What changed in this filing

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Item 1. Financial Statements

2023-07-20 compared with 2023-04-20 · 312 added, 178 removed, 835 unchanged (37% of the section changed)

3 unchanged sentences

(Amounts in millions, except per share data)

Three Months Ended

April 1, 2023 April 2, 2022

Three Months Ended Six Months Ended

July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022

Net sales $ 1,191.3 $ 1,136.6 $ 2,374.3 $ 2,234.4

26 unchanged sentences

(Amounts in millions)

Three Months Ended

April 1, 2023 April 2, 2022

Three Months Ended Six Months Ended

July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022

Comprehensive income (loss):

6 unchanged sentences

Amortization of net unrecognized losses

0.1 4.7 0.1 9.2

Income tax benefit

— ( 1.1 ) — ( 2.2 )

0.1 3.6 0.1 7.0

Total comprehensive income 269.8 130.1 541.8 346.1

73 unchanged sentences

(Amounts in millions, except share data)

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

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

Shareholders’ Equity Attributable to Snap-on Incorporated

6 unchanged sentences

Interests Total

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

Net earnings for the three months ended July 1, 2023

— — 264.0 — — 5.9 269.9

Other comprehensive loss — — — ( 0.1 ) — — ( 0.1 )

Cash dividends – $ 1.62 per share

— — ( 85.9 ) — — — ( 85.9 )

Stock compensation plans — 20.9 — — 43.4 — 64.3

Share repurchases – 359,000 shares

— — — — ( 94.8 ) — ( 94.8 )

Other — — ( 0.6 ) — — ( 5.9 ) ( 6.5 )

Balance at July 1, 2023 $ 67.5 $ 521.1 $ 6,635.6 $ ( 510.7 ) $ ( 1,956.4 ) $ 22.2 $ 4,779.3

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

Shareholders’ Equity Attributable to Snap-on Incorporated

Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Loss Treasury

Stock Noncontrolling

Interests Total

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

Net Earnings for the six months ended July 1, 2023

— — 512.7 — — 11.5 524.2

6 unchanged sentences

Other 0.1 — ( 1.3 ) — — ( 11.5 ) ( 12.7 )

Balance at July 1, 2023 $ 67.5 $ 521.1 $ 6,635.6 $ ( 510.7 ) $ ( 1,956.4 ) $ 22.2 $ 4,779.3

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 July 2, 2022:

Shareholders’ Equity Attributable to Snap-on Incorporated

Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Loss Treasury

Stock Noncontrolling

Interests Total

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

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

Net earnings for the three months ended July 2, 2022

— — 231.5 — — 5.7 237.2

Other comprehensive loss — — — ( 107.1 ) — — ( 107.1 )

Cash dividends – $ 1.42 per share

— — ( 75.7 ) — — — ( 75.7 )

Stock compensation plans — 13.4 — — 18.4 — 31.8

Share repurchases – 251,000 shares

— — — — ( 53.8 ) — ( 53.8 )

Other — — ( 0.6 ) — — ( 5.6 ) ( 6.2 )

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

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

Net Earnings for the six months ended July 2, 2022

— — 448.9 — — 11.0 459.9

6 unchanged sentences

Other — — ( 1.2 ) — — ( 10.5 ) ( 11.7 )

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

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

See Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

(Amounts in millions)

Three Months Ended

April 1, 2023 April 2, 2022

Six Months Ended

July 1, 2023 July 2, 2022

Operating activities:

6 unchanged sentences

Stock-based compensation expense 20.4 17.5

Deferred income tax provision (benefit) ( 0.2 ) 2.3

Deferred income tax benefit ( 9.2 ) ( 7.1 )

Gain on sales of assets ( 0.3 ) ( 2.9 )

Changes in operating assets and liabilities:

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

Trade and other accounts receivable ( 30.7 ) ( 73.7 )

9 unchanged sentences

Capital expenditures ( 48.8 ) ( 41.5 )

Acquisitions of businesses, net of cash acquired — 0.5

Disposals of property and equipment 1.0 4.2

22 unchanged sentences

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.

The company’s 2023 fiscal second quarter ended on July 1, 2023, and its 2022 fiscal second quarter ended on July 2, 2022.

The company’s 2023 and 2022 fiscal second 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 month periods ended April 1, 2023, and April 2, 2022, 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 and six month periods ended July 1, 2023, and July 2, 2022, have been made.

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

5 unchanged sentences

The carrying value of the company’s non-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 9 for further information on financial instruments.

See Note 9 for additional information on financial instruments.

New Accounting Standards

10 unchanged sentences

The following table shows the consolidated revenues by revenue source:

Three Months Ended

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

Three Months Ended Six Months Ended

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

Revenue from contracts with customers $ 1,184.6 $ 1,130.5 $ 2,361.1 $ 2,222.4

7 unchanged sentences

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

For the Three Months Ended April 1, 2023

For the Three Months Ended July 1, 2023

Commercial Snap-on Repair Systems

10 unchanged sentences

Total revenue $ 364.2 $ 523.1 $ 452.0 $ 93.4 $ ( 148.0 ) $ 1,284.7

For the Three Months Ended April 2, 2022

For the Six Months Ended July 1, 2023

Commercial Snap-on Repair Systems

12 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Three Months Ended July 2, 2022

Commercial Snap-on Repair Systems

& Industrial Tools & Information Financial Snap-on

(Amounts in millions) Group Group Group Services Eliminations Incorporated

North America* $ 128.7 $ 460.3 $ 254.7 $ — $ — $ 843.7

Europe 73.1 36.4 60.4 — — 169.9

All other 74.3 23.9 24.8 — — 123.0

External net sales 276.1 520.6 339.9 — — 1,136.6

Intersegment net sales 83.0 — 76.9 — ( 159.9 ) —

Total net sales 359.1 520.6 416.8 — ( 159.9 ) 1,136.6

Financial services revenue — — — 86.4 — 86.4

Total revenue $ 359.1 $ 520.6 $ 416.8 $ 86.4 $ ( 159.9 ) $ 1,223.0

For the Six Months Ended July 2, 2022

Commercial Snap-on Repair Systems

& Industrial Tools & Information Financial Snap-on

(Amounts in millions) Group Group Group Services Eliminations Incorporated

North America* $ 242.4 $ 908.1 $ 497.5 $ — $ — $ 1,648.0

Europe 154.9 76.5 122.3 — — 353.7

All other 140.0 48.1 44.6 — — 232.7

External net sales 537.3 1,032.7 664.4 — — 2,234.4

Intersegment net sales 161.9 — 150.6 — ( 312.5 ) —

Total net sales 699.2 1,032.7 815.0 — ( 312.5 ) 2,234.4

Financial services revenue — — — 174.1 — 174.1

Total revenue $ 699.2 $ 1,032.7 $ 815.0 $ 174.1 $ ( 312.5 ) $ 2,408.5

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

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

For the Three Months Ended April 1, 2023

For the Three Months Ended July 1, 2023

Commercial Snap-on Repair Systems

8 unchanged sentences

Total revenue $ 364.2 $ 523.1 $ 452.0 $ 93.4 $ ( 148.0 ) $ 1,284.7

For the Three Months Ended April 2, 2022

For the Six Months Ended July 1, 2023

Commercial Snap-on Repair Systems

8 unchanged sentences

Total revenue $ 728.0 $ 1,060.1 $ 898.6 $ 186.0 $ ( 312.4 ) $ 2,560.3

For the Three Months Ended July 2, 2022

Commercial Snap-on Repair Systems

& Industrial Tools & Information Financial Snap-on

(Amounts in millions) Group Group Group Services Eliminations Incorporated

Vehicle service professionals $ 25.2 $ 520.6 $ 339.9 $ — $ — $ 885.7

All other professionals 250.9 — — — — 250.9

External net sales 276.1 520.6 339.9 — — 1,136.6

Intersegment net sales 83.0 — 76.9 — ( 159.9 ) —

Total net sales 359.1 520.6 416.8 — ( 159.9 ) 1,136.6

Financial services revenue — — — 86.4 — 86.4

Total revenue $ 359.1 $ 520.6 $ 416.8 $ 86.4 $ ( 159.9 ) $ 1,223.0

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the Six Months Ended July 2, 2022

Commercial Snap-on Repair Systems

& Industrial Tools & Information Financial Snap-on

(Amounts in millions) Group Group Group Services Eliminations Incorporated

Vehicle service professionals $ 49.1 $ 1,032.7 $ 664.4 $ — $ — $ 1,746.2

All other professionals 488.2 — — — — 488.2

External net sales 537.3 1,032.7 664.4 — — 2,234.4

Intersegment net sales 161.9 — 150.6 — ( 312.5 ) —

Total net sales 699.2 1,032.7 815.0 — ( 312.5 ) 2,234.4

Financial services revenue — — — 174.1 — 174.1

Total revenue $ 699.2 $ 1,032.7 $ 815.0 $ 174.1 $ ( 312.5 ) $ 2,408.5

Nature of goods and services:

9 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 $ 180.0 million of long-term contracts that have fixed consideration that extends beyond one year as of April 1, 2023.

Snap-on had approximately $ 183.0 million of long-term contracts that have fixed consideration that extends beyond one year as of July 1, 2023.

Snap-on expects to recognize approximately 65 % of these contracts as revenue by the end of fiscal 2024, an additional 30 % 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 $ 65.7 million and $ 63.3 million at April 1, 2023, and December 31, 2022, respectively.

The balance of total contract liabilities was $ 67.0 million and $ 63.3 million at July 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 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.

During the three and six months ended July 1, 2023, Snap-on recognized $ 10.6 million and $ 45.3 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 April 1, 2023, and December 31, 2022, are as follows:

(Amounts in millions) April 1,

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

(Amounts in millions) July 1,

2023 December 31, 2022

2 unchanged sentences

Total trade and other accounts receivable – net $ 786.8 $ 761.7

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

Three Months Ended

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

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

Three Months Ended Six Months Ended

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

Allowances for credit losses:

2 unchanged sentences

3.5 2.9 8.2 6.6

( 2.5 ) ( 2.2 ) ( 7.3 ) ( 5.2 )

Currency translation

0.1 ( 1.0 ) 0.3 ( 0.7 )

End of period $ 32.3 $ 28.1 $ 32.3 $ 28.1

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Finance and contract receivables:

6 unchanged sentences

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.

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,

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

(Amounts in millions) July 1,

2023 December 31, 2022

20 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 April 1, 2023, and December 31, 2022, are as follows:

(Amounts in millions) April 1,

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

(Amounts in millions) July 1,

2023 December 31, 2022

34 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 April 1, 2023, and charge-offs for the three months ended April 1, 2023, are as follows:

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

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

29 unchanged sentences

The WARM methodology calculates the average annual write-off rate and applies it to the remaining term of the receivables.

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.

The WARM methodology is used since 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.

5 unchanged sentences

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:

The following is a rollforward of the allowances for credit losses for finance and contract receivables for the three and six months ended July 1, 2023, and July 2, 2022:

Three Months Ended

April 1, 2023 Three Months Ended

April 2, 2022

July 1, 2023 Six Months Ended

(Amounts in millions) Finance

9 unchanged sentences

End of period $ 65.1 $ 6.5 $ 65.1 $ 6.5

Three Months Ended

July 2, 2022 Six Months Ended

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

Allowances for credit losses:

Beginning of period $ 62.5 $ 7.7 $ 67.3 $ 8.4

Provision for credit losses 9.1 — 15.4 0.1

Charge-offs ( 12.8 ) ( 0.6 ) ( 26.2 ) ( 1.4 )

Recoveries 2.7 0.1 5.0 0.1

Currency translation ( 0.2 ) — ( 0.2 ) —

End of period $ 61.3 $ 7.2 $ 61.3 $ 7.2

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

5 unchanged sentences

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.

The amount and number of finance and contract receivable modifications as of July 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 April 1, 2023, and December 31, 2022, is as follows:

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

(Amounts in millions) 30-59

2 unchanged sentences

Past Due Total Greater

April 1, 2023:

July 1, 2023:

Finance receivables $ 15.2 $ 10.1 $ 16.6 $ 41.9 $ 1,850.6 $ 1,892.5 $ 13.8

17 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 April 1, 2023, and December 31, 2022, is as follows:

(Amounts in millions) April 1,

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

(Amounts in millions) July 1,

2023 December 31, 2022

4 unchanged sentences

Inventories by major classification are as follows:

(Amounts in millions) April 1,

(Amounts in millions) July 1,

2023 December 31, 2022

5 unchanged sentences

Total inventories – net $ 1,046.1 $ 1,033.1

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.

Inventories accounted for using the first-in, first-out (“FIFO”) method approximated 60 % and 61 % of total inventories as of July 1, 2023, and December 31, 2022, respectively.

The company accounts for its non-U.S.

inventory on the FIFO method.

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

As of July 1, 2023, approximately 37 % of the company’s U.S.

inventory was accounted for using the FIFO method and 63 % was accounted for using the last-in, first-out (“LIFO”) method.

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

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

Goodwill and Other Intangible Assets

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

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

(Amounts in millions) Commercial

4 unchanged sentences

Currency translation 2.5 — 0.8 3.3

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

Balance as of July 1, 2023 $ 305.4 $ 12.4 $ 730.8 $ 1,048.6

Additional disclosures related to other intangible assets are as follows:

July 1, 2023 December 31, 2022

(Amounts in millions) Gross Carrying Value Accumulated

11 unchanged sentences

Total other intangible assets $ 630.3 $ ( 360.8 ) $ 269.5 $ 621.6 $ ( 346.0 ) $ 275.6

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 2023, the results of which did not result in any impairment.

Provisions for the 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, changes in key personnel or litigation, a sustained decrease in share price and/or other events.

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

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

4 unchanged sentences

Intangible asset renewal costs are expensed as incurred.

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.

The aggregate amortization expense was $ 7.0 million and $ 13.9 million for the respective three and six month periods ended July 1, 2023, and $ 7.2 million and $ 14.4 million for the respective three and six month periods ended July 2, 2022.

Based on current levels of amortizable intangible assets and estimated weighted-average useful lives, estimated annual amortization expense is expected to be $ 27.1 million in 2023, $ 21.6 million in 2024, $ 15.5 million in 2025, $ 11.7 million in 2026, $ 10.3 million in 2027, and $ 9.0 million in 2028.

Exit and Disposal Activities

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

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

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

Balance at First Quarter Balance at Second Quarter Balance at

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

2023 Provision Usage July 1,

Severance costs:

3 unchanged sentences

Total $ 2.8 $ — $ ( 0.3 ) $ 2.5 $ — $ ( 0.3 ) $ 2.2

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.

As of July 1, 2023, the company expects that approximately $ 1.1 million of the $ 2.2 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’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 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 23.7 % in the respective first six 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 $ 0.7 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 April 1, 2023, and December 31, 2022, consisted of the following:

(Amounts in millions) April 1,

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

(Amounts in millions) July 1,

2023 December 31, 2022

9 unchanged sentences

* Includes unamortized debt issuance costs.

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

Notes payable of $ 17.8 million as of July 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 borrowed or outstanding under the Credit Facility for the three months ended and as of April 1, 2023.

no amounts were borrowed or outstanding under the Credit Facility for the six months ended and as of July 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 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.

As of July 1, 2023, the company’s actual ratios of 0.07 and 0.27 , 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 April 1, 2023, there were no commercial paper issuances outstanding.

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

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

18 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 April 1, 2023, and December 31, 2022 .

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

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

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Stock-based deferred compensation risk management:

2 unchanged sentences

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 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.

As of July 1, 2023, Snap-on had equity forwards in place intended to manage market risk with respect to 68,800 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:

April 1, 2023 December 31, 2022

July 1, 2023 December 31, 2022

(Amounts in millions) Carrying

14 unchanged sentences

• 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 included the following components:

Three Months Ended

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

Three Months Ended Six Months Ended

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

Service cost $ 4.5 $ 6.3 $ 9.4 $ 13.4

7 unchanged sentences

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

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

Three Months Ended Six Months Ended

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

Interest cost $ 0.6 $ 0.3 $ 1.1 $ 0.6

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

As of July 1, 2023, the 2011 Plan had 2,629,450 shares available for future grants.

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

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.

Net stock-based compensation expense was $ 10.2 million and $ 20.4 million for the respective three and six month periods ended July 1, 2023, and $ 8.5 million and $ 17.5 million for the respective three and six month periods ended July 2, 2022.

Cash received from stock purchase plan and stock option exercises during the respective three and six month periods ended July 1, 2023, totaled $ 51.8 million and $ 84.6 million.

Cash received from stock purchase plan and stock option exercises during the respective three and six month periods ended July 2, 2022 totaled $ 23.4 million and $ 29.2 million.

The tax benefit realized from both the exercise and vesting of share-based payment arrangements was $ 5.4 million and $ 10.5 million for the respective three and six month periods ended July 1, 2023, and $ 1.8 million and $ 3.9 million for the respective three and six month periods ended July 2, 2022.

Stock options:

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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.

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.

The company uses historical data regarding stock option exercise and forfeiture behaviors for different participating groups to estimate the period of time that stock 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.

2 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 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

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

Three Months Ended Six Months Ended

July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022

Expected term of option (in years)

3.80 3.74 4.89 5.14

Expected volatility factor 24.52 % 23.12 % 23.99 % 22.61 %

1 unchanged sentence

Risk-free interest rate 3.63 % 2.73 % 3.99 % 2.00 %

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:

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

(in thousands)

5 unchanged sentences

Forfeited or expired ( 18 ) 215.97

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

Outstanding at July 1, 2023 2,122 174.65 5.6 $ 240.9

Exercisable at July 1, 2023 1,609 158.64 4.5 208.4

* Weighted-average

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.

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

The intrinsic value of stock options exercised was $ 24.5 million and $ 47.1 million during the respective three and six month periods ended July 1, 2023, and $ 7.4 million and $ 10.2 million during the respective three and six month periods ended July 2, 2022.

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

As of July 1, 2023, there was $ 17.2 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 1.9 years.

Performance share units:

3 unchanged sentences

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

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

The weighted-average grant date fair value of PSUs granted during the six months ended July 1, 2023, and July 2, 2022, was $ 249.26 and $ 204.87 , respectively.

PSUs related to 60,402 shares and 46,217 shares were paid out during the six months ended July 1, 2023, and July 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:

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

(in thousands)

3 unchanged sentences

Cancellations and other ( 4 ) 215.56

Non-vested PSUs at April 1, 2023 267 208.62

Non-vested PSUs at July 1, 2023 267 208.54

* 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)

As of July 1, 2023, there was $ 23.9 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 1.2 years.

Restricted stock units:

3 unchanged sentences

in recent years, forfeitures have not been significant.

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:

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

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

(in thousands)

2 unchanged sentences

Cancellations and other ( 2 ) 215.96

Non-vested RSUs at April 1, 2023 83 215.54

Non-vested RSUs at July 1, 2023 82 215.39

* Weighted-average

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.

As of July 1, 2023, there was $ 9.6 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 1.4 years.

Stock appreciation rights:

2 unchanged sentences

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.

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Stock-settled SARs are accounted for as equity instruments and provide for the issuance of Snap-on common stock equal to the amount by which the company’s stock has appreciated over the exercise price.

9 unchanged sentences

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.

SNAP-ON INCORPORATED

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 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

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

Six Months Ended

July 1, 2023 July 2, 2022

Expected term of stock-settled SARs (in years)

2 unchanged sentences

Risk-free interest rate 3.87 % 1.96 %

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

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

Stock-settled

6 unchanged sentences

Forfeited or expired ( 71 ) 161.41

Outstanding at April 1, 2023 387 184.66 6.8 $ 24.3

Exercisable at April 1, 2023 255 163.58 5.6 21.2

Outstanding at July 1, 2023 330 189.32 6.9 $ 32.6

Exercisable at July 1, 2023 199 165.46 5.6 24.4

* Weighted-average

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

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

The intrinsic value of stock-settled SARs exercised was $ 2.6 million and $ 4.8 million during the respective three and six month periods ended July 1, 2023, and $ 0.5 million and $ 0.7 million during the respective three and six month periods ended July 2, 2022.

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

As of July 1, 2023, there was $ 4.2 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 1.9 years.

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

Six Months Ended

July 1, 2023 July 2, 2022

Expected term of cash-settled SARs (in years)

2 unchanged sentences

Risk-free interest rate 4.49 % 2.85 %

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 three months ended April 1, 2023, are as follows:

The intrinsic value of cash-settled SARs exercised was zero and $ 0.4 million for the respective three and six month periods ended July 1, 2023, and $ 0.2 million and $ 0.6 million for the respective three and six month periods ended July 2, 2022.

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

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

(in thousands)

2 unchanged sentences

Vested ( 1 ) 110.38

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

Non-vested cash-settled SARs at July 1, 2023 2 86.09

* Weighted-average

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.

As of July 1, 2023, there was $ 0.2 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 1.9 years.

Restricted stock awards – non-employee directors:

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 company awarded 5,760 shares and 6,525 shares of restricted stock to non-employee directors for the respective six month periods ended July 1, 2023, and July 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.

5 unchanged sentences

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

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.

There were 27,225 shares and 18,464 shares issued under this plan for the respective six month periods ended July 1, 2023, and July 2, 2022.

As of July 1, 2023, 551,598 shares were reserved for issuance under this plan and Snap-on held participant contributions of approximately $ 0.5 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.

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.

Compensation expense for plan participants was $ 0.5 million and $ 1.0 million for the three and six month periods ended July 1, 2023, and zero for both the three and six month periods ended July 2, 2022, respectively.

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Franchisee stock purchase plan:

2 unchanged sentences

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

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.

There were 46,510 shares and 44,937 shares issued under this plan for the respective six month periods ended July 1, 2023, and July 2, 2022.

As of July 1, 2023, 178,715 shares were reserved for issuance under this plan and Snap-on held participant contributions of approximately $ 1.0 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 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.

The company recognized market-to-market expense of $ 0.7 million and $ 1.6 million for the three and six month periods ended July 1, 2023, and zero for both the three and six month periods ended July 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

April 1, 2023 April 2, 2022

Three Months Ended Six Months Ended

July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022

Weighted-average common shares outstanding 52,956,701 53,312,259 52,987,935 53,354,487

2 unchanged sentences

54,005,879 54,238,807 54,034,815 54,275,411

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 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.

The dilutive effect of the potential exercise of outstanding stock options and stock-settled SARs to purchase common shares is calculated using the treasury stock method.

As of July 1, 2023, there were 500 awards outstanding that were anti-dilutive;

as of July 2, 2022, there were no 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.

2 unchanged sentences

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 months ended April 1, 2023, and April 2, 2022, is as follows:

Three Months Ended

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

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

Three Months Ended Six Months Ended

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

Warranty reserve:

5 unchanged sentences

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 April 1, 2023, and December 31, 2022, is as follows:

(Amounts in millions) April 1,

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

(Amounts in millions) July 1,

2023 December 31, 2022

11 unchanged sentences

Total operating lease liabilities $ 71.2 $ 64.1

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Lessor accounting:

1 unchanged sentence

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 3 for further information on finance and contract receivables.

See Note 3 for additional information on finance and contract receivables.

Other Income (Expense) – Net

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

Three Months Ended

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

Three Months Ended Six Months Ended

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

Interest income $ 9.9 $ 1.6 $ 17.9 $ 2.1

1 unchanged sentence

Net periodic pension and postretirement benefits – non-service 9.2 9.3 18.8 18.1

Other 0.1 — 0.2 —

Total other income (expense) – net $ 16.8 $ 9.3 $ 32.0 $ 17.6

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 April 1, 2023:

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

(Amounts in millions) Foreign

2 unchanged sentences

Postretirement

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

Other comprehensive income before reclassifications 0.2 — — 0.2

Amounts reclassified from Accumulated OCI — ( 0.4 ) 0.1 ( 0.3 )

Net other comprehensive income (loss) 0.2 ( 0.4 ) 0.1 ( 0.1 )

Balance as of July 1, 2023 $ ( 254.2 ) $ 6.5 $ ( 263.0 ) $ ( 510.7 )

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

(Amounts in millions) Foreign

Translation Cash Flow

Hedges Defined

Postretirement

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

2 unchanged sentences

Net other comprehensive income (loss) 18.3 ( 0.8 ) 0.1 17.6

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:

Balance as of July 1, 2023 $ ( 254.2 ) $ 6.5 $ ( 263.0 ) $ ( 510.7 )

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

(Amounts in millions) Foreign

2 unchanged sentences

Postretirement

Balance as of January 1, 2022 $ ( 145.1 ) $ 8.9 $ ( 207.7 ) $ ( 343.9 )

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

Other comprehensive loss before reclassifications ( 110.3 ) — — ( 110.3 )

1 unchanged sentence

Net other comprehensive income (loss) ( 110.3 ) ( 0.4 ) 3.6 ( 107.1 )

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

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

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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

(Amounts in millions) Foreign

Translation Cash Flow

Hedges Defined

Postretirement

Balance as of January 1, 2022 $ ( 145.1 ) $ 8.9 $ ( 207.7 ) $ ( 343.9 )

Other comprehensive loss before reclassifications ( 120.0 ) — — ( 120.0 )

Amounts reclassified from Accumulated OCI — ( 0.8 ) 7.0 6.2

Net other comprehensive income (loss) ( 120.0 ) ( 0.8 ) 7.0 ( 113.8 )

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

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

Amount Reclassified from Accumulated OCI

Three Months Ended

(Amounts in millions) April 1,

2023 April 2,

2022 Statement of Earnings

Three Months Ended Six Months Ended

(Amounts in millions) July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022 Statement of Earnings

Gains on cash flow hedges:

9 unchanged sentences

* These Accumulated OCI components are included in the computation of net periodic pension and postretirement health care costs;

see Note 10 and Note 11 for further information.

see Note 10 and Note 11 for additional information.

Snap-on’s business segments are based on the organization structure used by management for making operating and investment decisions and for assessing performance.

8 unchanged sentences

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

SNAP-ON INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (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.

3 unchanged sentences

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

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

Three Months Ended Six Months Ended

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

Commercial & Industrial Group $ 364.2 $ 359.1 $ 728.0 $ 699.2

17 unchanged sentences

Earnings before income taxes $ 348.1 $ 309.5 $ 677.0 $ 599.7

(Amounts in millions) April 1,

(Amounts in millions) July 1,

2023 December 31, 2022

11 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