What changed in this filing

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Item 1. Financial Statements

2023-04-20 compared with 2022-10-20 · 251 added, 405 removed, 762 unchanged (46% of the section changed)

3 unchanged sentences

(Amounts in millions, except per share data)

Three Months Ended Nine Months Ended

October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021

Three Months Ended

April 1, 2023 April 2, 2022

Net sales $ 1,183.0 $ 1,097.8

9 unchanged sentences

Other income (expense) – net 15.2 8.3

Earnings before income taxes and equity earnings 291.2 262.4 890.9 793.7

Earnings before income taxes 328.9 290.2

Income tax expense ( 74.6 ) ( 67.5 )

Earnings before equity earnings 229.5 201.5 689.4 610.8

Equity earnings, net of tax — — — 1.5

Net earnings 254.3 222.7

13 unchanged sentences

(Amounts in millions)

Three Months Ended Nine Months Ended

October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021

Three Months Ended

April 1, 2023 April 2, 2022

Comprehensive income (loss):

2 unchanged sentences

Foreign currency translation 18.1 ( 9.7 )

Reclassification of foreign currency translation loss from sale of equity interest to net earnings — — — ( 1.0 )

Unrealized cash flow hedges, net of tax:

2 unchanged sentences

Amortization of net unrecognized losses

4.6 9.0 13.8 27.2

Income tax benefit

( 1.2 ) ( 2.1 ) ( 3.4 ) ( 6.6 )

3.4 6.9 10.4 20.6

Total comprehensive income 272.0 216.0

7 unchanged sentences

(Amounts in millions, except share data)

October 1, 2022 January 1, 2022

2023 December 31, 2022

Current assets:

19 unchanged sentences

Other intangibles – net 273.3 275.6

Pension assets 71.8 70.6

Other assets 12.9 13.7

4 unchanged sentences

(Amounts in millions, except share data)

October 1, 2022 January 1, 2022

2023 December 31, 2022

LIABILITIES AND EQUITY

34 unchanged sentences

(Amounts in millions, except share data)

The following summarizes the changes in total equity for the three month period ended October 1, 2022:

Shareholders’ Equity Attributable to Snap-on Incorporated

Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Loss Treasury

Stock Noncontrolling

Interests Total

Balance at July 2, 2022 $ 67.4 $ 488.1 $ 5,996.2 $ ( 457.7 ) $ ( 1,769.6 ) $ 22.4 $ 4,346.8

Net Earnings for the three months ended October 1, 2022

— — 223.9 — — 5.6 229.5

Other comprehensive loss — — — ( 124.6 ) — — ( 124.6 )

Cash dividends – $ 1.42 per share

— — ( 75.7 ) — — — ( 75.7 )

Stock compensation plans — 5.5 — — 14.3 — 19.8

Share repurchases – 228,000 shares

— — — — ( 50.2 ) — ( 50.2 )

Other — — ( 0.4 ) — — ( 5.7 ) ( 6.1 )

Balance at October 1, 2022 $ 67.4 $ 493.6 $ 6,144.0 $ ( 582.3 ) $ ( 1,805.5 ) $ 22.3 $ 4,339.5

The following summarizes the changes in total equity for the nine month period ended October 1, 2022:

Shareholders’ Equity Attributable to Snap-on Incorporated

Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Loss Treasury

Stock Noncontrolling

Interests Total

Balance at January 1, 2022 $ 67.4 $ 472.7 $ 5,699.9 $ ( 343.9 ) $ ( 1,714.2 ) $ 21.9 $ 4,203.8

Net Earnings for the nine months ended October 1, 2022

— — 672.8 — — 16.6 689.4

Other comprehensive loss — — — ( 238.4 ) — — ( 238.4 )

Cash dividends – $ 4.26 per share

— — ( 227.1 ) — — — ( 227.1 )

Stock compensation plans — 20.9 — — 41.5 — 62.4

Share repurchases – 615,000 shares

— — — — ( 132.8 ) — ( 132.8 )

Other — — ( 1.6 ) — — ( 16.2 ) ( 17.8 )

Balance at October 1, 2022 $ 67.4 $ 493.6 $ 6,144.0 $ ( 582.3 ) $ ( 1,805.5 ) $ 22.3 $ 4,339.5

See Notes to Condensed Consolidated Financial Statements.

SNAP-ON INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Amounts in millions, except share data)

The following summarizes the changes in total equity for the three month period ended October 2, 2021:

The following summarizes the changes in total equity for the three month period ended April 1, 2023:

Shareholders’ Equity Attributable to Snap-on Incorporated

6 unchanged sentences

Interests Total

Balance at July 3, 2021 $ 67.4 $ 461.1 $ 5,423.5 $ ( 362.7 ) $ ( 1,585.9 ) $ 22.1 $ 4,025.5

Net Earnings for the three months ended October 2, 2021

Balance at December 31, 2022 $ 67.4 $ 499.9 $ 6,296.2 $ ( 528.3 ) $ ( 1,853.9 ) $ 22.2 $ 4,503.5

Net earnings for the three months ended April 1, 2023

— — 248.7 — — 5.6 254.3

Other comprehensive loss — — — ( 32.1 ) — — ( 32.1 )

Other comprehensive income — — — 17.7 — — 17.7

Cash dividends – $ 1.62 per share

4 unchanged sentences

Other 0.1 — ( 0.7 ) — — ( 5.6 ) ( 6.2 )

Balance at Balance at October 2, 2021 $ 67.4 $ 467.7 $ 5,552.8 $ ( 394.8 ) $ ( 1,645.8 ) $ 22.0 $ 4,069.3

The following summarizes the changes in total equity for the nine month period ended October 2, 2021:

Balance at April 1, 2023 $ 67.5 $ 500.2 $ 6,458.1 $ ( 510.6 ) $ ( 1,905.0 ) $ 22.2 $ 4,632.4

The following summarizes the changes in total equity for the three month period ended April 2, 2022:

Shareholders’ Equity Attributable to Snap-on Incorporated

7 unchanged sentences

Balance at January 1, 2022 $ 67.4 $ 472.7 $ 5,699.9 $ ( 343.9 ) $ ( 1,714.2 ) $ 21.9 $ 4,203.8

Net Earnings for the nine months ended October 2, 2021

Net earnings for the three months ended April 2, 2022

— — 217.4 — — 5.3 222.7

6 unchanged sentences

Other — — ( 0.6 ) — — ( 4.9 ) ( 5.5 )

Balance at Balance at October 2, 2021 $ 67.4 $ 467.7 $ 5,552.8 $ ( 394.8 ) $ ( 1,645.8 ) $ 22.0 $ 4,069.3

Balance at April 2, 2022 $ 67.4 $ 474.7 $ 5,841.0 $ ( 350.6 ) $ ( 1,734.2 ) $ 22.3 $ 4,320.6

See Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

(Amounts in millions)

Nine Months Ended

October 1, 2022 October 2, 2021

Three Months Ended

April 1, 2023 April 2, 2022

Operating activities:

7 unchanged sentences

Deferred income tax provision (benefit) ( 0.2 ) 2.3

(Gain) loss on sales of assets ( 3.0 ) 1.5

Changes in operating assets and liabilities, net of effects of acquisitions:

Gain on sales of assets ( 0.2 ) ( 2.7 )

Changes in operating assets and liabilities:

Trade and other accounts receivable ( 22.9 ) ( 53.1 )

9 unchanged sentences

Capital expenditures ( 23.0 ) ( 20.2 )

Acquisitions of businesses, net of cash acquired 0.5 ( 199.7 )

Disposals of property and equipment 0.5 3.8

2 unchanged sentences

Financing activities:

Repayment of long-term debt — ( 250.0 )

Net increase in other short-term borrowings 0.8 2.3

5 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents — 0.1

Decrease in cash and cash equivalents ( 20.7 ) ( 187.9 )

Increase in cash and cash equivalents 76.6 81.1

Cash and cash equivalents at beginning of year 757.2 780.0

9 unchanged sentences

The Condensed Consolidated Financial Statements include the accounts of Snap-on Incorporated and its wholly owned and majority-owned subsidiaries (collectively, “Snap-on” or the “company”).

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 in Snap-on’s 2021 Annual Report on Form 10-K for the fiscal year ended January 1, 2022 (“2021 year end”).

The company’s 2022 fiscal third quarter ended on October 1, 2022;

the 2021 fiscal third quarter ended on October 2, 2021.

The company’s 2022 and 2021 fiscal third quarters each contained 13 weeks of operating results.

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 in Snap-on’s 2022 Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (“2022 year end”).

The company’s 2023 fiscal first quarter ended on April 1, 2023;

the 2022 fiscal first quarter ended on April 2, 2022.

The company’s 2023 and 2022 fiscal first quarters each contained 13 weeks of operating results.

Snap-on’s Condensed Consolidated Financial Statements are prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”).

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 October 1, 2022, and October 2, 2021, have been made.

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 month periods ended April 1, 2023, and April 2, 2022, have been made.

Interim results of operations are not necessarily indicative of the results to be expected for the full fiscal year.

7 unchanged sentences

New Accounting Standards

In March 2022, the FASB issued ASU No.

2022-02, Financial Instruments – Credit Losses (Topic 326) – Troubled Debt Restructurings and Vintage Disclosures , which requires enhanced disclosure of certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty while eliminating certain current recognition and measurement accounting guidance.

On January 1, 2023, the beginning of Snap-on’s 2023 fiscal year, the company adopted ASU No.

2022-02, Financial Instruments – Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures , which requires enhanced disclosure of certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty and eliminates certain current recognition and measurement accounting guidance.

This ASU also requires the disclosure of current-period gross write-offs by year of origination for financing receivables and net investments in leases.

2022-02 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years;

this ASU allows for early adoption in any interim period after issuance of the update.

The adoption of this ASU is not expected to have a material impact on Snap-on’s Consolidated Financial Statements.

The adoption of this ASU did not have a significant impact on the company’s Condensed Consolidated Financial Statements.

Revenue Recognition

4 unchanged sentences

The following table shows the consolidated revenues by revenue source:

Three Months Ended Nine Months Ended

(Amounts in millions) October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021

Three Months Ended

(Amounts in millions) April 1, 2023 April 2, 2022

Revenue from contracts with customers $ 1,176.5 $ 1,091.9

7 unchanged sentences

The following tables represent external net sales disaggregated by geography, based on the customers’ billing addresses:

For the Three Months Ended October 1, 2022

For the Three Months Ended April 1, 2023

Commercial Snap-on Repair Systems

10 unchanged sentences

Total revenue $ 363.8 $ 537.0 $ 446.6 $ 92.6 $ ( 164.4 ) $ 1,275.6

For the Nine Months Ended October 1, 2022

Commercial Snap-on Repair Systems

& Industrial Tools & Information Financial Snap-on

(Amounts in millions) Group Group Group Services Eliminations Incorporated

North America* $ 370.6 $ 1,348.7 $ 766.3 $ — $ — $ 2,485.6

Europe 216.9 106.3 174.2 — — 497.4

All other 212.6 74.3 67.0 — — 353.9

External net sales 800.1 1,529.3 1,007.5 — — 3,336.9

Intersegment net sales 255.9 — 221.5 — ( 477.4 ) —

Total net sales 1,056.0 1,529.3 1,229.0 — ( 477.4 ) 3,336.9

Financial services revenue — — — 261.4 — 261.4

Total revenue $ 1,056.0 $ 1,529.3 $ 1,229.0 $ 261.4 $ ( 477.4 ) $ 3,598.3

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

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Three Months Ended October 2, 2021

Commercial Snap-on Repair Systems

& Industrial Tools & Information Financial Snap-on

(Amounts in millions) Group Group Group Services Eliminations Incorporated

North America* $ 128.3 $ 407.4 $ 217.5 $ — $ — $ 753.2

Europe 76.9 40.3 58.7 — — 175.9

All other 66.5 23.7 18.4 — — 108.6

External net sales 271.7 471.4 294.6 — — 1,037.7

Intersegment net sales 79.7 — 69.8 — ( 149.5 ) —

Total net sales 351.4 471.4 364.4 — ( 149.5 ) 1,037.7

Financial services revenue — — — 87.3 — 87.3

Total revenue $ 351.4 $ 471.4 $ 364.4 $ 87.3 $ ( 149.5 ) $ 1,125.0

For the Nine Months Ended October 2, 2021

For the Three Months Ended April 2, 2022

Commercial Snap-on Repair Systems

13 unchanged sentences

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

For the Three Months Ended October 1, 2022

Commercial Snap-on Repair Systems

& Industrial Tools & Information Financial Snap-on

(Amounts in millions) Group Group Group Services Eliminations Incorporated

Vehicle service professionals $ 20.8 $ 496.6 $ 343.1 $ — $ — $ 860.5

All other professionals 242.0 — — — — 242.0

External net sales 262.8 496.6 343.1 — — 1,102.5

Intersegment net sales 94.0 — 70.9 — ( 164.9 ) —

Total net sales 356.8 496.6 414.0 — ( 164.9 ) 1,102.5

Financial services revenue — — — 87.3 — 87.3

Total revenue $ 356.8 $ 496.6 $ 414.0 $ 87.3 $ ( 164.9 ) $ 1,189.8

For the Nine Months Ended October 1, 2022

Commercial Snap-on Repair Systems

& Industrial Tools & Information Financial Snap-on

(Amounts in millions) Group Group Group Services Eliminations Incorporated

Vehicle service professionals $ 69.9 $ 1,529.3 $ 1,007.5 $ — $ — $ 2,606.7

All other professionals 730.2 — — — — 730.2

External net sales 800.1 1,529.3 1,007.5 — — 3,336.9

Intersegment net sales 255.9 — 221.5 — ( 477.4 ) —

Total net sales 1,056.0 1,529.3 1,229.0 — ( 477.4 ) 3,336.9

Financial services revenue — — — 261.4 — 261.4

Total revenue $ 1,056.0 $ 1,529.3 $ 1,229.0 $ 261.4 $ ( 477.4 ) $ 3,598.3

For the Three Months Ended October 2, 2021

For the Three Months Ended April 1, 2023

Commercial Snap-on Repair Systems

8 unchanged sentences

Total revenue $ 363.8 $ 537.0 $ 446.6 $ 92.6 $ ( 164.4 ) $ 1,275.6

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Nine Months Ended October 2, 2021

For the Three Months Ended April 2, 2022

Commercial Snap-on Repair Systems

19 unchanged sentences

The remaining sales revenue is earned over time primarily for software subscriptions, other subscription service agreements and extended warranty programs.

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Snap-on enters into contracts related to the selling of tools, diagnostics, repair information, equipment and related services.

7 unchanged sentences

The remaining duration of these unsatisfied performance obligations range from one month up to 60 months.

Snap-on had approximately $ 185.0 million of long-term contracts that have fixed consideration that extends beyond one year as of October 1, 2022.

Snap-on had approximately $ 180.0 million of long-term contracts that have fixed consideration that extends beyond one year as of April 1, 2023.

Snap-on expects to recognize approximately 70 % of these contracts as revenue by the end of fiscal 2024, an additional 25 % by the end of fiscal 2026, and the balance thereafter.

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Contract liabilities:

1 unchanged sentence

The timing of payment is typically on a monthly, quarterly or annual basis.

The balance of total contract liabilities was $ 64.3 million and $ 63.8 million at October 1, 2022, and January 1, 2022, respectively.

The balance of total contract liabilities was $ 65.7 million and $ 63.3 million at April 1, 2023, and December 31, 2022, 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 and nine months ended October 1, 2022, Snap-on recognized revenue of $ 6.3 million and $ 51.2 million, respectively, that was included in the $ 63.8 million contract liability balance at January 1, 2022, which was primarily from the amortization of software subscriptions, extended warranties and other subscription agreements.

On August 1, 2021, Snap-on acquired AutoCrib EMEA GmbH (“AutoCrib Germany”), a former independent distributor, for a cash purchase price of $ 4.4 million (or $ 4.2 million, net of cash acquired).

AutoCrib Germany, based in Hamburg, Germany, distributes asset and tool control solutions for a variety of aerospace, automotive, military, natural resources and general industry operations.

In the first quarter of 2022, the company completed the purchase accounting valuations for the acquired net assets of AutoCrib Germany.

The $ 3.3 million excess of the purchase price over the fair value of the net assets acquired is recorded in “Goodwill” on the accompanying Condensed Consolidated Balance Sheets.

On July 1, 2021, Snap-on exchanged its 35 % equity interest in Deville S.A., valued at $ 21.8 million, for 100 % ownership of Secateurs Pradines (“Pradines”), a wholly owned subsidiary of Deville S.A.

with a fair value of $ 20.2 million (or $ 15.7 million, net of cash acquired), which reflects a $ 0.5 million purchase accounting adjustment finalized in the second quarter of 2022, and cash of $ 1.6 million.

Pradines, located in Bauge-en-Anjou, France, designs and manufactures horticultural hand tools for professionals and individuals.

The $ 10.2 million excess of the purchase price over the fair value of net assets acquired is recorded in “Goodwill” on the accompanying Condensed Consolidated Balance Sheets.

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 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.

In the first quarter of 2022, the company completed the purchase accounting valuations for the acquired net assets of Dealer-FX, and recorded $ 32.6 million of net deferred tax changes.

The $ 118.2 million excess of the purchase price over the fair value of the net assets acquired is recorded in “Goodwill” on the accompanying Condensed Consolidated Balance Sheets.

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

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.

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

During the three months ended April 1, 2023, Snap-on recognized $ 34.7 million of revenue that was included in the $ 63.3 million contract liability balance at December 31, 2022, which was primarily from the amortization of software subscriptions, extended warranties and other subscription agreements.

Trade and other accounts receivable:

Snap-on’s trade and other accounts receivable primarily arise from the sale of tools, diagnostics, and equipment products to a broad range of industrial and commercial customers and to Snap-on’s independent franchise van channel with payment terms generally ranging from 30 to 120 days.

The components of Snap-on’s trade and other accounts receivable as of October 1, 2022, and January 1, 2022, are as follows:

(Amounts in millions) October 1, 2022 January 1, 2022

The components of Snap-on’s trade and other accounts receivable as of April 1, 2023, and December 31, 2022, are as follows:

(Amounts in millions) April 1,

2023 December 31, 2022

Trade and other accounts receivable $ 813.6 $ 792.8

1 unchanged sentence

Total trade and other accounts receivable – net $ 782.4 $ 761.7

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following is a rollforward of the allowances for credit losses related to trade and other accounts receivable for the three and nine months ended October 1, 2022, and October 2, 2021:

Three Months Ended Nine Months Ended

(Amounts in millions) October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021

The following is a rollforward of the allowances for credit losses related to trade and other accounts receivable for the three months ended April 1, 2023, and April 2, 2022:

Three Months Ended

(Amounts in millions) April 1, 2023 April 2, 2022

Allowances for credit losses:

2 unchanged sentences

( 4.8 ) ( 3.0 )

( 3.0 ) ( 1.7 ) ( 8.2 ) ( 5.9 )

Currency translation

( 0.9 ) ( 0.7 ) ( 1.6 ) ( 0.6 )

End of period $ 31.2 $ 28.4

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Finance and contract receivables:

4 unchanged sentences

Finance receivables are comprised of extended-term payment contracts to both technicians and independent shop owners (i.e., franchisees’ customers) to enable them to purchase tools, diagnostics, and equipment products on an extended-term payment plan, with average payment terms of approximately four years .

Contract receivables, with payment terms of up to ten years , are comprised of extended-term payment contracts to a broad base of customers worldwide, including shop owners, both independents and national chains, for their purchase of tools, diagnostics, and equipment products, as well as extended-term 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, or the expansion of an existing franchise.

Contract receivables, with payment terms of up to 10 years, are comprised of extended-term payment contracts to a broad base of customers worldwide, including shop owners, both independents and national chains, for their purchase of tools, diagnostics, and equipment products, as well as extended-term 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, or the expansion of an existing franchise.

Finance and contract receivables are generally secured by the underlying tools, diagnostics and/or equipment products financed and, for contracts to franchisees, other franchisee assets.

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The components of Snap-on’s current finance and contract receivables as of October 1, 2022, and January 1, 2022, are as follows:

(Amounts in millions) October 1, 2022 January 1, 2022

The components of Snap-on’s current finance and contract receivables as of April 1, 2023, and December 31, 2022, are as follows:

(Amounts in millions) April 1,

2023 December 31, 2022

Finance installment receivables $ 589.2 $ 578.6

19 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The components of Snap-on’s finance and contract receivables with payment terms beyond one year as of October 1, 2022, and January 1, 2022, are as follows:

(Amounts in millions) October 1, 2022 January 1, 2022

The components of Snap-on’s finance and contract receivables with payment terms beyond one year as of April 1, 2023, and December 31, 2022, are as follows:

(Amounts in millions) April 1,

2023 December 31, 2022

Finance installment receivables $ 1,238.2 $ 1,210.4

33 unchanged sentences

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 October 1, 2022, are as follows:

The amortized cost basis of finance and contract receivables by origination year as of April 1, 2023, and charge-offs for the three months ended April 1, 2023, are as follows:

(Amounts in millions) 2023 2022 2021 2020 2019 Prior Total

3 unchanged sentences

Total Finance receivables $ 505.3 $ 854.7 $ 283.0 $ 131.2 $ 43.7 $ 14.0 $ 1,831.9

Finance receivables charge-offs $ — $ 5.7 $ 4.6 $ 2.5 $ 1.0 $ 0.7 $ 14.5

Contract receivables:

2 unchanged sentences

Total Contract receivables $ 46.1 $ 161.0 $ 111.3 $ 78.0 $ 51.9 $ 51.8 $ 500.1

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.

Contract receivables charge-offs $ — $ 0.1 $ 0.1 $ 0.3 $ — $ — $ 0.5

Allowances for credit losses:

The allowances for credit losses are maintained at levels that are considered adequate to cover expected credit losses over the remaining contractual life of the receivables using historical loss experience, asset specific risk characteristics, current conditions, reasonable and supportable forecasts, and an appropriate reversion period, when applicable.

Management performs detailed reviews of its receivables on a monthly and/or quarterly basis to assess the adequacy of the allowances and to determine if any impairment has occurred.

A receivable generally has 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 allowances, while amounts recovered on previously written off accounts increase the allowances.

For both finance and contract receivables, write-offs include the uncollectable principal amount of the receivable as well as the uncollectable accrued interest and fees, net of repossessions.

For finance receivables only, write-offs are partially offset by recourse from franchisees.

Recovered interest and fees previously written off are recorded through the allowances for credit losses and increase the allowances.

Absent a repossession, finance receivables are typically written off when an account reaches 120 days past due.

Repossessed accounts are typically written off within 60 days of asset repossession.

Changes to the allowances for credit losses are maintained through adjustments to the provisions for credit losses.

For finance receivables, the company uses a vintage loss rate methodology to determine expected losses.

1 unchanged sentence

The finance receivable portfolio contains a substantial amount of homogeneous contracts which fits well with the vintage analysis.

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For contract receivables, the company primarily uses a Weighted-Average Remaining Maturity (“WARM”) methodology.

1 unchanged sentence

The WARM methodology 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.

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The company performed a correlation analysis to compare historical losses to many economic factors.

4 unchanged sentences

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.

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 and nine months ended October 1, 2022, and October 2, 2021:

The allowances for credit losses are 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 1, 2023, and April 2, 2022:

Three Months Ended

October 1, 2022 Nine Months Ended

October 1, 2022

April 1, 2023 Three Months Ended

April 2, 2022

(Amounts in millions) Finance

9 unchanged sentences

End of period $ 62.7 $ 6.5 $ 62.5 $ 7.7

Three Months Ended

October 2, 2021 Nine Months Ended

October 2, 2021

(Amounts in millions) Finance Receivables Contract Receivables Finance Receivables Contract Receivables

Allowances for credit losses:

Beginning of period $ 72.3 $ 9.0 $ 76.3 $ 9.0

Provision for credit losses 5.8 — 23.7 0.8

Charge-offs ( 10.8 ) ( 0.4 ) ( 38.1 ) ( 1.4 )

Recoveries 2.3 0.1 7.7 0.3

Currency translation — — — —

End of period $ 69.6 $ 8.7 $ 69.6 $ 8.7

Depending on the contract, payments for finance and contract receivables are due on a monthly or weekly basis.

4 unchanged sentences

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 October 1, 2022, and January 1, 2022, were immaterial to both the financial services portfolio and the company’s results of operations and financial position.

In limited instances, Snap-on’s financial services business may modify certain receivables.

The amount and number of finance and contract receivable modifications as of April 1, 2023, and December 31, 2022, 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)

The aging of finance and contract receivables as of October 1, 2022, and January 1, 2022, is as follows:

The aging of finance and contract receivables as of April 1, 2023, and December 31, 2022, is as follows:

(Amounts in millions) 30-59

2 unchanged sentences

Past Due Total Greater

October 1, 2022:

April 1, 2023:

Finance receivables $ 12.3 $ 9.6 $ 19.9 $ 41.8 $ 1,790.1 $ 1,831.9 $ 16.8

Contract receivables 1.4 0.4 1.7 3.5 496.6 500.1 0.3

January 1, 2022:

December 31, 2022:

Finance receivables $ 17.2 $ 11.2 $ 19.5 $ 47.9 $ 1,746.0 $ 1,793.9 $ 16.5

14 unchanged sentences

Such finance and contract receivables are covered by the company’s respective allowances for credit losses and are written-off against the allowances when appropriate.

The amount of finance and contract receivables on nonaccrual status as of October 1, 2022, and January 1, 2022, is as follows:

(Amounts in millions) October 1, 2022 January 1, 2022

The amount of finance and contract receivables on nonaccrual status as of April 1, 2023, and December 31, 2022, is as follows:

(Amounts in millions) April 1,

2023 December 31, 2022

Finance receivables $ 9.3 $ 8.7

Contract receivables 2.8 3.3

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Inventories by major classification are as follows:

(Amounts in millions) October 1, 2022 January 1, 2022

(Amounts in millions) April 1,

2023 December 31, 2022

Finished goods $ 895.1 $ 882.2

4 unchanged sentences

Total inventories – net $ 1,049.1 $ 1,033.1

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Inventories accounted for using the first-in, first-out (“FIFO”) method approximated 59 % and 60 % of total inventories as of October 1, 2022, and January 1, 2022, respectively.

Inventories accounted for using the first-in, first-out (“FIFO”) method approximated 61 % of total inventories as of both April 1, 2023, and December 31, 2022.

The company accounts for its non-U.S.

inventory on the FIFO method.

As of October 1, 2022, approximately 36 % of the company’s U.S.

As of April 1, 2023, approximately 38 % of the company’s U.S.

inventory was accounted for using the FIFO method and 62 % was accounted for using the last-in, first-out (“LIFO”) method.

There were no LIFO inventory liquidations in the three and nine months ended October 1, 2022, or October 2, 2021.

There were no LIFO inventory liquidations in the three months ended April 1, 2023, or April 2, 2022.

Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill by segment for the nine months ended October 1, 2022, are as follows:

The changes in the carrying amount of goodwill by segment for the three months ended April 1, 2023, are as follows:

(Amounts in millions) Commercial

2 unchanged sentences

& Information

Balance as of January 1, 2022 $ 325.8 $ 12.4 $ 778.3 $ 1,116.5

Balance as of December 31, 2022 $ 302.9 $ 12.4 $ 730.0 $ 1,045.3

Currency translation 3.7 — 1.6 5.3

Acquisition-related adjustments ( 0.5 ) — ( 32.6 ) ( 33.1 )

Balance as of October 1, 2022 $ 280.7 $ 12.4 $ 717.5 $ 1,010.6

Goodwill of $ 1,010.6 million as of October 1, 2022, included $ 118.2 million from the acquisition of Dealer-FX, $ 10.2 million from the acquisition of Pradines and $ 3.3 million from the acquisition of AutoCrib Germany.

The purchase accounting valuations for the acquired net assets of AutoCrib Germany were completed in the first quarter of 2022.

Also in the first quarter of 2022, the purchase accounting valuations for the acquired net assets, including deferred tax assets, of Dealer-FX were completed, resulting in a reduction of goodwill of $ 32.6 million from 2021 year end.

In the second quarter of 2022, the purchase accounting valuations for the acquired net assets of Pradines were completed, resulting in a reduction of goodwill of $ 0.5 million from 2021 year end.

The goodwill from Dealer-FX is included in the Repair Systems & Information Group and the goodwill from Pradines and AutoCrib Germany is included in the Commercial & Industrial Group.

See Note 3 for additional information on acquisitions.

Additional disclosures related to other intangible assets are as follows:

October 1, 2022 January 1, 2022

(Amounts in millions) Gross Carrying

Value Accumulated

Amortization Gross Carrying

Value Accumulated

Balance as of April 1, 2023 $ 306.6 $ 12.4 $ 731.6 $ 1,050.6

A dditional disclosures related to other intangible assets are as follows:

April 1, 2023 December 31, 2022

(Amounts in millions) Gross Carrying Value Accumulated

Amortization Net Carrying Value Gross Carrying Value Accumulated

Amortization Net Carrying Value

Amortized other intangible assets:

8 unchanged sentences

Total other intangible assets $ 626.9 $ ( 353.6 ) $ 273.3 $ 621.6 $ ( 346.0 ) $ 275.6

As of October 1, 2022, the gross carrying value of intangible assets includes $ 28.4 million of customer relationships, $ 14.8 million of developed technology and a $ 17.7 million non-amortized trademark related to the Dealer-FX acquisition.

Provision for impairment of goodwill and/or other intangible assets could arise in a future period due to significant and unanticipated changes in circumstances, such as declines in profitability and cash flow due to 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 sustained decrease in share price and/or other events.

As of April 1, 2023, the company had no accumulated impairment losses.

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Snap-on completed its annual impairment testing of goodwill and other indefinite-lived intangible assets in the second quarter of 2022, and the testing did not result in any impairment.

Provisions for impairment of goodwill and/or other intangible assets could arise in a future period due to 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.

As of October 1, 2022, the company had no accumulated impairment losses.

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

2 unchanged sentences

Internally developed software 6

Snap-on is amortizing its customer relationships on both an accelerated and straight-line basis over a 14 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 12 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-average 14 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 $ 7.2 million and $ 21.6 million for the respective three and nine month periods ended October 1, 2022, and $ 6.4 million and $ 18.7 million for the respective three and nine month periods ended October 2, 2021.

The aggregate amortization expense was $ 6.9 million and $ 7.2 million for the respective three month periods ended April 1, 2023, and April 2, 2022.

Based on current levels of amortizable intangible assets and estimated weighted-average useful lives, estimated annual amortization expense is expected to be $ 26.9 million in 2023, $ 21.1 million in 2024, $ 15.1 million in 2025, $ 11.4 million in 2026, $ 10.3 million in 2027, and $ 8.9 million in 2028.

Exit and Disposal Activities

Snap-on did not record any costs for exit and disposal activities for each of the three and nine month periods ended October 1, 2022, and October 2, 2021.

Snap-on’s exit and disposal accrual activity for the first nine months of 2022 is as follows:

Balance at First Six Months Balance at Third Quarter Balance at

(Amounts in millions) January 1, 2022 Provision Usage July 2,

2022 Provision Usage October 1,

Snap-on did not record any costs for exit and disposal activities for each of the three month periods ended April 1, 2023, and April 2, 2022.

Snap-on’s exit and disposal accrual activity for the first three months of 2023 is as follows:

Balance at Three Months Balance at

(Amounts in millions) December 31, 2022 Provision Usage April 1,

Severance costs:

3 unchanged sentences

Total $ 2.8 $ — $ ( 0.3 ) $ 2.5

As of October 1, 2022, the company expects that approximately $ 1.4 million of the $ 3.8 million exit and disposal accrual will be utilized in 2022, and the remainder thereafter, primarily for longer-term severance payments.

As of April 1, 2023, the company expects that approximately $ 1.4 million of the $ 2.5 million exit and disposal accrual will be utilized in 2023, and the remainder thereafter, primarily for longer-term severance payments.

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

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Snap-on’s effective income tax rate on earnings attributable to Snap-on was 23.0 % and 23.5 % in the respective first nine month periods of 2022 and 2021.

Snap-on’s effective income tax rate on earnings attributable to Snap-on was 23.1 % and 23.7 % in the respective first three month periods of 2023 and 2022.

Snap-on and its subsidiaries file income tax returns in the United States and in various state, local and foreign jurisdictions.

2 unchanged sentences

Accordingly, Snap-on’s gross unrecognized tax benefits may increase by a range of zero to $ 0.6 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)

Short-term and Long-term Debt

Short-term and long-term debt as of October 1, 2022, and January 1, 2022, consisted of the following:

(Amounts in millions) October 1, 2022 January 1, 2022

Short-term and long-term debt as of April 1, 2023, and December 31, 2022, consisted of the following:

(Amounts in millions) April 1,

2023 December 31, 2022

3.25 % unsecured notes due 2027

8 unchanged sentences

* Includes unamortized debt issuance costs.

Notes payable of $ 17.7 million as of October 1, 2022, compared to $ 17.4 million as of 2021 year end.

Notes payable of $ 18.2 million as of April 1, 2023, compared to $ 17.2 million as of 2022 year end.

Snap-on has an $ 800 million multi-currency revolving credit facility that terminates on September 16, 2024 (the “Credit Facility”);

no amounts were outstanding under the Credit Facility as of October 1, 2022.

On September 15, 2022, the Credit Facility was amended to replace the London Interbank Offered Rate (“LIBOR”) with other benchmark interest rates.

no amounts were borrowed or outstanding under the Credit Facility for the three months ended and as of April 1, 2023.

Borrowings under the Credit Facility bear interest at varying rates based on either:

4 unchanged sentences

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 Leverage Ratio to 0.65 to 1.00 and/or increase the maximum Consolidated Net Debt to EBITDA Ratio to 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 October 1, 2022, the company’s actual ratios of 0.09 and 0.37 , respectively, were both within the permitted ranges set forth in this financial covenant.

As of April 1, 2023, the company’s actual ratios of 0.08 and 0.30 , 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 as back-up liquidity to support such commercial paper issuances.

As of October 1, 2022, there were no commercial paper issuances outstanding.

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

As of April 1, 2023, there were no commercial paper issuances outstanding.

Financial Instruments

9 unchanged sentences

Snap-on does not use derivative instruments for speculative or trading purposes.

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Snap-on is exposed to global market risks, including the effects of changes in foreign currency exchange rates, interest rates, and the company’s stock price.

2 unchanged sentences

Foreign currency risk management:

Snap-on has significant international operations and is subject to certain risks inherent with foreign operations, including currency fluctuations.

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 that Snap-on has payment obligations or receipts denominated in currencies other than the functional currency, including intercompany loans denominated in foreign currencies.

7 unchanged sentences

Interest rate risk management:

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

Snap-on may manage the exposure created by the differing maturities and interest rate structures of Snap-on’s borrowings through the use of interest rate swap agreements (“interest rate swaps”) and treasury lock agreements (“treasury locks”).

Interest rate swaps:

3 unchanged sentences

The change in the fair value of the derivative is recorded in “Long-term debt” on the accompanying Condensed Consolidate d Balance Sheets.

T here were no outstanding interest rate swaps as of both October 1, 2022, and January 1, 2022 .

T here were no outstanding interest rate swaps as of both April 1, 2023, and December 31, 2022 .

Treasury locks:

3 unchanged sentences

Upon the issuance of debt, the related amount in Accumulated OCI is released over the term of the debt and recognized as an adjustment to interest expense on the Condensed Consolidated Statements of Earnings.

There were no treasury locks outstanding as of both October 1, 2022, and January 1, 2022.

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

There were no treasury locks outstanding as of both April 1, 2023, and December 31, 2022.

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”).

Snap-on manages 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 potential mark-to-market effect on stock-based deferred compensation from changes in Snap‑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 such mark-to-market changes.

As of October 1, 2022, Snap-on had equity forwards in place intended to manage market risk with respect to 70,800 shares of Snap-on common stock associated with its deferred compensation plans.

As of April 1, 2023, Snap-on had equity forwards in place intended to manage market risk with respect to 68,200 shares of Snap-on common stock associated with its deferred compensation plans.

Counterparty risk:

2 unchanged sentences

Snap-on does not anticipate non-performance by its counterparties, but cannot provide assurances.

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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:

October 1, 2022 January 1, 2022

April 1, 2023 December 31, 2022

(Amounts in millions) Carrying

10 unchanged sentences

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 was estimated, using Level 2 fair value measurements, based on quoted market values of Snap-on’s publicly traded senior debt.

• Fair value of long-term debt is estimated, using Level 2 fair value measurements, based on quoted market values of Snap-on’s publicly traded senior debt.

The carrying value of long-term debt includes unamortized debt issuance costs.

1 unchanged sentence

• 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)

Pension Plans

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

Three Months Ended Nine Months Ended

(Amounts in millions) October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021

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

Three Months Ended

(Amounts in millions) April 1, 2023 April 2, 2022

Service cost $ 4.9 $ 7.1

2 unchanged sentences

Amortization of unrecognized loss 0.3 4.5

Net periodic pension (benefit) cost $ ( 2.5 ) $ 3.3 $ ( 7.5 ) $ 9.9

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

Net periodic pension benefit $ ( 4.7 ) $ ( 1.8 )

The components of net periodic pension benefit, other than the service cost component, are included in “Other income (expense) – net” on the accompanying Condensed Consolidated Statements of Earnings.

See Note 16 for additional information on other income (expense) – net.

1 unchanged sentence

Depending on market and other conditions, Snap-on may make discretionary cash contributions to its pension plans in 2023.

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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) October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021

Three Months Ended

(Amounts in millions) April 1, 2023 April 2, 2022

Interest cost $ 0.5 $ 0.3

Expected return on plan assets ( 0.2 ) ( 0.2 )

Amortization of unrecognized gain ( 0.3 ) —

Net periodic postretirement health care cost $ — $ 0.1

3 unchanged sentences

The 2011 Incentive Stock and Awards Plan (the “2011 Plan”) provides for the grant of stock options, performance share units (“PSUs”), stock appreciation rights (“SARs”) and restricted stock awards (which may be designated as “restricted stock units” or “RSUs”).

As of October 1, 2022, the 2011 Plan had 3,116,000 shares available for future grants.

As of April 1, 2023, the 2011 Plan had 2,612,539 shares available for future grants.

The company uses treasury stock to deliver shares under the 2011 Plan.

Net stock-based compensation expense was $ 8.1 million and $ 25.6 million for the respective three and nine month periods ended October 1, 2022, and $ 9.5 million and $ 33.3 million for the respective three and nine month periods ended October 2, 2021.

Cash received from stock purchase and option plan exercises during the respective three and nine month periods ended October 1, 2022, totaled $ 12.2 million and $ 41.4 million.

Cash received from stock purchase and option plan exercises during the respective three and nine month periods ended October 2, 2021, totaled $ 3.6 million and $ 158.4 million.

The tax benefit realized from both the exercise and vesting of share-based payment arrangements was $ 3.3 million and $ 7.2 million for the respective three and nine month periods ended October 1, 2022, and $ 2.2 million and $ 16.1 million for the respective three and nine month periods ended October 2, 2021.

Net stock-based compensation expense was $ 10.2 million and $ 9.0 million for the respective three month periods ended April 1, 2023, and April 2, 2022.

Cash received from stock purchase and option plan exercises during the respective three month periods ended April 1, 2023, and April 2, 2022 totaled $ 32.8 million and $ 5.8 million.

The tax benefit realized from both the exercise and vesting of share-based payment arrangements was $ 5.1 million and $ 2.1 million for the respective three month periods ended April 1, 2023, and April 2, 2022.

Stock options:

Stock options are granted with an exercise price equal to the market value of a share of Snap-on’s common stock on the date of grant and have a contractual term of ten years .

Stock options are granted with an exercise price equal to the market value of a share of Snap-on’s common stock on the date of grant and have a contractual term of 10 years.

Stock option grants vest ratably on the first, second and third anniversaries of the date of grant.

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes valuation model.

4 unchanged sentences

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 nine month periods ended October 1, 2022, and October 2, 2021, using the Black-Scholes valuation model:

Nine Months Ended

2022 October 2,

The following weighted-average assumptions were used in calculating the fair value of stock options granted during three month periods ended April 1, 2023, and April 2, 2022, using the Black-Scholes valuation model:

Three Months Ended

April 1, 2023 April 2, 2022

Expected term of option (in years)

2 unchanged sentences

Risk-free interest rate 3.99 % 2.00 %

A summary of stock option activity as of and for the nine months ended October 1, 2022, is presented below:

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

A summary of stock option activity as of and for the three months ended April 1, 2023, is presented below:

(in thousands)

1 unchanged sentence

(in millions)

Outstanding at January 1, 2022 2,432 $ 151.32

Outstanding at December 31, 2022 2,349 $ 163.07

Granted 241 249.26

1 unchanged sentence

Forfeited or expired ( 7 ) 203.98

Outstanding at October 1, 2022 2,473 160.86 5.6 $ 103.1

Exercisable at October 1, 2022 1,840 150.18 4.6 94.2

Outstanding at April 1, 2023 2,363 173.08 5.8 $ 175.0

Exercisable at April 1, 2023 1,839 158.34 4.8 162.8

* Weighted-average

The weighted-average grant date fair value of options granted during the nine months ended October 1, 2022, and October 2, 2021, was $ 34.35 and $ 26.19 , respectively.

The intrinsic value of options exercised was $ 13.1 million and $ 23.3 million during the respective three and nine month periods ended October 1, 2022, and $ 8.6 million and $ 67.5 million during the respective three and nine month periods ended October 2, 2021.

The fair value of stock options vested was $ 10.5 million and $ 12.5 million during the respective nine month periods ended October 1, 2022, and October 2, 2021.

As of October 1, 2022, there was $ 12.6 million of unrecognized compensation cost related to non-vested stock options that is expected to be recognized as a charge to earnings over a weighted-average period of 1.6 years.

Performance Share Units and Restricted Stock Units:

The weighted-average grant date fair value of options granted during the three months ended April 1, 2023, and April 2, 2022, was $ 51.09 and $ 34.35 , respectively.

The intrinsic value of options exercised was $ 22.6 million and $ 2.8 million during the respective three month periods ended April 1, 2023, and April 2, 2022.

The fair value of stock options vested was $ 9.1 million and $ 10.5 million during the respective three month periods ended April 1, 2023, and April 2, 2022.

As of April 1, 2023, there was $ 19.8 million of unrecognized compensation cost related to non-vested stock options that is expected to be recognized as a charge to earnings over a weighted-average period of 2.1 years.

Performance share units:

PSUs are earned and expensed using the fair value of the award over a contractual term of three years based on the company’s performance.

2 unchanged sentences

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

Time-based RSUs are earned and expensed using the fair value of the award over the contractual term of three years .

Vesting of the time-based RSUs is dependent upon continued employment over the three-year cliff vesting period.

The fair value of PSUs is calculated using the market value of a share of Snap-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 PSUs granted during the three months ended April 1, 2023, and April 2, 2022, was $ 249.26 and $ 206.20 , respectively.

PSUs related to 60,402 shares and 46,217 shares were paid out during the three months ended April 1, 2023, and April 2, 2022, respectively.

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”).

Changes to the company’s non-vested PSUs during the three months ended April 1, 2023, are as follows:

(in thousands)

Non-vested PSUs at December 31, 2022 199 $ 196.51

Granted 58 249.26

Performance assumption change ** 12 211.67

Cancellations and other ( 2 ) 204.00

Non-vested PSUs at April 1, 2023 267 208.62

* Weighted-average

** Reflects the number of PSUs above target levels based on performance metrics.

As of April 1, 2023, there was $ 28.6 million of unrecognized compensation cost related to non-vested PSUs that are expected to be recognized as a charge to earnings over a weighted-average period of 1.5 years.

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The fair value of PSUs and RSUs is calculated using the market value of a share of Snap-on’s common stock on the date of grant and assumed forfeitures based on recent historical experience;

Restricted stock units:

RSUs are earned and expensed using the fair value of the award over the contractual term of three years .

Vesting of the RSUs is dependent upon continued employment over the three-year cliff vesting period.

The fair value of RSUs is calculated using the market value of a share of Snap-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 awards granted during the nine months ended October 1, 2022, and October 2, 2021, was $ 206.58 and $ 184.69 , respectively.

PSUs related to 46,217 shares were paid out during the nine months ended October 1, 2022.

There were no PSUs paid out during the nine months ended October 2, 2021.

Changes to the company’s non-vested PSUs and RSUs during the nine months ended October 1, 2022, are as follows:

The weighted-average grant date fair value of RSUs granted during the three months ended April 1, 2023, and April 2, 2022, was $ 249.26 and $ 211.67 , respectively.

Changes to the company’s non-vested RSUs during the three months ended April 1, 2023, are as follows:

(in thousands)

Non-vested PSUs and RSUs at January 1, 2022 215 $ 180.29

Non-vested RSUs at December 31, 2022 58 $ 200.16

Granted 26 249.26

Cancellations and other ( 1 ) 203.64

Non-vested PSUs and RSUs at October 1, 2022 320 189.21

Non-vested RSUs at April 1, 2023 83 215.54

* Weighted-average

As of October 1, 2022, there was $ 28.6 million of unrecognized compensation cost related to non-vested PSUs and RSUs that are expected to be recognized as a charge to earnings over a weighted-average period of 1.3 years.

As of April 1, 2023, there was $ 11.3 million of unrecognized compensation cost related to non-vested RSUs that are expected to be recognized as a charge to earnings over a weighted-average period of 1.7 years.

Stock appreciation rights:

The company also issues stock-settled and cash-settled SARs to certain key non-U.S.

SARs have a contractual term of ten years and vest ratably on the first, second and third anniversaries of the date of grant.

SARs have a contractual term of 10 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 of Snap-on’s common stock on the date of grant.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following weighted-average assumptions were used in calculating the fair value of stock-settled SARs granted during the nine months ended October 1, 2022, and October 2, 2021, using the Black-Scholes valuation model:

Nine Months Ended

2022 October 2,

The following weighted-average assumptions were used in calculating the fair value of stock-settled SARs granted during the three months ended April 1, 2023, and April 2, 2022, using the Black-Scholes valuation model:

Three Months Ended

April 1, 2023 April 2, 2022

Expected term of stock-settled SARs (in years)

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Risk-free interest rate 3.87 % 1.96 %

A summary of stock-settled SARs as of and for the nine months ended October 1, 2022, are as follows:

A summary of stock-settled SARs as of and for the three months ended April 1, 2023, are as follows:

Stock-settled

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(in millions)

Outstanding at January 1, 2022 397 $ 160.09

Outstanding at December 31, 2022 385 $ 170.11

Granted 62 249.26

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Forfeited or expired ( 37 ) 159.87

Outstanding at October 1, 2022 407 169.54 6.5 $ 13.7

Exercisable at October 1, 2022 260 155.68 5.2 11.9

Outstanding at April 1, 2023 387 184.66 6.8 $ 24.3

Exercisable at April 1, 2023 255 163.58 5.6 21.2

* Weighted-average

The weighted-average grant date fair value of stock-settled SARs granted during the nine months ended October 1, 2022, and October 2, 2021, was $ 32.63 and $ 24.05 , respectively.

The intrinsic value of stock-settled SARs exercised was $ 0.5 million and $ 1.2 million during the respective three and nine month periods ended October 1, 2022, and $ 0.1 million and $ 3.1 million during the respective three and nine month periods ended October 2, 2021.

The fair value of stock-settled SARs vested was $ 2.0 million and $ 2.1 million during the respective nine month periods ended October 1, 2022, and October 2, 2021.

As of October 1, 2022, there was $ 2.8 million of unrecognized compensation cost related to non-vested stock-settled SARs that is expected to be recognized as a charge to earnings over a weighted-average period of 1.7 years.

The following weighted-average assumptions were used in calculating the fair value of cash-settled SARs granted during the nine months ended October 1, 2022, and October 2, 2021, using the Black-Scholes valuation model:

Nine Months Ended

2022 October 2,

The weighted-average grant date fair value of stock-settled SARs granted during the three months ended April 1, 2023, and April 2, 2022, was $ 48.85 and $ 32.63 , respectively.

The intrinsic value of stock-settled SARs exercised was $ 2.2 million and $ 0.2 million during the respective three month periods ended April 1, 2023, and April 2, 2022.

The fair value of stock-settled SARs vested was $ 1.9 million and $ 2.0 million during the respective three month periods ended April 1, 2023, and April 2, 2022.

As of April 1, 2023, there was $ 4.8 million of unrecognized compensation cost related to non-vested stock-settled SARs that is expected to be recognized as a charge to earnings over a weighted-average period of 2.1 years.

The following weighted-average assumptions were used in calculating the fair value of cash-settled SARs granted during the three months ended April 1, 2023, and April 2, 2022, using the Black-Scholes valuation model:

Three Months Ended

April 1, 2023 April 2, 2022

Expected term of cash-settled SARs (in years)

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Risk-free interest rate 3.60 % 2.58 %

The intrinsic value of cash-settled SARs exercised was zero and $ 0.6 million during the respective three and nine month periods ended October 1, 2022, and zero and $ 0.6 million during the respective three and nine month periods ended October 2, 2021.

The fair value of cash-settled SARs vested was $ 0.1 million for both the nine month periods ended October 1, 2022, and October 2, 2021.

The intrinsic value of cash-settled SARs exercised was $ 0.4 million for both the respective three month periods ended April 1, 2023, and April 2, 2022.

The fair value of cash-settled SARs vested was $ 0.1 million for both the three month periods ended April 1, 2023, and April 2, 2022.

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Changes to the company’s non-vested cash-settled SARs during the nine months ended October 1, 2022, are as follows:

Changes to the company’s non-vested cash-settled SARs during the three months ended April 1, 2023, are as follows:

(in thousands)

Non-vested cash-settled SARs at January 1, 2022 2 $ 47.13

Non-vested cash-settled SARs at December 31, 2022 2 $ 53.24

Granted 1 48.85

Vested ( 1 ) 72.11

Non-vested cash-settled SARs at October 1, 2022 2 36.45

Non-vested cash-settled SARs at April 1, 2023 2 54.52

* Weighted-average

As of October 1, 2022, there was $ 0.1 million of unrecognized compensation cost related to non-vested cash-settled SARs that is expected to be recognized as a charge to earnings over a weighted-average period of 1.7 years.

As of April 1, 2023, there was $ 0.1 million of unrecognized compensation cost related to non-vested cash-settled SARs that is expected to be recognized as a charge to earnings over a weighted-average period of 2.2 years.

Restricted stock awards – non-employee directors:

The company awarded 6,525 shares and 6,858 shares of restricted stock to non-employee directors for the respective nine month periods ended October 1, 2022, and October 2, 2021.

The company awarded 5,760 shares and 6,525 shares of restricted stock to non-employee directors for the respective three month periods ended April 1, 2023, and April 2, 2022.

The fair value of the restricted stock awards is expensed over a one-year vesting period based on the fair value on the date of grant.

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The company records compensation expense when Snap-on’s period-end stock price is greater than the plan purchase price.

For the nine month periods ended October 1, 2022, and October 2, 2021, issuances under this plan totaled 18,452 shares and 82,286 shares, respectively.

As of October 1, 2022, shares reserved for issuance under this plan totaled 578,823 shares and Snap-on held participant contributions of approximately $ 1.6 million.

There were no share issuances under this plan for the three month periods ended April 1, 2023, and April 2, 2022.

As of April 1, 2023, 578,823 shares were reserved for issuance under this plan and Snap-on held participant contributions of approximately $ 4.7 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 compensation expense related to the plan for both the three and nine month periods ended October 1, 2022, and recognized compensation expense of zero and $ 9.6 million for the respective three and nine month periods ended October 2, 2021.

Compensation expense for plan participants was $ 0.5 million and zero for the three month periods ended April 1, 2023, and April 2, 2022, respectively.

Franchisee stock purchase plan:

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The company records mark-to-market expense when Snap-on’s period-end stock price is greater than the plan purchase price.

For the nine month periods ended October 1, 2022, and October 2, 2021, issuances under this plan totaled 44,937 shares and 143,388 shares, respectively.

As of October 1, 2022, shares reserved for issuance under this plan totaled 225,225 shares and Snap-on held participant contributions of approximately $ 3.7 million.

There were no share issuances under this plan for the three month periods ended April 1, 2023, and April 2, 2022.

As of April 1, 2023, 225,225 shares were reserved for issuance under this plan and Snap-on held participant contributions of approximately $ 8.9 million.

Participants are able to withdraw from the plan at any time prior to the ending date and generally receive back all contributions made during the plan year.

The company did not recognize any mark-to-market expense related to the plan for both the three and nine month periods ended October 1, 2022, and recognized mark-to-market expense of zero and $ 16.7 million for the respective three and nine month periods ended October 2, 2021.

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The company recognized market-to-market expense of $ 0.9 million and zero for the three month periods ended April 1, 2023, and April 2, 2022, respectively.

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

October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021

Three Months Ended

April 1, 2023 April 2, 2022

Weighted-average common shares outstanding 53,019,170 53,396,714

2 unchanged sentences

54,063,751 54,312,014

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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 both October 1, 2022, and October 2, 2021, there were no awards outstanding that were anti-dilutive.

As of April 1, 2023, there were 302,756 awards outstanding that were anti-dilutive;

as of April 2, 2022, there were 358,774 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.

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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 October 1, 2022, and October 2, 2021, is as follows:

Three Months Ended Nine Months Ended

(Amounts in millions) October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021

Snap-on’s product warranty accrual activity for the three months ended April 1, 2023, and April 2, 2022, is as follows:

Three Months Ended

(Amounts in millions) April 1, 2023 April 2, 2022

Warranty reserve:

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End of period $ 14.8 $ 16.5

Snap-on is involved in various legal matters that are being litigated and/or settled in the ordinary course of business.

In the ordinary course of our business, Snap-on is subject to legal disputes that are being litigated and/or settled.

Although it is not possible to predict the outcome of legal matters, management believes that the results of all legal matters will not have a material impact on Snap-on’s consolidated financial position, results of operations or cash flows.

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Lessee accounting:

Supplemental balance sheet information related to leases as of October 1, 2022, and January 1, 2022, is as follows:

(Amounts in millions) October 1, 2022 January 1, 2022

Supplemental balance sheet information related to leases as of April 1, 2023, and December 31, 2022, is as follows:

(Amounts in millions) April 1,

2023 December 31, 2022

Finance leases:

10 unchanged sentences

Total operating lease liabilities $ 64.3 $ 64.1

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Lessor accounting:

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“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) October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021

Three Months Ended

(Amounts in millions) April 1, 2023 April 2, 2022

Interest income $ 8.0 $ 0.5

Net foreign exchange gain (loss) ( 0.9 ) ( 0.5 ) ( 3.5 ) ( 0.5 )

Net foreign exchange loss ( 2.5 ) ( 1.0 )

Net periodic pension and postretirement benefits – non-service 9.6 8.8

Foreign currency translation loss from sale of equity interest — — — ( 1.0 )

Other 0.3 — 0.3 0.3

Total other income (expense) – net $ 15.2 $ 8.3

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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 October 1, 2022:

The following is a summary of net changes in Accumulated OCI by component and net of tax for the three months ended April 1, 2023:

(Amounts in millions) Foreign

2 unchanged sentences

Postretirement

Balance as of July 2, 2022 $ ( 265.1 ) $ 8.1 $ ( 200.7 ) $ ( 457.7 )

Other comprehensive loss before reclassifications ( 127.6 ) — — ( 127.6 )

Balance as of December 31, 2022 $ ( 272.5 ) $ 7.3 $ ( 263.1 ) $ ( 528.3 )

Other comprehensive income before reclassifications 18.1 — — 18.1

Amounts reclassified from Accumulated OCI — ( 0.4 ) — ( 0.4 )

Net other comprehensive income (loss) 18.1 ( 0.4 ) — 17.7

Balance as of October 1, 2022 $ ( 392.7 ) $ 7.7 $ ( 197.3 ) $ ( 582.3 )

The following is a summary of net changes in Accumulated OCI by component and net of tax for the nine months ended October 1, 2022:

Balance as of April 1, 2023 $ ( 254.4 ) $ 6.9 $ ( 263.1 ) $ ( 510.6 )

The following is a summary of net changes in Accumulated OCI by component and net of tax for the three months ended April 2, 2022:

(Amounts in millions) Foreign

6 unchanged sentences

Net other comprehensive income (loss) ( 9.7 ) ( 0.4 ) 3.4 ( 6.7 )

Balance as of October 1, 2022 $ ( 392.7 ) $ 7.7 $ ( 197.3 ) $ ( 582.3 )

The following is a summary of net changes in Accumulated OCI by component and net of tax for the three months ended October 2, 2021:

(Amounts in millions) Foreign

Translation Cash Flow

Hedges Defined

Postretirement

Balance as of July 3, 2021 $ ( 84.5 ) $ 9.7 $ ( 287.9 ) $ ( 362.7 )

Other comprehensive loss before reclassifications ( 38.6 ) — — ( 38.6 )

Amounts reclassified from Accumulated OCI — ( 0.4 ) 6.9 6.5

Net other comprehensive income (loss) ( 38.6 ) ( 0.4 ) 6.9 ( 32.1 )

Balance as of October 2, 2021 $ ( 123.1 ) $ 9.3 $ ( 281.0 ) $ ( 394.8 )

The following is a summary of net changes in Accumulated OCI by component and net of tax for the nine months ended October 2, 2021:

Balance as of April 2, 2022 $ ( 154.8 ) $ 8.5 $ ( 204.3 ) $ ( 350.6 )

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Amounts in millions) Foreign

Translation Cash Flow

Hedges Defined

Postretirement

Balance as of January 2, 2021 $ ( 74.7 ) $ 10.5 $ ( 301.6 ) $ ( 365.8 )

Other comprehensive loss before reclassifications ( 47.4 ) — — ( 47.4 )

Amounts reclassified from Accumulated OCI ( 1.0 ) ( 1.2 ) 20.6 18.4

Net other comprehensive income (loss) ( 48.4 ) ( 1.2 ) 20.6 ( 29.0 )

Balance as of October 2, 2021 $ ( 123.1 ) $ 9.3 $ ( 281.0 ) $ ( 394.8 )

The reclassifications out of Accumulated OCI for the three and nine month periods ended October 1, 2022, and October 2, 2021, are as follows:

The reclassifications out of Accumulated OCI for the three month periods ended April 1, 2023, and April 2, 2022, are as follows:

Amount Reclassified from Accumulated OCI

Three Months Ended Nine Months Ended

October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021 Statement of Earnings

(Amounts in millions)

Foreign currency loss from sale of equity interest:

Foreign currency $ — $ — $ — $ 1.0 Other income (expense) - net

Income tax expense — — — — Income tax expense

Net of tax — — — 1.0

Three Months Ended

(Amounts in millions) April 1,

2023 April 2,

2022 Statement of Earnings

Gains on cash flow hedges:

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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.

The Snap-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

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

dealerships, through direct and distributor channels.

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 and military, power generation, transportation and technical education market segments (collectively, “critical industries”), primarily through direct and distributor channels.

The Snap-on Tools Group consists of business operations primarily serving vehicle service and repair technicians through the company’s multi-national 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 dealerships, through direct and distributor channels.

Financial Services consists of the business operations of Snap-on’s finance subsidiaries.

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Intersegment amounts are eliminated to arrive at Snap-on’s consolidated financial results.

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Financial Data by Segment:

Three Months Ended Nine Months Ended

(Amounts in millions) October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021

Three Months Ended

(Amounts in millions) April 1, 2023 April 2, 2022

Commercial & Industrial Group $ 363.8 $ 340.1

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Other income (expense) – net 15.2 8.3

Earnings before income taxes and equity earnings $ 291.2 $ 262.4 $ 890.9 $ 793.7

(Amounts in millions) October 1, 2022 January 1, 2022

Earnings before income taxes $ 328.9 $ 290.2

(Amounts in millions) April 1,

2023 December 31, 2022

Commercial & Industrial Group $ 1,271.1 $ 1,245.8

10 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements