Months Ended
(Amounts in millions)    September 30, 2017    October 1, 2016    Change
External net sales
     $ 712.9       77.2%        $ 644.5       74.8%        $ 68.4         10.6%
Intersegment net sales
   210.4       22.8%      217.5       25.2%      (7.1)      -3.3%







Segment net sales
   923.3         100.0%      862.0         100.0%      61.3       7.1%
Cost of goods sold
     (559.2)      -60.6%        (527.4)      -61.2%        (31.8)      -6.0%







Gross profit
   364.1       39.4%      334.6       38.8%      29.5       8.8%
Operating expenses
   (229.7)      -24.8%      (210.5)      -24.4%      (19.2)      -9.1%







Segment operating earnings
     $ 134.4       14.6%        $ 124.1       14.4%        $ 10.3       8.3%

2020.

Table of Contents

SNAP-ON INCORPORATED

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

(continued)

Snap-on Tools Group


	Three Months Ended
(Amounts in millions)	April 3, 2021				March 28, 2020				Change
Segment net sales	$	478.3	100.0	%	$	375.9	100.0	%	$	102.4	27.2	%
Cost of goods sold	(258.6)		(54.1)	%	(215.5)		(57.3)	%	(43.1)		(20.0)	%
Gross profit	219.7		45.9	%	160.4		42.7	%	59.3		37.0	%
Operating expenses	(120.8)		(25.2)	%	(111.8)		(29.8)	%	(9.0)		(8.1)	%
Segment operating earnings	$	98.9	20.7	%	$	48.6	12.9	%	$	50.3	103.5	%

Segment net sales of ~~$923.3~~$478.3 million in the first ~~nine months~~quarter of ~~2017~~2021 increased ~~$61.3~~$102.4 million, or ~~7.1%,~~27.2% from ~~2016~~2020 levels, reflecting a ~~$22.5~~$95.7 million, or ~~2.6%~~25.0%, organic sales gain and ~~$46.4~~$6.7 million of ~~acquisition-related sales, partially offset by $7.6 million of unfavorable~~favorable foreign currency translation. The organic sales increase ~~primarily includes mid single-digit gains~~reflects a double-digit gain in both the segment’s ~~European-based hand tools business~~U.S. and ~~in sales to customers in critical industries, partially offset by a mid single-digit decrease in sales of power tools.~~

international operations.

Segment gross ~~profit of $364.1 million~~margin in the first ~~nine months~~quarter of ~~2017 compared to $334.6 million last year. Gross margin of 39.4%~~45.9% improved 60320 bps from ~~38.8%~~ last year primarily due to the impact of higher sales ~~savings~~volumes and benefits from ~~the company’s~~ RCI ~~initiatives and 20 bps of favorable foreign currency effects, partially offset by a 10 bps impact from acquisitions.~~

initiatives.

Segment operating expenses as a percentage of ~~$229.7 million~~net sales in the first ~~nine months~~quarter of ~~2017 compared to $210.5 million last year. The operating expense margin of 24.8% increased 40~~25.2% improved 460 bps from ~~24.4%~~ last year primarily due to ~~increased costs, including~~the impact of higher ~~costs for research~~sales volumes and ~~engineering activities, and 20 bps of operating~~savings from cost containment actions, partially offset by higher stock-based expenses ~~for acquisitions.~~

related to the company’s franchisee stock purchase plan.

As a result of these factors, segment operating earnings of ~~$134.4~~$98.9 million in the first ~~nine months~~quarter of ~~2017,~~2021, including ~~$1.0~~$2.3 million of favorable foreign currency effects, increased ~~$10.3~~$50.3 million, ~~from 2016 levels.~~or 103.5%, compared to $48.6 million in 2020. Operating margin for the ~~Commercial & Industrial~~Snap-on Tools Group of ~~14.6%~~20.7% in the first ~~nine months~~quarter of ~~2017 increased 20 bps from 14.4%~~2021 compared to 12.9% last year.

~~Snap-on~~ ~~Tools~~

Repair Systems & Information Group

   Three Months Ended
(Amounts in millions)    September 30, 2017    October 1, 2016    Change
Segment net sales
     $ 392.7         100.0%        $ 397.2         100.0%        $     (4.5)      -1.1%
Cost of goods sold
   (228.5)      -58.2%        (223.9)      -56.4%      (4.6)      -2.1%







Gross profit
   164.2       41.8%      173.3       43.6%      (9.1)      -5.3%
Operating expenses
     (107.9)      -27.5%      (108.7)      -27.3%      0.8       0.7%







Segment operating earnings
     $ 56.3       14.3%        $ 64.6       16.3%        $     (8.3)        -12.8%


	Three Months Ended
(Amounts in millions)	April 3, 2021				March 28, 2020				Change
External net sales	$	275.2	79.2	%	$	249.3	79.2	%	$	25.9	10.4	%
Intersegment net sales	72.4		20.8	%	65.3		20.8	%	7.1		10.9	%
Segment net sales	347.6		100.0	%	314.6		100.0	%	33.0		10.5	%
Cost of goods sold	(187.6)		(54.0)	%	(163.9)		(52.1)	%	(23.7)		(14.5)	%
Gross profit	160.0		46.0	%	150.7		47.9	%	9.3		6.2	%
Operating expenses	(78.6)		(22.6)	%	(73.4)		(23.3)	%	(5.2)		(7.1)	%
Segment operating earnings	$	81.4	23.4	%	$	77.3	24.6	%	$	4.1	5.3	%

Segment net sales of ~~$392.7~~$347.6 million in the ~~third~~first quarter of ~~2017 decreased $4.5~~2021 increased $33.0 million, or ~~1.1%,~~10.5% from ~~2016~~2020 levels, reflecting a ~~$6.5~~$24.2 million, or ~~1.6%~~7.6%, organic sales ~~decrease, partially offset by $2.0~~increase, $4.0 million of acquisition-related sales and $4.8 million of favorable foreign currency translation. The ~~organic~~higher sales ~~decrease includes~~volume reflects a double-digit gain in sales of undercar equipment, a mid single-digit ~~decrease in the company’s U.S. franchise operations, partially offset by a double-digit sales gain in the company’s international franchise operations.~~

Segment gross profit of $164.2 million in the third quarter of 2017 compared to $173.3 million last year. Gross margin of 41.8% decreased 180 bps from 43.6% last year primarily due to a year-over-year shift in product mix and 70 bps of unfavorable foreign currency effects.

Segment operating expenses of $107.9 million in the third quarter of 2017 compared to $108.7 million last year. The operating expense margin of 27.5% increased 20 bps from 27.3% last year primarily due to the effect of the lower sales.

As a result of these factors, segment operating earnings of $56.3 million in the third quarter of 2017, including $2.3 million of unfavorable foreign currency effects, decreased $8.3 million from 2016 levels. Operating margin for the~~Snap-on~~ ~~Tools Group of 14.3% in the third quarter of 2017 compared to 16.3% last year.~~

   Nine Months Ended
(Amounts in millions)    September 30, 2017    October 1, 2016    Change
Segment net sales
     $   1,215.9         100.0%        $   1,216.4         100.0%        $   (0.5)      –
Cost of goods sold
   (691.0)      -56.8%      (687.8)      -56.5%      (3.2)        -0.5%







Gross profit
   524.9       43.2%      528.6       43.5%      (3.7)      -0.7%
Operating expenses
   (317.7)      -26.2%      (321.0)      -26.4%      3.3       1.0%







Segment operating earnings
     $ 207.2       17.0%        $ 207.6       17.1%        $ (0.4)      -0.2%

~~SNAP-ON INCORPORATED~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS~~

~~OF OPERATIONS~~

~~(continued)~~

Segment net sales of $1,215.9 million in the first nine months of 2017 decreased $0.5 million from 2016 levels, reflecting a $5.7 million, or 0.5%, organic sales gain, which was more than offset by $6.2 million 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 $524.9 million in the first nine months of 2017 compared to $528.6 million last year. Gross margin of 43.2% declined 30 bps from 43.5% last year primarily due to 60 bps of unfavorable foreign currency effects, partially offset by savings from 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.

As a result of these factors, segment operating earnings of $207.2 million in the first nine months of 2017, including $9.2 million of unfavorable foreign currency effects, decreased $0.4 million from 2016 levels. Operating margin for the~~Snap-on~~ ~~Tools Group of 17.0% in the first nine months of 2017 compared to 17.1% last year.~~

~~Repair Systems & Information Group~~

   Three Months Ended
(Amounts in millions)    September 30, 2017    October 1, 2016    Change
External net sales
     $ 260.3       78.1%        $ 223.8       78.2%        $ 36.5       16.3%
Intersegment net sales
   73.2       21.9%      62.3       21.8%      10.9       17.5%







Segment net sales
   333.5         100.0%      286.1         100.0%      47.4       16.6%
Cost of goods sold
     (175.8)      -52.7%        (153.0)      -53.5%        (22.8)      -14.9%







Gross profit
   157.7       47.3%      133.1       46.5%      24.6       18.5%
Operating expenses
   (74.3)      -22.3%      (61.3)      -21.4%      (13.0)        -21.2%







Segment operating earnings
     $ 83.4       25.0%        $ 71.8       25.1%        $ 11.6       16.2%

Segment net sales of $333.5 million in the third quarter of 2017 increased $47.4 million, or 16.6%, from 2016 levels, reflecting a $23.7 million, or 8.2%, organic sales gain, $21.6 million of acquisition-related sales and $2.1 million of favorable foreign currency translation. The organic sales increase includes double-digit gains in sales of diagnostic and repair information products to independent repair shop owners and managers, a high single-digit sales increase to OEM dealerships, and a low single-digit sales increase of undercar equipment.

Segment gross profit of $157.7 million in the third quarter of 2017 compared to $133.1 million last year. Gross margin of 47.3% improved 80 bps from 46.5% last year as a result of 40 bps of benefits from acquisitions and savings from the company’s RCI initiatives.

Segment operating expenses of $74.3 million in the third quarter of 2017 compared to $61.3 million last year. The operating expense margin of 22.3% increased 90 bps from 21.4% last year primarily due to 180 bps of impact from acquisitions, partially offset by benefits of sales volume leverage.

~~SNAP-ON INCORPORATED~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS~~

~~OF OPERATIONS~~

~~(continued)~~

As a result of these factors, segment operating earnings of $83.4 million in the third quarter of 2017, including $0.3 million of favorable foreign currency effects, increased $11.6 million from 2016 levels. Operating margin for the Repair Systems & Information Group of 25.0% in the third quarter of 2017 compared to 25.1% last year.

   Nine Months Ended
(Amounts in millions)    September 30, 2017    October 1, 2016    Change
External net sales
     $ 783.5       79.1%        $ 679.7       79.0%        $ 103.8       15.3%
Intersegment net sales
   206.9       20.9%      180.4       21.0%      26.5       14.7%







Segment net sales
   990.4         100.0%      860.1         100.0%      130.3       15.1%
Cost of goods sold
   (519.8)      -52.5%        (457.6)      -53.2%        (62.2)      -13.6%







Gross profit
   470.6       47.5%      402.5       46.8%      68.1       16.9%
Operating expenses
     (226.6)      -22.9%      (187.2)      -21.8%      (39.4)        -21.0%







Segment operating earnings
     $ 244.0       24.6%        $ 215.3       25.0%        $ 28.7       13.3%

Segment net sales of $990.4 million in the first nine months of 2017 increased $130.3 million, or 15.1%, from 2016 levels, reflecting a $69.4 million, or 8.1%, organic sales gain and $65.4 million of acquisition-related sales, partially offset by $4.5 million of unfavorable foreign currency translation. The organic sales increase includes high single-digit gains in sales of diagnostic and repair information products to independent repair shop owners and managers, and a low single-digit gain in sales to OEM ~~dealerships, and a mid single-digit gain in sales of undercar equipment.~~

dealerships.

Segment gross ~~profit of $470.6 million~~margin in the first ~~nine months~~quarter of ~~2017 compared to $402.5 million last year. Gross margin of 47.5% improved 70~~46.0% declined 190 bps from ~~46.8%~~ last year primarily due to ~~benefits from acquisitions~~the impact of higher sales in lower gross margin businesses and ~~savings from the company’s RCI initiatives. Restructuring costs included in gross profit were $0.8 million~~70 bps of unfavorable foreign currency effects.

Segment operating expenses as a percentage of net sales in the first ~~nine months~~quarter of ~~2016.~~

~~Segment operating expenses~~22.6%, improved 70 bps from 2020 primarily due to the impact of ~~$226.6~~higher sales volumes, 80 bps from lower costs related to $2.4 million of restructuring actions recorded in the first ~~nine months~~quarter of ~~2017 compared to $187.2 million last year. The operating expense margin of 22.9% increased 110 bps from 21.8% last year primarily due to 190 bps of impact from acquisitions,~~2020, partially offset by ~~sales volume leverage. Restructuring costs included in~~80 bps of operating expenses ~~were $0.1 million in the first nine months of 2016.~~

from acquisitions.

As a result of these factors, segment operating earnings of ~~$244.0~~$81.4 million in the first ~~nine months~~quarter of ~~2017,~~2021, including ~~$1.9~~$1.5 million of unfavorable foreign currency effects, increased ~~$28.7~~$4.1 million, or 5.3%, from ~~2016 levels.~~$77.3 million in 2020, which included $3.1 million of restructuring charges. Operating margin for the Repair Systems & Information Group of ~~24.6%~~23.4% in the first ~~nine months~~quarter of ~~2017~~2021 compared to ~~25.0%~~24.6% last year.

Table of Contents

SNAP-ON INCORPORATED

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

(continued)

Financial Services

   Three Months Ended
(Amounts in millions)    September 30, 2017    October 1, 2016    Change
Financial services revenue
     $ 79.0         100.0%        $ 71.6         100.0%        $ 7.4         10.3%
Financial services expenses
     (23.0)      -29.1%        (21.0)      -29.3%        (2.0)      -9.5%







Segment operating earnings
     $ 56.0       70.9%        $ 50.6       70.7%        $ 5.4       10.7%


	Three Months Ended
(Amounts in millions)	April 3, 2021				March 28, 2020				Change
Financial services revenue	$	88.6	100.0	%	$	85.9	100.0	%	$	2.7	3.1	%
Financial services expenses	(23.3)		(26.3)	%	(29.0)		(33.8)	%	5.7		19.7	%
Segment operating earnings	$	65.3	73.7	%	$	56.9	66.2	%	$	8.4	14.8	%

Financial services revenue ~~of $79.0 million~~ in the ~~third~~first quarter of ~~2017~~2021 increased ~~$7.4~~$2.7 million, or ~~10.3%~~3.1%, from ~~$71.6 million last year~~2020, primarily due to ~~$8.0~~$3.6 million of ~~higher revenue as a result of~~ growth ofin the company’s financial services portfolio, partially offset by ~~$0.7~~a $0.9 million ~~of decreased revenue~~decrease from lower average portfolio yields. In the first quarters of 2021 and 2020, the respective average yields on finance receivables were 17.6% and ~~contract receivables.~~17.7%. In the ~~third~~first quarter ~~the average yield on finance receivables was 17.9% for 2017~~of 2021 and ~~18.0% for 2016, and~~2020, the respective average yields on contract receivables were 8.4% and 9.0%. The lower yield on contract receivables ~~was 9.2% and 9.4%.~~in the first quarter of 2021 includes the impact of business operation support loans provided to franchisees in the second quarter of 2020 in response to the COVID-19 environment. Originations of ~~$271.8~~$261.8 million in the ~~third~~first quarter of ~~2017~~2021 increased ~~$2.0~~$6.2 million, or ~~0.7%~~2.4%, from ~~2016~~2020 levels.

~~SNAP-ON INCORPORATED~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS~~

~~OF OPERATIONS~~

~~(continued)~~

Financial services expenses primarily include personnel-related and other general and administrative costs, as well as provisions for credit losses. These expenses are generally more dependent on changes in the size of the financial services portfolio than they are on the revenue of the segment. Financial services expenses ~~of $23.0 million~~ in the ~~third~~first quarter of ~~2017 increased $2.0 million from $21.0 million last year~~2021 decreased primarily due to ~~changes in both the size of the portfolio and in the~~lower provisions for credit ~~losses.~~losses compared to the first quarter of 2020, which included a $2.6 million charge related to higher credit reserves resulting from the economic uncertainty associated with the COVID-19 pandemic. As a percentage of the average financial services portfolio, financial services expenses were ~~1.2%~~1.1% in ~~both~~the first quarter of ~~the third quarters of 2017~~2021 and ~~2016.~~

1.4% in 2020.

Financial services operating earnings ~~of $56.0 million~~ in the ~~third~~first quarter of ~~2017,~~2021, including ~~$0.1~~$0.7 million of favorable foreign currency effects, increased ~~$5.4 million, or 10.7%, from 2016 levels.~~

   Nine Months Ended
(Amounts in millions)    September 30, 2017    October 1, 2016    Change
Financial services revenue
     $   233.5         100.0%        $ 207.2         100.0%        $ 26.3       12.7%
Financial services expenses
   (70.4)      -30.1%        (60.1)      -29.0%        (10.3)        -17.1%







Segment operating earnings
     $ 163.1       69.9%        $ 147.1       71.0%        $ 16.0       10.9%

Financial services revenue of $233.5 million in the first nine months of 2017 increased $26.3 million, or 12.7%, from $207.2 million last year primarily due to $27.2 million of higher revenue as a result of continued growth of the company’s financial services portfolio, partially offset by $0.6 million of decreased revenue from lower average yields on contract receivables. In the first nine months of 2017 and 2016, the average yield on finance receivables was 17.9% for both periods, and the respective average yield on contract receivables was 9.2% and 9.4%. Originations of $807.0 million in 2017 decreased $8.4 million, or ~~1.0%~~14.8%, from ~~2016~~2020 levels.

~~Financial services expenses of $70.4 million in the~~

Corporate

Snap-on’s first nine months of 2017 increased $10.3 million from $60.1 million last year primarily due to changes in both the size of the portfolio and in the provisions for credit losses. As a percentage of the average financial services portfolio, financial services expenses were 3.7% and 3.6% in the respective first nine months of 2017 and 2016.

Financial services operating earnings of $163.1 million in the first nine months of 2017, including $0.7 million of unfavorable foreign currency effects, increased $16.0 million, or 10.9%, from 2016 levels.

~~See Note 3 to the Condensed Consolidated Financial Statements for further information on financial services.~~

~~Corporate~~

~~Snap-on’s~~ ~~third~~ quarter ~~2017~~2021 general corporate expenses of ~~$36.7~~$30.1 million ~~increased $14.2 million from $22.5~~compared to $18.5 million last year. The increased year-over-year ~~increase in~~ general corporate expenses primarily ~~reflects $15.0 million for~~reflect higher stock-based compensation, including costs associated with the ~~legal charge partially offset by lower pension expense.~~

~~Snap-on’s~~ ~~general corporate expenses in the first nine months~~company’s employee stock purchase plan.

Table of 2017 of $79.3 million increased $11.7 million from $67.6 million last year. The year-over-year increase in general corporate expenses primarily reflects $15.0 million for the legal charge partially offset by lower pension expense.

Contents

SNAP-ON INCORPORATED

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

(continued)

Non-GAAP Supplemental Data

The followingnon-GAAP supplemental data is presented for informational purposes to provide readers with insight into the information used by management for assessing the operating performance ofSnap-on Incorporated’s(“Snap-on”)non-financial services (“Operations”) and “Financial Services” businesses.

~~SNAP-ON INCORPORATED~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS~~

~~OF OPERATIONS~~

~~(continued)~~

The supplemental Operations data reflects the results of operations and financial position ofSnap-on’s tools, diagnostic and equipment products, software and othernon-financial services operations with Financial Services on the equity method. The supplemental Financial Services data reflects the results of operations and financial position ofSnap-on’s U.S. and international financial services operations. The financing needs of Financial Services are met through intersegment borrowings and cash generated from Operations; Financial Services is charged interest expense on intersegment borrowings at market rates. Income taxes are charged to Financial Services on the basis of the specific tax attributes generated by the U.S. and international financial services businesses. Transactions between the Operations and Financial Services businesses were eliminated to arrive at the Condensed Consolidated Financial Statements.

Non-GAAP Supplemental Consolidating Data – Supplemental Condensed Statements of Earnings information for the three months ended ~~September 30, 2017,~~April 3, 2021, and ~~October 1, 2016,~~March 28, 2020, is as follows:

Operations* Financial Services
(Amounts in millions) September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016
Net sales
  $ 903.8        $ 834.1        $ –           $ –
Cost of goods sold
    (455.2)         (415.0)     –         –

Gross profit
448.6      419.1      –         –
Operating expenses
(295.5)     (261.5)     –         –

Operating earnings before financial services
153.1      157.6      –         –
Financial services revenue
–         –         79.0      71.6
Financial services expenses
–         –             (23.0)         (21.0)

Operating earnings from financial services
–         –         56.0      50.6

Operating earnings
153.1      157.6      56.0      50.6
Interest expense
(13.1)     (13.0)     –         (0.1)
Intersegment interest income (expense) – net
17.7      18.3      (17.7)     (18.3)
Other income (expense) – net
(2.1)     (0.9)     –         0.1

Earnings before income taxes and equity earnings
155.6      162.0      38.3      32.3
Income tax expense
(43.2)     (47.7)     (14.0)     (11.9)

Earnings before equity earnings
112.4      114.3      24.3      20.4
Financial services – net earnings attributable toSnap-on
24.3      20.4      –         –
Equity earnings, net of tax
0.4      0.5      –         –

Net earnings
137.1      135.2      24.3      20.4
Net earnings attributable to noncontrolling interests
(3.7)     (3.5)     –         –

Net earnings attributable toSnap-on
  $ 133.4        $ 131.7        $ 24.3        $ 20.4


	Operations*				Financial Services
(Amounts in millions)	April 3, 2021		March 28, 2020		April 3, 2021		March 28, 2020
Net sales	$	1,024.6	$	852.2	$	—	$	—
Cost of goods sold	(511.0)		(430.6)		—		—
Gross profit	513.6		421.6		—		—
Operating expenses	(312.7)		(282.7)		—		—
Operating earnings before financial services	200.9		138.9		—		—

Financial services revenue	—		—		88.6		85.9
Financial services expenses	—		—		(23.3)		(29.0)
Operating earnings from financial services	—		—		65.3		56.9

Operating earnings	200.9		138.9		65.3		56.9
Interest expense	(14.3)		(11.3)		—		(0.1)
Intersegment interest income (expense) – net	14.4		18.1		(14.4)		(18.1)
Other income (expense) – net	4.3		1.5		—		—
Earnings before income taxes and equity earnings	205.3		147.2		50.9		38.7
Income tax expense	(46.5)		(33.8)		(12.6)		(10.1)
Earnings before equity earnings	158.8		113.4		38.3		28.6
Financial services – net earnings attributable to Snap-on	38.3		28.6		—		—
Equity earnings, net of tax	0.5		—		—		—
Net earnings	197.6		142.0		38.3		28.6
Net earnings attributable to noncontrolling interests	(5.0)		(4.8)		—		—
Net earnings attributable to Snap-on	$	192.6	$	137.2	$	38.3	$	28.6

*Snap-on with Financial Services on the equity method.

Table of Contents

SNAP-ON INCORPORATED

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

(continued)

Non-GAAP ~~Supplemental Consolidating Data – Supplemental Condensed Statements of Earnings information for the nine months ended September 30, 2017, and October 1, 2016, is as follows:~~

Operations* Financial Services
(Amounts in millions) September 30,
2017 October 1,
2016 September 30,
2017 October 1,
2016
Net sales
  $ 2,712.3        $ 2,540.6        $ –           $ –
Cost of goods sold
    (1,352.7)         (1,274.9)     –         –

Gross profit
1,359.6      1,265.7      –         –
Operating expenses
(853.3)     (786.3)     –         –

Operating earnings before financial services
506.3      479.4      –         –
Financial services revenue
–         –         233.5      207.2
Financial services expenses
–         –             (70.4)     (60.1)

Operating earnings from financial services
–         –         163.1      147.1

Operating earnings
506.3      479.4      163.1      147.1
Interest expense
(38.6)     (38.8)     (0.2)     (0.3)
Intersegment interest income (expense) – net
53.1      53.9      (53.1)     (53.9)
Other income (expense) – net
(5.7)     (0.4)     –         0.1

Earnings before income taxes and equity earnings
515.1      494.1      109.8      93.0
Income tax expense
(146.6)     (145.1)     (40.5)         (34.3)

Earnings before equity earnings
368.5      349.0      69.3      58.7
Financial services – net earnings attributable toSnap-on
69.3      58.7      –         –
Equity earnings, net of tax
1.2      2.2      –         –

Net earnings
439.0      409.9      69.3      58.7
Net earnings attributable to noncontrolling interests
(10.8)     (9.8)     –         –

Net earnings attributable toSnap-on
  $ 428.2        $ 400.1        $ 69.3        $ 58.7

*Snap-on with Financial Services on the equity method.

~~SNAP-ON INCORPORATED~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS~~

~~OF OPERATIONS~~

~~(continued)~~

~~Non-GAAP~~ Supplemental Consolidating Data – Supplemental Condensed Balance Sheet information as of ~~September 30, 2017,~~April 3, 2021, and ~~December 31, 2016,~~January 2, 2021, is as follows:

Operations* Financial Services
(Amounts in millions) September 30,
2017 December 31,
2016 September 30,
2017 December 31,
2016
ASSETS

Current assets:

Cash and cash equivalents
    $ 93.9         $ 77.5         $ 0.2         $ 0.1
Intersegment receivables
21.0     15.0     –        –
Trade and other accounts receivable – net
674.6     598.2     0.6     0.6
Finance receivables – net
–        –        505.8     472.5
Contract receivables – net
8.3     7.9     91.5     80.2
Inventories – net
649.9     530.5     –        –
Prepaid expenses and other assets
127.6     122.4     0.8     1.1

Total current assets
1,575.3     1,351.5     598.9     554.5
Property and equipment – net
472.6     423.8     1.6     1.4
Investment in Financial Services
311.6     288.7     –        –
Deferred income tax assets
55.2     49.1     26.0     23.7
Intersegment long-term notes receivable
553.0     584.7     –        –
Long-term finance receivables – net
–        –        1,018.6     934.5
Long-term contract receivables – net
11.2     11.2     299.2     275.5
Goodwill
924.0     895.5     –        –
Other intangibles – net
258.3     184.6     –        –
Other assets
52.6     47.9     –        0.1

Total assets
    $     4,213.8         $     3,837.0         $     1,944.3         $     1,789.7


	Operations*				Financial Services
(Amounts in millions)	April 3, 2021		January 2, 2021		April 3, 2021		January 2, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	904.2	$	923.2	$	0.4	$	0.2
Intersegment receivables	15.5		14.6		—		0.2
Trade and other accounts receivable – net	649.8		639.7		1.0		1.0
Finance receivables – net	—		—		527.4		530.2
Contract receivables – net	7.0		7.0		101.0		105.5
Inventories – net	730.1		746.5		—		—
Prepaid expenses and other assets	131.3		131.1		9.6		7.8
Total current assets	2,437.9		2,462.1		639.4		644.9

Property and equipment – net	517.1		524.4		2.0		1.8
Operating lease right-of-use assets	47.8		49.7		2.1		2.2
Investment in Financial Services	345.2		349.8		—		—
Deferred income tax assets	25.4		27.6		24.4		22.7
Intersegment long-term notes receivable	293.9		316.9		—		—
Long-term finance receivables – net	—		—		1,118.3		1,136.3
Long-term contract receivables – net	11.4		12.4		362.6		362.3
Goodwill	1,161.8		982.4		—		—
Other intangibles – net	254.6		260.8		—		—
Other assets	105.6		103.9		0.2		0.1
Total assets	$	5,200.7	$	5,090.0	$	2,149.0	$	2,170.3

* Snap-on with Financial Services on the equity method.

Table of Contents

SNAP-ON INCORPORATED

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

(continued)

Non-GAAP Supplemental Consolidating Data – Condensed Balance Sheets Information (continued):

Operations* Financial Services
(Amounts in millions)   September 30,
2017   December 31,
2016   September 30,
2017   December 31,
2016
LIABILITIES AND EQUITY

Current liabilities:

Notes payable and current maturities of long-term debt
    $ 203.4         $ 151.4         $ 250.0         $ 150.0
Accounts payable
203.4     170.3     1.3     0.6
Intersegment payables
–        –        21.0     15.0
Accrued benefits
47.7     52.8     0.1     –
Accrued compensation
72.2     85.7     2.6     4.1
Franchisee deposits
76.1     66.7     –        –
Other accrued liabilities
338.9     292.1     34.5     22.8

Total current liabilities
941.7     819.0     309.5     192.5
Long-term debt and intersegment long-term
–        –        1,308.0     1,293.5
Deferred income tax liabilities
28.5     13.1     –        –
Retiree health care benefits
34.3     36.7     –        –
Pension liabilities
181.8     246.5     –        –
Other long-term liabilities
87.5     86.5     15.2     15.0

Total liabilities
1,273.8     1,201.8     1,632.7     1,501.0

Total shareholders’ equity attributable toSnap-on Inc.
2,921.8     2,617.2     311.6     288.7
Noncontrolling interests
18.2     18.0     –        –

Total equity
2,940.0     2,635.2     311.6     288.7

Total liabilities and equity
    $     4,213.8         $     3,837.0         $     1,944.3         $     1,789.7


	Operations*				Financial Services
(Amounts in millions)	April 3, 2021		January 2, 2021		April 3, 2021		January 2, 2021
LIABILITIES AND EQUITY
Current liabilities:
Notes payable and current maturities of long-term debt	$	18.5	$	18.5	$	250.0	$	250.0
Accounts payable	235.0		222.3		0.9		0.6
Intersegment payables	—		—		15.5		14.8
Accrued benefits	74.4		59.7		0.1		—
Accrued compensation	71.1		87.2		2.2		2.7
Franchisee deposits	76.3		78.4		—		—
Other accrued liabilities	472.8		418.8		42.1		35.9
Total current liabilities	948.1		884.9		310.8		304.0

Long-term debt and intersegment long-term debt	—		—		1,476.2		1,499.0
Deferred income tax liabilities	74.9		70.4		—		—
Retiree health care benefits	33.8		34.5		—		—
Pension liabilities	117.6		127.1		—		—
Operating lease liabilities	30.0		31.6		2.0		2.4
Other long-term liabilities	98.4		94.9		14.8		15.1
Total liabilities	1,302.8		1,243.4		1,803.8		1,820.5
Total shareholders’ equity attributable to Snap-on	3,876.0		3,824.9		345.2		349.8
Noncontrolling interests	21.9		21.7		—		—
Total equity	3,897.9		3,846.6		345.2		349.8
Total liabilities and equity	$	5,200.7	$	5,090.0	$	2,149.0	$	2,170.3

* Snap-on with Financial Services on the equity method.

Table of Contents

SNAP-ON INCORPORATED

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

(continued)

Liquidity and Capital Resources

Snap-on’s growth has historically been funded by a combination of cash provided by operating activities and debt financing.Snap-on believes that its cash from operations and collections of finance receivables, coupled with its sources of borrowings and available cash on hand, are sufficient to fund its currently anticipated requirements for scheduled debt repayments (including the ~~repayment~~maturity of ~~$250 million of unsecured 4.25% notes, due January 15, 2018 (the “2018 Notes”))~~the 2021 Notes as defined below), 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.

Due toSnap-on’s credit rating over the years, external funds have been available at an acceptable cost. As of the close of business on ~~October 13, 2017,~~April 16, 2021, 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 the COVID-19 pandemic, 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.

The following discussion focuses on information included in the accompanying Condensed Consolidated Balance Sheets.

As of ~~September 30, 2017,~~April 3, 2021, working capital (current assets less current liabilities) of ~~$923.1~~$1,818.4 million ~~increased $28.6~~decreased $99.7 million from ~~$894.5~~$1,918.1 million as of ~~December 31, 2016~~January 2, 2021 (fiscal ~~2016 year end) due to~~2020 year-end) primarily as a ~~$261.9 million~~result of the net ~~increase in total current assets, partially offset by a $233.3 million increase in total current liabilities as~~changes discussed below.

The following represents the company’s working capital position as of ~~September 30, 2017,~~April 3, 2021, and ~~December 31, 2016:~~

(Amounts in millions)    September 30,
2017    December 31,
2016
Cash and cash equivalents
       $ 94.1             $ 77.6
Trade and other accounts receivable – net
   675.2         598.8
Finance receivables – net
   505.8         472.5
Contract receivables – net
   99.8         88.1
Inventories – net
   649.9         530.5
Prepaid expenses and other assets
   121.1         116.5




Total current assets
   2,145.9         1,884.0




Notes payable and current maturities of long-term debt
   (453.4)        (301.4)
Accounts payable
   (204.7)        (170.9)
Other current liabilities
   (564.7)        (517.2)




Total current liabilities
   (1,222.8)        (989.5)




Total working capital
       $ 923.1             $ 894.5

January 2, 2021:


(Amounts in millions)	April 3, 2021		January 2, 2021
Cash and cash equivalents	$	904.6	$	923.4
Trade and other accounts receivable – net	650.8		640.7
Finance receivables – net	527.4		530.2
Contract receivables – net	108.0		112.5
Inventories – net	730.1		746.5
Prepaid expenses and other assets	131.6		129.7
Total current assets	3,052.5		3,083.0

Notes payable and current maturities of long-term debt	(268.5)		(268.5)
Accounts payable	(235.9)		(222.9)
Other current liabilities	(729.7)		(673.5)
Total current liabilities	(1,234.1)		(1,164.9)
Working capital	$	1,818.4	$	1,918.1

Cash and cash equivalents of ~~$94.1~~$904.6 million as of ~~September 30, 2017, increased $16.5~~April 3, 2021, decreased $18.8 million from ~~2016~~2020 year-end levels primarily due to: (i) the funding of $216.5 million of new finance receivables; (ii) the funding of $200.0 million for acquisitions; (iii) the repurchase of 722,000 shares of the company’s common stock for $151.9 million; (iv) dividend payments to shareholders of $66.7 million; and (v) the funding of $19.3 million of capital expenditures. These decreases in cash and cash equivalents were partially offset by: (i) ~~$528.9~~$319.3 million of cash generated from operations; (ii) $228.6 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”); (iv) $51.0 million of net proceeds from notes payable and other short-term borrowings; and (v) $36.2$93.0 million of cash proceeds from stock purchase and option plan ~~exercises. These increases in cash~~exercises and ~~cash equivalents were partially offset by (i) the funding of $670.0~~(iv) $2.4 million of new finance receivables; (ii) the repurchase of 1,348,000 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 million; (v) the funding of $82.9 million for acquisitions; and (vi) the funding of $57.3 million of capital expenditures.

~~SNAP-ON INCORPORATED~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS~~

~~OF OPERATIONS~~

~~(continued)~~

net proceeds from other short-term borrowings.

Of the ~~$94.1~~$904.6 million of cash and cash equivalents as of ~~September 30, 2017, $76.7~~April 3, 2021, $251.9 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 repatriation~~Although the Tax Cuts and Jobs Act (“Tax Act”) generally eliminated U.S. federal taxation of ~~cash~~dividends from ~~certain~~ foreign subsidiaries, ~~could have adverse net tax consequences on the company shouldSnap-on~~such dividends may still be ~~required~~subject to ~~pay and record U.S.~~state income ~~taxes~~taxation 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~~can be accomplished in a tax ~~consequences.~~

efficient manner.

Table of Contents

SNAP-ON INCORPORATED

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

(continued)

Trade and other accounts receivable – net of ~~$675.2~~$650.8 million as of ~~September 30, 2017,~~April 3, 2021, increased ~~$76.4~~$10.1 million from ~~2016~~2020 year-end levels, primarily due to ~~higher sales, $22.2~~$10.7 million from the acquisition, partially offset by $5.5 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 6762 days at ~~September 30, 2017,~~April 3, 2021, and 6364 days at ~~December 31, 2016.~~

January 2, 2021.

The current portions of net finance and contract receivables of ~~$605.6~~$635.4 million as of ~~September 30, 2017,~~April 3, 2021, compared to ~~$560.6~~$642.7 million at ~~2016~~2020 year end. The long-term portions of net finance and contract receivables of ~~$1,329.0~~$1,492.3 million as of ~~September 30, 2017,~~April 3, 2021, compared to ~~$1,221.2~~$1,511.0 million at ~~2016~~2020 year end. The combined ~~$152.8~~$26.0 million ~~increase~~decrease in net current and long-term finance and contract receivables over ~~2016~~2020 year-end levels is primarily due to ~~continued growth of the company’s financial services portfolio and $20.0~~an increase in net collections, partially offset by $3.6 million of foreign currency translation.

Inventories – net of ~~$649.9~~$730.1 million as of ~~September 30, 2017, increased $119.4~~April 3, 2021, decreased $16.4 million from ~~2016~~2020 year-end levels primarily due to ~~support continued higher customer demand~~$9.6 million of inventory reductions and ~~new product introductions, as well as from $24.1~~$6.8 million of foreign currency ~~translation and $6.0 million of inventories related to the Norbar and TCS acquisitions.~~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 ~~3.1~~2.6 turns and ~~3.3~~2.4 turns as of ~~September 30, 2017,~~April 3, 2021, and ~~December 31, 2016,~~January 2, 2021, respectively. Inventories accounted for using thefirst-in,first-out (“FIFO”) method approximated ~~60%~~55% and ~~59%~~57% of total inventories as of ~~September 30, 2017,~~April 3, 2021 and ~~December 31, 2016,~~January 2, 2021, respectively. All other inventories are accounted for using thelast-in,first-out (“LIFO”) method. The company’s LIFO reserve was ~~$74.4~~$84.3 million and ~~$73.2~~$84.0 million as of ~~September 30, 2017,~~April 3, 2021, and ~~December 31, 2016,~~January 2, 2021, respectively.

Notes payable and current maturities of long-term debt of ~~$453.4~~$268.5 million as of ~~September 30, 2017, included $250~~both April 3, 2021, and 2020 year end, consisted of $250.0 million of ~~the 2018 Notes, $170 million of commercial paper borrowings~~unsecured 6.125% notes that mature on September 1, 2021 (the “2021 Notes”) and ~~$33.4~~$18.5 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 2016~~year-end~~ ~~balance sheet date.~~

Accounts payable of ~~$204.7~~$235.9 million as of ~~September 30, 2017,~~April 3, 2021, increased ~~$33.8~~$13.0 million from ~~2016~~2020 year-end levels primarily due to the timing of payments and ~~$6.5~~$2.5 million from the acquisition, partially offset by $2.0 million of foreign currency translation.

Other accrued liabilities of ~~$366.0~~$505.6 million as of ~~September 30, 2017,~~April 3, 2021, increased ~~$58.1~~$60.1 million from ~~2016~~2020 year-end levels primarily due to higher ~~income~~ tax accruals and $1.8 million from the ~~$15.0 million legal charge and $10.3~~acquisition, partially offset by $3.3 million of foreign currency translation.

~~SNAP-ON INCORPORATED~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS~~

~~OF OPERATIONS~~

~~(continued)~~

Long-term debt of ~~$755.0~~$1,182.3 million as of ~~September 30, 2017,~~April 3, 2021, consisted ofof: (i) ~~$200~~$300 million of unsecured ~~6.70%~~3.25% notes that mature ~~in 2019;~~on March 1, 2027 (the “2027 Notes”); (ii) ~~$250~~$400 million of unsecured ~~6.125%~~4.10% notes that mature ~~in 2021;~~on March 1, 2048 (the “2048 Notes”); and (iii) ~~$300~~$500 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 million of the 2018 Notes; (ii) $200 million of unsecured 6.70%3.1% notes that mature ~~in 2019; (iii) $250~~on May 1, 2050 (“the 2050 Notes”), partially offset by $17.7 million from the net effects 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 2016~~year-end~~ ~~balance sheet date; the 2027 Notes were issued in February 2017.~~

debt amortization costs.

Snap-on has ~~a five-year, $700~~an $800 million multi-currency revolving credit facility that terminates on ~~December 15, 2020~~September 16, 2024 (the “Credit Facility”); ~~as of September 30, 2017,~~ no amounts were outstanding under the Credit ~~Facility.~~Facility as of April 3, 2021. 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, as~~ratings; 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 ~~Debt~~Leverage Ratio to 0.65 to 1.00 and/or increase the maximum Consolidated Net Debt to EBITDA Ratio to ~~3.75~~4.00 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,~~April 3, 2021, the company’s actual ratios of ~~0.26~~0.12 and ~~1.16,~~0.54 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~~

Table of ~~September 30, 2017,~~Contents

SNAP-ON INCORPORATED

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

(continued)

Snap-on ~~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, ~~including~~however, it is continuing to monitor the ~~repayment~~impact 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 market~~such 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~~including the ~~repayment~~maturity of the ~~2018 Notes),~~2021 Notes, payments of interest and dividends, funding to support new receivables originated by our financial services businesses, capital expenditures, working capital, the funding of pension plans, and funding for share repurchases and acquisitions, if and as they arise.Snap-on intends to make contributions of ~~$7.1~~$9.2 million to its foreign pension plans and ~~$2.3~~$2.2 million to its domestic pension plans in ~~2017,~~2021, 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; depending~~Depending on market and other conditions,Snap-on may make ~~additional~~ discretionary cash contributions to its pension plans in ~~the balance of 2017.~~

2021.

Snap-on’s long-term financing strategy is to maintain continuous access to the debt markets to accommodate its liquidity needs, including the potential use of commercial paper, additional fixed-term debt and/or securitizations.

The following discussion focuses on information included in the accompanying Condensed Consolidated Statements of Cash Flows.

Operating Activities

Net cash provided by operating activities was ~~$415.0~~$319.3 million and ~~$415.6~~$213.4 million in the first ~~nine~~three months of ~~2017~~2021 and ~~2016,~~2020, respectively. The ~~$0.6~~$105.9 million year-over-year ~~decrease~~increase in net cash provided by operating activities primarily reflects a $55.6 million increase in net earnings and a $39.8 million increase from net changes in operating assets and ~~liabilities, partially offset by higher net earnings and $14.9 million of cash proceeds from the settlement of a treasury lock.~~

~~SNAP-ON INCORPORATED~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS~~

~~OF OPERATIONS~~

~~(continued)~~

liabilities.

Investing Activities

Net cash used by investing activities of ~~$282.4~~$207.2 million in the first ~~nine~~three months of ~~2017~~2021 included additions to finance receivables of ~~$670.0~~$216.5 million, ~~partially~~ offset by collections of ~~$528.9~~$228.6 million. Net cash used by investing activities of ~~$244.1~~$49.8 million in the first ~~nine~~three months of ~~2016~~2020 included additions to finance receivables of ~~$691.4~~$212.8 million, partially offset by collections of ~~$501.7~~$190.7 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 ~~approaching~~of approximately four years.

Net cash used by investing activities in the respective first ~~nine~~three months of ~~2017~~2021 and 2020 also included a ~~total of $82.9~~net $200.0 million ~~(net of $1.8~~and $6.1 million ~~of cash acquired)~~ for acquisitions. See Note 23 to the Consolidated Financial Statements for information onabout acquisitions.

Capital expenditures were ~~$57.3~~$19.3 million and ~~$56.6~~$17.2 million in the first ~~nine~~three months of ~~2017~~2021 and ~~2016,~~2020, 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.~~

RCI.

Financing Activities

Net cash used by financing activities of ~~$119.5~~$131.0 million in the first ~~nine~~three months of ~~2017~~2021 included ~~the $150 million repayment of the 2017 Notes at maturity, and the other items discussed below. These amounts were partially offset bySnap-on’s~~ ~~sale, on February 15, 2017, of $300 million of the 2027 Notes at a discount, from whichSnap-on~~ ~~received $297.8 million of net proceeds, reflecting $1.9 million of transaction costs, and $51.0 million of~~ net proceeds from notes payable and other short-term ~~borrowings.~~borrowings of $2.4 million. Net cash used by financing activities ~~was $146.8~~of $157.1 million in the first ~~nine~~three months of ~~2016.~~

2020 included net repayments of notes payable and other short-term borrowings of $41.9 million.

Proceeds from stock purchase and option plan exercises totaled ~~$36.2~~$93.0 million and ~~$32.4~~$1.5 million in the ~~respective~~ first ~~nine~~three months of ~~2017~~2021 and ~~2016.~~2020, 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, ~~and~~as well as stock options, ~~as well as~~and for other corporate purposes. In the first ~~nine~~three months of ~~2017,~~2021, Snap-on repurchased ~~1,348,000~~722,000 shares of its common stock for ~~$212.6~~$151.9 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 ~~nine~~three months of ~~2016,~~2020, Snap-on repurchased ~~492,000~~349,000 shares of its common stock for ~~$76.4~~$50.5 million under its previously announced share repurchase programs. As of ~~September 30, 2017,~~April 3, 2021, Snap-on had remaining availability to repurchase up to an additional ~~$438.8~~$268.7 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~~any.

Table of ~~2017.~~

Contents

SNAP-ON INCORPORATED

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

(continued)

Snap-on has paid consecutive quarterly cash dividends, without interruption or reduction, since 1939. Cash dividends totaled ~~$123.0~~$66.7 million and ~~$106.3~~$59.0 million in the first ~~nine~~three months of ~~2017~~2021 and ~~2016,~~2020, respectively. On November ~~3, 2016,~~6, 2020, the Board increased the quarterly cash dividend by ~~16.4%~~13.9% to ~~$0.71~~$1.23 per share ($~~2.84~~4.92 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 INCORPORATED~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS~~

~~OF OPERATIONS~~

~~(continued)~~

dividends.

Off-Balance Sheet Arrangements

The company had nooff-balance sheet arrangements as of ~~September 30, 2017.~~

April 3, 2021.

Critical Accounting Policies and Estimates

Snap-on’s disclosures of its critical accounting policies, which are contained in its Annual Report on Form10-K for the fiscal year ended ~~December 31, 2016,~~January 2, 2021, have not materially changed since ~~that~~the report was filed.

Outlook

COVID-19 continues to impact economic activity worldwide in 2021. Snap-on is accommodating to the related risks while safely pursuing opportunities in the COVID-19 environment. During 2021, the company believes there will be ongoing advancement against the virus-related turbulence, however, the trajectory of progress may be uncertain due to the evolving nature and duration of the pandemic and quarterly year-over-year comparisons to 2020 performance may be less meaningful than comparisons to pre-pandemic periods.

Snap-on expects to make continued progress ~~in 2017~~ along its defined runways for coherent growth, leveraging capabilities already demonstrated in the automotive repair arena and developing and expanding its professional customer base, not only in automotive repair, but in adjacent markets, additional geographies and other areas, including extending in critical industries, where the cost and penalties for failure can be high. In pursuit of these initiatives,~~Snap-on~~ the company expects that capital expenditures in ~~2017~~2021 will be in a range of ~~$80~~$90 million to ~~$90~~$100 million, of which ~~$57.3~~$19.3 million was ~~expended~~incurred in the first ~~nine months.~~three months of the year. Snap-on ~~also~~ continues to respond to the global macroeconomic challenges through its RCI, sourcing and other cost reduction initiatives.

Snap-on currently anticipates that its full year ~~2017~~2021 effective income tax rate will be ~~comparable~~in the range of 23% to ~~its 2016 full year rate.~~

24%.

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Item 3: Quantitative and Qualitative Disclosures About Market Risk

Market, Credit and Economic Risks

Market risk is the potential economic loss that may result from adverse changes in the fair value of financial instruments.Snap-on is exposed to market risk from changes in interest rates and foreign currency exchange ~~rates, including as a result of the weakening of the British poundvis-à-vis~~ ~~the U.S. dollar following the United Kingdom’s vote to exit from the European Union.~~rates. Snap-on is also exposed to market risk associated with the stock-based portion of its deferred compensation plans.Snap-on monitors its exposure to these risks and attempts to manage the underlying economic exposures through the use of financial instruments such as foreign currency forward contracts, interest rate swap agreements, treasury lock agreements and prepaid equity forward agreements (“equity forwards”).Snap-on does not use derivative instruments for speculative or trading purposes.Snap-on’s broad-based business activities help to reduce the impact that volatility in any particular area or related areas may have on its operating earnings as a whole.Snap-on’s management takes an active role in the risk management process and has developed policies and procedures that require specific administrative and business functions to assist in the identification, assessment and control of various risks.

Foreign Currency Risk Management

Snap-on has significant international operations and is subject to certain risks inherent with foreign operations that include currency fluctuations. Foreign currency exchange risk exists to the extent thatSnap-on has payment obligations or receipts denominated in currencies other than the functional currency, including intercompany loans denominated in foreign currencies. To manage these exposures,Snap-on identifies naturally offsetting positions and then purchases hedging instruments to protect the residual net exposures. See Note 910 to the Condensed Consolidated Financial Statements for information on foreign currency risk management.

Interest Rate Risk Management

Snap-on aims to control funding costs by managing the exposure created by the differing maturities and interest rate structures ofSnap-on’s borrowings through the use of interest rate swap agreements. Treasury lock agreements are used from time to time to manage the potential change in interest rates in anticipation of the ~~possible~~ issuance of fixed rate debt. See Note 910 to the Condensed Consolidated Financial Statements for information on interest rate risk management.

Snap-on utilizes aValue-at-Risk (“VAR”) model to determine the potentialone-day loss in the fair value of its interest rate and foreign exchange-sensitive financial instruments from adverse changes in market factors. The VAR model estimates were made assuming normal market conditions and a 95% confidence level.Snap-on’s computations are based on the inter-relationships among movements in various currencies and interest rates~~(variance/~~ (variance/co-variance technique). These inter-relationships were determined by observing interest rate and foreign currency market changes over the preceding quarter.

The estimated maximum potential net one-day loss in fair value, calculated using the VAR model, as of ~~September 30, 2017,~~April 3, 2021, was ~~$1.8~~$20.6 million, consisting of a $20.8 million loss on interest rate-sensitive financial instruments and ~~$0.5~~a $0.2 million gain 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.

Stock-based Deferred Compensation Risk Management

Snap-on aims to manage market risk associated with the stock-based portion of its deferred compensation plans through the use of equity forwards. Equity forwards are used to aid in offsetting the potentialmark-to-market effect on stock-based deferred compensation from changes inSnap-on’s stock price. Since stock-based deferred compensation liabilities increase as the company’s stock price rises and decrease as the company’s stock price declines, the equity forwards are intended to mitigate the potential impact on deferred compensation expense that may result from suchmark-to-market changes. See Note 910 to the Condensed Consolidated Financial Statements for additional information on stock-based deferred compensation risk management.

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Credit Risk

Credit risk is the possibility of loss from a customer’s failure to make payments according to contract terms. Prior to extending credit, each customer is evaluated, taking into consideration various factors, including the customer’s financial condition, ~~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. ~~Credit~~Finance 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.

Counterparty Risk

Snap-on is exposed to credit losses in the event ofnon-performance by the counterparties to its various financial agreements, including its foreign currency forward contracts, interest rate swap agreements, treasury lock agreements and prepaid equity forward agreements.Snap-on does not obtain collateral or other security to support financial instruments subject to credit risk, but monitors the credit standing of the counterparties and generally enters into agreements with financial institution counterparties with a credit rating ofA- or better.Snap-on does not anticipatenon-performance by its counterparties, but cannot provide ~~assurances.~~

assurances, especially in the current environment.

Economic Risk

Economic risk is the possibility of loss resulting from economic instability in certain areas of the world.Snap-on continually monitors its exposure in these ~~markets; for~~markets. 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 developments related to and 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.

As a result of the above market, credit and economic risks, net earnings and revenues in any particular period may not be representative of full-year results and may vary significantly from year to year.

Item 4: Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Snap-on maintains a system of disclosure controls and procedures that is designed to provide reasonable assurance that material information relating to the company and its consolidated subsidiaries is timely communicated to the officers who certifySnap-on’s financial reports and to other members of senior management and the Board, as appropriate.

In accordance with Rule13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), the company’s management evaluated, with the participation of the Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of the company’s disclosure controls and procedures (as defined in Rules13a-15(e) and15d-15(e) under the Exchange Act) as of ~~September 30, 2017.~~April 3, 2021. 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,~~April 3, 2021, 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.

Changes in Internal Control

There has not been any change in the company’s internal control over financial reporting during the quarter ended ~~September 30, 2017,~~April 3, 2021, 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)).

Table of Contents

PART II. OTHER INFORMATION

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following chart discloses information regarding the shares ofSnap-on’s common stock repurchased by the company during the ~~third~~first quarter of fiscal ~~2017,~~2021, all of which were purchased pursuant to the Board’s authorizations that the company has publicly announced.Snap-on has undertaken stock repurchases from time to time to offset dilution created by shares issued for employee and franchisee stock purchase plans ~~stock options~~ and equity plans, and for other corporate purposes, as well as when the company believes market conditions are favorable. The repurchase ofSnap-on common stock is at the company’s discretion, subject to prevailing financial and market ~~conditions.~~

                  Period
   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





Total/Average
   603,000          $ 149.46        603,000              N/A

~~N/A: Not applicable~~

*	Subject to further adjustment pursuant to the 1996 Authorization described below, as of September 30, 2017, the approximate value of shares that may yet be purchased pursuant to the outstanding Board authorizations discussed below is $438.8 million.

conditions, and pursuant to the Board’s authorizations that the company has publicly announced.

Period 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*
01/3/2021 to 01/30/2021 — — — $291.4 million
01/31/2021 to 02/27/2021 280,000 $193.37 280,000 $330.8 million
02/28/2021 to 04/03/2021 442,000 $221.28 442,000 $268.7 million
Total/Average 722,000 $210.45 722,000 N/A
N/A: Not applicable

* Subject to further adjustment pursuant to the 1996 Authorization described below, as of April 3, 2021, the approximate value of shares that may yet be

purchased pursuant to the outstanding Board authorizations discussed below is $268.7 million.

•In 1996, the Board authorized the company to repurchase shares of the company’s common stock from time to time in the open market or in privately negotiated transactions ~~(“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~~$179.99, $203.11 and ~~$149.01~~$231.74 per share of common stock as of the end of the respective fiscal ~~2017~~2021 months ended ~~July 29, 2017, August 26, 2017,~~January 30, 2021, February 27, 2021, and ~~September 30, 2017.~~

April 3, 2021.

•On ~~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 ~~2017~~2019 Authorization will expire when the aggregate repurchase price limit is met, unless terminated earlier by the Board. ~~The 2017 Authorization replaced both the 1998 $100 million authorization and the 1999 $50 million authorization, as discussed in “Item 2; Management’s Discussion and Analysis~~

Table of ~~Financial Condition and Results of Operations – Liquidity and Capital Resources” above.~~

Contents

Other Purchases or Sales of Equity Securities

The following chart discloses information regarding transactions in shares ofSnap-on’s common stock by Citibank, N.A. (“Citibank”) during the ~~third~~first quarter of ~~2017~~2021 pursuant to a prepaid equity forward agreement (the “Agreement”) with Citibank that is intended to reduce the impact of market risk associated with the stock-based portion of the company’s deferred compensation plans. The company’s stock-based deferred compensation liabilities, which are impacted by changes in the company’s stock price, increase as the company’s stock price rises and decrease as the company’s stock price declines. Pursuant to the Agreement, Citibank may purchase or sell shares of the company’s common stock (for Citibank’s account) in the market or in privately negotiated transactions. The Agreement has no stated expiration date and does not provide forSnap-on to purchase or repurchase its shares.


Citibank Purchases of Snap-on Stock
Period	Shares purchased	Average price per share
01/3/2021 to 01/30/2021	—	—
01/31/2021 to 02/27/2021	—	—
02/28/2021 to 04/03/2021	300	$216.82
Total/Average	300	$216.82

Table of Contents


~~Citibank Purchases ofSnap-on~~ ~~Stock~~Item 6: Exhibits

                  Period
   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



Total/Average
   12,500          $ 144.50

~~Item 6: Exhibits~~


Exhibit ~~10.1~~31.1		~~Snap-on~~ Incorporated 2011 Incentive Stock and Awards Plan (As Amended and Restated) *

~~Exhibit 31.1~~	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002.~~2002

Exhibit 31.2			Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002.~~2002

Exhibit 32.1			Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002

Exhibit 32.2			Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002

Exhibit 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 document

Exhibit 101.SCH			Inline XBRL Taxonomy Extension Schema Document**Document

Exhibit 101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document**Document

Exhibit 101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document**Document

Exhibit 101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document**Document

Exhibit 101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document**Document

Exhibit 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.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,Snap-on Incorporated has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			~~SNAP-ON~~ ~~INCORPORATED~~
~~Date:October 19, 2017~~	SNAP-ON INCORPORATED
Date: April 22, 2021		~~/s/~~/s/ Aldo J. Pagliari
			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
Net sales	$	903.8	$	834.1	$	2,712.3	$	2,540.6
Cost of goods sold		(455.2)		(415.0)		(1,352.7)		(1,274.9)

Gross profit		448.6		419.1		1,359.6		1,265.7
Operating expenses		(295.5)		(261.5)		(853.3)		(786.3)

Operating earnings before financial services		153.1		157.6		506.3		479.4

Financial services revenue		79.0		71.6		233.5		207.2
Financial services expenses		(23.0)		(21.0)		(70.4)		(60.1)

Operating earnings from financial services		56.0		50.6		163.1		147.1


Operating earnings		209.1		208.2		669.4		626.5
Interest expense		(13.1)		(13.1)		(38.8)		(39.1)
Other income (expense) – net		(2.1)		(0.8)		(5.7)		(0.3)

Earnings before income taxes and equity earnings		193.9		194.3		624.9		587.1
Income tax expense		(57.2)		(59.6)		(187.1)		(179.4)

Earnings before equity earnings		136.7		134.7		437.8		407.7
Equity earnings, net of tax		0.4		0.5		1.2		2.2

Net earnings		137.1		135.2		439.0		409.9
Net earnings attributable to noncontrolling interests		(3.7)		(3.5)		(10.8)		(9.8)

Net earnings attributable toSnap-on Incorporated	$	133.4	$	131.7	$	428.2	$	400.1


Net earnings per share attributable toSnap-on Incorporated:
Basic	$	2.33	$	2.27	$	7.43	$	6.89
Diluted		2.29		2.22		7.27		6.74

Weighted-average shares outstanding:
Basic		57.2		58.0		57.6		58.1
Effect of dilutive securities		1.1		1.3		1.3		1.3

Diluted		58.3		59.3		58.9		59.4


Dividends declared per common share	$	0.71	$	0.61	$	2.13	$	1.83


	Three Months Ended				Nine Months Ended
	September 30,		October 1,		September 30,		October 1,
	2017		2016		2017		2016
Comprehensive income (loss):
Net earnings	$	137.1	$	135.2	$	439.0	$	409.9
Other comprehensive income (loss):
Foreign currency translation*		51.4		(7.8)		138.9		(22.8)

Unrealized cash flow hedges, net of tax:
Other comprehensive income before reclassifications		–		–		6.1		–
Reclassification of cash flow hedges to net earnings		(0.5)		(0.1)		(1.2)		(0.3)
Defined benefit pension and postretirement plans:

Amortization of net unrecognized losses and prior service credits included in net periodic benefit cost		6.6		7.6		19.8		22.7
Income tax benefit		(2.3)		(2.8)		(6.9)		(8.3)

Net of tax		4.3		4.8		12.9		14.4

Total comprehensive income	$	192.3	$	132.1	$	595.7	$	401.2

Comprehensive income attributable to noncontrolling interests		(3.7)		(3.5)		(10.8)		(9.8)

Comprehensive income attributable toSnap-on Incorporated	$	188.6	$	128.6	$	584.9	$	391.4


	September 30, 2017		December 31, 2016
ASSETS
Current assets:
Cash and cash equivalents	$	94.1	$	77.6
Trade and other accounts receivable – net		675.2		598.8
Finance receivables – net		505.8		472.5
Contract receivables – net		99.8		88.1
Inventories – net		649.9		530.5
Prepaid expenses and other assets		121.1		116.5

Total current assets		2,145.9		1,884.0

Property and equipment:
Land		24.4		19.1
Buildings and improvements		350.3		309.4
Machinery, equipment and computer software		872.8		809.6

		1,247.5		1,138.1
Accumulated depreciation and amortization		(773.3)		(712.9)

Property and equipment – net		474.2		425.2

Deferred income tax assets		81.2		72.8
Long-term finance receivables – net		1,018.6		934.5
Long-term contract receivables – net		310.4		286.7
Goodwill		924.0		895.5
Other intangibles – net		258.3		184.6
Other assets		43.6		39.9

Total assets	$	5,256.2	$	4,723.2


(Amounts in millions)	September 30, 2017		December 31, 2016
Trade and other accounts receivable	$	689.6	$	612.8
Allowances for doubtful accounts		(14.4)		(14.0)

Total trade and other accounts receivable – net	$	675.2	$	598.8


	September 30, 2017				December 31, 2016
(Amounts in millions)	Finance Receivables		Contract Receivables		Finance Receivables		Contract Receivables
Performing	$	1,550.7	$	413.2	$	1,430.7	$	376.7
Nonperforming		27.8		2.2		24.9		2.0

Total	$	1,578.5	$	415.4	$	1,455.6	$	378.7


	Three Months Ended September 30, 2017				Nine Months Ended September 30, 2017
(Amounts in millions)	Finance Receivables		Contract Receivables		Finance Receivables		Contract Receivables
Allowances for doubtful accounts:
Beginning of period	$	52.5	$	4.8	$	48.6	$	3.9
Provision		12.8		0.8		38.6		2.7
Charge-offs		(12.6)		(0.7)		(38.0)		(1.9)
Recoveries		1.5		0.2		4.9		0.3
Currency translation		–		–		0.1		0.1

End of period	$	54.2	$	5.1	$	54.2	$	5.1


	Three Months Ended October 1, 2016				Nine Months Ended October 1, 2016
(Amounts in millions)	Finance Receivables		Contract Receivables		Finance Receivables		Contract Receivables
Allowances for doubtful accounts:
Beginning of period	$	42.6	$	4.5	$	38.2	$	4.4
Provision		10.8		0.5		30.4		1.1
Charge-offs		(9.2)		(0.6)		(28.0)		(1.3)
Recoveries		1.4		0.1		5.0		0.3

End of period	$	45.6	$	4.5	$	45.6	$	4.5


		Gain (Loss) 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 not designated as hedging instruments:
Foreign currency forwards	Other income (expense) – net	$	1.6	$	(0.7)	$	(2.3)	$	(4.9)
Equity forwards	Operating expenses		(0.9)		(0.7)		(2.2)		(1.4)


	Shares (in thousands)		Exercise Price Per Share*		Remaining Contractual Term* (in years)		Aggregate Intrinsic Value (in millions)
Outstanding at December 31, 2016		3,011	$	100.78
Granted		655		168.71
Exercised		(278)		87.00
Forfeited or expired		(71)		153.52

Outstanding at September 30, 2017		3,317		114.22		6.6	$	127.7

Exercisable at September 30, 2017		2,108		90.90		5.3		122.5


	Shares (in thousands)		Fair Value Price per Share*
Non-vested performance awards at December 31, 2016		207	$	141.94
Granted		77		168.70
Vested		(5)		142.78
Cancellations and other		(28)		154.46

Non-vested performance awards at September 30, 2017		251		148.64


	Stock-settled SARs (in thousands)		Exercise Price Per Share*		Remaining Contractual Term* (in years)		Aggregate Intrinsic Value (in millions)
Outstanding at December 31, 2016		303	$	125.38
Granted		100		168.73
Exercised		(8)		106.07
Forfeited or expired		(22)		124.88

Outstanding at September 30, 2017		373		137.49		7.8	$	6.3

Exercisable at September 30, 2017		179		118.54		6.8		5.4


	Cash-settled SARs (in thousands)		Fair Value Price per Share*
Non-vested cash-settled SARs at December 31, 2016		7	$	40.83
Granted		1		13.52
Vested		(3)		26.11

Non-vested cash-settled SARs at September 30, 2017		5		18.78